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Marketing Innovative
Software Products
ANALYSIS & RECOMMENDATIONS BASED ON
COMPANIES OF THE GERMAN SOFTWARE-CLUSTER
Dace Shafi (Hochschule Darmstadt)
1
Executive Summary
This study is concerned with ways how innovative software companies can increase their
ability to bring software products to market and thus secure and increase their competitive
advantage and gain greater market share. The data were collected from the enterprises in
the German Software-Cluster (www.software-cluster.org), which are highly innovative and
have joined their research and development efforts in large cooperative projects with the aim
of developing the next generation of business software.
This study follows three main objectives:

To assess the opinion of companies of the Software-Cluster regarding the changed
market environment due to new trends in the IT industry (e.g. Internet of Things,
Internet of Services, in-memory computing, and big data). The results show that a
lack of rich knowledge regarding new IT trends on the customer-side has led to an
increased know-how gap between software vendors and buyers where early
customer integration in product development is increasingly important.

To investigate determinants in innovation marketing. The main challenges and
success factors are: communication of the added value, customer integration,
clarification of complex terms, short innovation cycles, finding case studies, and the
correct estimation of innovation potentials. The main reasons for product market
failures are: insufficient presentations of the added business values, wrong estimation
of market penetration, and a wide gap between research and market.

To examine the levels of market orientation and innovation-related capabilities in
the Software-Cluster companies. The results indicate that they are highly innovative
and acknowledge the role of market orientation as an important resource of the
company. However, regarding marketing capability and marketing practice in general,
there is room for improvement.
Several recommendations are derived from the results obtained in this study regarding
innovation-related capabilities, market orientation, and innovation communication for the
software companies and are elaborated in detail in the study. The main practical implications
are that software vendors must involve marketing at the stage where technological ideas are
generated, pay increased attention to the product’s design and usability, and increase the
speed of their innovation cycles. Furthermore, they have to ensure knowledge transfer from
vendor to customer, increase their technology foresight, place high value on customer cocreation, and make their marketing instruments more social, interactive, and user-driven.
2
Contents
Executive Summary ................................................................................................................. 2 1 Objectives and Methodology of this Study ........................................................................ 5 2 Results of the Survey ........................................................................................................ 7 3 2.1 Key Informants ........................................................................................................... 7 2.2 Software Market Environment .................................................................................... 8 2.3 Determinants in Innovation Marketing ....................................................................... 9 2.4 Resource and Capability Analysis ........................................................................... 10 Recommendations for Marketing Innovative Software Products .................................... 13 3.1 General Recommendations ..................................................................................... 13 3.2 Innovation-related Capabilities ................................................................................. 14 3.3 Market Orientation ................................................................................................... 15 3.4 Innovation Communication ...................................................................................... 16 4 Overview of the Recommenations .................................................................................. 18 5 Appendix ......................................................................................................................... 19 5.1 Detailed Results of Resource and Capability Analysis ............................................ 19 5.2 References............................................................................................................... 23 3
Figures
Figure 1: Existence of marketing or sales department ............................................................. 7 Figure 2: Employees in marketing department ......................................................................... 7 Figure 3: Marketing budget in the last financial year (in percentage of net sales) ................... 7 Figure 4: Revenue in the last financial year ............................................................................. 7 Figure 5: Changed market environment due to new IT trends ................................................. 8 Figure 6: Research framework for resource and capability analysis ...................................... 11 Figure 7: Recommendations for the software enterprises ...................................................... 18 Figure 8: Innovation capability................................................................................................ 19 Figure 9: Opportunity exploration capability ........................................................................... 19 Figure 10: Marketing capability .............................................................................................. 20 Figure 11: Market orientation ................................................................................................. 21 Figure 12: Market performance .............................................................................................. 22 Tables
Table 1: Determinants in innovation marketing ...................................................................... 10 Table 2: Means and standard deviations for research measures .......................................... 12 Table 3: Product innovation.................................................................................................... 22 4
1 Objectives and Methodology of this Study
Software vendors face increasing challenges when developing and launching their innovative
products (Shafi, 2013, p. 4). This is a result of the fast pace of technological change,
globalization, saturation trends in markets, increasing customer demands (Dang, Mortara,
Thomson, & Minshall, 2011, p. 52; Filiaster, 2007, pp. 1, 2; Steinhoff & Trommsdorff, 2011, p.
