The themes of technological innovation, entrepreneurship, and organizing

Taxonomy of Marketing Core Competencies for Innovation

Eric Viardot

EADA Business School, Spain

ABSTRACT

This chapter argues there is a lack of taxonomy of the various marketing capabilities that are necessary to achieve the market success of innovation. It tries to fill this gap by proposing a model that subsumes two classes of Marketing Core Competencies (MCC) for successful innovative companies. The first cat­egory ofcore competencies is related to a superior ability of the firm to identify and to connect the actual market needs with the innovation during the preparation of the new product launching phase. Once the innovation is on the market, a second group of core competencies is associated with the capacity of the firm to ease the customers ’ tensions in order to facilitate the acceptance of the innovation and turn it into a market success through adoption and diffusion. In conclusion, the chapter underlines the impor­tance of the place of these two categories of Marketing Core Competencies (MCC) in innovative firms.

Copyright © 2012, IGI Global. Copying or distributing in print or electronic forms without written permission of IGI Global is prohibited.

INTRODUCTION

Large is the number of firms that have introduced an innovation with an original concept or a su­perior technology but failed to establish it on the markets. This is because innovation is more than invention. It is taking a new idea and developing it into a solution which satisfies a specific human

DOI: 10.4018/978-1-61350-165-8.ch026 need in a new and cost-effective way so that it generates customer value and a positive business impact (Viardot, 2004).

Innovations can be incremental or disruptive (Bower & Christensen, 1995). Incremental inno­vations improve the performance of established goods and services along the dimension that mainstream customers in major markets have already valued. Examples include continual development of faster microprocessors, flatter

screen for computers or higher - resolution medi­cal scanning devices or Short Message Service (SMS) for cellular phones. Disruptive innovations offer a different, original and often untested solu­tion to a larger category of needs (Christensen & Raynor, 2003).They are diffused throughout the economy like electricity, transistors, or machine tools in the past and computers, networks, and robots nowadays. They often provide the basis for the emergence of new industries that create major new markets. For instance, once comput­ers were introduced and accepted, it made sense to expand their power, offer new application software, and connect them. Once they were con­nected, online services and electronic commerce naturally made their way into the economy and consumers’ behavior. Similarly, today some very promising technologies could open new markets such as 3D mobile phones, engineered stem cells, solar fuel, green concrete, cloud programming... as identified by MIT in its 2009 special report on emergent technology (www. technologyreview. com/specialreports).

Many studies have been carried out on the new product adoption process, following the leading research by Rogers (1983) which defines the diffu­sion of innovation as a process that communicates innovation through certain channels over time among the members of a social system. These studies show that not all customers, individuals or organizations, react to innovations in identical ways, mostly because of their degree of involve­ment with technology (Latour &Alii, 2002). Some consumers will buy new products immediately, while others will buy them much later as they are uncomfortable with innovations, especially radi­cal ones because they are difficult to understand, untested, or perceived as one-off which will pass quickly. The consumers are going to wait for the next generation that may provide them with a solid benefit. But the next generation of products will never happen if the current generation is discon­tinued. It comes down to marketing to explain this innovation, so that the people can make an educated choice. What is true for consumers is also true for organizations. Many managers fret about innovative solutions and use various strategies to reduce risks in purchasing an innovative product. They try to assess the balance on the risk/return relationship of such investment much more than considering the novelty of a technology (Meldrum & Millman, 1991).

In line with the resource-based theory, market­ing can be defined as a continuous set of skills and competencies of a firm that constitutes a better value than its competitors (Vargo & Lusch, 2004). Consequently, the specificities of product innova­tion are driving the building of new capabilities for innovative companies. Although some papers are discussing the role of some specific Marketing Core Competencies (MCC) for innovations (Story & alii, 2009, Reid & de Brentani, 2010), there is not a taxonomy of the various marketing skills that are nece ssary to achieve the market succe ss of innovation. This chapter tries to fill this gap with a descriptive research based on literature review. As illustrated in Figure 1, the chapter proposes a model for successful innovative companies by subsuming two sets of specific MCC that are tak­ing place at two different phases in the innovation process; this one is considered as a complex set of communication paths over which knowledge is transferred internally and externally between the organization, the science base and the marketplace (Trott, 2008).

