LAUNCHING EFFORTS NEEDED FOR A HIGH-TECH PRODUCT
PhD Student Lavinia DOVLEAC Transilvania University of Brasov, Romania Email: [email protected]
Abstract: This paper aims the difficult problem of creating new product concepts in the area of high-technology and innovation. Because of scientific discoveries and impressive development of technology, many companies compete for market supremacy on the technological innovations market. In a global market, which is currently in an economic and financial crisis, consumers make a new hierarchy of priorities in terms of expenditure and consumption. Therefore, companies that create new products must be very careful about 2 aspects, so the new product may not become a failure: the products positioning on the market and the target group which they address to. This paper belongs to the marketing area by bringing into discussion theoretical concepts, by analyzing the stages crossed by a company in the process of launching a new high- tech product and crossing the abyss in the product adoption process by consumers.
Key words: high-tech product, product adoption process, launching process, product lifecycle, innovators, PC tablet
Introduction innovations of the past 30 years, made This paper aims to approach in a by Knowledge @ Wharton magazine theoretically and practically manner the (www.wall-street.ro), are included many main aspects of launching a new high- products or services using advanced tech product. There will be analyzed technology: the Internet, laptop, mobile one by one all the stages of the telephony, fiber optics, digital photo or launching process of a new product, ATM. Industries with "advanced taking as example an Apple product: the technology" use intensively research iPad. Throughout the paper there will be and development and apply used theoretical concepts from the systematically scientific concepts and marketing literature and for illustrating technical knowledge (ro.wikipedia.org). the examples there will be used Creating a new high-tech product marketing research results conducted involves considerable materials efforts, by specialized companies and personal human and time efforts, and very secondary data processing. The issue through research and studies. The of launching a new product is market often reacts in an unexpected particularly complex in the field of high way regarding the product. Finally, technology products because the pace consumers decide if the product is a of innovation is developing very rapidly success or a failure. and the competition between producers For a new product to be is very serious. successful, its necessity, quality and Some innovations are short-lived, value must be recognized by the while others are able to generate new consumer, meaning to be tested, industries. In a top of the most important accepted and bought in a repeated way (Florescu, Mâlcomete, Pop, 2003, an early market dominated by a few pp.564). visionary customers to a mature market The concept of “new product” has dominated by a massive block of several meanings (Pride, Ferell, 1993): customers whose orientation is In terms of marketing, the new prevalent pragmatic. The distance product is that product which is between these two markets, until now launched on the market at one moment ignored, is enough significant to be and finds no equivalent in the existing called a gulf, and crossing this gulf must supply; be the main focus point of any From the consumer point of view, marketing plan regarding the high the new product is one that has the technologies on long term. potential to satisfy a new need or an Each high-tech product truly existing one. innovative starts as a fad - something From the company point of view, apparently without market value or the new product is any product purpose, but with some great features assimilated into production for the first which generate much enthusiasm in a time by the company. group of "knowledgeable". This is an There are some assumptions from early market (Moore, 2009). Such a which the producer is tempted to start in market has, at this moment, the Apple creating and launching a new product: a iPad. strong brand sells everything; a new iPad is a brand of a small portable product will be sold because of computer (about 24.3 to 19 cm, 1.4 cm consumer curiosity, a high price is a thick, weight 680 grams to the model guarantee of quality for the new "Wi-Fi") produced and sold by Apple product; a strong promotional campaign company since April 2010. iPad has will convince a significant number of been called "a toy for media consumers consumers to purchase the product; - in whatever form." some consumers will be unsatisfied, so The period next to the creation of the company should not change the early market is when the rest of world vision and strategy; the product can be wait to see if something can be done of improved over time following the users this product; it is "the abyss" or "gulf." If opinions. it is discovered a valuable offer that can The American company Apple is a be predictably given to a target group of good example of high technology customers at a reasonable price, then a products manufacturer with a strong new main market is made. name in the world, with effective market Consumer attitude towards the strategies. Apple has managed to adoption of technology becomes conquer the market based on both user- important - whenever products are friendly design, as well as strong brand. requiring