It ain't easy marketing high-tech products. Let no one tell you otherwise.
Think about it. High-tech products intimidate many customers where other products wouldn't. And technology is a market relatively open to competition; one new technical innovation, and you're next biggest threat is in the game. As if those weren't challenges enough, the speed of technological change can make your current marketing strategy obsolete overnight.
HOW DO YOU SURVIVE?
Start by weatherproofing your marketing plan against the hail of challenges our wired world presents. Below, based on her new book on high-tech marketing, Prof. Jakki Mohr gives you five points of improvement that every high-tech marketer should know.
POINT 1: DO YOUR RESEARCH IN THE TRENCHES
Put aside the focus groups and surveys you use to research the market for more traditional products. They are often less well-suited to research and data collection for innovations simply because customers may find it difficult to articulate a need for products that they cannot see or understand.
Effectively researching the high-tech market means you have to get down and dirty with lead users. Lead users are those customers who adopt technology ahead of the mainstream (for more information on this, see our tutorial on lead users). They can give you insights into what future needs may be. Their minds are also more open to considering innovations that are just at the planning stages. In this way, you can learn how your product or company can solve real-life problems that your competition may not yet have seen.
POINT 2: UNDERSTAND THE NETWORK EFFECT
The network effect is one of the darling concepts of our New Economy, and has proven itself in the high-tech world. The network effect occurs when the power of a product's benefit depends on the total number of other users.
For instance, the first fax machine ever created offered no benefits whatsoever because it depends on a second fax machine to receive its messages. With every new fax machine used in the market, the power of the innovation's benefits increase. This increase in benefit motivates further customers to buy the machine, thus stimulating demand further. For example, Real Networks used this tactic to grow their market quickly with their RealPlayer.
But getting the network effect rolling can be counter-intuitive: selling new-to-the-market products at very low prices, licensing technology to competitors, and so forth. Understanding what it takes to design a product that can benefit from a network effect, and leveraging the dynamics of such an environment, can greatly strengthen your marketing plan for the high-tech markets.
POINT 3: EVERYONE CAN GET ALONG
The very disparate world views and skills of marketing and R&D personnel makes collaboration between these groups difficult. Nevertheless, it is crucial that these two groups work productively together. Enhancing opportunities for communication and interaction, rather than creating more conflict, can help to build bridges between these divides. Make sure you have marketing and engineering working on the same page before you attempt to capture the market.
POINT 4: USE THE 80/20 RULE
Pricing is no easy task for the high-tech firm. Today's economy dictates that firms must price in such a way that they can both recoup their R&D expenses while also keeping pace with the downward pressure on prices. How can firms price their products to achieve profitability in such a paradoxical environment? It's a tough balance to strike.
It is commonly accepted that 20 percent of a firm's customers contribute 80 of its revenues. These are the consumers that the high-tech firm should price for - not the less important 80 percent.
POINT 5: CHOOSE YOUR SEGMENT WISELY
Selecting a target market for launching your new technology is fraught with peril. Select the wrong target, and the venture may surrender the more profitable segment to the competition. Spread the risk against many market segments, and a firm's resources are spread so thinly that it is unsuccessful in any one segment. Overlooking the need to proactively select a target, and let customers self-select into purchasing or not, is both very inefficient in terms of a firm's resource allocation and also very ineffective in terms of the likely response that would be generated from unfocused marketing efforts.
Selection of an initial target market must arise from rigorous consideration of the cost/benefit ratio of customer's adoption decisions, and how compelling the reason is for a customer to buy. Moreover, an initial target market must be selected with conscious foresight about its ability to lead to access to related market segments.
CONCLUSION
High-tech products and services are introduced in turbulent, chaotic environments, where the odds of success are often difficult to ascertain at best, and stacked against success at worst. Although many more marketing issues require high-tech adaptations, the keys are: (1) to systematically examine what are the critical distinctions between high-tech environments and more traditional environments, and (b) to logically modify decision-making to account for those distinctions.
For all sorts of information on high-tech marketing, see Marketing of High-Technology Products and Innovations (2001) by Jakki Mohr. This book offers insights about how marketing tools and techniques must be adapted and modified for high-technology products and services; it highlights possible pitfalls, mitigating factors, and the "how-to's" of successful high-tech marketing.
