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Science and technology marketing

X27_1_technology_markets_9601.jpg Technology markets are characterised by rapid change and complicated relationships between suppliers, developers and end consumers and challenges of scale and pricing. An unusual feature of technology markets are network effects combining platform, developers, advertisers and consumers as a mutually-supporting eco-system.

In terms of marketing, this means that a specialist approach is needed to understand how to develop the appropriate market strategies to win and hold customers, while building relationships with suppliers and developers.

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.

As the market evolves though, the business needs to progress. Online, customer are fickle and often able to change with low barriers to switching, or moving to new or alternative platforms. However, great care is needed in evolving platforms as unwanted or unexpected changes can be a catalyst for switching.


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 a 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, and to create services for developers and third parties.

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, and networks are hard to replicate - for instance the network of hotels on booking.com, or networks of drivers for Uber.

These networks, mean marketing has to work for suppliers and partners as well as end-users and planning and co-ordination is required to manage launches and information among the different groups.


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 Netflix or video on demand relies on the presence of fibre optic cabling, huge video servers, billing systems, licensed film content, advertising networks and subscription systems. Some of these emerge separately from the company. However, the business has to ensure the other elements are in place first.

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 cloud-based systems 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, how access and data storage will be used, and contractually how factors like privacy and confidentiality are managed. Once one cloud-based service is used, the second question is how this links to other cloud-based services - for instance how a cloud-based CRM system links to a cloud-based accounts system.

Thus the infrastructure requirements and linking of technologies develops continuously.


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). In internet terms, the timeframe might have reduced to 12 months, but keeping ahead of the market makes it harder to know what customers will want.

With this gap between the customers' market view and the engineers' market view, care is needed to really find out what customers really look for and what are just speculative wish-list items. In particular, a good understanding of what customers do and use-cases, allows judgements about how to push technology forwards.

However, although customers are behind engineers in terms of technical development, they quickly become far more adept at learning how to use and implement the technology successfully than the 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. These then drive further network effects.


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. In some cases the cost of the purchase will be zero.

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, products require little or no service element (eg toys, music, clothes) 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, there is a two edged sword: high potential for success, but a sheer problem of scaling up quickly enough to keep all customers happy while being faster than competitors to establish a leading market share position, and making sure you have enough cash. If a business does not have a leading share position as the market matures, it simply will not 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 have not met customers needs are not 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.

 

Finding defendable positions, building start up plans, and then acquiring sufficient resources to be successful requires a clear perspective on the customer, the use-case and the way to fit this into current technology networks and infrastructures.

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


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