Marketing of High-Technology Products and
Innovations
Chapter 4: Market Orientation and
R&D/ Marketing Interaction in High-Technology Firms
© Mohr, Sengupta, Slater
2005
Chapter Outline Market Orientation
What it means to be Market Oriented Knowledge Management Facilitators of and Barriers to Being Market
Oriented The Hidden Downside of a Market Orientation
Marketing/R&D Interaction Relative to Innovation Type Barriers to Effective Interaction Strategies for Achieving Effective Interaction Keeping the Customer in Marketing/R&D Interaction
© Mohr, Sengupta, Slater
2005
Market Orientation What is a market orientation? What would you expect a market-oriented firm
to look like? What are some advantages and disadvantages
to being market-oriented? What are some advantages and disadvantages
to being customer-focused vs. competitor-driven?
What constitutes a knowledge management system?
© Mohr, Sengupta, Slater
2005
Market Orientation
Philosophy of doing business that emphasizes shared gathering, dissemination, and utilization of market information in decision making.
Impact of market orientation on performance: Firms that are strong technologically see a greater
impact of market orientation on performance (than firms which are not strong technologically)
© Mohr, Sengupta, Slater
2005
Aspects of a Market Orientation
1 Gathers information -About customers -About competitors -About market trends
2 Disseminates information throughout the company
3
Makes decisions cross-functionally based on use of information
4 Executes decisions in a coordinated manner and with commitment
© Mohr, Sengupta, Slater
2005
How market-oriented firms use information:
Gather information Current and future customers Competitive information Market trends
Disseminate information Across functions and divisions
Utilize information Across functions and divisions to enhance
commitment Execute decisions in coordinated fashion
© Mohr, Sengupta, Slater
2005
Capturing Value from Knowledge Assets
“ The essence of the firm is its ability to create, transfer, assemble, integrate, and exploit knowledge assets.”
David Teece
© Mohr, Sengupta, Slater
2005
Knowledge Management Proactive management of firm’s
bases of knowledge to better share and use information
Requires conscious oversight to overcome natural boundaries (between functions/divisions)
© Mohr, Sengupta, Slater
2005
From Data to Knowledge
Data
Knowledge
Information
Facts determined from a measurement of some kind.
Organized data.
Information that enables prediction.
Scaling & accuracy
purpose & meaning
Applicability & exploitability
© Mohr, Sengupta, Slater
2005
Influences on Achieving a Market Orientation
Top ManagementLeadership
DecentralizedResponsibility
Market-basedRewards
FacilitatingConditions
MarketOrientation
Innovativeness
New ProductSuccess
SuperiorProfitability
Turf Protection
Core Rigidities
Served Market
Barriers
Results
© Mohr, Sengupta, Slater
2005
Barriers to Being Market-Oriented
People hoard information (selective behavior in the gathering and dissemination process)
Core rigidities can cause people to disparage/disregard information about/from users (technology enthusiasm/arrogance)
Tyranny of the served market: Listening only to current customers (marketing
myopia) Users’ inability to envision new solutions
Solving problems only with current technologies
© Mohr, Sengupta, Slater
2005
The Hidden Downside to Being Market-Oriented
Listening too closely to customers can inhibit innovativeness Customers may be inaccurate both in
their positive endorsement of new products as well as in their rejection of new ideas.
feedback fanatic syndrome
© Mohr, Sengupta, Slater
2005
Overcoming the Pitfalls in Being Market-Oriented
Focus less on what customers SAY and more on what they DO. Empathic design
Match use of customer feedback to the type of innovation: For incremental innovations:
Customer feedback is vital and useful. For breakthrough innovations:
Customers bounded by current solutions, and insights about new technologies may be sketchy at best.
