Arto Rajala, Prof. Helsinki School of Economics

Arto Rajala, Prof.Arto Rajala, Prof.Helsinki School of EconomicsHelsinki School of Economics

arHigh Technology Marketing2

OutlineOutline

What is High Technology?What is High Technology?

High Technology in FinlandHigh Technology in Finland

What’s the Difference between High and Low What’s the Difference between High and Low

Technology?Technology?

What are the Marketing Implications of High What are the Marketing Implications of High

Technology?Technology?

Identifying & crossing the chasmIdentifying & crossing the chasm

Building marketing offeringsBuilding marketing offerings

ConclusionsConclusions


Defining MarketingDefining Marketing

MarketingMarketing is a business (management) discipline or is a business (management) discipline or orientationorientation””...performance of business activities that direct goods and ...performance of business activities that direct goods and

services from produces to consumer or user (AMA)”services from produces to consumer or user (AMA)”

Understanding actual and potential customer needs, byUnderstanding actual and potential customer needs, bydeveloping/modifying products, facilitating customer access to developing/modifying products, facilitating customer access to its offerings, attracting and influencing the market, creating its offerings, attracting and influencing the market, creating differential advantages (brand)differential advantages (brand)

Establishing and maintaining customer relationshipsEstablishing and maintaining customer relationships

Managing 4P’s (Product, Price, Place, Promotion)Managing 4P’s (Product, Price, Place, Promotion)

STP-model (Segmenting – Targeting – Positioning)STP-model (Segmenting – Targeting – Positioning)


Defining Technology (1/2)Defining Technology (1/2)

MachineryMachinery, equipment, tools, artifacts, etc. , equipment, tools, artifacts, etc. (tangible)(tangible)TechniquesTechniques – specific ways of proceeding or – specific ways of proceeding or completing instrumental acts and specific completing instrumental acts and specific arrangements of persons, materials, and tasks arrangements of persons, materials, and tasks (intangible)(intangible)The The sciencescience of knowledge to practical purpose of knowledge to practical purpose (to obtain something useful)(to obtain something useful)KnowledgeKnowledge and and skillsskills – not only to develop but – not only to develop but how to use how to use making benefit from technology making benefit from technology


Defining High Technology (2/2)Defining High Technology (2/2)

NoveltyNovelty – advanced compared to the-state-of-the-art – advanced compared to the-state-of-the-art

Knowledge intensityKnowledge intensity – based on radical innovation – based on radical innovation

Dependence on R&D and highly educated peopleDependence on R&D and highly educated people

R&D investments > 4% of turnover (OECD)R&D investments > 4% of turnover (OECD)

usually btw 10% - 20%usually btw 10% - 20%

Intensive development cooperation btw universities Intensive development cooperation btw universities

and research institutesand research institutes

Long R&D phase – short market existence Long R&D phase – short market existence


Categorisation of TechnologyCategorisation of Technology

Product TechnologyProduct Technologyembedded in the product itself

Process TechnologyProcess Technologya part of production or delivery system

Information TechnologyInformation Technologya platform that enables communication

Management TechnologyManagement Technologyknow-how and expertise to run the business

tacit vs. explicit knowledge


High-Tech Characteristics...High-Tech Characteristics...

New technologyNew technologyMakes the existing technology obsolete very Makes the existing technology obsolete very rapidlyrapidlyNew products or even new industries emergeNew products or even new industries emerge

Leading-edge technologyLeading-edge technologyThe-state-of-the-art in the field and not widespread The-state-of-the-art in the field and not widespread acceptance by those working in the fieldacceptance by those working in the fieldTechnology-base is newTechnology-base is new

Cross-industry characteristicsCross-industry characteristicsAbility to create/modify new applicationsAbility to create/modify new applications


Developer’s vs. user’s view on technologyDeveloper’s vs. user’s view on technologyTechnology adapters = Technology adapters = CUSTOMERSCUSTOMERS

