The technological environment represents the application to marketing of knowledge in science, inventions, and innovations. New technology results in new goods and services for consumers; it also improves existing products, offers better customer service, and often reduces prices through new, cost-efficient production and distribution methods. Technology can quickly make products obsolete—calculators, for example, wiped out the market for slide rules—but it can just as quickly open new marketing opportunities.
As we discussed in Chapter 1, technology is revolutionizing the marketing environment. Technological innovations create not just new products but also entirely new industries. The Internet is transforming the way companies promote and distribute products. Among the new businesses developing as a result of the Net’s success are Web-page designers, new types of software firms, interactive advertising agencies, and companies like CyberCash and First Virtual that allow customers to make secure financial transactions over the ‘Web. Industrial and medical use of lasers, superconductor transmission of electricity, wireless communications products, seeds and plants enhanced by biotechnology; and genetically-engineered proteins that fight disease are just a few more examples of technological advances.
VF Corp., the $5.5 billion apparel maker, has revamped its manufacturing operations with new software applications. The 100-year-old company’s product line includes four brands of jeans, (Lee, Britannia, Wrangler, and Rustler), HealthTex children’s clothes, and Jantzen swimwear and backpacks. VF apparel is sold through mass-market retail chains like Wal-Mart, Target, and Macy’s. Its 17 brands operated independently of one another until 1997, when integrated information systems brought the family of brands together. Marketers finally had access to company-wide data, Armed with information on customer demographics, such as popular colors and common sizes, marketers are able to identil5i the right mix of products for individual stores. Dubbed the micromarketing system, it allows marketers to predict how many white Wrangler jeans with a 34-inch waist would sell at a particular store in a certain city during the middle of summer. The new software was the key to growth in revenues of over $7 billion.22
Technology can sometimes address social concerns. Texaco marketers, for example, are acutely aware of the need to obtain sustainable growth in the petroleum industry. After 100 years of pumping oil out of California’s Kern River oil field, the reservoir was finally drying up. The company slogan “A World of Energy” was certainly true—there was oil in Kern River, but Texaco could not get it out of the ground. The oil was locked in layers of rock and sand, but using modern technology, Texaco was able to heat the oil and separate it from the earth so it could be pumped to the surface. Marketers now emphasize Texaco’s commitment to meeting future energy needs by bringing new life to dying oil fields. As the ad in Figure 2.8 explains, “Not even a plastic surgeon could work that kind of magic.”
Industry, government, colleges and universities, and other not-for- profit institutions all play roles in the development of new technology. In
search and development efforts by private industry represent a major source of technological innovation. Pfizer, a U.S.-based global pharmaceutical company, discovers, develops, manufactures, and markets innovative medicines for humans and animals. The 150-year-old company is known for developing cures of the future, spending billions each year on research that may defeat cancer, eliminate heart disease, and eradicate Alzheimer’s. In 1998, Pfizer introduced Viagra, a revolutionary treatment for erectile dysfunction, and Trovan, which has become one of the most prescribed antibiotics in the United States. In addition, Pfizer Animal Health continues to provide goods and services that keep animals well, including vaccines, feed additives, and the first arthritis medication in the U.S. specifically for dogs. To maximize the strength of its product lines, Pfizer invested nearly $3 billion in research and development in 2002. Pfizer has also forged ahead in sales and marketing. The firm’s pharmaceutical U.S. sales force, which doubled in just three years, has ranked number one in overall quality for the last four years. The drug giant’s commitment to defeating cardiovascular disease, a leading cause of premature deaths. Another major source of technology is the federal government, including the military. In fact, many consumer products that people take for granted today originated as military projects. Examples include air bags (originally Air Force ejection seats), scratch-resistant sunglasses (developed first as visors for space helmets), digital computers (first designed to calculate artillery trajectories), and the microwave oven (a derivative of radar systems).
Although the United States has long been the world leader in research, competition from rivals in Japan and Europe has intensified in recent years. For the past quarter century, the United States led the way with personal computers, networking systems, and Internet technology. Japanese firms focused on industries where they could capitalize on their ability to transfer technologies into commercial products. For instance, American firms developed the technology for videocassette recorders, but two Japanese companies, Sony and JVC, commercialized the invention into one of the most successful new products of the past two decades. To remain at the leading edge, American firms have taken steps to improve technology transfers from university and military researchers as well as private companies.