199

Integrating strategy, industrial product innovation and marketing research Richard D. ROSENBERG *

This article investigates the function of marketing research with respect to new industrial product innovation, commer- cialization and ultimate adoption and diffusion, Although industrial firms have implemented strategic planning concepts extensively. because of the uncertain nature of intermediate markets, they have failed to utilize the full capabilities of marketing research early in the new product innovation and development process.

The article also contends that even where there has been awareness of a critical lack of information at the innovation commercialization, and diffusion-adoption interfaces, discus- sion of the nature of this information has been insufficient and too narrowly focused to comprehend the decision-support needs of management. Properly integrating industrial marketing re- search and new product innovation requires remedying four basic problems, viz., problems of appropriate and full utiliza- tion, problems of substance and approach. problems of timing and uncertainty, and problems of integration with other func- tions. The paper concludes with a schema identifying a broad range of useful market research techniques within a framework which encompasses the sequential aspects of bringing a new industrial product to the market from conceptualization to adoption.

1. Introduction

Industrial marketing research resembles a sleeping giant capable of providing tremen- dous assistance to industrial marketers who confront a world characterized by ever-grow- ing uncertainty, but whose potential is not fully utilized. Recognizing an evident need to reduce this uncertainty where possible, par- ticularly in an environment of technological leap-frogging, economic fluctuation and polit-

* Richard D. Rosenberg is a member of the Faculty of In- dustrial Engineering and Management, Technion - Israel Institute of Technology, Haifa 32000, Israel.

Intern. J. of Research in Marketing 5 (1988) 199-211 North-Holland

ical instability affecting raw materials, energy supplies and market access, industrial market- ers have been pre-eminent in adopting and implementing strategic planning and strategic management. Ironically, due to the inherently concentrated nature of industrial markets and a high level of interaction between industrial marketers and their customers, the value of marketing research in reducing uncertainty has not been fully exploited with respect to industrial new product innovation and devel- opment. Strategy still remains a corporate function at the higher levels of management, while marketing research is relegated to data- collecting, advising and interpreting only if and when called upon.

The purpose of this paper is to investigate the interface between corporate strategy, in- dustrial product innovation and development, and market research methodologies, a subject which appears to receive inadequate treat- ment in marketing literature. Rogers (1983) refers to a critical need in the process of innovation and development for coordinating the firm’s research and development and commercialization activities, with the further imperative of relating them to the agencies which will assume responsibility for diffusing the innovation to its ultimate users.

In order to build an integrating framework, it is first necessary to examine the overall business strategies which lead to innovation on the one hand, and the interface with the marketing strategies employed in their com- mercialization, diffusion, and subsequent adoption in the marketplace, on the other. Having done this, it then becomes possible to assess the role of marketing research throughout the entire process, from product concept to adoption by users and from this to

0167-8116/89/$3.50 0 1989, Elsevier Science Publishers B.V. (North-Holland)

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R. D. Rosenberg / In&grating straregy, industrial product innovation, marketing research 201

determine the extent of its utilization, its ef- fectiveness, and where there remains a need for further integration. Fig. 1 portrays the interface schematically.

In this conceptualization, market research forms the support basis for a management decision to embark on a development, or to commercialize or abandon an innovative de- velopment. Marketing research assists in identifying the firm’s strategic thrust and is at the same time directed by its strategic goals. Moreover, market research can also provide the environmental inputs which determine the firm’s strategic posture. Finally, information gathered from the innovation diffusion and adoption process is fed back in to the stra- tegic process not only to confirm or alter strategic goals, but also to suggest possible modifications necessary to assist products being developed to better meet adopter needs and requirements.

2. Strategic thrust, strategic focus, and innova- tion

Notwithstanding what may be implied in the conceptual model shown in fig. 1, it is difficult, if not impossible to establish a dis- crete sequential model for the stages through which an innovative industrial product is brought into being. A strategic planning orientation would appear to see new products as outgrowths of the firm’s long range busi- ness strategy (Crawford (1983)) or as a result of its managerial strategic behavior (Ansoff (1979)). In both instances, the stimulus to innovate originates in the firm’s overall stra- tegic planning.

