The role of marketing in successful innovation

The role of marketing in

successful innovation

Dr. Wim G. Biemans

University of Groningen, The Netherlands

Title

How do you develop and launch a $3 million RV camper?

….or a top of the line electric sports car?

….or a bendable smartphone?

….or a new imaging system for hospitals?

Whether you are developing a new fast

moving consumer good…

…or a complex B2B product

The innovation process (i.e. the road to success)

is the same!

The Stage-Gate Model depicts the ideal innovation process

and guides the way to success

– series of activities

– go/no go decisions

– in practice not always this linear

“Using the analogy of North American football, Stage-Gate is the playbook that the team uses to drive the ball down the field to a touchdown; the stages are the plays, and the gates are the huddles.”

- Robert Cooper (2009)

Research shows that key success

factors are related to market(ing)

– synergy with existing markets

– quality of market research

– quality of product launch

No. 1 success factor:

does the product offer a

unique superior product

advantage that is valued

by customers?

Central question: what is the role of

marketing in innovation?

Answer depends on your perspective:

– Marketing as a central organizational

philosophy

– Marketing as a series of activities

– Marketing as a department

Marketing as a central philosophy

The entire organization must be focused on customers

Customer needs are the guiding principle for all decisions

Marketing as a series of activities

Marketing activities must be performed during the entire innovation process

These activities may be performed by the marketing department, other departments or

even partners or customers

Marketing as a department

The Marketing department must represent the voice of the customer in the organization

The Marketing department may be involved during the entire innovation process

Organizations must be designed

outside-in instead of inside out

– customer needs should guide organizational

design and organizational decisions

– focus on what makes sense for the customer,

instead of what is efficient and expecting the

customer to adapt to you

As a marketeer you must: …develop deep insights about your customers

…be an expert on their needs …be more aware of what they need than they are themselves

Do you really understand your customer?

– do you know what job they are trying to do?

– do you understand their key success factors?

– do you know how your product or service

creates value for them?

– can you explain (or better: demonstrate) to

them why they should do business with you?

Marketers make three critical mistakes:

1. They collect a lot of factual information (customers prefer X) instead

of explanations why customers behave the way they do

2. They think that they understand customers because they have

collected a huge amount of customer data

3. They focus on only a limited part of the customer experience

(functional features instead of emotions)

Marketers Customers conscious processes

unconscious processes

“At least 95% of all cognition occurs below awareness in the shadows of the mind.” - Gerald Zaltman (2003)

“It is not the customer’s job to know what

they want”

“Nearly 100% of innovation – from business to politics – is inspired not by ‘market analysis’

but by people who are supremely

pissed off by the way things are”

Tom Peters

How do you figure out what your

customers want?

Simply asking your customers does not always work

– many customers don’t know what they want

– many customers don’t want to tell you

– many customers say one thing but then do something else

You need other methods to really understand your customer

so that you can develop mind-blowing new products

– ask lots of ‘why’ questions

– observe the customer in his natural environment

– get a complete picture of your customer

“People will say they want sodium-free or low-carb foods. Then they leave the focus group and go to McDonald’s and supersize everything.”

- Vince Melchiorre, Senior Vice President Tasty Baking

Customers cannot always tell you what they need. To develop

successful new products, you need to know:

1. what job the customer is trying

to get done

2. what the customer is trying to achieve when performing the job

3. what might keep a customer from using the new product

What the customer thought he wanted… What the customer really wants

Clearly, the

customer is key

to successful

innovation…

But, which

customer?

Perhaps lead users because they

perceive new customer needs before

the rest of the market does

“Lead users face needs that will be general in a marketplace – but face them months or years before the bulk of that marketplace encounters them, and lead users are positioned to benefit significantly by obtaining a solution to those needs.”

- Eric von Hippel (1986)

Lead users are ahead of

the trend in the general

market

Lead users have a high

incentive to solve their

problem

Because a solution

doesn’t exist, lead users

create their own solution

Equipment for extreme sports is often developed

by enthusiastic users

Tim Berners-Lee invented the World Wide Web because he needed it

New medical equipment is invented by innovative

physicians

Be aware of innovative customers!

– they may be an interesting source of new

product ideas

– but they are often not representative of the

rest of the market

– always test their ideas on ‘regular’ customers

– make sure that a real market for the product

exists; if not, see if the product can be

adapted somehow

Biemans (2010)

Lead users provide new product ideas,

but customers may contribute to all stages

of the innovation process

After three years of delays, Boeing delivered the first 787 (Dreamliner) to All Nippon Airlines

– first commercial flight in November 2011

– total costs of the 787 program: $32 billion; no profits before 2020 (“if at all…”)

– United Airlines will get the first 787 in North America, 8 years after it was ordered…

For instance, during launch: launch customers

Selection of customers as innovation partners also depends on the nature of your value chain

Series of key questions:

1. What type of customers should we cooperate with?

– which level of the value chain?

– direct or downstream customers?

2. Which customers at that level are most appropriate to cooperate with?

– the largest customers?

– the customers with the biggest problems?

– the most willing customers?

– the no. 2 customer (who wants to become no. 1)?

3. How do we interact with them?

– do we already have an existing relationship?

– which individuals should we approach?

– how should we communicate with them?

So, what does all this mean

for marketers?

Develop deep insights into your

customers

– your current customers

– your prospective customers

– your competitor’s customers

– peripheral customers

• lead customers

• young customers

• customers facing extreme conditions

There is no excuse for not understanding your customer; TALK to your customers, OBSERVE how they use your product!

Focus on the total customer

experience

– customers do not care about your product,

but about how it will help them do a job

– develop a total customer experience

– deliver a consistent customer experience,

also if you cooperate with partners

– do not communicate product features, but

• B2C: communicate lifestyle

• B2B: tell the customer how you improve his business

Don’t fall in love with your own product; what matters is the customer’s opinion

Be the expert on the customer

– develop relationships with key customers

– represent the voice of the customer in your

innovation team

– maintain and develop the firm’s marketing

capability and skills

– encourage a customer-oriented culture

– ensure that market-related innovation

activities are performed

Marketers must take the leading role, but they should make sure that the rest of the organization is also strongly focused

on the customer

Use the behaviors of successful

innovators

– question: ask your customers lots of (why)

questions

– network: establish relationships with key

customers

– observe: look closely at how customers use

products to solve problems

– experiment: test new prototypes to obtain fast

market response

Get customer feedback often, early and continuously! Ask, observe, partipate, question, involve…

Make sure your partners perform

as well

– your customer’s experience may depend

very much on your partners’ performance

– it makes no sense to be innovative if your

partners lag behind

• Philips launched HDTV where cameras and

transmission standards were lacking

• Sony launched e-reader when customers lacked

easy access to e-books

Marketers must make sure that the total innovation ecosystem is in place in order to create a compelling customer experience

“If you’re not failing every now and again, it’s a sign you’re not doing anything very innovative.” - Woody Allen

Innovation is not a science, dare to experiment,

dare to fail!