oogles Chief Economist Hal Varian coined the phrase marketing is the new finance.

Varian foresaw great advances in ways to satisfy peoples needs, better matches between buyers and sellers, and a more robust advertising environment due to the availability of vast quantifies of rich, real-time, highly available big data. His predictions today ring truer than ever. Now, the information-rich environment enabled by the net is transforming marketing into something more. Specifically, marketing is becoming the new research and development (R&D). Marketers now have immediate access to consumer behaviors and reactions across multiple channels and media. This empowers them to take a leadership role in determining consumer preferences, meeting customer needs, and helping match supply with demand. In other words, driving the business.

Access to consumer behavior across multiple channels and media

Five years later, the information-rich environment enabled by the net is transforming marketing into something more. Specifically, marketing is becoming the new research and development (R&D). Marketers now have immediate access to consumer behaviors and reactions across multiple channels and media. This empowers them to take a leadership role in determining consumer preferences, meeting customer needs, and helping match supply with demand. In other words, driving the business. In the past, consumer preferences were largely determined through marketing research tools such as focus groups, surveys, and phone interviews. For the vast majority of marketers, gone are the days when groups of innocents were observed behind two-way mirrors, holding forth about credit card or car preferences. In light of the rise of the internet and social media, these types of tools are woefully inept at uncovering the deep knowledge of consumers that organizations need today. Nor can these methods gather information at the speed and volumes required to outmaneuver competitors in todays business world. Rapidly becoming outdated, too, are traditional methods of matching supply with demand. Traditionally, businesses have looked to their ERP and manufacturing systems to determine which inventory is moving and apply just in time manufacturing processes to meet customer needs.

At issue with this approach for marketers: it takes time for enough data to build up to make informed decisions, and typically only a handful of variables are factored in, such as where products are being purchased and in what quantities.

Marketing has become a pivotal business driver

Marketing was typically second in line to receive this supply and demand information, resulting in a time and information gap. They then designed and delivered clever creative campaigns to audiences roughly segmented by demographics or geographies. Due to the growth of mobile, social, addressable TV and other channels and massive amounts of behavioral data pouring in, marketing has become a pivotal business driver, in ways that are more powerful, scalable, fast, and insightful than a years worth of customer orders or multiple focus groups. In organizations that have adopted marketing management platforms capable of predictive data modeling, it is possible to have an immediate read on consumers and their preferences. When marketers understand consumer behaviors through actionable data, they can see gaps in markets, improvements to upcoming product introductions, pathways toward competitive differentiators, and better ways to express their brands.

Marketing executives contributions can take the form of more informed inventory replenishment, new product development, and more. For example, company managers can know right away if the Ford Mustang in black is outselling other colors. They might even be able to assume through in-depth, real-time modeling that the black version is selling in part due to a video showcasing a black Mustang that is being shown on specific websites. Company executives could quickly decide to manufacture more black Mustangs. Or, they might create a video highlighting a white Mustang if white models are overstocked.

In either case, it is possible to see the outcome immediately. Think of it as A/B or multivariate testingtechniques typically applied to website designs to gauge consumer preferences in terms of colors, content, and promotionsapplied to the entire business. The result is the ability to tie functional areas into one co-ordinated organism that can continually respond and improve, based on data and real-time analysis from marketing. It takes cultural change and leadership, because companies must break down the silos of information across departments and channels, but this is the new frontier. Recent technological innovations have made it possible to use automated systems and models to juggle many variables to make quick, smart decisions. For today, marketers need to understand that the power to improve the business through informed insights is easily within reach. Marketers have the answers to questions such as: Should we be selling more widgets, or focusing on our service business? Is red the new black? How do our customers want us to communicate with them? Marketing, if informed with data insights and equipped with the ability to share information across the organization, is now in the catbird seat in terms of generating business value.

http://econsultancy.com/in/blog/9919-marketing-is-becoming-the-new-r-d

Why cant marketing and research and development play nice? Both functions are essential to developing successful new products. But the two departments dont get along nearly as well as senior management thinks.
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See the complete Business Insight report.

How big is the gap? Huge. According to a survey we conducted, some 69% of senior managers described relations between marketing and R&D as collegial, but only 34% of mid-level managers saw the relationship that way.