Ansoff (1979) identified two general pro- files of managerial strategic behavior as ‘en- trepreneurial’ and ‘marketing’, the former substantially product-oriented, and the latter market-oriented. According to Ansoff, new product conceptualization and innovation, product pioneering, and the creation or adop-

tion of new and novel technologies are char- acteristic of entrepreneurial behavior with the time framework for anticipatory, explanatory, and creative strategies lengthening in that order. Ansoff’s model may be compressed into three basic thrust, as follows:

(a) An innovational thrust breaking with the past and concerned with pioneering new products or new product concepts by creating new technologies.

(b) An exploratory thrust, discontinuous with respect to the company’s past strategies, and characterized by the development of new product concepts through the adop- tion of new technologies created by others.

(c) An anticipatory thrust, which essentially retains continuity with the company’s previous marketing strategies in that it is characterized by emphasis on developing new products using known technologies.

Crawford (1983) states that the goal of the firm’s general business strategy should be to optimize the firm’s capabilities and resources with respect to its environment. Accordingly, new products strategies are intended to en- courage the exploitation of opportunities, and restrict diversion of the firm’s energies and resources to those opportunities which pro- vide a good fit.

In both cases, the innovation emphasis is in the direction of proactive behavior. An initiating posture as opposed to a reactive mode, demands that the firm cope with a high degree of environmental uncertainty from competitors, in terms of potential users’ needs, as a consequence of technological change in terms of both amplitude and frequency, and as a result of constantly changing regulatory constraints. For such proactive firms, better and more timely market intelligence to in- tegrate product innovation, product commer- cialization and product diffusion is far more critical than for companies whose product

202 R. D. Rosenberg / Integrating strategy, industricrl product mmuation, marketing research

development strategies may be characterized as reactive, e.g., defensive imitative, or op- portunistic in the short term (Gupta, Raj and Wilemon (1986)).

The importance of this focus is reinforced by the findings of Cooper (1983) to the effect that a firm’s new product strategy is an essen- tial component of its overall planning, with significant correlations between overall per- formance and (1) extensive use of market research for new products, (2) proaction in identifying market needs for new products, and (3) market-derived new product ideas. Little and Blair (Hubner (1986)) stress this need to integrate technological innovation into strategic planning.

Unfortunately, both Ansoff’s prescriptive model and Crawford’s strategic planning- product innovative construct are highly normative, and do not necessarily reflect things as they are. Cosse and Swan (1983), on the basis of empirical research, concluded that product managers generally do not have stra- tegic orientations, and that they do not, on the whole, perceive that the data required to implement a strategic planning model are use- ful, at least in relation to the effort needed to implement the model.

In fact, there is another point of view which sees innovation as arising not from proactive strategy, but rather as a result of reactive adaptation. In this connection, Tellis and Crawford (1981) have provided a useful stra- tegic focus in their Product Evolution Cycle idea, since it sees the new product evolving as a result of a continuous adaptation with the environment, built on patterns of growth, rather than on a quasi-biological life cycle model, affected by market factors, managerial effectiveness, and government mediation. Further, even though they admit the idea is not widely accepted, Day and Wensley (1983) suggest that the competitive struggle for dif- ferential advantage is the principal impetus for marketing innovation, while Greenley (1983) contends that new product innovation

stems either from perceived potential for market opportunity, or existing product dis- placement.

Whether the result of proactive or en- trepreneurial strategy, whether market need oriented, or competition reactive, it is clear that the implementation of effective innova- tive product development is dependent on environmental inputs, i.e., from the market in terms of users and competitors, technological dynamics, and possible governmental inter- vention.

