The Market Intelligence and Open Innovation interface: a case in theautomotive industry
Alessandro Comai
International University of Japan
Marcel Bogers
University of Copenhagen

Cite as:Comai Alessandro, Bogers Marcel (2023), The Market Intelligence and Open
Innovation interface: a case in the automotive industry . Proceedings of the European
Marketing Academy, 52nd, (114134)

The Market Intelligence and Open Innovation interface: a case in theautomotive industry

Abstract:
Although Open Innovation (OI) makes use of external market-based sources to gather
knowledge and insights, relatively little is known about the relationship between marketing
and OI. This paper explores the link between marketing and OI and specifically how OI
utilizes Market Intelligence (MI) during the new product development (NPD) process. After
examining the process used in an automotive company to develop a brand-new product, wefind that having a strong market orientation (MO) through MI enables the process byproviding key market insights to several decision makers. Tactical and strategic MI has themain role at the beginning of the process, but is used during all other phases as well. The
findings also reveal that there are two working modes employed by marketing, R&D andother teams involved in NPD when acquiring and using MI. In addition, MI contributes to anincrease in social capital related to innovation. Our findings suggest that companies should
adopt a strong MO in OI by embedding MI in their innovation operation to increase NPD
efficiency. Theoretical and practical implications are also discussed.

Keywords: Open Innovation, New product development, Market Orientation, Market
Intelligence; Automotive industry

Track: Innovation Management & New Product Development

11. Introduction of Paper
It is generally agreed that marketing and innovation are two functions which are mutuallyimportant in an organization. Several studies have linked marketing with innovation directly(Han et al., 1998; Hauser et al., 2006; Griffin et al., 2013; Pantano et al., 2019), and indirectly
by using market based resources as a key asset for open innovation. As such, MI is a central
strategic concept for companies across sectors and regions. While our knowledge about
various organizational attributes of open innovation is increasing, we know relatively little
about marketing aspects of OI.
First, this paper will outline the linkages between OI and MI, describing these under theconstruct of MO and new product development. Secondly, gaps in the literature are identified,following which research questions are stated and methodologies are described. Thirdly,
results from the case are presented and discussed, prior to conclusions and recommendations.
2. Open Innovation and Marketing Intelligence
OI is defined as the flow of inbound and outbound knowledge through pecuniary andnon-pecuniary mechanisms (Chesbrough, 2003). In the context of this work, it is important tohighlight the importance of having an inbound flow of information focused on understanding
market trends, competition and customers, among other factors. Specifically, customers,
suppliers and competitors are important resources of knowledge for the firm’s innovation
process (e.g., Cassiman & Veugelers, 2006; Enkel & Gassmann, 2008; Ili et al., 2010),
regardless of whether this information is provided by science or market specialists (Du et al.,2014).
There is a general consensus that MI can provide this information by scanning andanalyzing the environment. Although MI was primarily intended as a collection of
information (e.g., Kelley, 1965), it gradually became a sophisticated tool under the Market
Orientation (MO) construct (Day, 1990; Naver and Slater, 1990; Kohli and Jaworski, 1990,
1993). According to Kohli and Jaworski (1993), MO is based on three fundamental pillars: (1)intelligence generation, (2) intelligence dissemination and (3) responsiveness. Adopting MO
is beneficial for the firm (Hedaa & Ritter, 2005; Carbonell & Rodríguez Escudero, 2010),
although some criticisms have been raised if its success depends solely on marketing andignores a possible role for innovation (Han et al., 1998).
MO plays a key role in NPD (e.g., Hise et al., 1990; Cooper, 2001; Lamore et al., 2013).
Because MI captures external information for the organization, it is particularly relevant for2new product development (Griffin et al., 2013). MI involves a wide range of informationcollection about stakeholders and factors that affect customer needs and preferences, just as
the seminal work of Aguilar (1969) suggests scanning the environment, in search of ideas touse in R&D (Lambin, 2000). It is important to consider that MI involves very sophisticatedactivities and therefore it should not be viewed solely as a collection activity limited to acertain number of sources or sourcing (e.g., Laursen & Salter, 2006). It is not surprising thatmarket research, which is part of market intelligence, is the second most important of the six
critical factors in NPD (Kahn et al., 2012).
The link between marketing activities and OI becomes clear to see when firms need toobtain new ideas. Specifically, clients represent the most important knowledge source forinnovation (Enkel & Gassmann, 2008). Customers provide a valuable source of information
about their preferences (Reychav & Weisberg, 2009) and a customer-oriented firm leads tobetter product performance (Gatignon & Xuereb, 1997). Such a firm can also be actively
involved in the NPD process as a co-creator of products or services (von Hippen, 2005),
which might be suitable for radical innovation, as suggested by Bogers et al. (2010, p.868).
Market based information is also necessary during the entire NPD process. According to
Kohli et al. (1993), the company "periodically reviews the product development efforts toensure that they are in line with what customers want". However, special attention may berequired when customers are used as a principal source of innovation. According to Von
Hippel (1988), customers are not aware of all product trends and technology changes in themarket, and therefore they may not be able to express what they want.
Innovation can be radical or incremental. Subsequently, it is important that the process of
MI is adapted to the need for knowledge in both radical and incremental product development
processes. Barczak et al. (2009) observed that “for radical projects, marketing and R&D are
equally likely to be the function that owns the project”.
3. Links between OI and Market Intelligence and research gaps
Several studies have linked marketing with innovation directly (Han et al., 1998; Hauser
et al., 2006; Barczak et al., 2009; Griffin et al., 2013; Pantano et al., 2019; Leenders &Wierenga, 2002), and indirectly by using market based resources as a key asset for OI. The
seminal work by Chesbrough (2003, p.43) highlighted the need to gather knowledge and ideas
from outside, as well as the importance of opening up R&D departments. In this context,
marketing can play an important role by providing external information and knowledge.

