Product Innovation

The contributions of both the research and development function and the marketing function are necessary for the successful development and launch of a new product in the marketplace. Not only does each function offer different insights, but each has different expertise, all important for a product's success. However, the roles of the two functions are often unclear or overlap, so it is not uncommon to see the two functions competing rather than collaborating. To optimize new product development, the two departments need to not only contribute but to influence each other in order to develop a synergy that will produce the best possible product from their efforts. In this type of relationship, the information and insights offered by one group result in changes in behavior, attitudes, or actions of the other as appropriate.

Keywords: Front End Analysis; Innovation; Integrated Marketing Communications; Management; Market Share; Marketing; New Product Development; Research and Development (R&D); Strategic Planning; Survey Research

Overview

According to the old adage, the only thing that needs to be done in order for the world to beat a path to your door is to build a better mousetrap. Unfortunately, this is not always true. Selling better mousetraps, any mousetrap, or anything at all requires marketing efforts. In the case of the mousetrap, this may only be word-of-mouth marketing. Selling has evolved and typically requires a wide range of tools from the integrated marketing communications toolkit: advertising, direct response, sales promotions, and public relations. Otherwise, potential customers will not know about the better mousetrap — or even that they need one — and the path to the seller's door will remain remarkably unbeaten.

Marketing vs. Research & Development

Although the marketing function is often thought of as an add-on or afterthought to the development of the product itself, innovation efforts that integrate marketing early in the process are the most likely to be successful. This does not mean, however, that advertising early and often is the key. For example, in one geographical area, there is competition between two companies offering Internet services via cable. One company has been advertising for almost two years but has still to lay the cable that would provide cable Internet services to homes in the neighborhood. In the meantime, another company with existing cable has started offering the same service. Thus, synergy between marketing (e.g., selling the service) and research and development (e.g., developing the service) is necessary.

Both theory and research suggest that communication is necessary between the research and development function and the marketing function in order for the launch of a new product to be a success. This makes sense because each function has a different role in the organization and in the new product development process. Research and development systematically investigate problems with the intention of discovering new knowledge or solutions (research) and then applies that knowledge to creating new or improved products, processes, or services (development) that fit a need in the marketplace.

In the example of the better mousetrap, the marketing department might discover that consumers are less than satisfied with current mousetrap technology and that the development of better mousetrap technology could be profitable. Based on the insights of the marketing department, the research and development department might then investigate what a mousetrap needs to do, what current mousetraps do, and how mousetraps could be improved. Based on this knowledge, the research and development department might then take this knowledge and design a better mousetrap based on the insights from their research efforts. Ideally, the marketing department and the research and development department would continue to communicate during this process in order to develop the best possible mousetrap based not only on an objective yet isolated idea of what the ideal mousetrap might look like, but also based on the expectations of the market for mousetraps, what the market might be willing to pay, and what the market might be willing to accept. The marketing department would also respond to answer these questions and also integrate the insights of the research and development department about the characteristics of the ideal mousetrap in order to better position the mousetrap within the market, change the expectations in the marketplace regarding the characteristics of an ideal mousetrap, and position the mousetrap to gain a larger market share or to create a unique market niche.

Competing Functions: Front-End Analysis

Although it would seem that both the marketing and the research and development functions have clear and essential roles in the new product development process, in practice, it is not uncommon to see the two functions competing rather than collaborating. This is due, in part, to the fact that there is overlap between the functions of the two departments. For example, front-end analysis — the process of determining the needs and requirements of the customer and exploring the ways to best meet them — is thought by most engineers to be a research and development function. After all, it is the engineers who understand both the possibilities and limits offered by emerging technologies. Marketing personnel, however, think of front-end analysis as an activity under their purview since they are the ones who best know the needs and preferences of the customer. Further, many marketing personnel have technical backgrounds that they believe help them understand the technical requirements as well.

The truth lies somewhere in between. While research and development professionals may know technical requirements better than marketing personnel, marketing professionals tend to know the market — and what will or will not sell — better than engineering personnel. In addition, although marketing personnel may have a technical background, this tends not to be as current as the knowledge of the technical professionals in the research department. Alone, each function does not have adequate knowledge to produce the best product from both a technical and marketability standpoint. If the two departments work together as a true team, the new product has a better chance of meeting the needs of the customer and becoming a success in the marketplace. The research literature of the past twenty-five years supports the conclusion that cross-functional cooperation and communication between marketing and research and development is one of the most important factors in the success of a new product.

Working together as a team means more than both marketing and research and development participating in the new product development process. The two departments need to also influence each other in order to develop a synergy that will produce the best possible product from their efforts. In this type of relationship, the information and insights offered by one group result in changes in behavior, attitudes, or actions of the other as appropriate.

