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HIGH TECH STRATEGIES
Introduction to High Technology Industries
1
Common Characteristics of
High Tech Environments
• Market Uncertainty
• Technological Uncertainty
• Competitive Volatility
2
Market Uncertainty
Market Uncertainty is the ambiguity about
the type and extent of customer needs that
can be satisfied by a particular technology
• Consumer fear, uncertainty and doubt
• Customer needs change rapidly and unpredictably
• Customer anxiety over the lack of standards and
dominant design
• Uncertainty over the pace of adoption
• Uncertainty over/inability to forecast market size
3
Technology Uncertainty
Technology Uncertainty is not knowing whether
the technology or the company can deliver on its
promise
• Uncertainty over whether the new innovation will
function as promised
• Uncertainty over timetable for new product
development
• Ambiguity over whether the supplier will be able
to fix customer problems with the technology
• Concerns over unanticipated/unintended
consequences
• Concerns over obsolescence
4
Competitive Volatility
• Uncertainty over who will be future
competitors
• Uncertainty over “the rules of the game”
(i.e., competitive strategies and tactics)
• Uncertainty over “product form”
competition
– competition between product classes vs. between
different brands of the same product
• Implication: Creative destruction
5
High Tech Strategy Field
Market
Uncertainty
Technological
Uncertainty
High -Technology
Strategies
Competitive
Volatility
6
Network Externalities
• When the value of the product increases as more
people adopt it
– Also called demand-side increasing returns or
bandwagon effects
– Ex: portals on the Internet
– Metcalf’s Law: Value of the network = n2
(where n=# of users)
• Reliance on strategies to quickly grow the size of
the “installed base” (or customers using the
particular product/technology)
– May give away products for low price or even free
– Work to develop industry standards
7
Development of Industry Standards
• Standards create a common, underlying
architecture for products offered by
different firms in the market
• Standards are important because:
– Customers gain compatibility
• Lowers their perceived risk (FUD factor—fear,
uncertainty, and doubt)
• Allows for seamless interface of product
components.
– Due to network externalities, standards can
increase the value a customer receives
8
Why are industry standards
important? (Cont.)
• Availability of complementary products
determined by the size of the “installed base”
of a given product.
– Therefore, standards help ensure greater availability of
complementary products by helping to ensure a larger
size of the installed base.
– Customers get more value from the base product as
more complementary products are available.
9
Self-reinforcing Nature of
Standards
Reduce
customer
fear,
uncertainty,
& doubt
Larger
installed
base
STANDARDS
Increased
demand for
product
More
complementary
products
developed
Increased
customer
value
10
INTRODUCTION
• Lecture based on the concepts developed by the best all-time hightech strategies guru, Geoffrey Moore
•Books from Geoffrey Moore:
- Crossing the Chasm: Very good, sometimes difficult to read
- Inside the Tornado: Moore’s best book
- The Gorilla Game: high tech investor’s perspective
- Living in the Fault Line: Some parts are excellent, other parts
have changed much after the internet
bubble.
11
BASIC CONCEPTS
12
CONTINUOUS INNOVATIONS:
- Build upon existing standards and infrastructure
- To enjoy the product benefits, users only need to buy the
product and start using it
DISCONTINUOUS INNOVATIONS:
- Require new technologies and infrastructure that is
incompatible with the existing one
- Users will have to go through a a learning process
- Vendors, partners, suppliers of complementary products will
have to adapt to the new technology in order for the new
product to be marketed
-Ex: when you buy a VCR you need movies to rent
-Ex: when you buy a fax, you expects others to have it too13
Discontinuous Innovations
Continuous
Discontinuous
Electric car
Diesel cars
Better mileage cars
Multimedia Set-Tops
Programmable VCRs Remote-control tuning
Video Conferencing
Conference Calling
Voice Mail
High Tech Marketing Specializes in Discontinuous Innovations
14
UNSUCCESSFUL DISCONTINUOUS INNOVATION:
THE ELECTRIC CAR
• General Motors and Honda introduced electric-powered car
in California in mid 90s
• Positive features:
– Silent motor
– Non-polluting
– California legislature at the time required car manufacturers to sell
a percentage of non-polluting automobiles
• Challenges:
– Unpredictable battery charging needs (every 70 to 100 miles)
– Risk of getting without power on the road: against “freedom” feeling
represented by a car in US
– Lack of support by service infrastructure:
• Service stations, insurance, mechanics and repair
• Result: A failure
– Product was not ready to satisfy core aspects consumer value
(freedom, safety…)
– There is no successful introduction without the support of the rest of
the product infrastructure (service providers, etc.)
