high-tech products are new, they are based on new technologies, and they often precede a market demand. To market a product of high technology, the company must understand customer needs, educate them about the product and its underlying technology, and convince them that the new product represents the best solution to their problems.
The authors propose increasing the Ansoff Growth Strategy Matrix to identify six distinct market conditions, or cells, which represent an increasing risk for traders. Cells range from the most secure environment in which the best known products are sold to established markets --- for the more challenging environment in which high-tech products are offered to markets as yet undefined.
The document states that the failure rate significantly from the results of high technology products, lack of companies to realize that they are no longer competing in an environment of high-tech market. It is proposed that companies develop specialized marketing skills in each of the six environments.
New technologies, new products and new markets
The market definition of a high-tech product would be ... a product that is an innovative application of technology to solve market problems. The high-tech products represent a technological solution to the problem of a client who is not only new, but previously not even considered. The customer is not familiar with the product or its technology base, while the marketer of high technology may also be familiar with customer problems.
This dilemma is an extension of Ansoff driven concept 30 years ago. There are four distinct strategies for growth based on knowledge of a company and its products and markets.
Ansoff Growth Strategy Matrix
The authors propose increasing the Ansoff Growth Strategy Matrix to identify six distinct market conditions, or cells, which represent an increasing risk for traders. Cells range from the most secure environment in which the best known products are sold to established markets --- for the more challenging environment in which high-tech products are offered to markets as yet undefined.
The document states that the failure rate significantly from the results of high technology products, lack of companies to realize that they are no longer competing in an environment of high-tech market. It is proposed that companies develop specialized marketing skills in each of the six environments.
New technologies, new products and new markets
The market definition of a high-tech product would be ... a product that is an innovative application of technology to solve market problems. The high-tech products represent a technological solution to the problem of a client who is not only new, but previously not even considered. The customer is not familiar with the product or its technology base, while the marketer of high technology may also be familiar with customer problems.
This dilemma is an extension of Ansoff driven concept 30 years ago. There are four distinct strategies for growth based on knowledge of a company and its products and markets.
Ansoff Growth Strategy Matrix
This concept also distinguishes between the risk level of different growth strategies. Unless a company knows about a business, it is more likely to fail. Thus, the penetration strategy (selling the company is familiar with the markets / customers the company is familiar with) has less risk, while diversification strategy (selling products unknown to unknown markets) is more risky. Consultants often refer to cell diversification in the matrix as "cell suicide".
Expansion Growth Strategy Matrix
With some modifications, this table shows the growth strategy of the strategic dilemma facing high technology companies. The modification is necessary because the model's growth strategy was based on a premise of customers are familiar with the products (or product category) that are being offered (even if they are not familiar with the company that offered the product.) Even without technological innovation, customers in an expanding market will enter the market without the knowledge of the product. This complicates the task of the marketer who must not only learn about the new client, but also educate the consumer about the product. Unless the customer knows the product, the more difficult the task facing the dealer.
Taken to the extreme, this lack of knowledge characterized the problem facing the firm to market a product of high technology, where, by definition, the client is familiar with not only the product but also its underlying technology. To explain this additional level of strategic uncertainty and difficulty arising, the growth strategy matrix should be expanded.
Expanded Growth Strategy Matrix
This expanded matrix adds the dimension of the new technology, which means a new technology to market. This factor new technology adds an additional level of risk to the business of marketing, because it indicates that the marketing company will have to educate the customer about the technology before the client can be shown the benefits of the new product. In the case of former markets (the company has experience with) the company is already familiar with the problems faced by customers.
High Tech Growth and Better Mousetrap Fallacy
The New Market New Cell Technology, identified as High Tech in this matrix, this definition follows directly from the work of "high technology". It is no coincidence that the cell is less than the high-tech diversification (or suicide) of cells. It is even riskier. The marketer of a product of high technology, as illustrated by this representation, are not familiar with the market and therefore know very little about the problems faced by customers. Although the high-tech marketer must be able to demonstrate how the problems that the client can be solved by a product and a technology that is new to the customer, difficult to understand, and represent a high level of uncertainty of the buyer.
To be successful, even before the product is sold, the marketer of high technology must first learn about the market and then teach the market about the technology. The inability of managers to understand the challenge of marketing your company faces is the cause of frequent failures among high-tech products. Many companies run by technically trained personnel with little experience in strategic management or marketing, a victim of the fallacy better mousetrap. They fail because instead of aggressively marketing their product (learning about the needs of its customers and educate the consumer about the product and technology), these managers expect their customers to intuitively see the superiority of their product.
