Marketing of High-Technology Products and Innovations

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

2. 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 which are strong technologically see a greater impact of market orientation on performance (than firms which are not strong technologically)

3. Aspects of a Market Orientation

4. 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

5. 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)

6. Barriers to Being Market-Oriented • People hoard information • Core rigidities can cause people to disparage information about/from users • Tyranny of the served market: • Listening only to current customers • Users’ inability to envision new solutions • Solving problems only with current technologies

7. Downside to Being Market-Oriented • Listening 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.

8. Overcoming the Pitfalls in Being Market-Oriented • Don’t focus on what customers SAY; focus 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.

9. Overcoming the Pitfalls in Being Market-Oriented (cont.) • Focus on future customers (and not just existing customers) • Champion new ideas • Work in cross-functional teams

10. Effective Marketing/R&D Interaction

11. 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 feasibility Marketing brings voice of customer and marketplace into the development process

12. 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”

13. 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&D Justifies and institutionalizes disregard for market-related information/feedback

14. Overcoming Barriers to Marketing/R&D Interaction • Formalize systems to share/use information from other groups • Use informal networks to build bridges • Co-locate marketing/R&D in close proximity • Understand and be able to communicate articulately about the other’s domain, be it products, technology, markets • Be effective at building consensus in a nondirective fashion

15. Overcoming Barriers to Marketing/R&D Interaction • (To be used in cases where engineering systematically disregards marketing input): • Form strategic coalitions with upper management • Risk: May alienate peers • Bypass engineering to get the job done via external partners

16. Overcoming Barriers to Marketing/R&D Interaction (Cont). • Enhance opportunities for communication • Increased frequency of communication beyond minimum threshold, but below overload • Formal, planned interactions have more credibility than informal communications • Some conflict/tension is healthy

17. The Impact of Information Sharing Norms on Marketing/R&D Communication • Norms: expectations for extensive sharing of information between functions • These norms are most useful when marketing managers identify strongly with the organization as a whole (vs. the marketing function specifically)

18. The Impact of Goal Integration on Marketing/R&D Communication • Integrated Goals: The organization’s goals are superordinate to either marketing’s or R&D’s individual goals • Stressing integrated goals most useful when marketing managers identify strongly with the marketing function specifically (vs. organization as a whole) • Risk: increases use of coerciveness in communication by marketing

19. Caveat: • Effective marketing/R&D interaction must be firmly grounded in an understanding of customer needs and wants.

20. Keeping the Customer In R&D/Marketing Interaction?