3. Innovation and diffusion

Innovative new products may be defined as those which represent the embodiment of an invention, i.e., something that previously did not exist, in a form capable of use (Crawford (1983)). Accordingly, this inventive process proceeds from ‘ideation’ of a concept through a preliminary evaluative stage, to the trans- formation of the idea into a product by means of development or enhancement, or both. It goes without saying that regardless of whether or not they have originated as a result of market adaptation, the processes of innova- tion and diffusion of new industrial products are fraught with uncertainty. From a narrow product focus, the uncertainty which much be faced by proactive innovative strategies stems from a lack of information relating to what Rogers (1983) refers to as the characteristics of innovations, i.e., their

l Relative advantage - over the idea super- seded,

l Complexity - that is, the difficulty involved understanding and using such innovative products,

l Triahbility - The degree of possibility for limited trial use,

a Observability - the extent to which the results of the innovation will be visible to others.

R. D. Rosenberg / Integrating strategy, indurtriol product innouation, marketing research 203

Rogers emphasizes the need to measure these attributes of innovations in order to predict the rate of their adoption, since the degree to which innovations will be developed in the future will have a significant effect on the firm’s realization of its long-range stra- tegic goals. Another relevant issue raised by Rogers is the need to assess the extent and and significance of the difference between the contemplated innovation and the technology (ies), products, or services it is intended to displace. Here, too, arises the issue of com- plexity of its use as constituting a potential bar to successful entry at the worst, or a brake on the rate of adoption at the very least. In this connection, Little and Blair (in Hubner (1986)) refer to the problematic na- ture of both objective and subjective degrees of newness in innovative products and processes, and a need to evaluate their in- fluence.

Rogers’ primary interest in measuring in- novation attributes lies in a possibility to predict the rate of adoption of innovations. However, this focus on innovation attributes fails to deal with another issue; particularly crucial even at the innovation stage, i.e., the evaluation of potential demand. Maidique and Patch (1978) discussed the question of de- mand assessment on the basis of ‘First-to- market’, ‘second-to-market’, ‘late-to-market’, and ‘market-segmentation’ strategies, adding a series of marketing questions relating to price, selling methods required, and the iden- tities, size, and nature of unfilled ‘pockets of demand’, to the question of product attri- butes, differentiation, advantages and weak- nesses.

Mintzberg, Raisinghani and Theoret (1976), who investigated the inherent structural char- acteristics of unstructured decision processes, identified the marketing decision process as a basic decision process model which com- mences with ‘need recognition’, and proceeds through successive sequential stages called ‘design’, ‘choice evaluation’ and ‘authoriza-

tion’. Surprisingly, the ‘diagnosis’ and ‘search’ modules in the Mintzberg et al. marketing model are not in the direct channel of the decision process, even though diagnosis may very likely be the single most important routine in the overall decision model in- asmuch as it largely determines subsequent action decisions. Thus, Mintzberg et al. focus on the selection process and substantially ignore diagnosis, an orientation which is closely tied in with Rogers’s ‘diffusion/adop- tion’ theories.

Neither Rogers (1983) nor Maidique and Patch (1978) deal with a further characteristic of industrial product innovations; i.e., their possible extreme sensitivity to economic and user market fluctuations, since demand for them is largely derived rather than inherent and thus affected by technological consumer, and cyclical factors (Rosenberg (1982)).

Finally, the issue of response of competi- tors to innovative products, in those cases where imitation is relatively easy, is raised by MacMillan, Ce Caffery and Van Wijk (1985). While in general their listing of relevant prod- uct characteristics resembles those of Rogers (1983) theirs is a market orientation (as op- posed to Rogers, who is product oriented), with particular emphasis on competitive aspects of both the product and the market.

Robertson and Gatignon (1986) provide the closest approach to a linkage between product innovation, product diffusion and marketing research. According to them, tech- nological innovations generally take the form of complex products, and frequently the adopting unit lacks the basic knowledge structure required to evaluate and make prod- uct judgements. The result is a considerable amount of uncertainty on the part of adopters and hence, difficulty in forecasting the diffu- sion rate for the innovations. In fact, Robert- son and Gatignon maintain it may even be necessary to educate potential customers so that they can be rendered capable of evaluat- ing the innovation and rendering a worthwhile

204 R.D. Rosenberg / Integrating strategy, indurtrial product rnnovation, marketing research

judgement which could serve as a basis for the diffusion rate prediction.

