Marketing Model For High Technology Projects

PREFACE The Dissertation presents a study of marketing practice followed by high technology projects oriented medium scale industry. To start any business the success entirely depends on the marketing research done about the particular company and the consumer attitude towards the product. Marketing research plays a vital role in a business to make it success Conventional Marketing concepts and methods those work best for consumer products suits here, once technology has matured and established itself in the market place. But for high technology products, in the initial stages of market acceptance, what we term the supply-side stages the same marketing concepts and techniques sometimes do not work. The same conventional marketing concepts and techniques that are so largely responsible for the high standard of living enjoyed by mass distribution societies need adaptation and sometimes refinement to fit the specialized and often singular needs of companies engaged in high technology. In comparison to conventional marketing, selling a project poses unusual challenges to the marketing team. Indeed, the development of high technology that fulfils a significant human need or desire, present or future, is a critical marketing task. Adeptness depends not only on the collective ability of a nation’s scientists to make head way in R&D but also the prowess of its business people in making and developing incipient technologies into a commercial success.

1

For the product line, which I have chosen that, is High Technology Projects, normally a standard product does not exist rather they are configured/customized out of standard products according to customer’s requirements. Project marketing studied here, presents a customer defined, unique solution envisaged by the user department. Each project is unique in the sense that the requirement varies from customer to customer and the environment in which the project is expected to work. The main objective of marketing in a high technology project/ product oriented organization is to achieve customer acceptance and satisfaction, before profitability can be aimed at. Best acceptance of customer is achieved when his expectations are met adequately and when the project best suits the purpose for which the system is intended. I was looking for an opportunity to study about marketing methodology of high technology projects with reference to conventional marketing concepts. Electronic Corporation Of India Limited is one such organization I felt that will best suit for my study. I have got myself associated with Security Systems Business Unit dealing with products, which are prevailing in India, specifically designed for varying environments. As gathered, ECIL has been dealing with either individual System or integrated configuration using two or more systems. The report that follows reflects studies made by me after going into the details of each activity and through my interactions with the officials practicing them.

2

COMPANY PROFILE BRIEF HISTORY ECIL was setup under the Department of Atomic Energy in the year 1967 with a view to generating a strong indigenous capability in the field of professional grade electronics. The initial accent was on total self-reliance and ECIL was engaged in the Design Development, Manufacture and Marketing of several products emphasis on three technology lines viz. Computers, Control Systems and Communications. Over the years, ECIL pioneered the development of various complex electronics products without any external technological help and scored several 'firsts' in these fields prominent among them being country's •

First Digital Computer

•

First Solid State TV

•

First Control & Instrumentation for Nuclear Power Plants

•

First Earth Station Antenna

The company played a very significant role in the training and growth of high caliber technical and managerial manpower especially in the fields of Computers and Information Technology. Though the initial thrust was on meeting the Control & Instrumentation requirements of the Nuclear Power Program, the expanded scope of self-reliance pursued by ECIL enabled the company to develop various products to cater to the needs

of

Defense,

Telecommunications,

Civil

Aviation,

Insurance,

Information

Banking,

Police,

&

Broadcasting,

and

Para-Military

Forces, Oil & Gas, Power, Space Education, Health, Agriculture, Steel and Coal sectors and various user departments in the Government domain. ECIL thus evolved as a multi-product company serving multiple sectors of Indian economy with emphasis on import of country substitution and development of products & services that are of economic and strategic significance to the country.

Electronics Corporation of India Limited PO.ECIL, HYDERABAD - 500 062, AP, INDIA Phone: 91-40-27120131(10 lines)

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MISSION AND OBJECTIVES

MISSION •

ECIL's mission is to consolidate its status as a valued national asset in the area of strategic electronics with specific focus on Atomic Energy, Defense, Security and such critical sectors of strategic national importance.

OBJECTIVES •

To continue services to the country's needs for the peaceful uses Atomic Energy. Special and Strategic requirements of Defense and Space, Electronics Security Systems and Support for Civil Aviation sector.

•

To establish newer technology products such as Container Scanning Systems and Explosive Detectors.

•

To explore new avenues of business and work for growth in strategic sectors in addition to working for realizing technological solutions for the benefit of society in areas like Agriculture, Education,

Health,

Power,

Transportation,

Food,

Disaster

Management etc. •

To progressively improve shareholder value of the company.

•

To strengthen the technology base, enhance skill base and ensure succession planning in the company.

•

To

re-engineer

internationally

the

company

competitive

by

to paying

become

nationally

particular

attention

and to

delivery, cost and quality in all its activities. •

To consciously work for finding export markets for the company's products.

4

DIVISIONS The COMPANY is organized into DIVISIONS serving various SECTORS, National and Commercial Importance.

SECTOR

Divisions serving Nuclear sector

Divisions serving Defence sector

DIVISIONS

•

Control & Automation Division (CAD)

•

Instruments & Systems Division (ISD)

•

Components Division (CD)

•

Communications Division (CND)

•

Antenna Products Division (APD)

•

Servo Systems Division (SSD)

•

Strategic Electronics Division (SED)

•

Special Products Division (SPD)

•

Supervisory Control & Data Acquisition Division (SCADA)

Divisions handling Commercial Products

•

Business Systems Division (BSD)

•

Telecom Division (TCD)

•

Customer Support Division (CSD)

•

Computer Education Division (CED)

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CONVENTIONAL MARKETING AND ITS CONCEPTS

Marketing is typically seen as the task of creating, promoting and delivering Goods and Services to consumers and Businesses. It deals with identifying and meeting human and social needs. Marketers are skilled in stimulating demand for a company’s products. Marketing managers face a host of decision making challenges from major ones such as what product features to design into a new product, how many sales people to hire, or how much to spend on advertising etc. Under product marketing, companies selling mass consumer Goods and Services such as soft drinks, Tooth Paste, television sets and Air Travel, spend a great deal of time trying to establish a superior brand image. This requires getting a clear sense of the target customers, what needs their product will have to meet, and communicating brand positioning forcefully and creatively. Much of a brand’s strengths depend on developing a superior product and packaging and backing it with continuous advertising and reliable service. Marketing is a societal process by which individuals and groups obtain what they need and want through creating, offering and freely exchanging products and services of value with each other. It is an art of selling products. Marketing Management is the process of planning and executing the conception, pricing, promotion and distribution of ideas, goods, and services to create exchanges that satisfy individual and organizational goals.

