A Methodological Approach to the Marketing Process in the Biotechnology-based Companies

Carla Costa1 *, Margarida Fontes2 and Manuel V. Heitor1 1. Center for Innovation, Technology and Policy Research, Instituto Superior Tcnico, Lisboa Portugal 2. INETI, Lisboa Portugal * corresponding author, carla.rcosta@netcabo.pt

Paper accepted for publication in the Industrial Marketing Management Journal, Elsevier

July 2003

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BIOGRAPHICAL NOTES: Carla Costa MSc in Engineering Policy and Management of Technology and with a Business Administration Degree at ISCTE Instituto Superior de Cincias do Trabalho e da Empresa, Lisbon, she is a researcher at Center for Innovation, Technology and Policy Research, IN+, associated to the entrepreneurship promotion programme Green-wheel at Instituto Superior Tcnico, in Lisbon. Margarida Fontes Researcher at Departamento de Modelao e Simulao de Processos/Instituto Nacional de Engenharia e Tecnologia Industrial (INETI) with a PhD in Management of Innovation and an MSc in Management Sciences from the Manchester School of Management, University of Manchester Institute of Science and Technology, UK. Her main research interests are: management of technological innovation, academic- industry relationships and technological entrepreneurship. Manuel V. Heitor Professor of Mechanical Engineering at the Instituto Superior Tcnico in Lisbon, and director of the Center for Innovation, Technology and Policy Research, IN+, he is coeditor of several books and author of several scientific papers in the area of energy and environment and related fields, with emphasis on fluid mechanics and combustion. He is a Senior Research Fellow of IC Institute, The University of Texas at Austin and, in this context, he has led the Organizing Committee of a series of International Conferences on Technology Policy and Innovation, which began in 1997 in Macau.

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ABSTRACT: The paper addresses the commercialisation activities of biotechnology-based companies in a European context and discusses whether these companies are able to gain adequate market perceptions and set adequate marketing processes, taking into account three analytical steps: strategic marketing definition, marketing implementation, and evolution of strategy and implementation. A methodological approach was developed, considering the specific nature of the technology and the companies. The case of Portuguese companies was used to test this methodology.

The findings support the hypothesis that marketing issues constitute a problem for these companies, since most of them had serious difficulties in going through the marketing process. Marketing deficiencies were largely connected to the access to human resources with relevant management and marketing capabilities and were particularly felt by companies introducing discontinuous innovations.

The research confirms that this methodology is useful in the assessment of the marketing management process in biotechnology-based companies.

KEYWORDS: Biotechnology-based companies, marketing of innovation, marketing of technology

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1. Introduction

The emergence of a biotechnology industry has been a motive for much discussion and both the business and the academia worlds envision a life-science revolution emerging from the knowledge-based economy of the 21st century [ EuropaBio 1997, Enriquez 2000, EC 2001].

History shows that the emergence and development of industrial biotechnology has very particular characteristics [Orsenigo 1989]. Its most remarkable feature is the strong influence of science, which represents a fundamental source of progress in this new technological paradigm [Orsenigo 1989, Dosi 1984, Pavitt 1987]. A further differentiating feature was the role played by new biotechnology-based companies, that stem from a spontaneous division of labour in the research and productive activities [Orsenigo 1989, Nelson and Winter 1982, Teece 1988]. Small dedicated biotechnology companies are recognised to be the most efficient available organisational solution for the development of innovative activities in biotechnology [EC 2001]: they have better access to new scientific developments [Walsh et al 1995] and a remarkable capability for creative development [Sharp and Galimberti 1993], being particularly effective in identifying and exploring the emerging technological and market opportunities of the new scientific paradigm [Orsenigo 1989]. Thus, these companies act as intermediates in the process of transferring biotechnology from the research laboratories to industry, representing an institutional innovation motivated by technological change [Orsenigo 1989].

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However, even science-based companies do not subsist solely due to research and development activities aiming to create new products and services: it is essential to take these to the ma rket and turn them into successful innovations. In the case of biotechnology, companies may adopt different commercialisation routes: either take their technology directly to the market as a final product or channel it through the large established companies that will then apply their know-how and resources to commercialise it [Cetindamar and Laage-Hellman 2000]. Alternatively, they may follow a hybrid model, combining research services and licensing with research for own product development, in order to survive while aiming for an integrated activity in the future [Pfirrmann 1999]. But, whichever strategy companies adopt, the marketing process is an unavoidable step. Yet, biotechnology-based companies may face particular marketing problems, due to the combination between the nature of the technology being commercialised and the characteristics of the companies that developed it. In fact, these are often young, highly innovative SMEs created by entrepreneurs with a research background and, therefore, they may lack the resources and competences required to define a market strategy and to implement an adequate marketing process. Thus, one hypothesis to explore is that marketing process deficiencies are often present and raise critical obstacles to business development, particularly in the case of companies introducing more radical innovations.

2. The Biotechnology Industry and High-Technology Marketing 2.1 The Nature of the Biotechnology Business Much has been said about the somehow disappointing results obtained by most lifesciences pioneer companies, if compared to the initial expectations [Enriquez and

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Goldberg 2000]. This is especially the case in Europe, which has been lagging behind the US in this field [EC 2001, Storey and Tether 1996, Orsenigo 1999]. Factors like financing shortages, technological problems, legislation barriers and low public acceptance have been pointed out as causes for company failure in this area [EC 2001, Sharp and Senker 1999]. It is possible that the marketing-related deficiencies are also responsible for lack of business success in biotechnology.