Sociopolitical Factors

Athuahene-Gima and Evangelista (2000) performed a study of the cross-functional influence in new product development from both the marketing and research and development perspectives. The research took into consideration three perspectives found in the literature regarding the relationship between the marketing and research and development functions during the new product development process:

• Information processing
• Resource dependence
• Sociopolitical

From the information processing perspective, the work of the two teams is participatory and is designed to process information about the customer, market, and technology and reduce uncertainty so that a marketable product can be developed. The resource-dependent perspective also views information as an important resource and believes that the two functions are interdependent. The sociopolitical perspective views the two functions as competitors that struggle for power and attempt to meet their individual self-interests. Using the survey research method, the authors collected data from marketing and research and development personnel.

The authors found that marketing and research and development personnel have significantly different perceptions of each other's influence on the new product development process, each believing that its influence is more important to success. However, although marketing tends to see the necessity of research and development efforts for successful new product development, research and development tends not to see the importance of marketing's efforts in the process. This finding appears to be related to the sociopolitical nature of the relationship between the two departments. The authors also suggest that the two departments need to more realistically evaluate and understand both their own and the other department's contributions to the new product development process. The authors also found that although the contributions of research and development efforts in the new product development process are clear, the contributions of marketing are less so. As a result, marketing needs greater influence than research and development if it is to be effective in influencing the development of the new product.

Another factor that needs to be taken into account in understanding the interrelationship of marketing and research development efforts in new product development is the degree of innovation and complexity of the product. Athuahene-Gima and Evangelista (2000) found that the attitudes of research and development about the influence of marketing on the project did not change based on these two factors. However, marketing personnel believed that the influence of research and development is negatively correlated with the innovativeness of the product. This may be due to the fact that the more innovative the product, the farther away it is from the normal line and capabilities of the organization. The authors also found that the more important the project, the less important the influence of the other department on the project. This result also supports the sociopolitical nature of the relationship between the two departments.

Despite the sometimes contentious nature of the relationship between the marketing and research development functions during the development of a new product, the research literature still supports the conclusion that a synergistic relationship between the two is the best way to optimize the success of the product.

Applications

Case Study: A New Product Development Model

Rein (2004) describes the case of a Fortune 500 company that made changes to its product development process to foster a better working relationship between the marketing and research and development departments. The organization is a manufacturing company that offers a broad range of high-technology solutions and office equipment. Before the change, it was common for the marketing and research and development departments to try to do each other's jobs. Since many of the marketing personnel had originally worked in research and development, they tended to assume that they were still current with state-of-the-art knowledge even when they were not. Personnel in the research and development department, on the other hand, were often less than satisfied with the product requirements that they received from the marketing department and often conducted their own market studies as a result. Rather than working together, each department operated as if they could do the entire job better themselves. To make the situation even more difficult, the difference between what was a requirement and what was a technical approach to meeting the requirement was often blurred.

The organization's traditional new product development process comprised five phases:

• Direct,

• Define,

• Design,

• Demonstrate, and

• Deliver.

The first phases of the product comprised the front-end strategic planning part of the process. This phase was under the purview of the marketing department, in particular, that part of the marketing department that performed market research. The end product of the "direct" phase was the market attack plan. This plan articulated the strategy for making the organization's products competitive in the marketplace.

The next three phases of the process — define, design, and demonstrate — comprised the product delivery cycle. This part of the product development process was under the purview of the research and development department. The end product of the "define" state was the requirements for the product. The end product for the "design" phase was the product specifications. The end product for the "demonstrate" phase was the actual product itself.

The final phase of the process was product delivery. This phase came under the purview of the section of the marketing department that communicated information about the product to the marketplace. Management was also able to approve or discontinue the project at several points in the process. Introduction of the new product to the marketplace was successful, and revenues grew if

The original strategic planning had been insightful and

The product delivery cycle met the necessary time-to-market windows so that the product was available while there was still a demand for it.

Once the entire process was completed for a given product, it looped back to the beginning with the development of a new product. In addition, several products could be in process at the same time.

Introducing New Processes

The isolation rather than integration of the efforts of the two departments along the process, however, was often dysfunctional. The organization found that most problems occurred at the two points where there was a hand-off in the process from one department to another. Therefore, the organization decided to implement a new process in which the marketing and research and development departments worked together at the front and back ends of the process. After the new policy was implemented, the two departments worked together during the first phase of the process to both clarify the market requirements and develop a technical strategy that responded to the requirements. In the final phase of the process, the two departments also worked together to develop value messages to be used to market the new product to potential consumers (Rein, 2004).