The first category of core competencies is related to a superior ability of the firm to connect the actual markets needs with the innovation dur­ing the preparation of the launching phase of the new product. This group is composed of three different Marketing Core Competencies (MCC). Once the innovation is on the market, a second group of three other MCC is associated with the capacity of the marketing organization to ease customers’ tensions in order to facilitate the innovations acceptance and to turn it into a mar­ket success. In that chapter we define a marketing organization as one organization which is special­ized in marketing, and/or as a unit of an organiza­tion/firm, and/or as an Organization CreativeArea.

Figure 1. Marketing core competencies (MCC) in the innovation process

THE MARKETING CORE COMPETENCIES BEFORE THE INTRODUCTION PHASE OF AN INNOVATION

In the groundwork of the introduction phase of an innovation, three specific competencies are developed by the marketing organization. The first one is the capacity to help the firm’s top management to assess the market potential of an innovation. The second one is the particular skill to segment the potential markets for the innova­tion, either with a comprehensive study of the potential customers or with a proactive vision of the future market. The third core competence is the ability to define the innovation's positioning for its introduction on the market.

Marketing Core Competence 1: Assessing the Market Potential of an Innovation

Before considering the introduction of an innova­tion to the market, the primary step is to evaluate its business potential (Easingwood & Koustelos,

2000) . This requires a situation analysis in order to

identify the opportunities and threats in the market as well as to evaluate the possible market demand.

The situation analysis starts with an evaluation of the various elements of the firm's environ­ment (Technological, Economic, Sociological, Ecological, Ethical, Political and Legal forces) which may represent some threats or opportunities vis-a-vis the innovation considered. Regarding innovations the technological forces are obvi­ously always important as many innovations are technology-driven. This is even more important in the case of radical innovation and radical new products where companies can be blindsided when they tend to underestimate the potential of a breakthrough innovation or when they listen too loosely to their best customers and invest only in incremental innovation to lose ground ultimately (Christensen, 1997).

However, it would be an error not to take into consideration the other forces (Talke & Salom,

2009) . Most specifically, many firms tend to misjudge the sociological constraints which may slow the adoption process of an innovation. The political and legal dimensions are also extremely important as some innovations may not be accepted by a local government, such as in China when

Google had to agree that all search results with contents viewed as objectionable by the govern­ment should be censored (O'Rourke &Alii, 2007)

In the case of innovations, government often acts as a market raiser, through governmental research programs such as Eureka in Europe or HPCCI (High Performance Computing and Communications Initiative) in the United States. Those programs are funded and managed by vari­ous governmental agencies which can introduce much competitive bias by championing national suppliers. Through IP and patents regulations, local government can also impede or reduce the adoption of an innovation. For example, in China the government is willing to promote more eco-friendly cars and energies in order to reduce the massive air pollution in large cities. This has provided a boost for BYD one of China’s biggest producers of batteries for cell phones which is now a fast-growing maker of green cars and solar panels. (Arndt & Einhorn, 2010).

Governmental constraints can especially be felt by the importance of standards in international contracts. For example, the European Union’s taxation on the broadcasting oftelevision programs by the D2 Mac satellite killed the market of D-Mac decoders. On the other side, when the French, Ital­ian and German governments signed an agreement for the development of GSM (Global System for Mobile communication) as a common standard for the development of an effective pan-European solution to mobile communications, they paved the way for the meteoric growth of the mobile telecommunication industry in the 90’s in Europe (Seo & Hashem Sherif, 2009). If the government has an influence on the competitive environment, one should note that its force varies according to the size and the characteristics of the firms. The power of any governmental organization can also be affected by the political lobbying of large firms or the alliance of small ones.

Marketers must also provide an analysis of the potential competition for an innovation in order to assess its market potential. For example, disruptive innovations tend to create new markets and usually take root on the weakest segments of large companies which are already in the markets. While incumbents tend to stick with sustaining innovations for their traditional customers, chal­lenging companies will take on competitors with disruptive innovations.

For instance, the Chinese HTC has long been the manufacturer ofunbranded devices bearing the logos ofwireless giants such as Verizon, T-Mobile, Sprint Nextel, orNTT DoCoMo. But HTC was the first to adopt the open-platform of Google's An­droid operating system for smartphones. Android lowers the entry barrier for newcomers because it takes a lot of the innovation burden off of the hardware companies. HTC built the first phone powered by Google’s Android operating system, for T-Mobile, in 2008 and has launched its own line of smartphones with great success.