105) and the fact that the market environment for software enterprises in general has
become even more complex over the past few years (due to new technological
developments in IT, e.g., Internet of Things, Internet of Services, in-memory computing, and
big data) (Shafi, 2013, p. 4).
As it is essential for a software company to constantly secure and increase the competitive
advantage by bringing new products and services to the market and gain what is called the
“competitive innovation advantage” (Baaken, 2010, p. 3; Kliche, 1991, p. 51; Nevens,
Summe, & Uttal, 1990, pp. 5, 8; Steinhoff & Trommsdorff, 2011, p. 106) the purpose of this
study was to develop recommendations for software companies regarding the marketing of
innovative software products.
These recommendations were drawn from the analysis of:

the current software market environment,

determinants in innovation marketing (challenges, success factors, and reasons for
product market failures), and

resources and functional capabilities within software companies.
The data were collected from 23 enterprises in the Software-Cluster, which represent highly
innovative software companies that are cooperating in large joint research and development
projects with the aim of developing the trend-setting enterprise software of the future and are
current and future marketers of the results of these cooperative research activities. The data
were collected via an e-mail questionnaire which was sent out on November 5, 20121 to the
marketing executives of the Software-Cluster companies. The 17 usable questionnaires that
were returned yielded a response rate of 74%. This is quite a satisfactory result considering
that the response rate for online surveys is usually between 2-20% (Hofte-Frankhauser &
Wälty, 2011, p. 70).
Due to the relatively small number of respondents the results regarding the mean scores of
market orientation and innovation-related capabilities are not applicable to the whole German
1
Questionnaire can be obtained at [email protected].
5
software industry. However, since these companies are highly innovative, include large as
well as small and medium-sized enterprises and are increasingly dealing with the marketing
of innovative software products in the age of new IT trends, they can serve as reference
point regarding mean score of, e.g., innovation capability for other software companies.
Furthermore, they offer helpful insights regarding changed software market environment and
determinants in innovation marketing. Thus, recommendations developed in this study are
relevant for software enterprises in general that are currently facing the challenge of
successfully marketing their innovative products.
Due to the fact that innovation diffusion is a very complex process with a large variety of
influencing factors and many still uncertain and unknown determinants, the suggestions
developed in this study serve only as guidelines. These guidelines are flexible and software
companies must evaluate whether a particular suggestion is relevant and achievable
individually. All that considered, implementation of these suggestions will likely lead to the
development of software products that are in line with actual practice and increase the
likelihood of successfully bringing them to market.
6
2 Results of the Survey
2.1
Key Informants
In this study marketing and sales managers in the Software-Cluster enterprises were used as
key informants. However, several responses also came from the top-level managers.
As the figures below show, the great majority of the companies in the Software-Cluster (94%)
had their own marketing or sales department. Only one company did not have such a
department. Almost half of the surveyed companies (44%) employed three to five workers in
their marketing department. Regarding marketing budget in the last financial year, 50% of the
enterprises reported that they had financial resources in the range of 1-3% of net sales.
