China's booming high-tech market gives rise to a huge demand for improving skills of high-tech marketing. To meet this demand, CEIBS began to offer "Marketing High Technology Offerings" in its 2005 EMBA programme. During the course break, The Link interviewed Professor Scott Ward, who was happy to share his insights with the readers.

THE LINK: The recent years have witnessed a rapid growth of high technology worldwide. What trend do you observe in China's and global high-tech market? What opportunities will emerge from this sector?

SCOTT WARD: Firms have long marketed "high technology" products, going back to the early days of phonographs, radios, televisions, and electro-mechanical calculating machines. In recent decades, the pace and nature of technological innovation has dramatically increased, so specific interest in marketing high technology offerings has emerged, especially in China, which is a "hotbed" of high technology production. In the past, developing economies typically emerged from exporting raw agricultural products, to growth through direct foreign investment, transferring that knowledge to developing home-grown industries. The process took many years. In China, the pace of this typical route to economic development has been dramatically speeded up. From being the "workshop of the world", exporting low cost goods, China has attracted foreign investment from many kinds of businesses, including high-tech firms, and has formed many home-grown high-tech firms. Foreign high-tech firms that hope to profit from marketing in China are rapidly matched by Chinese firms that invest in competitive high technology products. The next step is for Chinese firms to enter world markets. A key need is to complement formidable skills in low-cost production with capabilities to innovate and develop next-generation technologies, rather than simply adopting existing technologies and producing them at low cost for the local market. It is also critically important for Chinese firms to establish strong global brands.

The acquisition of IBM's PC business by Lenovo is a case in point. I say that it is Lenovo that is to lose. They bought a very high equity brand. In five years when they are no longer using the IBM brand name, the question is: "Will people be ready to buy and have the same trust in the Lenovo name?" The major challenge for Lenovo is to build a brand as strong as IBM on the world wide basis. That is no simple task. I understand that Lenovo may market two products?a premium "ThinkPad" brand, and a low-cost but trendy Lenovo brand. That could be a very wise move, since it reflects market segmentation and leverages the considerable brand equity in the "ThinkPad" sub-brand name. The Lenovo brand would leverage the firm's advantages in low-cost manufacturing.

What I advocate is that Chinese firms strive to grow their own brand equity. A good example, though not in high-tech sector, is Haier. It is becoming a global brand. They were very wise. They came in the US market with a wine cooler. High income, high education people buy their product. Therefore, they are building their brand in an affluent and well educated market segment, which is very smart. So, Haier is not becoming known as a low-cost, low-price brand, but as a premium brand. Another good example is Samsung in South Korea. They are building a global brand on the basis of innovated products. They may not be revolutionary innovations, but they are next-generation such as high-tech TV and cell phones. It is a good lesson for Chinese high-tech firms as well.

THE LINK: What are the characteristics of the high-tech market, products and services? What do you think are the critical factors for successfully marketing high-tech offerings? Could you give us an example?

SCOTT WARD: High degrees of market and product uncertainty, and rapid product life cycles are distinguishing characteristics of high-tech markets. Also, in contrast to consumer goods, consumers often don't know and can't verbalise what their future needs are. Traditional market and consumer research is of limited usefulness. The most successful high-tech marketers anticipate customer needs, even before customers know they have them. Consumer marketing is the process of determining customer needs and developing products to satisfy those needs. In other words, demand drives supply. In high-tech markets, markets are often unknown and unknowable, especially for "new to the world" technologies. The result is that technology offerings can drive customer demand, but a danger is assuming that a new technology is a sufficient condition for market success. It can take many years for new technologies to gain acceptance, much less market success. Since many high-tech offerings are based on the intrinsic value of technologies more than expressed consumer needs, high-tech marketers may be deluded into thinking that high-tech products are "so good" they will sell themselves, and that traditional market analysis and planning is not applicable. It is more difficult to craft marketing plans for high-tech products than for typical B2C products and services, but high-tech marketers proceed at great peril if they fail to engage in insightful market and customer analysis and do not craft marketing plans.

That is a unique challenge for high-tech companies. A high technology does have the potential to drive demand, but cannot guarantee it. The question is: "Is the marketer capable of several years of market development with substantial expenses, even as competitors enter the market?" That is a major issue. In many cases, it is foresight and diligence that matter. For example, Chester F. Carlson, the man who invented Xerox, was told not to make the machine, because initial research came back saying that people didn't want it. They were satisfied with current technologies like mimeograph machines. But he persisted and it proved to be a successful technology. Another example is James Dyson, the inventor of vacuum cleaner. He had thousands of failures. But he stuck with it and invented a better technology. Dyson is selling very well at high premium prices. High-tech markets are filled with the stories of people with wisdom, foresight and persistence.

