Communication Strategy for
High-Tech Products
Investing in marketing communication, or “marcom,” is one of
the secrets of the high-tech firms that seem to flourish during
the economic downturns. While most of their competitors cut
on communication costs in order to save money, the successful
firms increase their communication to grow their market
share. That does not mean to expand their advertising budget
drastically. To be sure, some large companies spend heavily in
advertising to knock down their competitors. Table 8.1 intro-
duces the biggest communication spenders in the United
States. To this list, one could add Samsung Electronics, which
launched a $400 million global ad campaign in 2002 with $70
million for the North American market.
However, the sheer volume of money is not the ultimate
indicator of performance; some highly successful companies
have managed to achieve recognition through creativity and
publicity. One of the most famous high-tech brands in 2003
was Google, the well-recognized Web search engine that has
achieved this position mostly through word of mouth and
quality. Amazon, eBay, and Yahoo have also achieved immedi
-
ate recognition on low advertising budgets. Those Web-based
firms have managed better than their competitors to ride the
wave of the Internet. They have been able to generate buzz
among “influencers” instead of relying solely on traditional
advertising. The excitement and passion they have generated
has translated into sales.
For that matter, they are just following the previous gen
-
eration of successful high-tech champions, such as Intel,

to the planning of communication campaigns, including the use of different
media. Furthermore, preannouncement as well as public relations, corpo-
rate advertising, and viral marketing (word-of-mouth marketing, which
pushes people to pass along a message) have a particular importance in the
communication strategy of high-tech products.
8.1 Communication for high-tech products
The three main characteristics of a high-tech product—technology, rate of
change, and innovation—have an important impact on the communication
strategy for the selected market segments.
First, it is essential for the company to interpret the product’s high-
technological content in terms of how well it meets the customer’s needs
and wants. A typical error is to communicate about the characteristic of a
product instead of its main benefits, for the mainstream customer. Second,
because products change rapidly, marketing departments need to let target
customers know when new models of product are available. All the winning
high-tech firms have strong preannouncement strategies [2], as well as
know-how, as we will detail in Section 8.5. Third, in the case of a disruptive
innovation, the company must explain the new technology and provide a
vision of the future, as well as the added value this new technology gives the
customer [3].
218 Communication Strategy for High-Tech Products
Table 8.1 The top Advertising Budgets from High-Tech
Companies in the United States
2002
($ million)
2001
($ million) %Change
% of Total
U.S. Sales
Verizon

sion maker). Interestingly, this is true not only in B2B, but also in B2C: most
of the consumers of electronic goods, such as video-game consoles, PCs,
Internet services, or cellular handsets, are children who do not have the
money to buy those items. The communication strategy must reach not
only these children, but also their parents or family members who pay the
bills, in order to market the product effectively. These specifics for high-tech
products can be found when setting and then allocating the communication
budget.
8.2 Setting a communication budget
The recommended method for developing a communication budget is the
so-called objective-and-task method, where marketers first define their spe
-
cific objectives, then determine the tasks that must be performed to achieve
these goals, and finally estimate the costs of the necessary resources to per
-
form these tasks. This method has the advantage of spelling out assumptions
about the relationship between dollars spent, exposure levels, and sales.
Unfortunately, in the high-tech business, this method is not of much
use, because most related data are not easily defined. The makeup of the tar
-
get market (consisting of innovators and early adopters) makes it difficult to
assess the exposure cost of a message and even more difficult to assess the
number of exposures to the message that are needed before a part of the tar
-
get market decides to try the product.
Consequently, advertising budgets are very often determined pragmati
-
cally as a percentage of sales figures or sales forecasting or advertising budg
-
ets of previous years for similar products, if available. One should note that

-
ured” media (i.e., whose audience can be measured as opposed to
unmeasured media, which includes all the communication toward dis
-
tribution channels), such as TV ads, daily and trade print media, outdoor
venues, radio, on-line, and direct marketing.
Multiple-page ads in newspapers such as the Wall Street Journal
advertised numerous company divisions. Other print media, outdoor
venues, and radio showed specific large customers, including Bank of
America or Saks, which explained how they were “playing to win.”
Other print ads put in banking, retail, and automotive publications pro
-
moted IBM’s solutions for those specific industries.
Designed by the ad agency Ogilvy & Mather, the advertising cam-
paign had messages such as “E-business. It’s the only game in town,”
and “Downtime means losing profits and opportunities, so you can’t let
it happen. IBM Tivoli software allows you to predict the business impact
of the technology you’re responsible for, so that you can make smarter
decisions today.”
This was the first time that IBM ran a consolidated campaign across
all of its divisions and offices and it came with its biggest budget for a cor-
porate campaign so far.
Question 1: How did the IBM campaign fit with the main characteris-
tics of IBM’s high-tech products and services?
Question 2: What are the pros and the cons for IBM to run a single
cross-division advertising campaign?
category of services was the first to be introduced on the market and Voda
-
fone wanted both to put it on the map and to achieve significant sales. It
invested in a £25 million ($38 million) public relations and advertising