Technology providers = Technology providers = SUPPLIERSSUPPLIERS

Customer perceived valueCustomer perceived valueAdded value to customerAdded value to customer

Knowledge intensityKnowledge intensityDifferent technology settingsDifferent technology settings

Technology life cycleTechnology life cycleFrom product to process technologiesFrom product to process technologies

… … High-Tech CharacteristicsHigh-Tech Characteristics


A Definition of High-Tech …A Definition of High-Tech …… from Marketing Point of View… from Marketing Point of View

““High-tech is that of the High-tech is that of the leading-edge technologyleading-edge technology

involving a high level of involving a high level of knowledge intensityknowledge intensity, ,

which enhances the which enhances the valuevalue of the product or of the product or

process to the customer in the sense that it process to the customer in the sense that it

provides better quality, lower costs, or it makes the provides better quality, lower costs, or it makes the

use of the object easier compared to the old use of the object easier compared to the old

technology”technology”


High Technology in FinlandHigh Technology in Finland......http://tilastokeskus.fi/tk/yr/ttt_huippu.html & http://www.research.fi/

Turnover of high-tech companies 16 billion euro (1999)Turnover of high-tech companies 16 billion euro (1999)

Share of high-tech in manufacturing output 27 % [USA 32 %]Share of high-tech in manufacturing output 27 % [USA 32 %]

Average growth of production per year 31 % btw 1995-1999Average growth of production per year 31 % btw 1995-1999

Employed 42 000 people (1999) [30 500 (-95, + 8 % /year]Employed 42 000 people (1999) [30 500 (-95, + 8 % /year]

Number of R&D stuff Number of R&D stuff 68 00068 000 (2000) [47,000 (-91)] (2000) [47,000 (-91)]

1 2031 203 doctoral dissertations (2001) [ doctoral dissertations (2001) [524 524 (-91)](-91)]

20,9 20,9 % of total export (2001) % of total export (2001) 10,010,0 billion euro [ billion euro [6,0 6,0 % in 1991]% in 1991]

17,8 % of total import (2001)17,8 % of total import (2001) 6,4 6,4 billion euro [billion euro [12,1 12,1 % in 1991]% in 1991]

R&D investments (2002) R&D investments (2002) 3,47 3,47 %% of BNP ( of BNP (4.9 4.9 billion euro of which billion euro of which

companies accounted for companies accounted for 70,7 70,7 %)%)

3 083 3 083 patent applications (-99)patent applications (-99), 4.6 dom. pat./10 000 , 4.6 dom. pat./10 000

Large externalities (other industrial sectors)Large externalities (other industrial sectors)

http://tilastokeskus.fi/tk/yr/ttt_huippu.html

http://tilastokeskus.fi/tk/yr/ttt_huippu.html

http://www.research.fi/




Tuotekehitysmenot

Source: www.research.fi

R&D Expenditures in Finland

Universities

Public sector

CompaniesCompanies



Major High-Tech Sectors in FinlandMajor High-Tech Sectors in Finland

ElectronicsElectronicsTelecommunicationTelecommunicationData and Office EquipmentData and Office EquipmentScientific InstrumentsScientific InstrumentsBiotechnologyBiotechnology

High technology is a problem from industry High technology is a problem from industry classification point of view - no explicit statistic classification point of view - no explicit statistic available!available!

ICT- Information & Telecommunication Cluster


High-technology share of export and importin Finland

Source: www.research.fi

Export

Import



Source: Statistics Finland




Factors behind the Finnish Success Factors behind the Finnish Success

Strong technology-base (Forest & Metal/Engineering Strong technology-base (Forest & Metal/Engineering Industries)Industries)High level of R&D investments (public vs. private)High level of R&D investments (public vs. private)Focusing on core capabilities - outsourcing others Focusing on core capabilities - outsourcing others (Nokia)(Nokia)Technological co-operation between companies, Technological co-operation between companies, research co-operation between companies and research co-operation between companies and universities - Networking (Technology Villages)universities - Networking (Technology Villages)Educated labour force (75% of 25-35 years old have a Educated labour force (75% of 25-35 years old have a university or vocational training)university or vocational training)Rapid globalisation - ‘born global’ companiesRapid globalisation - ‘born global’ companiesAccess to venture capital fundingAccess to venture capital funding




