high-tech marketing

Hightech Marketing Strategy

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주요참고문헌

- Adrian Ryans, Roger More, Donald Barclay and Terry Deutscher, Winning Market Leadership : Strategic Market Planning for Technology-Driven Businesses, Wiley (Dec 15, 1999)- Geoffrey A. Moore, 캐즘 마케팅(Crossing the Chasm), 세종서적, 2002 (초판번역: 벤처마케팅(1999)) - Geoffrey A. Moore, 토네이도 마케팅(Inside the Tornado: Strategies for Developing, Leveraging, and Surviving Hypergrowth Markets), 세종서적, 2001 -이승주, 경영전략실천매뉴얼, 시그마컨설팅그룹, 1999

자료물 출처: 파아란 영혼 http://intempus.tistory.com , [email protected]

본 자료는 위 참고문헌 및 기타 리포트에서 인용하여 제작하였음을 알려드립니다. 제작한 지 거의 10년이 다 된 자료물이나, 현재에도 하이테크마케팅은 충분한 의미를 가진다는 판단 아래 다시 업로드하여 유통합니다.


T A B L E O F C O N T E N T S

I. Process for Understanding Market

II. Understand Discontinuous Innovation

III. Technology Adoption Life Cycles

IV. Understand Buyer Behavior

V. Understand Complete Market Chain

T A B L E O F C O N T E N T S



III. Technology Adoption Life Cycles




Define the Business Arenas :

• Define the arena within which you will search for attractive opportunities

Define the Business Arenas :

• Define the arena within which you will search for attractive opportunities

Identify Attractive Opportunities :

• Segments the market• Evaluate market forces

Identify Attractive Opportunities :

• Segments the market• Evaluate market forces

Understand the Market Environment

• Lay out market chain(s)• Understand buyer

choice/rejected behavior




Understand the Profit Dynamic :

• Estimate market acceptance• Develop price, cost, and

investment forecasts




Implement the StrategyImplement the Strategy

Planning Process

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Assess Resources and Competencies :

• Identify resources and competencies

• Determine fit

Assess Resources and Competencies :

• Identify resources and competencies

• Determine fit







Understand the Competitive Challenge :

• Analyze current and potential competitors

• Understand strategy drivers

Understand the Competitive Challenge :

• Analyze current and potential competitors

• Understand strategy drivers

Make Tough Strategic Choices:• Review past strategy• Identify strategic issues• Create option• Make Choices

Make Tough Strategic Choices:• Review past strategy• Identify strategic issues• Create option• Make Choices

Plan Critical Relationships:

• Identify key players• Plan relationships• Organize relationship teams

Plan Critical Relationships:

• Identify key players• Plan relationships• Organize relationship teams

Complete the Winning Strategy :

• Detail complete strategy • Ensure strategic leverage for

market chain members

Complete the Winning Strategy :

• Detail complete strategy • Ensure strategic leverage for

market chain members







Planning Process


Process for Understanding Market

q Process for Analyzing Technology Adoption, Buyer Behavior, and Market Chains

Technology Adoption Life Cycle

Understand Buyer Behavior

Identify Stage of Technology Adoption Life Cycle

Understand Characteristics of Target Adopter Group

Understand “Whole Product” Needs

Identify Decision-Making Unit

Understand Choice Criteria

Understand Choice/Rejection Process

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Understand Buyer Behavior

Understand Complete Market Chain




Review Market Chain Options

Consider Market Chain Dynamics

Analyze Buyer Behavior at All Key Levels in the Chain


What is Innovation?

What is Innovation?

• Innovation is the successful development and commercialization of new products, services, or business systems.

• In many industries, innovation is the primary basis for competitive advantage and the principal driving force of industry structural change.

• Continuous Innovation• Dynamically Continuous Innovation• Discontinuous Innovation

Source of Innovation

Unexpected Occurrence

IncongruitiesNew Knowledge

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• Innovation is the successful development and commercialization of new products, services, or business systems.

