If you’re like many companies we work with, you operate in a highly competitive market where the supply of your product is greater than the demand. You know that your success depends on producing and selling exactly what your existing and prospective customers want. What your customer thinks he/she is buying, what he/she considers value, is decisive. This determines what your business is, what you produce and whether your business will prosper. Your Marketing organization serves as a critical member of your value creation and innovation process. Creating customer value is Marketing’s fundamental mission.
This task has become more challenging courtesy of the internet. Your customers are more empowered than ever and are taking control of how, when and where they consume products and services. They are less brand-loyal and trusting, and they prefer to acquire information from personal research, friends and product specialists. These changes have significant implications to businesses and Marketing. For example, you may need to make significant changes in your Marketing mix, messaging and general approach to customer interaction. In addition, commoditization, the internet, mobility and virtualization are contributing to a transformation that is impacting companies on a variety of fronts, including new product development.
Without a great product that meets a customer need or solves a customer problem, the rest of the Marketing mix is worthless. While no easy task, the ability to innovate (develop products and services that offer fresh ideas and are relevant to customers) is fundamental to your ability to grow. Investment in incremental improvements to and small innovations in existing products and processes does bring growth. However, it is new game-changing breakthroughs that will launch your company into new markets, enable rapid growth, provide a platform for long-term growth and create high return on investment.
Why Marketing Needs to be at the Front End of Innovation
It is vital to get your products right from conception to commercialization. New product development depends on synthesizing the knowledge of what is needed in the market and how to create a product to meet these needs. Marketing is the keeper of customer intelligence. It is their responsibility to help the organization use this intelligence to positively impact innovation and new product/service development.
How? By transforming customer insights into business insights that drive innovation. The creation of new products and services to meet the needs of customers provides the basic ingredient for growing shareholder value. A quote often attributed to Peter Drucker articulates the value of both Marketing and Innovation, “Because its purpose is to create a customer, the business has two basic functions: marketing and innovation. Marketing and innovation produce results, all the rest are costs.”
Marketing plays a central role in translating customer information into new products and then positioning these products in the market. New products/services are the way companies respond to changing customer preferences and dynamic competition. Various studies have shown that companies where Marketing and R&D communicate and cooperate have enhanced new product performance. Over the years, research by authorities such as Ruekert and Walker, by Souder, and by Song and Parry found that Marketing’s participation in the new product development process and its integration with other functional groups such as research and development are among the most important factors affecting new product success.
Coming up with innovation is one thing, bringing it to market is another. Where the neglect of the Marketing mix comes into play is usually in the launch of innovative products. This happens when Marketing is disenfranchised from the product development process. Avoid the mistake of relegating Marketing to the role of sending out a press release and coordinating a new product launch event. Engage your Marketing team from the very start. Expect your Marketing organization to take ownership of the upstream process, which includes segmenting the market, selecting the right target markets, defining the value proposition and communicating the value to the target markets.
Your Marketing team needs to understand not only who will buy, but why they want to buy and how much they will buy. The team also needs to be able to look with a broader scope and understand when specific markets will buy. These are the Marketing insights that benefit your organization, the kind of insights that can not only make or break your new product but can make or break your company.
Your Marketing team may need to think outside the box and take a more creative and proactive approach to getting your innovative products noticed.
Four Steps to Empower Marketing to Head the Innovation Charge
- Encourage your Marketing organization to return to its roots and renew its focus on determining, producing, and selling what your customers want.
- Request your Marketing organization to own the task of spotting new trends and quickly translating these into opportunities. This requires research.
- Establish metrics for your Marketing team around innovation, time to market, time to revenue, time to profit, rate of new product success and product adoption.
- Enhance the collaboration between your product development and Marketing functions. They need to work together if you want to effectively and efficiently conceive and market new products and services.
As in many process-change projects, the “what to do” is easier to know than the “how to do it effectively.” If you want to get started but have implementation questions, let’s schedule a time to talk.