1-2 employees
6%
Companies
with
marketing/sales
department
n = 17
19%
n = 16
Companies
with no
marketing/sales
department
94%
12%
3-5 employees
6-10 employees
19%
44%
10-20 employees
6%
> 20 employees
Figure 1: Existence of marketing or sales
department
Figure 2: Employees in marketing department
< 2 Mio. Euro
1-3%
13%
19%
6%
25%
< 10 Mio. Euro
4-6%
n = 16
50%
n = 16
12%
31%
7-10%
> 10%
Figure 3: Marketing budget in the last
financial year (in percentage of net sales)
44%
< 50 Mio. Euro
> 50 Mio. Euro
Figure 4: Revenue in the last financial year
Moreover, almost half (44%) of the cluster companies had a revenue up to €50 million. One
quarter (25%) of the companies had revenue below €2 million and could therefore be
classified as very small software vendors. Further 12% stated that their revenue was up to
€10 million and 19% had revenue of more than €50 million and, therefore, constitute large
7
enterprises2. Software vendors of the cluster operate on B2B markets and are world leaders
in the following fields: industry-specific standard software, software for enterprise
infrastructures, mapping of industry and customer-specific business requirements and
processes, innovative solution integration with existing systems as well as continuous
improvement of business processes in the companies. SMEs in the Software-Cluster offer
competitive, industry-specific approaches that complement the standard solutions (SoftwareCluster, 2009, p. 4).
2.2
Software Market Environment
The following figure represents the answers to six questions that investigate whether the
companies in the Software-Cluster feel that the market environment for software is changing
due to new IT trends. To begin with, 47% of the companies surveyed disagreed with the
statement that software buyers have rich knowledge regarding the new IT trends.
0%
20%
Software buyers (SMEs in particular) have rich
knowledge of new IT trends
24%
60%
80%
100%
30%
23%
47%
Know-how gap between software vendors and
buyers has increased due to higher technology
complexity
Market research must be increasingly
supplemented with innovation market research
(technology foresight)
40%
53%
23%
82%
12% 6%
n = 17
In the age of new IT trends software vendors
must change their marketing strategies
Innovation strategies in software companies are
shifting from technology push to market pull
76%
12% 12%
12%
35%
53%
It is increasingly important to integrate customer
6%
throughout the entire value chain
94%
Disagree
Neutral
Agree
Figure 5: Changed market environment due to new IT trends
2
According to the classification of the European Commission (Thommen & Achleitner, 2006, p. 67).
8
The majority of the Software-Cluster companies (53%) reported that the know-how gap
between software vendors and buyers has increased due to higher complexity of new
information technologies.
Furthermore, regarding the changes in market environment, enterprises of the SoftwareCluster also strongly agreed (82%) that it is increasingly important to supplement the market
research strategies with innovation market research. Moreover, 76% also agree that
nowadays software vendors are often forced to change their marketing strategies, since the
products based on new information technologies must be positioned with different (or
adjusted) marketing instruments. The statement that innovation strategies might be shifting
from technology push towards market pull gets a little less affirmation by the cluster
companies, since only 35% agree with this statement. The majority (53%) has chosen the
option “neutral”, suggesting that in their opinion such a shift is not present or is present only
in a very moderate manner. And as can be seen in the figure above, 94% of companies
surveyed agreed that customers must be more and more involved in the product
development and design.
2.3
Determinants in Innovation Marketing
The Software-Cluster enterprises were also asked to state the most important challenges as
well as critical success factors that software vendors face when marketing new software
products. Moreover, they also noted factors that, in their opinion, were mostly responsible for
new product market failures. In this part of the study, open ended questions were used to
better integrate individual viewpoints.
Software-Cluster companies see that the communication of the added value, provable ROI,
the overall marketing strategy, customer integration and practice-oriented products are the
main critical success factors in innovation marketing.
Furthermore, the greatest challenges that software companies face are finding useful case
studies, the correct estimation of innovation potential and a fitting sales strategy. Also
knowledge transfer from vendor to customer is seen as a challenging task. Moreover, the
reasons that are mostly responsible for innovation market failures are the large gap between
research and market as well as ill-defined value added for the customer or poor presentation
of it.
