ABSTRACT
Managers of high-tech firms must recognize the unique characteristics of technological innovation in formulating marketing strategy. This chapter focuses on the appropriability problem, a particularly important concern facing high-tech firms. It suggests the importance of investing in complementary marketing assets to mitigate this problem. In the patented and branded segment of the pharmaceutical industry, which combines intellectual property rights (IPR) with easy replicability, the emphasis is on heavy complementary promotion during the patent life of a drug. However, complementary marketing assets take different forms in different industries. The objective of such a strategy is to increase the primary demand for the product as well as build a brand name, which will help sustain the competitive advantage during the post-patent period when price competition from the producers of generic drugs is intense. Complementary marketing assets take the form of significant investments made by the firm to achieve the optimal level of codification in order to enhance appropriability.