a change in the current mode The brand Apple offers high quality of behavior or a change of other products built using an innovative products and services that they base technology that stores a great creativity, on. Such products, sensitive to imagination and a specific design. The changes, are disruptive innovations. company tries products that could The other concept, the "continuous" become benchmarks in the sector. innovation refers to the normal process of improving a product that does not The transition of high-tech require a change in behavior. product from the early market to Apple iPad can be considered a the mature market "continuous" innovation. Its main The most dangerous point in the advantages are: small size, good quality development of high technology of images on screen, many possibilities markets is marked by the transition from for connecting to networks, long period 150 of independence with a single battery a new technological product consists charge. The 3G model (more primarily of innovators and early expensive) provides wireless adopters. In the high technology sector, connectivity to the Internet from any innovators are better known as place where there are mobile-cellular "technics" or "technology enthusiasts", network with the necessary services. while early adopters are the “seers”. Typically, the first to adopt new Specific attributes for the technology are those who appreciate adoption process of high-tech the technology itself. They are the first products who appreciate the architecture of the The process of adopting the new new product and realize why it has a product is the mental process by which competitive advantage over comparable a person passes from finding about the products already existing on the market. existence of an innovation to its final adoption (Lefter et al. 2006, pp.445). Reactions generated by the This process involves several launching process of a high-tech successive stages: identification of new product products on the market, development of Differences between the the interest for the new product, perception of the concept and the evaluation of the new product, selection new product and effective adoption. During the new product High-tech industry needed a model development there are three types of which effectively copes with a new testing: the concept, the product and the mode of product introduction. market, to obtaining accurate Technology is absorbed in any given information (Doyle and Stern, 2006). community in stages corresponding to The confidence in test results increases the psychological and social profiles of with the transition from one test to various segments within that another. community. The innovators approval is Retrevo Company conducted a an important tool for developing a study that examined the reactions of credible launching basis for users before and after launching the approaching the early adopters. A iPad and the results indicated a revised version of the technology decrease in purchase intent after the adoption process involves a space product launch. The survey was applied between each two psychographic to a sample of 1000 people in the U.S. groups. This distance represent the In a first phase of the study, 52% of separation of the two groups - namely respondents hadn't heard about the the extent to which any group would iPad. In the second phase of the survey, have difficulty accepting a new product applied immediately after the launch of if it is presented in the same way as to the iPad, the percentage of those who the previous group. had never heard of this product has The real "gulf" occurs between the fallen to 18%. The third phase of the early adopters and the early majority. survey was carried out immediately The early adopter expects to obtain a after launch. substantial advantage over the Figure 1 shows the modification in competition. By contrast, early majority time of the respondents' buying wants to buy a productivity improvement intentions. As the product becomes for existing operations. They want a available, customers are forming a technology which enhance, not replace, negative opinion and do not want to buy the current mode in which they conduct it. business. The initial set of customers for
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Modification of buying intentions for iPad
15% after the 61% launch 5% I need more information to decide 21% during the I don't w ant to buy 52% launch 9% I w ant to buy
17%
The moment of response moment The before launch 26% 3%
0% 20% 40% 60% 80% Percentage of responses
Figure 1. The modification of buying intentions for iPad in USA Source: Own calculations
Another survey was conducted by In Figure 2 it can be observed in YouGov and involved an intercultural what proportions was taken interest in approach, because it was applied after purchasing an iPad in the concerned iPad launch in several countries: United countries. The most interested in iPad Kingdom (on a sample of 2047 seemed to be the Arabs, while respondents), Germany (1054 Americans and Europeans adopted a respondents), USA (1000 respondents), somewhat reluctant attitude. 58% of Denmark (503 respondents) and the consumers in the Middle East said they Middle East (Saudi Arabia, Qatar, would buy an iPad; by comparison, only Bahrain, Kuwait and United Arab 17% said the same thing in Germany, Emirates - a total of 2252 respondents). 13% in the U.S. and only 7% in Denmark and Great Britain.