© Mohr, Sengupta, Slater
2005
Overcoming the Pitfalls in Being Market-Oriented (Cont.) Focus on future customers (and
not just existing customers) (investigate the possible causes of unexpected failure/success)
Champion new ideas Work in cross-functional teams
© Mohr, Sengupta, Slater
2005
Customer-Led and Market-Oriented: Don’t Confuse the Two
Customer-Led Expressed Wants Served Market Customer Satisfaction Linear Learning
Customer Surveys Key Accounts Concept Testing
Market-Oriented Unarticulated Needs New Customers Customer Value Breakthrough Learning
Customer Observation Lead-Users Experimentation
© Mohr, Sengupta, Slater
2005
Effective Marketing/R&D Interaction1 Match nature of
interaction to the type of innovation
2 Examine and overcome core rigidity of elevation of engineering over marketing
3 Use formal and informal interactions to build bridges
4 Enhance opportunities for communication
© Mohr, Sengupta, Slater
2005
Nature of Marketing/R&D Interaction Matched to Type of Innovation
Break-through innovations Success based on technological (R&D)
prowess Role of marketing: To provide market-
related feedback on market opportunity areas, market development, feedback on product features/engineering
feasibilityMarketing brings voice of customer and marketplace into the development process
© Mohr, Sengupta, Slater
2005
Nature of Marketing/R&D Interaction Matched to Type of Innovation (Cont.)
Incremental Innovations Because customers can provide useful
feedback for product development, role of marketing is critical
Role of R&D: Ensure marketing understands technological
capabilities Assist with marketing efforts Assist with understanding customers
R&D remains “close to the customer”
© Mohr, Sengupta, Slater
2005
Barriers to R&D/Marketing Interaction
Corporate culture/core rigidity that is technology-driven Elevates status of engineering over marketing
personnel Engineering takes on important marketing
tasks Spatial distance in physical locations of
marketing and R&DJustifies and institutionalizes disregard for market-related information/feedback
© Mohr, Sengupta, Slater
2005
R&D and Marketing Stereotypes
Time Orientation
Projects Preferred
Ambiguity Tolerance
Department Structure
Bureaucratic Orientation
Primary Loyalty
Professional Orientation
Long
Breakthrough
Low
Informal
Less
Profession
Science
Short
Incremental
High
Moderately Formal
More
Firm
Customer
R&D Marketing
© Mohr, Sengupta, Slater
2005
Strategies to Enhance R&D – Marketing Interaction
Coordination
Co-optation
Communication
ConstructiveConflict
PositiveInteraction
© Mohr, Sengupta, Slater
2005
Co-optation. Effective marketers:
Build informal networks and bridges to engineering
Give the credibility to those who understand products, technology, markets and be able to communicate articulately about the other’s domain
Form strategic coalitions with upper management Risk: May alienate peers
If necessary, bypass engineering to get the job done via external partners (a way of governance)
© Mohr, Sengupta, Slater
2005
Cooperative Strategies Co-locate marketing and R&D in close
proximity Rotate personnel through different
functions Develop cross-functional networks Create group incentives that encourage
cooperation Build consensus in a nondirective fashion
© Mohr, Sengupta, Slater
2005
Communication
Increased frequency of communication beyond minimum threshold (125/3-month), but below overload (525/3-month)
Disseminate information through formal channels when possible for credibility
Create norms for extensive sharing of information between functions
Make it clear that the organization’s goals are subordinate to either marketing’s or R&D’s individual goals
© Mohr, Sengupta, Slater
2005
Constructive Conflict Spirited discussion creates new and
innovative ideas Pressure for harmony stifles emergence of
alternative viewpoints Result of emphasis on harmony may be
“groupthink” where contrary opinions are not expressed and problems are ignored
Key to “constructive” conflict is respect Once a decision is made, no second
guessing!
© Mohr, Sengupta, Slater
2005
Caveat: Effective marketing/R&D
interaction must be firmly grounded in an understanding of customer needs and wants.
© Mohr, Sengupta, Slater
2005
Keeping the Customer In R&D/Marketing Interaction?
Customer Marketing Engineering Product Technology
Rock Pile
Would you like a rock?
Sure
Here’s a
blue rock?
OK Find me a big, cheap, fast, dense, sharp...rock
Wrong rock
Do you have a red rock?
What’s wrong
with blue?
I can make a purple one
OK, but only
if its square
We don’t have square ones …