Why Technology Marketing is different!

TECHNOLOGY MARKETINGLECTURE

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TECHNOLOGY MARKETINGis different !

ESB Lecture Dr. Ute Hillmer

June 2009


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Content of the Lecture

1. Why is Tech Marketing different?

2. Characteristics of innovative technology

3. Customer profiles

4. Marketing Communication Strategy

a) Communication content

b) Technology decision process

c) Communication channels / networks

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Examples for technology products??

“… that TECHNOLOGIES changed the way

you do things in your discipline /

profession lately?”

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Why should marketing be different?

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… really change the way one is doing things

… need a lot of explanation– benefits often not readily obvious– difference to competition not readily obvious

… have a short product lifecycle – today's technology might be outpaced tomorrow

… influence and penetrate life and its experiences

rethinking Marketing : New=Good Credibility= important

Technology Marketing is different because its products…

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– are sceptical and expect a dialogue– don’t have any time to waist– can be well informed– are uncertain due to always new technologies – expect customised solutions at low prices

rethinking Marketing : New=Good Credibility= important

Technology Marketing is different because its customers…

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Most importantly: Technology Marketing is different because its Products…

… really change the way you are doing things

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Time

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Source: Rogers Diffusion of Innovation 1962, 1995, p.262; Moore; Crossing the Chasm 1995, 1999, p.12; The Chasm Institute LLC 2008.

The Diffusion of an Innovation

Early Market

Tornado

Mainstreet Total Assimilation

Continuous innovationDisruptive innovation

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Time

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Why do certain innovations have a much longer mainstreet momentum?

Why do certain innovations diffuse much

faster than others?Intro


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1. Favourable Characteristics of Technology

Innovations.

2. Business Strategy that recognises different

customer profiles.

3. Marketing Communication Strategy were

communication content and communication

vehicle recognises and considers point 1+2.

Success Factors of an Innovation Diffussion Strategy

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Inbound Elements of High Tech Marketing

Characteristics of technology

Customer profiles

Communication strategy– Content

– Technology decision process

– Communication channels / networks

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Inbound Elements of High Tech Marketing


Customer profiles

Communication strategy– Content

– Technology decision process

– Communication channels / networks

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1. Favourable Characteristics of Technology Innovations

Innovations perceived as having greater:

- relative advantage -

compatibility

- trialability - observability

- less complexity - familiarity

will be adopted more rapidly than others

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Relative Advantage

· Measured in economic terms, but social prestige, convenience, and satisfaction are also important

· Objective advantages are not so important, it matters if an individual perceives the innovation as an advantage

= Degree to which a technology is perceived as “better”

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An advantage for one individual, a thread for another?

Yes!

No! Mmm...

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Sub dimensions of Relative Advantage

· economic profitability

· low initial cost

· a decrease in discomfort

· social prestige

· savings in time and effort

· immediacy of the reward

· personal goal

· more or less flexibility

· more or less control

· personal marketability

· curiosity

· stability

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Subjective Construction of Reality

Each individual sees the world through subjective lenses. Making sense of the world through her/his own meaning system.


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A Bike!

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A Bike! ?

Bla bla ... Blub

blub...

Blob blob ...

Blubber blubber...


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A Meaning System Approach

“… is built around the idea that people develop beliefs that organise their world and that give meaning to their experiences”

DWECK 2000, p. xi

Different people hold different meaning systems.

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Marketing and Rationality„Good" is relative

- not immediately evident

- complex to understand

- circumvented by the market

- considered to be amoral

- difficult to implement

„Good“ ideas do not sell themselves, they need to be properly expressed and communicated

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Marketing and Rationality (2)

Most individuals perceive their actions as rational.

Lack of knowledge or inaccurate perception guide an individuals evaluation.

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Status Aspects

Every innovation also has at least some degree of status conferral.

A motivation for many individuals to adopt is the desire to gain social status.

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Special Forms of Advantages

· A fad

· Preventive technologies

· Incentives

· Mandates

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A Fad

is an innovation that represents a relatively unimportant aspect of culture, which diffuses very rapidly, mainly for status reasons, and then is rapidly discontinued.

