1. Marketing of Technology Intensive Products
Dr. Matti J. Haverila

2. Table Contents Issues for High Tech Companies (1-5)
Hurdle of Internationalization
What seems to be the Problem
Types of New Products
Strategy Process (1-5)
Positioning
Positioning Example
Differentiation
Key Points in Strategy Process (1)
Business Idea
Key Points in Strategy Process (2-7)
John Warnock, Adobe
NPDP
Stage-Gate NPD (1-7)
Approaches to NPD
NPD Strategies
Marketing- Technology Balance
Marketing-Mix - Product (1)
Learning Cycle
Marketing-Mix - Product (2)
Degree of Product Modification
Research Process
Research Results (1-4)
Successful vs. Unsuccessful (1-4)
Conclusion (1-5)
Recommendations
Finland vs. California (1-2)

3. Issues for High Tech Companies (1)*
Finance related factors Weight of the problem
The difficulty to get financial support 84
High cost of financing
Acquisition of financing
Total of finance related factors
R&D related factors
The credibility of the company amongst the customers 94
The capability to follow the development of technology 65
Lack of R&D competence
The technological ageing of products 10
Total of R&D related factors
* See Autio et al: Uudet teknologiayritykset...

4. Issues for High Tech Companies (2)
Competition related factors Weight of the problem
The competition by replaceable products 64
Domestic competitors
International competitors
Total of competition related factors
Labour related factors
The acquisition of employees
The high cost of employees
Total of labour related factors

5. Issues for High Tech Companies (3)
Management related factors Weight of the problem
Lack of accounting competence
The difficulty to get management team 14
The difficulty to get board
Total of management related factors
Production related factors
The acquisition of machinery and equipment 66
The long production time of the product 63
Total of production related factors
Other factors
The bureaucracy of the government and local authority 106
The acquisition of factory space 43
The attitude of the university
The attitude of the family
Total of other factors

6. Issues for High Tech Companies (4)
Market or marketing related factors Weight of the problem
Minor identity of the company
Lack of marketing competence
Getting of customers and creating customer relationships 98
The high price of the product or service 88
Difficulty to get to the distribution channels 59
Acquisition of international contacts 52
Total of market or marketing related factors 564

7. Issues for High Tech Companies (5)
Issue Area Weight of the problem
Market or marketing related factors 564
Finance related factors 235
R&D related factors
Other factors
Labour related factors 159
Management related factors 137
Competition related factors 136
Total of production related factors 129

8. Hurdle of Internationalization
North-American
technology
companies
S a l e s
Finnish
technology
companies
Hurdle of Internationalization
Technology Companies

9. What seems to be the problem?
Richard M. Cyert, the president of Carnegie-Mellon University:
America's most formidable high-tech problem is not innovation - the problem is marketing new ideas.
Sam Walton
There is only one boss - the customer. And he can fire everybody in the company from the chairman on down, simply by spending his money somewhere else.

10. The Types of New Products
Product Lines
(20%)
New to the
World Products
(10%)
High
Improvements
/Revisions to
Existing Products
(26%)
Additions
to Existing
Product Lines
(26%)
Newness
to the
Company
Cost Reductions
(11%)
Repositionings
(7%)
Low
Low
High
Newness to the Market
GoTo

11. New Product Development Process (NPDP)
Business Strategy
Exploration
Idea Generation
Concept development
Business Analysis
Screening
Protype development
Market testing
Plant Scale-Up
Commercialized Products
Product Launch
Post Launch Check-Up

12. Stage-Gate NPD (1) Idea Gate 1 Stage 1 Gate 2 Stage 2 Gate 3 Stage 3
Initial Screen
Second Screen
Idea
Gate 1
Stage 1
Gate 2
Stage 2
Preliminary
Investigation
Detailed Investigation
(build business case)
Decision on
Business case
Postdevelopment
Review
Gate 3
Stage 3
Gate 4
Stage 4
Development
Testing &
Validation
Prelaunch Business
Analysis
Post Launch
Review
Gate 5
Stage 5
PLR
Production &
Launch

13. Stage-Gate NPD (2) Idea Gate 1
Initial Screen
The decision to commit resources to the project.
Evaluation of “must meet and should meet” criteria,
which deal with strategic alignment, project feasibility,
magnitude of opportunity and market attractiveness,
differential advantage, synergy with the company’s
resources, and fit with company policies.
Idea
Gate 1
The company identifies potential wants and needs of each customer segment, examines the external market and competitive trends.
It offers tangible needs, wants, complaints and problems that customers have about a certain activity, function or product performance.
In the idea generation stage company generates new ideas, that fit the identified categories, through a variety of problem-solving and creative techniques.
A good new product idea can make or break a project: ideas are the feedstock of the new product process.

