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  1. Research Paper Date: November 30, 2005 For: Prof. Zwick Group #3 Xiang Chen John Farcich Christopher Irwin Lori Rayner Weijie Yang 1
  2. INTRODUCTION The following study discusses design as a competitive advantage in technology-related products. More specifically, we will explore where in the life cycle of the product (or category or model) innovations in design and “form” potentially overtakes core functionality in consumer- focused technology products, and how this impacts marketing strategies. The first section of the paper (Form for Existing Function) analyzes the elements of form and function in the iPod and hybrid cars. Both are examples of “break through” technology, positioned as an improved product within the existing category. In contrast, Form for New Function looks at the market created by the Blackberry device. We also look specifically at the development of mobile communication devices (which have reclaimed “push e-mail” functionality with smart phones) within the context of the “Attention Economy”1. The mobile telephone market in China offers an example of the maturing and crowding of this product category, and we present the form and function responses in the section More Form, More Function. As a conclusion, we offer Key Implications to Marketing Strategies for consumer-focused technology products in the final section of the paper, and compare these to existing research in this field. 2
  3. A. FORM FOR EXISTING FUNCTION This section of the paper analyzes the elements of form and function in relation to iPods and hybrid cars. While both product innovations are relatively new to the market space the successes of each are not congruent. This portion of the paper examines where the main differences lie and infers conclusions from these variations. I. IPOD Since its debut in 2001, the iPod has grown from an advanced music player to a cultural status symbol. The iPod is a brand of portable and digital audio/video players that are designed and marketed by Apple Computer. Most iPod models store media on a built in hard drive, however the iPod Shuffle and iPod Nano utilize flash memory2. Background/Launch When Apple first entered the digital music player industry, a market for MP3 players had already been created by RIO with a release three years earlier in 1998. At this time digital music players came in two types: (1) small with limited storage (using flash memory), or (2) bulky hard drives with more storage and impenetrable controls.3 When Apple entered the scene in 2001, it was determined to create a device that was powerful and easy to use. Moreover however, the product would be highly design intensive utilizing Apple’s core competency by creating a product with incandescent style.4 Apparently Apple has succeeded as over 3 million iPods have been sold in total and this number continues to grow rapidly. When the iPod was launched in 2001, the marketing department must have been struggling with the issue of how to position the product. Despite the new technology, Apple chose not to feature the innovation in the core value proposition that Apple. By positioning on the basis of new technology, Apple would have needed to create a new category. Obviously, the process of growing a category is long and strenuous, as Geoffrey Moore has depicts in Crossing 3
  4. the Chasm. Instead, Apple chose to position the iPod as simply “a better walkman.” This strategy had allowed iPod to exploit the growing consumer confidence in the product category. As a result, Apple was able to directly penetrate the mainstream market and adoption occurred rather quickly. Now it appears that the iPod actually defines the category of personal music players. Current Product Position From a form/factor perspective, the iPod remains at the top of the pile. Apple recognized that great design and easy functionality are becoming more and more critical in delivering consumer technology products to market.5 Years ago this was not the case; design was not nearly as important. While the Sony Walkman has sold over 300 million units, it is commonly recognized as a horrible design and a terrible interface.6 While it is apparent that Sony had focused on several different lifestyles (consumer segments) including: skiing, jogging, or camping, they neglected to standardize a stylish design.7 In retrospect, we suspect the product design was engineering-centric, focussing on technology and not on the customer. When the Sony product debuted as new to market—when the concept of portable music was new—this function was the key driver for success. Now however, as the personal music player category has matured, form is beginning to take precedence over function. This is not to say that iPod isn’t functionally sound, on the contrary, the iPod operates quite smoothly and can hold up to 10,000 songs. However, the emphasis is not on the technology, but more so, on the ownership experience. The rounded corners, the slim profile, the bright colours, and the toggle wheel have allowed iPod stand out from competitors in a crowded marketplace. Targeted towards several tech-savvy segments, the iPod has become “the new walkman.” In fact, iPod has become so popular it has captured 75% of the mobile music player market and iTunes now accounts for 4