15
Industries where discontinuous
innnovations are a driving force:
• High-tech industries:
– Telecommunications (mobile phones, infrastructure,
telecommunications services)
– Computers and ”hardware”
– Chemicals
– Software
– Biotechnology
– Electronics
– Fiber optics
– Microelectronics
– Multimedia systems
– Pharmaceutical industry
– Robotics
– Semiconductors
– Defense
– Other emerging high-tech
16
Industries where discontinuous
innovations are a driving force:
• Main Industries outside high-tech but highly
influenced by high-tech:
–
–
–
–
–
–
–
–
Financial services
Insurance
Health care
Aerospace
Utilities
Retailing
Publishing
Broadcasting
17
Value Chain
Technology
Products &
Consumables
Consulting
Sales &
Support
Applications
Customer
Service
Product Providers
Service Providers
Technical
Buyers
End Users
$$
Economic
Buyers
Customers
All these linkages are required
for a new technology wave to succeed
19
Technology Adoption Life Cycle
Pragmatists:
Stick with the herd!
Conservatives:
Hold on!
Visionaries:
Get ahead of the herd!
Skeptics:
No way!
Techies:
Try it!
Innovators
Early
Early Majority
Adopters
Late Majority
Laggards
Pragmatists create the dynamics of high-tech market development.
20
Innovators - Technology Enthusiasts
• Primary Motivation:
– Natural attitude to explore-learn about new technologies
• Key Characteristics:
– Where to find them
• Advanced technological departments of big firms: usually
empowered to buy new products for exploration
• “Techies” of smaller firms: Part of the MIS or product design team
–
–
–
–
Believe in the value of technology as such
Strong ability for understanding technical information
Like to be the first ones to test new products
Do not mind if the product has still missing elements or features (low
speed, poor documentation, questionable performance) as long as it is
the newest technology
21
Innovators - Technology Enthusiasts
•
Key Characteristics
- Do whatever they can to help to develop the product
- Great source of technical feedback
- Crucial for identifying if the technology is truly innovative or not
- Will discover bugs and problems with the new technology
- Will try to develop the technology beyond what is possible
- They have strong referencing power for later stages: their
opinion is relevant
•
Challenges/Difficulties:
- Want unrestricted access to top technical people whenever
there is a technical problem (risky from the company side)
- Will test the new technology for free (they usually have more
passion than money)
- They do not represent strong buying power
- Not a market by themselves, but a test “if the product works”:
crucial to find technology enthusiasts with access to big bosses
22
Early Adopters - The Visionaries
• Primary Motivation:
– To gain dramatic competitive advantage respect to competitors,
through a revolutionary use of the technology in their business
processes
• That is the visionary’s “dream” that must be understood
• They are not looking for improvements, but for fundamental
breakthroughs
• Key Characteristics:
– Great imagination for applying technology to specific business
processes
– Top executives, attracted by high-risk, high-reward business plans
– Charisma for getting the rest of their organization to buy the project
23
Early Adopters - The Visionaries
• Key Characteristics:
– Will commit to create the missing elements of the new technology,
for making it ready to be used
– They are not price-sensitive: emphasize more the potential future
gains (they bring real big money to develop the product): best
source of high-tech development capital
– Motivated by the potential return on investment of their dream
– Effective in informing the business community about technology
advances: draw media attention to themselves and indirectly to our
product
– Easy to sell, hard to please (dreams are difficult to fulfill as initially
imagined)
• Challenges/Difficulties:
– Want to market the new technology fast (not always easy in hightech)
– Demand high degree of customization of the technology to their
very particular needs, and demand a lot of technical
support/resources:
• Too much money can be spent in customization for just one
24
customer
Early Majority - Pragmatists
• Primary Motivation:
– They want to gain productivity improvements through evolutionary
changes in the new technology, only if the new technology has
previous successes