14. Stage-Gate NPD (3) Stage 1 Gate 2
Second Screen
Stage 1
Gate 2
Preliminary
Investigation
Turning an idea into a concept means giving the idea form, substance and shape. The concept must describe the real, functional or perceived benefits of the new product concept.
In gate 2 the project is re-evaluated in the light of the new information obtained in stage 2.

15. Stage-Gate NPD (4) Gate 3 Stage 2
Decision on
Business case
Stage 2
Gate 3
The elements of the definition include target market definition, delineation of the product concept, specification of a product positioning strategy, and spelling out essential and desired product features, attributes, requirements and specifications.
Detailed Investigation
(build business case)
Business analysis requires examining the dynamics of the category and the competition, cost positions, consumer buying patterns and fit with internal strengths in order to develop financial projections.
Stage 2 is a detailed investigation stage, which clearly defines the product and verifies the attractiveness of the project prior to expenses.
Gate 3 is the final gate before the development stage, the last point at which the project can be killed before entering heavy spending. In gate 3 the project is re-evaluated based on f.ex. NPV and IRR together with sensitivity analysis, such as portfolio impact assessment through portfolio maps.

16. Stage-Gate NPD (5) Stage 3 Gate 4
Postdevelopment
Review
The post implementation review is a check on the progress and continued attractiveness or the product and project. The gate revisits the economic aspects via revised financial analysis based on new and more accurate information. The validation plans for next stage are approved for immediate implementation.
Stage 3
Gate 4
Development
The objective is to design one or more prototypes, that are in final form for customer testing. Company figures accurately the cost of materials and manufacturing.
Stage 3 witnesses the implementation of the development plan and the physical development of the product. The emphasis is on technical work, but marketing and manufacturing activities proceed in parallel. These activities are iterative, with each development result taken to the customer for assessment and feedback.

17. Stage-Gate NPD (6) Stage 4 Gate 5
Prelaunch Business
Analysis
In-house product tests, user or field trials of the product, trial or limited pilot production, pre-test market, test market or trial sell, and revised financial analysis.
Stage 4
Gate 5
Testing &
Validation
The objective of the market testing is to determine whether the new product is a winner and what changes need to be made prior to launch. The main advantage is to provide real-life direction on how to improve the positioning, packaging, pricing, advertising, and self placement.
In the stage 4 company runs tests and validates the entire viability of the project, the product, the production process, customer acceptance, and the economics of the project.

18. Stage-Gate NPD (7) Stage 5 PLR
Post Launch
Review
Stage 5
PLR
Production &
Launch
Timing, coordinated and carefully planned execution and communication are the cornerstones of a successful launch. Identification of the target customer, product positioning, and competitive advantage must be factored into the development of the roll out plan.
The stage involves implementation of the marketing launch plan and the production plan. The marketing plan outlines company’s objectives, strategies and programs, and guides the product’s entry to the market.
Marketing planning is an outgoing activity, that occurs formally and informally throughout of the new product process.

19. Approaches to NPD Process
Consumer driven
Competition driven
Technology driven
Idea generation
Market Analysis
Technology needs and
application ideas
Concept development
and consumer screening
Concept identification
and screening
Concept development
and consumer screening
Business Analysis
Product development
Business Analysis
Product development
Prototype development
Consumer/Lab testing
Production testing
Test marketing
Advanced development
Market Launching
Market Launching
Market Launching

20. NPD Strategies Success Rate % of company sales from new products
Marketing and technology integrated
Low budget,
conservation
% of company sales
from new products
High-budget,
Shotgun
Technology driven
Focused, but
weak technology

21. Marketing - Technology Balance
Relative
Effort
Allocation
Marketing efforts
Engineering efforts
Cutting
Edge
State of
The Art
Advan-
ced
Main-
stream
Mature
Decline
State of Technology

22. Marketing Mix - Product (1)
Slow Learning Cycle
Sales-customer feedback
Develop
product
Launch
Improved
Product
Rapid Learning Cycle
Sales-
customer
feedback
Sales-
customer
feedback
Sales-
customer
feedback
Develop
product
Launch
Improved
Product
Launch
Improved
Product
Launch
Improved
Product

23. Learning Cycle
Rapid Learning Cycle
Slow Learning Cycle

24. Marketing Mix - Product (2)40
Market share
achieved 30 20 10
Introductory
Growth
Mature
Decline
Product not Modified
Product Modified

