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Rice University researcher discovers what makes a tech product stand out in a crowd

Turns out, timing is everything when launching a new tech product, this reacher found for Rice Business Wisdom. rawpixel.com /Pexels

From smart phones to video games to virtual reality toys, new products roll forward as relentlessly as the tides. So what, and how, should you tell consumers about your product to avoid being swept away in a sea of similar wares?

To answer this question, Rice Business professor Amit Pazgal and colleague Yuanfang Lin of Conestoga College dove into the particulars of how companies differentiate their products by informing consumers about a new product's quality.

The rush of new products, they note, is particularly intense in technology, where innovations are constant — which means consumers constantly need information about them. Traditionally, tech companies make the case for their products using advertising, free sample, product trials and splashy product demonstrations. (See your local Apple Store).

But how does a consumer's wish for information interact with their ultimate buying decision?

Timing, Pazgal and Lin found, plays a powerful role in the type of information that best influences consumers. Suppose, for example, Firm 1 offers a new product, say a smartphone with innovative features. This makes Firm 1 a pioneer. For a certain golden period, Firm 1 might hold a monopoly in the market, since there's simply no other smartphone like theirs. This is the moment, the researchers say, to offer consumers information that reveals the product's true quality and uniqueness. Because no similar product is out there, Firm 1 has the power to establish the parameters for judging its invention.

Inevitably, of course, another company (call it Firm 2) will come up with something comparable. Thanks to the heavy lifting in innovation by Firm 1, Firm 2 has the luxury to create a phone of equal or greater quality. And this is when the tide starts to turn. One might assume Firm 2 would just inform consumers of the superior quality of its product. But, surprisingly, Pazgal and Lin found that in most cases Firm 2 will instead focus on educating consumers about their preference for quality — in effect, leaving it up to the buyer to decide which of the two phones they really wants.

However, if another firm emerges with a similar product of lesser quality, its marketing will likely take yet another turn. Instead of trying to claim better quality, late entry companies offering an inferior product typically admit outright that their product isn't as well made as other versions.

That's because such firms calculate that if customers discover this themselves, they'll react badly. By telling the truth and pricing appropriately, a firm can find a calm stretch of water elsewhere in the market, someplace where it's not clashing directly with the earlier, higher quality products.

Whether it's Alexa, a smart TV or a virtual reality game, Pazgal and Lin explain, when a product enters the market for the first time, consumers need to be shown how it works. When a second product in the same line is introduced by a different company, the marketing task changes: it's now more important to show consumers how to identify a quality product, and then let them choose for themselves.

Any time a company launches a device or service into the world, in other words, it needs to trust consumers' ability to learn — and not drown them with too much information. Informed what good quality looks like, Pazgal and Lin conclude, consumers will swim on their own to the item they truly want.

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This article originally appeared on Rice Business Wisdom.

Amit Pazgal is Friedkin Chair in Management and Professor of Marketing and Operations Management at Jones Graduate School of Business at Rice University.

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Building Houston

 
 

Greentown Houston is headed for the Innovation District, which is being developed in Midtown. Photo via Getty Images

After announcing its plans to expand to Houston in June, Boston-based Greentown Labs has selected its site for its cleantech startup and tech incubator.

Houston Mayor Sylvester Turner and the Greater Houston Partnership announced that Greentown Houston will be opening in the Innovation District, being developed by Rice Management Co. and home to The Ion. The site is located at 4200 San Jacinto St., which was Houston's last remaining Fiesta grocery story before it closed in July.

The facility is expected to open this coming spring and will feature 40,000 square feet of prototyping lab, office, and community space that can house about 50 startups, totaling 200 to 300 employees.

"We are thrilled to announce the selection of Greentown Labs' inaugural location in partnership with RMC, the City of Houston, the Partnership, and leading global energy and climate impact-focused companies," says Emily Reichert, CEO of Greentown Labs, in a press release. "In order to meet the urgent challenge of climate change, we must engage the talent and assets of major ecosystems around the country. We look forward to catalyzing the Houston ecosystem's support for climatetech startups as we work together toward a sustainable future for all."

Emily Reichert is the CEO of Greentown Labs. Photo courtesy of Greentown Labs

Greentown Labs launched in 2011 as community of climatetech and cleantech innovators bringing together startups, corporates, investors, policymakers, and more to focus on scaling climate solutions. Greentown Labs' first location is 100,000 square feet and located just outside of Boston in Somerville, Massachusetts. Currently, it's home to more than 100 startups and has supported more than 280 startups since the incubator's founding. According to the release, these startups have created more than 6,500 jobs and raised over $850 million in funding

"We are so pleased that Greentown Houston will locate in the heart of the Innovation District, where they will seamlessly integrate into the region's robust energy innovation ecosystem of major corporate energy R&D centers, corporate venture arms, VC-backed energy startups, and other startup development organizations supporting energy technology," says Susan Davenport, chief economic development officer at the Greater Houston Partnership, in the release. "Houston truly is the hub of the global energy industry, and Greentown Houston will ensure we continue to attract the next generation of energy leaders who will create and scale innovations that will change the world."

Greentown Houston, which previously announced several founding partners in June, has just named new partners, including: RMC, Microsoft, Saint-Gobain, and Direct Energy. According to the release, Greentown Houston is also looking for Grand Opening Partners. Naturgy and and FCC Environmental Services (FCC) are the first to join on as a grand opening partners, and startups and prospective partners can reach out for more information via this form.

Reichert previously told InnovationMap that it was looking for an existing industrial-type building that could be retrofitted to meet the needs of industrial startups that need lab space. She also said that this approach is very similar to how they opened their first location.

Rice Management Company is developing the Innovation District in the center of Houston. Screenshot via ionhouston.com

The new location will be in the 16-acre Innovation District that's being developed by RMC, which will be anchored by The Ion, a 270,000-square-foot hub that is being renovated from the former Sears building.

"What we love about Greentown Labs as much as its commitment to helping Houston become a leader in energy transition and climate change action is its proven track record of job creation through the support of local visionaries and entrepreneurs," says Ryan LeVasseur, managing director of Direct Real Estate at RMC, in the release. "Greentown Houston, like The Ion, is a great catalyst for growing the Innovation District and expanding economic opportunities for all Houstonians. We're thrilled Greentown Labs selected Houston for its first expansion and are honored it will be such a big part of the Innovation District moving forward."

Acquiring the new Greentown location is a big win for the mayor, who released the city's Climate Action Plan earlier this year. The plan lays out a goal to make Houston carbon neutral by 2050.

"We are proud to welcome Greentown Labs to Houston, and we are excited about the new possibilities this expansion will bring to our City's growing innovation ecosystem," says Turner in the release. "Organizations and partners like Greentown Labs will play a vital role in helping our City meet the goals outlined in the Climate Action Plan and will put us on the right track for becoming a leader in the global energy transition. The City of Houston looks forward to witnessing the innovation, growth, and prosperity Greentown Labs will bring to the Energy Capital of the World."

Greentown Labs will host a celebratory networking event on September 24 at 4 p.m. Registration for the EnergyBar is open here.

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