This is a question that when asked, you get a variety of answers. In many cases, the definition is too narrow, and only focuses on advertising and outward communication to customers. Sometimes it is confused with sales. One of the classic, timeless descriptions of the difference between sales and marketing comes from Theodore Levitt’s famous 1960 Harvard Business Review article, “Marketing Myopia”. In Levitt’s definition, selling focuses on the needs of the seller. It’s all about turning a product into a revenue stream. Marketing on the other hand is focused on the needs of the buyer and meeting their needs. That definition of the difference has stood the test of time, but is often forgotten.
Before going further, let’s step back for a moment and take a broader view. What is innovation? My favorite description comes from Tom Allen and Gunter Henn in their book entitled “The Organization and Architecture of Innovation” and is represented in the figure to the right (1). Innovation is defined here as mediating between two on-going streams of activity: development of the market needs and technological developments or potential solutions to problems.
This description captures nicely the concept that innovation is really about matching a technology to a customer need, and that both technology and market needs are changing with time. Customers rarely purchase a technology solely for the sake of the technology itself. It has to satisfy a utilitarian and/or an emotional need. Sometimes these needs can be verbalized by customers and sometimes they cannot. So, “marketing” in this sense is all about defining what the customer will value. It’s about defining products, along with R&D, to fulfill both utilitarian and emotional needs. It’s about defining products that meet the business strategic and competitive strategies.
The second point is that from the standpoint of the organization structure, R&D (and manufacturing for that matter) lives in the world of the technology track and the “marketing” role resides in the realm of customer needs. I would further delineate “marketing” by dividing into two basic functions. In many organizations there is a product manager. This role, I like to say, has “one foot in engineering and one foot in sales and marketing”. They are the “voice-of-the-customer”, so to speak, on the project team. They are a conduit for information coming in from the market. For instance, how customer needs are changing, competitive activities, feedback from direct sales, etc. They understand, or should, the technical challenges, risks and trade-offs of developing the product. They normally would be responsible for consulting with all stakeholders, both internal and external, to define a new product. The product manager would typically work closely with the second function, which is what many usually think of in terms of “marketing” but is really more properly defined as “marketing communications”. We are talking here about the “4P’s” of marketing (Product, Place, Price, and Promotion), and we will come back to that in a moment.
Taking a broader view of “marketing” in terms of meeting customer needs cannot be overemphasized. At the end of the day, that is what new product development is all about. Going back to the Levitt’s article, he makes a strong case that there really is no such thing as a growth industry. There are only companies organized and operated to take advantage of growth opportunities. Every industry was at one time a “growth industry” but the mistake companies make, in Levitt’s view is:
1) Growth is assured by expanding demographics.
2) There is no competitive substitute.
3) Too much focus on improving efficiency and driving down unit cost.
4) A preoccupation with the product itself and not enough about how it meets a customer need.
This fits nicely into my concept of having a “design view” of your business (see this blog post). The bottom line is that if you are not continually looking at how your products are meeting a more broad definition of your customer’s needs, then someone else will. In my opinion that really is the basis of Christensen’s concept of “disruption”.
This also fits well with a recent article in Harvard Business Review entitled “The Grass Isn’t Greener”. The author points out that in many cases management concludes that sagging revenue growth is related to their “industry”, and then attempt to improve growth by finding a “better industry”, through for instance acquisitions. The authors looked at shareholder returns over a (10) year period in multiple industries and found that they are strikingly similar. Their conclusion is that you are better off determining ways to standout in your industry vs. thinking that the “grass is greener” on the other side of the fence! This is exactly Levitt’s point.
Let’s return to the “marketing communications” aspect of marketing. There are two basic sets of activities here. One set of activities are focused “outward” to the potential customer base, and the other set is directed “inward” towards the internal organization.
The “outward” aspects are what would classically be described as the “4P’s”: Product, Place, Price, and Promotion. Even here, there is room for a more nuanced, customer-centric definition, as described in “Rethinking the 4P’s”, a recent Harvard Business Review article. The figure below summarizes how the article redefines them.
Finally, there are “inward” directed marketing activities, which are focused on internal stakeholders, typically those in sales. This is often forgotten in the rush to get a product to market, but is very important. It relates to helping the sales organization to successfully position and sell the product, and become product champions. Having been in sales, I can attest to the importance of this aspect of “marketing”. These efforts are especially important if the innovation is new-to-the-firm and there is not sufficient internal knowledge. A timely article on this subject was recently published in the Journal of Product Innovation Management.
So, we have discussed many aspects of “marketing” and its role in NPD. What do you think? Are there other definitions missing from this discussion? How do you define marketing and its role in NPD?
(1) See pages 30-31: Thomas J. Allen and Gunter W. Henn, The Organization and Architecture of Innovation. (New York: Elsevier, Inc., 2007)
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