Regarding the competitive analysis for an incoming innovation, the traditional five forces framework created at Harvard University and popularized by Michael E. Porter (1985), need to be adapted slightly. Indeed, besides the ri­valry among existing competitors, the threat of both substitute products and new entrants, the bargaining power of suppliers and of buyers, it is important to consider the relative influence of the “complementers”. They can be defined as the firms that provide complementary product or services which are adding value to the product innovation (Adner & Kapoor, 2010) For example, the functioning of ERP or CRM software—a radi­cal innovation for many organizations trying to implement and to adapt it—requires the help of specialized consulting firms such as Accenture, Cap Gemini Ernst &Young and hundreds of smaller ones. Similarly the value of an innova­tive operating system depends on the number of application software available on it. Similarly software developers are “complementors” of Windows, Linux, Symbian or Android. Comple - mentors can have some significant influence in expanding the market. For instance, a recent work has shown that offering greater levels of access to independent hardware developer firms produces up to a fivefold acceleration in the rate of new handheld device development (Boudreau, 2010).

Finally to complete the environmental and competitive analysis, Marketers have to provide an estimate level of market demand. Demands are desires that can materialize thanks to money and some purchasing power. For instance, many consumers want broadband with unlimited Internet access connected to a sophisticated home cinema system. Only a few are able and willing to buy that.

In the case ofincremental innovations, market­ers can always go and interview customers who are already using this category of product. They can rely on several tools such as, ethnographic surveys, concept tests and prototype tests, expert opinions, sample groups, test markets, etc. For instance, Nokia combined some fundamental ethnographic with long-term user research in China, India, and Nepal to analyze how illiterate people live in a world full of numbers and letters (Katz, 2003). As a consequence, Nokia created an innovative “iconic” menu that can be navigated only by im­ages. Furthermore, the growing percentage of the population having online access in western and emergent countries, coupled with the unlimited capacity of the Internet to influence lifestyles, has turned the Web into a tool for understanding and anticipating consumer needs and to gauge consumer thinking and behavior (Hardey, 2009).

But a precise evaluation of demand is not easy to accomplish when the innovation is radical and markets are exploding. Thus, estimating the overall demand of an innovation is never straightforward because markets are in a constant state of flux and because the goal is to create markets rather than battle for market share on existing markets.

Marketing Core Competence 2: Segmenting the Potential Markets for the Innovation

Ifthe conclusion ofthe situation analysis indicates a potential demand for an innovation, the next step is to segment the market because, in today's environment, an innovation cannot reach every­one everywhere at every time. The time when one product sufficed to satisfy demand is over. Customers have become more demanding and more informed, and competition drives companies to differentiate themselves. Groups (segments) of customers with similar wants desires, buying behavior, or some other significant characteristic needs must be identified. Consequently, successful innovative firms are very much aware that they have to determine the most important customers and what they value (Thomke & Von Hippel, 2002) in a given innovation. Those are the necessary conditions to ensure that the innovation corre­sponds well to customer wants and expectations.

To successfully market an innovation, there exist two approaches: demand-driven marketing for incremental innovations that customers are awaiting and vision-driven marketing for radical innovations. The former approach is based upon market knowledge, whereas the latter is based upon the views ofthe innovator and requires some kind of market pro-activeness (Sandberg, 2002). The dichotomy between market-driven marketing and vision-driven marketing leads to two differ­ent segmentation methods. The market-demand approach breaks down the market into different segments, the needs of which are analyzed before defining a product. The market-vision (or market - supply) approach identifies a certain number of future customers who will then serve to construct the segments by extrapolation.

A large number of incremental innovations happened because of customer demand in response to an expressed or latent need. Many of these innovations only show variations of an original product with simply some improvements that were requested by the customers. For instance, microcomputers are becoming more and more compact, portable, and powerful; but they have not really changed since 1981. For these demand - driven innovations, segmentation methods that are developed and frequently used in marketing can generally be used. They are based on the selection of segmentation criteria to break down the total market according to the characteristics and the behavior of consumers or industrial customers, in order to regroup them in different segments that are as heterogeneous as possible in terms of needs and expectations.

