Title: Marketing of Technology Intensive Products
1Marketing of Technology Intensive Products
2Table 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)
3Issues for High Tech Companies (1)
- Finance related factors Weight of the problem
- The difficulty to get financial support 84
- High cost of financing 79
- Acquisition of financing 72
- Total of finance related factors 235
RD related factors The credibility of the
company amongst the customers 94 The capability
to follow the development of technology 65 Lack
of RD competence 45 The technological
ageing of products 10 Total of RD related
factors 214
See Autio et al Uudet teknologiayritykset...
4Issues for High Tech Companies (2)
- Competition related factors Weight of the
problem - The competition by replaceable products 64
- Domestic competitors 47
- International competitors 25
- Total of competition related factors 136
Labour related factors The acquisition of
employees 100 The high cost of
employees 59 Total of labour related
factors 159
5Issues for High Tech Companies (3)
- Management related factors Weight of the
problem - Lack of accounting competence 109
- The difficulty to get management team 14
- The difficulty to get board 14
- Total of management related factors 137
Production related factors The acquisition of
machinery and equipment 66 The long production
time of the product 63 Total of production
related factors 129
Other factors The bureaucracy of the government
and local authority 106 The acquisition of
factory space 43 The attitude of the
university 29 The attitude of the
family 25 Total of other factors 203
6Issues for High Tech Companies (4)
- Market or marketing related factors Weight of
the problem - Minor identity of the company 143
- Lack of marketing competence 124
- 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
7Issues for High Tech Companies (5)
- Issue Area Weight of the problem
- Market or marketing related factors 564
- Finance related factors 235
- RD related factors 214
- Other factors 203
- Labour related factors 159
- Management related factors 137
- Competition related factors 136
- Total of production related factors 129
8Hurdle of Internationalization
Sa l e s
Finnish technology companies
Hurdle of Internationalization
Technology Companies
9What 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.
10The Types of New Products
New 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
11New 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
12Stage-Gate NPD (1)
Second Screen
Initial Screen
Stage 2
Idea
Stage 1
Gate 1
Gate 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
Post Launch Review
Prelaunch Business Analysis
Gate 5
Stage 5
PLR
Production Launch
13Stage-Gate NPD (2)
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 companys 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.
14Stage-Gate NPD (3)
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.
15Stage-Gate NPD (4)
Decision on Business case
Gate 3
Stage 2
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.
16Stage-Gate NPD (5)
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.
Gate 4
Stage 3
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.
17Stage-Gate NPD (6)
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.
18Stage-Gate NPD (7)
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 companys objectives,
strategies and programs, and guides the products
entry to the market. - Marketing planning is an outgoing activity, that
occurs formally and informally throughout of the
new product process.
19Approaches 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
Business Analysis
Product development
Product development
Prototype development
Consumer/Lab testing
Production testing
Test marketing
Advanced development
Market Launching
Market Launching
Market Launching
20NPD Strategies
Success Rate
Marketing and technology integrated
Low budget, conservation
of company sales from new products
High-budget, Shotgun
Technology driven
Focused, but weak technology
21Marketing - Technology Balance
Relative Effort Allocation
Marketing efforts
Engineering efforts
Cutting Edge
State of The Art
Advan- ced
Main- stream
Mature
Decline
State of Technology
22Marketing 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
Launch Improved Product
Launch Improved Product
Develop product
Launch Improved Product
23Learning Cycle
Rapid Learning Cycle
Slow Learning Cycle
24Marketing Mix - Product (2)
40
Market share achieved
30
20
10
Growth
Introductory
Mature
Decline
Product not Modified
Product Modified
25Degree of product modification
Incremental gains
Costs
0
2
4
6
8
10
12
16
18
20
14
Zone of minimal Product adaptation (minor type)
Zone of minimal product adaptation
Zone of minimal Product adaptation (major type)
26Research Project
- The of RD of the sales
- Mean 9,62 Mode 15 Median
8,0 - The of marketing of the sales
