Marketing of High-Technology
Products and Innovations
Chapter 4:
Market Orientation and
R&D/ Marketing Interaction in
High-Technology Firms
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 crossfunctionally 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




Disseminate information


Across functions and divisions
Utilize information


Current and future customers
Competitive information
Market trends
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
Knowledge
Information that
enables prediction.
Information
Organized data.
purpose &
Data
meaning
Facts determined from a
measurement of some kind.
Scaling &
accuracy
© Mohr, Sengupta, Slater 2005
Applicability &
exploitability
Influences on Achieving a
Market Orientation
Barriers
Turf Protection
Facilitating
Conditions
Core Rigidities
Top Management
Leadership
Served Market
Decentralized
Responsibility
Results
Innovativeness
Market
Orientation
New Product
Success
Superior
Profitability
Market-based
Rewards
© 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
Interaction
nature of
1 Match
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 feasibility
Marketing 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&D
Justifies and institutionalizes disregard for marketrelated information/feedback

© Mohr, Sengupta, Slater 2005
R&D and Marketing Stereotypes
R&D
Marketing
Time Orientation
Long
Short
Projects Preferred
Breakthrough
Incremental
Ambiguity Tolerance
Low
High
Department Structure
Informal
Moderately Formal
Bureaucratic Orientation
Less
More
Primary Loyalty
Profession
Firm
Professional Orientation
Science
Customer
© Mohr, Sengupta, Slater 2005
Strategies to Enhance
R&D – Marketing Interaction
Co-optation
Coordination
Positive
Interaction
Communication
Constructive
Conflict
© 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
Sure
Marketing
Engineering
Product Technology
Rock Pile
Would you
like a rock?
Find me a big, cheap,
fast, dense,
OK
sharp...rock
Here’s a
Wrong
blue rock?
rock
Do you have a
red rock?
OK, but only
if its square
What’s wrong
with blue?
I can make a
purple one
We don’t have
square ones
© Mohr, Sengupta, Slater 2005
…