Nevertheless many innovations are not pulled by the market but they are pushed by the ideas of companies or individuals, as more than 80% of all researchers of all time are still alive and working today. The market for a new radical innovation is more difficult to understand as it is coming from a research laboratory or a creative genius. Nevertheless, the intrinsic value of an invention does not necessary lead to a business because the evaluation of the innovation by customers is often a big question mark (Veryzer, 1998). The reason is that radical innovation frequently brings new level of functionality that the customers may not figure out immediately; also such innovation often implies drastic changes in consumption patterns (O’Connor, 1998).

Anticipating the changes that a radical inno­vation will bring to the market requires foresight (Hamel & Prahalad, 1994) and vision. Sony’s founder, Akio Morita, always contended that “the public does not know what is possible, but we do.” (Rosenbloom & Cusumano, 1987). Consequently, the traditional methods that are used to identify particular market segments must be adjusted. To determine the potential custom­ers to whom these radical innovations may be directed, marketers must anticipate and under­stand the needs that these innovations satisfy as well as the products that will materialize them. They have to figure out, through brainstorming and creativity techniques, the potential custom­ers who may find some value in an innovation whose existence they do not even suspect today. A very effective approach is to target lead users, companies, organizations or consumers (Pitta & Alii, 1996) that have needs that go far ahead of the average users and who may even have started to develop a prototype (Von Hippel & Alii, 2000).

It is hard for would-be customers to identify the needs that a disruptive innovation may fulfill, especially ifthis innovation is presented under the form of a concept (Mullins & Sutherland, 1998). Thus the marketing organization should select key potential customers who are interested in the product innovation and give them the opportunity to test various prototypes (Beta testing) (Dolan & Matthews,1993).The best way to recognize their needs is to partner with the customers (Dunn & Thomas, 1994) and have them test a prototype (Leonard & Rayport, 1997). Actually, it has been shown that when individuals play a part in the design of the technology their involvement increases (Barki & Hartwick,1989) and becomes more positive adding to the need and value of the technology (Guimaraes & Alii, 1999).

The ultimate goal of a Beta-testing is to evalu­ate how well the prototype fits the customers' needs (Lilien & Alii, 2002). Accordingly and in parallel with R& D, the marketing organization monitors the beta tests. Furthermore, by work­ing closely with test customers, the marketers may gain not only a better knowledge of their needs but also some insights into the price the market will be ready to accept, as well as some ideas about the most efficient way to advertise and distribute the future product. Companies like 3M or Google have developed an unparalleled core competence in continually testing new ideas with their current and prospective customers. The Post-it Picture Paper—that let people stick their photos to a wall on display—or the “mash-ups” which combines Google’s map with interesting location websites are some of the recent fruits of their ability to openly interact with their customers and stakeholders.

Marketing Core Competence 3: Positioning the Offer for the Target Segment

Among all the skills which have a strong competi­tive advantage, innovation positioning is probably the most difficult to achieve. It starts with the marketing organization's capacity to select, among the various market segments identified, the best customers target to aim at when introducing the innovation on the market (Guiltinan, 1999). This is crucial because all customers’ segments do not share the same importance.

The first element of selection is the level of acceptance of the innovation by the customers belonging to the segment (Easingwood & Lunn,

1992) . But marketers have to also take into con­sideration other strategic elements such as

• the evaluation of the segments' potential— in terms of attainable volume and profit,

• the segments’ accessibility according to the company’s resources, their strategic significance for the company’s mission,

• the position of competitors, and the level entry barriers, in particular, administrative and governmental stumbling blocks.

Sometimes, the high introductory price of an innovation, due to the need to optimize R&D costs and to the lack of an economy of scale at the beginning of the manufacturing process, im­mediately determines the choice of segments with a high purchasing power.

Within the selected segments, marketers define the most significant customers who will be tar­geted first. They have two choices: either making a concentrated marketing or making a differenti­ated marketing. Concentrated marketing selects only one or a very few number segments. Smaller companies often prefer having a smaller number of niches rather than having a small market share ofa large market. Differentiated marketing selects several segments with marketing methods adapted to each segment. Large high-tech companies such as HP, SAP or Orange, for instance, address a large, diverse group of users in different sectors (bank­ing, insurance, industrial) with varied financial resources, ranging from small companies to large multinationals. Each segment has its own type of product, price, place, and promotion that definitely require the involvement of more resources.