9
Critical success factors (n = 15)
Challenges (n = 15)
Reasons for failures (n = 14)
Communication of the added
value, provable ROI (4)
Finding use cases (4)
“Valley of death” – gap between
research and market (4)
Marketing strategy (3)
Correct estimation of
innovation potential (3)
Ill-defined use for customer
or poor presentation of it (4)
Innovation must reflect
customer demand (2)
Sales strategy (3)
Inaccurate estimation of
market penetration (2)
Customer integration (2)
Knowledge transfer from vendor
to customer (1)
Not enough partner networks (1)
Market research (1)
Gaining the first adopter (1)
Lack of sustainability (1)
Explanation of hype topics
to the customer (1)
Low marketing budget (1)
No well-considered
business model (1)
Short innovation cycles,
agile development methods (1)
Winning attention of
potential customers (1)
Wrong timing for market
entrance (1)
Market access (1)
Customer integration (1)
Legend: Number of namings is given in the brackets
Table 1: Determinants in innovation marketing
2.4
Resource and Capability Analysis
The third part of the analysis adopted the resource-based view (RBV) of a firm, which tries to
explain the differences between companies and their profitability in high-tech markets with
the differences in their resources and capabilities. Whereas the competitors of a company
can acquire the same resources, functional capabilities are much harder to imitate or transfer
and therefore the possession of these superior capabilities bestows the competitive
advantage upon a company (Dutta, Narasimhan, & Rajiv, 1999, p. 548).
A strong market orientation has been recognized as one of the most important sources of
ideas for innovations and is therefore a very important resource of a company (Dutta,
Narasimhan, & Rajiv, 1999, pp. 547-551). Yet a strong market orientation without the
development of innovation-related capabilities, or conversely the generation of inventions
alone without the ability to commercialize these inventions, will not lead to successful market
performance. Therefore, a combination of effective marketing and superior innovation
capability is necessary in order to achieve great success in high-tech industries (Dutta,
Narasimhan, & Rajiv, 1999, pp. 547-551) (see Figure 6, p. 11).
10
There are numerous scholars that have carried out an extensive research in order to
determine which capabilities are specifically relevant for successful commercialization of new
products and services. Capabilities that have proven to be significant determinants for the
success of an innovation are marketing (Dutta, Narasimhan, & Rajiv, 1999; Engelen,
Kemper, & Brettel, 2010; Morgan, Vorhies, & Mason, 2009; Ramaswami, Srivastava, &
Bhargava, 2009; Weerawardena, 2003) innovation (Akman & Yilmaz, 2008; Cakar & Ertürk,
2010; Ellonen, Jantunen, & Kuivalainen, 2011), and exploration (Wei, Hou, Wang, & Wang,
2011; Yalcinkaya, Calantone, & Griffin, 2007) capabilities.
This part of the questionnaire adopted input-output perspective of a firm and was developed
by drawing on previous research studies examining the positive influence of innovationrelated capabilities and market orientation (consisting of customer and competitor orientation
and interfunctional coordination (Deng & Dart, 1994; Gray, Matear, Boshoff, & Matheson,
1998; Narver & Slater, 1990)) on market performance and product innovation. There exists a
substantial body of research in this field supporting the positive impact of market orientation
and innovation-related capabilities on firm’s outcomes and their particular relevance in hightech commercialization (Atuahene-Gima & Ko, 2001; Carbonell & Escudero, 2010; Ellonen,
Jantunen, & Kuivalainen, 2011; Engelen, Kemper, & Brettel, 2010; Kumar, Jones,
Venkatesan, & Leone, 2011; Morgan, Vorhies, & Mason, 2009; Taghian, 2010; Voola &
O'Cass, 2010; Zahra & Nielsen, 2002; Zhang & Duan, 2010). Some have also focused on the
software industry (Akman & Yilmaz, 2008; Cakar & Ertürk, 2010; Nambisan, 2002;
Ruokonen, Nummela, Puumalainen, & Saarenketo, 2008; Seager & Gorda, 2009).
capabilities
related
Innovation-
Innovation capability
+
Exploration capability
Productinnovation
Marketing capability
+
orientation
Market
+
+
Customer orientation
+
Market performance
Competitor orientation
Interf. coordination
+
Figure 6: Research framework for resource and capability analysis
11
These constructs were measured using multi-item scales that have already been used and
validated in previous research studies. Since the positive relationships between these
constructs have extensively been examined in previous studies, this research study does not
concentrate on finding support for these positive influences but rather examines the levels of
innovation-related capabilities, MO, market performance, and product innovation among
enterprises in the Software-Cluster to draw conclusions and give recommendations.