CONSUMER BUYING BEHAVIOUR 6

Understanding the buying behaviour of the target market is the essential task of marketing management under marketing concept. The consumer market consists of all the individuals and households who buy or acquire good and services for personal consumptions. The buying behaviour tries to find out the answers for the questions, who buys? How do they buy? Where do they buy? Do they buy? (A)FACTORS INFLUENCING CONSUMER BUYING BEHAVIOR There are four major factors that influence the buying behaviour such as cultural factors, social factors, personal factors, and psychological factors. i.

CULTURAL

FACTORS:

Culture

is

the

most

fundamental

determinant of a person wants and behaviour. Values, perceptions, preferences, and behaviour are the main variable under culture of an individual. Each culture contains sub-culture like nationality, religious group, geographical area, and linguistic divisions etc. ii.

SOCIAL FACTORS: Consumer behaviour is also influenced by social factors such as the consumer reference group family and social roles and status.

iii.

PERSONAL FACTORS: A buyer decision is also influenced by his or personal

characteristics,

notably

the

buyers

age,

lifestyle,

occupation, economic circumstances etc. iv. PSYCHOLOGICAL FACTORS: a person buying choice is also influenced by four major psychological factors such as motivation, perception, learning belief and attitudes.

(B) BUYING DECISION PROCESS

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It includes buying roles, types of buying and steps in buying process. I.

BUYING ROLE

The buying role could be classified into four parts. These are initiator, influencer, decider and buyer. II. TYPES OF BUYING BEHAVIOR Consumer decision taking varies with the type of buying decision. There are four types buying behaviour such as Complex buying behaviour, Habitual buying behaviour, Variety seeking buying behaviour. III. STAGES IN BUYING DECISION PROCESS Here are five stages in buying decision process namely problem recognition search, evaluation of alternatives purchase decision and past purchase behaviour.

NEED RECOGNITION The buying process starts with the buyer’s recognition of a problem of need. The buyer senses a difference between his actual state and desired state. INFORMATION SEARCH There

are different

sources from where

a consumer can gather

information like personal sources commercial sources, experimental sources. EVALUATION OF ALTERNATIVES After gathering information about different products the customer will be in a fuss as to choose which product among the mainly alternatives consumer usually evaluate the alternatives on traditional basis, on the basis of utility function etc. from the many alternative consumers at last choose the best one for him. PURCHASE DECISION 8

A consumer who decides to execute purchase intention will be making up to five purchase decisions. POST PURCHASE BEHAVIOR After purchasing the product and services the consumer will experience some level of satisfaction or dissatisfaction with the product and services that will influence subsequent behaviour. If consumer is satisfied he may show the probability of buying the product the next time, satisfied customer will say good thing about the product, proving the statement that "satisfied customer is the best advertisement.” A dissatisfied customer may take some action against it. They may try to reduce the dissonance by abandoning returning the product. Understanding consumer needs and buying process is the foundation of any company. By understanding how buyers go through problem recognition, information search evaluation of alternatives, the purchase decision and post purchase behaviour marketers can pick up many clues as to how to meet buyers need. LITERATURE REVIEW MARKETING Marketing is a societal process by which individuals and groups obtain what

they

need

and

want

through

creating,

offering

and

freely

exchanging products and services of value with others or otherwise it is the process of planning and executing the conception, pricing, promotion and distribution of ideas, goods, services to create exchanges that satisfy individual and organizational goals.

MARKETING STRATEGY 9

Marketing strategy is a set of objectives, policies and rules that leads the company's marketing efforts. It is the marketing approach to accomplish the bread objective of the marketing approach to accomplish the bread objective of the marketing plan. The various process of marketing strategy are given below. 1. Selecting largest markets segmentation 2. Positioning 3. Product 4. Price 5. Place 6. Promotion 7. Research and development 8. Marketing research

MARKET SEGMENTATION AND SELECTING TARGET MARKET It is an effort to increase a company's precision marketing. The starting point of any segmentation discussion is mass marketing. In mass marketing, the seller engaged in the mass production, mass distribution and mass promotion of one product for all buyers. Market segment consists of a large identifiable group within a market with similar wants, purchasing power geographical location, buying attitudes or buying habita. It is an approach midway between mass marketing and individual marketing.

Through

this

the

choice

of

distribution

channels

and

communication channels become much easier. The researchers try to form segments by looking at consumer characteristics; geographic, demographic, and psychographic. After segmenting the market then target market selected.

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2. POSITIONING: - The positioning is a creative exercise down with an existing product. The well known products generally hold a distinctive position in consumer's minds. The positioning requires that every tangible aspect of product, price, place and promotion must support the chosen positioning

strategy.

Company

should

develop

a

unique

selling

proposition (USP) for each brand and stick to it, PPL consistently promotes its DAP fertilizer by Higher yield at lower cost. As companies increase the number of claims for their brand, they risk disbelief and a loss of clear positioning. In general a company must avoid four major positioning errors. Those are under positioning over positioning, confused positioning and doubtful positioning. 3. PRODUCT: - A product is any offering that can satisfy a need or want. The major types of basic offerings are goods, services, experiences, events, places, properties, organizations, information and ideas. The company gives more importance in quality, packaging, services etc. to satisfy the customers. The products has it's life cycle. The product strategies are modified in different stages of product life cycle. 4. PRICE: - It is the most important aspect in company's point of view. Price of the product will be decided by the company according to the competitor's price. 5. PLACE: - This plays a major role in the entire marketing system. The company emphasis on its distribution network. Proper distribution network gives proper availability of the product. 6. PROMOTION: - Promotion is the one of the major aspects in marketing strategies. By adopting various promotional activities the company create strong brand image. It also helps in increasing the brand awareness. It includes advertising, sales promotions and public relations etc. 7. RESEARCH AND DEVELOPMENT: - after testing, the new product manager must develop a preliminary marketing strategy plan for 11

introducing the new product in to the market. The plan consists of three parts. The first part describes the target market's size, structure and behaviour. The second part outlines the planned price, distribution strategy and marketing budget for the first year. The third part of the development describes the long run sales and profit goals and marketing mix strategy over time.

