Marketing High Technology

Chapter Seven – Specific Challenges of Marketing High Technology

The meaning of ‘High Tech’

Although marketing high technology operates on the same basic principles, given its impact on contemporary lives, it is worthwhile to explore high technology as a separate area. We will use the term high technology to mean ‘sophisticated knowledge associated with some general field of endeavor.’ Thus, high technology can apply to most industries, but usually in specific areas. For example, one might think of the bituminous coal industry as being ‘very low-tech.’ However, that industry applies very sophisticated know-how in many areas, including exploration, extraction and analysis. On the other hand, many would say that the computer industry is ‘very hi-tech’ while, in reality, computers, as an industry can today be considered a commodity, although in some fields, such as integrated circuit creation and manufacture, it is technology-intensive. All of this to say, usually the more one knows about any industry, the easier it is to identify the areas of that industry that are technology-intensive, or ‘high-tech.’

a. Market-Driven Decision Making
b. Maintaining Balance Between R&D and Marketing
c. Managing in a Fast-Paced Environment

Market-Driven Decision Making

Many areas of high technology have a past based on the premise of “build it and they will come.” Meaning that the orientation was initially to engineering, and ultimately, a product was created for which there was demand based on its technical features. The only reason technical features ever are needed is that they are able to provide additional benefits sought by a group of customers.

In order to understand the forces are work, let us review what we have said about new products. First, a new product must provide additional user benefits, or the same benefits in a more effective way, based on the customer’s perception. Therefore, while many new product ideas in the realm of technology-intensive products and services have seen success, their success was based on the additional benefits people received, not on the ‘new way of doing things,’ itself. For example, if someone offered you a solar-powered razor, you might say ‘no thank you,’ based on your perception that there are no additional benefits to be realized by using the product, whereas, if someone offered you a solar-powered palm-top device, you might consider based on the added benefit that you would never have to change batteries in the device. Thus, always look for additional benefits, not features, and you are more likely to really understand customers’ needs. Sometimes the benefits of a feature become so well-recognized that we talk in terms of the feature, itself. For example, most people know that a turbocharger on a car indicates added acceleration, therefore, we recognize the benefits of the feature instantly with out reference to the benefits the feature will provide. However, this is the exception rather than the rule, and when in doubt, it is preferable to think in terms of benefits.

A firm that thinks in terms of features and organizes accordingly, can be called “technology driven” because the focus is on the various technologies that comprise the firm’s Core Competencies (or basic abilities in production and operations). These core competencies then often drive the firm’s efforts, not the needs of customers in the marketplace.

Firms that are ‘market-driven,’ strive to understand various technologies. However, they gain this knowledge based on the prospective ability of these technologies to provide benefits to their chosen customers.

Maintaining Balance Between R&D and Marketing

Competent and focused Research and Development is the life’s blood of any high technology organization. The Research and Development (R&D) function is comprised of individuals who are highly educated and skilled in areas relevant to the technologies applied to develop the organization’s core competencies. For example, a firm manufacturing sophisticated test and measurement products may have personnel trained in electrical engineering and computer science in their R&D department, whereas, a pharmaceutical firm might have organic chemists and microbiologists in its R&D department. Thus, a characteristic of the R&D function is that employees in that function often are very bright people who strive to add to what is known in their area of expertise. The difficulty often encountered is that a search for knowledge solely for the sake of knowledge (basic research) is rarely sufficient in a for-profit business venture. Therefore, a link between the focus of activities of R&D departments and certain benefits sought by customers must ultimately be recognized. These benefits may be specific as in ‘a faster way to do analysis’ or general as in ‘easier to use.’ However, this link must exist in order to guide the allocation of resources among competing organizational needs.

Marketing can provide the link between the R&D department’s knowledge of technology and how that knowledge can be translated into delivering additional benefits to customers. The “next bench syndrome” is a well-known approach to creating test and measurement products that argues a test engineer in R&D also has the exact needs of his/her customers, so that when the engineer has a need in the area of testing and measurement, s/he is a perfect model for what a customer will need. While this concept is certainly applicable in some cases, it can lead to investment in products and services that are not commercially viable. The next-bench syndrome will only be a dependable guide to product development in high technology when the target customer is literally a clone of the employee in the R&D department. Another shortcoming of the next-bench syndrome is that engineers and scientists often think in terms of features, not benefits, thus including certain features may not provide the benefits the customer is seeking.

Marketing personnel are trained to uncover what benefits (as translated into features) that customers are seeking. There is a concept called “quality function deployment” (see the following website for a relevant article: http://akao.larc.nasa.gov/dfc/qfd.html that helps in this process of translating benefits into features.)

Managing in the Fast-Paced Environment of High Technology

While marketing can add value high technology environments, it is imperative that there is a clear understanding of the role of marketing. Also, the interface between the marketing and R&D departments needs to be clearly defined. This rarely happens because most firms in high technology industries are not market-driven, they tend to be either sales-driven or technology-driven. Some indicators that a high-tech firm is sales-driven are:

 The top executive for marketing has the title: Vice-President of Sales and Marketing
 The marketing department has no marketing research personnel assigned to it
 Sales personnel have little or no input into what products are developed
 Sales personnel are paid primarily on a commission
structure with little incentive to develop long-term customer relationships

Some indicators that a high-tech firm is technology-driven are:

 Marketing has little or no input regarding what products are developed
 There are no formal programs for marketing research other than visits to present customers by R&D personnel
 No sophisticated technologies are used to uncover present and potential customers needs
 Marketing’s primary role is seen as either ‘sell what we make’ or ‘find prospects to buy what we make’

While there are many exceptions, we believe that most organizations operating in high technology areas are characterized by either a sales orientation or a technology orientation. For a student of principles of marketing, this simply means that you must have a sound understanding of what marketing is in the ideal world, because some day, you may be responsible for introducing marketing principles into an organization yourself.

Product positioning for High Technology

In no area is it more important to position products than in technology-intensive environments. The temptation is often to position the product in terms of features. However, it is usually more feasible to position along the lines of benefits sought because that language translates instantly to how the customer is thinking. There are exceptions as discussed above, but, most frequently customers are seeking how their job can be accomplished more efficiently and more effectively. This is particularly important if the user is not an influencer as described in Chapter Three. Often the reason it is difficult to position a high technology product offering is that the product really doesn’t provide any additional benefits to its target customers. While the saying “build a better mousetrap and the world will beat a path to your door” holds some truth, it is the proper answer for success).

Chapter Seven Glossary

High technology - sophisticated knowledge associated with some general field of endeavor

Market-Driven Decision Making – an approach to choice that is based on identified desires for benefits among specified customer groups

Quality Function Deployment – a concept that attempts to translate customer benefits sought into product features

Next Bench Syndrome – the assumption that a designer or engineer will have identical needs of his/her customers thus, the engineer is in the best position to know what products to design and build