High Tech Success Means intensive market research and customer education
A company in competition with the strategy of successful high technology by combining their expertise, their ability to quickly obtain information about issues of their customers and their needs, and their ability to give the customer enough technical knowledge to evaluate and choose your product. Unfortunately, this is a very transient and skills that resulted in early successes tend to become much less important than the market matures.
In today's technologically intensive environment, the markets are changing rapidly. The life cycles of products and innovations spread quickly shorten. While the High Tech trader is learning about the market ... key customers (opinion leaders) are more familiar with the technologies and products. Even more important, product and technological singularity which helped offset the strategic incompetence of the dealer at the beginning of its life cycle is lost as new, and sometimes exceeding, the products enter the market. To succeed in this market, the company must realize that it is competing in a high-tech market, but in a "penetration" strategic environment and must change its strategy accordingly.
A company embarking on a strategy of high technology must simultaneously be learning about your market first and learning the market on an emerging technology. The learning component of this strategy should result in the high-tech marketer to invest heavily in market research to understand the structure and the market needs that are coming.
The academic component should result in a communication strategy that adopts a missionary role. Advertising and promotional materials must explain not only the product and its benefits, but the adequacy of the underlying technology. The sales staff must be technologically sophisticated, enabling them to help clients implement and integrate this high-tech product in its current set of acceptable solutions to their problems.
As the product technology provides high performance benefits that allow the substitution of other products and technologies, and because the direct competition is likely to be low, the premium pricing strategies are appropriate. Although this strategy is being implemented in high-tech marketer should prepare for the inevitable transition to a penetration strategy.
The shift to a penetration strategy requires changes in marketing activities. Market research must pass basic learning for competitive monitoring. Publicity and communication will focus more on product differentiation and the role of personal selling is going to change. The sales person will focus more on providing customer service (rather than education) and providing market information. Prices will become a competitive weapon, distributors and other channel intermediaries are likely to be used.
Lost Arts Software as the market for Lotus
Software Arts invented the concept of spreadsheet analysis with your PC program VisiCalc. VisiCalc may well have been a better mousetrap than the market sought. Unfortunately, the company continued to compete as if it were a better mousetrap (and single). When Lotus launched its integrated software for the 123 market, VisiCalc was dropped. Software Arts has never changed the basics of your marketing strategy and continued to compete as if the product offered was unique and the market leader. Sales fell until 1985, when it was acquired by Lotus.
Lotus 123 was a brilliant success in technology. Indeed, the success of the product quickly drove it out of the cell high-tech strategic and a penetration strategy. Lotus was agile and flexible enough to adapt to the penetration strategy. aggressive retail merchandising established high visibility in the market. aggressive pricing and site license programs helped the company maintain a competitive position. All these steps indicate the strategic implementation of the Lotus that he was no longer competing in a high tech environment.
Too often, the change in the strategic environment of high-tech marketing goes unnoticed by the company. Worse still, the change can be noticed but ignored because acknowledging the change would require a strategic change. In some high-tech companies, the need to appear distinct from conventional companies is so great that the administration refuses to recognize environmental change fearing that to accept the change would require the company to become more conventional in its business practices.
The marketing teams specialized for each of the six cells
The object of this paper is not to suggest that high-tech companies can not succeed. These companies clearly have significant potential because of its ability to offer radically new solutions to customer problems. However, unless these companies are remarkable luck, they are doomed to fail without marketing strategy and guiding them in the market.
Even companies that can survive the first market pressures can not be sure of long-term success, because this market will change and if the company is to remain vital and viable, your strategy must change. Part of the change will occur as firms move from one approach to feature high-tech "startup" companies for the portfolio strategy of multiproduct firms in stable and mature. It is unlikely that the management skills necessary for successful high-tech strategy to easily transfer readily to other strategies. This can be seen at the start of the founders of Apple Computer and Lotus Development Corporation two to be replaced by more qualified managers in traditional marketing strategies.
The company best positioned for long term success need not abandon its innovative high-tech. Instead, it should have different teams ready to take a strategic product as it evolves in its area of strategic performance. The winning company will have not only a marketing group (which is more than many high-tech companies have today) that will have a separate marketing group for each of the six cells in the Extended Growth Strategy Matrix.