Marketing Mix

Product Product variety

Price List price

Promotion Sales promotion

Place Channels

Quality

Discounts

Advertising

Coverage

Design

Allowances

Sales forces

Assortments

Payment

Public

period

relation

Brand

Credit

Direct

name

terms

marketing

Features

Packaging

Locations

Inventory Transport

Sizes Services

MARKETING HIGH TECHNOLOGY 12

Technology progress in any society is fostered ad facilitated by the presence of three key ingredients1. Innovation and creative people, 2. An economic climate conductive to entrepreneurship and 3. The managerial know-how both for a. Stimulating new concepts b. Taking

the

promising

ideas

through

successful

initial

communication and beyond These three elements complement one another and produce synergies. Innovation works best when all these ingredients are presents. High technology oriented products, services, processes and projects represent totally new concepts which are un heard and of break thoughts. They are modified and configured in their lines with improvements of existing products or projects according to the requirement of the customer. Technological innovation is managerial know-how to develop and market high tech products. There is a real need now for much more planned technological innovation with in the corporate structure, rather than having society rely on the single – person venture that has historically characterised technological breakthroughs. Technological research, development, and marketing simply require too much capital and expertise for the single – venture entrepreneur.

Fortunately, marketing thought and practise has advanced and been refined to the point where a great deal is known about enhancing the

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success of high tech product endeavours. Marketing technology has kept pace with engineering technology. Yet in high technology firms there is too frequently an absence of adequate marketing knowledge and skills, consequently the product failure rate is higher than it should be or would be with the application of appropriate marketing concepts and method. Marketing knowledge and expertise is vital to the success of high technology projects oriented firms.

SUPPLY SIDE MARKETING • Marketing concepts have traditionally been demand Side oriented and

have devoted most of it attention consumer products. ♦ High technology marketing however, involves demand side and supply side marketing expertise and pertains to industrial and technical projects. • The supply – side concept has its origins in classical, pre-Keynesian

economic theory. ♦ The idea that supply can create its own demand is known as say’s law. • Supply side – marketing, then refers to any instance where a product can create a market – in other words, the product is responsible for the demand, rather than the demand being responsible for the product. • Supply – side marketing is a more aggressive approach to business

than its demand side counterpart. It is founded on the entrepreneurial spirit, calculated but high-risk taking, and the bent to exploit the unknown for great personal and/or corporate gain. Yet, supply side projects and divisions are disproportionately important in auguring long term corporate profitability and more broadly, in technological progress for society.

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CHARACTERISTICS OF HIGH TECHNOLOGY ORIENTED PROJECTS • The business requires a strong scientific/technical basis. • New technology can obsolete existing technology rapidly • As new technologies come on stream, their application. Create or revolutionize markets and demands. • No of players (sellers) in such business as usual more and the buyers are few hence it is buyers market. • It represents an imperfect competition, in market structure. Forward • Company • Customer

customer Offers company Requests

R AND D MARKETING FUNCTION

The role of high – technology marketing management is to apply technology strategically in the market place so that the firm gains competitive advantage. The achievement requires close linkage between the high tech firms R and D Marketing Functions.

THE NATURE OF HIGH TECH MARKETS

15

There is ample evidence pointing to specific ways in which high tech markets are different from consumer package goods markets. Because high tech companies exploit and create change rather than consolidate and defend existing conditions the interdependence between marketing and technology is of crucial importance. Companies regarded as low-tech may basically adjust their marketing strategies to reflect relatively unchanging technological conditions. High tech companies, however, must recognize that both technological and marketing conditions are rapidly changing (Nystrom 1990). This dynamic environment necessitates stronger consideration for the marriage of marketing and technology. Research and practice indicate that high tech markets are characterized as dynamic and complex which results in a changing target market over the life cycle (Abell 1978, Davidow 1986, Beard and Easing wood 1996). The complexity of the product also impacts market acceptance in different ways in high tech markets (Davidow 1986). As high tech products are more complicated, they require greater customer education and more product information. This necessity results in greater effort on the part of marketing to adequately convey the necessary information as well as greater effort on the part of the consumer to digest the information.

PROMINENT ISSUES IN HIGH TECH MARKETS HIGH TECH MARKETS: • exploit and create change • are complex • need to be targeted carefully • Exhibit risk • require deliberate timing • are extremely fast-paced Consumers of high tech offerings, particularly those first to adopt a technology, are extremely sophisticated and product/technology savvy this means that you can ignore getting to know your customers while 16

focusing on product leadership. The level of sophistication prevalent in high tech markets, however, demands developing an intimate knowledge of the consumer in order to ensure that the offering is captures what the customer considers being desirable. Target marketing is another critical factor for firms introducing high tech products. Easingwood and Lunn (1992) found that clearly targeted products diffuse more rapidly than non-targeted products. Complicating this factor is evidence that the customer base changes for each stage of the product life cycle as different segments of the market become interested

in

the

product

at

different

times

(Davidow

1986).

Consequently, it is important to recognize the need to clearly identify and profile a target market as well as take into account that the profile of the target market will change over time. PRODUCT LAUNCH PROCESSES Inherent in the adoption process concept is the notion that different stages of adopters have different requirements. Combining these different requirements with the emphasis on shorter development cycles and shorter life cycles prevalent in high tech markets makes correctly targeting each adopter category critical. THE NEW PRODUCT DEVELOPMENT PROCESS Models of new product development prescribe critical stages that organizations should go through to have a successful product launch. Regardless of the model, critical phases include: product idea generation, idea screening, concept testing, business analysis, marketing mix development, test marketing and commercialization. In theory, going through these stages systematically helps organizations weed out the potential failures. Customer focus is an integral component of the product development process that is often ignored. The need to incorporate the voice of the customer (adopt the marketing concept) at every phase is imbedded in these models of new product development, each phase contributing 17

additional knowledge as to what customers want. Yet concept testing and test marketing are most often overlooked by new product development teams as they rush to get their product to market before the competition. Unfortunately, this can lead to fatal errors when customer expectations are extremely high - or when dealing with a sophisticated customer - as is the case for high tech products. One of the ways to understand how different types of customers respond to new product offerings is to examine Rogers’ Diffusions of Innovation model (Rogers 1962). DIFFUSION OF INNOVATIONS AND ITS ROLE IN HIGH TECH DIFFUSION

Developing the belief that individuals differ in their readiness to adopt new products, Rogers describes five types of individuals innovators, early adopters, early majority, late majority and laggards (Table 3). These types differ in terms of their timing to adopt a new product and the sources of information they rely on to adopt new products. Understanding the differences in the five adopter groups presents a way to successfully reach individuals at various stages of adoption as the main uses of research on characteristics of adopter categories is to provide a basis for audience segmentation strategies..." (Robinson, Fornell and Sullivan 1992). As the requirements for success change as the market evolves (Abell 1978), this widely accepted adopter classification system should cause the innovative firm to research the characteristics of the innovators and early adopters and direct introductory marketing strategies specifically at them.

