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

© Jakki Mohr 2000 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)

© Jakki Mohr 2000 Aspects of a Market Orientation

© Jakki Mohr 2000 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

© Jakki Mohr 2000 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)

© Jakki Mohr 2000 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

© Jakki Mohr 2000 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.

© Jakki Mohr 2000 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.

© Jakki Mohr 2000 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

© Jakki Mohr 2000 Effective Marketing/R&D Interaction

© Jakki Mohr 2000 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

© Jakki Mohr 2000 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”

© Jakki Mohr 2000 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

© Jakki Mohr 2000 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

© Jakki Mohr 2000 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

© Jakki Mohr 2000 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

© Jakki Mohr 2000 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)

© Jakki Mohr 2000 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

© Jakki Mohr 2000 Caveat: Effective marketing/R&D interaction must be firmly grounded in an understanding of customer needs and wants.

© Jakki Mohr 2000 Keeping the Customer In R&D/Marketing Interaction?