1 하이테크 제품전략 Product Strategy for High-Tech Companies

2 Core Strategic Vision Market Platform Plan Product Strategy Where are we going? How will we get there? Why will we be successful? Where are we going? How will we get there? Why will we be successful? Vector of differentiation Product expansion New product development Vector of differentiation Product expansion New product development Defining technology Product platform strategy Product line strategy Defining technology Product platform strategy Product line strategy High-Tech Product Strategy: The MPP Framework

3 Core Strategic Vision  Product strategy is a roadmap, and it is useful only when…  Who’s responsible for vision?  Components of successful CSV  Focus  Clarity  Completeness: where, how, why  Feasibility  CSV needs adjusting and updating.  Vision guides strategy.

4 CSV in action: Compaq example  Vision statement in 1993 “We want to be the leading supplier of PCs and PC servers in all customer segments worldwide. We intend to accomplish this goal by leading the industry in developing new products, pricing competitively, controlling costs, supporting customers, and expanding distribution. Compaq understands the dynamics of the industry and is poised to move decisively to exploit new opportunities.”  Compaq changes its CEO to change its vision.

5 Product Platform Strategy  A product platform is a collection of common elements (esp. the underlying technology) implemented across a range of products.  Product platform is a foundation of product strategy in high-tech companies.  Product failures in high-tech companies frequently can be traced to a lack of or incomplete product platform strategy.  The nature of product platforms varies widely across industries.

6 An Example: Palm Handwriting Recognition Palm OS Palm IIIc Palm IIIx Palm III Palm V Palm Vx Palm VII Common Platform Elements Product Lines with Unique Features Segment 1 Segment 2 Segment 3

7 From Portfolio to Platform Thinking  Leveraged “high-variety” strategy: high variety and growth in a cost-effective way  Benefits of Platform Strategy  Strategic focus with longer-term view  Consistent (or coherent) and rapid product deployment  Operational efficiencies thru “sharing”  Reaction in time: anticipative replacement of a product platform  Other dimensions of platform thinking

8 Defining Technology  A product platform consists of a number of platform technology elements. (cf. PTE framework)  A “defining technology” defines the capabilities and limitations of the platform.  Supporting technology elements support or enhance the defining technology element.  Segmenting technology elements address the specific customer value propositions of priority segments.  The choice of a defining technology is perhaps the most critical strategic decision that a high-tech company makes.  “Defining technology = Core competence” in HTM  DT defines limitations as well as capabilities.

9 “Managing” Product Platform  Identify where in a platform life cycle  Extend the life of a major platform: exploration vs. exploitation  Understand the causes of decline  Replace a platform with a next-generation platform ? $

10 Product Line Strategy  A product line strategy is a time-phased conditional plan for sequence of developing products from a common product platform.  Coverage  Collectively, products within a product line should cover the major segments of the market.  Avoid product proliferation and market confusion.  Dynamics  Check assumptions before product extension.  Timing of product releases  Limitations of Line extension  Coordinate product families and lines  Platform limitations

11 Principles of Product Differentiation 1.Differentiation determines a relative position of your product in consumers’ mind. 2.Differentiation (benefit-) segments the market. 3.Differentiation evolves throughout a market’s life cycle: market development – growth – maturity – (redifferentiation) – decline 4.Differentiation should be managed as vectors, not points.

12 B A C D E differentiation strategy H M L LowMediumHigh Relative Differentiation Relative Price Positioning through Differentiation

13 Vector of Differentiation (VOD)  MPP involves selecting, deselecting, and prioritizing market segments thru a consistent winning ‘vector of differentiation.’  Benefits of VOD  VOD separate the strategic from the tactical  A VOD focuses product improvements  The length and slope of a VOD provide strategic insights over time (I.e. market life cycle).

14 Differentiation Strategies or Vectors  Unique features  Ease of use / User interface / Design  Capabilities / Performance  Compatibility / Standard  Cost reduction  productivity  cost of investment  cost of product failure  total cost of ownership  Brand Reputation

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16 Differentiation is Risky When…  Differentiation cannot be sustained: commoditization problem (e.g. e-commerce)  There is insufficient proximity to price.  Customer preferences are misunderstood.  The cost of differentiation is too high.  There is too much unfocused differentiation.  A new vector sub-segments the market.  Emerging technology can change a VOD.  A company fails to build the perception of differentiation.

17 Cannibalization Strategies  Cannibalization: Risk or Opportunity?  Cannibalization is bad because...  Cannibalization is good when the transition is orderly and profitable.  Cannibalization as defensive strategy  Self-Cannibalization:  You don’t want someone else to do it.  Cannibalization as offensive strategy  Cannibalization hurts the market leader more.  Risks of cannibalization strategies