Three Contentious Marketing Topics

1. Pitfalls of New Technologies
2. Quests for Customer Satisfaction
3. The Favourite Weak Strategy: Line Extension

Pitfalls of New Technology

New technologies often must cross the abyss from L7-L6 to L5-L3: i.e. they must create the markets into which they wish to sell their amazing new products.

The Market Creation Strategy is Complex

No matter what their advantages, new high-tech products require an extraordinary mixture of business strategies to bridge the gap between facts/reality (L6/L7) and expedient conventionality (L5-L1):

● Positioning [#20]
● Research & Development [#21]
● First Mover [#22]
● Commoditisation [#19]
● Applications [#16]
● Education [#18]
● Strategic Alliances [#17]
● Standards [#15]
PLUS
● several of the lower-level strategies as well.

The Usual Result

• There can be a long, agonizing, and seemingly hopeless period before a new idea becomes a commercially-successful product. Two phases can be identified:

Phase 1: between product conception and reaching the market; &
Phase 2: between reaching the market and commercial success.  

• High costs in R&D and in educating customers are unavoidable. The secret is market timing, i.e. enter when the market is about to explode. But: it is usually a matter of sheer chance that technological, economic and social factors align in an optimal configuration. 
• Recognize that the market evolves via TALC (Technology Adoption Life Cycle): customers are initially Enthusiasts, then Visionaries, then Pragmatists in specific niches wanting total solutions, and finally Conservatives, for whom cost is everything. More…
  

Benefits: Image and reputation of technological leadership-intense brand loyalty, and pre-emption of best-in-market position.
Disadvantage: Very risky. Why not be a free rider and wait for someone else to do the market creation work, then imitate more cheaply, and spend large sums on promotion with safety.

Back to Top

Quests for Customer Satisfaction

At the heart of any business strategy are satisfied customers willing to pay for the company’s products and services. The average enterprise loses 10%-20% of its customers each year and many others, while still loyal, restrict purchasing due to dissatisfaction.

Many strategies are claimed to target «customer satisfaction». Alternative terms like ‘customer delight’ and ‘customer intimacy’ are unsatisfactory. As with any general term, these may apply at all levels. In practice,

• Delight often seems to refer to values in the operational culture at L1.
• Intimacy strategies often refer vaguely to a category of customer that is a matter of market-definition at L3 (and far from the normal meaning of ‘intimacy’).

What must be grasped is that customers are focused upon as a group at L4, and as individuals at L5.

The Complete Satisfaction Strategy

Research suggests that companies providing complete satisfaction do far better than those whose customers are merely satisfied. However, completeness is a substantial and costly challenge.

It depends primarily on:

● Care [#12],
● Loyalty [#10],
● Customer Partnering [#14]
● Customisation [#11]

properly supported by sensible:

● Segmentation [#8],
● Differentiation [#9]
● Advertising [#6] .

Back to Top

The Favourite Weak Strategy: Line Extension

Power-centric leaders are tempted to equate line extension with product development and innovation. This is based on the conviction that it is possible to leverage the success of the company’s name or existing brands by applying them to other products.

This popular and expedient strategy regularly fails; it tends to weaken the original leading line through blurring customer perceptions and by cannibalising its market share.

Conclusion: There is never a short cut to great success: truly new products require their own complete and discrete developmental and marketing process, including a unique brand name.

Ries &TroutRies, A and Trout, J. The 22 Immutable Laws of Marketing 1994, Harper Collins  argue:

that line extension can work in the following situations:
● If only a small volume of sales is sought.
● If the field is already crowded.
● If the advertising budget is small.
● If the product is a commodity.
● If direct selling is used.

Back to Top

---

• Next section: Government interventions in the economy.

• Other Applications:

► Developing a commercial ethos
► Supporting business and markets 
► How big organizations must harness staff 
► Developing a career
► Cooperating for results

Originally posted: July 2009

---

All posted material is part of a scientific project and should be regarded as provisional. Visitors are encouraged to think through the topics and propositions for themselves. Copyright © Warren Kinston 2009-2016.
All Rights Reserved.

---

comments powered by Disqus

---