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Preventive Technologies

Preventive innovations are slower to diffuse because • individuals have difficulties in perceiving their

relative advantage

• the rewards are uncertain

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Incentives

increase the degree of relative advantage of the technology• incentives increase the rate of adoption

• incentives lead to adoption of an innovation by individuals different from those who would otherwise adopt

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Mandates

incentives or penalties by law, tax etc.• behaviour change that is desired by society

but might not be desired by the individual can be mandated

tax reduction for solar energy boost in solar energy cell sales

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Favourable Characteristics of Innovations

Innovations perceived as having greater:

- relative advantage -

compatibility

- trialability - observability

- less complexity - familiarity

will be adopted more rapidly than others

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Triability

• Technology is easier to adopt if it can be tried out

in part, on a temporary basis, or easily dispensed

with after trial.

• It‘s a way to find out how it works under one's own

conditions it gives meaning to a technology

= Degree to which a technology can be experimented with on a limited basis

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Complexity

• It is the perception of the end user that counts

for achieving public adoption.

• An innovation might look simple from the

viewpoint of the developer.

= Degree to which a technology is perceived as difficult to understand and use.

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Compatibility

• Technologies that are incompatible with

values and norms will be adopted much

slower because they require the adoption of

a new value system.

= The degree to which technology is perceived as being consistent with existing values, past experiences, and needs of potential adopters

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Familiarity

A combination of past experiences and social conformity.

Often, it is the compatibility of a new technology to familiar social and individual concepts and not to existing technologies and processes.

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Naming a new Technology

A name affects its perceived familiarity and compatibility

Customer research to name a new technology in each culture

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Positioning a Technology

Positioning „co-designs“ a technology

Position a new technology in relation to already familiar concepts familiarity!

Potential adopters have relevant experiences with which they associate the new innovation.

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Observability

• Observing the advantages of a new technology

increases the chance of adoption significantly.

• After some adopt, observability improves the

diffusion effect, a critical component of technology

transfer.

= degree to which the results of a technology are visible to others

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Where in a marketing plan do the discussed areas belong?

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Marketing Plan 1. Objective

2. Marketing StrategyTarget Customer

Compelling reason to buy

3. Key Issues

4. Product MarketingWhole Product

Features

Service

Benefits

Pricing

Distribution Channels

Competition

5. Marketing CommunicationTarget Customer

Positioning

Key Message

Elements of the Communication Mix

Deliverables

6. Partner MarketingPartners & Allies

7. Key Account Marketing

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Outbound Elements of Technology MarketingCharacteristics of technology

Customer profiles

Communication content

Technology decision process

Communication channels / networksCustomer


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“Innovativeness”

Indicates overt behavioural change, not just cognitive or attitudinal change

= degree to which an individual or a unit is relatively earlier in adopting new technologies

Yes!No!Mmm... Customer


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Human Behaviour + Technology Marketing

“… dramatically change past behaviour…”

and the typical human reaction:– the majority of the market will hesitate to buy

for a long time

– when the new way of doing things gets accepted, everybody wants it right away

No !!!

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Early Majority

Late Majority

Early Adopters

Laggards

Innovators

Chart based on Rogers 1962, 1995, p. 262 and Moore 1991,1999, p. 12

Individual Adopter Categorization on the Basis of Innovativeness

Looking for messurable,

incremental improvements

Early Majority

„I don‘t have to like this

technology, even if I use it“

Late Majority

Dream-driven,

technology-

entusiastic

businessm

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Early Adopters

„Technology, no thanks!“

Laggards

Technology is their life

Innovators

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Sources: Rogers Diffusion of Innovation; Moore; Crossing the Chasm

Laggards

Skeptics:No way!

Late Majority

Conservatives:Hold on!

EarlyAdopters

Visionaries:Get ahead!

Early Majority

Pragmatists:Stick with the herd!

Innovators

Techies:Try it!


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Source: Chasm Institute 2008 LLC.