- Mean 10,02 Mode 10 Median
8,7 - The of export share of the sales
- Mean 62,4 Mode 90 Median
70 - The number of product launches per year (total
536) - Mean 6,6 Mode 3 Median
3,0
27Research results (1)
- Marketing method Rank
- 1. Personal selling 1
- 2. Marketing concept 2
- 3. New product development strategy 3
- 4. Differentiation 4
- 5. Product/service specialisation 5
- 6. Pricing 6
- 7. Sales promotion 7
- 8. Market segmentation 8
- 9. Marketing organisation 9
- 10. Distribution 10
- 11. Positioning 11
- 12. Marketing planning 12
- 13. Market share 13
- 14. Publicity 14
- 15. Market research 15
- 16. Advertising 16
- 17. Marketing information systems/ Marketing
intelligence 17 - 18. Marketing consultants 18
28Research 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
29Research 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
30Research 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
31Successful vs. Unsuccesful (1)
- Successful cases Unsuccessful cases
- Marketing method Rank Rank
- 1. Personal selling 1 1
- 2. NPD strategy 2 5
- 3. Marketing concept 3 4
- 4. Differentiation 4 2
- 5. Product/service specialisation 5 6
- 6. Pricing 6 7
- 7. Market segmentation 7 9
- 8. Sales promotion 8 3
- 9. Marketing organisation 9 7
- 10. Distribution 10 11
- 11. Positioning 11 11
- 12. Marketing planning 12 13
- 13. Market share 13 9
- 14. Market research 14 15
- 15. Publicity 15 16
- 16. Advertising 16 16
- 17. MIS/ Marketing intelligence 17 14
32Successful vs. Unsuccesful (2)
- Successful cases Unsuccessful cases
- Marketing method Rank Rank
- 1. Personal selling 1 1
- 2. NPD strategy 2 5
- 3. Marketing concept 3 4
- 4. Differentiation 4 2
- 5. Product/service specialisation 5 6
- 6. Pricing 6 7
- 7. Market segmentation 7 9
- 8. Sales promotion 8 3
- 9. Marketing organisation 9 7
- 10. Distribution 10 11
- 11. Positioning 11 11
- 12. Marketing planning 12 13
- 13. Market share 13 9
- 14. Market research 14 15
- 15. Publicity 15 16
- 16. Advertising 16 16
- 17. MIS/ Marketing intelligence 17 14
33Successful vs. Unsuccesful (3)
- Successful cases Unsuccessful cases
- Marketing method Rank Rank
- 1. Personal selling 1 1
- 2. NPD strategy 2 5
- 3. Marketing concept 3 4
- 4. Differentiation 4 2
- 5. Product/service specialisation 5 6
- 6. Pricing 6 7
- 7. Market segmentation 7 9
- 8. Sales promotion 8 3
- 9. Marketing organisation 9 7
- 10. Distribution 10 11
- 11. Positioning 11 11
- 12. Marketing planning 12 13
- 13. Market share 13 9
- 14. Market research 14 15
- 15. Publicity 15 16
- 16. Advertising 16 16
- 17. MIS/ Marketing intelligence 17 14
34Successful vs. Unsuccesful (4)
- Successful cases Unsuccessful cases
- Marketing method Rank Rank
- 1. Personal selling 1 1
- 2. NPD strategy 2 5
- 3. Marketing concept 3 4
- 4. Differentiation 4 2
- 5. Product/service specialisation 5 6
- 6. Pricing 6 7
- 7. Market segmentation 7 9
- 8. Sales promotion 8 3
- 9. Marketing organisation 9 7
- 10. Distribution 10 11
- 11. Positioning 11 11
- 12. Marketing planning 12 13
- 13. Market share 13 9
- 14. Market research 14 15
- 15. Publicity 15 16
- 16. Advertising 16 16
- 17. MIS/ Marketing intelligence 17 14
35Conclusions (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 Ps), 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.
36Conclusions (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 (gt40)
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.
37Conclusions (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.
38Conclusions (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.
39Conclusions (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.
40Recommendations
- 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 RD
and production personnel. - Try to achieve critical mass in your export sales
and marketing expenditure. Find any, and all
means to overcome this obstacle.
41Finland vs. California (1)
- CA Finland Diff. Significance
-
- MARKETING CONCEPT
- 1. Marketing concept 3.32 3.95 -0.63 0.02
-
- MARKETING MIX VARIABLES
- 1. Personal selling 4.22 4.13 0.09
- 2. Product/service specialization 2.60 3.70 -1.10
0.0002 - 3. Pricing 3.07 3.49 -0.42
- 4. Sales promotion 4.00 3.26 0.74
- 5. Distribution 3.23 3.10 0.13
- 6. Publicity 4.00 2.48 1.52 0.0001
- 7. Advertising 3.50 2.33 1.17 0.0005
42Finland vs. California (2)
- CA Finland Diff. Significance
- MARKETING ORGANIZATION AND PLANNING
- 1. NPD strategy 3.48 4.08 -0.60 0.0586
- 2. Differentiation 4.85 3.74 1.11 0.0000
- 3. Market segmentation 3.09 3.38 -0.29
- 4. Marketing organization 3.70 2.90 0.80 0.0001
- 5. Positioning 3.37 2.92 0.45
- 6. Marketing planning 2.91 2.84 0.07
- 7. Market share 2.13 2.51 -0.38
- 8. Market research 3.05 2.26 0.79 0.0385
- 9. MIS 3.17 2.07 1.10 0.0032
- 10. Marketing consultants 1.84 1.74 0.10
-
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