• In many industries, innovation is the primary basis for competitive advantage and the principal driving force of industry structural change.

• Continuous Innovation• Dynamically Continuous Innovation• Discontinuous Innovation

InnovationInnovation

Incongruities

Process Needs

Industry and Market

Changes

Demographic Changes

Changes in Perception

New Knowledge

Source: P.Drucker, “The Discipline of Innovation,” Harvard Business Review, 1985


The Technology S-Curve

The S-Curve Phenomenon Making The Transition To a New Technology

Performance

Limit

Performance

discontinuity

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Effort Effort

Source : R.Foster, Innovation:The Attacker’s Advantage, 1996


The Attacker’s Advantage in Technology Development

Technology Leap

Performance of New

Technology

Cumulative Effort

Attacker

10

Productivity of R&D Function

Cumulative Effort

Cumulative Effort

Defender

Source : J.Kluge, “Managing Technological Discontinuity,” Innovation and Technology Management, 1989


Changing Leadership in the Semiconductor Industry

1955(Vacuum Tubes)

1965(Transistors)

1975(Integrated Circuits)

1995(Submicrons)

RCASylvaniaGeneral ElectricRaytheonWestinghouseAmperexNational VideoRawlandEimacLansdale

HughesTransitronPhilcoSylvaniaTexas InstrumentsGERCAWesinghouseMotorolaClevite

TIFairchildNationalIntelMotorolaRockwellGIRCAPhilipsAMD

IntelNECToshibaHitachiMotorolaSamsungTIFujitsuMitsubishiPhilips

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RCASylvaniaGeneral ElectricRaytheonWestinghouseAmperexNational VideoRawlandEimacLansdale

HughesTransitronPhilcoSylvaniaTexas InstrumentsGERCAWesinghouseMotorolaClevite

TIFairchildNationalIntelMotorolaRockwellGIRCAPhilipsAMD

IntelNECToshibaHitachiMotorolaSamsungTIFujitsuMitsubishiPhilips

Source : R.Foster, Innovation:The Attacker’s Advantage, 1996


III. The Technology Adoption Life Cycle


Technology vs. Product Category Life Cycles

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* Boston Consulting Group portfolio management model


The Technology Adoption Life Cycle

q Understanding this technology adoption life cycle, and where your products and services are positioned relative to this adoption life cycle, can give you some important insights into buyer behavior.

Visionaries :

Get ahead of the herd!

Pragmatists :

Stick with the herd!

Conservatives :

Hold on!

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Source : Everett M. Rogers, Diffusion of Innovations, 1962

Innovators Early Adopters Early Majority Late Majority Laggards

Techies :

Try it!

Visionaries :

Get ahead of the herd!Skeptics :

No way!

Time

2.5% 13.5% 34% 34% 16%


Innovators(Technology Enthusiast)

q Gatekeeper to the Early Adopter.§ They don’t need a complete solution.§ But, Innovators want lots of information on the technology so they can understand how the technology works. In many

cases, they will read leading scientific journals in the field and attend technical conferences.

Innovators(Technology Enthusiast, Techies)

Focus § Technology

Key Characteristics § Very Knowledgeably about technology § Appreciate elegant technical solutions§ Like to test new technology§ Don’t need complete “solutions”

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§ Very Knowledgeably about technology § Appreciate elegant technical solutions§ Like to test new technology§ Don’t need complete “solutions”

Needs § Early access to emerging technologies§ Access to all information on technology

Role in adoption process § Confirm viability of technology(They are critical in legitimizing the product and convincing other potential users that the technology does in fact work)

Challenges § Want unrestricted access to top technical people§ Want no-profit pricing(preferably free)