Buying intentions over the world
70% 58% 60%
50%
40%
30% 17% 20% 13% 10% 7% 7% Percentage of responses
0% Middle East Germany SUA Denmark UK Countries
Figure 2. The expression of buying intentions in the concerned countries Source: Own calculations
By ignorance, consumers have in the Middle East, 59% of consumers made a major confusion about the use believed that iPad can function as a of iPad and overestimated its features: mobile phone and 59% believed that it
152 has a webcam. In comparison, 37% of computers of all time", "a winner" or in respondents in Germany and UK, 36% contradiction "an expensive niche U.S. and 40% of Denmark believed that product that is between laptop and the iPad can function as a mobile. smartphone, but that does not meet the Consumers were willing to pay need either for one nor the other." different prices for Apple Tablet PC. Although not intended for Thus, in UK, Denmark and Germany, complicated operations, iPad is, in the users would be paid between 410 and view of analysts, perfect for 630 dollars for an iPad, while U.S. entertaining. It is considered more respondents were willing to pay suitable for home users, not for between 300-400 dollars, and the business applications. Middle East, between 160-320 dollars. Potential problems with high- The importance of specialists’ tech product launch evaluation of high-tech product The company which developed a In business, technology new product must first decide when the enthusiasts are the opening door people best moment for launching it. Then the to any new technology. They are the company must decide where the new most interested in learning about it and product will be launched: in one city, in they are for everyone else the people a region, on the national or international who have the power to make the first market. Only few companies have the assessment. They also want to be the capital and capacity needed to launch first to receive the new material. So, new products in national or international they can make very good comments distribution (Kotler, 2004, pp.473). very early in the design cycle. Product development entails certain In most cases, innovators don't risks. No matter how well the marketing have a strong position to dictate the researches are conducted, new purchasing decisions of others and they products fail with depressing regularity. aren't a significant market. But instead, The risks that can arise are related to they are one extremity of the bridge, the the market, to the technology involved original source of references for the or related to the strategy (Blythe, 2003, product or service and a testing pp.156). framework for the introduction of modifications to the product or service. Production problems Apple has always tried to make his Apple has announced an initial first priority the concept of "user launch date worldwide in March, but experience". Thus, in March 2010, then was postponed by one month before the appearance of iPad in stores, (April 3) and the new date concerned a group of journalists from major only the U.S. market. No explanations newspapers in the U.S. have tested the were given concerning the launching new product, then wrote a review based postpones. According to some analysts, on their opinions. Initial evaluations of there was a production problem of the the iPad were less favorable, based mobile device. only on information given by the Regarding the consumer segment, company, not by testing. Then, four the decision to postpone the first days before the official launch, in the deliveries of Apple's Tablet PC outside media appeared the reviews of the first the U.S. was a reason of displeasure for users from magazines like: The Wall who wanted the new gadget, but turned Street Journal, The New York Times, into a business for speculators on the Chicago Sun Times, USA Today, Internet. So-called resellers, who buy PCMAG.com. So the iPad was called: massive product opportunistic and sell "a pure innovation - one of the best them on the Internet at greatly 153 increased prices to customers who, for competitive store, it's possible that iPad one reason or another, have no direct becomes a competitor in e-readers. access to them, began to supplement Apple's innovation comes more the price of iPad with over 500 dollars from positioning than from technologies on sites as Craiglist or eBay (source: or functions of the iPad. iPad is a Reuters). Speculators have oriented to product of "style, elegant but not customers in the United States, faced necessarily efficient, with a higher price. with the lack of products in stores. Those who will buy it are, on the one The product was available in a first hand, those who rely on personal phase, besides the U.S., in Australia, branding and differentiation and early Canada, France, Germany, Italy, Japan, adopters who are able and willing to Spain, Switzerland and the United embrace a new product for mobile Kingdom at the end of April 2010. computing. Then, from 19 July 2010, the iPad Despite the high price, those who has become available in another nine have an iPhone is likely to choose an countries: Austria, Belgium, Hong Kong, iPad because they were familiar with Ireland, Luxembourg, Mexico, the functionality of the IOS operating Netherlands, New Zealand and system from Apple. Singapore. In a study conducted by MyType (www.laptopnews.ro) on iPad users, Originality problems was taken into account the French-Italian STMicroelectronics psychographic dimensions, too. The group holds in the European Union research was conducted on a sample of since 2001 the trademark "IPAD". 