Innovations – core of high techonology Innovations – core of high techonology http://tilastokeskus.fi/tk/yr/ttinno1.html

InnovationInnovation ~ a totally new, or a remarkable enhanced, product, service ~ a totally new, or a remarkable enhanced, product, service or production system/processor production system/process

EU innovation research 2000EU innovation research 2000Posted in Finland to 3 462 companies – 50% answeredPosted in Finland to 3 462 companies – 50% answeredHighest level of innovation activities in telecom (73 %), Highest level of innovation activities in telecom (73 %), electrotechnical industry (67 %) and chemical industry (63 %) electrotechnical industry (67 %) and chemical industry (63 %) Innovation expenditures (2000) was estimated 4.9 billion €Innovation expenditures (2000) was estimated 4.9 billion €Innovation activities had the highest impact on expanding product or Innovation activities had the highest impact on expanding product or service offering, enhancing quality, market expansion or increase in service offering, enhancing quality, market expansion or increase in market share market share The most important source of innovation was the company itself The most important source of innovation was the company itself (90%)(90%)About 2/3 of companies involved in innovation activities were About 2/3 of companies involved in innovation activities were confronted with difficulties to implement themconfronted with difficulties to implement themEconomical factors such as too high a risk, increasing costs, and the Economical factors such as too high a risk, increasing costs, and the lack of suitable source of funding and competence personnel were lack of suitable source of funding and competence personnel were the worst bottlenecks for innovation activitiesthe worst bottlenecks for innovation activities

http://tilastokeskus.fi/tk/yr/ttinno1.html









Technology Life-CycleTechnology Life-Cycle

Time

Era of Ferment Design Competition Substitution

Era of IncrementalChange Elaboration of

Dominant Design

TechnologicalDiscontinuity 1


DominantDesign 1

Time

Era of Ferment Design Competition Substitution

Era of IncrementalChange Elaboration of

Dominant Design



DominantDesign 1


Nature of High Tech MarketsNature of High Tech Markets

Why are high-tech markets different ?Why are high-tech markets different ?• HIGH-TECH HIGH-TECH high uncertainty about high uncertainty about

technology and markettechnology and market

Market uncertaintyMarket uncertainty• Ambiguity about the type and extent of customer Ambiguity about the type and extent of customer

needs that can be satisfied by the technologyneeds that can be satisfied by the technology

Technological uncertaintyTechnological uncertainty• Not knowing whether the technology - or the Not knowing whether the technology - or the

company providing it - can deliver on its promise company providing it - can deliver on its promise to meet needs , once they have been articulatedto meet needs , once they have been articulated


Market Uncertainty

Will the marketadapt industry

standard?

How will needschange in the

future?

What needs canbe met by newtechnology?

How fast willthe innovation

spread?

How large isthe potential

market?

TechnologyUncertainty

Will delivery timetables

be met?

Will the vendorgive high-

quality service?

Will the newproduct function

as promised?

Will newhigh-tech makeours obsolete?

High-TechMarketing

Will there be side effects of technology ?

Sources of UncertaintiesSources of Uncertainties

Based on: Moriarty & Kosnik (1989)


Taxonomy of Marketing SituationsTaxonomy of Marketing Situations

BetterMousetrapMarketing

High TechMarketing

Low TechMarketing

High Fashion

Marketing

TechnologicalUncertainty

Market Uncertainty

High

Low

Low High

Based on: Moriarty & Kosnik (1989)


Challenges for MarketingChallenges for Marketing

New designs must win market shareNew designs must win market shareRole of distribution channelRole of distribution channel

Customer perceptionsCustomer perceptions

CompetitionCompetitionFrom higher performance to lower costs From higher performance to lower costs and differentiation through minor design and differentiation through minor design variations and strategic positioning tacticsvariations and strategic positioning tactics

