The R&D-marketing interface and new product entry
strategy
Keywords
Marketing strategy, R&D,
Market entry,
New product development
Abstract
In this paper, we postulate that a
balanced input from R&D and
marketing improves the entry
strategy selection process. While
doing so, we focus our attention
on two dimensions: magnitude of
investment and timing of entry. On
the basis of the literature and
empirical studies, we have
developed a conceptual
framework and defined measures
for the desired level of the R&D/
marketing interface. This
framework contributes to the
literature on the R&D/marketing
interface by spelling out the
interaction between the R&D/
marketing interface and entry
strategy decision on new product
performance. It also adds to the
literature on new product
introduction by focusing on the
determinants of entry strategy and
their impact on new product
performance.
Marketing Intelligence &
Planning
20/2 [2002] 82±85
# MCB UP Limited
[ISSN 0263-4503]
[DOI 10.1108/02634500210418491]
[ 82 ]
Qing Wang
Warwick Business School, University of Warwick, Coventry, UK
Elisa Montaguti
Warwick Business School, University of Warwick, Coventry, UK
The R&D/marketing interface and its role in
the new product development (NPD) process
have been extensively studied during the
past 20 years. Researchers have examined the
underlying reasons for the success or failure
of NPD projects and the effect of R&D-
marketing integration on both project and
company-level success. A significant amount
of evidence has supported the notion that
R&D-marketing cooperation increases NPD
success (Griffin and Hauser, 1996; Cooper,
1983; 1984; Gupta et al., 1985; Souder and
Chakrabarti 1978).
A number of studies have identified
the main facets of R&D and marketing
cooperation in more successful firms
(cf. Griffin and Hauser, 1996). These include:
. analysing customer needs;
. generating and screening new ideas;
. developing new products according to
market needs;
. analysing customer requirements; and
. reviewing test market results.
However, the link between the R&D/
marketing interface, the specific tasks and
new product performance, remains unclear.
For instance, little is understood in terms of
how the level of the R&D/marketing
interface influences the formulation of an
effective new product entry strategy, and
how the entry strategy in turn affects the
performance of the new product in the
marketplace.
The objective of this paper is to suggest a
conceptual framework and research
propositions concerning the link between the
level of the R&D/marketing interface, the
entry strategy in terms of timing of entry and
the magnitude of investment, and the market
performance of a new product. The proposed
conceptual framework includes credibility
and influence as crucial factors affecting the
level of the R&D/marketing interface,
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extending beyond previous concepts
promoted in the literature, which is
dominated by the information processing
perspective.
The existing rationale
Cooper (1983, 1984) found, in his studies of
industrial firms, that projects and
management strategies balancing marketing
and R&D inputs have a greater percentage of
new product successes and greater
percentage of their sales coming from new
products. Gupta et al. (1985) revealed that
lack of communication was the number one
barrier to achieving integration among
marketing and R&D. Souder and Chakrabarti
(1978) researched both consumer and
industrial firms, concluding that interaction,
integration and information exchange
significantly differentiate between technical
and commercial success and failure. They
suggested that successful NPD outcomes
require the participation of each function,
particularly during the early stages of the
process.
This research stream considers the R&D/
marketing interface as an information-
processing sub-system of the organisation,
designed to reduce customer, market and
technology uncertainty in the NPD process
(Moeneart and Souder, 1990). It is consistent
with the resource-dependence perspective,
which considers information as an important
resource and argues that marketing and R&D
depend on each other for necessary resources
to perform their activities. A high level of
interdependence between R&D and
marketing, when performing their functional
tasks, is particularly critical for novel and
complex NPD projects (Emerson, 1962).
However, these studies provide only a
partial picture of the R&D/marketing
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Qing Wang and
Elisa Montaguti
The R&D-marketing interface
and new product entry
strategy
Marketing Intelligence &
Planning
20/2 [2002] 82±85
interface process. The amount of
communication and information flow alone,
cannot define the optimal ± or desired ± level
of the R&D/marketing interface. This is
because the nature of information
interpretation and resource utilisation is
idiosyncratic and is conditioned by
functional capabilities and political
processes of influence during the NPD
process. A recent study (Atuahene-Gima and
Evangelista, 2000) found that a high level of
interaction between marketing and R&D did
not result in a high level of appreciation of
each other's contribution, neither did it
result in a positive evaluation of each other's
influence in the NPD process. This suggests
that high communication intensity between
R&D and marketing does not necessarily
reduce the level of market uncertainty
perceived by marketing due to the lack of
credibility of R&D information.
Consequently, this lack of trust of R&D
information is unlikely to lead to increased
confidence of the marketing personnel when
making important decisions such as new
product entry strategy.
In addition to the issue of credibility, the
extent to which information offered by
participants in the NPD process leads to
changes in behaviour or action, is also
dependent on the degree of influence one
party has on the other. Frost and Egri (1991)
suggested that participation and
communication alone are unlikely to
enhance one's impact on the outcomes of
decision making without an accompanying
influence. Here, participation refers to the
extent to which team members engage in
information sharing or communication in
the NPD process (McQuiston and Dickson,
1991). Influence on the other hand, is defined
as the degree to which information offered by
participants in the NPD process leads to
changes in behaviour, attitudes and/or
actions of the recipients (Kohli, 1989).
Influence is germane in NPD, because NPD
is about risk, ambiguity and uncertainty, and
is replete with functional conflicts caused by
differences in perceptions and self-interests.
Studies have shown that R&D and marketing
tend to have different perceptions and
interpretations of the characteristics of a
new product, particularly in terms of its
technical novelty and the extent to which it
affects the established consumption patterns.