  5. 84% of legal downloaded music sales.8 As mentioned the real lure of the iPod is not the access to an entire music collection, but more so, access to an exclusive community of fellow iPod users. The iPod culture has proliferated the mainstream. From a network ecology perspective, Apple has been quite successful in creating an iPod community. iPod users have an immediate common bond. Users share stories and discuss their music preferences. Fan sites abound the Internet and users are posting recommendations and ideas for iPod innovations and accessories. There is a sense of co-creation in the fact iPod’s can be customized to a particular taste via the accessories offered. This brings us to the compliments network. Apple and other manufacturers have been extremely triumphant in the establishment of a very deep compliments network. These include such physical things as charging stations, protective casings, and belt clips, to the more intangible iTunes software package. As witnessed, the iPod compliment products have a similar emphasis on the stylish form factor. These vast compliments allow for continued user loyalty. Apple success is apparent, as they are the only producer of this new product category (with the exception of the newly branded HP iPods). Therefore, they control all of the distribution channels. This exclusivity is another factor in iPod’s success. Also the success of the iPod may have been caused by the shortened product lifecycle of the personal music player. Future Outlook With the debut of the iPod Nano, it is quite apparent that form is continuing to take precedent over function from a marketing perspective. While the true innovation behind introduction of the Nano (flash memory) was indeed functional, the product is primarily positioned on its new and slimmer design (thinner than a pencil). Accordingly, proper positioning will prove to be essential for growth within this category. 5
  6. Conclusion In conclusion, the community effect along with its aesthetically pleasing appearance and simple functionality has made iPod one of the most successful products of the 21st century. In the case of iPod, we can further conclude that as the digital music player product category has matured, form has begun to take precedence over function as the key driver for success. II. HYBRID CAR The hybrid car has recently created the latest buzz in Hollywood as many celebrities including Brad Pitt, Leonardo DiCaprio and Cameron Diaz are trading in their gas-guzzlers for the environmentally friendly hybrid car. The hybrid car is an automobile that uses a combination of at least two different fuel sources for its propulsion, e.g. gasoline and electricity. This section of the paper will use the Toyota Prius to illustrate the evolution of the hybrid car in the North American market9. As a full hybrid, the Toyota Prius can run on solely the engine alone, the batteries alone, or a combination of both. Typically, the gasoline engine handles routine high-speed travel and the electronic engines handle the everyday stop-and-go street traffic situations. Background/Launch The hybrid car is an old concept that can be traced back to 1665, when astronomer Ferdinand Verbiest created plans for a miniature four-wheel unmanned steam “car” for Chinese Emperor Khang His.10 The first electric-powered taxicab was launched in England in 1886; the car used a battery with 28 cells and a small electric motor.11 It was not, however, until the early 1990’s that car manufacturers began to invest heavily in research and development of hybrid vehicles. In 1997, Toyota launched the world’s first mass-produced hybrid car in Japan, the Toyota Prius.12 An international launch followed in 2000. This car was functionally designed to 6
  7. enable consumers to experience an increase in a vehicle's fuel mileage and low emissions through energy optimization management, torque on demand control, and regenerative brake control.13 Originally, the hybrid car was positioned as an environmentally friendly and fuel- efficient car, within the existing automobile product category. Toyota’s market positioning was appealing to a niche market of environmentalists; however this positioning was not successful in reaching the mass market of consumers. Generally, “hybrid drivers tend to be environmentalists, free-thinkers who resist the over-commercialized aspect of American society.”14 Current Product Position After eight years in the market, the hybrid is still in the infancy stage. The product has yet to achieve mass-market adoption. Currently, hybrids account for less than 1% of total vehicle sales.15 The cars have proven to have comparable performance vs. traditional cars (see table below for comparison) and achieve as much as 100% more fuel efficiency. How on earth can such an innovative product not yet be a market success? Comparison Manufacture Toyota Honda Honda Model Prius Sedan Civic Sedan Accord Sedan Type Full Hybrid Traditional Traditional Invoice Price 19,222 19,109 18,130 Engines & Power Engine 1.5L 76 hp 14 1.7L 100 hp I4 2.4L 166 hp 14 Horsepower 76 @ 5000 RPM 100 @ 6100 RPM 166 @ 5800 RPM Torqe 82 @ 4200 RPM 98 @ 4000 RPM 160 @ 4000 RPM Fuel Economy City (mpg) 59 30 25 Highway 51 34 34 Source: www.automotive.com There are many factors which are inhibiting the mass market success of the hybrid car, the primary factors include, i) perceived value of car, ii) car design and iii) limited network infrastructure. 7