25. Degree of product modification
Incremental gains
Costs 2 4 6 8 10 12 14 16 18 20
Zone of minimal
product
adaptation
Zone of minimal
Product adaptation
(minor type)
Zone of minimal
Product adaptation
(major type)

26. Research Project The % of R&D of the sales
Mean = 9, Mode = Median = 8,0
The % of marketing of the sales
Mean = 10, Mode = Median = 8,7
The % of export share of the sales
Mean = 62, Mode = Median = 70
The number of product launches per year (total 536)
Mean = 6, Mode = Median = 3,0

27. Research results (1) Marketing method Rank 1. Personal selling 1
2. Marketing concept
3. New product development strategy 3
4. Differentiation
5. Product/service specialisation 5
6. Pricing
7. Sales promotion
8. Market segmentation 8
9. Marketing organisation 9
10. Distribution
11. Positioning
12. Marketing planning
13. Market share
14. Publicity
15. Market research
16. Advertising
17. Marketing information systems/ Marketing intelligence 17
18. Marketing consultants

28. Research results (2) Marketing method Description of importance
1. Personal selling Very important
2. Marketing concept Very important
3. New product development strategy Very important
4. Differentiation Very important
5. Product/service specialisation Rather important
6. Pricing Moderately important
7. Sales promotion Moderately important
8. Market segmentation Moderately important
9. Marketing organisation Moderately important
10. Distribution Moderately important
11. Positioning Moderately important
12. Marketing planning Moderately important
13. Market share Moderately important
14. Publicity Rather unimportant
15. Market research Rather unimportant
16. Advertising Very unimportant
17. Marketing information systems/ Marketing intelligence Very unimportant
18. Marketing consultants Very unimportant

29. Research results (3) Marketing method Description of importance
1. Personal selling Very important
2. Marketing concept Very important
3. New product development strategy Very important
4. Differentiation Very important
5. Product/service specialisation Rather important
6. Pricing Moderately important
7. Sales promotion Moderately important
8. Market segmentation Moderately important
9. Marketing organisation Moderately important
10. Distribution Moderately important
11. Positioning Moderately important
12. Marketing planning Moderately important
13. Market share Moderately important
14. Publicity Rather unimportant
15. Market research Rather unimportant
16. Advertising Very unimportant
17. Marketing information systems/ Marketing intelligence Very unimportant
18. Marketing consultants Very unimportant

30. Research results (4) Marketing method Description of importance
1. Personal selling Very important
2. Marketing concept Very important
3. New product development strategy Very important
4. Differentiation Very important
5. Product/service specialisation Rather important
6. Pricing Moderately important
7. Sales promotion Moderately important
8. Market segmentation Moderately important
9. Marketing organisation Moderately important
10. Distribution Moderately important
11. Positioning Moderately important
12. Marketing planning Moderately important
13. Market share Moderately important
14. Publicity Rather unimportant
15. Market research Rather unimportant
16. Advertising Very unimportant
17. Marketing information systems/ Marketing intelligence Very unimportant
18. Marketing consultants Very unimportant

31. Successful vs. Unsuccesful (1)
Successful cases Unsuccessful cases
Marketing method Rank Rank
1. Personal selling
2. NPD strategy
3. Marketing concept 3 4
4. Differentiation
5. Product/service specialisation 5 6
6. Pricing
7. Market segmentation 7 9
8. Sales promotion
9. Marketing organisation 9 7
10. Distribution
11. Positioning
12. Marketing planning
13. Market share
14. Market research
15. Publicity
16. Advertising
17. MIS/ Marketing intelligence
18. Marketing consultants

32. Successful vs. Unsuccesful (2)
Successful cases Unsuccessful cases
Marketing method Rank Rank
1. Personal selling
2. NPD strategy
3. Marketing concept 3 4
4. Differentiation
5. Product/service specialisation 5 6
6. Pricing
7. Market segmentation 7 9
8. Sales promotion
9. Marketing organisation 9 7
10. Distribution
11. Positioning
12. Marketing planning
13. Market share
14. Market research
15. Publicity
16. Advertising
17. MIS/ Marketing intelligence
18. Marketing consultants

33. Successful vs. Unsuccesful (3)
Successful cases Unsuccessful cases
Marketing method Rank Rank
1. Personal selling
2. NPD strategy
3. Marketing concept 3 4
4. Differentiation
5. Product/service specialisation 5 6
6. Pricing
7. Market segmentation 7 9
8. Sales promotion
9. Marketing organisation 9 7
10. Distribution
11. Positioning
12. Marketing planning
13. Market share
14. Market research
15. Publicity
16. Advertising
17. MIS/ Marketing intelligence
18. Marketing consultants