For example, Wang and von Tunzelmann
(1997) found that marketing perceives a more
critical role of a new product for positioning
in a market segment than R&D. Marketing
also perceives a higher degree of
customisation of individual products than
R&D. The different perceptions derive from
the inherent differences of R&D and
marketing personnel, in terms of their
personality, cultural background, time
orientation, ambiguity tolerance and level of
detail of language used (Griffin and Hauser,
1996).
The marketing/R&D interface theory
(Griffin and Hauser, 1996; Song and Dyer,
1995; Gupta et al., 1985), however, proposes
that it is through the R&D/marketing
interface that a firm can hope to smooth the
difference in R&D's and marketing's
perceptions while exploiting the
complementarity between marketing and
R&D capabilities (Dutta et al., 1999).
The proposed relationship between the
interface and new product performance,
however, tends to disregard the role played
by the entry strategy on new product success.
Researchers in marketing have stressed the
critical importance of introduction strategies
for innovative products (Shankar, 1999;
Green et al., 1995; Gatignon et al., 1990). In
their study of the pharmaceutical industry,
while considering a multiple entry strategy
component (e.g. product quality and
magnitude of investment), Gatignon et al.
(1990) showed that market characteristics do
affect the entry strategy selection process. In
this vein Green et al. (1995) developed and
tested an integrated framework focusing on
the antecedents of entry strategy and its
impact on performance. Their empirical
analysis revealed the critical role of entry
strategy on new product performance.
However, it failed to identify the role of
structural characteristics on the entry
strategy selection process. More recently,
Shankar (1999) extended prior work while
jointly studying the determinants of both the
introduction and incumbent response
strategies. His results show that new product
introduction is influenced by the
incumbent's reaction strategy. Despite these
important efforts, research in this area is still
limited and further study is needed to
understand the entry strategy selection
process, as well as the factors affecting the
entry strategy effectiveness.
In this paper, we postulate that a balanced
input from R&D and marketing improves the
entry strategy selection process. While doing
so, we focus our attention on two dimensions:
magnitude of investment and timing of entry.
On the basis of the literature and empirical
studies, we have developed a conceptual
framework and define measures for the
desired level of the R&D/marketing
interface.
[ 83 ]
Qing Wang and
Elisa Montaguti
The R&D-marketing interface
and new product entry
strategy
Marketing Intelligence &
Planning
20/2 [2002] 82±85
[ 84 ]
The conceptual framework
Unlike the link between the R&D/marketing
interface and NPD success, which is well
established in the literature, the link between
the R&D/marketing interface and the new
product entry strategy is much less
understood. This is in part due to the fact that
the R&D/marketing interface literature
tends to over-emphasise the information
sharing aspect of NPD process, ignoring the
political processes that are central to the
strategic decision-making processes of firms.
In a study of 12 new drug development
projects (Wang, 1997), the R&D and
marketing functions were found to have
collaborated in accomplishing tasks in three
areas. These were:
1 conceptual development ± identifying and
evaluating relevant information;
2 strategic development ± market
positioning and product differentiation;
and
3 implementation ± internal and external
communication.
The political nature of the R&D/marketing
interface is stronger in the area of strategic
development. Three factors are attributable
to this finding:
1 R&D and marketing attempt to influence
the process of strategic development,
entry strategy in particular, as they have
greater stake in its outcomes and face
greater personal or professional risks.
2 There exists a power imbalance between
R&D and marketing, conditioned by
organisational contexts, such as a
technology-driven culture, which is likely
to lead one party to use influence as
countervailing power.
3 There exist inherent differences between
R&D and marketing personnel, in terms of
their personality, cultural background
and language. These differences lead to
different perceptions and interpretations
Figure 1
The link between the R&D/marketing interface, the new product entry strategy and
performance
of the two parties regarding the
characteristics of the new product, and
hence the appropriate entry strategy
for it.
Communication intensity, information
credibility and relative influence, create the
actual level of the R&D/marketing interface
(see Figure 1). The desired level of the R&D/
marketing interface is defined as a state of
the R&D/marketing interface when:
. communication intensity is high;
. information credibility is high for both
parties; and
. influence is mutual and consistent with
the level of information credibility.
The desired level of the R&D/marketing
interface may differ from the actual level
characterising a firm. More specifically, a
strong mis-match between what is desired
and what is developed reduces a firm's
ability to predict market response to a new
product (Li and Calantone, 1998). As a result,
the level of confidence on the effectiveness of
marketing variables is diminished and the
magnitude of the investment at entry is lower
(Shankar, 1999).
In a similar vein, a better understanding of
customer needs helps determine a firm's
entry timing. In particular, when the market
is particularly responsive to new product
performance and the difference between the
desired and actual levels of R&D/marketing
interface is marginal, then a firm should
enter the market quickly and with a
high-performance product. By contrast, when
the difference is significant, then the firm
should delay its entry (Bayus et al.,
forthcoming). This means that by optimising
the R&D and marketing interfaces, firms can
formulate better strategies both in terms of
resource allocation and entry timing.
This framework contributes to the
literature on the R&D/marketing interface
by spelling out the interaction between the
R&D/marketing interface and entry strategy
Qing Wang and
Elisa Montaguti
The R&D-marketing interface
and new product entry
strategy
Marketing Intelligence &
Planning
20/2 [2002] 82±85
decision on new product performance. It also
adds to the literature on new product
introduction by focusing on the determinants
of entry strategy and their impact on new
product performance.
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