Early Adopters(Visionaries)

q Fund the development of the early market§ Visionaries can imagine high-leverage applications of the technology and are willing to take substantial risks to gain the

potential rewards.§ If they can see lots of leverage from applying the technology, they are also willing to invest their resources to create a

complete solution

Early Adopters(Visionaries)

Focus § Breakthrough that will create competitive advantage

Key Characteristics § Can imagine high leverage applications§ Willing to take risks§ Willing to invest resources to create§ Not price sensitive

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Key Characteristics § Can imagine high leverage applications§ Willing to take risks§ Willing to invest resources to create§ Not price sensitive

Needs § Lots of support§ Want to move quickly

Role in adoption process § Help commercialize the technology(They can demonstrate the business value of the technology)

§ Give visibility to technology

Challenges § Want rapid time-to-market§ Demand high degree of customization and support


Early Majority(Pragmatists)

q Bulwark of the mainstream market § Looking for proven solutions that can give them a competitive advantage, § So They like to work with a market leader, or work with other suppliers that provide the required level of support and

service.

Early Majority(Pragmatists)

Focus § Proven solution that can give lower costs and/on competitive advantage

Key Characteristics § Comfortable with technology § Pragmatic rather than risk takers§ Like to work with market leaders § Have a “wait and see attitude”§ Don’t like surprises

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Key Characteristics § Comfortable with technology § Pragmatic rather than risk takers§ Like to work with market leaders § Have a “wait and see attitude”§ Don’t like surprises

Needs § Complete, proven solution§ Want credible reference accounts in their own industry

Role in adoption process § Are entry point into huge, mainstream market(Pragmatists create the dynamics of high-tech market development.)

Challenges § Insist on good references from trusted colleagues§ Want to see the solution in production at the reference site


Late Majority(Conservatives)

q Extend product life cycles§ But they adopt new technology only under duress§ They are driven to adopt the new technology in order to reduce costs and to remain competitive in their markets.§ They need a complete solution and they prefer a simple, standardized, pre-assembled solution that just works.

Late Majority(Conservatives)

Focus § Remain competitive

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Focus § Remain competitive

Key Characteristics § Less comfortable with technology § Resistant to change § More price sensitive § Risk averse

Needs § Prefer simple solutions that are easy to install and operate § Want to buy the established standard

Role in adoption process § Represent significant portion of the total market§ Can be quite profitable

Challenges § Need completely pre-assembled solutions§ Would benefit from value-added services but do not want to pay for them


Laggards(Skeptics)

q Retard the development of high-tech markets§ In many cases, a Skeptics located in an influential position in a company can delay, or stop, the adoption of a new

technology. § The Challenge in these situations is to find some way to work around the skeptic or to neutralize the skeptic, so that

other, more innovative individuals within the organization can support the adoption of the new technology.

Laggards(Skeptics)

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Laggards(Skeptics)

Focus § Avoid change

Key Characteristics § Very skeptical of technology and business cases§ Very risk averse

Needs § Technology may need to be “Hidden” from them § Need to be convinced that all other solutions are weaker

Role in adoption process § Obstructs change § You should usually try to avoid or neutralize them

Challenges § Not a customer§ Can be formidable opposition to early adoption


Identify Stage of Technology Adoption Life Cycle

q Understanding the adoption process has some clear implications for you as you try to speed the adoption of an innovative new product or service.

q The Adoption “Stairway”

§ Innovators(Technology Enthusiast)§ Seed innovators with new product§ Help innovators educate visionaries

§ Early Adopters(Visionaries)§ Capture interest of visionaries§ Make them satisfied customers§ Serve as good references for pragmatists

§ Early Majority(Pragmatists)§ Gain bulk of revenue by serving pragmatists ideally by becoming market leader and setting de facto standards

§ Late Majority(Conservatives)§ Generate volumes and experience so product become reliable and cheap to meet demands of conservatives

§ Laggards(Skeptics)§ Leave skeptics to their own devices

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q Understanding the adoption process has some clear implications for you as you try to speed the adoption of an innovative new product or service.

