Chapter 7

Chapter seven assumes that a company has limited resources and tries to answer the question of what market direction will give the best results. Ultimately, every product or service is trapped in an envelope of barriers and it is impossible for any firm to maximize all desired attributes of a product offering. The first question the authors answer is, given that impossibility, what barriers should firms push?

Segmented Market Lumpiness
Technological value stems from creating an attribute set from which its customers derive satisfaction. Attributes can change over time as the technology changes. Product and services from the firm act as a translation device between the technology attributes and the technology customers. Preferences for certain attributes create uneven concentration of customers that make the market “lumpy”. Also, for a given price, a customer would make a trade off for a certain attribute so look for the “most favored attribute. Strategic success comes when a given attribute set is the most favored in the market so strategist have to decide pre marketing what attributes will be the favorite

Pushing Technology Barriers in Lumpy Markets
Managers need to consider intersection between market segments and technology barriers. Also, focusing on single segment could cause vulnerability. Unfortunately, sometimes most attractive markets are beyond reach based on current technology and barriers, however, using emerging technology can open up more possibilities.

It is important to frame technology with respect to attributes, technology, and different markets. This framework allows the firm to visualize what attributes and markets may be out of reach or what attributes should be modified or changed to increase market value.

Identifying Valuable Technologies for Lumpy Markets
The identification of valuable technologies is based on three sets of conditions:

• Attributes that differentiate one offering form another
• The appeal off attributes to different markets segments
• How tech barriers influence interaction between attributes and segments

Firms should use an attribute matrix categorize the customer reactions:

• Basic – taken for granted
• Discriminators – distinguish among providers
• Energizing – draw sharp distinctions between offerings

Once the matrix is created, firms should look at current attributes in firm to see if they can be altered, discuss alterations, then test. The tests will show segments and will help the firm to make matrices that will show what attributes are truly valued

Technology constraints
Once firms have identified current and future attributes valued by their customer segment, they can then identify the constraints that could prevent the firm from delivering the attributes. This “homework” provides a foundation for whether and how to explore the technology.

Investing in options
Because of the uncertainties involved with anticipating market lumpiness, firms should combine traditional financial analysis with the future market analysis. They can do this by looking at ways to push the technology barriers and finding technologies that help achieve thos new position or the company can look for a market that fits the emerging technology.

Positioning
There are three strategic options for this positioning:
Single niche domination which moves the barrier so that it can offer a superior product to a single niche and is best used when the competitors in the uniform and attractive segment cannot deliver the attributes at the reasonable price because of the tech barriers
Niche fusion finds a technology that will dominate in a fusion of one or more segments by disrupting one or more of the tech barriers. Firms should identify the dimensions of the merit that differentiate the current attribute set then identify projects that put the firm in a position to deliver the most favorable attributes

Create a new technology Envelope by radically changing the configuration of the attribute sents by introducing a new technology.

Identifying Options for Applying New Technologies
A reverse analysis must be done by emerging technology firms to find valuable market applications. The firm should look for potential attributes that can be created by the emerging technology and then find the needs that can be served by the attribute.

I am again reminded of disruptive technologies in this chapter. Specifically, I am reminded of NetBooks. I believe NetBooks are a good example of using a new technology (solid state drives) to push into a new market. Granted, true to disruptive technology, the market segment was below the choice segments, but I believe the market was pushed none-the-less.