Adopter Categories Category Characteristics Role in Diffusion

Innovators

willing to take risks 18

"gatekeeper"

impersonal and Early Adopters

scientific information accept new ideas early

opinion leaders

rely on multiple Early Majority

sources of information risk adverse;

don’t purchase until

rely on company-

late growth stage

generated promotional information and wordLate Majority and

of-mouth require early

this is an advantage

Laggards

categories to "test

for companies who

drive" the product

enter during maturity (Dell Computer, AMA 1988)

R&D - MARKETING FUNCTION The

role

of

high–technology

marketing

management

is

to

apply

technology strategically in the market place so that the firm gains competitive advantage. The achievement requires close linkage between the high tech firms R and D Marketing Functions. THE R & D EFFORT PORT FOLIO GRID In this grid, the high tech company’s products can be classified into several “effort warranted” categories, according to the degree of technical/market fir:

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Heavy emphasis – deserving full support, including basio R and D Selective opportunistic emphasis – may be good or may be bad, requires a careful approach and top management attention. Limited defensive support – merits only minimum support.

Te ch nol og y Op po rtu nit y

Selective

Heavy

Heavy

H i g h

Emphasis

Emphasis

Emphasis

Limited

Selective

Heavy

Support

Emphasis

Emphasis

M e d i u m

Limited

Limited

Selective

Support

Support

Emphasis

l o w

Low

Moderate

High

Marketing Opportunity

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NEED FOR A MARKETING AND R AND D INTERFACE Marketing – R and D interface is essential because both groups play critical roles in the product development process especially in high tech firms. First, it must be recognised that the new product or process tends to be extremely complex and often has a number of potential uses. Some of these applications may be determined by marketing during the process of positioning the new product or process in an appropriate industry or niche with in an industry. Each group has special expertise to contribute in the introductory stage of the products development, and one or the others absence from such deliberation can produce redundancy of effort, as well as numerous false starts. Second, it needs to be remembered that high tech products, unlike other industrial or consumer goods, tend to be supply – generated. The conventional marketing concept or purely demand oriented product development results in product nuance, not product breakthroughs. Since the high tech product or process break through represents truly new developments, R and D tend to dominate the firm in its early stage of development. Thus, the need to involve R and D and marketing in product development or application efforts is essential.

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DEVELOPMENT OF MARKETING – R AND D INTERFACE There have been various organisational arrangements suggested for ensuring continued interaction between R and D and Marketing. An approach to new product development is the use of venture team. This group typically includes rep’s from marketing, R and D, production etc, involved in product development task from idea generation to marketing introduction.

MARKETING DECISION VARIABLES The elements that the marketing manager has under his or her control and can manipulate are referred to in marketing parlance as the 4Ps – Product, Price, Place (distribution), and Promotion (advertising, personal selling, sales promotion, and public relation) Collectively, when integrated into and overall marketing program for a company,

these

marketing

decision

variables

are

known

as

the

company’s marketing mix. The marketing mix decision is extremely critical because it is instrumental in determining the degree of success experienced by a company in the market place vis – a – vis its organisation. The true test of the marketing executive is low cost is allocated among the marketing mix variables and ultimately what performance results in the market place.

STRATEGIC MARKET PLANNING

22

The high – technology firm operates in an environment that can change almost overnight with the discovery or application of new technology which obsoletes the old. Strategic planning is even more imperative in high – tech firms than in companies doing business in more predictable mature markets. This is because conditions are evolving so rapidly – conditions that can literally make or break a company quickly. The high – tech organisation can be proactive.

PRODUCTIVE DEVELOPMENT: There are various identifiable stages of development in any industry or form of industry evolution. In the supply – driven, introductory phase, the emphasis in the firm continues to come from R and D, as the new improvements and applications tend to push them on the market. The industry itself has not really been totally sorted out, as the number of producers continues to grow. In this immature industry sitting, the emphasis is on R and D technically skilled sales people who must demonstrate how the product or process can be applied. The perspective of managers involved in developing new products often seems to be at odds with the perspectives of customers (Table 1). When selecting products, consumers focus on features, what the

consequences

are

from

using

those

features

and

how

the

consumption experience fits into their values (Gutman 1982; Gardial, Clemons, Woodruff, Schumann, and Burns 1994). Product adoption is smoother when the product is easy to operate and does not require behavioral changes (Davidow 1986). To get people to adopt a new technology, it should possess unique qualities which current offerings

23

cannot deliver (Porter 1980). Last, but not least, their goal is to fulfill unmet needs.

TABLE Customer Focus versus Managerial Focus Customer Focus

Managerial Focus

Features Consequences, values Ease of operation Unique qualities Consumption

Design Cost Ease of production Unique technologies Production

In the supply – driven, introductory phase, the emphasis in the firm continues to come from R and D, as the new improvements and applications tend to push them on the market. The industry itself has not really been totally sorted out, as the number of producers continues to grow. In this immature industry sitting, the emphasis is on R and D technically skilled sales people who must demonstrate how the product or process can be applied. In the supply driven stage, the shift is to applications and to product modifications that will maintain its state of art. The company’s purpose will be to demonstrate its ability in the field. R and D will still receive significant attention in the organisation, but it will now be coupled with marketing applications and considerable attention will be focused on determining which applications will be most productive.