q The Adoption “Stairway”

§ Innovators(Technology Enthusiast)§ Seed innovators with new product§ Help innovators educate visionaries

§ Early Adopters(Visionaries)§ Capture interest of visionaries§ Make them satisfied customers§ Serve as good references for pragmatists

§ Early Majority(Pragmatists)§ Gain bulk of revenue by serving pragmatists ideally by becoming market leader and setting de facto standards

§ Late Majority(Conservatives)§ Generate volumes and experience so product become reliable and cheap to meet demands of conservatives

§ Laggards(Skeptics)§ Leave skeptics to their own devices


Discovering The Chasm

q Visionaries don’t see enough of a head start, Pragmatists see no reason to start yet.

Visionaries :

Get ahead of the herd!

Pragmatists :

Stick with the herd!

Conservatives :

Hold on!

Early Market Mainstream Market

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Innovators Early Adopters Early Majority Late Majority Laggards

Techies :

Try it!

Visionaries :

Get ahead of the herd!Skeptics :

No way!

Time

The Chasm


Model Breaks Down at Key Transition

q Pragmatists don’t trust visionaries as references

Visionaries Vs. Pragmatists

§ Adventurous§ Early buy-in attitude§ Think Big§ Go it alone relationships§ Spend big§ First strike capability§ Think Pragmatists are pedestrian

§ Don’t need reference base§ Take greater interest in technology§ Underemphasize infrastructure§ Plan for disruption§ Don’t plan to stay for long

§ Prudent§ Wait-and-see§ Manage expectations§ Maintain§ Spend to budget§ Staying power§ Think Visionaries are dangerous

§ Reference base very important, not visionaries

§ Less interested in technology§ Value infrastructure and support§ Dislike disruption§ Plan for long term career

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§ Adventurous§ Early buy-in attitude§ Think Big§ Go it alone relationships§ Spend big§ First strike capability§ Think Pragmatists are pedestrian

§ Don’t need reference base§ Take greater interest in technology§ Underemphasize infrastructure§ Plan for disruption§ Don’t plan to stay for long

§ Prudent§ Wait-and-see§ Manage expectations§ Maintain§ Spend to budget§ Staying power§ Think Visionaries are dangerous

§ Reference base very important, not visionaries

§ Less interested in technology§ Value infrastructure and support§ Dislike disruption§ Plan for long term career


Crossing the Chasm

q A number of indicators warn of an emerging chasm

§ Product vendor’s problemü 80% of many solutions – 100% of noneü Pragmatists won’t buy 80% solutions

§ Most common vendor mistake: ü Committing to the most common enhancement requestsü Never finishing any one customer’s wish-list

§ Solutionü Focus on a single beachheadü Accelerate formation of that segment’s whole productü Pick a list and finish it!

Chasm

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q A number of indicators warn of an emerging chasm

§ Product vendor’s problemü 80% of many solutions – 100% of noneü Pragmatists won’t buy 80% solutions

§ Most common vendor mistake: ü Committing to the most common enhancement requestsü Never finishing any one customer’s wish-list

§ Solutionü Focus on a single beachheadü Accelerate formation of that segment’s whole productü Pick a list and finish it!

Early Market Mainstream Market


Most Important Implication

q Don’t let this happen to you

§ Not seeing the chasm creates a chasm crisis§ Management is discredited§ Equity is radically diluted§ Key personnel become disillusioned§ Drastic actions are taken – but don’t help§ Typical success pattern is not achieved § Everyone loses

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q Don’t let this happen to you

§ Not seeing the chasm creates a chasm crisis§ Management is discredited§ Equity is radically diluted§ Key personnel become disillusioned§ Drastic actions are taken – but don’t help§ Typical success pattern is not achieved § Everyone loses


