The Technology Paradox Strategy and Consumer issues

The Technology Paradox

Strategy and Consumer issues

Strategic Paradoxes

Differentiation still happens on price or quality.

So, what is it?• a new set of rules? Like…“Power goes up and price comes down in lockstep.”

Like…“Businesses can thrive at the very moment when their

prices are falling the fastest.”

How? Why?

Glut: take advantage of the cheap resource

Commodities:• Storage space• Processor speed (chips)

• De-Commodify using Commodities: New applications, products, and services:

Converging devices, iPod (is Nintendo President Hiroshi Yamauchi wrong?), Halo2, video conferencing, movie streaming, Tivo, etc.

Complex enterprise solutions (CRM, DM, ERP), sales processes (ophoto), and manufacturing processes (programming in India).

Key Claims:

The cost of the parts will be almost incidental to the price of the final package.

''Tomorrow's factories will sell customer gratification, not things.''

But, is technology really free and superabundant?

Always new ways to consume more capacity and speed.

Paradox of Technological Products

• The Network:

Example: Video Game

• What determines the perceived quality of your product?

Launch Paradox

• Always already imperfect technology (think i-mode: slow transmission, limited storage space, untested network, etc.)

• Unpredictable consumers• We do not know how they use it• We do not know if they like it.

• Burden of innovation• How well will the product work?

Bad word of mouth!

• Overpromising and underdelivering! Think WAP! Apple Newton!

– Especially bad with first-generation customers that have a critical need for the product.

– They can least afford failure.

The Cycle of Failed Expectations: How First-Generation Technologies Can Flop

A company aggressively markets…



…an imperfect, first-gen technology…



to consumers with critical needs…




but the product FAILS to meet expectations…






turning early adopters into early rejecters…









who spread negative word-of-mouth…




“tainting” the product and killing momentum.




who spread negative word-of-mouth…

Managing Expectations: The Power of the Frame

• Mental category into which consumers reflexively place products.

• Heuristics• Referential cues (marketing or embedded in

product)=> Frames dictate the psychological category

consumers adopt in interacting with the product.• Often frame is tacit and marketers take it for

granted: – WAP as “mobile Internet”

Mobile Internet Technology Infotainment Service

A Comparison of the Perceptions of the Two Categories


A redundant technology if consumers already have Internet access via PC.




A service that is completely unrelated to PC-based Internet access.





A utilitarian technology for serious power users looking to enhance their productivity.






A delightful and casual service for people who want to be current, trendy, up-to-date.







A technically-sophisticated technology that is complicated to use.








A simple service that is easy to use.









Threatening to consumers who are not comfortable adopting new technologies.










Non-threatening, because almost everyone is already comfortable using a mobile phone.











Intimidating to anyone who does not understand what the Internet is.












Unintimidating because everyone understands what infotainment is.













A thoughtful purchase for customers with specific needs.













A thoughtful purchase for customers with specific needs.

An impulse purchase for customers with spontaneous needs.


Imperfections in the technology…


would have lead to frustration among “power business” users…



But because DoCoMo re-framed the product for a different alpha consumer…




they happily adopted a different model of use.





Slow network (9.6 kbps)





Slow network (9.6 kbps) Would have been perceived as too slow to boost productivity.






The framing encouraged tiny bursts of communication during “niche” times.







Perceived as an efficient service for those “in-between” times of the day.








Minimal storage space on the handsets

Frequent service failures, dropped data

Cumbersome keypad typing

Handsets had no PDA-like functionality








Minimal storage space on the handsets

Would have been perceived as impractical, since there was no way to save important messages.

The framing encouraged the sending of short, casual messages that didn’t need to be saved.

Perceived as a delightful way to dash off quick, spontaneous messages to friends.

Frequent service failures, dropped data

Would have created frustration, since the failures would have resulted in a loss of critical information and a loss of productivity.

The framing encouraged the transmission of entertaining “snippets” of non-essential information designed to brighten the day.

Service failures were perceived as no big deal since usage patterns tended to be so trivial.

Cumbersome keypad typing

The learning curve would have been perceived as too steep, i.e. too much trouble to learn.

The framing led to the embedding of fun emoticons in the keypad.

Perceived as a clever way to send emotional notes to friends, and cool way to be recognized as a member of the “thumb tribe”.

Handsets had no PDA-like functionality

Would have expected more PDA-like functionality.

The framing encouraged the perception of the handsets as fashion items

Perceived as an innovative way to make a fashion statement.

Source: Mick and Fournier, JCR, 1998

Documents

The Technology Paradox Strategy and Consumer issues