20,000 people aged between 13 and 49 The name "iPad" might trigger a years, from the United States. dispute between Apple and the According to the results, the users who Japanese group Fujitsu, which in 2003 have an iPad are very educated, rich filed an application for registration of the and sophisticated and they cherish the mark in the Patent and Trademarks power and personal success much Office in the United States. Fujitsu iPad more than other people. is a terminal used in retail. What counts for real is the fact that Shenzhen Great Loong Brother the decision to buy a tablet, a phone or Chinese company claims that the other gadget is individual and stays device produced by them, P88, very individual. similar to Apple iPad is, in fact, the original from which American company Market adjustment to the new inspired. If Apple will enter the Chinese high-tech product market with iPad, it will be sued by the Inside the market there is always a Chinese company, since it would affect group of innovative companies which, its sales. through creative ideas, find a use for the new products. Concerns about the choice of Conde Nast Media Group, target market publisher of Wired magazine, GQ, Apple has built around its product Vanity Fair, The New Yorker and (whether it is a MacBook, an iPod or Glamour, made versions that can be iPhone) features and high-tech read on the iPad. Low cost airline applications that provide users real Jetstar in Australia will provide experiences. iPad is an alternative customers iPad tablet loaded with positioned premium on netbooks, as the music, movies, books and games. MacBook's are alternatives positioned Using the tablet in flight costs $ 10. The premium to PCs. If the iBooks will be a tablets will be found for the beginning only on domestic flights that lasts longer 154 than one hour and each plane will have the market. Having already a 30 tablets. benchmark and a model, profile In the Italian restaurant Il companies have embarked to create PC Marchesino, iPad's are used as a hi- tablets with better features or lower tech menu, used by clients to see prices. Tablets provide a balance in pictures of food, nutritional value, form and function. The integration of calories and other useful information wireless connectivity in each tablet is a relating to the served food (source: reference transformation, redefining the Italy-ru.). If one customer has an allergy use of the device. Enhancements such to one of the ingredients, the menu as touch screen, energy management gives it an alternative ingredient. The and storage make the tablet a complete electronic menu is bilingual, being device. available in Italian and English. As it can be seen in table 1, in the eight months since the launch of iPad, The market evolution of a the competition reacted and the most high-tech product powerful companies launched the PC After launching the iPad, the tablets. competitors weren't long in coming to
Table 1 The PC tablets launched after iPad PC Tablets June July August September October Cisco Cius X Samsung Galaxy Tab X Dell Streak X Fujitsu LifeBook X HP Slate 500 X Toshiba Folio 100 X Source: Own calculations
India, known for its results in high- specifically by Tablet Kiosk for use in technology area, responded in July harsh conditions. The product face the 2010 revealing a prototype of a tablet, dust, water, temperature and humidity the cheapest in the world at this or not very strong shocks, and is moment that cost $ 35. The tablet, suitable for use in industry, agriculture, which uses solar power, is the result of exploration, etc. the work of the Indian Institute of So far, Apple has sold 8.5 million Technology and was designed to be the iPads worldwide. In the first 80 days cheapest computer that can be from launch, were already sold 3 million distributed and very easy to use. It is units, and at the end of third quarter of the first part of youth education program 2010, 4.5 million units were sold. In in India using technology and the figure 3, we can see the evolution of Internet. iPad sales (in units) until this now, and Another prototype of PC tablet, the prediction for 2011. Sahara TufTab, was designed
155 iPad Sales Evolution 04.2010-12.2011
25000000
20000000 20,000,000
15000000
10000000 8,500,000 1,000,0000 4,500,000 5000000 500,000 1,000,000 300,000 0 1st day 1st w eek 1st 3rd trim. nov.2010 1st year dec.2011 month
Fig.3. iPad sales evolution in the period 04.2010-12.2011 Source: Own calculations
In October 2010, VoucherCodes The price represents a very conducted a survey among 3000 important element when it comes to buy respondents from UK in respect of "the a PC tablet, especially for women. Men war of PC Tablet" and the general are interested in technical specifications market situation and consumer views. and features. Moreover, in terms of From the research it was found that price, if a competitor comes up with a companies that have the greatest cheaper PC Tablet than iPad, the chance to bring an iPad rival, according market will definitely react to change: for to respondents, are Dell and RIM. a reduction of $ 160, over 30% of the Samsung followed close, according to market will abandon the iPad. Figure 4.