Crossing the Chasm

q Time of despair, early market interest wanes, but mainstream not comfortable with product

q Pragmatist departmental managers adopting before the herd

§ Head-pin segment adopts only if in severe pain§ Responsible for a broken mission-critical business process § Must have complete solution to the business process problem § Will try anything that looks like it should work§ Will track customer references within own niche carefully

q Niche Marketing prevails

§ Direct sales opens up the niche§ Indirect sales takes over the niche once adoption is under way§ Healthy price margins and restricted competition are normal§ Think whole product not product

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q Time of despair, early market interest wanes, but mainstream not comfortable with product

q Pragmatist departmental managers adopting before the herd

§ Head-pin segment adopts only if in severe pain§ Responsible for a broken mission-critical business process § Must have complete solution to the business process problem § Will try anything that looks like it should work§ Will track customer references within own niche carefully

q Niche Marketing prevails

§ Direct sales opens up the niche§ Indirect sales takes over the niche once adoption is under way§ Healthy price margins and restricted competition are normal§ Think whole product not product


After Crossing the Chasm - Market Development Model

q Your company then must try to leverage this success in on segment to other related segments§ Early Market : Deal-driven marketing prevails§ Crossing the Chasm : Niche marketing prevails§ Bowling Alley à Tornado à Main Street

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Bowling Alley

q Period of niche-based adoption in advance of the general marketplace; whole product for niche applications

§ First, managers in your company might try to identify other vertical markets with almost identical applications and move to penetrate them.

§ Second, they might look new, different, but related applications in the vertical market in which your company is already established.

Seg 1

App 3

Seg 2

App 2

Seg 3

App 1

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Seg 1

App 1

Seg 2

App 1

App 3App 2

Seg 1

App 2

App 1

Whole Product Customer Reference

Seg : Segment

App : Application


Tornado

q Period of mass market adoption; market place switches over to new paradigm§ Once the company has begun to successfully implement the bowling pin strategy and penetrate the early majority or

pragmatists, revenues grow very rapidly.

§ Pragmatist infrastructure managers adopting with the herd§ Transition to the new infrastructure§ Must have standards§ Rely on market share

§ Mass marketing prevails§ Streamlined one-size-fits-all whole product§ Low-touch, high-volume distribution§ Think product

Post-Tornado Market Shares

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q Period of mass market adoption; market place switches over to new paradigm§ Once the company has begun to successfully implement the bowling pin strategy and penetrate the early majority or

pragmatists, revenues grow very rapidly.

§ Pragmatist infrastructure managers adopting with the herd§ Transition to the new infrastructure§ Must have standards§ Rely on market share

§ Mass marketing prevails§ Streamlined one-size-fits-all whole product§ Low-touch, high-volume distribution§ Think product

The GorillaChimp #1Chimp #2Monkeys

Post-Tornado Market Shares


Gorilla Power

q Gorilla set the de facto standards in a hypergrowth market

q Basis of gorilla power

§ Proprietary open architecture§ Proprietary means gorilla can control standards going gorward§ Open means rest of the value chain becomes dependent on gorilla

§ High switching costs§ Keeps customers and partners in§ Keeps competitors out

q Results in unique combination of three types of power§ Supplier power (over customers)§ Value chain power (over partners)§ Market leadership power (over competitors)

q Gorilla – Market leader in a tornado, Proprietary ‘architecture’q Chimp – Market challenger in a tornado, Incompatible with the gorilla architectureq Monkey – Market follower in a tornado, May clone gorilla architecture

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q Gorilla set the de facto standards in a hypergrowth market

q Basis of gorilla power

§ Proprietary open architecture§ Proprietary means gorilla can control standards going gorward§ Open means rest of the value chain becomes dependent on gorilla

§ High switching costs§ Keeps customers and partners in§ Keeps competitors out

q Results in unique combination of three types of power§ Supplier power (over customers)§ Value chain power (over partners)§ Market leadership power (over competitors)

q Gorilla – Market leader in a tornado, Proprietary ‘architecture’q Chimp – Market challenger in a tornado, Incompatible with the gorilla architectureq Monkey – Market follower in a tornado, May clone gorilla architecture


