One of the primary triggers for my joining the bschool was the desire to make high tech products successful in the market. I had worked in some pretty innovative high-tech startups which made stuff such as network secure switch, cloud bases services and city wide WiFi network deployments. An example of innovation was the Tropos WiFi gear that powered cool solutions such as automatic electricity meter reading, forest fire sensing, monitoring water pipeline flow for leakage etc. In these startups, we grappled with the customer related issues daily and I gradually ended up being besotted by the charms and challenges of marketing such cutting edge technology products.
And since I stepped inside XLRI, I have been trying to orient myself towards this direction. I have taken to marketing in particular and have been trying to understand the concepts better. But at the same time, I also find sort of a dissonance(again a marketing jargon!)- all the marketing literature is largely skewed towards conventional products such as FMCG, consumer durables, etc. Of course, high technology products are not alien and share a lot of features with such conventional products but many a time I realized that they present specific challenges for marketers.
Before moving on, let me define what I mean by high tech startups here:
1. The product is based on a new technology/idea which is not well shaped yet. Cloud computing, Hadoop, etc were here in 2007.
2. The technology is fast evolving and different players trying to gain upper hand over each other.
3. Customers, specifically the Enterprise customers, understand the technology and are primarily driven to such products to reap significant benefits.
Here are a few things relevant to this which come to my mind right now:
1. Weak product: If your company has not done a great job with the product design and development, the chances of you being able to market them are drastically less than conventional products. And before you say this is too obvious, let me remind you- in technology space it is pretty common for products to become misaligned with the current flavor of the market. So, if your company has not been at its toes from the concept stage to the delivery stage and has not looked at where the market is going, then the conceived product tends to fall misaligned with where the market has moved to. For eg. WiFi gear was selling like hot cakes in 2004 timeframe but how with increased adoption of 3G and WiMAX, how do you sell it now?
The problem is that in conventional products, the other 3 Ps viz price, place and promotion can offset this weak product disadvantage to some extent. So you have a regular mp3 player(Philips Go! player comes to my mind), you can still market it to some customer segment in a place where there is less competition, using shops which the segment trusts or by using consumer promotions.
The problem is highlighted even more when the customers understand the technology. For example, it is difficult to sell a weak high technology product to enterprises which are coming to you only because they have a technology vision.
2. Benefits and perils of Internet distribution: If your product is available for download from internet then there are certain challenges you should be aware of. Internet is a great enabler and helps you reach to a totally unexpected market. At the same time however, Internet is also a common platform shared by all of us. Now, suppose your marketing program worked and a prospective customer wants to buy your product. Cool. But when he comes to internet to buy your product, he can be exposed to different ideas which can make him change his mind. He might discover products from competition or he might discover a new product category itself. He might be confused by competition and delay his decision. The threats are endless.
3. Intangibility of software: All said and done, a software is intangible, a commodity like soap is not. This is good and bad. Marketing loves intangibility as it can be “riskified” and sold at a higher margin than a tangible commodity(If this needs explanation then think – would you pay Rs 100(3x) for a soap? No. But how about paying Rs 300 for a coffee which is organic and has reduced caffeine? You probably might go for it as there is intangibility in play now).
At the same time, for software, intangibility comes with a challenge. A potential customer can’t appreciate the real value of the product upfront and hence one needs to devise solutions to effect the purchase. Now, you can do one of:
a. reviews, customer forums, demo videos so that potential customers know your product works.
b. give them free evals, demonstrations, etc.
Option a is lower cost and applicable for “easy to use" products but option b is what you would have to do if your product is complex, high tech and new on the market. And that might cost money and effort for each potential customer. You also need to highlight your support SLAs here.
4. Company’s credibility: This, most often than not, is the deciding factor. The company needs to position itself as an honest, stable and tech savvy company. The reasons are:
a. Honest: Remember Tangible Vs Intangible point above. If the software doesn’t work the customer would want money back. Also, he would want to ensure that you are not a malware/data stealing company.
b. Stable: More true for continuous involvement products. For eg. if Google is not stable, would you do emails with gmail?
c. Tech savvy: Customers need to make sure that the bugs will be fixed on time and improvements will be done as technology world changes. This is where the halo effect is important- i.e. if you have people from Google, MS in your company it helps. CEO blogs, press releases all help to build this image.
I would try to keep on editing/updating the above text as my understanding improves. For now, if you are aroused you can read this interesting write up on Ten Reasons High-Tech Companies Fail