L9: Market Led Change
EC10: Innovation & Commercialisation
Acquiring a scientific technology is the first
part of the equation . . . .
Marcus Thompson
wmt1@stir.ac.uk
Outline to Market-Led Change
 Product
Testing
 Routes to Market
 Managing Knowledge
 Planning & Research
EC10
9. Market-Led Change
2
1. Product Testing
EC10 Innovation &
Commercialisation
The Role of Research
“Market research links the consumer, customer
and public through information - information used
to identify and define market opportunities and
problems, generate, refine and evaluate market
actions; to monitor marketing performance; and to
improve understanding of the marketing process.
Marketing researchers specify the information
needed to address marketing issues, design the
methods for collecting information, manage and
implement data collection, analyse the results and
communicate the findings and their
implications”source: American Marketing Association, Kotler, p320
9. Market-Led Change
4
Ways to Approach Research
Exploratory Research
–Gather preliminary information to better define
problems, opportunities and issues for further
investigation. Used to orientate before a visit. Usually
desk research.
Test Marketing
–Used to asses market potential, trends or attitudes of
customers. Used as an overview before or after a visit.
In-Depth Investigation
–Structured and systematic research. Used to plan
strategies e.g., product launch or market entry. Usually
field research. Adapted from Kotler, p321
9. Market-Led Change
5
Collecting Information
Desk Research (Secondary)
– Published (or secondary) Data
Advantage - cheaper to collect from
recognised sources, provides
overview of demand and trends.
Disadvantage - not specific, needs to
be collated from different sources,
can be out of date quickly, no
guarantee of relevance, cannot
always be validated.
9. Market-Led Change
6
Collecting Information
Field Research (Primary)
Advantages - quality of data can be
controlled, company specific, limited to
relevant data, up to date and can be used to
gather qualitative date on attitudes.
Disadvantages - a poor plan collects poor
data, danger of introducing bias, timeconsuming, need a sound knowledge of
methods. A more expensive and more
effective method of collection.
9. Market-Led Change
7
Testing New Products Ideas
Ideally, used to predict how a new product idea will
perform.
Results will define market entry options and positioning
Selecting which market to research is prescribed by:
– Stage of product maturity
– Anticipated extent of buyer differentiation
– Company’s proposed position in the product-market
– Structure of competition - direct and indirect
– Company resources and expertise in conducting
research
– Economy of scale considerations for scope of research
9. Market-Led Change
8
Conducting Test Marketing
Market testing can be used either or both:
– A) Research & Development Stage
1.
confirm demand (sic)
2. finalise features of new product including
user characterisics, product features,
competitive advantages, price points,
channel and communication development.
– B) Before Product Launch to determine
product modifications and enhancements.
Source: Adapted from Strategic Marketing, Cravens, Irwin, 1991, pp2569. Market-Led Change
9
Conducting Test Marketing
Stages
– Recruitment of participants as a
representative sample.
– Securing background information to test
– Exposing participants to information
regarding new product.
– Determining reaction before use &
comparing with after use.
9. Market-Led Change
10
2. Route to Market
How to find and gain
entry, especially to
overseas markets
Fast Growth Companies
 Distinctive
Marketing Style:
– Restricted in scope and activity
– Simple approach to marketing
management
These are exhibited by an
– Inherently informal decision
making
intuitive and opportunistic
– Impulsive planning approach to strategy and market
management. The entrepreneur
– Reactive to marketplace
may know what is happening but
Adapted–
from
Marketing & Entrepreneurship,
Opportunistic
it is difficult for an observer to
Carson et al, p155
understand!
– Short-term horizons
9. Market-Led Change
12
Strategic Trade-Offs
 Acquire
or retain customers?
 Test or pitch a product or service?
 Diversify or Consolidate customer
base?
 Research or confirm potential?
 Define or manage barriers?
 Recruit or support representative?
 Assess potential rather than meet
forecast?
9. Market-Led Change
13
Export Entry Points