Main Street

q Period of aftermarket development; goal is now to reach and flesh out the market potential

q Installed base driving the after-market § Want better value, no disruption§ Two paths: commodity vs. differentiation§ Installed vendor has major competitive advantage§ Customer relies on trial, not references

q Mass customization prevails§ Standard core for price-sensitive sales§ Customizable surface for differentiated offers§ High-touch, high-volume distribution direct to end users§ Think end-user experience not product

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q Period of aftermarket development; goal is now to reach and flesh out the market potential

q Installed base driving the after-market § Want better value, no disruption§ Two paths: commodity vs. differentiation§ Installed vendor has major competitive advantage§ Customer relies on trial, not references

q Mass customization prevails§ Standard core for price-sensitive sales§ Customizable surface for differentiated offers§ High-touch, high-volume distribution direct to end users§ Think end-user experience not product

CommodityMarket

Niche Market Extensions

<Market opportunity in Main Street>


The Comparison of Bowling Alley and Tornado

q Bowling Alley vs. Tornado

§ Focus on economic buyer and end-user

§ Emphasize ROI as the compelling reason to buy

§ Differentiate “whole product” for a single application

§ Partner with value-added distribution channel to ensure customized solution delivery

§ Use value-based pricing to maximize profit margins

§ Avoid competition to gain niche market share

§ Position products within vertical market segments

§ Focus on infrastructure buyer; ignore economic buyer

§ Ignore ROI; focus on timely infrastructure deployment

§ Commoditize product for general purpose use

§ Distribute via low cost, high volume channels to ensure maximum market exposure

§ Use competition based pricing to maximize market share

§ Attack competition to gain mass market share

§ Position products horizontally as global infrastructure

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§ Focus on economic buyer and end-user

§ Emphasize ROI as the compelling reason to buy

§ Differentiate “whole product” for a single application

§ Partner with value-added distribution channel to ensure customized solution delivery

§ Use value-based pricing to maximize profit margins

§ Avoid competition to gain niche market share

§ Position products within vertical market segments

§ Focus on infrastructure buyer; ignore economic buyer

§ Ignore ROI; focus on timely infrastructure deployment

§ Commoditize product for general purpose use

§ Distribute via low cost, high volume channels to ensure maximum market exposure

§ Use competition based pricing to maximize market share

§ Attack competition to gain mass market share

§ Position products horizontally as global infrastructure


The Comparison of Tornado and Main Street

q Tornado vs. Main Street

• Sell to infrastructure buyer

• Focus on timely & reliable infrastructure deployment

• Commoditize product for universal deployment (open systems & need for strategic partnerships)

• Distribute via low cost, high volume channels & advertise heavily to ensure maximum market exposure

• Drive price points even lower to maximize market share

• Attack other competitors to gain market share

• Position products horizontally as global infrastructure

§ Sell to end-user

§ Focus on end-user’s product experience; seek to gratify individual needs

§ Differentiate commoditized products via +1 campaigns directed at specific niches

§ Continue same channels, but focus on merchandising that communicates +1 messages

§ Gain margins above low cost clone with +1 benefits

§ Compete against own low-cost offering to boost margin share

§ Position in niche markets based on end user preferences

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• Sell to infrastructure buyer

• Focus on timely & reliable infrastructure deployment

• Commoditize product for universal deployment (open systems & need for strategic partnerships)

• Distribute via low cost, high volume channels & advertise heavily to ensure maximum market exposure

• Drive price points even lower to maximize market share

• Attack other competitors to gain market share

• Position products horizontally as global infrastructure

§ Sell to end-user

§ Focus on end-user’s product experience; seek to gratify individual needs

§ Differentiate commoditized products via +1 campaigns directed at specific niches

§ Continue same channels, but focus on merchandising that communicates +1 messages

§ Gain margins above low cost clone with +1 benefits

§ Compete against own low-cost offering to boost margin share

§ Position in niche markets based on end user preferences


Toward the “Whole” Product

q With the innovator, the core product is a big part of the whole product.q By the time the product has reached the late majority or conservatives adopter group, the success of the

product will depend much more heavily on the non-core elements of the product rather than the core product itself.

q Thus the core-product is increasingly taken for granted and becomes a less important determinant of choice as the product moves into the later stages of the adoption cycle.

