Focus area - technology markets

Technology markets provide a number of features and challenges that are not found in conventional consumer-style markets.

In terms of marketing, this means that a specialist approach is needed to understand how to develop the appropriate market strategies to meet the problems that you face in a technology market.


Technology markets are a challenge from the point of view of strategy development because they are:

Marketeers need to be aware of these issues, because they all have an effect in what you can do and what you should be thinking of in the future.


Fluid and dynamic

The impact of technology over the last few years has been so drastic, that it can be difficult to remember a time without mobile phones, computers or digital cameras. But it's not just technology that changes, the competitive environment does to, with competitors merging and new ones popping-up continually.

For the marketeer, although exciting, such rapid change makes long-term planning more difficult and means that you need to focus on building areas of stability. This stability normally comes from focusing on building long-term relationships with clients and customers by focusing on their needs and concentrating on providing the service they want.


Highly network dependent

Technology markets are also considerably network dependent. By network here we are not talking about computer networks, but networks of association - links between people and firms.

Typically your technology product or service is highly dependent on having other technology around too (see below). For example mobile phones need masts and handsets, computer servers need routers and hubs, which in turn means there is a need for someone to integrate the systems together and to get the software working across these devices.

To develop a market successfully therefore means more than just meeting the customers' needs. It also means looking at how you fit in with other companies in your space. Do you have a defined network position, or are you isolated? Do you have support from other providers such as consultants, other software companies, hardware companies or service companies? Building network relationships as you grow can greatly increase your value to the customer.


Infrastructure reliant

As mentioned above, technologies are highly dependent on one another. In order to enter a market therefore, you need to understand what level of infrastructure exists to support your technology.

For instance for an area like interactive TV, you need support from cabling infrastructure, huge video servers, billing systems, set top boxes, content, advertising. Putting in place an iTV system is tough because you need all the bits. One bit alone doesn't work.

Within a corporate environment, you are also likely to need to know what already exists in terms of technology, but also potentially, in terms of the corporate structure, culture and existing knowledge. If you are selling mobile computers for instance, it's not just how they will connect to the corporate network, but also what structure is in place to ensure they are backed-up, or serviced and who will train users in these areas.


Knowledge and learning lags

It used to be the case (and it is probably still true), that the products people are using today are at least two years behind what is available to buy today, while you are designing today products for launch in two years.

Consequently your engineers are trying to design products that are at least four years ahead of what an average customer has experience of. And four years is a long time in technology markets (see fluid and dynamic above)

With this gap between the customers' market view and the engineers' market view, you need to take care to really find out what customers really need and look for and what are just speculative wish-list items. In particular, if you have a good view of what customers do you can make judgments about how technology can improve what they do.

Because although your customers are behind your engineers in terms of technical development, they quickly become far more adept at learning how to use and implement the technology successfully than your design team. Although your engineers know what is technically possible, after some time your customers become better at implementation and management of the technology. They develop fixes and workarounds that should be providing your engineers with the clues they need to take the development further.


Purchase price is a small part of the costs

When customers first purchase technology, they tend to worry about the cost of the purchase and what the technology will do.

As the technology is rolled out across the organisation the price of the technology is matched by the cost of training, support and overall cost of management.

For instance, loading an upgrade on a single tablet/notebook may take 5 minutes. But if you have 1000 across the organisation, that's nearly 12 days of work to complete the upgrade.

Consequently customers needs change over time as their working patterns adapt the technology to their situation. In particular their needs change. Early on with a few items they want something to do the job. Later with more users they need ease of use to reduce training costs. With more items they need ease of management to reduce support costs and downtime.

In the work we have done, this pattern is as true for everyday items like telephones as it is with computers. Consequently from a design and communication point of view, there is a change from features to get the job done, towards service and getting the job done simply.


Scale and ramp up

The final challenge from technology markets is the the hurdle of scale, particularly for software.

In most other markets, you are selling products that require little or no service element (eg toys, music, clothes), no market is genuinely "new" and a product typically has a long lifecycle (a model of car is expected to have a life of 7-10 years).

In a technology market, product lifecycles are short, there is normally a larger service element and products are often genuinely innovative building new market sectors from nothing.

Consequently you have the two edged sword of high potential for success, combined with the sheer problem of scaling up quickly enough to keep all your customers happy and beating your competitors to establish a leading market share position, and making sure you have enough cash. If you don't have a leading share position as the market matures, you simply won't be able to survive as the competitive shake-out takes place.

Essentially this is the problem that all Internet companies have faced as they have scaled up. When the shake-out came, those that hadn't met customers needs weren't able to deliver the profits. A number of the famous cases spent a disproportionate amount promoting themselves and not enough getting the service or offering right in order to keep happy customers and to build profitable market share.

For help and advice on marketing in technology markets contact info@dobney.com