Niche first: The art of selling a new high-tech product category

Launching a new high-tech product category into a world already saturated with electronic gadgets can be daunting even for the savviest marketers.
However, no matter how jam-packed the market for multi-purpose devices seems to be, manufacturers continue to delve further into technology convergence, producing more advanced products at more competitive prices, thus creating a constant need to re-educate the consumer about what's on offer.

Launching a new high-tech product category into a world already saturated with electronic gadgets can be daunting even for the savviest marketers.

However, no matter how jam-packed the market for multi-purpose devices seems to be, manufacturers continue to delve further into technology convergence, producing more advanced products at more competitive prices, thus creating a constant need to re-educate the consumer about what’s on offer.

Cell phones will soon be doubling as personal computers with constant Internet access and e-mail facilities, while offices will only require one machine for all their printing and laser copying needs.

Last month, there was an expansion of SMS (short message service) when the four major carriers (Bell Mobility, Microcell Solutions, Rogers AT&T Wireless and Telus Mobility) agreed to share their connections. According to the Canadian Wireless Telecommunications Association (CWTA), this will greatly speed up the development of wireless communications in Canada, and will provide many marketing opportunities for manufacturers of wireless devices.

‘The advent of seamless text-messaging across networks will certainly provide an easy entry for marketers promoting the mobile e-mail market,’ says Peter Barnes, president and CEO at the Ottawa-based CWTA.

‘As people start to use wireless e-mail in the business world and simple text messaging at a consumer level, those needs will eventually cross-pollinate,’ he says.

In fact, a recent survey by Ernst & Young indicates that although only 4% of Canadians currently use wireless Internet service, 24% are likely to use such a service by the end of next year.

A number of major players including Motorola, Nokia and Siemens have launched wireless cell phones to provide instant mobile Internet access. Although these devices are expected to be the technology of the future, at this early stage in their evolution they are generally being marketed at a niche audience – the tech-savvy business traveler.

Microcell Solutions, a Montreal-based provider of personal communications services under the Fido brand name, is currently undergoing the challenge of marketing Motorola’s new V66 wireless handset, which gives Internet and e-mail access while on the move. The V66 operates via Microcell’s mobile Internet service GPRS (General Packet Radio Service), which was launched this fall, and is the first commercial system of its kind to be marketed in Canada.

‘It is always a big challenge to launch a new product category because consumers don’t understand it,’ says Patrick Hadsipantelis, director of marketing at Microcell Canada.

Young professional business travelers make up the initial target demographic. To this end, Microcell has formed a partnership with Air Canada to provide a promotional in-flight video for business travelers, and billboard advertising within major Canadian airports, created by Bos in Montreal.

‘Mainstream advertising like TV is not going to help us at this early stage,’ explains Hadsipantelis. ‘We need to talk directly to the business travelers by working on a highly targeted basis.’

The key in marketing this type of technology, Hadsipantelis says, is to concentrate on the benefits of the service such as high-speed connectivity and mobile Internet access. Fido customers can use the V66 for voice service and text messaging on the networks of Fido’s worldwide partners. They can also use it for GPRS data access throughout Canada and in the U.S. through Microcell’s ‘roaming’ partner, VoiceStream Wireless.

Hadsipantelis anticipates broadening the advertising focus later in 2002, when consumer awareness has increased. ‘As we eliminate some of the key obstacles, consumers will become more and more privy to this kind of product category,’ he predicts.

Microcell is currently in talks with other potential marketing partners to reach the business traveling demo.

According to Warren Chaisatien, telecom analyst at IDC Canada, the wireless industry will face its biggest marketing challenge when the third-generation wireless (3G) network, which offers a full array of graphics, is rolled out in Canada next year. The danger, he says lies in an attempt to explain the complex technology. ‘Instead of focusing on technology, marketers should be focusing on benefits to the individual user, or if they are talking to a business they need to emphasize the value and return on investment,’ says Chaisatien.

Nokia Canada is one player to have adopted this approach. ‘The key to advertising a new high-tech product category is to remember that the consumer is not interested in the technology,’ says Lillian Tepera, director of marketing at the Ajax, Ont.-based manufacturer. ‘As an industry we’ve made mistakes in the past by focusing too heavily on the technology behind a new product. Consumers don’t want to hear about GPRS. They want to know what the product can do for them, so our strategy is to add a human touch and focus on one or two key selling points for each product we market.’

Nokia will be bringing two new varieties of high-tech phones with the launch of the 8390 GPRS phone early in 2002 and the 9290 communicator in the second quarter, both of which provide continuous Internet access.

‘The communicator is targeted at business people so we will be pushing the point that a phone like this can be used for something like changing your power-point presentation while you’re in the car on your way to the airport to meet a client,’ says Tepera. (Editor’s note: Likely not recommended by nine out of 10 traffic cops.)

Although Nokia expects that 95% of households won’t be buying such an advanced product in its early stages, it makes sense to do some mass marketing to create a halo effect, Tepera says. ‘We will be looking at TV, out-of-home and print as well as online advertising so as to position our products in the minds of the consumers.’