THE LINK: In your class, you will teach how to use the framework of 5Cs-4Ps to market high-tech offerings. Could you give us some ideas here?

SCOTT WARD: The 5Cs-4Ps framework is an elaboration of typical marketing planning frameworks. It is important to define the marketing problem, and the context, markets and customers, competitors, company strengths and weaknesses, and collaborators as a way of sizing up the current situation. In many marketing plans, this is called the "situation analysis." Based on the 5Cs analysis, marketers then turn to strategic alternatives and objectives to carry out strategies. Finally, a "4Ps" marketing plan?product, price, promotion and place (distribution) is specified to carry out the strategy and achieve objectives. My framework stresses the concept and tool I call "funnel logic," to define, size and value markets, identify target market segments, and then set objectives to move target customers from unawareness to various cognitive and behavioural stages leading to purchase, and post-purchase states (such as customer satisfaction and loyalty). By setting objectives in the "consumer funnel" marketers can monitor success in achieving revenue and profit objectives and make changes to the marketing programme as needed. Today, marketing planning must be based on quantitative as well as qualitative analysis, and specify quantitative outcomes in order to demonstrate marketing's "return on investment." It's no longer acceptable to propose marketing expenditures without sound quantitative metrics to measure marketing's effectiveness.

THE LINK: Could you please give an example of how "the funnel theory" works?

Scott Ward: First, we have "market funnel". Suppose there are 0.3 billion people in the United States. Of them, 20 million are joggers and runners. Of them, 15 million are affluent. In this way, you pick a target market segment, funnelling down from the overall market. The other funnel is the consumer funnel. If my target market segment is 4 million affluent and serious joggers for my running shoes. Of them 80% I want to make aware of it. 40% I want to become interested in it. 50% go to the stores. Of them 20% buy it. You size the market in this way and make your marketing programme. Then, you set objectives, hire marketing and sales people to achieve these objectives. You can measure how your marketing programme is doing by those objectives and make changes accordingly. It is all part of a global trend that marketing is becoming transparent, accountable and quantitative. Marketing must show its return on the investment.

THE LINK: If Chinese high-tech companies want to sell their products and services to the US and Europe markets, what should they do to secure their success?

SCOTT WARD: In my opinion, the most important skills for Chinese firms as they move to world markets are to build skills at developing innovative products, and in market analysis and brand management. Chinese markets are so large that it's amazing to me that I had so many students in my course, "marketing high technology offerings." The key needs for high-tech firms in China now are obtaining capital and having sufficient production capacity to respond to demand?Chinese markets are very large and growing very rapidly. The Deloitte analysis of the "fast 50" high-tech firms in China show annual growth rates in the thousands. For several years to come, many high-tech companies in China can prosper merely by responding to local demand. Far-sighted firms will invest in innovation, improving quality, choosing world markets to serve, and carefully crafting effective global marketing plans.

THE LINK: We found in your teaching outline that you use some cases of Chinese companies. I also know you have very rich experiences in Executive Education. How do you manage to cater to the needs of the local students?

SCOTT WARD: I have not taught in China before, although I have taught in other countries in Asia and Europe for many years. It is always risky to use "local" cases because students may know (or believe they know) something about the company which contradicts information in the case study. This can sabotage a case discussion, but the two Chinese cases I taught worked quite well. It is important for Chinese students to be able to relate to local examples. Foreign faculty can bring a broad perspective to a class in a different national environment, but it is important for the faculty member to do some "homework" on a foreign market in order to understand the context and issues, and to have credibility in the classroom.

THE LINK: What is your impression of Shanghai and CEIBS?

SCOTT WARD: I find Shanghai to be as I expected?huge, vibrant, and fast paced. My EMBA students have been a pleasure to work with. They are prepared, eager to learn and open to ideas, concepts and tools. I especially appreciated their level of preparation for case studies, and their willingness to engage in dialogue. CEIBS is a wonderful idea. Business is becoming more global, and truly global business schools like CEIBS are at the cutting edge.

Scott Ward

Scott Ward is Professor of Marketing at the Wharton School (University of Pennsylvania) where he teaches courses in Marketing Management. He designed and directed the 5-day seminar, "Marketing High Technology Offerings" in Wharton's Executive Education programme. He is consistently among the top-rated instructors in Wharton's Executive Education programmes.

Before coming to Wharton in 1980, Ward taught at the Harvard Business School. He received his Ph.D. from the University of Wisconsin in 1968, after working for an advertising agency in his hometown of Pittsburgh, PA, and in New York. In his advertising career, Ward worked on both consumer and industrial accounts.

Ward has been among the most-cited authors in Marketing. He is recently completing a book, Making Marketing Decisions, which he hopes to help students and managers understand how to craft effective marketing plans combining qualitative and quantitative analyses.