34. Successful vs. Unsuccesful (4)
Successful cases Unsuccessful cases
Marketing method Rank Rank
1. Personal selling
2. NPD strategy
3. Marketing concept 3 4
4. Differentiation
5. Product/service specialisation 5 6
6. Pricing
7. Market segmentation 7 9
8. Sales promotion
9. Marketing organisation 9 7
10. Distribution
11. Positioning
12. Marketing planning
13. Market share
14. Market research
15. Publicity
16. Advertising
17. MIS/ Marketing intelligence
18. Marketing consultants

35. Conclusions (1)
The success rate when launching high technology products into the export markets was in this study 80,41 %.
Amongst Finnish high technology companies product and sales related factors appear to have greater importance than marketing related factors, when launching new products into the foreign markets.
Among marketing mix (4 P’s), product factors have the highest utilisation, while the non-personal elements of promotion have the lowest usage ratings.
Personal selling is the most important promotional element.
Pricing and place factors are only moderately important elements in the marketing mix decision.
The careful balance between the various marketing methods is important in the successful launch of new high technology product into the export market.

36. Conclusions (2)
Publicity, promotion, marketing organisation, market share and positioning are marketing methods, which are more commonly used in larger companies.
Advertising, publicity, sales promotion and market share are marketing methods that are more commonly used in companies in which most (>40%) of the sales of the company is sold outside Finland.
Personal selling and positioning are marketing methods which are more commonly used in companies where the president of the firm has a technical and marketing background, or just marketing background than in companies where the president has only technical background.
Differentiation is a marketing method which is more commonly used in companies where the senior marketing officer of the firm has a technical and marketing background, or just marketing background than in companies where the senior marketing officer has only technical background.

37. Conclusions (3)
Publicity, promotion, marketing organisation, market share and positioning are marketing methods, which are more commonly used in larger companies.
Product/service specialisation, distribution, and positioning are marketing methods that are more commonly used in companies with more experience on product launches into the export markets.
There were no significant differences either in absolute or relative marketing expenditure between large and small companies, nor were there significant differences in marketing expenditure amongst companies with different amount of experience on product launches into the export markets.
Marketing concept is a marketing method which is more commonly used in successful product launches.

38. Conclusions (4)
There were significant differences in relative marketing expenditure among companies with different percentage of the sales of the company sold outside Finland. In companies where the export's share of turnover was less or equal to 40 %, the mean of the marketing expenditure was 7,6%, and in companies where export's share of turnover more than 40 %, the mean of the marketing expenditure was 11,2 %.
The three factors (the absolute sales volume of the company, the absolute amount of export volume and the absolute amount of marketing expenditure) differentiate effectively the successful and unsuccessful product launches.
There were no differences in the outcome of product launches between the industries nor were there any differences in the outcome of product launches between the companies with different amount of experience in product launches into the export market.

39. Conclusions (5)
There were no differences in the outcome of product launches depending upon the background of the president of the company nor were there any differences in the outcome of product launches depending upon the background of the highest ranking marketing officer of the company.
Product/service specialisation, distribution, advertising, publicity, promotion, market share, positioning, marketing planning and market research are marketing methods more commonly used by companies with higher relative marketing expenditure.

40. Recommendations
Study carefully the marketing strategy when launching high tech products. The launch of a new high tech product into foreign markets is different than the launch of a traditional consumer product.
Remember that the new product is finished only when the launch process is completed, i.e. the final customer has received the product and is satisfied with it.
Be aware of the final customers' real needs. Make sure you are able to offer the benefits he is seeking. Try not to compensate for the shortages of the product offering with overly optimistic promotional efforts.
Be prepared to increase your relative marketing expenditure with a substantial amount while the share of export of your sales increases.
Implement the marketing concept into your organisation. Involve everybody including the R&D and production personnel.
Try to achieve critical mass in your export sales and marketing expenditure. Find any, and all means to overcome this obstacle.

41. Finland vs. California (1)
CA Finland Diff. Significance
MARKETING CONCEPT
1. Marketing concept
MARKETING MIX VARIABLES
1. Personal selling *
2. Product/service specialization
3. Pricing *
4. Sales promotion *
5. Distribution *
6. Publicity
7. Advertising

42. Finland vs. California (2)
CA Finland Diff. Significance
MARKETING ORGANIZATION AND PLANNING
1. NPD strategy
2. Differentiation
3. Market segmentation *
4. Marketing organization
5. Positioning *
6. Marketing planning *
7. Market share *
8. Market research
9. MIS
10. Marketing consultants *

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