When we asked staff in each department what they thought about the staff in the other, the comments were even more revealing. R&D employees complained that marketers give them poor data, that the marketing department is too insistent about certain product features or benefits, and that marketers are mainly useful in developing launch plans rather than in actually coming up with new products. Marketing, meanwhile, had its own beefs: R&D doesnt include marketers early enough in the productdevelopment process; R&D doesnt understand marketing, or what it brings to the process; R&D takes the credit when a product succeeds, and blames marketing if a product doesnt sell. Such complaints are hallmarks of a dysfunctional productdevelopment process. Both marketing and R&D have indispensable roles to play, but neither can reach its full potential without the other. Companies where such divides exist are more likely to miss out on the kinds of breakthrough products and market-research discoveries that can drive growth and profits for years. In what follows, we share our strategies for getting both sides to engage more productively from the earliest stages of a products development.
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Ross MacDonald

1. Make sure everybody recognizes the value that each department brings to the processand how one side complements the other.

While R&D tends to focus on technical issues and hard data, marketing zeroes in on what customers want and how much they will pay. In essence, R&D staff should be masters of the art of the possible, while marketers should master the art of the valuable, or knowing what people want and will pay for. Marketers are seldom equipped to solve technical problems. Similarly, R&D often cant see the difference between what a product can do and what its potential customers actually want it to do. Even in cases where developers engage directly with customers, the ability to ask the right questions and generate reliable, robust market insights is a complex skill honed over years. One can discover many things that are technically possible, yet may have little or no value. On the other hand, a company may identify a valuable customer need but lack the technical know-how to satisfy it. The point is not that R&D cant learn to think a bit like marketers. They should be encouraged to do so. But dont

expect either side to perform the others tasks exceptionally well. To boost mutual awareness, a number of companies we interviewed require their R&D professionals to articulate and, if possible, quantify the value of their work in terms of what it means to the customer. This often brings R&D and marketers together early in a project. Some companies also encourage or even require marketers to be technically proficient enough to be partners with R&D.
Culture Clash

The Situation: Different priorities and ways of thinking often create gaps in understanding between marketing and researchanddevelopment staff.

The Problem: Such gaps often mean that one side dominates the development of new products, giving short shrift to the other. When
marketing dominates, R&D can be under too much pressure to hit on breakthrough ideas. When R&D dominates, new products can lack marketable strengths.

The Solution: Companies should help both sides learn to appreciate each others strengths, and encourage them to work closely
together at the earliest stages of product development.

2. If one department or the other is dominating a companys process for developing new products, bring the two more into balance.

Its surprising how often one side is in the drivers seat. At technology-based companies, R&D tends to hold the upper hand. At consumer-goods makers, its marketing. Each situation has its disadvantages. When marketing has too much control, it stifles the creativity of engineers, who often feel they dont have the time or backing to think of things beyond what the marketers want. At one consumer-goods company, both marketing and R&D professionals agreed that because of an incessant drive to follow predetermined launch dates dates that were typically dictated by marketingproduct advances were only incremental. R&D had to forgo technical opportunities because it was so often under deadline pressure.

Conversely, where R&D is king, marketing often is called in only at the end of the product-development process, when its time to develop a launch plan. At one company were familiar with, a company planned a major product launch after nine of its competitors were already selling a very similar product. The company conceded that its product had no advantage over the others. This company clearly should have gotten marketing involved in the development process much earlier.

One of the best ways to bring marketing and R&D more into balance is to create cross-functional teams to discover unmet needs of current or potential customers. A collaborative approach helps both sides experience each others contributions, and ensures both are at the table from the beginning.
3. Have the two sides speak a common language.

This is crucial for the departments to work together. They need to be able to communicate with each other,

especially when it comes to understanding how a potential product relates to a customer need. At a major oil company where the marketing staff was often put off by highly technical reports from R&D, senior management began requiring R&D to base its reports for marketing and sales on how the proposed new technologies would specifically help customers. A cover sheet for all technical briefings was created that required the speaker to describe all of the critical points in laymans terms. A lot of researchers at the company said they found this challenging at first, but over time it improved their ability to collaborate with colleagues in other functions, not just marketing. The approach helped others across the company better understand the companys underlying technologies.
4. Get out of your silosup to a point.