The mean scores and standard deviations of all research variables are displayed in the
following table. According to the table, cluster enterprises reported higher-than average
levels of innovation, exploration, and marketing capabilities3. However, the level of marketing
capability (3,22) is much lower than that of innovation capability (4,11). Regarding the three
components of market orientation, customer orientation (4,13) had the highest result,
followed by the interfunctional coordination (3,93) and competitor orientation that showed a
level of 3,3. Taken together, these components constitute a market orientation score of 3,78,
which is above average but is still lower than, for instance, the mean score of innovation
capability. Generally, companies in the Software-Cluster do quite well regarding their market
performance (3,87), suggesting that most of the cluster companies performed better than
expected and better than their competitors in the last financial year. On average every cluster
company has introduced 8,62 products that were either new only to the market, new only to
their company or new to both. Detailed overview of answers to each of these constructs is
contained in Appendix 5.1, p. 19.
Research measure
Mean
SD
Research measure
Mean
SD
Innovation capability
4,11
0,96
Competitor orientation
3,30
0,90
Exploration capability
3,87
0,59
Interfunctional
coordination
3,93
0,62
Marketing capability
3,22
0,75
Market performance
3,87
1,04
Market orientation
3,78
0,53
Product innovation
8,62
1,44
Customer orientation
4,13
0,91
Legend: Measured on a scale from 1 to 5, product innovation measured with a metric scale
(ranging from zero to infinite), SD = standard deviation.
Table 2: Means and standard deviations for research measures
3
Average being three according to the five-point Likert scale (1 - disagree, 2 - disagree slightly, 3 - neutral, 4 agree slightly, 5 - agree).
12
3 Recommendations for Marketing Innovative Software Products
These recommendations are based on the analysis of the current software market
environment and of determinants for new product commercialization. Moreover, they are
derived from the resource and functional capability analysis within software companies.
These suggestions address not only the 4Ps of marketing-mix (product, place, price, and
promotion) but also refer to other critical factors that are particularly vital in software
innovation marketing.
3.1
General Recommendations
There exists a large body of research in high-tech industries that suggests that technologybased businesses often are concentrated on technological developments and lack the
needed marketing talent and expertise (Dutta, Narasimhan, & Rajiv, 1999, p. 548; Mohr &
Sarin, 2009, p. 85; Tripathi, Guin, & De, 2012, pp. 5-7). Therefore, the importance of
marketing in successful innovation commercialization must be acknowledged (especially in
SMEs). And since technology-push oriented innovations are primarily oriented toward higher
technical performance and only secondarily toward specific market needs (Narayanan, 2001,
p. 70), marketing must be involved at the stage where technological ideas are generated.
Moreover, in order to be able to better understand current customer requirements, early
customer integration in the product development process can be considered a critical
success factor that determines innovation success. By listening to the customers and
integrating them in the value added chain the gap between research and market can be
reduced, the so called “valley of death” can be bridged, and the innovation development
process in general can be made more practice-oriented. When the customers participate in
the product development, it is less likely that they will delay their purchase of a high-tech
product due to technological uncertainty and will perceive such purchase decisions as less
risky. Such practice is particularly crucial for more technology-push-oriented innovations.
Another recommendation for the software marketing is that products must increasingly be
positioned as simple, handy, portable, and visually appealing. Such trends will gain even
higher importance in the coming years, since mobile and cloud solutions in particular will
increasingly be used by average-users.
13
3.2
Innovation-related Capabilities
Software-Cluster companies reported higher-than average levels of innovation capability,
however, the ability to reflect changes at market conditions quickly by making
improvements in products and processes should be increased (see Figure 8, p. 19). Due to
today’s highly competitive environment and high pace of technology development especially
in the IT field, such ability constitutes another critical success factor not only for gaining
competitive advantage but also for basic survival of the company.