Potential Product

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Generic Product

Augmented ProductExpected Product


Priorities in Market

Deal-driven Marketing

MassMarketing

Mass Customization

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Niche Marketing

Key Priority: Simplify and extend the whole productPartnering Priority: Complementary skills and resources in marketing and distribution to succeed in identifying new nichesDistribution Priority: Find some hunters for the Tornado and farmers for the Main Street

Key Priority: Design & build the whole productPartnering Priority: Complementary technologies & services to form the whole product and win dominant segment shareDistribution Priority: Find some evangelists for Early market and Crusaders for Bowling Alley



q The decision-making unit, or buying network, is a group of individuals that have some influence on whether to buy a particular product or service and, if the decision is made to buy the product or service, the particular brand of that product or service.§ To recognize that the key individuals in the decision-making unit may very well evolve over time.§ To understand the power and influence of each individual in the decision-making unit.

BuyerKey Questions

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ApproverInfluencer

User

Who is the Customer?

• Who are the key decision-makers?

• In what decisions do they exercise influence?

• What evaluation criteria do they use?



q A second important element is the choice criteria that individuals in the decision-making units bring to bear as they attempt to make a decision. These criteria are related to both organizational and personal objectives.

Product Criteria

§ Product criteria refer to the fit of the product attributes to the customer’s need.

§ Does the product or service have the functionality, quality, reliability, speed the customer is seeking?

Process Criteria

§ Process criteria refer to the degree to which your product or service fits the customer’s need from a purchasing, usage, and disposal perspective.

§ Some organizations call this the customer interface strategy.

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§ Product criteria refer to the fit of the product attributes to the customer’s need.

§ Does the product or service have the functionality, quality, reliability, speed the customer is seeking?

§ Process criteria refer to the degree to which your product or service fits the customer’s need from a purchasing, usage, and disposal perspective.

§ Some organizations call this the customer interface strategy.

This information on choice criteria by market segment can be absolutely critical as you design your product and service offerings and as you decide how best to

position them relative to customer needs and competitive offerings in the market.



q The third element in understanding buyer choice/rejection behavior is the “How” question – how the customer goes about making decisions in the choice/rejection process.§ In order for them to adopt the new product or service, these customers need to switch from their existing choices.

Competitor A’s Solution

CurrentSolution

Your Solution

Step 3 : BUILD BARRIERS

Creation of barriersto reduce chances

of rejection of yournew solution

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Time

Experience Experience

Perceived Need for Change

Competitor B’s Solution

CurrentSolution

Step 1 : OUT

Rejection of current choice or solution

Step 2 : IN

Adoption of new solution

Step 3 : BUILD BARRIERS

Creation of barriersto reduce chances

of rejection of yournew solution

Choice/Rejection Process(The Three Critical Issues)


Defining Market Chain

q A Market Chain is simply the chain of organizations a company uses that play key roles converting raw materials into solutions that meet end-user requirements

q Market Chain as live, profit-driven, value-creating networks of companies that compete with other value-creating systems in the market

Raw Materials Equipment End User/

Consumers

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Raw Materials Components Systems/

Products

Services

Manufacturer/OEM Distributor

Distributor

VAR/Retailer

End User/Consumers

End User/Consumers

OEM – Original Equipment Manufacturer

VAR – Value-Added Reseller


Choices Among Market Chain

q Market Chain Challenge facing a Manufacturer Trying to Reach Multiple Target Segments