and others major European and Asian newspapers—as well as advertising
on prime-time programs on national TV such as Law & Order and 60 Minutes
and programs on cable networks that reach their target audience, such as
CNN, the History Channel, and the Discovery Channel.
Figure 8.1 introduces the choices of media types by high-technology
companies. The degree of importance of media starts from the top and goes
down for B2B firms [4]. For B2C companies, the ranking of priorities is
upside down.
8.3.1 Sales
Sales and sales management usually appear at the top of the market’s
preferred communication tools for B2B companies. This underlines the role
of a direct sales force, which is to be not only a distribution channel, but also
8.3 Allocating the advertising budget 221
a source of communication. Actually, for some small start-ups, sales
representatives are the only communication tool. Consequently, it is of the
utmost importance for the marketers to make sure that the representatives
exactly know the positioning and the key benefits of the products they are
selling. If they have not been trained correctly, there is a strong probability
that they will not communicate the right message to the customers.
8.3.2 Trade magazines
Trade magazines that specialize in and target a specific audience are a pre
-
ferred medium when presenting an innovation or developing the advan
-
tages of a new product or a new technology. These magazines have a strong
educational role. The simplest way to provide them with information is the
news release, usually a typewritten copy of less than 400 words with the
firm’s name, address, and phone number as well as the contact person.
There are also feature articles, which are longer manuscripts that are written
by a member of an association, a distinguished researcher, or an executive

Not
important
B2B
Newspapers
Outdoor media
On-line marketing
Figure 8.1 Importance of promotional tools used by high-tech firms.
publications are familiar with technology. According to a recent survey
from Reed Elsevier Business Information Research, based on its own publi
-
cations, more than 7 in 10 subscribers of B2B specialized publications regu
-
larly read at least 3 of 4 issues, and more than 9 out of 10 read at least
occasionally [5].
Every industry has its specialized publications that often have global cov
-
erage, like Flight International, Journal of Electronic Defense, Jane’s International
Defense Review, European Polymer Journal, IEEE Communications Magazine,or
Telecommunications Magazine. For computers, there are more than 100 publi
-
cations in circulation; some of those publications target professionals, such
as Computerworld or Wired; others are aimed at consumers like PC Magazine
or Gamefan magazine, as well as Nintendo Power or PlayStation Magazine,
among the various video game magazines.
Other communication publications are sponsored magazines, like IBM
Think Research Magazine or Motorola Access,orOracle Magazine, and newslet
-
ters such as IBM Software Newsletter or Microsoft Windows Newsletter. They are
distributed to customers and interested parties at no cost. Newsletters con
-

8.3 Allocating the advertising budget 223
than spend millions on a lavish booth, ND SatCom took an inconspicuous
spot to install a clever satellite network demonstration that clearly showed
the benefits of their solution. Ahead of time, they invited technical decision
makers of key customers to visit the booth for private presentations. This
introduced these customers to an unfamiliar supplier who had interesting
and potentially beneficial technology.
A new trend is that of individual trade shows organized by only one
company and where business partners and third-party product makers also
exhibit. Apple’s Apple Expo is the most famous and consumer oriented. At
this type of trade show all of a company’s proposed products can be pre
-
sented in one large area instead of in a small booth. These trade shows,
which are always very impressive, can assure that customers have faith in
the organizing company (which is a very important element of choice in
high technology).
These individual trade shows also offer the opportunity to organize a
gigantic public relations event for customers, distributors, and journalists
while ensuring that its impact will not benefit competitors. However, this
type of trade show also requires sizable financial resources.
A more economical solution consists of making company visits. All large
high-tech companies, from Intel, EADS, and Aventis to IBM, but many
small- to medium-sized high-technology companies as well, organize trips
so that their existing and prospective customers can visit R&D facilities,
under a nondisclosure agreement. These visits are also part of a purchasing
activity by allowing customers to test new prototypes, to find out about a
potential supplier’s long-term plans, and to ask questions about a new
technology.
Scientific conventions are communication tools reserved for companies
who sell to manufacturers of chemicals, aeronautics, or nuclear technology,