• Key Characteristics:
– Intelligent department managers, responsible for critical business
applications
– Risk averse: risks will be undertaken only when all safety nets in
place
– They are the mass
– They aim technology to serve their purposes for the long term
– Require competition for feeling safe and having alternatives
25
Early Majority - Pragmatists
• Key Characteristics:
– Do not love technology: they accept technology only in proven
applications, where improved productivity is guaranteed, and if the
mass goes with them
– Price sensitive
– Like to go with the market leader because:
• Everyone will adapt its products to the leader (leader sets the
standard)
• Leader attracts many third parties for complementary products
and services: the market will be more responsible to the leader
product
• Challenges:
– Insist on good references from other pragmatists, not from
visionaries
– Want to see the solution working well at the site that provided the
references/recommendations (product must be ready)
26
Late Majority - Conservatives
• Primary Motivation:
– They acquire technology just to stay at the same level with the
competition (skeptical about value gains from technology).
• Key Characteristics:
– Fear technology a little bit
– Do not have high aspirations about high-tech investments: will not
support high margins
– Not risk takers
– Very much price-sensitive: buying late provides them with the
opportunity to negotiate better prices and conditions
– Highly reliant on a single, trusted advisor
• Challenges:
– Package required:
• Pre-assembled and bundled solution
• Single-use and simple
• User friendly solutions
– Would benefit from value-added services but do not want to pay for
27
them
Laggards - Skeptics
• Primary Motivation:
– To maintain things as they have traditionally been: prefer lowcost and non-technical solutions
• Key Characteristics:
– Good at criticizing technology marketing ”booms”
– Do not believe productivity-improvement gain from technology
– Seek to block purchases of new technology
• Challenges:
– Not a customer, but should be considered
– Can form a strong opposition to early technology adoption
28
Four Marketing Frameworks
1 on 1
Marketing
Mass
Marketing
Deal
Driven
Niche
Marketing
29
Customer Satisfaction
Four Product Management Priorities
Competitive
Price/Performance
Solution
Enablers
End User
Delighters
Core
Product
Early Market
Bowling Alley
Tornado
Main Street
Time
30
Product/Service Mix
Services
Products
Products + Services = The Whole Product
32
Three Service Models
Professional
Services
Transaction
Services
Distribution
Services
33
Sample Service Offerings
Professional
Services
Distribution
Services
Transaction
Services
• Consultative selling
• Competitive selling
• Order processing
• Business process
reengineering
• System configuration
• Maintenance
• Facilities management
• Systems integration
• Implementation
support
• Project management
• Train-the-trainers
• Custom training
• Customer service
• System conversion
• Technical support
• Contract management
• Warranty
• Outsourcing
• Upgrade management
• Broadcast data feeds
• Proprietary database
access privileges
34
Service Management Priorities
Low margin
Standard
High margin
Custom
Medium margin
Customized
Shallow Water
Deep Water
35
Part Two:
Go-to-Market Strategy Models
36
Assessing Innovation Discontinuity
A
B
C
D
4
Shadow
Area
3
Ideal Positioning of
the Innovation
according to its stage
in the TALC
2
Pain
1
Gain
39
Assessing Innovation Discontinuity
- Analysis
- Shadow zone:
- Future is uncertain
- There is gain at an equivalent level of pain
- Not very compelling: markets will not move these
innovations forward
- Areas in the periphery are easier to dealt with than
areas in the shadow zone (where benefit/pain
tradeoffs are less visible
- Action: Decide a specific TALC stage into which to
move, and assess the needed strategy (explained
further)
41
Strategy Template Checklist
Source of money
1. Target Customer
2. Compelling Reason to Buy
To fulfill the compelling
reason to buy
3. Whole Product
4. Partners and Allies
Function of whole product
integration complexity
Function of all other
factors
7. Competition
8. Positioning
Next move
Needed for whole product
5. Distribution
6. Pricing
For the customer's money
Source of demand
Relative to competition
9. Next Target
This template holds for all stages in the Life Cycle.