Representation
– Agents
– Distributors
Direct
– Retailers or Wholesaler
– Direct selling
– On-line
– Acquisitions
Franchising
Partnering
Channel options can be
varied from domestic to
international markets.
Partnering options
depend on industry and
are most used for
emerging industries.
– Strategic Alliances, Technology Licensing, Joint
Ventures
– Knock-down
9. Market-Led Change
14
Preparation: Market Entry
Options
Little
Control
Complete Knock
Down
Agent
Semi-Knock
Down
Distributor
Low
financial
Investment
Less
Margin in
long term
Electronic
Marketing
Licensing
High level of
commitment.
High long term
returns
Direct Sales
Joint
Venture
High Level
of Control
Little
Market
Feedback
Own Sales
Company
9. Market-Led Change
High Level
Feedback
15
Preparation: Positioning

Differentiation
–
–
–
–
–


Acceptance of attributes.
Price and/or Quality.
Applications and usage.
Brand image.
Channel Management.
Overseas markets
differ from
domestic markets –
even in Europe
Complimentary Activity.
Legals
– Patents, Registered Design, Copyright

Applying the 80/20 Rule
9. Market-Led Change
16
Choosing a Position




Positioning is the perception created for target
market buyers about the the firm and its
products.
The Positioning Strategy is a deliberate attempt
to show “distinctive competencies” that sets
the company and product apart from others.
A Positioning Strategy combines the elements of
the marketing mix. It determines the resources
allocated, indicates how to allocate resources
between product, distribution, price, promotion
and selling;
Positioning is either implicitly accidental or
explicit!
9. Market-Led Change
17
3.Managing Knowledge
 Timmons ,”there are two classes of venture
opportunities; those that are profitable and
can be harvested and (2) all the rest.
 The most successful entrepreneurs work
hard to sort out the good opportunities
among the myriad of new business ideas
that flow their way. They are opportunity
focused”.
9. Market-Led Change
19
Buying Promises
 If you can’t see it, touch it, smell it, you are
buying a “promise”
 There are 3 types of Product Properties for
every good and service
– search (comparison) qualities
– experience qualities
– credence (credibility) qualities
9. Market-Led Change
20
Technology Perspectives
 Technology Innovations
– exploitation of new ideas – incorporating new
technologies, design and best practice is the
key business.
 Commercial Innovation
– Venture management strategies and structures
that bring these new technologies to market.
9. Market-Led Change
21
Innovation Triggers
 Push Innovation.
– Where an organisation is already active in a market and needs to
maintain competitive advantage. Here the innovator can be a
prisoner to their own R&D Success. Ideally this form should be
continuous. Downside - can be product-centred organisation.
Upside is that it is sustainable model.
 Pull innovation.
– Where an emerging technology allows innovations to exceed what
a customer thought was possible. These are quantum scientific
leaps. These are the real scientific innovations. These are
disruptive innovations.
– Downside - the pull innovation is discontinuous and extremely
risky. Discontinuous innovation can also be a one product wonder.
SME’s or Corporates??
 This is where the venture management skills comes in.
9. Market-Led Change
22
What Makes for Success





New to market (not cutting edge technology)
Based around tried & tested technology
Saves customers money
Meets an unfilled customer-need
Supports existing practices/ways of doing
business.
9. Market-Led Change
23
What Detracts from Success
 Based on cutting edge/untested science.
 Created with no defined solution in mind.
9. Market-Led Change
24
Key Success Factors for Innovation
 Sustainable Business Model
 Architectural Linkages
– Social, technical & commercial
 An Entrepreneurial Team to balance science &
commerce
 Global perspective
 Adaptive use of technologies & business
processes to meet a specified market need.
 Customer-centred players – niche rather than
segment.
 Exit strategies.
9. Market-Led Change
25
Making the Vision into Reality
Vision must exist before strategy development and planning
 The vision provides:
– sense of direction.
– defines goals and
objectives.
– provides focus when going
gets tough.
– gives the venture a moral
content and social priority.
– It communicates and
attracts venture support.
– It forms the basis of the
leadership strategy.
 The vision is constantly
refocused:
 what is source of value to be
created?
 Who will be involved?
 Why will they want to be
involved?
 What rewards will they gain?
 What new relations are needed
 What is the potential for self
development?
Source: Adapted from, Strategic Entrepreneurship, Wickham, 1998, p107
9. Market-Led Change
26
Innovation: Visionaries V Pragmatists
 Visionaries
 Corporate Pragmatists
– Adventurous
– Early buy-in attitude
– Think "big"
– Independent of the
"herd"
– Spend big
– First-use capability
– Think Pragmatists
are pedestrian
– Prudent Wait-and-see
– Manage expectations
– Part of the "herd"
– Spend to budget
– Staying power
– Think Visionaries are
dangerous
– Pragmatists don't trust
visionaries as
references.
9. Market-Led Change
27
Do not think about selling to .
 Pragmatists or Late Majority

