Technology Life Cycle and Market Segmentation

Abstract

The picture of the technology cycle in Figure 2.1 begins at a point in time (marked “technological innovation”) where a device exists. Other companies have complementary devices; for example, one firm may have set-top home multimedia boxes, another firm having movie-on-demand databanks, and a third company having to-the-home cable infrastructure. At this point, each firm begins a low-level investment¹ to investigate the possible profitable alliances and the potential market size. This potential is called “latent demand” because there is no demand in the economic sense for a product that does not exist, and consumers cannot articulate their desire for something they have never heard of (more about this in Chapter 9). But the wise innovator begins to “warm up the audience” even before the product development cycle begins. This is what AT&T has done with the YOU WILL campaign. It is interesting that this kind of advertising is different from traditional corporate image advertising. Image advertising differs from product advertising in that it promotes the company as a whole, and by extension, its entire current (and perhaps future) product line. The YOU WILL campaign, in contrast, prepares the customer for a particular technological direction the company will take, though the form of the product and the identities of the companies in the alliance that will produce it are still unknown.

“Revenue generating is not the most important consideration in the market development phase. The most important activity in this stage is learning. You need to find: what product configuration is most in demand, who the best customers are, how customers actually use the new product, how they perceive the product’s benefits, [and] how to best distribute the product.”

J.W. Taylor, Planning Profitable New Product Strategies

“You will.”

AT&T