Lecture 8 Flashcards
Sales and Profits during the
life-cycle of a produce
Humped curve, sales peak then drop and then a new product is released
•Technology
(from Greek: techno=art, skill;
logia=branch of learning)
•The provision of practical solutions for human
needs, usually through the application of scientific
knowledge
Innovation
•Replacement of the existing technology with
something new, providing special value for a
defined group of users
•Innovation provides economic value, creativity
does not (necessarily)
Two types of innovation
Product
Advances in the products themselves
Process
Products remain constant. Methods by which those products are produced changes
What Drives Changes in Technology?
Need! Necessity is the mother of invention…
providing:
•Satisfying the need is possible and the knowledge to
do so exists
•Knowledge can be applied in a feasible manner from
engineering and economic perspectives
•There exists financing, skilled workers and other
necessary resources to develop the technology
•An innovator who will take charge
Phases in the Adoption Decision Process (Rogers)
מודעות (awareness( התעניינות (interest( הכרעה (decision( לאמץ (accept (לא לאמץ (reject( ניסוי (trial( אימוץ (adoption(
Groups of Adopters: Innovators: Techies
• Acquire product for love of technology • Few preliminary requirements • Desire to get into inner workings of product • Desire to be the “first on the block”
Groups of Adopters: Early adopters: the Visionaries
• These customers have the vision to see how to integrate new technologies • Have the passion and conviction to convince the organization to acquire the technology • Rely on intuition in place of reviews and experiences of others
Groups of Adopters: Early Majority: the Pragmatists
• Motivated by pragmatism • Have no desire to be “guinea pigs” • Desire technology to enhance performance rather than to provide quantum leap • Have certain comfort level with new technology
Groups of Adopters: Late Majority
• Similar to early majority in most respects, but have a lower comfort level with new technology, therefore: – Prefer to wait until technology becomes “standard” – Prefer to buy from large established suppliers – Will buy only where there is significant customer support
Groups of Adopters: Laggards
• Prefer to avoid new technology.
Generally only adopt when necessary
What Speeds the Pace of
Technological Diffusion?
1.Size of advantage over previous technology 2.Compatibility with existing systems, infrastructures, thought processes, etc. 3.Less complex than prior technology 4.May be tried without major cost or commitment 5.May be easily copied
Pricing & Technology Diffusion
- Generally, pricing is a function of cost a/o market a/o
competitors etc. - In cases of “perishable” technology-based products
there are a number of pricing possibilities:
Leading Tech Innovation: Advantages
No competition High efficiency Revenue generation Improved reputation Sustainable competitive advantage of 1st to market? Setting barriers to entry Grabbing market niches
Leading Tech Innovation: Disadvantages
Sizable risks Tech. development costs Market development costs Infrastructure costs Cannibalization of existing products Learning (curve) costs
