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 Select message strategy
Audience overlaps with firm’s 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 competitor’s 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 company’s value proposition
Accounts for the “viewer’s” 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 Suppliers OEM/Manufacturers Dealers -business use
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 firm’s 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!
Don’t 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