In view of Cooper’s findings (Cooper (1983)), it is surprising that none of these marketing strategy theorists deals with the implications of strategy and strategic manage- ment decision-making. That is, should we venture? Should we innovate? Why create and pioneer new technologies and new products? These questions, after all, are really what it’s all about.

4. Management decision issues and marketing research

In considering the realities of new product development, whether its posture is proactive or reactive, whether its goal is growth, market position, or product portfolio-oriented, and whether the Company’s strategic thrust is an- ticipatory, or exploratory - and particularly when it is innovational - management is con- fronted by a number of questions, the answers to which form the basis for determining oper- ational strategies and tactics. Product accep- tability in terms of technical performance specifications, need for company reputation for reliability in the areas of delivery and service support, degree of existing product cross-impact, potential for competit ion from new and similar products, and ultimate market share potential, have been suggested by Acito and Husted (1981), or Porter (1980) as neces- sary knowledge in the context of pursuit of new technologies, or decisions as to which emerging industry to enter. At best these are only strategic decision support areas, rather than basic strategic issues, particularly in the context of innovation.

Scott and Hassan (1987) in a very recent article which deals with the appropriateness of Rogers’s diffusion mode l presenf a deci- sion mode l which identifies two distinct inter- faces in the innovation decision process. The

first interface is between decision criteria such as costs, benefits, and risk. The second in- cludes sequential and interactive conceptual criteria which they term perception, assess- ment, and conceptualization. Significantly, while Scott and Hassan criticize the Rogers mode l as lacking in sufficient ‘m icro analyti- cal detail’ to serve as a good predictor of market behavior, a marketing research phase is not included in their ‘eclectic mode l’. The data and their interpretation which would provide the basis for the assessment function in the mode l are thus ignored or assumed as a given without specification.

MacMillan, Ce Caffery and Van W ijk (1985) present a series of questions that must be answered in the new product decision pro- cess. These questions relate to relevant prod- uct characteristics in a manner somewhat sim- ilar to that set forth by Rogers (1983). The difference between these question groups is that while Rogers sees the need to answer them in the context of diffusion and adop- tion, i.e., a user focus, MacMillan et al. see them in their competitive aspect. For exam- ple, to what degree will entry be visible to competitors and easily copied, and what is the degree of strategic attack on ma jor markets of competitors?

Reporting the results of an emp irical study which examined the link between product innovation strategy and performance in terms of ultimate product success in 122 firms, Cooper (1983) found conclusive evidence that innovative strategy and product success are closely associated. More important, high per- formance was characterized by a market ori- ented approach which involved identifying customer needs, and a proactive program to develop new product ideas and bring forth new products which not only have a differen- tial advantage over competitors’ offerings but also a definite impact on the users. Con- versely, poor performance was characterized by low expenditure for new product market research.

R.D. Rosenberg / Integrating strategy, indurtrwl product innouation, marketing research 205

It is therefore quite clear that industrial marketing research has a challenging role to play in industrial product innovation decision making (Cox and Dominguez (1979)), instead of being relegated to its more traditional con- clusive market measurement and demand or sales estimation functions. And, market ori- ented decisions issues such as those in the following list must therefore be added to Rogers’ product/user issues (Rogers (1983)) and the product/competition issues suggested by MacMillan et al. (1985):

(1) Does the new product-concept meet an apparent significant customer need?

(2) Are the product’s performance specifica- tions acceptable in terms of these needs?

(3) Is there a sufficient market for the new product?

(4) What market share is the new product likely to attain?

(5) How might the new product’s market share vary with price?

(6) What marketing investment would be required to achieve marketing goals?

(7) What existing products/brands of the innovating company would be affected by entry of the new product?