Regarding exploration capability, cluster companies have in general already acknowledged
the importance of so called “proactive marketing”- market driving (proactive) instead of
market driven (reactive) orientation - and reported a higher-than-average score. However,
they have also reported that even though the company was driven by the perception of
opportunity, they often felt constrained by the resources at (or not at) hand (see Figure 9, p.
19). Limited personnel resources and low marketing budget have also been distinguished as
one of the most important challenges that especially small software vendors face (see Table
1, p. 10). Even though it might be a very difficult task to convince a company’s management
to increase the marketing budget especially in a SME, they must acknowledge that when the
budget is used adequately, return on investment can be much greater than expected.
Regarding marketing capability, only 50% of enterprises in the Software-Cluster reported
that the effectiveness of their promotional activities in gaining market share is higher than
competitor’s (see Figure 10, p. 20). Since company’s promotional activities are responsible
for effective communication and the knowledge transfer between vendor and customer,
efforts in this field should be enhanced. Moreover, only every second enterprise reported that
the speed of new product introduction is higher than competitor’s. Hence, the software
enterprises should adjust their organizational structure and implement other necessary
measures to increase the speed of new product introduction which is particularly crucial
in the age of rapid technological development. Only 50% of the surveyed enterprises agree
that their marketing capabilities enable them to successfully compete with their competitors
implying that the other half of the companies in the Software-Cluster either disagree or are
not entirely convinced that this is the case. Therefore, it can be suggested that software
vendors should thoroughly evaluate their marketing activities and define critical factors that
can be improved. They should invest more on those marketing capabilities where they most
lag their competitors. Furthermore, only 38% of cluster companies agree that their market
research efforts were higher than competitors and since poor market research and market
analysis has been distinguished as one of the common weaknesses in almost every study of
14
why new products fail on the market (Cooper, 2011, p. 37), software companies should
significantly increase their market research efforts. Furthermore, due to the high pace of
technological change and developments, software vendors must also educate themselves
and constantly be up-to-date in view of newest technologies. This means that they have to
increasingly supplement their market research campaigns with innovation market research
(innovation intelligence) to gain technology foresight and to be able to develop new
products early based on these technologies.
3.3
Market Orientation
The analysis showed that customer orientation had the highest score of all constructs
assessing market orientation (see Table 2, p. 12). As the additional regression analysis
showed, customer orientation had a significant positive influence on innovation capability,
underpinning customer’s value in the process of innovation development. Therefore,
software companies must make sure that customer focus is deeply embedded in the
innovation process to realize promising competitive innovation advantage.
The results further indicate that competitor orientation is the least developed and
acknowledged construct within MO. Software enterprises should increasingly monitor their
competitor’s actions, collect marketing data on them to help direct their marketing plans,
instruct their sales people to monitor and report on competitor’s activities, and try to respond
rapidly to rival’s actions. Just like gathering and using important information from the
customers, information on competitors might help to recognize new technology trends in the
early stages and allow to plan marketing activities better.
The results from the third component of MO – interfunctional coordination - were in
general very satisfactory. Companies shared their marketing information and information
about customer needs with all departments and overall did a good job integrating activities of
all departments (see Figure 11, p. 21). However, they should also increasingly involve all
departments in the preparation of business plans and strategies and have inter-departmental
meetings to discuss customer needs more often in order to increase the average levels of
interfunctional coordination.