2009 Category Life Cycle Placement

• Cloud computing

• Many web 2.0 applications

• Many “green” technologies

• Mobile, web-based b-applications

• Solar power• Tablet computers• Social networking

(business)• Smartphones

• Consumer games• Social networking

(consumer)• Laptops (enterprise)

• HDTV• Laptops (consumer)• Virtual meetings

(enterprise)

LaggardsLate Majority

EarlyAdopters

Early Majority

Innovators

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Inventors: Techies Technology is their life

Technology - Crazy– Spend hours to get the product to work – Do everything to help the product– Technology should be for free

Forgiving souls– Don’t mind lousy documentation and weird procedures

to achieve functionality– Want technology first – no need for a sales channel

Their role: they move technology forward but do not generate much diffusion

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Visionaries Technology enthusiastic businessmen, driven by a dream

Businessman first- driven to be the first - new technologies are used to serve their own strategic benefit- don’t want incremental but fundamental improvements- make business world aware of new technologies- not very price-sensitive, have project budget- live in the future- communicate with techies and other visionaries

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Visionaries (2)

Take a risk- love publicity

- risky projects

- start projects from ground up, don‘t want standards, want to develop them

- buy by intuition

- highly motivated, driven by a dream


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Visionaries (3)

Excellent communicators- charismatic; they fight for their project

- like to serve as a reference

- network with techies and pragmatists

- too many references demotivate visionaries

- look for new ideas in communication with intelligent people

Their role: they fund the product development

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PragmatistsLook for measurable, incremental improvementDriven by business results

- improved productivity

Avoid risk- risk is a negative term- want to work with market leader/ established firms- look for product quality, support, consulting, good

interfaces, reliability- want standards, “save buys”- need references- live in the present

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Pragmatists (2)Loyal customers• are interested in company they buy from

• revenue and profit must grow steadily “stability”

• communicate within company and industry

• the first mass market

Their role: They hold the key to the mainstream market

BUT: you need to be established in order for them to buy from you but you don‘t get established until they buy from you ! ?

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Pragmatists (3)

Consequences out of this profile

One really needs to be familiar with the processes and issues that worry these people

Offer a clear relative advantage to them Customer


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- They do what pragmatics do, but later- Invest in technology to keep up with

competition- Have low technical competence

Conservatives“I don’t have to like the product, even if I use it”

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- predictable- want everything faster, cheaper, improved- are price sensitive- like bundles, pre-installed solutions- “if it isn’t broken, don’t fix it”- very interested in service and support

Their role: huge mass market

Conservatives (2)

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Laggards

Skeptics:No way!

Late Majority


EarlyAdopters


Early Majority


Innovators

Techies:Try it!


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The Chasm

1. Visionaries had their turn and new visionaries chase new dreams (new technologies new visionaries)

2. Pragmatists want to wait

3. Investors get nervous

NO MARKET!! ?? Customer


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Technology Adoption and Its Challenges

Zeit

Lack

of a

ppre

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ion

Translate a hot technology into a business benefit

How much technical competence is necessary?

From „change agent“ to productivity improvement

Marktvolumen

Geoffrey Moore 1995, 1999

Early Majority

Late Majority

Early Adopters

Laggards

Innovators


EarlyAdopters

Early Majority

Innovators

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Why is there a Chasm?

Techies and Visionaries talk

Conservatives watch the Pragmatists before buying technology

BUT

Visionaries and Pragmatists don‘t respect each other

customer references are there

- but not the right ones!

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Why won’t Pragmatists buy?

1. Pragmatic customers hold on to the old paradigm

2. Customers see the benefit but they don‘t have a pressing reason to change

3. User and purchasing want to hold on to the old status quo

the market reacts reluctantCustomer


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What can be done?

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Crossing the Chasm successfully

„Concentrate a overwhelming power on a small, focused target market segment“

FOCUS

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Pragmatists want Observability

“… be familiar with the processes and issues that worry these people…”

relative advantage compatibility

trialability

observability

less complexity

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What does that mean for Marketing?

The previous key to success has to be thrown away! Everything has to be changed:

· rework message and positioning · new message: solve a core niche problem· get references in this niche

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Positive Effects of the Focus

· Effective marketing message

· Word of mouth (interpersonal networks)

· 100% product solution is possible

· Focused investment of resources

· Usually no competition (not yet)

· Possibility for market leadership

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The 100%-Product

Anything else you would needto achieve yourcompelling reason to buy

Core-Produkt

Additional Software

AdditionalHardware

StandardsandProcedures

Trainingand Support

Systemintegration

Installationand Debugging

CablesCustomer


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Pragmatists value stability and predictability As long as there is no stability and predictability in the market, they will not make a decision. They talk with each other, they watch and they wait.

