Finding the right marketing strategy for high tech firms and startups is a tricky business. High tech, short for high technology, refers to new technologies that are being developed for the first time.
Technopedia defines high tech as following:
“High tech is a term that is generally applied to economic and industrial sectors wherein technological innovation is emphasized. High-tech industries play an important role in the modern economy, and often experience significantly higher pay than other industries.”
In this review, we will look into what separates a marketing strategy for high tech from other marketing endeavors, the implications this distinction results in, and some pointers on how we can leverage them to our benefit.
The novelty of the technology looks like a pure advantage at fist sight but almost always utilizing high tech products requires a change of perspective for the consumers’ part and a paradigm shift from an established way of life.
To grasp this notion, let us go back in time and imagine the world before cars and internal combustion engines. People are going around on horses and in carriages. Your company has developed a car. You are not just marketing a product but you have to fight the world into accepting your proposed new version of doing things. People, as well as the vast chain of services established around the horse-centered way of communication, should be convinced to let go of what they already possess and embrace your new ways.
A good marketing strategy for high tech products should focus on depicting a clear picture of the devised future. This holistic representation should include detailed facts addressing the worries one might face when change is inevitable. Consequently advertising the benefits of your product is simply not enough when we are talking about high tech.
The Search for Maturity
High tech is the realm of cut-throat competition and firms need to innovate more and do it faster than the other parties. When you are pitching a brand new product you are fighting the preconception that new things need time to be perfected. Building trust is a major part of any marketing strategy for high tech products.
Concentrating solely on innovation and forgetting about eliciting trust and experience is a common mistake happening in the planning phase of a marketing strategy for high tech products.
Show people you have done your homework and the innovation has not happened over the night. Focus on the skills and experience of your employees and the extensive hours put for achieving what you have achieved.
An obvious point would be to avoid releasing incomplete products. No amount of innovation can fix a bad experience a customer has had with one of your products. You would be branded as the company who releases their products too soon, and no one wants that.
So to put it simply, test extensively before telling the world about your products and when you are finally talking about it, make sure you do not forget mentioning that you have tested it.
The Right Price
Finding the optimum price for products is an extensive process for any business, high tech or not, yet high tech can be priced a little bit higher because of the life-changing value its innovation delivers for consumers.
Innovation is the outcome of R&D and this process is known for being demanding in resources and not always reliable to succeed in the first few tries. Innovation is not cheap and when it happens you have a new product that is better than your competitors’. You think you would have absolute freedom in setting your desired price, so why not spend more?
Yes you might succeed and your product could be far better but how much better? So much that people would be willing to pay four times the competitor product’s price tag? Do not bankrupt yourself deluded into thinking you cannot fail.
Marketing strategy for high tech should take into account the market’s threshold for pain and guide the design and production process in coming up with a product that although innovative could hit the markets at a reasonable price.
William H. Davidow talks about pricing in Marketing High Technology:
“The value of most high-tech products is determined by the cost of alternative solutions to the customer… But sometimes there is no alternative approach. Then, pricing is a matter of placing a value on the solution to a particular customer problem. That value has nothing to do with the cost of building the product.”
If there is too much resistance in the market, going with a penetration pricing strategy could place your brand at a higher bargaining position for future pricing dilemmas.
Imagine that your firm has developed a powerful microprocessor for cellphones that is 100 times more powerful from what is in the market right now. Although a bit expensive, let us assume that you have managed to produce this novelty at a very reasonable price, like 3 times the conventional microprocessors.
You hold a press conference and tell the world about your great success. It is a wonderful achievement and the possibilities are infinite… but are they really? What can people actually use it for? There are simply no applications for your great product yet. Everyone would be very interested in your product but no cellphone company would buy them from you, because there is no public demand.
A good marketing strategy for high tech products assesses the needs of the market before letting the management go all in and spend their last dime. A better marketing strategy for high tech products creates the application and includes the solution in the product.
Before designing this titan of a microprocessor you should sit down and think hard about the applications of this innovation from day one. Then tailor the product to best meet the needs required for that application.
Now when you hold your press conference you can showcase these one or two applications as instances of infinite other possible applications and leave people in awe, wondering about the vast possibilities. Innovation is a revelation of the existence of possibilities in the realm of impossible and it should inspire people to explore it for themselves.
Some high tech products are directly purchased and used by the people, for example, a high tech pill.
A great part of high tech though is purchased by industries, for example, an imaginary efficient catalyst that can reduce the refinery process’s time 30% and curb environmental impacts of cobalt extraction by omitting pollutants.
When we think about marketing this hypothetical catalyst we know who we have to target, cobalt refinery factories, right?
What differentiates the high tech from conventional products is their groundbreaking effect on the way of things. Marketing strategy for high tech should be the result of careful analysis of this transformation to identify whom it affects.
Cobalt refineries might not care about that 30% because it requires a big change in production methods and some of these factories are traditionally not known for their pursuit of high efficiency, meanwhile, everyone else could care less about better cobalt.
But people care about the environment and your product has a great impact on saving it from destructive pollutants. By letting people know about your product you are creating a public expectancy and demand that pressures governments as well as industries that use cobalt (like rechargeable battery manufacturers) into requiring the cobalt factories to use your catalyst.
A lot of industry-used high tech products end up in third party consumer products that transform people’s lives, for example, cellphone microprocessors. A big segment of consumers trust phone manufacturers to use the right hardware, but an equally large group of tech-savvy users want to have a say in the hardware as well as the aesthetic aspects of the product. If the end-users are convinced they want your product to be on their phones, this demand influences the manufacturers to choose your product over the competitors.
A relevant marketing strategy for high tech should incorporate informing the society of the impact the product has on life in the bigger picture.
As a marketer in the high tech industry, you have to sometimes make promises that there is simply no way of making sure you can keep them. Working on the bleeding edge of technology means that you are gazing into the unknown. You think you are going to come up with something new, something that will work perfectly and solve people’s problems. You might have achieved this before but this time you should outdo yourself and everyone else.
We presume a need in the target customer and assume we can meet that need with our innovative solution. There is too much left for chance and this is the nature of any marketing strategy for high tech. We can sure try to minimize the guesswork by utilizing data and simulations but even after all that there still would be a big black void that we have to face head-on. Innovation is what it is.
“The most important ingredients of great high-tech marketing aren’t taught in business schools. Most marketing people don’t even like to handle them. They require personal commitment to the product’s success that is consistent with the company’s philosophy, a dogged pursuit of customers, and an untiring commitment to service. Those are the soul of a product. With them a great product lives and grows, and even a weak product can endure against all odds.” – William H. Davidow, Marketing High Technology