A concentrated marketing is less expensive but riskier than marketing that is divided over several segments. The choice also depends upon technical possibilities and the company’s capac­ity to quickly put a quality product with a truly competitive advantage on the market. The choice depends as well upon the company’s overall strategy. For instance, some companies wish to postpone entering a market segment until the pioneers have shown their existence.

Finally, on each selected market segment, comes the “positioning” ofthe innovation in order to ensure that it is well perceived, identified, and recognized by the customers of the key selected segments. Positioning is the creation of the in­novation’s perceived image in customers’ minds. Positioning is the ultimate step in differentiating between existing and would-be competitors.

The positioning reflects the innovation' s value for the customer and its main competitive advan­tage. Usually, the innovation provides a very high value due to its novelty (differentiation) or a value equal to more traditional solutions but at lower cost (cost advantage). Novelty is very obvious in the case of an innovation. In consumer electronics, Samsung has successfully applied the fresh fish “sashimi” approach: it markets the most sophis­ticated products ahead of the competition and charges premium prices before the product is no longer fresh and the competition is there (Xuefeng,

2009) . But the rise of developing economies has seen the coming of “low cost” innovations because of the lower purchasing power of their customers (Prahalad, 2002). Today, innovative Chinese or Indian companies are coming up with new products and services that are dramatically cheaper than their Western equivalents such as $300 computers, and $30 mobile phones that provide nationwide service for less than 2 cents a minute.

A good positioning statement should be able to change or even reverse the mindset of customers (Jaworski & Alii, 2000). However, the position­ing of an innovation, especially a radical one is always difficult. This is because customers often have difficulties understanding how a new radi­cal product can be an improvement, especially as long as they have not experienced the product nor figured out how the product or service will meet their need. This makes the communication of the benefits even more indispensable. Additionally, customers often have difficulties distinguishing between the best and the rest within the large number of frequent new product announcements

Once the positioning is defined, it is translated into the marketing mix of the innovation (i. e., the design and the associated services of the product, the distribution channels, the communication campaign, and the price). Then the innovation is ready to be launched.

THE MARKETING CORE COMPETENCIES AFTER THE LAUCH OF AN INNOVATION

When the innovation has been launched on the market, the role of Marketing is to facilitate its adoption rate in order to accelerate the growth of its market share. This requires the activation of a new set of skills and competencies. The first skill is the capacity to reach new customers beyond the original target market. The second competence is the ability to leverage the brand equity of an innovation to accelerate its market penetration. Finally, the third capability is the talent for mak­ing the most effective use of the latest innovations in the marketing tools and techniques to engage with the largest number of potential customers in order to enlarge the market.

Marketing Core Competence 4: Moving Beyond the Initial Category of Customers

Once the innovation has reached the initial cat­egory of customers, marketing has to shift the attention to other segments that are getting more attracted by an innovation which is no longer ground-breaking (Moore & McKenna, 1999). Building on different adoption and diffusion models, one can distinguish between six classes of customers: the Innovators, the Forerunners, the Mainstream users, the Followers, the Traditional­ists, and the Rebels.

• Innovators usually have an enduring in­volvement based on an interest or arousal for a given product on a day to day basis (Richens & Block, 1986). Actually some researcher argue that over time techno­logical innovation can encourage a psy­chological addiction to high technology for some category of users, either at home or in the work environment (LaTour & Roberts,1992).

• Forerunners often are respected opinion leaders who are more careful than innova­tors. They consider the ownership of a high tech product mostly as a status symbol to assert their difference with the rest of the society.

• Mainstream users will purchase a prod­uct not because it is innovative or different but because it fulfills a need, such as sav­ing time or money, being more practical, or more reliable than the existing solution. They crave for references and testimonials from actual customers. They try to mini­mize the risk and usually go for the lead­er, boosting the external network effects (Shapiro &Varian, 1999).

• Followers go along with the Mainstream users but much later. They are under the influence of the incapacitating FUD (Fear, Uncertainty, and Doubt) factors. Like Saint Thomas, they need to touch and see the solution functioning elsewhere - either at relatives or friends’ houses for consumers and customers or competitors’ locations for businesses - before thinking to purchase it. Innovations often make those customers nervous and they normally look for fully packaged and easy-to-use products.

• Traditionalists are skeptics who do not buy a product until it has become part of tradi­tion. They are technology averse and will buy this category of product only when they do not have any other choices.