  8. The Toyota Prius enables consumers to achieve high performance without sacrificing fuel economy, but at a higher initial cost. The Prius hybrid models carry a price premium of between $4815 and $5250 (US) over standard gasoline cars (i.e., Echo or Corolla).16 The price differential becomes larger as the power of the electric drive components is increased. Although the initial price is higher than that of a traditional car, Toyota was anticipating that consumers would be willing to pay a premium and then recoup the incremental costs through gas savings over the lifetime of the car. However, consumer research illustrates that consumers do not utilize payback periods or discount rates in making purchasing decisions. Consumer researchers have argued that such calculations are beyond most consumer decision capabilities and do not fit with cultural models of behaviour.17 As a result, consumers who are concerned with fuel economy are turning to cheaper alternative technologies available including, clean diesel, turbo charging and six-speed transmissions, all which give fuel economy benefits at a lower initial cost than hybrids. The design of the hybrid car has been criticized for lacking design differentiation vs. traditional cars. In North America, cars are considered to be a “status symbol” and consumers do not want to pay a premium for a vehicle that does not enhance their image. Moreover, despite increased gas prices, 56% of Americans refuse to downsize their premium sport utility vehicles.18 Hybrid car manufacturers are slowly discovering that the design of the car is critical. The most successful hybrid model to date, the 2004 Toyota Prius, has allowed owners to differentiate themselves through a futuristic design.19 “‘The Prius is a fashion statement,’ said Art Spinella, a consultant with CNW Marketing Research, who surveys car-buying trends. ‘It looks different. The Prius has set itself apart with a geek-chic look -- a thick, curved body, a high back end and glittering computer displays on the dashboard. People recognize that the driver is driving a hybrid vehicle. It clearly makes a bigger statement about the person than other hybrid 8
  9. designs.’”20 This appealing design has created such a strong demand for the Prius that there is now a six-month waiting list. So while manufacturers are starting to realize that form / factor is an important differentiator, there are still other concerns that have inhibited growth potential. There has been limited success in creating a flourishing hybrid user community; as a result, this has lead to high consumer uncertainty. Many consumers are not confident in making a large financial investment in a hybrid vehicle because there are many uncertainties associated with the new technology. These uncertainties include: long term cost of operation, reliability, resale value, durability, as well as the associated complementary networks (i.e.: maintenance / repair).21 Through strong consumer networks, potential customers would have the ability to alleviate some concerns through learning about the experiences of others. The technology perception is at the product level now. Car manufactures must remove consumer concerns before the technology will be able to reach the process level. Also the product lifecycle for the automobile is extremely long and slow to change. This has resulted in function taking primary precedent over form. As the product continues to advance through the lifecycle however form will begin to supersede function. Future Outlook Many manufacturers are starting to introduce consumers to the next generation of larger and “more mainstream hybrids [that] emphasize luxury, high-tech wizardry, and/or power— rather than environmental benefits”—as a result the demographic profile of a hybrid driver will shift into the mass market.22 9
  10. Conclusion The hybrids inability to move beyond the initial niche environmentally friendly cars has been a key inhibitor to the success of the product. As a result of its niche positioning, the car has been unable to penetrate the mass market. However, manufactures are recognizing these trends and the current (e.g. 2006) generation of hybrid vehicles are moving towards more mainstream needs by putting an emphasis on design. III. Key Findings - Form for Existing Function: In comparing the launch of the successful Apple iPod vs. the Toyota Hybrid, there are several key learning’s including: • Development of user network and complements network is critical to achieve strong consumer buying confidence. • Targeting one specific niche market vs. mass market will significantly impact the time to reach the mass market. • Focusing on functionality as well as form is a key success factor for penetrating the mass market. • The length of the product lifecycle is strongly correlated to when form surpasses functionality as a key differentiating feature. 10
  11. B. FORM FOR NEW FUNCTION: THE BLACKBERRY The Blackberry has become a symbol of the mobile executive and has enjoyed promotional activity from celebrities23, including Jack Welch and Oprah Winfrey. Blackberry created and continues to dominate the category of the converged mobile device that brings e-mail and voice together in a mobile handset. First launched in 1999 as a “push” e-mail solution, the Blackberry line of products has evolved to include voice capability since 2002. Initially targeted to business people as a tool for corporate productivity, Blackberry is widely available to consumers through wireless carriers in Canada, the United States and throughout the world. This is the result of Research in Motion’s (RIM) strategic decision to work with wireless carriers24. Background/Launch The precursor to what became the Blackberry line of products was in August 1998, when RIM released the Inter@ctive Pager with full keyboard25. On January 19, 1999, RIM released media material launching the “Blackberry” solution, purported to be: “the first complete, secure, integrated, wireless email solution for the mobile professional26.” The media and promotional material at the time describe the functionality in depth, highlighting (1) the ability to keep one e- mail address; (2) Always On, Always Connected™ function, (3) security features, and (4) optional corporate support. The initial marketing focus was to Wall Street professionals who RIM’s VP of Corporate Marketing, Mark Guibert, describes as “heavily communications focused, [and] heavily customer focused.” This would enable the audience to adopt the technology—based on the functionality—without the Blackberry being proven in other segments.27 11