24

In the supply driven stage, the shift is to applications and to product modifications that will maintain its state of art. The company’s purpose will be to demonstrate its ability in the field. R and D will still receive significant attention in the organisation, but it will now be coupled with marketing applications and considerable attention will be focused on determining which applications will be most productive. MARKETING ORGANISATION When evaluating the marketing organisational arrangement in any organisation, there are a number of rather fundamental avenues that need to be explored. They are 1. The reporting level of marketing 2. The interface between R and D and marketing 3. The relationship between marketing and sales 4. The locus of marketing decision making

Positioning and the selection of Target Markets POSITIONING – Positioning seems to best describe the steps that the high – tech marketer needs to follow if it is to identify correctly the firms target markets and to place them is priorities. Positioning connotes a degree of flexibility that allows the marketer to contemplate a broad range of users or applications for its products or process. The process of positioning allows the high tech marketer to determine the various industries or buying groups that can use the product and away them in an ordered fashion.

25

As a result of its positioning of forts, a high – technology company should be able to indicate which industries offers it greatest potential, which firm in those industries would benefit most from its product or process and which markets (in rank order) it will attempt to exploit.

Stages in positioning for the high – technology marketer Proceeding through the stages of positioning, the company should be able to identify most of the opportunities and potential target markets for it product or processes.

Stage 1

Stage 2

Stage 3

R and D Breakthrough (Multipurpose product or process)

Intra corporate Applications Analysis (Industry)

Formal Market opportunity Identification Analysis

Market priority

Stage 4

Stage 5

Assessment

In depth Marketing Research In priority industry

26

Selection and Ranking

Stage 6

Of Target Market(s)

Stages in positioning for Targeting high – tech Markets

Product life cycle for High tech companies The product life cycle can be the key to successful and profitable product management, from the introduction of new products to profitable disposal of obsolescent products. A company’s positioning and differentiation strategy changes as the product, market, competitors change over the product life cycle. Bell shaped curve that represents the four stages of PLC (Introduction, Growth, Maturity, and Decline) is of little value to managers in high tech companies. The traditional product life cycle concept suggests market conditions and sales volume as means to ascertain when a product is growing, maturing and absolution. But, sales volume of high tech products can be misleading when used as a processor of life cycle evolution. The revenues or units sold of a product associated with a particular technology typically reach an apex after a competing superior technology is introduced that ultimately renders the old product obsolete. So,

in

addition

to

general

market

conditions

and

sales

volume

performance, astute high – tech executives will also closely monitor technology life cycles. This approach will lead to more effective marketing and technical decisions.

27

In introductory market phases, there is usually enough growth to accommodate most of the pioneering competitors, and entrepreneurial – type executives thrive. There

is

nearly

undivided

focus

on

technical

competence

and

inventiveness. But a markets mature, competitors intensely war with one another for share and as a result, executive with different orientation and expertise are required. The emphasis in the market will have shifted away from technical innovation to distribution, advertising and sales promotion, and pricing.

Product and Performance

Limit of particular technology

Technology B

Technology A On set of effort

Man --- hours Invested

Technological Life Cycle The horizontal axis designates units of effort that have been expended on a technology to date, such as the total R and D man-years or dollars spent. The vertical axis refers to the most crucial measure of products and process performance. 28

More Technology A starts out slowly, because of intense and heavily financed R and D efforts performs markedly better, and finally plateaus as the technology reaches its performance limits. At technology A’s performance capacity, the new Technology B is already wending its way through its own s – curve, a curve that starts out at a performance level far above technology A’s origin. For a while the technologies compete (theirs – curves overlap), until the superior Technology B eventually wins out and captures the market. The high tech company that is successful in staying on the cutting edge of its industry’s technology must spend more time analysing technology life cycles than on studying experience curves.

29

The Typical New Product Development Process in the Successful High – Tech firm Obtain new product idea and concept test Marketing involvement Begins

R and D Involvement

Identify prospective customers

Begins

Conduct market Research

Estimate Demand

Develop and test prototype

Make product Introduction Decision Final Product development

Test Marketing 30

The dotted line indicates that the test marketing in process high – tech companies is neither typical nor atypical

Commercialisation

♦ First, both Marketing and R and D are involved in the formative stages. ♦ Second, demand estimate are considered at best estimates of market potential and are not sophisticated projections normally associated with nature markets. ♦ Third, leading high tech firm are calculated risk takers. There is a noticeable lack of test marketing where usually a product is marketed in a limited geographic area or with a small number of buyers before a full – fledged communication effort is made. In many market situations, particularly in mature consumer products industries, test marketing is the rule. In high tech industries, test marketing neither the rule nor the exception. Test marketing of high tech products runs the risk of providing competitors with the time and technological information it needs to react. As

technological

secrecy

and

surprise

cue

key

elements

of

innovativeness, test marketing is not considered as rule for high technology projects. High technology oriented companies rely on a great deal of customer identification, demand forecasting and marketing research. 31

MARKETING STRATEGIES AT ECIL •

A leader in Indian electronic industry, Electronic Corporation of India Ltd has been in the fore front of many breakthroughs in the field of electronics. Backed by a strong R & D team, ECIL developed a unique capability to configure,

manufacture, install, commission, maintain and

gain customer satisfaction for tailor made systems is the field of information technology, controls, communication and instruments. •

Here the industry understands the customers requirement and shows then how their technology is beneficial over other business players.

•

Unlike conventional marketing practices for consumer products which use heavy expenses on promotional activates, ECIL in order to make the customer aware of the product uses road show and mail shots and gather feedback information, based on promotion program.

•

With progressive awareness, apparently lucrative security system market has been attracting more and more players, which has created a competitive environment. The competition is becoming fiercer as there are few buyers and many suppliers for high technology oriented projects. so, to sustain in such a market ECIL tries to achieve competitive advantage by earning more and more credentials from customers and by gaining better customer satisfaction in return.

•

ECIL differentiates itself from other market players as it deals with product which are prevailing in India , having wide range of customers, engaged in strategic& nationally important activities like 32

1) space research 2) nuclear research 3) thermal power research generator 4) Nuclear power generator 5) Cement industry 6) Steel industry and its modernisation 7) Defense sector’s instrumentation 8) Oil sector’s exploratory efforts 9) Govt establishments and institutions asset management etc.

