Marketing High Technology: Crossing the Chasm and Other Issues Dr. Dawne Martin MGMT 897 April 22, 2003

Agenda  What makes high-tech marketing different?  How does technology create competitive advantage?  What are in critical success factors in moving technology through the Technology Adoption Life Cycle?  How do you build a high-tech marketing plan?

What Makes High-Tech Marketing Different?  Types of Innovations –Continuous – extensions of previous technology –Discontinuous – disruptive technologies  Changes in strategy and behavior  May not be intuitive to market  May require changes in infrastructure  Customer Knowledge –Education of customer to create value  Life Cycle Time –Pace of adoption of new technologies and change to other technologies

Market Penetration and Market Development Index Figure 3.6 – Roger Best, Market-Based Management, 2 nd ed.

Competitive Advantage Hierarchy Technologies Value Chains Markets Differentiation Competitive Advantage Drivers Competitive Advantage Effects Offer PowerGAP Customer Power Industry Power Category Power Adopted from Paul Wiefels, The Chasm Companion, Harper Business, CAP

What Speeds Adoption?  Relative advantage  Compatibility  Visibility  Trialability  Ease of Use  Question: What are the advantages and disadvantages of the McMasters engine relative to current technology and fuel cell technology.

Early Market -- Technology Enthusiasts  Assume that discontinuous innovation is superior to current technology –Seek out opportunities to explore new technologies –Forgiving of mistakes and bugs –Gatekeepers for new technologies in business –What they want  The truth about product  Access to most knowledgeable technical people  First to get new stuff Geoffery A. Moore, Crossing the Chasm, Harper Business, 1991

Early Market -- Visionaries  Match new technologies to opportunities  Create high-visibility, high-risk projects  Looking for a “quantum leap” forward for industry and customers – “fundamental breakthrough”  Not price-sensitive or adverse to risky products  What they want –Project orientation –Meet window opportunity –Expectations – manage these through project timelines with specific deliverables and frequent updates Geoffery A. Moore, Crossing the Chasm, Harper Business, 1991

Mainstream Markets -- Pragmatists  Focus on making incremental improvements in productivity  Desire standardization – loyal customers  Communicate within their own industry  Keep vendors to a minimum  What they want –Cost effective solutions –Proven technology –Single point of contact –Price –Take their time to make decisions Geoffery A. Moore, Crossing the Chasm, Harper Business, 1991

Mainstream Markets – The Conservatives  Against discontinuous innovation on principle – tradition focused  Buy and use discontinuous innovations because they must to keep up  Invest only in mature technologies  Price sensitive  What they want –Pre-assembled packages –Heavily discounted prices –Ease of use –Single function

Marketing to Cross the Chasm Paul Wiefels, The Chasm Companion, Harper Business, 2002  Target specific niche markets through technology enthusiasts and visionary stages  Broaden niche to cross chasm – Bowling Alley –Shared applications –Word of mouth for refereneces –Develop a must have value-statement  Capability to ensure competitive advantage  Improves productivity  Reduces operating costs –Choose a niche  Application niche  Thematic niche: portability across incompatible hardware platforms

Marketing to Cross the Chasm Paul Wiefels, The Chasm Companion, Harper Business, 2002  Inside the Tornado – hyper-growth through changes in business paradigm –Herding – move together –Preference for emerging market leader –Competitors enter to fill supply gap – Gorillas, Chimps & Monkeys –Competing in the Tornado  Showcase your strengths & highlight competitor’s weakness  Standardize product offering – reducing complexity, time to customer, service requirements  Drive price down  Make products widely available  Community all points of advantage  Main Street Issues – Market Maturity and Decline –Growth slows or sales decline –Profits lag –Competing  Commodity approach –Market share –Superior and sustainable economies of scale –Low-cost channels –Operate profitably on low and declining margins  Value-driven approach –Focus on installed base –Reconnect customer sub-segments and add additional value (mass customization) –Support products – engineer additional benefits into product –Differentiation –Plus One Marketing – doing everything as well as competitor plus one thing really well.

Components of a Marketing Plan  Environmental & Internal Analysis  Marketing Strategy –Analysis of potential markets –Target market(s) –Positioning  Tactical Marketing Strategy  Marketing Budget  Performance Timeline  Performance Evaluation

Environmental & Internal Analysis  What’s happening as the industry as a whole? What’s driving the industry –Technology changes –Economics –Socio-cultural changes –Political legal changes  What are you’re companies strengths and weaknesses? –Technology/Product –Marketing Expertise –Management & Manufacturing Capabilities –Financial Resources –Human Resources Analyze the current climate in the auto industry and what McMaster’s has going for it.

Marketing Strategy  Choose target markets from segments – VALUE! –Assess market attractiveness  Market growth  Competitive intensity  Market access –Assess competitive advantage  Cost advantage  Differentiation advantage  Marketing advantage  Positioning – focus on relative competitive advantages and customer needs  Conduct a preliminary analysis of potential market segments.

Figure 11.4 Factors That Shape Market Attractiveness Roger Best, Market-Based Management, Prentice-Hall, 2000.

Figure 11.6 Determinants of a Competitive Advantage Roger Best, Market-Based Management, Prentice-Hall, 2000.

Develop Tactical Plan  Marketing mix decisions to implement strategy –Product and service quality and attributes –Pricing –Channels of Distribution  Multiple Channels  E-commerce  Sales force or manufacturer’s reps –Promotion  Direct marketing  Publicity  Advertising  Based on the needs and habits of transportation customers, where should you spend your money?

Marketing Budgets  Provide detailed expenditures with justification for each expenditure how it was calculated  Start with a cash flow projections  Should forecast sales growth over 3 – 5 years  Justify your sales forecasts by information on market growth, competitors and customer needs  Justify your expenditures