(8) What is the likelihood and projected speed of competitor response?

(9) How might sales of the new product be affected by entry of similar new and competitive product(s)?

(10) Would the new product fit in with the current product portfolio?

In addition, the following strategic issues must be considered in strategic product in- novation decision-making:

(1) Would the new product make a signifi- cant contribution towards achieving one or more corporate strategic goals?

(2) How much risk is involved in the new product development?

(3) Should the company decide to invest in

developing the new product, and if so, how much should be invested?

(4) How well is the new product development system functioning?

The informational, analytical, and interpre- tive inputs which can assist in answering these questions constitute an essential component of management’s strategic decision area.

5. Industrial marketing research and new prod- uct innovation

Unfortunately, there are a number of prob- lems involved in integrating industrial marketing research programs with the new product decision making process, and conse- quently, a need for better understanding the interrelatedness of their roles. These may be classified as (1) problems of utilization (2) problems of substance and approach, (3) problems of timing and uncertainty and (4) problems of integration with other functions.

Sommers (1983) states that while ‘market- ing research can and should be a vital part of the process of strategic marketing planning ( . . .) data gathered through research efforts is never translated into strategic information’. In fact, market research and market analysis may exist even in an organization ecology in which there are no general marketing objec- tives (Slate and Winter (1983)). And, notwithstanding that the principal source of new product ideas is often the market and not technological opportunity (Klinger (1977)), beyond screening studies, little industrial marketing research effort is expended to in- vestigate product feasibility, to assure fits with customer needs, and to test products in the market setting prior to commercialization (Cox and Dominguez (1979)). The failure of Gould as a result of entering a new industrial product on the basis of intuitive and experi- ential assessment of product/market fit, and without utilizing market research, was de-

206 R. D. Rosenberg / Integrating strategy, industrial product rnnountion, marketing research

scribed by Choffray and Lilien (1980). According to these researchers, market re- search would have easily disclosed product weaknesses which prevented successful entry.

There are also problems of substance and approach. For example, Scott and Keiser (1984) found that conventional quantitative methodologies used in new product market- ing tend to overstate the likelihood of adop- tion. They have suggested what they refer to as ‘judgemental modelling’, i.e., having indi- viduals make a large number of judgements on a number of product concepts, which per- mits relating controllable market variables more directly to prediction of market re- sponse.

Moreover, the literature on industrial marketing research is mainly either task- or activity-oriented, or else it is focused on re- search methodologies and statistical tech- niques. Hutt and Speh (1981), for example, discuss industrial marketing research largely in terms of forecasting or descriptive analysis. Dodge (1970), while characterizing the marketing research role in terms of data col- lection and analysis, refers not only to fact- gathering, but also to defining, interpreting and presenting problems required in the deci- sion process. These activity approaches were consolidated and elaborated by Cox and Dominguez (1979) in terms of analysis of sales, costs and profitability, market and in- dustry analysis, market and sales potential estimation, product decision research, input- output analysis, and forecasting. Others, such as Haas (1982), Hill (1973), Kinnear (1979), Klinger (1977), Reinmuth (1974), Rosenberg (1982), Acito and Husted (1981), Chakrabati and Morgan (1981), Crawford (1983), Cra- vens, Hills and Woodruff (1976), Webster (1979) and others deal almost entirely with statistical methodology and techniques.

Choffray and Lillien (1980) have provided a useful alternative to industrial market re- search approaches based primarily on identi- fying and quantifying unfilled known

customer needs. They propose a proactive, innovative product generation paradigm con- sisting of needs research, idea generation and idea testing. The general structure of market research as suggested by them, in addition to basic market analysis, includes segmentation (both macro and micro), investigation of the degree to which awareness of the innovation can be evoked, choice models both individual and group, and assessment of potential for long term growth.