  12. Industry: Voice and e-mail devices (1998-1999) Home/office based Mobile VOICE Telephone Mobile phone E-MAIL Desktop/laptop Blackberry* *Research in Motion created this category with the Inter@ct/ Blackberry. Current Product Position: The Blackberry redefined mobile communications and created new product categories based on functionality that was previously unavailable. From 2002 to 2005 the Blackberry operated alone in a niche market without any major competitors (although there continued to be a large number of substitute products). During this time, Blackberry had created quite a strong user network that gave customers a brief sense of community. Blackberry was an elite product to the more affluent and successful business person. At the time, RIM was able to be an exclusive compliment in terms of service provider and producer of the product. Based on network ecology this aided in the Blackberry’s early successes. Industry: Voice and e-mail devices (2002) Home/office based Mobile VOICE Telephone Mobile phone VOICE and EMAIL Microsoft Exchange Blackberry* *Blackberry created this category with the Blackberry 5810 In 2003, the first Blackberry with a colour display appeared on the market, which was the first significant product improvement not directly related to the core functionality of receiving information in real time. The 2004 product launches includes the first Blackberry that looks like a telephone (T-mobile); in response to new entrants into the category, in the form of smartphones. As the category has evolved, RIM has realized that a phone like design is becoming a necessary point of parity. 12
  13. Today the category is filled with numerous competitors, and RIM is losing ground to smartphones and, in the corporate hybrid PDA space, to Palm and Dell28. Differentiation is largely based on non-core functions and design, as is evident in the following product analysis. Communication Other Compatibility Competitive functions functions positioning HP IPAC Voice and e-mail Colour Cingular Wireless Right size to use hw6515 screen; Network; MS Camera, GPS Office Mobile 3 Motorola Q Voice and e-mail Colour Cellular network; Slimmest (Razr screen, MS Window’s cell phone) thumb wheel, Mobile 5 speaker phone Nokia E61 Voice and e-mail Push-to-talk, Wifi, VoIP and Roams like a (expected in global roaming, cellphone 2006) Blackberry e-mail, MS Office Blackberry Voice and e-mail 20-key Blackberry A phone-like 7100 keyboard, software; works Blackberry Sure type “virtually anywhere in the world” Dell Axim e-mail only Advanced Wifi, MS Mobile 5 Cheaper (with no X51v gaming voice function) Conclusion While the Blackberry was first to market in the “push button email solution” product category, their first mover advantage has been all but lost. Non-traditional competitors such as cell phone and consumer electronic manufacturers have been rapidly entering the market and differentiating their products based upon form. While offering similar functionality to that of the Blackberry, competition appears to be much more design focused and therefore attempting to capture more of the mainstream market. Key Findings - Form for New Function: 13
  14. • Initially when launching a new product category, the marketing focus is on the education of the consumer on the core functions that the new product provides. • Once the product reaches the mass market and the industry becomes saturated with competition, manufactures focus on product differentiation. • The differentiation is based on both functionality and design features, but design continues to become more important as the product moves through the lifecycle. 14
  15. C. MORE FORM, MORE FUNCTION: MOBILE PHONES IN CHINA “Mobile phones are changing us and the world we live in. Over the last decade, mobile phones have massively changed our culture, society and communication patterns.”29 A mobile phone is an electronic telecommunications device with the same capability as a traditional fixed line telephone. However, the mobile phone is portable and connects to the phone network using radio wave transmission technology.30 This section of the paper will use the Chinese market to illustrate the advancements of the mobile phone. The market in China is the largest in the world. Currently over 300 million Chinese own a mobile phone and over 6 million new contracts are taken out every month. Background/Launch The history of mobile phones can be traced back to the 1950s with the introduction of the radiophone. Motorola launched the first mass marketed mobile phone into the China market in 1987. 31 The initial phone was a large handset that weighed approximately a half a pound. This cell phone was initially targeted to business users who required a convenient means of voice communication.32 Within the past 20 years however, the mobile phone market in China has evolved with increased functionality and changing form factors. They have shifted from being rare and expensive pieces of equipment used by businesses to a pervasive low-cost personal item purchased by the masses. A strong user network has evolved through increased mobile functionality and high levels of user penetration. For example, the emergence of the first Chinese input (SMS) mobile phone (CD928+) captured over 2 million users.33 This creation allowed network users to interact with one another through text messaging and created a mobile community. Many users increasingly rely on their mobile phone to keep in touch with their friends via text messaging, photo sharing, instant messaging, etc. 15