42
Target Customer
Economic Buyers
Financial
Executive
LOB
Executive
IT
Director
Department
Manager
Technology
Evaluator
Lead
End Users
Technical Buyers
End Users
• Business-to-business
model supports up to six
roles
• Titles change, but roles
are the same
• Consumer markets fuse
these roles into three or
fewer
• Purchase influence
migrates over the the life
cycle
43
Target Customer
• Success with a set of prospects will depend on:
• Are customers identifiable?
• Can customers be accessed through sales and marketing efforts?
• Do customers have funds for purchasing in a reasonable time
under appropriate circumstances?
• Are customers able to make the purchase (power and financial
ability)?
44
Compelling Reasons to Buy
- Main motive: economic consequences of doing nothing vs. making an
investment to address a current problem/exploit an opportunity
- Motivation is more apparent in bowling alley and tornado markets
- Motivation is more latent in Early Markets and Main Street (more
emotional as well)
- Purchase must be justified to oneself, colleagues and superiors
Compelling Reasons to Buy and the TALC
Go ahead of the herd for competitive advantage.
Go ahead of the herd to fix a broken business process.
Go with the herd to get on the new infrastructure.
Go after the herd to get better values.
45
Whole Product Elements
Consulting Hardware
Complementary
Services
Post-sales
service
& support
Pre-sales
services
Software
Complementary
Products
The
Product
Peripherals
Legacy
interfaces Connectivity
The whole product is the minimum set of products and services
needed to fulfill the target customer's compelling reason to buy.
46
Whole Product
Generic
Product
Augmented
Product
Expected
Product
Potential Product
47
Whole Product
• Generic Product
-What is shipped when the purchase is made
• Expected Product
-What the customer things to be buying when the generic order is
placed
- Example: If the generic order is a computer, the expected
product is the CPU, keyboard, mouse, monitor and cabling
• Augmented Product
-The idealized form of the product in which the buyer will achieve
the buying objective
- Example: In a PC, the software, printer, Internet connections
and other services
• Potential Product
-An extension of the product benefits through a set of products and
services
- Example: TV view hardware and software, infrared mouse…
48
Evolution of the Whole Product
Generic
Product
Potential
Product
Mostly
custom
work
Expected
Product
Augmented
Product
Assimilated
Product
Plug & play
Fully
Mass
some
integrated customized
customization
Different whole product priorities at different stages of the life cycle.
49
Types of Partnerships
Complementors
Suppliers
Focal Firm
Distribution
Customers
Competitors
51
Types of Partnerships (cont.)