15
3.4
Innovation Communication
Cluster enterprises acknowledge that software buyers (SMEs in particular) do not have rich
know-how of new IT trends (see Figure 5, p. 8). The higher complexity of new technologies
has led to an increased know-how gap between software vendors and buyers. Therefore,
one of the greatest challenges software vendors face nowadays is guaranteeing a proper
knowledge transfer from vendor to customer. Sufficient presentation of added business
value to the customer has been distinguished as one of the critical success factors in
innovation marketing. These business cases must entail realistic assumptions that are
matched with each customer’s requirements. Following these notions, one of the greatest
challenges for the software companies is to educate their customers on the technologies
incorporated in the products. They have to communicate the added value of the products
based on these technologies as well as show provable ROI to the software buyer. Further, it
is especially important for small software buyers to get successful case studies from local
references. It reduces the perception of uncertainty at the customer side. One of the greatest
challenges for software companies may therefore be to gain the first customer (an early
adopter) which then might serve as a case study for other potential buyers.
In regard to innovation communication, another suggestion for software companies is to
simplify the marketing message. Especially for products that encompass complex
technologies or hype topics, the marketing message must be easy-to-understand.
Moreover, software enterprises should also follow current marketing trends and make their
marketing instruments more interactive, dynamic, social, mobile, and user-driven. They
should evaluate the profitability of new media tool usage. These include viral videos,
webinars, tutorials, and other methods. These promotional instruments are suitable not only
for customer education, but also for entertainment and thus, may help to get customer
attention and increase product differentiation. And since products based on new technologies
(e.g. cloud, in-memory computing) might actually be more exciting for the customer as
compared to robust business software solutions in the past, more creative marketing
instruments are often suitable and more effective.
Brand management is another marketing field of great importance which software
companies should pay increased attention to, especially in the age of new information
technologies. It has been argued that in order to effectively mobilize the interest in a new
technological idea, communication must take place at two levels – at a mass level to create
excitement and general “pull”, and at an individual level to explain what the technology is
16
about and to persuade interested stakeholders of its usefulness (Jolly, 1997, pp. 80, 81). It
can be suggested that at first the new IT trend must be promoted and brought to a wider
audience. Whereas conferences target more specific audiences like software developers, IT
practitioners, and researchers, the use of so called “new media” tools like YouTube videos
and Facebook may help to reach wider audiences (e.g. IT students, start-ups, and
journalists). It can further be assumed that only when a new technology is of wider
recognition, software enterprises should determine whether including the name of a
technology in a brand name of a product is a purposeful branding strategy. For instance,
Software-Cluster companies face the challenge of marketing emergent software as a new
trend in IT. It can be assumed that the term “emergence”, at least on the first encounter,
does not raise any particular associations and is generally a term that does not immediately
stick to one’s mind. The term requires a lot of clearing-up. Therefore, these companies are
increasingly considering whether an alternative term might be required for more
sophisticated marketing purposes. It is particularly crucial that marketing managers of the
companies are integrated in such decision making processes.
17
4 Overview of the Recommenations
GENERAL RECOMMENDATIONS
1
Acknowledge the importance of marketing (especially SMEs) and try to increase your
financial and personnel resources in marketing department!
2
Involve marketing at the stage where technological ideas are generated!
3
Place increased value on customer co-creation; integrate customer early in the product
development to avoid “valley of death!”
4
Pay increased attention to your product’s design and usability!
RECOMMENDATIONS REGARDING INNOVATION-RELATED CAPABILITIES
5
Increase your market research efforts and supplement them with innovation market research
campaigns to increase your technology foresight!
6
Increase your ability to adapt to changed market conditions quickly!
7
Increase the speed of your innovation cycles to minimize the change in development target!
RECOMMENDATIONS REGARDING MARKET ORIENTATION
8
Measure customer satisfaction on regular basis!
9
Watch your competitor!
10
Involve all departments in your company in preparing business plans and strategies!
RECOMMENDATIONS REGARDING INNOVATION COMMUNICATION
11
Make innovation communication an integral part of your overall enterprise communication
strategy!
12
Ensure knowledge transfer from vendor to customer; explain complex topics!
13
Ensure sufficient presentation of business value to the customer; provide case studies;
demonstrate ROI!
14
Increase the effectiveness of your promotional activities! Make them more personal,
interactive, social, mobile, and user-driven!
15
Place high value on your branding strategies!