  16. The Chinese market has not only experienced rapidly changing functionality, but also, changing form. In 2002, when Motorola launched its first 360-degree swivel phone in China, the Motorola V70, the primary focus of the phone moved from functionality to form.34 The fashionable design made it very attractive to the young generation. Additionally, many manufacturers have been successful in establishing an extensive compliments network. These include such physical things as belt clips, protective casings, headsets and decorative jewels. “The mobile phone itself has also become a fashion object, with users decorating, customizing, and accessorizing their mobile phones to reflect their personality.”35 This co-creation has enabled consumers to customize their phones in order to differentiate themselves from the mass consumer market. Current Product Position Currently, the multimedia cell phone is a mainstream product in the Chinese cell phone market. Mobile phone manufacturers are faced with increasing competitive rivalry as well as shortening model life cycles.36 As a result, manufacturers are constantly seeking new functions and features to satisfy rapidly changing customer needs and increase their market shares. Nokia has tried to increase market share by quickly bringing new products onto the market. The company launched 40 new products during 2003, including 31 handsets with colour screens and 14 with cameras.37 Not only are more Chinese consumers purchasing the phones, but also current users are constantly upgrading as new phones with new features are introduced into the market. Consequently, this has significantly reduced the model life cycle and increased research & development and marketing expenses.38 In the context of a rapid growth of multimedia cell phones, the upgrade of functionality has become the major growth driver. According to the consumer behaviour analysis of 2004 and 2005, price and functionality are still the major factors consumer consider when buying mobile 16
  17. phones. Almost 68% of consumers thought that functionality and price are very important, 55% consumer will consider brand name when they buy the mobile phone; only 44% consider that the appearance is very important.39 Factors Consumers Consider when Purchasing a Cell Phone 80% 67% 68% 70% 54% 60% 43% 50% 38% 40% 30% 30% 20% 10% 0% ce ce e n n nd ic io tio vi n a Pr at er ra nc Br ut ea S Fu ep es p R Ap al rS te Af Source: http://market.ccidnet.com/pub/report/show_2446.html See table below for growth rates driven by functionality in 2005: Functionality Number of Units Sold 2005 Growth Rate (2005 vs. 2004) (Q3) Colour Screen Phone 19,335,000 35% Camera Enabled Phone 13,191,000 106.6% MP3 Phone 4,998,000 392.0% Smart Phone 1,398,000 119.1% Source: China Mobile Network www.chinamobile.gov.cn Examining the colour screen phone and camera-enabled phones for example, the rapid growth period for colour screen phones have gone and the market share of colour screen phone have stabilized at over 90%.40 Right now, the market is moving towards a higher resolution screen and higher quality colour. In terms of new function and features, growth on new camera phones has slowed down. Last year, new camera phones represented 75% of newly introduced cell phones.41 This year, this number increased 2% to 77%. On the other hand, MP3-enabled phones have increased from 31.4% to 47.7%, Bluetooth has increased from 11.0% to 15.4% and smart phones have increased from 6.8% to 9.2%.42 Therefore, colour screens and camera phones 17
  18. have become the mainstream and necessary features in the market and MP3 phones and Smart Phones will likely become the new growth drivers. Smart phones are especially poised for success and are still in the very early stage of its development. For the past few years, cellular carriers and handset manufacturers have talked a lot about third-generation (3G) services for mobile phones. Simply put, 3G cellular technology brings wireless broadband data services to your mobile phone. Boosting speeds from 144Kbps (roughly three times faster than a 56K dial-up modem connection) to 2.4Mbps (close to cable-modem speed), 3G networks let you speed through Web pages, enjoy streaming music video, watch on- demand video programming, download and play 3D games, and videoconference with your fellow mobile user network. While the interface is undoubtedly different on a cell phone, the experience of surfing, downloading, and streaming stands to be very close to that of a broadband connection on a computer. 