Marketing of High-Technology Products and Innovations Chapter 4: Market Orientation and R&D/ Marketing Interaction in High-Technology Firms.

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


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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?


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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)


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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


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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


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Capturing Value from Knowledge Assets

“ The essence of the firm is its ability to create, transfer, assemble, integrate, and exploit knowledge assets.”

David Teece


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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)


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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


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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


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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


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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


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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.


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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


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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


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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


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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


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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”


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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


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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


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Strategies to Enhance R&D – Marketing Interaction

Coordination

Co-optation

Communication

ConstructiveConflict

PositiveInteraction


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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)


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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


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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


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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!


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Caveat: Effective marketing/R&D

interaction must be firmly grounded in an understanding of customer needs and wants.


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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 …

Marketing of High-Technology Products and Innovations Chapter 4: Market Orientation and R&D/ Marketing Interaction in High-Technology Firms.

Documents

market orientation slide

market orientation philosophy

marketoriented firms

marketoriented people

market barriers results

information current

functionsdivisions slide

marketingrd interaction