The issues of uncertainty and proper tim- ing are critical to the product innovation pro- cess. First of all, even with major resource firms, innovative new products are frequently opportunity driven. Utilizing state of the art technologies, precludes the possibility of rely- ing on past experience (De Brentani and Drijge (1985)). In smaller, high-technology firms with revolutionary product innovations, the innovation decision area is even more uncertain and more complex. Surprisingly, in reviewing the product and market dimensions involved in the new product decision process, these same authors make virtually no refer- ence to market research and its potential con- tribution to the reduction of risk and uncer- tainty. Yet, even innovative products em- bodying unique features and which offer a good fit with customer needs may fail due to uncertain market conditions which might have been disclosed by adequate market research (Calantone and Cooper (1981)).

The timing of the marketing research early in the innovation and new product develop- ment process may also be an important fac- tor. This is particularly true in innovations which involve new buyers, where there is less certainty as to the more common organiza- tional buying and adoption processes, a lower degree of product differentiation and hence less competitive advantage, more dominant competitors with the new product, and per- ception of higher risk to the adopting organi- zation (More (1984)).

The integrating role of market analysis and

R. D. Rosenberg / Integrating strategy, industrial product mnountion, marketing research 207

market research with new product innovation is defined succinctly by Rexroad (1983) as providing a link between the technology base, customers, and competitors. Gupta (1986) contends that this integrative need is depen- dent on the degree to which the firm’s strategy is proactive and the extent of environmental uncertainty as related to consumers and their needs. technological dynamics, and the com- petition. Finally, Calantone and Cooper (1981) refer to the impact of a high degree of synergy between innovation and new product development, and market research.

The gap between industrial marketing re- search programs and marketing decisions spotlighted by Dodge (1970), particularly in the strategic context, is quite evident. In the area of strategic innovation and pioneering in developing new products, this gap is a critical one. It can be bridged by adopting a strategic approach, and by integrating the activities and methodologies involved in a marketing research program directed by well-defined re- search objectives, with the firm’s innovation and new product development strategies.

6. The role of marketing research in the cor- porate strategy - innovation development and diffusion interface

In their adaptation of Cooper’s ‘New prod- uct process model’, Cooper (1980) and Calantone and di Benedetto (1988) include the market research function in its relation to the relevant technical activities at various stages in the innovation development process from ‘ technological breakthrough’ to com- mercialization. They also emphasize the im- portance of the interface between research and development and marketing, though this emphasis is clearly on the need for overall coordination of technical and marketing ac- tivities and areas of responsibility. However, their mention of marketing research activities is only very general, i.e., limited to a few

generalized tasks such as customer need iden- tification, initial market analysis and estima- tion, and test marketing. In fact, the activity relevant to the ‘product development stage’ in their model is indicated merely as ‘market research’. More specific indication of types of marketing research techniques, and analytical methods is not presented, although Calantone and di Benedetto do stress their importance to ultimate product commercial success in terms of the quality of the market intelligence and marketing information mode available.

Assessment of the extant literature thus suggests the need for a framework providing a more detailed and, hopefully, more useable menu of marketing research techniques, one which relates them to marketing tasks and informational needs at various stages in de- veloping and commercializing new and innovative products. However, in terms of a broader strategic context, such a framework, albeit required and helpful, must go beyond an implicit focus simply on how to bring about successful commercialization of a specific new product.

What appears to be missing throughout the literature is reference to the interface between the activity stages in the development and commercialization of new products together and the special, perhaps even unique, needs at each stage for the information and analysis provided by marketing research, and their integration into the overall strategies of the firm if they are to contribute to the company’s growth and profitability. Unquestionably, marketing research must be assigned key roles in this interface.

