Marketing of High-Technology Products and Innovations

1
Marketing of High-Technology Products and
Innovations

• Advertising and Promotion in
• High-Tech Marketing
• Tools to Build and Maintain
• Customer Relationships

2
Chapter Agenda

• The Advertising and Promotion Pyramid
• Branding Concerns in High-Tech Markets
• New Product PreAnnouncements
• Using Marketing Communications to Manage Customer
  Relationships

3
Main Concepts

• Brand awareness/Brand equity (will be explained
  in class)
• Advertising and promotion pyramid
• CPM
• Public Relation
• Publicity
• Strategies for Branding in High-Tech Environment
• Rational Branding

4
Main Concepts

• Ingredient Branding (Cobranding)
• Derived Demand
• Preannouncement
• Vaporware
• Database Marketing/One-to-one Marketing
• Categories of Customers
• Strategies for Customer Relationship Management
• CRM

5
Advertising and Promotion Pyramid
6
Media Advertising

• Select media vehicle
• Audience overlaps with firms target market
• Cost efficiency (CPM)
• Fit of editorial climate with brand message
• Size/Frequency of ads
• SRDS, CMP Media, media kits
• Select message strategy
• Break through clutter/gain attention
• Reinforce brand message

7
Public Relations/Publicity

• Event sponsorship
• Charitable events/cause marketing
• Corporate advertising
• Press conferences, press releases
• Product announcements

Positive image is vital, yet hard to quantify
8
Direct Mail

• Effectiveness a function of
• List quality
• Appropriate mailing size/frequency
• Message strategy

9
Trade Shows

• To launch new products, reach sales prospects,
  compare competitors products
• Expense vs. return
• Attract traffic to booth
• Follow-up on leads

10
Catalogs, Literature, Brochures

• Build on earlier communications
• Showcase key benefits in terms of
• Relative advantage
• Compatibility
• Scalability
• Service/warranty
• Total cost of ownership

11
Telemarketing

• Outbound
• Inbound
• Way to manage customer relationships efficiently

12
Personal Selling

• Effectiveness of this most expensive tool a
  function of foundation established by lower-level
  tools in the pyramid.

Premise of the pyramid Use the more
cost-efficient/wider-reach tools at the base of
the pyramid to establish foundation with
prospects and to more effectively leverage more
expensive/narrower reach tools.
13
Internet

• Can be used at all levels of the pyramid
• Focused attention in Chapter 11

14
Branding in High-Tech Markets

• Advantages of strong brands to firms
• Command premium prices
• Have credibility which can be leveraged in new
  markets
• Can lower customer acquisition costs
• Reduces risks with new product introductions
• Advantages of strong brands to customers
• Signal of a safe choice trustworthy and
  long-lived
• Decision-making heuristic

15
Branding in High-Tech Markets

• Short product life cycle and customer fear,
  uncertainty, and doubt put a premium on having
  strong brand names.

16
Strategies to Develop Strong Brands

• Supply steady stream of innovations that deliver
  value
• Emphasize traditional media advertising and PR
  tools rather than sales promotion
• Influence the influencers to credibly stimulate
  word-of-mouth via opinion leaders

17
Strategies to Develop Strong Brands (Cont.)

• Brand the company, platform, or idea (rather than
  the individual product)
• Rely on symbols and imagery to create brand
  personality
• Effectively manage all points of customer contact
• Work with partners in co-branding
• Effectively use the Internet

18
The Internet as a Branding Tool

• Use when Internet is part-and-parcel of the
  companys value proposition
• Accounts for the viewers active role (vs.
  passive viewing)
• Focuses on the customer experience at the Web
  site
• Rational branding emotion meaningful
  experience

19
Branding Strategies for On-Line Companies

• Brands very important where switching is easy.
• Make customer experience meaningful
• Understand importance of speed and response time
• Deliver on their promise

20
Ingredient Branding
Dealers
Suppliers
OEM/Manufacturers
Customers
-personal consumption -business use
-raw materials -components -production
equipment -services
21
Ingredient Branding

• Stimulates derived demand
• Rely on cooperative advertising

22
Pros/Cons of Ingredient Branding
23
Pros/Cons of New Product Preannouncements
24
Tactical Considerations in PreAnnouncements

• Timing
• Function of the innovativeness, complexity,
  customer buying considerations, timing of product
  design decisions

25
Timing of PreAnnouncements

• Use EARLIER preannouncements when
• Product complements are needed
• Products are novel or complex (engender buyer
  uncertainty)
• Long buying process
• High buyer switching costs

26
Timing of PreAnnouncements

• Use LATER preannouncements when
• Need to keep development information from
  competitors
• Product features not known till late in the
  product development process
• Want to minimize risks of cannibalization
• Time preannouncements to coincide with purchase
  cycle of customers

27
Tactical Considerations in PreAnnouncements

• Nature and Amount of Information
• Reveal product attributes?
• Reveal how product works?
• Reveal how it compares to existing products?
• Reveal pricing/delivery?

28
Tactical Considerations in PreAnnouncements

• Communication Vehicles
• Trade shows
• Advertisements
• Press releases/press conferences

29
Tactical Considerations in PreAnnouncements

• Target audiences
• Customers
• Competitors
• Distributors
• Partners
• Shareholders
• Employees
• Industry Experts

30
PreAnnouncements Useful When

• Firm has low market dominance
• Faces lower cannibalization risks
• Faces fewer antitrust concerns
• Firm believes competitors not likely to respond
• Ex specialized technology/patent protection
• To advance the customer decision process
• Product requires customer learning or customers
  face switching costs

31
Avoid PreAnnouncements When

• Cannibalization might be high
• Firm has strong portfolio of products
• Customers would postpone current purchases
• Firm is large and might be accused of predatory
  intent

32
Customer Relationship Marketing

• Use database marketing to categorize customers on
  volume and profitability and/or on share of
  customer purchases and consumption level
• Rely on customer relationship management software
• Tailor marketing communications appropriately

33
Categories of Customers

• Low share of purchases/Low consumption in
  category
• Absent compelling reason, avoid the customers
• The Strategic Power of Saying No
• Risk of alienating wrong customers

34
Categories of Customers (Cont.)

• High share of purchases/Low consumption in
  category
• Reasonably profitable, but not compelling
• Sustain with occasional offers
• Low share of purchases/High consumption in
  category
• Major opportunity
• Grow firms share of business
• Aggressive marketing

35
Categories of Customers (Cont.)

• High share of purchases/High consumption in
  category
• Bread and butter customers
• Attractive to competitors!
• Dont be complacent

36
Other Strategies for CRM

• Capture the customer
• Event oriented prospecting
• Extended organization
• Manage by wire
• Mass customization
• Yield management

37
CRM Software

• Front office software to
• Automate the sales force
• Track accounts and prospects
• Automate call centers
• Create customer profiles
• Provide scripts
• Cross-sell
• Coordinate communication

38
CRM Software (Cont.)

• Analyze customer purchase history
• Design targeted campaigns
• Measure results
• Develop Web interface
• Product catalog, shopping cart, credit-card
  purchases
• Web configurator, for custom products
• Web analysis of cookies