Under the new process, product development was actually dependent on the "engagement of three persistent teams: a marketing team, a technical team, and a decision team" (Rein, 2004, p. 36). The marketing team identified and prioritized the requirements of the marketplace and developed value messages to market the eventual product. As opposed to the original process, the marketing team included marketing personnel who were concerned with both the front end (i.e., requirements analysis) and the back end (i.e., communication strategy). The leader of this team was a senior marketing person who also had responsibility for strategy and product planning. The new technical team was given the responsibility "to develop and document both the technical strategy and the requirements" for the product (Rein, 2004). The technical team was made up of subject matter experts from each of the product development groups and from research and development. The leader of the technical team was typically a senior member of the research and development department. The decision team had the responsibility of approving or disapproving the market requirements, technical strategy, and value messages. This team included senior members of the marketing, research and development, and product development departments.

As a result of the changes to the new product development process, three new activities were added: market requirements identification, technical strategy development, and value message development. As opposed to the simplistic, original lock-step process, the revised process was designed to take into consideration the fact that, at many points, activities were parallel rather than sequential. For example, customers wanted features. However, the price for those features could not be determined until after the technical investigation was completed. On the other hand, determining what technical features would be included was difficult to accomplish until the market research was completed. A lock-step process could not accomplish this. So, the new process was developed to be synergistic to give all parties the information they needed when they needed it (Rein, 2004).

Viewpoints

Support for Synergistic Processes

According to the literature on new product development, the greater the interaction between the marketing and research and development functions is, the greater the likelihood that the product will be successful. The literature also suggests that clearly defining the areas of responsibility and the interrelationship between the two functions will help increase the likelihood of success. The synergistic process implemented by the organization formalized the roles of both departments in the product development process. It increased the interactions between the two departments and also made them more productive. Another finding of the literature is that management support of the process is essential for new product development efforts to be successful. The organization's new process does this through the new management team for product development, which includes senior management from involved departments. Another finding in the literature is that the strategy for developing and introducing a new product needs to include a strong marketing orientation, including not only back-end processes such as crafting a message and determining the appropriate media mix but also strong front-end work determining the market requirements. The new process implemented by the case study organization has added this emphasis. Further, the research evidence suggests that marketing research needs to be strategically timed so that it can be used as input in product design efforts. In the new, synergistic process implemented by the organization, market research is an ongoing process supporting development activities. The new process also links marketing research with business implications, another suggestion of previous research findings in the literature.

The new product development process, with its integration of the activities of both the marketing and research and development departments and its facilitation of communication between the two, proved to be successful. The organization credits the new process with enabling it to successfully compete in a new market.

Conclusion

Although research and development efforts can build a better mousetrap, marketing efforts are essential for being able to sell the mousetrap. Otherwise, the organization may have a mousetrap whose features are still being refined by engineers, a mousetrap that sits on the shelves because no one knows about it, or no mousetrap at all because although a need was sensed, nothing was done about it. The insights and contributions of both functions are necessary for the successful development and launch of a new product. The benefits of using the insights of both departments are optimized when they work together to create synergy and not only participate in the process but influence each other and work together with mutual respect.

Terms & Concepts

Front-End Analysis: A generic process used to determine the needs and requirements of the customer and how to meet these needs.

Innovation: Products or processes that are new or significant improvements over previous products or processes and that have been introduced in the marketplace or used in production.

Integrated Marketing Communications: An approach to marketing communications that combines and integrates multiple sources of marketing information (e.g., advertising, direct response, sales promotions, public relations) to maximize the effectiveness of a marketing campaign.

Management: The process of efficiently and effectively accomplishing work through the coordination and supervision of others.

Market Niche: A sub-segment of a particular market where the consumers' needs are not being met and on which an organization focuses its efforts.

Market Share: The proportion of total sales of a given type of product or service that are earned by a particular business or organization.

Marketing: According to the American Marketing Association, marketing is "the activity, set of institutions, and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large” (American Marketing Association, 2023).

New Product Development: The application of systematic methods to all processes necessary to bring a new product to the marketplace from conceptualization through marketing. New products can be improvements on existing products or total innovations.

Research and Development (R&D): A function within the organization that systematically investigates problems with the intention of discovering new knowledge or solutions (research) and then applies that knowledge to creating new or improved products, processes, or services (development) that fit a need in the marketplace.

Strategic Planning: The process of determining the long-term goals of an organization and developing a plan to use the company's resources — including materials and personnel — to reach these goals.

Survey Research: A type of research in which data about the opinions, attitudes, or reactions of the members of a sample are gathered using a survey instrument. The phases of survey research are goal setting, planning, implementation, evaluation, and feedback. As opposed to experimental research, survey research does not allow for the manipulation of an independent variable.

