TelSysBiz 11 Techno Service Marketing

11.
Technology Service Marketing
TELECOMMUNICATION SYSTEM & BUSINESS

BM61B3
SYSTEM AND BUSINESS OF TELECOMMUNICATION

Framework
TELECOMMUNICATION SYSTEM AND

BUSINESS
Contents,
Telecommunications basic concept,
infrastructure in the telecommunications industry based on data communication,
a comprehensive telecommunication business model in Indonesia.
Telecommunications business governance system is referring to the e-TOM
1. Introduction of
9. Telecomm service
telecommunication and
marketing and
business system
business
2. Telecommunications
10. Distribution strategy 12. Case study
industry and competition
11. Trend and business
and business
expansion
3. Basic concept Network practice
4. Data Communication
5. Cellular and wireless 7. E-TOM and model
6. Internet and service business
Integration 8. Telco competencies
Contents
Product vs Service
Uniqueness of Techno Services Marketing
Diffusion of Innovation Curve
Technology Marketing Tools
Rule for Marketing the Technology

Product & Service
3/26/2017 SYSTEM AND BUSINESS OF TELECOMMUNICATION 4

PRODUCT vs SERVICES
Intangible
Inseparability. The production & consumption done
almost at the same time
Sold first, then produced and consumed
simultaneously
Heterogen. Tend to vary from one transaction to the
next. Produced by people that makes variability
inherent in the process.
Perishable. Cannot be saved, stored, reserved,
inventoried that leads to great challenges relating to
the balance of supply and demand
Hoffman, K.D. & Bateson, J.E.G. (2011). Services Marketing; Concepts, Strategies, & Cases (4th edition).
South-Western Cengage Learning. Mason, USA.
IM TELKOM 2013 SYSTEM AND BUSINESS OF TELECOMMUNICATION 5


Technology Services Marketing
Services :
Deeds, efforts, performance
Service marketing myopia Condition of firms
that produce tangible products and overlook
the service aspects of their products
Transfering the commodity into experience
and transforming customer life (ex ; Starbuck)

http://www.techterms.com/definition/technologyservices
Technology Services Marketing

Marketing services that involve technology
These include information & communication technology,
such as technical support, computer networking, systems
administration, common Internet services (Web hosting, e-
mail, and social networking)
Technology services may also include services not directly
related to information technology, such as telephone and
cable TV services.
Other industries, such as a digital photography, graphic
design, and video production may be considered
technology services, since they involve modern technology.
Technology services covers such a broad range of industries
and occupations makes it difficult to easily quantified.

Customer-Centered Marketing?
Organization-centered marketing involves
communication of messages aimed at conveying
company and brand benefits to the market.
Customer-centered marketing means starting
with the particular needs or wants of a targeted
market segment and communicating an effective
brand response to those needs within marketing
messages.
The starting point in the marketing effort is the
distinction.
Neil Kokemuller, Demand Media (http://smallbusiness.chron.com)



-Network Effects-
Uncertain capabilities, worthiness, application in the
real-life
Remember your first experince when buying smartphones
Type of goods
Search, easy to learn from sufficient research
Experience, doesnt know the value until it consumed,
supported by indirect role of advertising, uncertainty
swithcing cost
Credence, difficult to judge, customers dont know
whether the brand they selected is best even after they
have purchased it.
What you expect when youre choosing your provider? Is it really
catchup the 7.2 mbps?

Credence are about reputation (Your brand)

Telco should position its service to have credence
characteristics to makes their service less
vulnerable to competitive attack
Unwise product extensions, corporate scandal, or
external factors that might be unrelated to
service quality could harm your credential
Build your credential not only based on your
efforts
Network effects exist when the value of a good,
or more specifically the demand for the good,
rises as the number of customers increases
Direct network effects increase the value of a

service directly when more customers exist
(telephone network, e-mail). The more customers
each service has, the larger and more valuable
the universe of potential.
Indirect network effects increase the value of the
service indirectly. Broadband penetration enables
users to download content-rich pages, and that
causes Web site developers to enrich their sites

-Switching Cost & Locked In-
Switching cost and lock-in.
Vendor lock-in, also known as proprietary lock-

in or customer lock-in, makes a customer dependent on a
vendor for product/services unable to use another vendor
without substantial switching cost
Lock-in costs which create barriers to market entry may

result in antitrust action against a monopoly.

www.themetisfiles.com
IM TELKOM 2013 18
-Technology Paradox-
Consumers are much more sensitive to upfront costs
than ongoing expenses.
Open standards tend to reduce lock-in, market leaders
tend to resist them, though maintaining proprietary
standards might not be wise in technology markets.
Opening standards to third-party developers can create
a complementary market and indirect network effects
Technology paradox. Prices fall so fast and so low in
technology markets developers cant recoup their
initial investment.
Technology service providers find that achieving a
critical mass of customers is much more important
than recovering research and development costs.