•

Business on this line is performed in ways unique to project marketing improvising upon certain conventionally practised steps.

•

Business activities/ projects initiates in either of following. i.

Forward way: - The Company in order to publish tries to make the customer aware of the product /technology through the road shows, advertising mail shots etc.

ii. Backward way: - seeking expression of internet (EOI) from interested

and

capable

entities

who

and

user

releases

an

advertisement can fulfil his requirement. Based on fulfilments of qualifying criteria presented by the tendered, his shortlists the respondents for further progress in the matter.

1. Awareness – exploring in taped market and personal contact. 2. Enquiry

- purchase order- order acknowledgement

3. Release of work order- Q AP- Dispatch 4. Installation – Release of Payments – sale compacts 5. After sale service – PBG – maintenance- clearance certificate –AMC offer.

•

All

products

services

or

projects/processes

concepts, are unheard- of breakthrough.

33

represent

totally

new

•

Which are modified and configured in their lines with improvements of existing products or projects according to the requirement of the customers?

•

Sin conisation

of specific customization and the offered system that

fulfils the customer requirement is the dynamic challenge of making manager. •

Marketing research techniques if adapted and developed especially for evaluating the future market feasibilities of technological breakthrough it’s can at least do a better job of producing improved linkage between R and D and the marketing team.

•

The project team and marketing team present their skills in designing a project in such a way that it has adaptability and upgradeability to meet the customer requirements.

•

From exploring to the unknown market by promotional activities such as technical exhibitions, demonstration etc. to the after sale service and gaining value in return in form of customer feedback is typical marketing task.

34

Market prospect/marketing team Reach EOI through Target Market Selection

Address potential customers • • •

Road shows Mail shots Personal contacts

(In order to generate customer awareness)

(Making the requirement Felt by Customer)

Threat perception Analysis What is

expected?

Gather feedback from prospect customer

Initial contract proposal

Prospective Supplier Receives enquiry Respond to Enquiry

Building technology that fulfils 35 the Customer requirement Revised Technical technical negotiations Requirement

PROCESS DESCRIPTION:The product or system is categorized as a) Catalogue or standard product or system, which are offered based on published data sheets for technical aspects and commercially operated approved price list. As input requirements and expected outputs are clearly defined for such instruments there is a likelihood of presence of fair degree of competition. b) Custom

built

product

or

system

where

the

product/system

is

manufactured based on inputs and requirements from the customer. Majority of projects come under this category, is the sense that each project/system is unique and is tailor-made to serve specific purpose of user. c) Joint venture products /systems where the technical and commercial aspects are governed by MOU (Memorandum of Understanding) entered in to by both the companies. Such ventures are normally enacted through amalgamation of strength of each and every individual partner.

Initially, customer and supplier may/may not know each other. If they don’t know each other, then seller has to try hard to position their product/technology in the customers’ notice. In order to target the untapped market, he tries to create awareness among customers and try to influence them by using certain promotional activities such as road shows, mail shorts, advertising in selected papers and journals In Road shows, equipments, or technical products are brought out or exhibited in public place, in order to persuade prospective customers by showing their effectiveness and utility.

36

•

Technical journals, Indian security, space security journals are used specifically at security systems. Business unit for advertising.

•

Personal contacts: Awareness among potential users can be spread even by using corporate relationships and contact network is society.

•

All these are expected to be a major cornerstone in the firms position

BUSINESS DEVELOPMENT INITIATIVE

Personal communications

ECIL

Personal contacts Old customers Direct contact Seminars

MESSAGE (S)

Non Personal Contact • Public relations • Advertising ♦News papers ♦Journals ♦Technical magazines • Road shows • Mail shots • Industrial Exhibitions/ Trade shows

37

Target Market Development

• • • •

Company’s success and survival depends not only on its continued ability to develop new products and processes but also on its ability to make its target markets aware of their availability at right price.

This phase of business activity usually aims to: •

Create awareness among untapped market

•

Provide customers or potential customers with information.

•

Presecuren the potential customers via the media selection.

•

Provide leads by stimulating interest in the product or process.

•

Assist in forming and/or enhancing the company’s image or reputation.

•

Increase the public and prospectuses customer awareness of the company and its products or process.

➢ Through this process of communication to untapped market, free

company gains value in form of feedback in return. ➢ Depending on feedback information collected, the product /project is moulded and modified.

APPRAISAL: It is done to gain the customers attention positioning the company’s performance, value, nature in terms of quality, leadership, R&D, excellence and product attributes using credentials like order copies, performance certificates, awards and companies reputation etc. this is to show their presence in market and to ensure their excellence in market to develop further business deals with customer. 38

PRESENTATION AND DEMONSTRATIONS: In order to differentiate its Technology and prowess from other players in customers view; company presents an efficient demonstration, proving its uniqueness and excellence in fulfilling the customer requirements. Presentation embodies all the planned external and internal contact that occurs between the company and its targeted public. The sort of targeted public that the firm may wish to contact plausibly includes its customers and prospective customers, its shareholders, decision maker, the broader financial community, key government officials, event employers. In every instance, the contact is carefully planned so that it is consistent with the desired objective of quality the firm seeks to project.

Depending

on

customer’s

requirement,

study

of

site

and

threat

perception analysis, the company gives presentation explaining the parameters, on what basis, this technology has been selected, the uniqueness, the benefits what the customer acquires, etc. Decision makers of Customers Company react accordingly. If they had a position impact they would further by forwarding an enquiry to prospective supplier.

HIGH LEVEL INTERACTION:

39

After

the

prospective

customer

is

identified

and

targeted,

the

communication between the prospective customer and the designer or indenter of company is strengthened by high level interactions. Company communicates with old customers through courtesy calls, for up gradation reporting and expansion proposals. This is two – way interaction program that brings out interest of old customer to fulfil their requirement.

Making the requirement felt by the customer is the immediate job of the marketing R & D team. This team supports and if feasible assists the customer in framing requirements, because the customer may not have full knowledge about the technical specifications and their importance. It is this team’s duty to give complete information regarding the product, its uses, combinations, its types and from etc.