Bibliography

Athuahen-Gima, K., & Evangelista, F. (2000). Cross-functional influence in new product development: An exploratory study of marketing and R&D perspectives. Management Science, 46, 1269-1284. Retrieved September 22, 2009, from EBSCO Online Database Business Source Premier http://search.ebscohost.com/login.aspx?direct=true&db=buh&AN=3785875&site=ehost-live

de Assunção, J. B. (2008). From the special issue editor: Bridging marketing and operations in new product development. Journal of Product Innovation Management, 25, 414-417. Retrieved September 22, 2009, from EBSCO Online Database Business Source Premier http://search.ebscohost.com/login.aspx?direct=true&db=buh&AN=33334673&site=ehost-live

Fischer, T., & Henkel, J. (2012). Capturing value from innovation—Diverging views of R&D and marketing managers. IEEE Transactions on Engineering Management, 59, 572-584. Retrieved November 27, 2013, from EBSCO Online Database Business Source Complete http://search.ebscohost.com/login.aspx?direct=true&db=bth&AN=82707714

Lamore, P. R., Berkowitz, D., & Farrington, P. A. (2013). Proactive/responsive market orientation and marketing–research and development integration. Journal of Product Innovation Management, 30, 695-711. Retrieved November 27, 2013, from EBSCO Online Database Business Source Complete http://search.ebscohost.com/login.aspx?direct=true&db=bth&AN=88106796

Rein, G. L. (2004). From experience: Creating synergy between marketing and research and development. Journal of Product Innovation Management, 21, 33-43. Retrieved September 22, 2009, from EBSCO Online Database Business Source Premier http://search.ebscohost.com/login.aspx?direct=true&db=buh&AN=12829235&site=ehost-live

Rubera, G., Ordanini, A., & Calantone, R. (2012). Whether to integrate R&D and marketing: The effect of firm competence. Journal of Product Innovation Management, 29, 766-783. Retrieved November 27, 2013, from EBSCO Online Database Business Source Complete http://search.ebscohost.com/login.aspx?direct=true&db=bth&AN=78301267

Tatikonda, M. V., & Montoya-Weiss, M. M. (2001). Integrating operations and marketing perspectives of product innovation: The influence of organizational process factors and capabilities on development performance. Management Science, 47, 151-172. Retrieved September 22, 2009, from EBSCO Online Database Business Source Premier http://search.ebscohost.com/login.aspx?direct=true&db=buh&AN=4114194&site=ehost-live

What is Marketing? The Definition of Marketing. (2023). American Marketing Association. Retrieved May 24, 2023, from https://www.ama.org/the-definition-of-marketing-what-is-marketing

Suggested Reading

Baker, W. E., & Sinkula, J. M. (2007). Does market orientation facilitate balanced innovation programs? An organizational learning perspective. Journal of Product Innovation Management, 24, 316-334. Retrieved September 22, 2009, from EBSCO Online Database Business Source Premier http://search.ebscohost.com/login.aspx?direct=true&db=buh&AN=25438985&site=ehost-live

Brettel, M., Heinemann, F., Engelen, A., & Neubauer, S. (2011). Cross-functional integration of R&D, marketing, and manufacturing in radical and incremental product innovations and its effects on project effectiveness and efficiency. Journal of Product Innovation Management, 28, 251-269. Retrieved November 27, 2013, from EBSCO Online Database Business Source Complete http://search.ebscohost.com/login.aspx?direct=true&db=bth&AN=58058271

Gupata, A. K., Raj, S. P., & Wilemon, D. (1986). A model for studying R&D–marketing interface in the product innovation process. Journal of Marketing, 60, 7-17. Retrieved September 22, 2009, from EBSCO Online Database Business Source Premier http://search.ebscohost.com/login.aspx?direct=true&db=buh&AN=4999838&site=ehost-live

Luo, L., Kannan, P. K., Besharti, B., & Azarm, S. (2005). Design of robust new products under variability: Marketing meets design. Journal of Innovation Management, 22, 177-192. Retrieved September 22, 2009, from EBSCO Online Database Business Source Premier http://search.ebscohost.com/login.aspx?direct=true&db=buh&AN=16107984&site=ehost-live

Pitt, L., & McCarthy, I. (2008). Connecting product innovation management and marketing. Journal of Commercial Biotechnology, 14, 197-200. Retrieved September 22, 2009, from EBSCO Online Database Business Source Premier http://search.ebscohost.com/login.aspx?direct=true&db=buh&AN=32776737&site=ehost-live