Re-examination of fig. 1 shows that to develop a particular and appropriate corpo- rate thrust, and formulate overall strategic goals it is necessary first to identify inherent needs for specific market intelligence and in- formation. These needs then determine the relevant marketing research activities which can best supply the requisite strategic infor- mation base. Perhaps, more significant in de-

208 RD. Rosenberg / In@zgraring strategy, industrial product innooarion, markeiing research

Strategic thrust

Opportunity identification

Technology S”l-WYS

Technological mapping

Almanac-type Delphi

Company capability study

Strategic goals

Macro analysis

Market opportunity/ Strategic goal

integration

Market attractive- ness analysis

Competitor analysis Trend analysis Product/market

fit analysis Product portfolio

analysis Risk identifica-

tion and assessment

Product innovation and development

Micro analysis

Product form determination

Product suitability evaluation

Worthwhileness evaluation

Product

Concept genera- tion

Concept testing Concept screening Prototype testing

Market

Product/market model building

Minimum demand analysis

Cost benefit forecasting and analysis

Management decision to commercialize

Projection of results of commercialization

Determination of cost to enter and establish market

Cross impact analysis

Return-on- investment analysis

Break-even estimation

Generic market/ product position analysis

Innovation diffusion

Evaluation of diffusion progress

Comparison of actual diffusion rates with statistical innovation- diffusion models.

Key buyer studies

Fig. 2. Innovation stages, marketing research activities, and marketing research techniques.

Innovation adoption

Evaluation of innovation development process effectiveness

Innovation development process review and evaluation:

Technological Budgetary Decision process

scribing the marketing research-strategy in- terface is the suggestion in fig. 1 of an itera- tive process linking two principal strategic decision points. The first, which might be termed affirmation, marks the decision to proceed with the innovation development. The second is the decision to commercialize and this might be called confirmation. Each re- quires allocation of resources and commit- ment to a market. Each of these strategic decision areas is linked in an iterative process intended to ensure that the new product not only meets customer needs, and that it is directed to the appropriate target market(s), but also that it constitutes a satisfactory fit with the company’s product portfolio and will contribute to achieving its strategic goals. Marketing research with respect to, defining both initial and subsequent informational needs and then carrying out the activities

required to satisfy them can therefore be a major contributor to the strategic manage- ment of the firm, assisting in both micro and macro analysis.

A third significant interface with marketing research is in diffusion progress assessment and final post-commercialization evaluation of both adoption success and the entire in- novation-development process. The informa- tion flow in each of the stages feeds back to both overall strategy formulation and the product-specific commercialization tactical phases, redirecting marketing research activi- ties and assisting in restating marketing re- search goals.

A scheme uniting the innovation-develop- ment diffusion stages, marketing research ac- tivities of tasks, and relevant marketing re- search techniques with strategy and goal for- mulation is presented in fig. 2. It does not

R. D. Rosenberg / Integrating strategy. industrial product innouatmn, marketing research 209

pretend to represent a comprehensive listing of market research activities and/or tech- niques. Rather, it is intended to describe the relating of available marketing research meth- odologies to the strategic and innovation development-diffusion processes at their vari- ous stages.

Adoption of a posture which comprehends the state and dynamics of the technological environment is a necessary antecedent for identifying innovational opportunities. Tech- nological survey and/or mapping, the use cf Delphi to forecast technology change, along with company self-study of its strengths and weakness in terms of R&D, marketing, and production, capabilities, financial resources, and existing product line characteristics form a basis for sound technological opportunity identification.

Opportunities having been identified must then be examined on a macro-basis with respect to their potential for integration within the firm’s overall strategy and in terms of its mission and contributing to its goals. This involves assessing the attractiveness of the market(s) for the proposed innovation, identi- fying and assessing present and potential competitors, examining relevant user and environmental trends and evaluating the de- gree of fit between the new product and its proposed market(s). It also includes locating the new product and/or technology within the firm’s total product portfolio. However, while ostensibly these activities and/or tech- niques may appear to be focused on assessing potential for success, they serve the equally important function of identifying areas of possible risk and determining the degree of that risk.

The product innovation and development phase requires a micro approach to marketing research activity. Concept must be given form as a product with respect to appearance, function and performance attributes and, to the extent possible, service requirements. Marketing research must provide the infor-

mation base for making these determinations in terms of potential customers’ views as to suitability. Concept generation, testing, and screening along with prototype testing are appropriate techniques to perform these tasks. However, prior to authorizing the investment in the development of the new product and determining how much should be allocated in terms of physical, financial, and human resources, its economic worthwhileness must be considered. Techniques suggested for this purpose include product/market building, minimum demand analysis, and cost-benefit forecasting and analysis.

