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    Marketing of High-Technology

    Products and InnovationsJakki J. Mohr

    Chapter 2:

    Strategy and Corporate Culture inHigh-Tech Firms

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    Jakki Mohr 2001

    Internal (within the firm)Considerations in

    High-Tech Marketing

    Effective

    Cross-Functional Marketing

    /R&D Collaboration

    Being Market-Orientated

    Acquire Disseminate Use Information

    Relationship Marketing

    Partnering with important stakeholders

    Access to Resources

    Funding Management Expertise

    Maintaining Innovativeness

    Creative Destruction Corporate Imagination Expeditionary Marketing Culture of Innovation

    ENHANCED

    ODDS OF

    SUCCESS

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    Jakki Mohr 2001

    Strategic Market Planning

    Process in High-Tech Markets

    Understand theCompetitiveChallenge

    IdentifyAttractive

    Opportunities

    Define the

    Business Arena

    Understand theMarket

    Environment

    Make ToughStrategicChoices

    Implement

    Understand theProfit Dynamic

    Assess Resourcesand

    Competencies

    Complete theWinning Strategy

    Plan CriticalRelationships

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    1. Define the Business Arena Potential customer segments that could be

    served;

    Potential applications or functionality that couldbe provided to these customers;

    Possible technologies and capabilities that couldbe used to create the applications or

    functionality; and Possible role for the organization in providing

    the value to the customer versus the roles ofothers in the market chain.

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    2. Identify Attractive

    Opportunities Thoroughly segment the market

    Assess profitability of serving eachsegment

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    3. Understand the Market

    Environment Depict market flows/supply chain

    Understand buyer behavior

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    4. Assess Resources and

    Competencies Financial resources

    Technology platforms

    Intellectual capital

    Manufacturing capacity

    Brand equity Capabilities (including skills and

    knowledge)

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    5. Understand the

    Competitive Challenge Identify the actual, potential and indirect

    competitors

    Determine: How each competitor competes

    Their current and likely future performances

    What drivers underlie their business strategies

    Consider likely competitive responses toopportunity What are this competitors areas of weakness or

    vulnerability that the firm could exploit?

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    6. Make Tough Strategic

    Choices Decide whether opportunity should be

    pursued

    What will it be worth to win?

    Is the market opportunity attractive enough?

    Is the strategy powerful enough to generate a

    sufficient level of profitability? If not, are there compelling reasons to proceed?

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    6. Make Tough Strategic

    Choices (Cont.) Select/develop best strategy to take

    advantage of opportunity

    Achieve leadership position in theopportunity?

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    6. Make Tough Strategic

    Choices (Cont.) Do synergies exist within the portfolio of

    opportunities being considered

    Leverage a common technology

    Leverage a common market chain

    Are the strategies for the various

    opportunities reasonably consistent?

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    7. Plan Critical Relationships With other firms in the market chain

    With organizations outside the marketchain

    Company with a complementary product orservice

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    8. Complete the Winning

    Strategy Pricing

    Marketing Communications

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    9. Understand the Profit

    Dynamic Develop a detailed financial model for

    each opportunity

    More refined profitability analysis based ondetailed understanding of completemarketing strategy and associated costs

    Look for modifications to enhanceopportunitys overall profitability.

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    10. Implement the Strategy Make sure people who will implement

    are involved in the strategy formulation

    process Commitment

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    Liability of Bigness Traits of large firms can inhibit their

    ability to develop radical innovations:

    Bureaucratic

    Focused on economies of scale

    Core competencies become core rigidities

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    Three Characteristics of

    Core Competencies Difficult for competitors to imitate

    Significantly related to benefits end-

    user receives

    Allow access to a wide variety ofdisparate product-markets.

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    Tree Analogy to Core Competencies

    SNOWBLOWERS

    Branches/canopy

    represents the wi dely dif ferent

    product markets to whi chthe core competency has provided access

    MOTORCYCLES

    SMALL

    CARS

    LAWN

    MOWERS

    SUPERIOR R&D

    SMALL

    ENGINES

    CORPORATE

    CULTURESUPERIOR

    MANUFACTURINGSUPERIOR MARKETING &

    KNOWLEDGE OF CUSTOMERS

    Roots are underlying ski l l s and capabil i ti es that represent core competencies.

    Trunk is the core

    product, or the physi cal

    embodiment of the

    core competenci es.

    The core

    product must be

    signifi cantl y related to benefi t

    end-user receives.

    Implications of Co e

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    Implications of CoreCompetencies in Strategic

    Planning Resource allocations may defy

    conventional logic

    Violate ROI criterion

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    When Core Competencies

    Become Core Rigidities Core rigidities: ingrained routines,

    knowledge, and skills become strait-

    jackets that inhibit a firms ability todevelop new products built aroundunfamiliar skills, routines, and new

    knowledge. Ex: cultural norms, over-reliance on

    existing technologies

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    How to Avoid Core Rigidities

    Creative Destruction

    Proactively develop next-generation technology

    that may obsolete current technology Ex: Develop Web-sites that undermine current

    distribution channels

    Corporate Imagination Expeditionary Marketing

    Culture of Innovation

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    Jakki Mohr 2001

    4 Elements of

    Corporate Imagination (1) Willingness to overturn

    price/performance assumptions

    Incremental improvements to existingtechnologies (which move along the sameprice/performance curve) vs.

    Radical innovations which allow greatly-

    improved performance at roughly comparableprices as existing technology

    Technology life cycles (see next slide)

    Ex: Moores Law

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    Technology Life Cycles

    Performance

    Time

    Limit of Particular Technology

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    Some Implications of

    Technology Life Cycles New technologies often come from

    companies not selling current generation of

    technology Incumbents often invest in both improving

    existing technology and developing new

    Incumbents often underestimate viability ofnew developments

    Therefore, new technologies can catchestablished firms by surprise

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    4 Elements of

    Corporate Imagination (Cont.) (2) Escape the tyranny of the served

    market

    Excessive focus on current customers

    Obscures the fact that customer needsmay change over time and may be solved

    in radically new ways Therefore, look for market opportunities

    outside of existing product/markets.

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    4 Elements of

    Corporate Imagination (Cont.) (3) Use new sources of ideas for

    innovation

    Rather than using standard marketingresearch tools, use lead users andethnographic observation (empathicdesign) (Discussed fully in Ch. 5)

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    4 Elements of

    Corporate Imagination (Cont.) (4) Get out in front of customers.

    Lead them where they want to go before

    they themselves know it. Requires being close to the customerAND not being blinded by existing rulesand procedures.

    B B kth h i

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    Box: Breakthroughs inCorporate Strategy

    Dont be constrained by existing industryboundaries

    Competitors can be found in many places: Direct competitors, suppliers, partners

    Product form competition

    competition between product classes