ENQUIRY:DETERMINATION OF REQUIREMENTS RELATED TO THE PRODUCT/SYSTEM: 1) CATALOGUE AND STANDARD PRODUCT/SYSTEM:

On receipt of enquiry or an obtaining tender documents, latest datasheet/ catalogue will be considered or review covering all the aspect. 2) CUSTOM BUILT PRODUCT/SYSTEM: On receipt of enquiring or an obtaining tender document, incharge marketing and project leader of the respective business unit determine the product or system requirement/ covering

all

the

aspects

in 40

consultation

specifications

with

incharges,

manufacturing and quality assurance or any other process owner as required. ➢ Product/system specifications are decided depending on the

technical negotiations between the prospectus customer and supplier. PRODUCT SPECIFICATION COVERS: 1) Requirements specified by the customers, including the requirements for delivery and post-delivery activities. 2) Requirements not stated by the customers but necessary for specified or intended use. 3) Statutory and regulatory requirements related to the product. 4) Any additional requirements determined by the project leader.

➢ Product/system specifications are configured according to the

customer’s enquiry so as to meet their requirements and to achieve fitness for the purpose which the project is intend for.

TENDER REVIEW: 1) CATALOGUE AND STANDARD PRODUCT/SYSTEM. •

Incharge marketing section reviews the tender with the project leader whether the customer requirements are completely met.

•

The observations of the review are recorded in tender/contract review form and quotation is sent based on the price list or suitable letter and customer supplied form.

•

Quotation is a written statement by the supplier that includes technical details of product/ project/service, price details incidental charges like insurance and transport validity period and also the delivery time details.

•

Normally a quotation is to response of an enquiry of customer. 41

•

Quotation is of three types:1) One part quotation 2) Two part quotation 3) Three part quotation

One part quotation includes total technical terms and commercial and price information and certain other documents towards proving suppliers suitability, experience etc. TWO PART QUOTATION INCLUDES: 1) TECHNICAL PART:

detailed technical information of the product/

products offered, compliance statement towards proving that the item offered is the best possible match to their requirement. List of items offered

with quantities but without price. Terms and

conditions of sale also forms a part of the technical offer also called as techno-commercial offer. 2) PRICED PART: in this part of quotation only the prices of items

offered are mentioned. This part of quotation may undergo changes when a changed system or enhanced quantity of delivery is decided between the seller and the buyer in course of technical negotiation. THREE PART QUOTATION INCLUDES: 1) Experience and credentionals of company 2) Technical part

3) Priced part Then, a sale lead number is allotted to the offer and the same is posted in sale lead register. CUSTOMER BUILT PRODUCT OR SYSTEM: After

obtaining

clarifications(if

any)

and

understanding

the

requirement of customers, incharge marketing and project leader shall

42

organize review with all concerned departments as required to consider the following before preparing cost estimates for the enquiry. 1) Whether quality requirements of the customer can be met, 2) Special standards to be applied 3) Special manufacturing facilities required 4) Documentation supply needs 5) Special inspection and test equipment requirements 6) Commercial terms and conditions

Presenting Quotation (Price Promotion) (1part / 2part / 3part)

Price Negotiations Price Revision

STOP

Rejected to order

accepted to order

Delay in ordering Quotation validity expires Revalidation of Quotation Purchase order [Once purchase order is received, the prospective supplier becomes ultimate supplier or authorised seller] • Comm. Req terms • Quality Req • Tech. spec • Completeness of order • Rate of taxes • Delivery period • Other cond’s to run the project

Contract review Discrepancy / mistakes

43

Verify and modify the contract

Contract review

Order acknowledgment

Production / project team activity starts

The observations of the review are recorded in tender or contract review form. After preparation of cost estimates, it is verified by quotation review committee (QRC). Consisting of representatives from manufacturing department, marketing department, finance and accounts department. Based on quotation review committee, recommended estimates haed of business group/competent authority will finalize the price to be quoted. Incharge marketing section prepares and submits the bid in the required format as provided in the tender or in the standard quotation form under covs of a suitable forwarding. Quotations are normally kept valid for customer acceptance for a definite period or (for period during which drastic changes are not anticipated) or on enquiry o0f validity period or earlier than that a customer may ask for extension to complete his inhouse procedure. On receipt of such request for extension the marketing section reviews the possibility with respect to current cost up and on ascertaining the feasibility, revalidates the quotation for the desired period. Sometimes, extended validity is offered to wean back a prospective buyer or as a means of customer support program.

PURCHASE ORDER:

44

A purchase order (PO) is a commercial document issued by a buyer to a seller, indicating types, quantities, and agreed prices for products or services the seller will provide to the buyer. Sending a PO to a supplier constitutes a legal offer to buy products or services. Acceptance of a PO by a seller usually forms a one-off contract between the buyer and seller, so no contract exists until the PO is accepted.[1]

POs usually specify terms of payment, incoterms for liability and freight responsibility required delivery date, and specifications and reference or part numbers of the items to be purchased, with quantities and prices. When accepted by the seller, it forms an agreement between the buyer and seller. From an internal control perspective, Purchase Orders are the end result of an authorization process that is traditionally triggered by the creation of a Purchase requisition. An internally authorized Purchase requisition is normally converted into a PO CONTRACT REVIEW: 1. Contract review for catalogue and standard products or systems and

customer based product: •

The details of scope of contract and its technical aspects in the customers order is compared with the quotation by project leader.

•

The details of commercial aspects in the customer order are compared with the quotation of marketing section.

•

The observation of the review is recorded in the tender or contact review.

•

Only after completion of these activities, the deviations if any are listed and suitable amendment to the order is requested through order acknowledgment sent to customer by incharge marketing. Contract/ purchase order is registered in order booking register.

45

•

At this stage all the preorder documents are transferred to a separate order file according to order acknowledgment numbers. The relevant data regarding the contract/ purchase order are noted in contract profile form.

•

The contract profile provides details to monitor the status of the contract at any given time.

1. Contract review for joint ventures product system:-

when order or letter of interest is received from customer, in charge marketing and project leader review the order whether the technical and communicable aspects are as per memorandum of understanding and recorded the observations in tender or contract review form and the details are registered in the order booking system. RELEASE OF WORK ORDER:1)

for catalogues and standard products and systems:Marketing

section

operates

an

annual

production

plan.

