Marketing: Neglect it at your own peril

The declining factor in any business’s ability to exploit its product innovations commercially is the relationship between its marketing and research & development departments. In spite of this
, however, many innovations still fail because of a fundamental misunderstanding of what marketing is. Marketing departments need to be involved in development from the beginning.

Success for any product or service depends in identifying a target market and testing its commercial viability with that target market to strike the right balance between product or service quality and the price consumers are willing to pay.

However, while many large, successful businesses have systems in place to ensure research and development is market-led, their scale can make them slow to respond to market changes. While smaller businesses may be more flexible, limited resources often mean smaller marketing departments are more sales-focused – concentrating on what happens once a product has been made, rather than feeding into the product development process.

“Marketing is not just about advertising and communications once a new product has been developed, it’s about getting under the skin of consumers, identifying target markets and formulating the best market positioning for a new product,” says David Nicholls, global client director of international marketing consultancy Added Value, which has worked on many new product launches including the development of Walkers’ Sensations crisps.

“Yet all too often R&D and marketing departments fail to work closely together. The result is that marketing is a fundamental missing link whose absence profoundly limits a company’s ability to deliver commercially successful product innovation,” he adds.

A marketing department’s involvement in product development should begin right at the start of the process. Only in this way can a team know that the product they are developing will be relevant to a specific target market, and packaged and presented accordingly.

“Unless you continually market test a product innovation throughout its development the risk is it will no longer be relevant to the market by the time of its launch,” says Manlio Minale, a consultant at brand consultancy Wolff Olins, which has worked on the development of many products including Orange and First Direct. “And unless you keep testing it once it’s in the market, as big a danger is the risk that a product’s rivals will quickly catch up.”

Staying ahead of the competition has been an important issue for the socially responsible micro-energy company, Lifeline Energy (formally Freeplay Energy), a business built on its development of the Freeplay wind-up radio which produces a diverse range of self-sufficient power products.

“While the best way we can protect our market position is by ensuring we continue to make the best self-generating energy products on the market, it is also important for us to continually update and innovate our products’ quality and functionality so as people copy us we stay one step ahead – which is where marketing insight truly comes into its own,” says Rory Stear, Freeplay Energy’s Founder, Chairman and CEO.

Achieving this, however, has taken time. “A fundamental transition for our business has been from being engineering-led to marketing-led,” he adds. “When we started out 11 years ago we had a product idea first, and then asked ourselves who we could sell it to. As we’ve evolved, however, we’ve had to become consumer-driven – identifying different niche target markets around the world to develop new products for, and redesigning certain product features to hit the right price points.”

When a business is engineering-led there is a tendency to focus only on producing the best product. “But you can’t create a Rolls-Royce in a market where you’ll only ever be able to command a Ford Mondeo price,” Mr. Stear points out. “You’ve got to learn how to compromise without undermining your product’s quality and integrity. It’s about knowing what your market wants, and what your market will bear.”

Getting the right culture within an organization – not only to foster innovation but channel it effectively to maximize its commercial return – is a significant challenge for many businesses.

Engineers focusing on product development do not naturally think about the consumer when they are doing what they do, which is why feeding consumer insight and even retailers’ opinions into the product development process where feasible is really important.

Another obstacle can be a company’s internal structure and the impact this may have on corporate culture. “Marketers must force themselves into the product development process, and to do this they need the support of a chief executive who thinks this is important, too,” Mr. Stear says.

Commercially successful innovation depends on vision – a desire to be radical, to challenge and to break the mould that must come from the top down within the organization, Mr. Nicholls at Added Value believes. “Also important is a belief in the importance of consumer insight that permeates an entire business rather than simply sitting within the marketing department,” he says.

Consumer insight is not just a by-word for market research, however. “it’s not about data and reports, it’s about understanding your consumer and putting that understanding at the heart of everything your business does,” Mr. Nicholls adds.

As markets become saturated and more products find it harder to differentiate themselves from their rivals by functionality alone, customer service is becoming an increasingly important differentiator between products. As a result, how consumers experience products and services is becoming an increasingly important part of marketing – especially for innovations, says Mr. Minale at Wolff Olins.

“iPod isn’t just a great product innovation – Apple created a whole economy around it with the development of related services such as iTunes,” he explains. “Apple worked to reinvent the music market by creating its own world – something it has in common with all successful product innovators. The best product and service innovations use consumer insight to change the way we think about doing things.”

Creating a brand that inspires and motivates at every point of contact between product or service and consumers is now a priority. Effective marketing campaigns can no longer afford to be just about product specifications; it is increasingly important to associate that product with something more, according to a study published by Research International.

For its report, Return of the Product, Research International polled consumers in 43 countries to gauge the intensity of their relationships with brands. The most successful brands do not need to be luxury or niche, it concluded. More important is a brand’s positioning around strong, psychological propositions – Nike’s incitement to action, “just do it”, for example.

Not so long ago a business could ask itself: “What consumer need can this new product satisfy?” In today’s climate, however, few – if anyone – can afford to think like that anymore.

“The difficulty now is that every consumer need we have has already been satisfied by at least 20 products,” Mr. Nicholls observes. “That’s why in the most successful businesses, innovation must be driven by marketing rather than product design.”

Dr. M. L. Yakubu (Lawal Karmanje)