• incremental changes take placeincremental changes take place

Segmenting - Targeting - PositioningSegmenting - Targeting - Positioning

Commercialising Commercialising High-Tech Products (1/2)High-Tech Products (1/2)

Identifying and Crossing the ChasmIdentifying and Crossing the Chasm


Key IssuesKey Issues

Why so many excellent products fail?Why so many excellent products fail?90-95 % of new product ideas newer reach market90-95 % of new product ideas newer reach market

30-50 % of introduced products seem to fail on the 30-50 % of introduced products seem to fail on the marketmarket

Are there differences between high-tech and Are there differences between high-tech and low-tech product concerning the low-tech product concerning the commercialisation process?commercialisation process?

Critical issue: Time-to-MarketCritical issue: Time-to-Market

Using the ‘Market Development Model’Using the ‘Market Development Model’


Technology Adoption Life-CycleTechnology Adoption Life-Cycle

Pragmatists create the dynamics of high-tech market development.Pragmatists create the dynamics of high-tech market development.

Source: Moore (1998)

AdoptersEarly

14%

Late Majority

33%

Early Majority

33%

Innovators

2,5%

Laggards

16,5%

Techies:Try it!

Visionaries:Get ahead of the herd!

Skeptics:No way!

Conservatives:Hold on!

Pragmatists:Stick with the herd!


Innovators - Technology EnthusiastsInnovators - Technology Enthusiasts

Primary Motivation:Primary Motivation:Learn about new technologies for their own sakeLearn about new technologies for their own sake

Key Characteristics:Key Characteristics:Strong aptitude for technical informationStrong aptitude for technical informationLike to alpha test new productsLike to alpha test new productsCan ignore the missing elementsCan ignore the missing elementsDo whatever they can to helpDo whatever they can to help

Challenges:Challenges:Want unrestricted access to top technical peopleWant unrestricted access to top technical peopleWant no-profit pricing (preferably free) Want no-profit pricing (preferably free)


Early Adopters - The VisionariesEarly Adopters - The Visionaries

Primary Motivation:Primary Motivation: Gain dramatic competitive advantage via Gain dramatic competitive advantage via revolutionaryrevolutionary breakthrough breakthrough

Key Characteristics:Key Characteristics:Great imaginations for strategic applicationsGreat imaginations for strategic applicationsAttracted by high-risk, high-reward propositionsAttracted by high-risk, high-reward propositionsWill commit to supply the missing elementsWill commit to supply the missing elementsPerceive order-of-magnitude gains — so not price-Perceive order-of-magnitude gains — so not price-sensitivesensitive

Challenges:Challenges:Want rapid time-to-marketWant rapid time-to-marketDemand high degree of customization and supportDemand high degree of customization and support


Early Majority - PragmatistsEarly Majority - Pragmatists

Primary Motivation:Primary Motivation:Gain productivity improvements via Gain productivity improvements via evolutionaryevolutionary changechange

Key Characteristics:Key Characteristics:Astute managers of mission-critical applicationsAstute managers of mission-critical applicationsUnderstand real-world issues and tradeoffsUnderstand real-world issues and tradeoffsFocus on proven applicationsFocus on proven applicationsLike to go with the market leaderLike to go with the market leader

Challenges:Challenges:Insist on good references from trusted colleaguesInsist on good references from trusted colleaguesWant to see the solution in production at the Want to see the solution in production at the reference sitereference site


Late Majority - ConservativesLate Majority - Conservatives

Primary Motivation:Primary Motivation:Just stay even with the competition.Just stay even with the competition.

Key Characteristics:Key Characteristics:Better with people than technologyBetter with people than technologyRisk averse Risk averse Price-sensitive Price-sensitive Highly reliant on a single, trusted advisorHighly reliant on a single, trusted advisor

Challenges:Challenges:Need completely pre-assembled solutionsNeed completely pre-assembled solutionsWould benefit from value-added services but do not Would benefit from value-added services but do not want to pay for themwant to pay for them


Laggards - SkepticsLaggards - Skeptics

Primary Motivation:Primary Motivation:Maintain status quo.Maintain status quo.

