Developing new food products that deliver value to the customer requires integrated efforts between different functional units. Cross-functional integration between the research and development (R&D) and marketing units is particularly crucial in innovation to meet emerging market needs and trends. In fact, experimental evidence indicates that cross-functional cooperation between R&D and marketing is a key success factor in new product development. In reality, however, most marketing and R&D departments operate as separate, silo-like units, with the “technical vs commercial” philosophy widening the gap between them.
Innovation and new product development (NPD) are key drivers of growth in the food industry. Successful companies thrive by having successful products in the marketplace. Consumer preferences and consumer trends are an equally important market driver. This is because people typically have socio-cultural, physiological, and even emotional associations with the foods and beverages that they consume. Furthermore, new technologies, increased availability of information, and changing lifestyles have spurred greater consumer awareness, leading to a rapidly evolving consumer and a fast-moving market.
Marketing expenditures by food and personal care products manufacturers now outpace R&D expenditures. A 2006 survey by Nutrition Business Journal revealed that food and personal care products manufacturers spend 9.2% of revenue on marketing, compared to only 4.4% of revenue on scientific research. An understanding of the consumer trends and market landscape is therefore critical knowledge for innovation and new product development.
Historically, tradespeople embodied the integration of R&D and marketing. For instance, the baker knew where to buy the flour and other ingredients for baking bread; customers came to him and asked for different kinds of bread, likely stating their preferences. Research, product development, and marketing were all integrated into one. With the growth of industry and businesses, there was the need for specialization and targeted development of expertise in specific functional areas. This inadvertently led to a separation between marketing and R&D.
Organizational management experts like Ernst and colleagues (2010) and Song and Parry (1997) have defined three distinct phases of the NPD process: 1) concept development; 2) product development; and 3) implementation. The concept development stage involves the generation and refinement of ideas, market and trend analysis, opportunity assessment, and preparation of the product concept. The second stage—product development—entails technical development, prototype testing, and test marketing. The final stage—implementation—is heavily oriented towards marketing-related activities such as market segmentation, product positioning, product launch, and sales training. R&D, however, plays an indispensable role in technical product support.
Specific, concerted activities from both the R&D and marketing functions constitute an integral part of all three phases of the NPD process.
The R&D function is primarily concerned with scientific and technical characteristics of a product, such as the product composition, product quality, raw materials, processability and stability, regulatory constraints, potential for modification or extension, and other issues. R&D is thus typically focused on the “technical identity” of a product.
The marketing function, in contrast, is usually concerned with the commercial aspects of the product, such as market and industry landscape, pricing and profitability, value identification and maximization, differentiation and positioning, customer characteristics, and other market-related issues. Marketing therefore is typically focused on the “market identity” of the product.
With such divergent foci, cross-functional cooperation between these two has to be an active, targeted process.
Two approaches have been proposed for effective cross-functional cooperation. Kahn (1996) proposes an attitudinal approach, which is an affective, volitional process where the two groups have a common vision and a mutual understanding in order to achieve collective goals. The other approach proposed by Song and Parry (1992, 1997) is behavioral, whereby specific behaviors such as communication, interaction, and cooperation between the two groups are put into practice.
Through attitudinal or behavioral cross-functional cooperation, the R&D and marketing functions can bridge the technical-commercial gap, thereby enhancing the innovation and NPD process. A seamless interface between the R&D and marketing functions is essential in transforming a product from simply a collection of characteristics and features (technical identity) to an integrated product with a market identity that maximizes benefits and delivers value to the customer.
Lorraine Niba, Ph.D., a Professional Member of IFT, is Marketing Manager-Soluble Fiber Global , National Starch Food Innovation, Bridgewater, NJ 08807 ( [email protected] ).
Ernst, H., Hoyer, W.D. and Rubsaamen, C. 2010. Sales, marketing and R&D cooperation across the new product development Stages: implications for success. J. Mktg. 74(5): 80-92.
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Song, X.M. and Parry, M.E. 1992. The R&D-Marketing interaction in Japanese high technology firms. J. Prod. Innov. Mgmt. 9(2): 91-112.
Song, X.M. and Parry, M.E. 1997. The determinants of Japanese new product successes. J. Mktg. Res. 34(1): 64-76.