The majority pragmatists, who represent about one-third of available
customers, dislike discontinuous innovations and believe in tradition rather than
progress. They buy high-technology products reluctantly and do not expect to
like them.
 Traditionalists or Laggards

do not engage with high technology products - except to block them. They
perform the valuable service of pointing out regularly the discrepancies
between the day-to-day reality of the product and the claims made for it.

At least until you have the organisation & team to do it!
9. Market-Led Change
28
Bridging the Chasm
 How should Enterprise Fellowships translate the
excellence in Scottish research into new
businesses and products.
 Translate blue-sky applied scientific research
(from Universities) into iTi market led ventures.
 Who will be responsible for creating the bridge
between scientific community and commerce?
9. Market-Led Change
29
4. Planning & Research
EC10
Innovation & Commercialisation
Attitudes Towards Marketing
 For most small firms, marketing remains
a blind spot. (Barclays Bank 2002)
 three-quarters of entrepreneurs start their
businesses without doing any market
testing to establish whether there is a
demand for their product or service.
 many business owners think that
'marketing equals advertising equals
unnecessary cost'
9. Market-Led Change
31
Marketing Transition
 Because of access to funding marking is,
initially a low priority at start-up.
 In early stages of growth firm’s approach
is simplistic, e.g. advertising
 As its support structure grows, it will
develop internal communication with
stakeholders and external promotions to
customers, partners and suppliers
9. Market-Led
Change
Based on
Churchill,
2003
32
Marketing Transition
 As market knowledge builds through experience,
market communications becomes more focused in
terms of the message and in terms of targeting.
 Because of the early dominance of the “entrepreneurial
founder”, ad hoc marketing decisions are progressively
replaced by a team approach to strategic planning.
 The planning horizons which were initially short-term
now lengthen as the customer base increases and
competitive advantages are gained
 the move from an “informal and reactive” to “planned
and proactive” approach to business development.
 To achieve this it becomes necessary continually to
match the vision with the business objectives and to
convert these into a coherent marketing strategy.
9. Market-Led Change
33
Conducting Market Research
Definition of Problem
 Research Proposal
 What you want to know
 What you already know
 What you expect to
achieve
The work plan
Problem specification
Study size
Methodology
Resources & constraints
Adapted
Background
to project
from Strategic Marketing Cravens, Irwin 1991 p604
9. Market-Led Change
34
Conducting Market Research
Data Collection
Determined by proposal
Piloting
Administration of collection
Data Analysis
Determined by Stages 2 & 3
Influenced by output &
objectives
Tabulation, graphs, &
interpretation
 Report
 write-up
 content
 executive summary
 delivery &
feedback
 action plans
9. Market-Led Change
35
The Research Brief
 Country or industry sector
 Market size or trends
Methods of Collection:
 Market structure
 Suppliers and products
face to face interviews
telephone
 Competitors
Mailing/on-line
 Prices
 Distribution & Channel
 End-user & buyers
fax-back
web discussion groups
focus group
 Regulations, tariffs &
standards
9. Market-Led Change
36
Research Checklist
 Market Trends
 The Competition
 Your Own Performance
 The Product or service
 The Customers
9. Market-Led Change
37