Key Characteristics:Key Characteristics:Good at debunking marketing hypeGood at debunking marketing hypeDisbelieve productivity-improvement argumentsDisbelieve productivity-improvement argumentsBelieve in Believe in the law of unintended consequencesthe law of unintended consequencesSeek to block purchases of new technologySeek to block purchases of new technology

Challenges:Challenges:Not a customerNot a customerCan be formidable opposition to early adoptionCan be formidable opposition to early adoption


The Logic of Commercialising High-The Logic of Commercialising High-Tech ProductsTech Products

Seeding new products to TechisSeeding new products to TechisTechis help and educate VisionariesTechis help and educate VisionariesVisionaries serve good references for Visionaries serve good references for the Pragmatiststhe PragmatistsBecoming the market leader by serving Becoming the market leader by serving Pragmatists and setting standardsPragmatists and setting standardsLeverage success - generate sufficient Leverage success - generate sufficient volume & experience -- reliable volume & experience -- reliable products which are also cheap enough products which are also cheap enough to Conservativesto ConservativesLeaving Sceptics to their on devicesLeaving Sceptics to their on devices


Discovering the ChasmDiscovering the Chasm

High-tech products are warmly welcome in an early market High-tech products are warmly welcome in an early market (techies & visionaries) but then will fall into a chasm (sales will (techies & visionaries) but then will fall into a chasm (sales will falter and often plummet)falter and often plummet)

Visionaries don’t see enough of a head startVisionaries don’t see enough of a head startPragmatists see no reason to start yetPragmatists see no reason to start yet

Crossing the chasm Crossing the chasm gaining the acceptance within a mainstream gaining the acceptance within a mainstream market - becomes and organisational imperative … but very few market - becomes and organisational imperative … but very few high-tech products cross these chasmshigh-tech products cross these chasms

Early Market Mainstream Market

Chasm



Crossing the ChasmCrossing the Chasm

Product vendor’s problemProduct vendor’s problem80% of many solutions—100% of none80% of many solutions—100% of nonePragmatists won't buy 80% solutionsPragmatists won't buy 80% solutions

Most common vendor mistake:Most common vendor mistake:Committing to the most common enhancement requestsCommitting to the most common enhancement requestsNever Never finishingfinishing any one customer's wish-list any one customer's wish-list

SolutionSolutionFocus on a single beachheadFocus on a single beachheadAccelerate formation of that segment's whole productAccelerate formation of that segment's whole product



Successful CrossingSuccessful Crossing

Considering the difference between visionaries and Considering the difference between visionaries and pragmatistspragmatists

the former is willing to bet ‘on the come’the former is willing to bet ‘on the come’

the latter want to see the solutions in production (i.e. see the the latter want to see the solutions in production (i.e. see the whole product before they by it)’ whole product before they by it)’

Many high-tech companies are not willing to commit to Many high-tech companies are not willing to commit to develop any ‘whole product’develop any ‘whole product’

they focus on four to five likely candidate segmentsthey focus on four to five likely candidate segments

risk for having everything for nobodyrisk for having everything for nobody

Putting all eggs in one basket is the only safe way to Putting all eggs in one basket is the only safe way to cross the chasm - Why? (Focus & Globalisation)cross the chasm - Why? (Focus & Globalisation)

Commercialising Commercialising High-Tech Products (2/2)High-Tech Products (2/2)

On the Mainstream MarketOn the Mainstream Market


Market Development ModelMarket Development Model

BowlingAlley

Chasm

Tornado

TotalAssimilation

Main Street

EarlyMarket

Mainstream Market



Beyond the Chasm Beyond the Chasm - Assessing Mass Market- Assessing Mass Market

The Bowling AlleyThe Bowling Alleya period of niche-based adoption in advance of the a period of niche-based adoption in advance of the general marketplace, driven by compelling customer general marketplace, driven by compelling customer needs and the willingness of vendors to craft niche-needs and the willingness of vendors to craft niche-specific whole productsspecific whole products