-Free Riding-
Free rider : someone who benefits from resources,
goods, benefits, or services without paying for the cost
of the benefit
Free-riding occurs when some customers get pirated

products or servicessuch as software, music, or
satellite televisionwhile paying customers foot the bill
Most free riding is undesirable for content & service

providers because it reduces the incentive & the
resources to create new content or services
Free-riding does have a benefit in terms of market

share.

-Versioning-
Versioning ; business practice when company
produces different models of the same product,
then charges different prices for each model.
Versioning gives the consumer the option of
purchasing a higher valued model for more
money or a lower valued model for less money.
The business is attempting to attract higher prices
based on the value a customer perceives
(http://www.investopedia.com)
Feature can be added or taken away to create
different version and price point
Technology vendors utilize versioning to make use

of the low incremental cost of additional
customers
Versioning refers to the practice of selling slightly
different forms of a product or service to meet
the distinct needs of users. Ex : Service providers
who offer DSL in various speeds are using
versioning to expand their markets.
Versioning offers an opportunity to practice price
discrimination at the customers request based
on their willingness to pay
Versioning benefit :
expand markets
intensify the network effect,
drawing more customers and
increasing profitability
Creating market leadership
The challenge is to set up the versions so that
customers self-select the service that best
meets their needs and that provides
maximum profit for the service provider.
-Technology Brand-
categories Mass
of
technology Speed
brand :
Direction
Forces in mass categories
Value propotision, importance of the brand to the success of its

customer
Ecosystem potential, its importance with its category partners to the

success of customer. Partnership between providers are crucial
Category leadership, products dominance within its category and the

categorys importance to the customer. Customer attracted to market
leader

Forces in brand speed categories
How well the brand manage changes in its marketplace.
Anticipating the demand for new technologies
Pacing its own technology introductions to optimize the adoption cycle


Diffusion of Innovation Curve

DIFFUSION of INNOVATION CURVE
blog.kitetail.com

Service providers need to adjust their marketing

strategies & tactics at any point along the curve to
maximize the success.
At each transformation point on the curve, there is a
crack defining the different buying criteria of
customers.
Most high-technology failures occur because the
technology cannot cross this chasm
(differences/distances/gaps) into mainstream markets
The chasm occurs between the early adopters and the
early majority.

13.5%
34%
13.5% 34%
16%
13.5%

DIFUSSION of INNOVATION CURVE
Early adopters
More willing than the early majority to change their
behavior to adjust to new technologies
Able to imagine the benefits they would gain from the new
technology
Make their purchase decisions without requiring outside
recommendations
Technology enthusiast
Early majority
Will wait until the technology is easy to use
Not reluctant to accept new technology,
Need outside confirmation before making the investment.
Pragmatist, easy to setup & easy to use

Marketers need not focus on early adopters

(prefer to develop their own opinions)
Marketers also wise to ignore stated customer
desires in this phase.
Service provider should select a subset of the
group or clearly defined customer segment, &
focus market development on producing a
compelling reason to buy

concentrate on differentiating
Bowling the service,
alley period emphasizing value & return
(tunnel-like on investment to customers,
focus) assigning a low priority to
competition or infrastructure

Tornado period
Success in one market niche, enable the service provider to use its credibility in
new niches then develop the brand leadership that convinces the early majority to
buy.
Customers in multiple segments rush in and the marketing strategy focuses on
distribution, infrastructure, and competitive pricing to builds market share.
Finally, the mass market begins to buy, and the strategy changes
again. Prices begin to erode, because new customers are arriving
at a slower rate;
Service provider strategy ;

Product leadership
Operational excellence
Customer intimacy
Do You Know Where You Going To??

Operational excellence ;
Wide distribution
Ease of use
Reliable performance
Invest in infrastructure that
will ensure supply, minimize
returns, and provide
support

Customer intimacy ;
Customers who adopt new technologies in the late majority and
laggards who resist adoption for as long as possible respond best to
customer intimacy.
Period for harvesting, drawing profits from cash cows without
making further investments.
High-growth with a large market share are stars and require
investment during the growth phase. These units represent the future
profitability of the enterprise.
Low-growth and low-share units are dogs whose resources should
probably be redirected elsewhere.
High-growth products with a small market share are unknown, for
which investment might or might not result in creating new stars.
High market share businesses in mature markets of low growth are
cash cows when the laggards and the late majority finally come
around to adopting new technologies.