• Vertical partnerships: with members at
other levels of the supply chain
– Suppliers
– Distribution channel members
– Customers
• Horizontal partnerships: with members
at the same level of the supply chain
– “Complementors:” makers of jointly-used
products
– Competitors—”competition”
52
Reasons to Partner
•
•
•
•
•
•
•
•
•
Accelerate Product Development
Access resources and skills
Gain cost efficiencies
Speed time-to-market
Access new markets
Define industry standards
Differentiate the Product
Develop complementary products
Gain market clout
53
Product Life Cycle, Innovation,
and the Role of Alliances
High
Product
Innovation
Rate of
Major
Innovation
Process
Innovation
Low
Stage of Product Life Cycle
Emergence
Growth
Maturity
Decline
Alliance Types
Standards
Licensing
Technology
Licensing
R&D
Marketing
Manufacturing
Marketing
Process R&D
Attacker
Incumbent
54
Risks in Partnering
•
Failure of the relationship
– Adversarial rather than cooperative thinking
– Mistrust, insecurity, impatience, hidden agendas
– Partners don’t invest energy in the alliance because it
requires a level of intimacy they are not used to
•
•
Failure to understand the other Party’s Goal
Machiavellian attitudes
– Example: Strategic Alliance for Technology where the only
real goal is to access each other customers
– Example: Lets join forces so me (A) and you (B) can both
sell our products, degenerates into “lets partner so you (B)
can sell our products for us (A)”, or A tries to sell in B, rather
than sell through B.
55
Risks in Partnering
• Loss of autonomy and control
• Loss of proprietary information to partner
• Potential legal issues and antitrust problems
• Failure to achieve alliance objectives
• Unchecked Executive Egos
• Excessive promises when negotiations are done
without checking the organization and colleagues
capabilities to deliver them
• Absence of a real strategy
• Joint development fails, and ends up in both
parties bundling or packaging difficult-to-sellproducts instead of creating a better solution for
the customer
• Resource commitments do not materialize
56
Factors Contributing to
Partnership Success
• Joint (bilateral) interdependence
– Caution warranted with partners of unequal
size
• Governance Structure
• Joint Commitment
• Trust in the partner’s motives and intents
• Effective Communication
• Compatible Corporate Cultures
• Integrative conflict resolution and negotiation
(vs. “hard,” win/lose bargaining)
57
Partners and Allies
Assemble for the project
Us
?
?
Us
Recruit for the whole product
US
Us
?
?
Limit to reduce friction
Us
Eliminate to retain margin
58
Distribution Channels
Evangelists
Global Systems
Systems Integrators
Marketing Complexity
WANs
Mainframes
Direct Sales
Minis
LANs
VARs
PC Servers
Desktop PCs
Retail
Printers
Keyboards
Web, Telesales
Toner
Service
Technicians
Solution Complexity
60
Distribution Channels
• Distribution Channel concepts:
- Define System Integrators
• Dealers that manage very large and complex computer projects
• Create customized solutions for customers (high level of
consulting and tailoring required)
• Bundle and Re-Sell different brands of equipment, providing the
missing elements, and tailoring them for specific customer needs
• Define Direct Sales
• Sales from Manufacturer to the customer through
manufacturer’s own sales force or through the internet
• Define Value Added Retailers (VARs or VADs)
• Purchase products from several hi-tech companies and add
value to them for meeting the customer’s specific needs
• Ex.: VAR purchases hardware, operating system and
bundles it with specific medical software for dentists. Some
degree of tailoring, at much smaller scale than system
integrators
• Retail
• Web, Telesales
61
Distribution Channels
• Primary Objective of Distribution Channel Selection
• To ensure that a relationship can be created and sustained with the
most influential customer (economic, technical or final user) as the
product moves through the TALC
• Criteria to design the Distribution Channel Choice:
• Solution Complexity: How complex is the product to install, deploy
and use?
• Marketing Complexity: How difficult is the product to source, buy
and support?