3G cell phones are the next big trend in the cell phone market of China. However, before getting into 3G, cell phone producers are going to have to work closely with carriers to make sure that their products meet the necessary requirements. Network analysis shows us that as the market grows to mature, carriers are going to play an increasingly important role in the cell phone market. Carriers like Bell and Rogers (the compliment network) will require the likes of Nokia, Samsung, and Motorola (the producer network) to customize cell phones and sell them as service packages to customers. To summarize the mobile phone product category from a network ecology perspective, it is quite apparent that the development of each network is critical to the products success. That is, the product can only be as strong as its user network. As the user network expands features such as text and video messaging suddenly become more attractive and necessary. A large compliments network is required as mobile service providers act as the link between the users. Less necessary compliments such as accessories enhance the user’s experience. Finally the large 18
  19. producer network ensures differentiation by innovation. That is, companies must differentiate their offering to ensure success in the marketplace. Conclusion In the mobile phone industry in China, consumer behaviour is quite complex; they desire low price, high functionality and also fashionable design. As model lifecycles are very short companies are trying to differentiate themselves by whatever means necessary. Based on the consumer research results, functionality is still the key driver in customers purchase decisions. Technological innovation on cell phones will keep more focus on new features rather than just the design and appearance. Once the design or function becomes an industry standard, it becomes the must-have feature customers require. Colour screen cell phones (form) accounts for 90% of market now), Chinese input (function) is now also an industry norm. Based on the consumer analysis, although design differentiation is important to consumers, due to the abundance of features that can be added, their top consideration when purchasing a product continues to be functionality. There is so much farther to go in the cell phone market before complete convergence is met, therefore functionality may continue to surpass form. Key Findings: • Consumer’s behaviours are changing rapidly. Today's “wows” become tomorrow's must- have features. • Customer “satisfaction” requires fulfilling basic requirement, but future customers demand "wow factor" that exceed their expectations. 19
  20. D. KEY MARKETING IMPLICATIONS The following is a discussion of marketing implications drawn from these case studies, as well as existing marketing theory. 1. Form for Existing Function The positioning of both the iPod and hybrid cars have been within an existing category. (iPod within “portable music players” and hybrid cars within “cars.”) As discussed in class43, the advantage of positioning a product in an existing category defines the parameters for consumer demand. An existing category confirms that consumer demand exists. These markets are by definition “mature” and therefore differentiation comes largely from design. Entrants, however, earn the right to draw on existing demand by being a “better” version of what is already there. As discussed, positioning the “iPod as a better walkman” was successful because it surpassed the functionality of the Walkman (compatibility with digital music), Discman (smaller and does not skip) and MP3 players (more storage and the “wheel”). This combined with a sleek design ensured a successful launch and continued market success. The hybrid car was “just like cars but better for the environment” only it offered unfamiliar experiences (silent idling) and was not noticeably superior in relevant areas. The innovative form of the Honda Insight could not overcome the functional parity, and in some cases had shortcomings. Micki Eisenman cautions that a focus on form necessitates constant contact with customers and interaction to remain engaged with fickle consumer tastes44 (e.g. cell phones in China). Attaching a memorable aesthetic form to a product can also create positive associations between the brand and new developments. This can be especially powerful as the technology adoption increases and the consumer perceptions move from the product to the process. As evident from 20
  21. the hybrid car example, the slow adoption can stifle a product whose functionality does not exceed the customer’s base level requirements on core attributes. 2. Form for New Function A product with brand new—and unfamiliar—function must create its own market and following. As described by Geoffrey Moore,45 the product must move across the “chasm” that separates the relatively small group of early adopters and the large market of mainstream consumers. In a relevant class reading46, Meldrum supports this with his discussion on the importance of building trust with end-users (e.g. consumers) when presenting a product or service that is unfamiliar. In this category, the form of the product appears only relevant as relating to function (e.g. size and weight for a portable device). Within the new category the differentiation is on function, as was the case with the launch of the Blackberry in 1999. Positioning in a new category enables the company to define the market and establish leadership as a first mover47. The key risks with this approach involve that the market will be unproven, and there is significant time-to-adoption risks involved in reaching the mainstream market profitably. 3. More Form, More Function From a function perspective, marketers must ask: “Which customers value this new function and by how much?” It is possible (and very tempting to try!) to serve more needs of customers, which can build in switching costs and offer more value (for which can command a premium). Again, this is related primarily to products within well-established markets, where supply exceeds demand. 21