The natural inclination for either department may be to stay inside ones silo. But that is counterproductive. For instance, when R&D teams are excited about new technological opportunities, they should reach out to other business units and let them know what theyre working on. They should be advocates for the direction they think a product or technology should take.
For Further Reading
See these related articles from MIT Sloan Management Review

Memo to Marketing
Peter Lorange (Winter 2005) Marketing research must become a model for innovation rather than support the mere incremental administration of brands.

http://sloanreview.mit.edu/x/46205 Managing Technology as a Business Strategy

Tamara J. Erickson, John F. Magee, Philip A. Roussel and Kamal N. Saad (Spring 1990) By managing technology effectively, executives can ensure that their companys R&D program focuses on developing technologies that support its product and marketing strategy.

http://sloanreview.mit.edu/x/3138

Hurdle the Cross-Functional Barriers to Strategic Change

Michael D. Hutt, Beth A. Walker and Gary L. Frankwick (Spring 1995) The authors track a strategic decision in a Fortune 500 corporation, identify political obstacles that overshadowed the process, and highlight turning points in the strategys direction.

http://sloanreview.mit.edu/x/3632 A Plan to Invent the Marketing We Need Today

Yoram (Jerry) Wind (Summer 2008) The discipline of marketing hasnt kept up with the rapid changes facing 21st-century businesses. Here are seven strategies that can make marketing both relevant and rigorous in todays world.

http://sloanreview.mit.edu/x/49411 What People Want (and How to Predict It)

Thomas H. Davenport and Jeanne G. Harris (Winter 2009) Companies now have unprecedented access to data and sophisticated technology that can inform decisions as never before. How successful are they at helping forecast what customers want to watch, listen to and buy?

http://sloanreview.mit.edu/x/50207

However, they shouldnt become solely focused on fulfilling the wishes of the different business units, which are generally focused on what they can sell today and in the relatively near future. Because of the focus on quarterly results, it is difficult for most business units to devote substantial resources to opportunities that might not blossom for three or more years. The challenge thus is building a portfolio that supports the incremental needs of current businesses, as well as long-term growth opportunities.
5. Focus on the consumer.

When both sides are encouraged to think in terms of what customers want, it helps clarify thinking about product designs and how resources should be allocated. When engagement and thinking in terms of customer needs become routine, everyone has a common vision for what is being developed and why. Focusing on the customer sounds obvious, but doing it well is a challenge. Simply listening to customers is not enough. The ability to ask questions, observe and engage with customers to generate reliable, robust marketing insights is a trained skill learned through experience.

Still, direct interaction with current and potential customers is important for marketing folks and R&D alike. So, let engineers spend time in the field with the customers. If the company sells gasoline, let them work at a filling station. There are likely to be ways of applying technologies or products to problems that only occur to people steeped in the technical capabilities of your company. To develop its Classmate PC, a low-cost laptop for schoolchildren in developing countries,Intel Corp. INTC -0.19% , of Santa Clara, Calif., has sent engineers and other staff to schools in Asia, Africa, Latin America and the Middle East. Classroom observations have helped shape design features: The laptops are sturdy, with nonslip surfaces, and allow students to write on an electronic tablet. Studying and being responsive to local cultures and support systems for the schools also helps the company market the product. Deeper involvement with customers can help marketing in many areas. At Baxter International Inc. Inc., BAX -1.84% the Deerfield, Ill., medical-supply company, marketing staff performed an in-depth study of kidney-dialysis care in the field, with patients, doctors, nurses and technicians, examining all aspects of the process. Over the course of the study, marketers identified some 30 possible new product and service opportunities. In collaboration with R&D, some of those ideas have been brought to market already. Other ideas generated by the project are still in development, including pilot projects in various markets around the world.

When marketing and R&D together are truly focused on understanding and acting on customer needs, it makes both of their jobs easier and their results more productive. A few years ago, General Electric Co. GE +3.53% of Fairfield, Conn., started a line of kitchen appliances called the Caf Series, for people who love to cook and entertain. Marketing helped develop the concept of kitchen as caf; industrial designers and other technical staff gave the appliances refrigerators, stoves, dishwashers and ovensa look and features that incorporated the caf concept. Both R&D and marketing spent time with consumers cooking in their kitchens and taking notes. Companies most capable of bringing R&D and marketing together around what really matters to customers will build a powerful competitive weapon. Its not easy. But if it were, thered be no money in it.
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