The TornadoThe Tornadoa period of mass-market adoption, when the general a period of mass-market adoption, when the general marketplace switches over to the new infrastructure marketplace switches over to the new infrastructure paradigmparadigm

Main StreetMain Streeta period of aftermarket development, when the base a period of aftermarket development, when the base infrastructure has been deployed and the goal now is infrastructure has been deployed and the goal now is to flesh out its potentialto flesh out its potential

End of LifeEnd of Lifewholly new paradigms (technology) come to marketwholly new paradigms (technology) come to market


Technology vs. Category Life CyclesTechnology vs. Category Life Cycles

Product CategoryLife Cycle

(Ongoing sales)

Technology Adoption Life Cycle(First time adopters)

Market shareis captured here

Market share is converted intoserved installed base here



Four Marketing FrameworksFour Marketing Frameworks

DealDriven

NicheMarketing

MassMarketing

1 on 1Marketing



Product MixProduct Mix Offerings Offerings

ApplicationSystems

• Photography

• Color printing

• Wireless telephony

• Word processing

• Internetworking

• Worldwide Web

Core Products

• Cameras

• Inkjet printers

• Cell phones

• Word processors

• Routers, switches

• Browsers/servers

AftermarketProducts

• Film, lenses

• Cartridges, paper trays

• Batteries, modems

• Suite upgrades

• Performance tools

• Plug-ins



Service Service Mix Mix OfferingsOfferings

ProfessionalServices

• Consultative selling

• Business process reengineering

• Systems integration

• Project management

• Custom training

• System conversion

• Contract management

TransactionServices

• Order processing

• Maintenance

• Facilities management

• Outsourcing

• Upgrade management

• Broadcast data feeds

• Proprietary database access privileges

DistributionServices

• Competitive selling

• System configuration

• Implementation support

• Train-the-trainers

• Customer service

• Technical support

• Warranty


Managing Marketing Offerings Managing Marketing Offerings in High-Tech Firmsin High-Tech Firms

Are the 4 P’s still relevant?Are the 4 P’s still relevant?


Product PlatformProduct Platform

Product platform is a Product platform is a collection of common elements, collection of common elements, particularly the underlying technology elements, particularly the underlying technology elements, implemented across a range of productsimplemented across a range of products..

It is primarily a definition for planning, decision making, and It is primarily a definition for planning, decision making, and strategic thinking.strategic thinking.

Especially important in high-tech firms in which multiple Especially important in high-tech firms in which multiple products are related by common technology.products are related by common technology.

Platform defines the cost structure, capabilities, and Platform defines the cost structure, capabilities, and differentiation of the resulting products.differentiation of the resulting products.

Separating product platform strategy from product line Separating product platform strategy from product line and individual product strategy, a company can and individual product strategy, a company can concentrate on its most important strategic issues.concentrate on its most important strategic issues.


Product Platform Product Platform

Element A

Element B

Element C

Product 1

Product 3

Product 2

Product 1b

Product 1a

Product 4

Segment III

Segment II

Segment I

Uniqueproduct

elements

Commonplatformelements

Source: McGrath (2000, 55)


Main CharacteristicsMain Characteristics

Product platform is Product platform is NOTNOT a product! a product!... but the lowest common determinator of relevant ... but the lowest common determinator of relevant technology in a set of products or product linetechnology in a set of products or product line

Product failures in high-tech firms often caused by Product failures in high-tech firms often caused by incomplete product platform strategyincomplete product platform strategyNature of product platforms varies across industriesNature of product platforms varies across industries

e.g. in PC it consists of the microprocessor e.g. in PC it consists of the microprocessor combined with its operating system, packaging, combined with its operating system, packaging, power supply, memory, disk drives, monitors, and power supply, memory, disk drives, monitors, and interfacesinterfacese.g. it can be a chemical compound combined with e.g. it can be a chemical compound combined with with the manufacturing processwith the manufacturing process


Market Platform Plan (MPP)Market Platform Plan (MPP)

MPPMPP integrates knowledge about the market and integrates knowledge about the market and knowledge about the product and its defining knowledge about the product and its defining technologytechnology

Core strategic vision

Product platform strategy

Product line strategy

New product development

Market platform plans•Defining technology•Platform architecture•Product line plans•Platform management

Core strategic vision•Where are we going?•How will we get there?•Why will we be successful?