  22. In the Meldrum reading48, the term “technology seduction” describes the practice of focussing on improvements that are enabled by the technology, as opposed to concentrating on the consumer need. In a recent rant, leading New York Times technology columnist David Pogue took issue with hyping “irrelevant specs” in his Ten Commandments to electronics manufacturers49. The threat is someone stealing the low end of the market and creating a new niche. In his book The Innovator’s Dilemma50, Clayton Christensen describes the risk associated with incremental developments (additional or horizontal) over-serving some segments of the customer group. This leaves this group open to simpler (and cheaper) products, and forces incumbents to move up market in order to avoid competing on price with and inferior product. 22
  23. E. CONCLUSION Today’s continual technology improvements and product innovations and improvements create more opportunities and choices for marketers of consumer technology products. By definition, technology products perform a function. Additionally, all will have a form. Marketers must consider both in approaching strategies to engage consumers. True breakthroughs can create opportunities to create—and own—a market. However, even with bona fide innovations, the iPod example shows advantages in playing down the innovation in order to access and existing market. Consumer preferences and pressures to differentiate are pushing cell phone makers to add more and more, but is this creating an opportunity for a low-end solution provider? Understanding the relative position on the life cycle, and understanding customer needs can assist in formulating a sustainable strategy. 23
  24. Endnotes 24
  25. 1 Davenport, T. H., & Beck, J. C. (2001). The Attention Economy: Understanding the New Currency of Business. Boston: Harvard Business School Press. 2 Wikipedia. Accessed from: http://en.wikipedia.org/wiki/Apple_iPod 3 “Introducing the World’s first MP3 Player” Eliot Van Buskirk 2005 4 “iPod Nation” Steven Levy 2005 5 “iPod Marketing Exposed” David Richards 2005 6 “iPod Marketing Exposed” David Richards 2005 7 “Doing Cultural Studies: The story of Sony Walkman” Paul du Gay, Stuart Hall, Linda Janes, Hugh Mackay and Keith Negus 8 “iPod Marketing Exposed” David Richards 2005 9 Toyota Prius web site. Accessed from: www.toyota.com/prius/ 10 http://www.hybridcars.com/history.html 11 ibid. 12 Toyota web site. Accessed from: www.toyota.com/prius/ 13 Lemonick, Michael D. “How to Kick the Oil Habit.” Time Magazine. 10/31/2005, Vol. 166 Issue 18, p60-64, 4p, 3c. 14 Recycled Thought Web site. Accessed from: http://recycledthought.blogspot.com/ 15 Author Unknown. “ Hybrid car sales rose 81% last year”. USA Today. 16 Car Smart Web site. Access from: www.carsmart.com 17 Automobile Buyer Decisions about Fuel Economy and Fuel Efficiency Final Report. University of Californaia. Energy Foundation. Sept 1, 2004. 18 Author Unknown. “56 Percent of Americans Refuse to Downsize Vehicles Despite High Gas Prices.” NEWSWEEK. Oct 10, 2005. 19 USNews.com. “2004 Toyota Prius. A revolution becomes routine”. Accessed from: www.usnews.com. 20 http://www.precautionarytales.net/2004_09_05_archive.shtml 21 “An environmental and economic comparison between hybrid electric vechicles and pure combustion engines.” January 2004. University of California. 22 Hybrid Car web site. Accessed from: www.hybridcars.com 23 http://www.blackberry.com/products/blackberry/using_blackberry.shtml#quotes 24 http://www.rim.net/news/kit/media/pdfs/rim_history.pdf; retrieved Nov. 19, 2005 25 http://www.blackberry.com/news/press/1998/pr-26_08_1998.shtml 26 http://www.rim.net/news/press/1999/pr-19_01_1999-01.shtml; retrieved Nov. 19, 2005 27 http://www.cnn.com/2005/BUSINESS/03/23/blackberry.rim/ 28 Smart Phones and Hybrid PDAs, wavewire.com, accessed Nov. 28, 2005 29 http://www.taipeitimes.com/News/bizfocus/archives/2005/01/16/2003219672 30 http://en.wikipedia.org/wiki/Mobile_phone 31 ibid. 32 http://www.accessmag.com/CurrentIssue/Technology.html 33 http://www.mm123.com/mmnum123.htm 34 http://www.infosyncworld.com/reviews/n/2209.html 35 Wikipedia. Accessed from: http://en.wikipedia.org/ 36 Datamonitor. Mobile Phones in China. Industry Profile. November 2004. 37 Ibid. 38 http://www.mindfully.org/Technology/2005/Mobile-Phone-Sales25may05.htm 39 http://market.ccidnet.com/pub/report/show_2446.html 40 http://www.chinamobile.gov.cn/200511/56594.shtml 41 ibid 42 ibid 43 Detlev Zwick, Nov 10, 2005 44 Micki Eisenman’s website: retrieved Nov. 24, 2005 www.columbia.edu/~le86/Dissertation_Summary.htm
  26. 45 Geoffrey Moore, “Crossing the Chasm,” Harper Business Books 46 M.J. Meldrum, “Marketing high-tech products; the emerging themes” European Journal of Marketing: 1995 47 ibid M.J. Meldrum referencing Ansoff and Stweart 48 ibid M.J. Meldrum 49 David Pogue, “10 Ways to Please Us, the Consumers,” New York Times, Nov. 2, 2005 50 Christensen, Clayton M. (1997). The Innovator's Dilemma, Harvard Business School Press. Works Cited 1. Buskirk, Eliot Van. “Introducing the World’s first MP3 Player”. 2005. 2. Car Smart Web site. Access from: www.carsmart.com.