A pattern, stability and predictability develops as soon as there is a clear market leader

This is the way to the mass market

Market leadership

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Focus – and then?Situation:Vendor has market leadership in a small niche + a 100% product for a small niche.

Next step:

New markets develop automatically, that are close to the focused niche because now there are:

• relative product advantages that almost fit • credible references observability

• word of mouth credible communication channels

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Recap: Marketing Plan 1. Objective



3. Key Issues


Features

Service

Benefits

Pricing


Competition


Positioning

Key Message


Deliverables


7. Key Account MarketingCustomer


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Outbound Elements of Technology Marketing


Customer profiles



Communication channels / networks

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Communication contentTwo kind of information:

Technology information

What is it?

How does it work?

Why does it work?Individual evaluation information

What might it do to me?

How can I benefit?

What will I loose?

Technology evaluation information

What are the consequences?

What are the benefits?

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Time

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Laggards

Skeptics:No way!

Late Majority


EarlyAdopters


Early Majority


Innovators

Techies:Try it!

Who needs what kind of information and when?

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Level of Concern over Time for the Mainstream

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Customer profiles



Communication channels / networks

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Technology Decision Process

· Knowledge

· Persuasion

· Decision

· Implementation

· Confirmation

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Types of Innovation Decision

• optional innovation decision

• collective innovation decision

• authority innovation decision

Individual’s influence on the decisionOrganizational decision processes

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Customer profiles



Communication channels / networksComm.

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Communication Channels / NetworksCommunication

process in which participants create and share information with one another in order to reach a mutual understanding.

Communication Channels – connect the informed individual with the others. – the means for the information exchange to communicate a new idea to one or several others.

Comm. Strategy


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Communication Channels (2)

• Mass media channels

• Interpersonal channels

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Role of Communication Channels

• Technology is not evaluated in scientific studies of its consequences (also they are not irrelevant to early adopters)

• People depend mainly upon subjective evaluation from other individuals like themselves

The core motivator is the modelling and imitation of opinion leaders and peers who have adopted previously

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Technology and Cultural Change

Technology adoption always brings about culture change adoption decision is a change in the “rules for behaviour”.

Sometimes, social structure and culture must change considerably to adopt. The public requires assurances from opinion leaders to make such a change.

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Mass Media Channels

Rapid and efficient to inform about the existence of an innovation = awareness creation

It also gives feedback to potential adopters about those who have adopted.

Because they create awareness, mass communications place some pressure upon opinion leaders to make decisions about the new technology. Comm.

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Mass Media Channels

are …..

Comm. Strategy


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Interpersonal CommunicationInterpersonal communications between experts and the public, opinion leaders and the public, peers and among friends and family = persuasion

Equally as essential as mass communications.

Knowing the viewpoints of close references (e.g., family and friends) and opinion leaders is a critical element of the social comparison process leading to choice shift.

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Communication Channels Effectiveness

by decision stages

· Mass media is more important at the knowledge stage

· Interpersonal channels are more important at the persuasion stage

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Communication Channels Effectiveness (2)

by adopter category

· Mass media channels are more important than interpersonal channels for early adopters;

· Interpersonal influence is less important to early adopters

Mass media channels early in a product life cycle; interpersonal channels later

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Communication Channels Effectiveness (3)Interpersonal Channels and Adopter Profile

Source: Rogers, Diffusion of Innovations, p. 198

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Mass Media Communication Flow

Transmission of facts alone limited success

Media presents positions of proponents and opponents and opinion leaders are mediating the information higher success

Mass media channels are primarily knowledge creators (awareness)

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Interpersonal Communication Flow: Opinion leaders

Social systems have prestige hierarchies some persons / organisations are more influential than others

Focus upon wining opinion leaders. It will be opinion leaders who will persuade others to adopt.

Interpersonal networks persuade Comm. Strategy


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Communication Networks

Networks have a certain degree of structure, of stability. This structure is so complex, that even the members of the system do not understand the communication structure of which they are part.

