ESRI Case 1 ESRI Case

ESRI Case Study Floretta Johnson MKT 569

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ESRI Case Study ENVIRONMENTAL SYSTEMS RESEARCH INSTITUTE (ESRI) 1. Of the three types of uncertainty that characterize high-tech markets, which type is ESRI experiencing most acutely? Elaborate and provide strategic implications for ESRI.

In Chapter 1 of Marketing of high-technology products and innovations, the authors state that there are three characteristics that all high-tech environments have in common. They are identified as market uncertainty, technological uncertainty, and competitive volatility (Mohr, J., Sengupta, S., & Slater, S. (2010). ESRI appears to be experiencing the competitive volatility most acutely. Competitive volatility is defined by Mohr, et al as intensity in the degree of change in the competitive landscape and uncertainty about competitors and their strategies, (2010). There are three components in the competitive volatility uncertainty. The first is the uncertainty over who will be the new competitors in the future. ESRI experienced this firsthand with the competition they received from Google Earth, Microsoft and the virtual globe. New competition to the industry can be the cause of disruptive technologies. Oftentimes, their new innovated technologies can make the existing technology obsolete. The next component of competitive volatility is what competitive tactics or strategies will be used by the new competitors. New competitors may render the existing rules or business

ESRI Case 3 strategies useless. Newcomers may be able to change the way of doing business for everyone involved. Once again, this was the case for ESRI. ESRI and the other competitors used the business model of gaining revenue from the sale of their GIS software. However, the newcomers (Google Earth and Microsoft) relied on advertising revenue instead of revenues from GIS sales. The final component asks the question what product will the existing industry compete with, in the case with ESRI, the newcomers were able to offer products that did not require any GIS traditional software. They were able to offered virtual globes from the internet. Due to the newcomers and the new innovative technologies that they are deploying, the strategic implications of competitive volatility for ESRI are outline below. According to Mohr, Sengupta, and Slater, managers must avoid being myopic (narrow-minded) when it comes to evaluating competitive threats (2010). The case pointed out the differing views pertaining to the virtual globes being a threat. Many of the managers felt that the new technology was not a threat because it was not a real GIS. These types of views make it easier for newcomer to create innovated ways to meet and solve their customers needs. Another strategy for ESRI according to Mohr is to avoid the market leaders innovators dilemma. ESRI had no problem at launching new innovative technologies that could compete with Google Earth; they launch their desktop ArcView and a web based application. Even when some managers at the company did not think that the new technology of the newcomers was a threat, ESRI launch the new technology knowing that it might cut into the sales of their existing products.

ESRI Case 4 2. What are the characteristics of the newest competitors that have allowed them to gain traction in the GIS industry? The case describes the newest competitors, (Google and Microsoft) as being the hottest companies in the IT (information technology) world. These companies were able to provide fast and simple interfaces to GIS data, they did not require a traditional GIS software,. The traditional manner required data to be stored on ones personal computer, but the new technology allowed the user to use the internet and web services, and the customers did not have to pay a fee. The newcomers provided a less complicated version of the GIS system which was geared toward the consumer. 3. To what extend does ESRI face disruption, in the classic sense of the word? Disruptive innovation is defined or described as whether the innovation appeals to a low-end or emerging customer segment rather than existing, mainstream customers (Mohr, et al, 2010). Disruptive innovations may come into existence because the companies may increase the sophistication of the feature set in their products. This can permit the newcomers to emerge into the market with a product that is on the lower-end. The product at first may only appeal to a small segment, but it may have the momentum to appeal to a larger base while remaining as nonthreatening to the existing firms in the industry. Even though the products are introduced as a lower-end products, they possess certain features that makes them attractive to the masses, (low price, simple to use, and convenient).

ESRI Case 5 This was the case in the ESRI case. The traditional GIS users from the early 1990s were different high-end GIS users. The latter users wanted a GIS product that was simple, fast, and modern. The modern user required a product that was simple; ESRI had to develop products that meet their need. The subsequent disruption was with the new virtual globes that were offered by the competitors from Google and Microsoft. The virtual globes were able to gain a massive following so quickly was because they competed in a different market arena. ESRI focus was on supporting and improving their existing ArcGIS system to better serve their current customers. This way of thinking (myopic views) caused ESRI to miss some potential clients. 4. Should ESRI explicitly target the new GIS customer (mainstream, non-professional, lowend)? If so, what organizational changes might this require?

ESRI should target the new GIS customers as well as find a way to keep their existing base. The new technology will probably become more successful as the years and technology progress. If ESRI develop a bi-focal vision it will be able to meet these needs. ESRI should target a segment in the company that is devoted to monitoring the threats and address them.

ESRI Case 6 ESRI must adopt a culture of innovativeness. This must be from top management down. Top management should support and pursue the new market, management should also be willing or not afraid to produce new products that may cannibalize some sales. ESRI will need to form some collaborating or partnership with Google or Microsoft. This is a good way to gain access to the readily available resources, and it can lead to a situation where all parties win. 5. How would you characterize GIS diffusion in terms of the categories of adopters? Has it crossed the chasm? In my opinion it appears that ESRI in dealing with business is in the early adopter early majority stages. ESRI has produce new innovated technologies that have the potential to cross the chasm. However, ESRI must first offer the consumer a complete or whole product. In order to reach the massive or become a mainstream product, ESRI must identify a beachhead, and offer the consumer the product and the solutions. The whole product to reach the new segment

should consist of the computer, access to the internet, a program or browsers for the GIS program, and some knowledge concerning the programs offered. Training for management may be need in order to reach the new target segment because of ESRI history with dealing with high end users. 6. How can companies such as ESRI compete in this era of free?

ESRI Case 7 ESRI can compete in this era of free by sustaining innovations with a reasonably fast cycle time. It is also apparent that the company needs to be resourceful and efficient. This includes finding new ways to use the companys existing products, new market approach, have a price structure that offers the product at different prices, for example, AOL, offers a free version and a paid version, ESRI might consider adopting this method. ESRI can also consider revising the method they obtain revenues, current they are receiving revenues from the sale of the GIS software, they may consider to use their expert knowledge to offer some type of training classes.

7. What should the traditional GIS vendors such as ESRI do, in light of the new industry trends? The case stress that ESRI longevity is due to the fact that they practices smart classic business senses, which means that they listening to the customers, investing in new technology and aligning it to real customer needs, introducing sustaining innovations into their structural design, working with business partners that improve their products, and they have learn to keep an eye its competitors (Mohr, Sengupta, & Slater, 2010). Since, this appears to be working well for them; the firms should contain using this method. They also need to sustain or promote innovations for the legacy clients. They should also keep abreast with the new clients needs by creating disruptive innovation to capture a share of the new market. They should also build a partnership or collaboration with the competitors like

ESRI Case 8 Google and Microsoft to get users acclimated to the different features offered by GIS. This can prove to be a win-win situation for all parties.

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References Mohr, J., Senguta, S., & Slater, S. (2010). Marketing of high-technology products and innovations (3rd Ed.). New Jersey: Prentice-Hall.