  27. 3. CCID Web site. Accessed from: http://market.ccidnet.com/pub/report/show_2446.html. 4. China Mobile Web site. Accessed from: http://www.chinamobile.gov.cn/200511/56594.shtml 5. Christensen, Clayton M. (1997). “The Innovator's Dilemma”, Harvard Business School Press. 6. du Gay, Paul and Stuart Hall, Linda Janes, Hugh Mackay and Keith Negus: Doing Cultural Studies: The story of Sony Walkman. 7. Eisenman, Micki. Dissertation Summary. Accessed from: www.columbia.edu/~le86/Dissertation_Summary.htm. 8. “Hybrid car sales rose 81% last year”. USA Today. Oct 2005. 9. Hybrid Cars Web site. Accessed from: http://www.hybridcars.com/history.html. 10. Lake, Maggie. “How Blackberry Conquered the World”. CNN.com. Mar 2005. Accessed from: http://www.cnn.com/2005/BUSINESS/03/23/blackberry.rim/. 11. Lemonick, Michael D. “How to Kick the Oil Habit.” Time Magazine. Oct 2005.Vol. 166 Issue 18, p60-64, 4p, 3c. 12. Levy, Steven. “iPod Nation”. 2005. 13. Lyons, Robert. “Be Seen to Be Green”. Accessed from: http://www.precautionarytales.net/2004_09_05_archive.shtml, Sept 8, 2004. 14. Meldrum, M.J. “Marketing high-tech products; the emerging themes” European Journal of Marketing: 1995. 15. MM123.com Web Site. Accessed from: http://www.mm123.com/mmnum123.htm. 16. Mobile Phones in China - Industry Profile. Datamonitor. Nov 2004. 17. “Mobile Phones are Changing Us and the World We Live In.” Taipeitimes. Jan 2005. Accessed from: http://www.taipeitimes.com/News/bizfocus/archives/2005/01/16/2003219672. 18. “Mobile Phone Sales Rose 17 Percent in Q1 2005 Gartner raises forecast for 2005 Worldwide Sales as Q1 results set record”. Softpedia. May 2005. Accessed from: http://www.mindfully.org/Technology/2005/Mobile-Phone- Sales25may05.htm. 19. Moore, Geoffrey. “Crossing the Chasm,” Harper Business Books. 1999. 20. Pogue, David. “10 Ways to Please Us, the Consumers,” New York Times, Nov. 2, 2005 21. Recycled Thought Web site. Accessed from: http://recycledthought.blogspot.com/. 22. Richards, David. “iPod Marketing Exposed”. 2005. 23. Sapieha, Chad. “Like a Virgin: Cell phones come age with new styles and plans.” Access Magazine. Accessed from: http://www.accessmag.com/CurrentIssue/Technology.html. May 2004. 24. Toyota Prius Web site. Accessed from: www.toyota.com/prius/. 25. University of Californaia. Energy Foundation. “Automobile Buyer Decisions about Fuel Economy and Fuel Efficiency Final Report.” Sept 1, 2004. 26. University of California. “An environmental and economic comparison between hybrid electric vechicles and pure combustion engines.” January 2004. 27. RIM History. Accessed from: http://www.rim.net/news/kit/media/pdfs/rim_history.pdf; retrieved Nov. 19, 2005. 28. “Research in Motion Unveils Next-Generation Inter@ctive Pager with Full Keyboard”. Research In Motion. August 1998. Accessed from: http://www.blackberry.com/news/press/1998/pr-26_08_1998.shtml. 29. “Research in Motion Introduces Wireless Email Solution for Microsoft Exchange Users. Jan 1999. Accessed from: http://www.rim.net/news/press/1999/pr-19_01_1999-01.shtml; retrieved Nov. 19, 2005. 30. “Who is Using Blackberry” Blackberry Web site. Accessed From: http://www.blackberry.com/products/blackberry/using_blackberry.shtml#quotes 31. Wikipedia Web site. Accessed from: http://en.wikipedia.org. 32. Zwick, Detlev. Nov 10, 2005. 33. “56 Percent of Americans Refuse to Downsize Vehicles Despite High Gas Prices.” NEWSWEEK. Oct 10, 2005. 34. “2004 Toyota Prius. A revolution becomes routine”. USNews. Accessed from: www.usnews.com.

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