Source: McGrath (2000)


The Market Platform Plan FrameworkThe Market Platform Plan Framework

Enables companies to translate platform Enables companies to translate platform strategy into a practicable strategy into a practicable ’’attack planattack plan’’ for a for a target markettarget market

Characterize & prioritize customer segmentsCharacterize & prioritize customer segments

Define the basis of customer value & Define the basis of customer value & differentiationdifferentiation

Define the offerings to the customersDefine the offerings to the customers

Define monitoring plan to sense environmentDefine monitoring plan to sense environment

Establish economic metrics for measuring success Establish economic metrics for measuring success in the marketin the market


Managing High-Tech Products… Managing High-Tech Products…

Distinctive nature of high-tech products Distinctive nature of high-tech products create certain challenges for product create certain challenges for product managersmanagers

dependence on R&D dependence on R&D

risky businessrisky business

global nature of marketsglobal nature of markets

long development cycle - but short economic life long development cycle - but short economic life cyclecycle

What is the role of pricing decisionsWhat is the role of pricing decisions

Implications of Product Life Cycle ModelImplications of Product Life Cycle Model


What is a product?What is a product?

Corebenefit or

service

Packaging

Features

StylingQuality

Brandname

Installation

Aftersalesservices

Warranty

Deliveryand credit

Augmented product

Actual product

Core product

Potential product


Are prices and costs really related?Are prices and costs really related?… … yes, but not so directly as we usually thinkyes, but not so directly as we usually think

keep in mind PLC when making pricing decisionskeep in mind PLC when making pricing decisions most high-tech products evolve into commoditiesmost high-tech products evolve into commodities

emphasising the role of internal costsemphasising the role of internal costs• risk of overlooking what happens in the market -- what risk of overlooking what happens in the market -- what

price customers are willing to payprice customers are willing to pay

Surprisingly ... small differences in costs and Surprisingly ... small differences in costs and margin objectives can have dramatic effects margin objectives can have dramatic effects on the price a company must command in the on the price a company must command in the market placemarket place

… … Managing High-Tech ProductsManaging High-Tech Products


Evolution of the Whole ProductEvolution of the Whole Product

Different whole product priorities at different stages of the life cycle.Different whole product priorities at different stages of the life cycle.

Mostlycustom

work

Plug & playsome

customization

Fullyintegrated

Masscustomized


ConclusionsConclusions

What have we learned?What have we learned?


‘‘Current Wisdom’ on High-Tech MarketingCurrent Wisdom’ on High-Tech Marketing

Interaction between marketing and R&DInteraction between marketing and R&DCoping with the high levels of technological and market uncertaintyCoping with the high levels of technological and market uncertainty

Marketing capabilities & business competenciesMarketing capabilities & business competencies

Product development processesProduct development processesRapid changes in technology and market settingsRapid changes in technology and market settings

Shortening the ‘breakthrough-time’Shortening the ‘breakthrough-time’

Market offering and product platform approachesMarket offering and product platform approaches

Increasing importance of services Increasing importance of services Emphasise technical support and after sales serviceEmphasise technical support and after sales service

Differentiating from competitorsDifferentiating from competitorsBuilding strong relationships with suppliers, channels and customersBuilding strong relationships with suppliers, channels and customers

Analysing value systems Analysing value systems Networks, strategic alliances, partnerships Networks, strategic alliances, partnershipsRely on qualitative rather than quantitative approaches for market Rely on qualitative rather than quantitative approaches for market researchresearch

What the customers really value?What the customers really value?


