Chapter 13 - Deployment strategy

Question 1

What is deployment?

Answer 1

• degree to which people understand and use a new product
  
  • little value if not understood
• best strategies accelerate adoption by reducing uncertainty and lowers resistance to switch from competitor
• key elements:
  
  • timing
  • licensing and compatibility
  • pricing
  • distribution
  • marketing

Question 2

Timing

Answer 2

• launch could be programmed to:
  
  • take advantage of seasonal effects
  • prevent or allow cannibalization of existing products
• function of many factors including seasonal or business cycles and the availability of complementary goods
• rapid technological change -> not too close (customers reluctant to replace) nor too long (competitiors)
  
  • sometimes new introdced when old still viable, to keep loyalty and leadership
  • cash flow and return on investment penalized
• timing of entry can be used to take advantage of business cycle or seasonal effects

Question 3

Advantages of compatibility

Answer 3

• consider the new product’s compatibility with competitors or own products
  
  • compatible with existing products, advantage of installed base
  • firm with large ib could make products incompatible with other technologies
• backward compatibility effective with continous innovation
  
  • no technological gap, existing installed base

Question 4

Pricing strategies

Answer 4

• price influences product positioning, rate of adoption, and cash flow
• several strategies:
  
  • survival pricing -> cover variable costs and some fixed costs, overcapacity and competition, short run
  • maximize current profit pricing -> price that maximizes returns, short run, based on demand estimates
  • maximum market skimming pricing -> high price to recover initial development costs, signal high value, can slow adoption, attracts competitors
  • maximum market share or penetration pricing -> price as low as possible, attract customers, increase volume and decrease production costs, risky, initial free and then monthly payment
    
    • freemium strategy -> core product free or low cost, add-on pricy

Question 5

Distribution

Answer 5

• direct sells
  
  • control over pricing, service, customization and selling process
  • can be expensive or impractical
• intermediaries
  
  • manufacturers’ representatives -> indipendent agents, promote and sell products of one or few manufacturers
  • wholesalers -> buy in bulk and the resell in smaller and diverse bundles
  • retailers -> sell products to public
  • Original Equipment Manufacturers -> buys products from oder manufacturers and customizes them
• disintermediation or reconfiguration of intermediaries
  
  • online sales, bypass intermediaries

Question 6

Questions to take into account for distribution choice

Answer 6

• How does the new product fit with distribution of existing product lines?
  
  • existing sales channel?
  • new product warrant the cost and time required to build a direct sales force?
• How numerous and dispersed are customers, and how much product education or service will they require?
  
  • pre-purchase trial ?
  • customization?
• How are competing products or substitutes sold?
  
  • need to change customer behavior?
  • may affect how it is perceived in the market?

Question 7

What are some of the strategies to accellerate distribution?

Answer 7

• considered when an industry is likely to select single technology as the dominant design
  
  • establishing a large installed base and to encouraging developers of complementary goods
• alliances with Distributors
  
  • exclusive contracts with incentives to carry and promote certain goods, exclusivity contract as motivation
• bundling Relationships
  
  • sold in tandem with another product with large installer base, increases familiarity with products
• contracts and sponsorship
  
  • encorages distributors, complementary goods or large-end users, price discounts or special services
• guarantees and consignment
  
  • can reduce risk and uncertainty about a product, both distributors and complements providers

Question 8

Marketing strategy

Answer 8

• take into account the nature of target market and the innovation
  
  • shape perceptions and expectations
  • installed base and availability of complementary goods
• advertising, promotions, and publicity/public relations

Question 9

Advertising

Answer 9

• effective message
• media that conveys message to appropriate target market
• balance between entertainment/aesthetics ans information content
• to build customer awareness of a technological innovation

Question 10

Promotions

Answer 10

• temporary selling tactics used at the customer or distributor level to stimulate purchase or trial
• offer samples/ free trials
• inclusion of additional products/services
• offering sales bonuses

Question 11

Publicity and Public Relations

Answer 11

• word-of-mouth recommendations, public awareness and goodwill
• viral marketing
  
  • capitalize on social networks of individuals to spread advertising
  • spark rapid spreading of the information through social networks
• connectors
  
  • large and diverse circle of acquaintances
  • remembering names and important dates
• mavens
  
  • driven to obtain and disseminate knowledge of their interests
  • track prices, consumer activists, like to help other consumers
• salespersons
  
  • natural persuaders
  • acute to send and respond to nonverbal cues
  • can infect others with their mood

Question 12

Tailoring the Marketing Plan to Intended Adopters

Answer 12

• each adopter group responds to different marketing content
• Innovators and Early Adopters -> marketing with significant technical content and leading-edge nature of product
  
  • media with high content and selective reach
• Early Majority -> marketing emphasizing product’s completeness, ease of use, consistency
  
  • media with high reach and high credibility
• Late Majority and Laggards -> marketing emphasizing reliability, simplicity, and cost-effectiveness
  
  • media with high reach, high credibility, but low cost

Question 13

How can marketing shape perceptions and expectations?

Answer 13

• with advertising, promotions and publicity
• press releases and preannouncement
  
  • promote existing and planned products
  • can increase intalled base, more adoptions
  • vaporware
• reputation
  
  • succesful products influence expectations of future products
• credible commitments
  
  • financial commitment signals confidence in new product