• Potential difficulties (outside the dotted-line)
• High marketing complexity / Low solution complexity (Upper-left
quadrant)
• The product is too easy for the channel use that wont be able to
provide enough services/do enough businesses
• Bad deal for the customer (channel will charge too much),
customer feels paying for something which is not needed
• Example: Sell PC through direct sales
• Solution: Change the channel (killing flies with cannonballs!) 62
Distribution Channels
• High solution complexity / Low marketing complexity
(Lower-right quadrant)
• Too complicated product for the used channel
• Distribution channel will suffer
• Ex: Trying to sell a complex supply chain mgmt software
application through avge. computer reseller
• Solution: distribution channel will change the pricing (higher)
63
Distribution Options
Suppliers
Agent/Broker/Distributor
Manufacturers/OEMs
Distributor/Broker
Resellers
Resellers
End Customers
65
Evaluation of Distribution
Performance
Reseller’s contribution to supplier profits
Reseller’s contribution to supplier sales
Reseller’s contribution to growth
Reseller’s competence
Reseller’s compliance
Reseller’s adaptability
Reseller’s loyalty
Customer satisfaction with reseller
66
Blurring of Distinctions
• Distributors/resellers backward integrating
into assembling products
• Suppliers forward integrating into computer
manufacturing
• Channel assembly
– Customization, speedy turnaround
– Based on build-to-order model
• Co-location
– Distributor’s employees work from vendor’s site
– Customization
• Shift into services
67
Gray Markets
• Diversion of goods to unauthorized
distributors, sold at discounted prices
– Manufacturer loses control over distribution
– Legitimate channels lose business
– Loss of incentive for legitimate channel
members to push sales or provide service
– Intra-brand competition, channel conflict
68
Causes of Gray Markets
• Pricing policies with large volume discounts
• Differential in international exchange rates (parallel
importing)
• Cost differences between different types of resellers
– Free-riding of discount outlets on full-service outlets
• Selective distribution
– Lack of intra-brand competition may invited gray
marketers
• Producers perform marketing functions
– Reduces customer’s risk in buying from unauthorized
distributors
• Incompatible compensation policies
– Utilize plant capacity
– Meet sales volume quotas
69
Solutions to Gray Markets
• Track source of units and cut off supply to gray market
– Signals commitment to legitimate channels
– Mitigates price erosion
– May be burdensome administratively
• One-price policy (no volume discounts)
• Increase penetration in the market
• Collect information on extent of the problem,
consistently measure channel member performance
70
Black Markets, Piracy, and Restricted
Exports
• Black Markets
– Counterfeit goods
– Piracy
– Especially problematic with unit-one cost structures
• Export Restrictions on sales of “dual use”
products to some countries
71
Adding New Channels:
The Internet
• Hybrid channels
– Conflicts between manufacturer and its dealers
pursuing same customers
– “Co-opetition”
• Options
– Avoid the Web (and conflict)
– Go to the Web (invite conflict and even mutiny)
– Disintermediate
– Bricks-and-clicks model
72
Avoiding Conflict with Existing
Channel
• Use website to disseminate only product
information
• Use website only to generate leads; direct
buyers to dealers
• Sell limited merchandise offerings through
website
• Take online orders from small customers;
direct larger customers to dealers
• Launch website without publicity
73
Trends in Supply Chain Management
• Vertical electronic markets on the Internet
– Hubs used to connect suppliers to their manufacturing
customers
– Often owned by cybermediaries
• Supply chain management software
– Bring data from manufacturing, inventory, and suppliers
to integrate decision making
• Outsourcing
– Reduces cost but increases supply chain vulnerability
– Political backlash from unions and legislatures
74
Pricing
Buyer Motivation
Gain
Pain
Early market
Bowling alley
Value-based
vs. status quo
vs. price leader
Pricing Frame
of Reference
Competition-based
Main Street
vs. status quo
Tornado
vs. market leader
75
Pricing
• Pricing in high-tech highly associated with customer value
• Who are the target customers? Do they have budget/power to
buy?
• What are the customer objectives when buying our product? How
grave for them is the risk of doing nothing?
• How is the product assembled to meet customer objectives?
• How is the product delivered, supported and complemented? Will
partners get a fair return for their efforts?