2

1

Market Channels Target Segments

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Manufacturer

1

3

7

4

65


Choices Among Market Chain

q Two Potential Market Channels for a Manufacturer of Semiconductor Components to Access the Antilock Braking Systems Market

CapitalEquipment

Raw Materials

Motorola

Modules Tevis

GM Dealers CarBuyers

Ford Dealers CarBuyers

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CapitalEquipment

Supplies

Motorola

Modules Bosch

Ford Dealers CarBuyers

Chrysler Dealers CarBuyers


Consider Market Chain Dynamics

q Take account of a number of considerations.

q First, it should use channels that represent an attractive opportunity for it. Other things being equal, it should focus on the channel(s) most likely to be successful in gaining market share, growth, and profitability. These channels will be ones where there is an excellent fit between what the channels can deliver and the needs of the end user.

q Second, if a company is aiming to capture leadership in the opportunity, it should focus on those channels where it can clearly emerge as the market leader relative to competing companies using the same chain. It will need to present powerful reasons for the market chain members to work closely with it and to aggressively market its products.

q In PC Industry, Dell eliminate all downstream market chain members and deal directly with customers largely by personal selling, by telephone, or over internet.

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q Take account of a number of considerations.

q First, it should use channels that represent an attractive opportunity for it. Other things being equal, it should focus on the channel(s) most likely to be successful in gaining market share, growth, and profitability. These channels will be ones where there is an excellent fit between what the channels can deliver and the needs of the end user.

q Second, if a company is aiming to capture leadership in the opportunity, it should focus on those channels where it can clearly emerge as the market leader relative to competing companies using the same chain. It will need to present powerful reasons for the market chain members to work closely with it and to aggressively market its products.

q In PC Industry, Dell eliminate all downstream market chain members and deal directly with customers largely by personal selling, by telephone, or over internet.


Downscaling and Upscaling

RawMaterials Components Systems/

ProductsManufacturer

(OEM) Distributor VAR/Retailer

End Users/Consumers

Vertical Downscaling or Upscaling

Changing an organization’s Value-adding role

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RawMaterials Components Systems/

ProductsManufacturer

(OEM) Distributor VAR/Retailer

End Users/Consumers

Horizontal Upscaling

Changing the application and/or technology to create more value-added

for market chain members


Vertical Downscaling and Upscaling

q Vertical Upscaling

q Vertical Downscaling

Motorola

Modules

Modules

Tevis

Bosch

Car Makers Dealers CarBuyers

Motorola acquire a module maker

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q Vertical Upscaling

q Vertical Downscaling

Motorola

Modules

Modules

Tevis

Bosch

Car Makers Dealers CarBuyers

Motorola


Market Chains as a Series of Choice/Rejection Process

q The major challenges in any technology-intensive industry is§ Getting new products to the market in a timely manner§ Managers don’t usually pay enough attention to adoption along each of the market channels that make

up the market chain§ Existing business that carry a certain set of products and services and operate in certain ways

q Once they have adopted, you or other players in the market chain will need to work with them and develop programs that solidify the new behavior.

q To do all of this effectively requires that you or other committed partners in the market chain understand the decision-making unit, the choice criteria, and the choice/rejection process at all levels in the market chain.

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q The major challenges in any technology-intensive industry is§ Getting new products to the market in a timely manner§ Managers don’t usually pay enough attention to adoption along each of the market channels that make

up the market chain§ Existing business that carry a certain set of products and services and operate in certain ways

q Once they have adopted, you or other players in the market chain will need to work with them and develop programs that solidify the new behavior.

q To do all of this effectively requires that you or other committed partners in the market chain understand the decision-making unit, the choice criteria, and the choice/rejection process at all levels in the market chain.


Thank you.

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Thank you.

high-tech marketing

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