• Finally, the Rebels will always reject a product because of its very nature. Such an allergy to innovation may be driven by cultural or religious reasons like in the case of the well-known Amish in the US. In that case, the numbers are not important. But sometimes, the rejection of an innovation maybe based on security or ethical reasons which may create a significant number of rebels such as in the case of genetically modified organisms protested by a large number of European consumers.

Less than one innovation out of ten is making it on the market (Clancy & Stone, 2005) because usually companies cannot expand beyond those the two first categories of customers, namely the Innovators and the Forerunners, who are always enticed by an innovation. Many firms have dif­ficulties to cross the rift between forerunners and mainstream users. The real marketing challenge is there. Innovators and Forerunners need to be acquired; therefore they are a necessary condition to succeed on the market, but not a sufficient one.

As a consequence, the market penetration of an innovative new product can be accelerated by informing and educating Mainstream users and Followers so that they will know the product, be able to measure its superiority over other exist­ing products, and describe its benefits to other people. But studies show that the more complex an innovation is, the more time it will take for the innovative product to be accepted (Easingwood & Beard, 1989). For any new product, the more important the extensive retraining required, the higher the risk to be rejected because of the high switching costs (Pae & Hyun, 2002). Mainstream users and Followers usually want their product/ usage skills that they have developed with one product, to be transferable across to another origi­nal product. If it is not the case, they may decide not to learn how to use the new product (Alba & Hutchinson, 1987). A classic example is the QWERTY typewriter keyboard that has persisted as a standard for years, despite the availability of superior alternatives.

Marketing Core Competence 5: Leveraging the Brand Equity

Some innovation-driven companies have managed to develop a specific competence in leveraging their brand equity in order to increase the penetra­tion of their new products or services (Halliday & Trott, 2010). A commonly accepted definition of brand equity, an off balance-sheet resource, is the value added by the brand name to a product (Farquhar, 1999). This added value can be defined as an increase in awareness, positive associations, perceived quality and loyalty from the customers (Aaker, 1991).

Leveraging the various components of the brand equity provides an effective way to defer some of the restraints which inhibit customers to adopt a new product or service (Temporal & Lee, 2000; Corkindale & Belder, 2009). First, when an innovation is unknown, some would-be customers are not even aware that such a product is available on the market. Additionally, innovation tends to worry many customers or external parties (Boyd and Mason, 1999) for different reasons. Some others are afraid that the innovation will be dif­ficult to learn or will not work. Others consider that the quality is an issued since the innovation has not been tested long enough on the market. Others believe that the innovation will become obsolete quickly. All are always postponing their decision to adopt it.

Many consumers view radical product innova­tions as risky purchases (Gregan-Paxton & Roed - der, 1997), but this is also true for organizations. They choose a company they can trust and that they know will be around for a sufficient length of time to guarantee the solution's durability. A qualitative survey of 50 marketing directors of innovative high tech firms has shown that, when considering the relative importance of the purchasing factors for an innovative product, the confidence in the vendor is more important than the technology used and has the same weight as the price of the product (Viardot, 2004).

Consequently, managing efficiently the brand equity of an innovation helps to reassure individu­als or industrial buyers. A strong brand facilitates the identification of the innovation while attach­ing a quality image and a personality that bonds with the customers and facilitates their loyalty (Urde, 1999). This was the strength of IBM in the computer industry of the 1970s, DEC in the 80's, Microsoft in the 90's, and Dell during the first half of this decade.

While brand equity can increase the value of an innovation, researches have shown that product innovation can inversely have a significant, posi­tive effect on brand equity (Aaker, 1996) because it can create differentiation, expand usage contexts, prevent competitors and enlarge the personality of the brand. For instance, Google is perceived as a clean, friendly but credible path to accessing the tremendous wealth of the Internet. Cisco’s image is associated with being a visionary and an expert in Internet telecommunication as well as a partner with its clients. And the Apple brand personality is about lifestyle, imagination, innova­tion, passion, and aspirations. It also suggests also “power-to-the-people” through innovation thanks to simplicity and the removal of complexity from people’s lives (www. marketingminds, 2010). More specifically, significant product innovations may be particularly useful for attaining drastic improvements in brand equity over a shorter period when they are meaningful to consumers (Sriram & Alii, 2007). Ultimately, brands have to innovate to maintain their relevance and their customer base.

