1. Marketing of High-Technology Products and Innovations Jakki J. Mohr
Chapter 2:
Strategy and Corporate Culture in High-Tech Firms

2. Internal (within the firm) Considerations in High-Tech Marketing
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3. Strategic Market Planning Process in High-Tech Markets
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4. 1. Define the Business Arena
Potential customer segments that could be served;
 Potential applications or functionality that could be provided to these customers;
 Possible technologies and capabilities that could be used to create the applications or functionality; and
 Possible role for the organization in providing the value to the customer versus the roles of others in the market chain.
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5. 2. Identify Attractive Opportunities
Thoroughly segment the market
Assess profitability of serving each segment
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6. 3. Understand the Market Environment
Depict market flows/supply chain
Understand buyer behavior
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7. 4. Assess Resources and Competencies
Financial resources
Technology platforms
Intellectual capital
Manufacturing capacity
Brand equity
Capabilities (including skills and knowledge)
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8. 5. Understand the Competitive Challenge
Identify the actual, potential and indirect competitors
Determine:
How each competitor competes
Their current and likely future performances
What drivers underlie their business strategies
Consider likely competitive responses to opportunity
What are this competitor’s areas of weakness or vulnerability that the firm could exploit?
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9. 6. Make Tough Strategic Choices
Decide whether opportunity should be pursued
What will it be worth to win?
Is the market opportunity attractive enough?
Is the strategy powerful enough to generate a sufficient level of profitability?
If not, are there compelling reasons to proceed?
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10. 6. Make Tough Strategic Choices (Cont.)
Select/develop best strategy to take advantage of opportunity
Achieve leadership position in the opportunity?
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11. 6. Make Tough Strategic Choices (Cont.)
Do synergies exist within the portfolio of opportunities being considered
Leverage a common technology
Leverage a common market chain
Are the strategies for the various opportunities reasonably consistent?
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12. 7. Plan Critical Relationships
With other firms in the market chain
With organizations outside the market chain
Company with a complementary product or service
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13. 8. Complete the Winning Strategy
Pricing
Marketing Communications
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14. 9. Understand the Profit Dynamic
Develop a detailed financial model for each opportunity
More refined profitability analysis based on detailed understanding of complete marketing strategy and associated costs
Look for modifications to enhance opportunity’s overall profitability.
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15. 10. Implement the Strategy
Make sure people who will implement are involved in the strategy formulation process
Commitment
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16. “Liability of Bigness”
Traits of large firms can inhibit their ability to develop radical innovations:
Bureaucratic
Focused on economies of scale
Core competencies become core rigidities
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17. Three Characteristics of Core Competencies
Difficult for competitors to imitate
Significantly related to benefits end-user receives
Allow access to a wide variety of disparate product-markets.
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18. Tree Analogy to Core Competencies
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19. Implications of Core Competencies in Strategic Planning
Resource allocations may defy conventional logic
Violate ROI criterion
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20. When Core Competencies Become Core Rigidities
Core rigidities: ingrained routines, knowledge, and skills become strait-jackets that inhibit a firm’s ability to develop new products built around unfamiliar skills, routines, and new knowledge.
Ex: cultural norms, over-reliance on existing technologies
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21. How to Avoid Core Rigidities
Creative Destruction
Proactively develop next-generation technology that may obsolete current technology
Ex: Develop Web-sites that undermine current distribution channels
Corporate Imagination
Expeditionary Marketing
Culture of Innovation
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22. 4 Elements of Corporate Imagination
(1) Willingness to overturn price/performance assumptions
Incremental improvements to existing technologies (which move along the same price/performance curve) vs.
Radical innovations which allow greatly-improved performance at roughly comparable prices as existing technology
Technology life cycles (see next slide)
Ex: Moore’s Law
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23. Technology Life Cycles
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24. Some Implications of Technology Life Cycles
New technologies often come from companies not selling current generation of technology
Incumbents often invest in both improving existing technology and developing new
Incumbents often underestimate viability of new developments
Therefore, new technologies can catch established firms by surprise
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25. 4 Elements of Corporate Imagination (Cont.)
(2) Escape the “tyranny of the served market”
Excessive focus on current customers
Obscures the fact that customer needs may change over time and may be solved in radically new ways
Therefore, look for market opportunities outside of existing product/markets.
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26. 4 Elements of Corporate Imagination (Cont.)
(3) Use new sources of ideas for innovation
Rather than using standard marketing research tools, use lead users and ethnographic observation (empathic design) (Discussed fully in Ch. 5)
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27. 4 Elements of Corporate Imagination (Cont.)