What does this mean?What does this mean?

The ‘High-Tech’ label is not ‘once and for all’, so today’s The ‘High-Tech’ label is not ‘once and for all’, so today’s hot new technologies becomes tomorrow’s basic hot new technologies becomes tomorrow’s basic technology technology Surprisingly, high-tech marketing is not so different from Surprisingly, high-tech marketing is not so different from that of low-tech as often claimed … that of low-tech as often claimed … … … but there is a special need for more marketing focus but there is a special need for more marketing focus in high-tech context because ...in high-tech context because ...

Customer’s view is easily overlookedCustomer’s view is easily overlooked• To avoid developing a product which are ‘engineer's dilemma but To avoid developing a product which are ‘engineer's dilemma but

marketer’s nightmare’marketer’s nightmare’Knowing competitors well enoughKnowing competitors well enoughGlobal view of high-tech businessGlobal view of high-tech businessCross-industry effects and convergence of different Cross-industry effects and convergence of different technologiestechnologiesFocusing more and more on servicesFocusing more and more on services


LähteitäLähteitäHigh Technology in FinlandHigh Technology in Finland 20012001 (also (also 1999, 1999, 1997, 1995, 1993, 1991), 1997, 1995, 1993, 1991), Finnish Academies of TechnologyFinnish Academies of Technology..McGrath, Michel E.McGrath, Michel E. ( (20012001), Product Strategy for High-Technology ), Product Strategy for High-Technology CompaniesCompanies: Accelerateing Your Business to Web Speed. N.Y: : Accelerateing Your Business to Web Speed. N.Y: McGrew Hill.McGrew Hill.Mohr, J. J.Mohr, J. J. (2001), Marketing of High-Technology Products and Innovations. (2001), Marketing of High-Technology Products and Innovations. Upper Saddle River, N.J: Prentice Hall.Upper Saddle River, N.J: Prentice Hall.Moore, G.Moore, G. (1995), Crossing the Chasm: Marketing and Selling High-Tech (1995), Crossing the Chasm: Marketing and Selling High-Tech Products to Mainstream Customers. New York: HarperCollins Publishers.Products to Mainstream Customers. New York: HarperCollins Publishers.Moore, GMoore, G. (1998), Inside the Tornado: Marketing Strategies from Silicon . (1998), Inside the Tornado: Marketing Strategies from Silicon Valley’s Cutting Edge.Valley’s Cutting Edge.Moore, Moore, JJ.. F.F. ( (19971997), ), The Death of Competition: Leadership & Strategy in the The Death of Competition: Leadership & Strategy in the Age of Business Ecosystems. N.Y.: HarperCollins Publisher.Age of Business Ecosystems. N.Y.: HarperCollins Publisher.Paija, L. Paija, L. (2001), Finnish ICT Cluster in the Digital Economy, Helsinki: (2001), Finnish ICT Cluster in the Digital Economy, Helsinki: Taloustieto Oy.Taloustieto Oy.Simon, H. Simon, H. (1996), Hidden Champions: Lessons for 500 of the World’s Best (1996), Hidden Champions: Lessons for 500 of the World’s Best Unknown Companies. Boston, Mass: Harvard Business School Press.Unknown Companies. Boston, Mass: Harvard Business School Press.Tapscott, D. Tapscott, D. (1999), Creating Value in the Network Economy. A Harvard (1999), Creating Value in the Network Economy. A Harvard Business Review Book. Business Review Book. Tidd, Joe, John Bessant Tidd, Joe, John Bessant andand Keith Pavitt Keith Pavitt (1997), (1997), Managing Innovation: Managing Innovation: Integrating Technological, Market and Organizational ChangeIntegrating Technological, Market and Organizational Change. Chichester, . Chichester, UK: John Wiley & SonsUK: John Wiley & Sons

Documents

Arto Rajala, Prof. Helsinki School of Economics