1. Marketing of High-Technology Products and Innovations Jakki J. Mohr
Chapter 1:
Introduction to High-Technology

2. Technology is ubiquitous
Examples of traditional “high-tech” industries:
Computers and information technology
Biotechnology
Telecommunications
Internet
Examples of some industries where technological innovation is creating radical changes:
Waste management
Agriculture
Automotive
Oil and Gas
Consumer Products
© Jakki Mohr, 2001

3. The “New Economy”
Substitution of knowledge and information for physical assets
Massive investments in information technology
Enhanced productivity
Falling prices for technology
 Faster growth and lower inflation at the same time
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4. Drawbacks to Technology Impact on Economy
Volatile
Relies on constant stream of innovation
Dot-com crashes
Stock market effects
Global effects
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5. Definitions of “High-Tech”
Government perspective
“Common underlying characteristics” perspective
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6. Definitions of Technology:
the practical application of knowledge especially in a particular area (e.g., engineering)
a manner of accomplishing a task especially using technical processes, methods, or knowledge (e.g., new technologies for information storage)
scientific technology involving the production or use of advanced or sophisticated devices (as in computers or electronics)
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7. Definitions of Technology: Government Perspective
Classify industries based on objective, measurable indicators:
the number of technical employees
$ spent on R&D
# of patents filed in industry
Used by the Bureau of Labor Statistics, Organization for Economic Cooperation and Development, and the National Science Foundation
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8. Level 1 Industries: Technology-Intensive
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9. Level 1 Industries (Cont) Technology-Intensive
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10. Level II Industries: Technology Moderate
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11. Shortcomings to the classification approach:
Some industries are R&D intensive (i.e., high-tech), but new products are not revolutionary
Ex: Cigarettes
May exclude industries who are technology-driven
Ex: Textiles production
Some industries with standardized output produced in mass quantities
Ex: Some computing equipment
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12. Definitions of Technology: Common, Underlying Characteristics
Market Uncertainty
Technological Uncertainty
Competitive Volatility
Other Characteristics
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13. Market Uncertainty: ambiguity about the type and extent of customer needs that can be satisfied by a particular technology
Consumer fear, uncertainty and doubt (FUD)
Customer needs change rapidly and unpredictably
Customer anxiety over the lack of standards and dominant design
Uncertainty over the pace of adoption
Uncertainty over/inability to forecast market size
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14. Technology Uncertainty: not knowing whether the technology or the company can deliver on its promise
Uncertainty over whether the new innovation will function as promised
Uncertainty over timetable for new product development
Ambiguity over whether the supplier will be able to fix customer problems with the technology
Concerns over unanticipated/unintended consequences
Concerns over obsolescence
© Jakki Mohr, 2001

15. Competitive Volatility: changes in competitors, offerings, strategies
Uncertainty over who will be future competitors
Uncertainty over “the rules of the game” (i.e., competitive strategies and tactics)
Uncertainty over “product form” competition
competition between product classes vs. between different brands of the same product
Implication: Creative destruction
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16. Characterizing the High-Tech Environment
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17. Other Characteristics Common to High-Tech Markets:
“Unit-one” costs: when the cost of producing the first unit is very high relative to the costs of reproduction
Ex: development vs. reproduction of software
Demand-side increasing returns: When the value of the product increases as more people adopt it
Also called network externalities and bandwagon effects
Ex: portals on the Internet
Implications: may give away products for free
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18. Other Characteristics Common to High-Tech Markets: (Cont.)
Tradeability problems arise because it is difficult to value the know-how which forms the basis of the underlying technology
Ex: How much to charge for licensing the rights to a waste-eating microbe?
Knowledge spillover: Another type of externality that arises from the fact that technological developments in one domain spur new developments and innovations in other areas.
Ex: Human Genome Project
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19. Supply Chain for Auto Industry
Suppliers
Car Manufacturers
Car Dealers
Customers
-personal consumption
-business use (fleets, etc.)
-raw materials
-components
-production equipment
-services
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20. A Supply Chain Perspective on Technology
Often, technological innovations occur at upstream (i.e., supplier) levels in the supply chain
Such innovations may radically affect the manufacturing process or the inner workings of a product, but
End-user behavior may not be significantly affected
Examples: cars, food, computing, hair styling, Internet
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21. Continuum of Innovations
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22. Supplier vs. Customer Perceptions of Nature of Innovation
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23. Contingency Theory
Type of marketing strategy is contingent upon the nature of the innovation.
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24. Examples of Implications of Contingency Theory:
Breakthrough Incremental
R&D/Marketing Interaction
R&D leads; “technology push”
Marketing leads; “customer pull”
Type of Marketing Research
Lead users; empathic design
Surveys; focus groups
Role of Advertising
Primary demand; customer education
Selective demand; build image
Pricing
May be premium
More competitive
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25. Framework for High-Tech Marketing Decisions
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