• Pricing in perspective:
• Our product vs. status quo
• Used in Early Markets and Crossing the Chasm
• Value-based pricing
• Based on returns from visionary’s dream or gains from
switching to new paradigm
• Inelastic
• Pricing should reflect the need for margins in order to fund
the creation of product infrastructure
76
Pricing
• Pricing in perspective:
• Our product vs. market leader (used in tornado strategies)
• Product infrastructure is in place, product is commoditized
• New Entrants in the industry
• Our product vs. Price Leader (Main Street)
• Price can be higher or lower depending on strategy adopted
(low price, differentiation, segmentation…)
77
Computing Customer Equity
60
50
40
Profit from Referrals
30
20
Profit from Increased
Purchases
10
0
-10
-20
Base Profit
Year 1
Year 2
Year 3
Year 4
Year 5
Acquisition Cost
-30
-40
-50
78
Customer Acquisition Strategies
High
Retention
Profit
Potential
Low
Take them all!
Pay as You Go
Short
Selective
Restructure/
Divest
Long
Acquisition Investment Recovery Time
79
Aspects of Cost to Serve
• Acquisition Costs
• Production Costs
• Distribution Costs
• Service Costs
80
Competition
Product
vs.
Product
Company
vs.
Company
Category
vs.
Category
Market
vs.
Market
Product
vs.
Service
Reference competition (with a set of alternatives in the same category)
Economic competition (set of alternatives competing for the same budget)
81
Basis for Positioning Strength
Thought leader in a new category
“Owns” one or more market niches
Has market share in a hypergrowth market
Continually makes great new offers
82
Next Target Customer
Main Street
The Tornado
The Bowling Alley
The Early Market
Niche expansion:
Grow profitable
revenue from installed
base through 1-on-1
marketing and
mass customization
Niche penetration:
First customers
Go get another
big deal
Dominate first niche
then go after
adjacent niches
Mass market growth:
Grow horizontally
into new channels,
platforms, and geographies
83
Strategy Thumbnail: Early Market
Target Customer
Visionary LOB executive
Compelling Reason to Buy
Dramatic competitive advantage
Whole Product
Technology-based project
Partners and Allies
Consultants and integrators
Distribution
Direct sales
Pricing
Value-based, gain motivated
Competition
Category vs. category
Positioning
Technology-based leadership
Next Target Customer
Another LOB exec in a different industry
85
Early Market Whole Product
• Technology Enthusiasts:
• Value GENERIC PRODUCT
• Will develop the elements pieces for making it work
• GENERIC PRODUCT can be incomplete
• Areas investigated in the core product by enthusiasts:
• Will technology work?
• Will technology be supportable
• Are other techies interested?
• What are the camps forming around the product?
• Visionaries:
• Value POTENTIAL PRODUCT: Ability of the product in creating
competitive advantage
• They will need strong system integrator partnership for
transforming the CORE into the POTENTIAL PRODUCT of a
specific application
• Selling argument: The possibilities associated with specific
applications of the emerging technology
89
Strategy Thumbnail: Bowling Alley
Target Customer
Pragmatist departmental manager
Compelling Reason to Buy
Fix a problem business process
Whole Product
Niche-focused application
Partners and Allies
Emerging value chain
Distribution
Direct sales transitioning to VARs
Pricing
Value-based, pain motivated
Competition
Market vs. market
Positioning
Niche market leadership
Next Target Customer
Adjacent niche market
96
Strategy Thumbnail: Tornado
Target Customer
Pragmatist technical buyer
Compelling Reason to Buy Get on the new infrastructure
Whole Product
Platform products
Partners and Allies
Consolidating value chain
Distribution
Drive to higher-volume, lower-touch
Pricing
Competition-based, pain motivated
Competition
Company vs. company
Positioning
Market-share-based leadership
Next Target Customer
New platforms, channels, geographies
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Strategy Thumbnail: Main Street
Target Customer
End-users
Compelling Reason to Buy
Better values with no risk
Whole Product
Add-ons, consumables, transactions
Partners and Allies
Disintermediated value chain
Distribution
Low-cost, high-touch
Pricing
Competition-based, gain motivated
Competition
Offer vs. offer
Positioning
Better experience for end users
Next Target Customer
Next micro-niche
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