Figure 2 illustrates this dual relationship which may generate a very positive feedback loop as brand equity increases market penetration of the innovation which in turn enhances the brand equity. The process starts with the triggering of brand equity through advertising as the marketing literature suggests that advertising can affect brand equity (Keller 1998). But the building of a strong brand image for an innovation does not always require big advertising budgets. Some highly successful companies have managed to achieve recognition through creativity and publicity like Facebook or Google, which have achieved this position mostly through word-of-mouth and qual­ity. E-bay, Amazon, or Yahoo have also received top-of-mind recognition on a low advertising budget. Those web based firms have been able to generate “buzz” among “influencers” instead of relying solely on traditional advertising. The excitement and passion they have generated has translated into sales afterwards. In that matter, they just follow the previous generation of successful innovators such as Intel, Microsoft, Compaq, Cisco, and others; these firms were first talked about in the pages of the Wall Street Journal, the Financial Times, Business Week, Forbes and Fortune magazines. Once their brand image was made, they started to spend money in advertising to maintain their image and notoriety.

When promoting an innovation, brand equity management is not exclusive to private companies.

It has been used very effectively by some alli­ances to promote an innovation in order to make it a standard. Consider the case of Bluetooth, a short-range networking protocol for connecting all types of digital devices (mobile phone, com­puter, GPS, etc) or accessing the Internet by wireless signals at short range. In 1998, five companies founded the Bluetooth Special Interest Group (SIG): Ericsson, IBM Corporation, Intel Corporation, Nokia and Toshiba Corporation. Its goal was to promote the development of the new protocol as the standard solution for wireless connections. Very early the decision was made to develop a strong brand so as to communicate with end-consumers in order to accelerate its recogni­tion and to step up its adoption by other indus­trial companies. From the beginning, Bluetooth has been actively promoted by members of the SIG among the end users. The average brand awareness level in the United States, United Kingdom, Germany, Japan and Taiwan has risen from 60% in 2004, to 85% in 2009. Such a high level of recognition has pushed many companies to adopt Bluetooth as the standard wireless con­nection. In 2004, the Bluetooth SIG had 3400 members; today it has more than 10,000 member companies in the telecommunications, computing, automotive, music, apparel, industrial automation and network industries (www. bluetooth. com).

Marketing Core Competence 6: Mastering the Latest Innovative Marketing Tools to Connect with the Markets

Finally, in order to enlarge the market for an in­novation, the marketing organization has to be able to use the latest innovations in the marketing tools and techniques to engage with the largest number of potential customers. In the very recent years, the most striking innovations are in the Internet and the social networks. Internet has changed

Figure 2. The dual relationship between brand equity and innovation

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the marketing platforms of companies (Chaffey & Alii, 2009). It is a powerful communication tool which allows an instant, interactive and personalized exchange with the customer; it is also a virtual distribution channel; it contributes to create new services around an existing hard product, it permits to receive customers' feedback very quickly so that they can “co-create” a product with the company. It plays also a leading role in CRM programs as it establishes a vital link with customers.

But in the last two years, the Internet has paved the way to an even more important innovation for marketers: the raise of the social networks, most notably MySpace, Facebook, and Twitter (Trusov & Alii, 2009). Building on the needs and desires for intense and constant communications, those networks have managed to aggregate millions of users while altering their daily lives. They now offer a credible, less expensive alternative to massive advertising expenditure when marketers envisage enlarging the market of an innovation. Indeed, the “viral campaigns” are just traditional “word of mouth” campaigns but amplified by the scope and the speed of the Internet and the dynamics of the network structure (Stephen & Toubia, 2010). Twitter, which allows users to “tweet” about anything they wish via posting a message, not exceeding 140 characters, on their account on-line is revolutionizing the way people communicate. It is now incorporated in nearly all cellular phones and some businesses have already used it as a platform to reach its current 190 mil­lion users worldwide and still growing very fast. With Tweets and SMS combined with the latest advanced in geo-marketing, marketers are able to leverage the vast potential of the Smartphone as the new vessel for offering product information, updates, special offers, or even specific discounts. As the field of innovation in marketing tools is shifting from the personal computer to the mobile phone (Ratten, 2009), this provides marketers with cheaper and more effective ways to engage with new prospects.