Perceived benefit over alternative product

Communicability of the product benefit
Price & ongoing costs
Ease of use and to get
Promotional efforts
Perceive risk
Dstribution intensity
Compatibility with the existing standar and values
Divisibility (to what extent product can be tested)
IM TELKOM 2013
http://www.quickmba.com/marketing/product/diffusion/ SYSTEM AND BUSINESS OF TELECOMMUNICATION 40
Technology Marketing Tools

TECHNOLOGY MARKETING TOOLS
Challenges ;
inability of conventional market research tools to assess
customer demand accurately
Potential customers simply do not have adequate
experience with the new services to give market
researchers legitimate reactions.
Among the best-known tools to improve market
research are ;
lead users,
empathic design,
quality function deployment.
These market research techniques depend less on what
customers say and more upon what they do

Leade users ;
those whose unusual present needs will represent
those of the mainstream in the future.
correspond roughly with the innovators on the
diffusion of adoption curve, but differ in that their
strong immediate functional needs eclipse
highly motivated to innovate because a solution will
benefit them
often cobble together their own prototype solutions
because they are not yet available in the marketplace.
atypical but valuable users of mainstream services
Lead user process ;

identify a market or technical trend;
identify lead users for their experience and intensity of need;
analyze the need data of lead users,
project these findings to the general market of interest.
Workshops, interviews, and other communications enable
the service provider to capture the specific unaddressed
user needs, the quantifiable benefits of meeting those
needs, and acquire some design direction for the eventual
solution.
Once a new prototype is available, the service provider can
test the proposed service with more mainstream
customers.

Empathic design
observes the customer when using the service, to capture
the attitudes, behavior, and unmet needs that the
customer cannot articulate
record verbal and nonverbal activities and sensory or
emotional
reactions to service attributes.
uncover the triggers of use, the ways the customer uses
the service in ones own environment
useful for disruptive technology research, because it
refrains from asking customers questions that they simply
cannot answer about whether this new technology will
help them
apply well in the virtual environment

Empathic design step ;
Observation of the customer using the service in

real settings
Document the customers behavior and problems
they face, including the customers responses to
openended questions such as why are you doing
that?
Pool their experiences and brainstorm solutions to
the problems and opportunitiesthey discovered.
Develop prototypes of potential solutions
Quality function development ;

Voice of the customer
Involves cross-functional teams of marketers, engineers,
customers, and others in all stages of development
Customer know better than anyone else how they use
the services and what benefits they derive.
quantify user needs and then prioritize them according to
their importance to the customer.
the customer needs to verify that fast means one
second, or four seconds, or milliseconds.
compare the service against competing services, which
provides additional insight.

deconstructs those needs into the elements of

design that can create the desired outcome
The objective is to find customer delight, which
can be develop as a source of competitive
advantage

Customer-centered marketing requires the service provider

to focus on ;
solutions rather than features,
demand instead of supply,
customer behavior rather than attitudes.
Most service providers advantaged by the fall of regulation,
the transparency of the market, growth in demand for
higher volume services, advances in technology, &
customer engagement in the purchase process.
The advantage does not always equal success.
The service providers that become market leaders will do
so by winning one customer at a time, again and again,
throughout the customer relationship lifetime

Outsourcing

Rule for Marketing the Technology
Services old to you might be new to a client.
Offer services that are in demand.
Understand how the customer wants to be approached.
Know the criteria with which you are being evaluated.
Understand and anticipate customer concerns.
Be aware: the customers challenge can be addressed in
more than one way.
Be an advocate for your customers.
Rome wasnt built in a day, but parts of it were.
Your brand is important.
Provide marketing training to non-marketing staff.
http://www.statechmarketing.com
IM TELKOM 2013 PeterSYSTEM
MirusAND BUSINESS OF TELECOMMUNICATION 51
Handy Resources & Refference
Strouse, Karen G.(2004). Customer-

Centered Telecommunication Services
Marketing. Artech House. London

Assignment 11
1. Please find a versioning strategy in your Telco company /
operator.
2. Discuss & Find the example of your operator strategies in
product leadership, operational excellence and customer
intimacy.
3. Analyze your findings on point 1 & 2 above, and conclude
the benefits of them for your operator.
Should be delivered on D-1 of next session

to imtromadhan@gmail.com

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11.