Management’s decision to launch the new product once developed must be based on projected results in the market place in terms of sales volume and growth rate, market share potential and profitability. Related is a pro- jection of the marketing costs involved in the product launch and in achieving market share goals. This also involves looking at possible impact on existing company and/or competi- tor alternative offerings as well as on the firm’s present and non-related product lines. Techniques for enabling these projections may include cross-impact analysis, R.O.I. analysis, break-even estimates, and product position analysis.

After launch, the company focus is on the progress of diffusion of the innovation using comparison of actual diffusion rates with stat- istical innovation-diffusion models. Key buyer studies may not only shed further and more descriptive information on diffusion progress, but they can also bring important feedback as to necessary product improve- ments, and other, heretofore, unknown uses and/or applications.

Once the innovation has apparently been successfully brought to the market and adopted, a final research activity should be evaluating the development decision, techni- cal product development, and the commer- cialization processes in terms of technologi- cal, organizational, and budgetary considera-

210 R.D. Rosenberg / Integratrng strategy, industrial product innovation, marketing research

tions. This assessment, together with updated forecasts or trends for future sales and the total market environment for the new prod- uct, also represent vital decision summary inputs for strategic planning and for future commercialization-innovation/development process decision-making.

7. Summary

This paper has attempted to examine basic informational needs and market research uses related to new industrial product innovation and development within three basic concep- tual frameworks: overall strategic planning; new product innovation, diffusion and adop- tion; and new product marketing decision- making all of which conceive of the innova- tion process as taking place in an environ- ment both dynamic and uncertain.

Treatment of industrial marketing research in the marketing literature tends to be focused either on techniques and their implementa- tion; on statistical tests and their validity, reliability, and efficiency; on model building and the purported uses of these models; and where function is the focus, on a narrow informational usage area. This paper has sought to place marketing marketing research techniques more directly within a sequential model integrating new product innovation and development with the strategic decision pro- cess, instead of positioning them as peripheral adjuncts, supplying information as appears necessary, or more likely only when called for specifically by management.

No assertion is intended that mere aware- ness of the issues in terms of critical inter- faces, or recognition of the potential for in- tegrating market research and its various ac- tivities into the overall strategic decis,ion pro- cess with respect to innovation and new prod- uct development, will overcome problems re-

lating to management’s inability and/or unwillingness to better utilize the contribu- tion offered by marketing research for better strategic decision-making. Inadequate utiliza- tion of available management tools to enable reaching sounder decisions, is an issue in it- self, one which extends beyond the scope of this paper. Hopefully, however, greater awareness of what is available in the way of marketing research techniques, not just on the part of marketing research practitioners, how they fit into the strategic management pro- cess, how they can assist in the integration of the various company functions involved in innovation and new product developments, and what they can do for the strategic deci- sion-maker, may serve to stimulate greater utilization - by managers charged with stra- tegic decision-making.

At best, results of use of the marketing research activities and techniques discussed may be imperfect, inadequate and subject to more than one interpretation. The question is then, do we have anything better, or would relying solely on intuitive decision-making produce better results with respect to in- novating and developing new products in a turbulent and uncertain environment.

While there has been some awareness of the important contribution market research can make in evolving overall company strategy, its principal strategic function has nevertheless been connected to individual de- cisions to innovate which arise as a result of corporate strategy already determined. This is even true in the case of new strategies devel- oped because of highly significant innova- tions which resulted from serendipity rather than from purposeful planning. Conse- quently, market research in the context of innovative new product development has as its greatest challenge marketing its own con- tribution to evaluating the future, and not merely continuing in its more accepted role of analyzing the possible effect of marketing variables on past or present performance.

R. D. Rosenberg / Integrating strategy, mdurtrial product innovation, marketmg research 211

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