CONCLUSION: THE PLACE OF THE MARKETING WITHIN INNOVATION ORIENTED FIRMS

As the marketing is one of the Organization's Creative Areas which contributes to develop core competencies, it is important to consider its place within innovation oriented firms. This is made even more important because numerous innova­tion failures are the result of a disastrous lack of cooperation between the marketing and R&D areas. Indeed, the rivalry between those two areas can derail the most promising future of innovations as R&D’s people tend to underuse or even ignore the information from the Marketing department (Maltz & Alii, 2001). One ofthe first basic recipes for success is to foster the collaboration between R&D and marketing, but this is easier said than done (DeLuca & Atuahene-Gima, 2007).

One of the main reasons is because of the multiple walls between marketing and R&D, especially cultural that make them two different and separate worlds (Griffin & Hauser, 1996). Marketing professionals usually have a business background, even if it is also good to have a technical background as well. They are trained to combine data and intuition in order to answer general problems and to make profit-oriented business decisions, generally within a short time frame. They talk of markets, product benefits, and perceptual positioning for customers. Conversely, research and development professionals generally have an engineering or sciences background. They are trained to generate and then test hypotheses in order to resolve technical problems and to pro mote scientific development on a long-term basis. They talk in product specifications and performance.

All these differences may be frequently in­tensified by structure (Leonard-Barton, 1992) and by geography when R&D departments are located on an outside campus, while marketers are close to markets or at headquarters. This leads to less interpersonal activity and hardens disparate worlds of thought. However the integration of

Tune

Generic MCC

Detailed MCC

Before

Innovation

Launch

Connectuig the actual needs of the markets with the umovatrve ofter

Assessing the market potentral

Segmenting the potential markets

Positioning the ofter

Facilitating the product uuiovation adoption rate 111 order to accelerate the growing of its market share

Moving beyond the uutial category of customers

Leveraging the brand equity

Mastering the latest innovative marketing tools to comiect with the markets

After

Innovation

Launch

Figure 3. The core competencies for the successful marketing ofproduct innovations

R&D and marketing is excessively important especially to enforce the effectiveness of new product development (Souder & Sherman, 1998). On one hand, R&D needs marketing’s market vision and guidance for the general direction of research. On the other hand, marketing needs R&D to invent products that correspond to the customer needs it has identified. Some companies have managed to integrate the Marketing and R&D departments to work together in developing and marketing innovative products. Each time it starts the development of a new car, the 200 to 300 project teams' members are relocated from their various location to the “Forschungs und Innovationszentrum” (Research and Innovation Center) in Munich, Germany, for up to three years. This unique capability allows BMW to facilitate communication and prevent last minute conflicts between R&D and Marketing. It has contributed to BMW the success of its most recent models (Riege, 2007).

To conclude this chapter, Figure 3 summarizes the specific marketing core competencies that have been identified in this chapter as some of the key capabilities which have to be developed in order to contribute to the market success of a product innovation and subsequently to the overall profit­ability of a company. They have been mapped out along a sequential phase in the innovation process mostly for a goal of clarification. They represent a sequential and logical continuum of indepen­dent stages while in reality they are continually interacting with each other. For example, the use of social networks may drive a new segmentation process which then may impact the positioning of the offer and consequently the brand management.

This categorization of Marketing Core Com­petencies (MCC) can be considered as the foun­dation for constructing an expanded typology where each of the six main core competencies could be broken down into more precise sub­competencies. It could be useful for companies, and educators, who would like to build or to strengthen marketing competencies (Wellman,

2010) in order to increase the market acceptance of their innovative products and to amplify their competitive advantage for achieving superior profitability. Additionally, as this CCM model is theoretically informative but practically untested, this would open a new avenue for future research.

The themes of technological innovation, entrepreneurship, and organizing

About the Contributors

Farley S. Nobre (PhD, MSc, BSc) is Professor at the School of Management of Federal University of Parana, Brazil. His research interests include organizations, knowledge management systems, innova­tion and sustainability. …

The Roles of Cognitive Machines in Customer — Centric Organizations: Towards Innovations in Computational Organizational Management Networks

Farley Simon Nobre Federal University of Parana, Brazil ABSTRACT This chapter proposes innovative features of future industrial organizations in order to provide them with the capabilities to manage high levels …

Tools That Drive Innovation: The Role of Information Systems in Innovative Organizations

Jason G. Caudill Carson-Newman College, USA ABSTRACT The purpose of this chapter is to examine computer technology as a tool to support innovation and innovative processes. The primary problem that …

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