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Although a number of studies have discussed the MO construct in relation to OI (Arrigo,
2018; Cheng et al., 2014) or measured its positive effect on innovation (Atuahene-Gima,
1996; Jimez‐Jimez et al., 2008), or analyzed the contribution of MO using external suppliers
in radical or incremental innovation projects (Song & Thieme, 2009), the role of market
intelligence (MI) is unclear, despite it being a fundamental pillar of MO. Pantano et al. (2019)addressed the contribution of technology and innovation to marketing, but the opposite
relationship remains unaddressed. On the other hand, despite the number of studies focusedon the different stakeholders that are involved in NPD (e.g., Olson et al., 2001), it is not clear
to what extent these stakeholders utilize the MO framework, especially when it comes togathering and sharing MI.
We therefore want to gain more insight into how and to what extent MI is used in the
different innovation stages. West and Bogers (2014) observed that it “remains unclear how
external innovations travel from the outside to a commercial product through the firm’s
business model and to what extent it requires distinct innovation strategies”. This motivates us
to seek a better understanding of how MI is an integrated OI process using NPD with market
orientation as the main theoretical foundation. Thus, the research questions we wish toaddress are:
1. How is MI utilized in the company during the NPD stage?
2. How closely do R&D and Marketing teams work together?
3. What aspects affect the relationship between MI and OI?
4. Methodology
A single case study is provided to illustrate the process, describing how MI is integrated
into the innovation funnel during the development phase (Chesbrough et al., 2006, p.3). Given
the established importance of studying how OI is used in the automotive sector (Gassmann etal., 2010; Wilhelm & Dolfsma, 2018; Ili et al., 2010), we explore the case of the Piaggio
Group to shed light on how MI is utilized and integrated in OI projects.
The use of qualitative research allows us to gain a better understanding of the different
points within a specific context (Bryman & Bell, 2011). Case description has been
demonstrated to be effective in OI literature where single cases (e.g., Dodgson et al., 2006)
and multicases (e.g., Mortara et al., 2009; De Massis et al., 2012) were utilized. In addition, acase represents empirical evidence which may contribute to the innovation models that were4