Respective marketing section of business unit prepares and issues annual work order to PPC- production planning and control for preparation of annual plan. 2)

for customer based product /system :Marketing section prepares the detailed scope of supply, delivery schedule and other relevant data required for the extension of order/contract and sends a letter along with a copy of purchase order to PPC for allotment of job number. PPC issues the job number allotment letters to various sections for initiating necessary manufacturing actions

For joint venture products, in charge marketing places the requirements as and when the order received. AMENDMENT TO CONTRACT ORDER:

46

1) Any amendment that is required from customers before or during execution of orders are discussed and communicated to all relevant departments. 2) Any variations during execution of contract are tak4en up with customers and project leader obtains clearances/approvals for the variation before proceeding with the further work. CUSTOMER COMMUNICATION: Product information: •

Incharge marketing of concerned business unit posts or updates the product information.

•

Incharge marketing of concerned project leader uses effective communication to contact customer at different

stages

regarding enquires, contracts or orders including amendments.

Quality control tests • Components test by QC • Test Req. – plan

Supplier generates Quality Assurances Plan

Pre Despach Inspection • Test report authenticity has to be given Approval /Authorisation to ship finished system • After 3rd party Inspector approves note

Shipment order (consignment Shipment release form

System Installation commissioning 47 System acceptance / completion certificate Submission of Bill

for transport)

Release Payment

Ownership transfers to buyers

QUALITY ASSURANCE PLAN: After the production activity completes, the systems sent for the quality tests. Quality assurance plan and approval will be given by the supplier to the customer depending in quality test performed. Inspection clearances certificate is forwarded to supplier from customer on basis pf pre-dispatch inspection. •

This gives an approval or authorization to ship. Shipment order is released by the customer asking the supplies to deliver the system.

•

The delivery of the goods as per contract is made through delivery challan.

•

The materials required for installation and commissioning the other items required for field work are delivered through general delivery challan.

•

Consignment note for transportation is given.

•

System installation commissioning starts at the customer site. After completion, the customer gives system acceptance certificate to the suppliers.

The claim for payment of the contract amount is made through invoice, and the customers are followed up for the payments due.

48

Submission

of

bills

that

includes

even

the

installation

transportation charges, by the supplier to the customers.

and The

customer releases the payments through bank/DD/cash. This results in transfer of ownership from supplier to the customer. Then the customer forward commissioning certificate saying the system is here by accepted. Thus a sale completes and after sales service function takes its roles. •

Supplier gives guarantee in form of PGB- performance Bank guarantee and commitment to keep the system in working state for guaranteed period.

•

On basis of the maintenance service given by the supplier; customer gives a clearance or performance certificate which becomes a creditionals for the company.

Contract closure: •

Receipt of the clearance certificate results in the contract closure.

•

If the customer wants the maintain service by the supplier to be continued, he may be proceed for annual maintenance contract with supplier.

49

AFTER SALES Supplier – commitment to keep the system in working state Maintenance and guarantee for agreed a year period • Becomes credential to win more customers.

Clearance certificate Maintenance contract

Performance certificate Optional

CUSTOMER FEEDBACK AND CUSTOMER COMPLAINTS: •

In charge marketing sends customer feedback forms to each customer and obtains the satisfaction level on rendered services or product supplied by ISD. The customer satisfaction level is computed and corrective actions will be initiated where require as per procedure.

•

In charge marketing of respective business unit receives and enters in customers complaints register:

a) The complaints received from customer. b) Complaints received but cannot be attended by branch office, and

forwards to the concerned project leader. 50

•

Respective project leader analyses the complaints involves action plan and schedule for attending customer complaint

•

Respective business unit in charge/project leader ensures all necessary

follow-up

action

to

attend

customer

complaints

satisfactorily. •

If any additional work is involved and there is need for offering commercial

proposal,

in

charge

marketing

initiates

and

communicates the same to the customer. •

After the complaint is attended, in charge marketing of respective business unit closes the complaint in the register.

•

In charge marketing of respective business unit sends the status of the customer complaints to in charge customer complaints cell every week for review.

•

Based on this information, the in charge customer complaints cell complies

the

pending

complaints

monthly

and

quarterly

on

customer complaints compliance review committee. •

Customer

complaints

are

reviewed

quarterly

by

customer

complaints review committee and conveyed by customer complaints cell in which all business units in charges and quality department incharge are the members. The minutes of meeting will be circulated to all the concerned for implementation.

51

SWOT ANALYSIS: The strengths, weaknesses, opportunities, and treats of ECIL are: 1. Reputation, goodwill skilled manpower 2. Shot length of manufacturing line 3. Ability to source components globally 4. Long-term relationship with suppliers 5. Vendor development programme WEAKNESSES: 1. The decision making is widely dispersed in the organization. As a result of this no one has absolute authority to take quick, independent decisions. There are too many checks and watch dogs like internal audits, statutory audit, government audit and vigilance dept etc. 2. Users expectations or aspirations are notional, they need to be met to add satisfaction. But it becomes difficult for marketing personal to meet that requirement under same expectations and satisfaction as day by day there may be in technology and also the customer requirements. 3. Because of govt policy even in the favourable market conditions the company could not charge higher price to increase profits.

52

EPILOGUE: It is a universal truth that at the extremities if a venture- small or big, there are eager buyer and motivated seller. This holds well for across the country business, consultancy, corporate business, promoting various social activities, entertainment. Fun making, leisure industry, tourism promotion and many more stoking of human attributes of eagerness and motivation promoters business, progress

of

the

society,

industrialization,

prosperity,

international

corporation and many more. In course of my academic life, I set my eyes on a career in marketing as I am fascinated with the knowledge of overall progress made over the centuries by mankind, pursuit of excellence that always goes on in human brain and shows up in various innovations reported all over the world. Over and above the study of MBA (marketing) which normally imitates as to general marketing concepts, I have developed desires to know the application aspects of acquired knowledge in practiced field. As my first step, I have tried to understand the psyche of the entities involved and modalities followed by an elite business house in promoting business

in

project

conceptualization,

implementation. 53

design,

manufacturing,

and

Study based on exposure in the activities and interaction with the marketing team members, forming a part of my curriculum is dedicated to my institute and to my fellow an future colleagues to refer to.

54