Nokia has also adopted a segmentation strategy to acknowledge that some consumers simply want a straightforward phone while others want all the latest gadgets. ‘We are currently targeting different products at very different sorts of users and that will continue,’ she says. In Europe, the Finnish giant will also be positioning itself as a powerhouse in software next year with the unveiling of the 7650, which doubles as a digital camera.

Motorola and Nokia are competing with numerous other players in the growing wireless category. For example, California-based Handspring is launching a multi-purpose device integrating e-mail, messaging, Web browsing and cellular phone functions in one small handset. The Treo 180 will be coming to Canada in early 2002, selling at $550.

Handspring chose to focus its marketing efforts on the people it refers to as ‘early adaptors’ of technology. ‘These are the people who are already walking around with various elements of the Treo hanging from their belts,’ explains Karen Sipprell, VP of corporate marketing at Handspring. ‘It is always a challenge to launch a new category like this, so we are focusing on these people who already understand what each device does, and have always longed for a consolidation of the three.’

The Treo’s key market will be mostly those in their 30s, although Sipprell says the focus is on targeting people of a certain mindset rather than of a particular age. ‘Most will be professional business people initially, but we do want to target the general consumer in the long-run,’ she says. Handspring plans to colaborate with GSM carriers to create combined ad campaigns, because as Sipprell says: ‘Carriers have the resources for multi-media campaigns which we aren’t in a position to finance on our own.’ Discussions are currently underway with GSM carriers, and Handspring is expected to announce a Canadian partner soon in either Rogers AT&T or Microcell.

Another of Handspring’s strategies will be ‘seeding programs’ through which a number of the devices will be given to visible people in all walks of life, such as education, government and entertainment.

‘This is intended to build momentum around the product,’ says Sipprell. ‘If we get a handful of influential people to go out and use the Treo, it will bring exposure to the product and make it seem more accessible to the general masses.’

Sipprell expects the wireless market to develop significantly in the years ahead. ‘We really believe these devices are the phones of tomorrow,’ she says.

Wireless technology is not the only high-tech sector to be evolving towards the mass market. Digital photography has been around for some years but until recently it has been popular only among a small sector of society. Canon Canada hopes to capture the lion’s share of what it anticipates will be an ‘exploding digital photography market’ by shifting its marketing focus to the mainstream consumer.

‘In the last seven or eight months digital cameras, printers and scanners have become a lot more mainstream,’ says Ian Macfarlane, VP and general manager of Canon’s photographic products group. ‘As the competition in the market leads to more features at more attractive price-points, a lot more general consumers are getting interested in digital photography.’

As part of a national campaign, Grey Worldwide in Toronto has created a 30-second TV spot that launched on Dec. 6 with the tagline, ‘Astonish Yourself.’ It highlights Canon’s 70-year history and takes the viewer through the changing technology, finishing with today’s high-tech digital models. ‘The point of this campaign is to let people know that because of Canon’s history, this is what they are capable of today,’ explains Marc Stoiber, executive creative director at Grey. ‘We are demonstrating how the whole lineup of products works so well together.’ A newspaper and magazine campaign following a similar theme was launched across the country in late November.

Although Macfarlane says the campaign is designed to promote Canon’s whole range and brand image rather than to sell a particular product, it comes at an appropriate time, shortly after the launch of the PowerShot S40 and S30 digital cameras. A new lineup will follow in 2002, which Stoiber says will be promoted with subsequent executions.

Another player to be anticipating a boom in the digital printing market with the forthcoming convergence of copiers and printers, Hewlett-Packard (Canada) is preparing its marketing strategy ahead of a product launch.

‘There is a general awareness in the market place that these products are merging into one, but people don’t fully understand what that means to them,’ says Janet Le Mare, marketing manager for imaging and printing systems, based at the manufacturer’s Calgary sales office.

In order to overcome this obstacle, Le Mare says Hewlett-Packard is using a multi-pronged marketing approach incorporating demonstration events to educate the consumers, and customer surveys to find out what people are looking for in a product. ‘People adapt at different speeds and to different degrees so we have to help them through the transition,’ she says.

Hewlett-Packard launched its first family of products in this new combined printing and imaging category in 2000. The LaserJet 8150 range was launched with a newspaper and radio campaign, which will be expanded significantly when the manufacturer introduces its new product lineup in Spring 2002.

Music technology is also evolving at a remarkable rate. In October, Apple launched its iPod MP3 player with a FireWire connection, which allows music files to be transferred more quickly and efficiently than standard MP3 players. The device can store up to 1,000 CD-quality songs in a pocket-sized device. To market this product, a two-prong advertising approach was adopted to try to appeal to Apple’s existing customers while still drawing in the less techno-savvy crowd. For the existing customers, direct marketing in the form of e-mail and post-cards was used, while a TV and outdoor campaign was created for non-Mac users.

‘The FireWire aspect is highlighted on our Web site, but in our mass-marketing the goal was to make people aware of what this device does,’ says Robyn Goldring, advertising and communications manager at Markham-based Apple. All aspects of the campaign have been well-received, Goldring says, although sales results are not known at this stage.