(4) Get out in front of customers.
Lead them where they want to go before they themselves know it.
Requires being “close to the customer” AND not being blinded by existing rules and procedures.
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28. Box: Breakthroughs in Corporate Strategy
Don’t be constrained by existing industry boundaries
Competitors can be found in many places:
Direct competitors, suppliers, partners
Product form competition
competition between product classes vs. between different brands of the same product
Firm may not control all critical assets
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29. Box: Breakthroughs in Corporate Strategy (Cont.)
Bring new voices into the strategy formulation dialogue.
Create new connections across technologies, hierarchical levels, geographical and business units
Come from a new vantage point
Have passion for discovery and novelty
Be willing to experiment
(vs. focus on efficiency)
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30. Be a Market Pioneer?? PROS CONS
First mover advantage creates entry barriers
Economies of scale
Experience effects
Reputational effects
Technological leadership
Buyer switching costs
Higher profits and higher share
Define product exemplar
Higher consumer awareness
Large development costs
Market uncertainty
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31. Pioneers (“First Movers”) (Cont.)
Successful Pioneers
Have technological foresight
Understand the market
Have marketing acumen
Understand competitors’ strengths and weaknesses
A bit o’luck
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32. When do “late” movers succeed?
Identify overlooked product position
Undercut pioneer on price
Out-advertise or out-distribute the pioneer
Innovate superior product
Innovate superior business/marketing strategy
Reshape the category
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33. Two ways to improve new product success rates
Improve the odds on each individual product introduction—the “hit” rate.
Gather as much information as possible, tailor the product
Drawbacks: time consuming, market needs may change before launch. “Ready, Aim, Aim, Aim.”
Increase the number of forays into the market—the “times at bat”—Expeditionary Marketing
Many quick incursions into the market increases learning about the market
Low-cost, fast-paced incursions allow quick re-calibration
Combination of speed and learning enhances success
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34. Expeditionary Marketing
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35. Expeditionary Marketing: Advantages
More accurate learning of customer needs
Time between market learning and product launch is shortened
Maximizes odds that product delivered matches customer’s needs
Customer needs less likely to change in the short-term
Implication: Issue is less being right the first time, but being able to accumulate market experience, and quickly adapt market offerings
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36. Insights in the Ability to Learn from the Market
Competitive advantage derives less from having information, and more from the superior ability to use information.
Interpersonal and organizational trust enhances the use of information.
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37. Insights in the Ability to Learn from the Market (Cont.)
Caveats in using information
Merely using some information is insufficient to generate superior performance. Using knowledge held by marketing managers contributes to superior performance.
Relying too excessively on organizational memory can inhibit innovativeness.
It is the marriage of marketing knowledge with technological knowledge that leads to effective product innovation.
Improvising with respect to product strategy may be effective—but only when a high degree of information is shared both within and across the organization’s boundaries.
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38. Nurturing a Culture of Innovation
Characteristics of a firm that fosters innovation—
Identifies market needs that are divergent from (rather than congruent with) existing strategies
Roles and responsibilities of key players may not be clearly defined in early stages
Screening for new product ideas not based on formal criteria, but done informally based on technical/market merit
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39. Characteristics of Organizations Who Foster Innovation (Cont.)
Role of product champion is key
Tireless crusaders for idea
Innovative firms have reward system and culture to promote influence of product champions
Personnel given time and incentives to be innovative
Tolerate risk and “mistakes”
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40. Skunk Works
Isolate new venture groups outside the normal organizational hierarchy
Cons:
- Signals a corporate culture that has impediments to innovation
(Creativity doesn’t happen within normal operating procedures)
- Isolates the creative process
Pros:
- Allows for more creativity, unfettered by existing corporate protocols.
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41. Applying Lessons of Innovativeness to Businesses’ Internet Experiences
New business models came from industry outsiders
Competitive Volatility
Core rigidities and the tyranny of the served market:
Existing companies bound by existing rules of the game and existing customers
Underestimation of new competitors
Need for creative destruction
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42. Applying Lessons of Innovativeness to Businesses’ Internet Experiences (Cont.)
Expeditionary Marketing:
Shorter learning cycles
Quicker opportunity to adapt strategies
Understand core competencies
Reliance on skunk works
Pioneering advantages
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43. “The Liability of Smallness”
Financial Resources
Reliance on venture capital
Formal companies/banks
Informal “angels”
What Venture Capitalists Look For:
Management Team
Marketing Plan
Technology/Product
ROI
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44. Other Resources for Start-Ups
Technology incubators
Partners (Ch. 3)
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