Figure 7: Recommendations for the software enterprises
18
5 Appendix
5.1
Detailed Results of Resource and Capability Analysis
0%
20%
40%
60%
Our organizational culture supports and
6% 6%
encourages innovation
88%
Knowledge from different sources is efficiently and
6% 6%
rapidly used in product development
88%
Our firm is able to reflect changes at market
conditions to own products quickly
12% 12%
80%
100%
76%
n = 17
Employees are supported and encouraged to
6% 6%
participate in product development
New ideas that come from customers, etc. are
evaluated and included into product development
activities
88%
12% 12%
Our firm can adapt to environmental changes
quickly by making improvements at ist products 6%
and processes
76%
18%
76%
Disagree
Neutral
Agree
60%
80%
Figure 8: Innovation capability
0%
20%
40%
Our firm continuously explores and exploits new
6% 12%
markets and opportunities
Our firm is driven by perception of opportunity while
not constrained by available (or not available)
resources
18%
100%
82%
41%
41%
n = 17
Our firm continuously tries to discover aditional
needs of our customers of which it is unaware
18%
Our firm searches for opportunities in areas where
6%
customers have trouble expressing their needs
82%
24%
70%
Disagree
Neutral
Agree
Figure 9: Opportunity exploration capability
19
0%
20%
Quality of our customer service is much higher 6%
Effectiveness of our promotional activities in
gaining market share is higher
60%
100%
50%
31%
19%
69%
19%
50%
31%
19%
Advertising expenditure as precentage of sales is
higher
80%
63%
31%
Quality of our sales people is higher 12%
Our distribution networks are stronger
40%
25%
62%
13%
n = 16
Our market research efforts are higher
Ability to differentiate products marketed by the firm
6%
is higher
Speed of new product introduction is higher
13%
38%
75%
19%
19%
Our marketing activities are more often subcontracted to external agencies
Our marketing capabilities enable us to successfuly
compete with our competitors
12%
50%
50%
31%
63%
25%
37%
50%
Disagree
Neutral
12%
Agree
Figure 10: Marketing capability
20
Customer Orientation
0%
20%
18%
76%
After-sales service is an important part of our
6%
business strategy
18%
76%
We have a very strong commitment to our
6%
customers
We always try to create customer value in our
6% 6%
products
23%
30%
24%
12%
41%
41%
65%
82%
12%
23%
23%
12%
n = 17
47%
29%
18%
We do a good job integrating activities of all
6%
departments
47%
41%
12%
Our marketing people regularly discuss customer
needs with other departments
All deparments are involved in preparing business
plans and strategies
23%
47%
Our top managers often discuss competitor's
6%
actions
We regularly have inter-departmental meetings to
discuss market trends
59%
35%
Our sales people are instructed to monitor and
report on competitor activities
Marketing information is shared with all
departments
100%
88%
18%
Marketing data on our competitors is collected to
help direct our marketing plans
We always respond rapidly to competitor's actions
80%
94%
We regularly monitor our competitor's marketing
efforts
Competitor Orientation
60%
We encourage customer comments and
6%
complaints
We measure customer satisfaction on regular
bases
Interfunctional Coordination
40%
65%
77%
18%
70%
18%
76%
Disagree
Neutral
Agree
Figure 11: Market orientation
21
0%
Our overall performance last year was greater than
6%
expected
20%
40%
60%
19%
80%
100%
75%
n = 16
Overall, we outperformed our major competitors last
7%
year
20%
73%
Disagree
Neutral
Agree
Figure 12: Market performance
Product innovation
Minimum
Number of products introduced by the firm
that were not new to the firm but new to the
market you serve
Number of products introduced by the firm
that were new the firm but not to the
market you serve
Number of products introduced by the firm
that were both new to the firm and to the
market you serve
Maximum
Sum
Mean
SD
0
5
36
2,77
1,45
0
5
30
2,31
1,84
0
14
46
3,54
4,13
n = 13
Table 3: Product innovation
22
5.2
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