Technology Service Marketing

TELECOMMUNICATION SYSTEM & BUSINESS

SYSTEM AND BUSINESS OF TELECOMMUNICATION

TELECOMMUNICATION SYSTEM AND

SYSTEM AND BUSINESS OF TELECOMMUNICATION

3/26/2017 SYSTEM AND BUSINESS OF TELECOMMUNICATION 4

IM TELKOM 2013 SYSTEM AND BUSINESS OF TELECOMMUNICATION 5

3/26/2017 SYSTEM AND BUSINESS OF TELECOMMUNICATION 6

IM TELKOM 2013 SYSTEM AND BUSINESS OF TELECOMMUNICATION 7

Technology Services Marketing

IM TELKOM 2013 SYSTEM AND BUSINESS OF TELECOMMUNICATION 8

IM TELKOM 2013 SYSTEM AND BUSINESS OF TELECOMMUNICATION 9

3/26/2017 SYSTEM AND BUSINESS OF TELECOMMUNICATION 10

IM TELKOM 2013 SYSTEM AND BUSINESS OF TELECOMMUNICATION 11

IM TELKOM 2013 SYSTEM AND BUSINESS OF TELECOMMUNICATION 12

Credence are about reputation (Your brand)

Direct network effects increase the value of a

IM TELKOM 2013 SYSTEM AND BUSINESS OF TELECOMMUNICATION 15

Switching cost and lock-in.

Vendor lock-in, also known as proprietary lock-

Lock-in costs which create barriers to market entry may

IM TELKOM 2013 SYSTEM AND BUSINESS OF TELECOMMUNICATION 16

IM TELKOM 2013 SYSTEM AND BUSINESS OF TELECOMMUNICATION 19

Free-riding occurs when some customers get pirated

Most free riding is undesirable for content & service

Free-riding does have a benefit in terms of market

IM TELKOM 2013 SYSTEM AND BUSINESS OF TELECOMMUNICATION 20

Technology vendors utilize versioning to make use

Forces in mass categories

Value propotision, importance of the brand to the success of its

Ecosystem potential, its importance with its category partners to the

Category leadership, products dominance within its category and the

IM TELKOM 2013 SYSTEM AND BUSINESS OF TELECOMMUNICATION 25

Forces in brand speed categories

How well the brand manage changes in its marketplace.

Anticipating the demand for new technologies

Pacing its own technology introductions to optimize the adoption cycle

IM TELKOM 2013 SYSTEM AND BUSINESS OF TELECOMMUNICATION 26

IM TELKOM 2013 SYSTEM AND BUSINESS OF TELECOMMUNICATION 27

3/26/2017 SYSTEM AND BUSINESS OF TELECOMMUNICATION 28

IM TELKOM 2013 SYSTEM AND BUSINESS OF TELECOMMUNICATION 29

Service providers need to adjust their marketing

IM TELKOM 2013 SYSTEM AND BUSINESS OF TELECOMMUNICATION 30

IM TELKOM 2013 SYSTEM AND BUSINESS OF TELECOMMUNICATION 31

IM TELKOM 2013 SYSTEM AND BUSINESS OF TELECOMMUNICATION 32

Marketers need not focus on early adopters

IM TELKOM 2013 SYSTEM AND BUSINESS OF TELECOMMUNICATION 33

IM TELKOM 2013 SYSTEM AND BUSINESS OF TELECOMMUNICATION 34

Service provider strategy ;

Do You Know Where You Going To??

IM TELKOM 2013 SYSTEM AND BUSINESS OF TELECOMMUNICATION 36

IM TELKOM 2013 SYSTEM AND BUSINESS OF TELECOMMUNICATION 37

IM TELKOM 2013 SYSTEM AND BUSINESS OF TELECOMMUNICATION 38

Perceived benefit over alternative product

3/26/2017 SYSTEM AND BUSINESS OF TELECOMMUNICATION 41

IM TELKOM 2013 SYSTEM AND BUSINESS OF TELECOMMUNICATION 42

Lead user process ;

IM TELKOM 2013 SYSTEM AND BUSINESS OF TELECOMMUNICATION 44

IM TELKOM 2013 SYSTEM AND BUSINESS OF TELECOMMUNICATION 45

Empathic design step ;

Observation of the customer using the service in

Quality function development ;