How to increase the sales of new products in the marketplace by 12-18%
Looking for a way to increase the sales of new products?
A new study has been published looking the effectiveness of R&D and marketing cooperation as compared to R&D and sales cooperation for new-product development and sales under different market and organisational circumstances in business-to-business settings.
The study, conducted by four universities in Germany, found that in business to business sales, new product development could have between a 12 to 18% advantage in the marketplace if the product R&D function works with the sales or the marketing function in the run up to the products launch.
Up to now, previous research has mainly looked at the R&D function working with the sales and marketing teams as if these often very separate roles in an organisation were one unit. However, these functions have quite different roles and perspectives that need to be taken into account. Often work between these functions can be expensive and not properly focused.
The researchers looked at what the sales and the marketing functions do and how they could bring added advantage from working with the R&D team. What they found what that the advantage of R&D collaboration with either the sales or the marketing function is dependent on the strategies the organisation is following.
Sales teams and R&D
The sales team’s role is to sell the company’s product and work with customers to achieve good outcomes for both the company and the customer.
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The sales team is usually working with the customer most of the time. Sales isn’t a one-way thing either – relationships are formed and intelligence is gathered about the customer and frequently about rivals and the market conditions as well.
The researchers found that since the sales team knows what is happening on the ground, they usually have a very good idea as to what is happening in the market. Where there is turbulence, the sales team can feed back to the research and development function as to exactly what is needed by their customers. This can feed back into product development.
The researchers found that, “Results from a series of simulations on the basis of our model, show that, for example, industrial firms relying on R&D–sales cooperation gain a relative new-product advantage 17% higher than firms who do not leverage sales and R&D cooperation.”
This rises to an 18% improvement in sales where the company has a differentiation strategy in place and the sales and R&D people work together. In essence a differentiation strategy is where a firm aims to develop and market unique products for different customer segments.
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Therefore, if a company follows a differentiation strategy focusing on value creation for the customer, R&D requires precise information on customer wishes and needs, which sales, if they keep in touch with their customer, should know.
Marketing and R&D
The marketing function can often have little or no direct customer contact, but rather focuses on trends in the marketplace. Marketing functions often have a medium to long term strategic view, where the sales team tends to live in the present. As such where there is high market turbulence the marketing team will often not have much luck in helping plan for a new product.
Where cost leadership is the company’s strategy for a product then cooperation between the marketing and research and development teams could yield a 12% advantage in the marketplace. Cost leadership describes a way to establish a competitive advantage by achieving the lowest cost of operation in the industry.
Conclusions – horses for courses
To Increase the sales of new products as shown above, the advantage of sales or marketing collaboration with the R&D function largely depends on the strategies being followed by the organisation. Having said that, organisations that do not have healthy collaboration between the sales, marketing and R&D functions are likely to be at a competitive disadvantage.
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