not utilized very much in the past (Mahajan & Wind, 1992). Therefore, an interview with key
personnel from the company would be most appropriate to provide the knowledge required
for this study.
In order to answer our research questions, we have identified key directors in Piaggio whowere willing to participate in our study through an in-depth interview related to the following
activities: R&D, Strategic innovation and Marketing Intelligence. These areas represent
highly specialized functions within Piaggio and all of them have an active role in NPD.
5. Findings and discussion
The interviews with the R&D manager were conducted in June 2021, which allowed us
to draw up the different stages of NPD in Piaggio Group, as well as details of the roles
described in Figure 1. However, the interview conducted with Strategic Innovation (SI) took
place in May 2022. The study yields three main findings:
The first finding is that MI is used across all stages. However, the role of MI in terms ofresources and participation differs between stages. In the first stage, where the objective is tosearch for and define opportunities, MI and SI have the main role and R&D is practicallyabsent. SI and MI teams define the trends and customer preferences, respectively. The
information provided is necessary for building the vehicle definition (Phase 2) and thebusiness plan (Phase 3). According to the SI managers “this macro phase sets Piaggio apartfrom other motorbike manufacturers which, in most cases, are pushing new models to themarket”. On the other hand, during the development phase, known as “vehicle engineering”(Phase 4), MI plays a minor role, as this phase focuses on technical aspects of the product.
The findings are partially consistent with the study of Song and Thieme (2009), but our
results show that MI is more extensively used in all phases, rather than only focused on thepredesign and commercialization of the product.
The second finding is that two working modes are developed: close working relationships
and independent endeavor. In the first mode, MI and R&D staff work closely together andassume a primary role. This is the interface in which work is carried out in collaboration. In
the second mode, departments work separately, usually assuming a secondary role. In eachphase, the relative importance of the MI team and the R&D team varies. For example, before
the go-kill gate (Phase 3), Product Marketing and R&D work together to provide an opinion
on feasibility and an estimation of costs/timing with respect to the scooter or motorbike.
However, in this phase other teams participate, such as the Accounting/Financial Control
team. This innovation engagement model focuses on reducing risk in the decision making
5process and ensures the best possible success for the new product. During these stages, astronger connection between different teams increases social capital (APQC, 2003, p.10),
which results in better performance and efficiency among teams involved in the innovation
process.
The third finding is that there are several aspects that influence MI and OI. First, there is
the management style and its role in NPD. Before Piaggio acquired the Aprilia brand, NPD inthe company was mainly driven by its CEO, who might be subject to cognitive biases related
to the market. Secondly, the size of the company and the financial resources available might
help to overcome mistakes. Thirdly, a public company as opposed to a private one needs to
respond to various stakeholders, and therefore strong fact based justification is needed when
making large investments such as developing a new vehicle. Finally, the cost involved in
NPD also has an influence. The finding is consistent with Avlonitis and Gounaris (1999), whosuggest that those “companies wishing to reorientate themselves and develop a Marketing
Orientation are obliged to direct their efforts towards changing both their attitude andbehaviour”.
Lastly, the automotive sector has undergone several important changes. According to the
VP of global digital marketing, one of the drivers that has significantly contributed to theadoption of a customer centric orientation has been the digitalization of marketing. Like othercompanies in the automotive sector, Piaggio employed a B2B business model in which thedealer was the client. However, through access to digital media Piaggio was able to become
customer centric and gain a better understanding of customer preference in both product andservice. In this context, MI has become more important than ever in delivering precise
product specification based on customer preferences.

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Figure 1. Roles of MI and Strategic Innovation in each of the NPD stages in Piaggio Group6. Conclusions
The research reveals the underlying reasons for embedding MI into the OI framework.
Practitioners can gain a better understanding of the benefits of MO, specifically when MI isused for innovation. This can promote the implementation of MI and provide reliableknowledge about the market and the environment for R&D teams. We consider this study is
relevant for R&D directors, as well as for executives who wish to improve new productdevelopment (NPD) by exploiting MI, in order to make their companies more market oriented
and ultimately achieve better results.
Moreover, studying the role of MI in OI can present new research opportunities, as wellas encourage further discussion on studies focused on sourcing (e.g., Laursen and Salter,2006). In this respect, the research highlights the fact that a market oriented company canhave very sophisticated MI which involves long and short term analysis in different teams. In
addition to this, other teams such as the R&D team can make a significant contribution to MO
and the related intelligence. Indeed, according to the definition suggested by Kohli andJaworski (1993), the MO focus is not limited to customers, but includes a wide range ofstakeholder and environmental factors, extending the focus beyond customers. Thus, we
believe that an OI oriented company can easily utilize the MO framework to provide thespecific intelligence needed for the innovation department. Perhaps the most importantconsideration is to involve the R&D department in the activities of MO in order to achieve acollective intelligence process. For instance, Veugelers et al. (2010) asserted that technology
intelligenceI can also be used by other departments in the company including the marketing
department. Therefore, a possible field of study is how these different intelligence activities
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are used among the different departments and how these departments cooperate in terms ofadjusting and sharing, which may help shed light on how OI is used internally between
different departments.
On the other hand, the study demonstrates the possibility of building a close working
relationship between several teams involved in radical or incremental innovation (or NPD). In
this respect, a better understanding of the interaction between the parties may be needed. Inorder to have a successful MO, several stakeholders are needed to execute the MI activities.
Generating and distribution can be performed by the marketing and/or innovation team.
However, in the case of responsiveness, another decision maker can have the main role. At
Piaggio, this can be observed on many occasions during the company’s NPD. Since several
studies failed to delve into these aspects, we consider there is a future opportunity for researchhere in both OI and Marketing fields.
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