LG HP 4% 6% Mic r os of t 8%
Samsung 9% Apple 52%
RIM 10%
Dell 11%
Figure 4. The most preferred brands by the consumers Source: Own calculations
The factors that lead women to situation is as follows: quality, ease of buy iPad are in order of importance: use, price, design, dimensions, price, usability, quality, size, design, confidence in the manufacturer, and the confidence in the manufacturer, the number of applications. number of applications. For men, the 156 Conclusions of consumers, manufacturers can The rapid changes of the transform the products on time avoiding technological environment, with the failure. implications in reducing the period of For example, Apple needs to come developing products and in shortening up with an improved version of the iPad. their life cycle is why high-tech industry The main disadvantages of the current companies must focus on improving version are: lack of support for and creating new products. simultaneous execution of multiple Companies should make efforts to applications, the lack of support for create innovations developing ideas, videos. The "Wi-Fi" model can not be products or technologies perceived as used as a normal mobile phone, it novelties. Leading and organizing doesn't have a camera or webcam. It activities related to the assimilation of has no screen with 16:9 ratio. It has no high-tech products are complex USB and FireWire interfaces, and no processes. For the company, the main video output. advantages of introducing a new iPad is a step in Apple's growth product are: winning new customers, trend in the use of mobile devices. In obtaining competitive advantage, image 2009, the only laptops that have building, revenue growth, broadening increased sales were netbooks, and the the product mix, etc. proportion of smartphones users is According to a survey realised by growing in a market that is already Strategy Analytics, iPad held in the third intense combat, and where the use of quarter of 2010 (July-September), information and the use of mobile 95.5% of the total market for PC applications followed the same Tablets. The year 2011 will show if the ascending evolution. iPad will be receive the mature market. Positioning iPad is between To prove its capabilities, iPad will also netbook and smartphone, so that the have to be included into everyday launch of the Apple gadget will not objects and be used primarily as an reinvent necessarily, the PC industry, auxiliary tool for daily tasks: email, web but will influence the direction of browsing, text editing, sketches and development of a demand which is notes. clearly manifested. To do this, Apple should make High-tech industry is a prolific efforts to correct some issues, as: Wi-Fi environment for creating and launching connection problems and over-heating new products. The competition on the components. These would be issues market and the technological that require immediate solution. opportunities leads to amazing On the other hand, companies inventions and innovations. But must show a permanent care for the manufacturers should not neglect the launched products and they should fact that their products must always improve them for resisting on the bring a real benefit to consumers, so market. Being attentive to the demands they can accept these products.
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ACKNOWLEDGEMENT This paper is supported by the Sectoral Operational Programme Human Resources Development (SOP HRD), financed from the European Social Fund and by the Romanian Government under the contract number POSDRU/6/1.5/S/6
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