100 members: 4.950 links200 members: 19.900 links

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Interpersonal Communication Networks

• Interconnected individuals who are linked by patterned communication flows to a given individual.

• Individual behaviour is determined in part by information and influence that is communicated through the individual's personal network. Comm.

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Interpersonal Networks (2)Interlocking personal networks

a network of individuals, all of whom interact with each other

Radial personal networksa set of individuals linked to a focal individual (opinion leader) but not interacting with each other. Such networks are less dense and more open

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Interpersonal Networks (3)are…

Comm. Strategy


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Radial Personal Networks "the strength of weak ties" · Weak ties occur with individuals only

marginally included in the current network of contacts

· They allow the exchange of information with a wider environment

· Particularly important in the diffusion of innovations because the links reach out to the entire system Comm.

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Radial Personal Networks “the strength of weak ties“ (2) · new information flows stronger in weak

ties, because an individuals close friends seldom know much more that the individual does not also know.

· Communication proximity: the degree to which two individuals in a network have overlapping personal communication networks Comm.

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Similarity in Networks

· individuals tend to be linked to others who are close to them in physical distance and who are relatively homophilious = similar in social characteristics.

· Network links with similar individuals require the least effort (easy communication) and are most rewarding (agreement on many terms).

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Similarity in Networks (2)· Technology diffusion demands a certain

degree of heterophily to be effective

If individuals want more information, they must break out of the comfort of close links and form more open and spatially distant network links.

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Personal Networks and Thresholds· A threshold is reached when an individual is

convinced to adopt as the result of knowing that some minimum number of other individuals have adopted

· The threshold is an individual level.

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Personal Networks and Thresholds (2)· some people adopt late, but early within their

personal network - a lack of network exposure to the innovation

· some people adopt easily within the entire system but late within their personal network

a person is more likely to adopt if more of the other individuals in his or her personal network have adopted previously

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Time

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EarlyAdopters

Early Majority

Innovators

Technology-adoption Life-cycle- the Cycle in the Cycle

Comm. Strategy


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Strategy

TimeLaggardsLate Majority

EarlyAdopters

Early Majority

Innovators

Mainstream Behaviour

Increasingly conforming behaviour

Chart based on Rogers 1995, p. 262 and Moore 1999, p. 12

Nonc

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TimeLaggardsLate Majority

EarlyAdopters

Early Majority

Innovators

Individualistic Behaviour

Increasingly individualistic

behaviour

Chart based on Rogers 1995, p. 262 and Moore 1999, p. 12

Nonc

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Nonc

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Group-Identity dominates

Role-Identity dominates

time

Multiple, coherent group and role identities that balance the individual

individualistic endorsement behaviour

Strong ROLE-identity “I can change it”

Individualistic behaviourStrong ROLE-identity

“I can and will change it”

conforming behaviourstrong GROUP-identity

“I am part of it”

Group-Identities vs. Role-IdentitiesDuring Technology Adoption


Ute Hillmer 08

Intro

Product

Customer

Comm.Strategy

Recap: Marketing Plan 1. Objective



3. Key Issues


Features

Service

Benefits

Pricing


Competition


Positioning

Key Message


Deliverables


7. Key Account Marketing

Comm. Strategy


Ute Hillmer 08

Intro

Product

Customer

Comm.Strategy

E-Learning Case Study

Develop the key components of a marketing and

marcom plan for a product in the fast moving e-

learning (online learning) segment.


Ute Hillmer 08

Intro

Product

Customer

Comm.Strategy

E-Learning Case Study 1 Your company is in the business of developing and marketing e-learning software for the institutional or organisational market. A strategic move is to develop a software application, especially targeted at the academic online-learning market. You and your team are in charge to develop the market oriented part of the business plan for, what is hoped to become a new, breakthrough software application within the next 2-3 years.

At the end of the 4 days, your team is expected to present an outline of the marketing- and marcom-plan to the board, the VP of R&D as well as the VP of sales and marketing in order to get their OK for the necessary funding and the time allocation of the respective teams necessary for the project. (Joint presentation at the end of the 4th day, each team member presenting about 5 minutes).

Why Technology Marketing is different!

Business

Transcript of Why Technology Marketing is different!