Wharton Chapter 7

Chapter 7 focuses on the marriage of technology and market segmentation. Technology markets are defined as “lumpy”, in that they can be fickle in determining what certain market segments want today and what they will want in the future. Using a very low-level example using laptop computers and two-dimensional variables, they create an envelope defining the technology associated with the two variables. They then create a market segment diagram using three market segments’ utility for the two valuables. It was fascinating to see the result when they overlapped the two envelopes to create an estimate for where they were, and where they may want to be. This could be a determinate as to what technology they may want to improve upon to reach a more diverse market, i.e. multiple market segments. They can also use this information to determine if investments in certain technologies will help them advance their market share.
Everything in this chapter focused on the idea of attributes. Attributes are the differentiating factor between the good of one company to a similar good of another company. These attributes require heavy analysis which can be broken into three components: Basic (expected feature), Discriminators (distinguish between providers), and Energizing features (discriminators that draw a sharp distinction). The authors then explore options to infiltrating these lumpy markets through clever use of a market niche either by combining two niches of two different markets (Fusion), or by advancing their technology barrier to a place where they can offer a superior product to a competitor in a single niche (Single Niche Domination). Or, they can take the most difficult road and create a new technology envelope by essentially revolutionizing the entire attribute set for a technology. An easy way to think about the value of attributes is to think of the history of the automobile. I think of the new Smart Fortwo car as an example of technology and market working together to establish a niche. If Smart had put out the car before a certain market segment was ready for it, it most probably would have failed. On that same premise, had there been a market segment for a car that got 33/41 2008 EPA miles per gallon and was only 8.8 feet long, but Smart did not have the technology investments in the right area, they may have failed to make it to market and attract this niche customer at an attractive price.