In order to succeed in the market, companies have to address the marketing issues and tackle them adequately. Biotechnology-based companies are a particular case, because the strategic decisions and the marketing issues to handle may not be ordinary. In fact, due to the science based nature of biotechnology, most biotechnology-based companies are technology intensive, being often involved in the development and

commercialisation of highly innovative products. However, high technology marketing can be very complex, requiring companies to adopt counterintuitive strategies and to possess good management competencies and, in some cases, enough resources to sustain a delayed market entry processes.

The development of new technologies/products in biotechnology has been mainly conducted by small science-based companies due to the division of labour between the new technology- intensive companies and the existing companies, which possessed a number of complementary assets in the production and marketing areas [Teece 1986]. As a result, although some companies can become fully integrated and grow, they usually start as SMEs and the majority remain small and specialised [Orsenigo 1989, Sharp and Senker 1999]. Thus, most of the new biotechnology developments which often involved radical innovations were introduced by young science-based SMEs. It

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is recognised that the objectives and flexibility of small firms are more compatible with this type of innovative business project [Christensen 1997]. However, they have a number of limitations concerning resources and competencies that may constrain their capacity to handle the requirements of high technology marketing. One such limitation concerns their competence base, since they are often created by technical entrepreneurs with a strong technological orientation but without formal management training. Another limitation concerns their lower level of financial resources and the financing problems they ha ve to solve in order to invest in long-term research and lengthy commercialisation processes. As a result they often do not possess and may find difficulties in accessing the necessary skills, especially in the strategic management and marketing areas.

The typical company profile described above has implications for the internal management process, since management procedures tend to be less formal and strategy may not be formally expressed. On the other hand, companies are frequently unaware of the specific nature of the marketing process in the case of radical innovations. In conclusion, these features may cause additional difficulties and thus raise strong obstacles to the development of the new biotechnology-based companies, which are critical elements of the biotechnology system [EC 2001, Orsenigo 1989, Walsh et al 1995].

Because Europe's institutional set- ups, history, traditions and skills are different from those of the US the creation and development of European biotechnology companies followed a path that differs from that of their US counterparts [EC 2001]. As a result, European companies are known to be, in general, smaller, less active in the global

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network of collaborative relations and in the markets for technology, being mainly present in platform technologies and maintaining diversified strategic portfolios [EC 2001, Brandys 1998]. They are also more often integrated companies, selling products and services, while American (and to some extent British) ones predominantly sell patents or contract research [Mangematin et al 2001]. Marketing management may be more complex but at the same time more critical for the integrated companies that actually have to take the final products or services to the market. Nevertheless, most existing research focuses on the commercialisation route linked to patents and research contracts, especially in the pharmaceutical industry, where this business model is used extensively. Given the weight in Europe of integrated and hybrid companies, that follow a different business model [Mangematin et al 2001], research about the commercialisation process should consider both types of companies, taking into account the different marketing implications.

2.2 High Technology Marketing

The marketing management process in high technology companies requires the use of basic marketing techniques, founded on the same philosophy and principles as applied to any other product, guiding the company's offer according to market needs [Moriarty and Kosnik 1987]. Therefore, the traditiona l concepts of strategic planning and marketing management, as defined by Kotler [1991], are valid in such cases. Consequently concepts like market selection, marketing- mix and differentiation are also critical for high technology products [Moriarty and Kosnik 1987].

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Moreover it has been argued that the marketing of high-technology products may face different challenges from the low-technology ones, particularly when the technology has a disruptive or discontinuous nature [Brandys 1998, Moore 1995a, Lynn et al 1996]. The basis for this argument is the long period of time that precedes the dissemination of major innovations and the list of marketing defeats related to high-technology products. Indeed, there are many examples of well- managed firms that registered cases of failure in the introduction of new technologies. According to Christensen [1997], the reason behind such failures is the fact that their managers followed the widely accepted management principles in conditions that were not `normal'. This author maintains that a company attempting to introduce disruptive technologies should not strictly follow the marketing rules that apply to sustaining innovations. By the time a disruptive technology emerges, it results in products that have a worse performance, at least in the near-term, although they have a very different value proposition that is valued by a few fringe customers. Only on a later stage will this technology clearly become an advantageous substitute for the existing technology. The problem, or the innovator's dilemma, is that although the level of information about the market potential is low, the advantages of a first-mover are very strong. This calls for investment decisions in a low information situation. Hence, it is recognised that the best strategy definition cannot be known in advance: it requires managers to develop plans for learning along the way, creating a discovery-based planning through an iterative process of trial, learning and trial again. With respect to entry strategies, the most appropriate strategy seems to be using a new market niche, populated by customers that appreciate the product's distinctive features. This author considers that small companies have more incentives than large ones to introduce disruptive innovation, since their dimension is more

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compatible with the initial low returns, which is consistent with the role played by biotechnology-based SMEs.

Other research present similar conclusions: Moore [1995a] and Lynn et al [1996] explain the market difficulties of innovative products through the concept of discontinuous innovation, which is similar to that of disruptive technologies. Innovations can be classified in a continuum that goes from continuous innovation to discontinuous innovation, passing through dynamically continuous innovation. Continuous innovations are small improvements introduced over time, while dynamically continuous innovations involve some change in technology, although the product is used in the same way as its predecessors. Discontinuous inno vations involve fundamental changes in the customers' attitude and behaviour and in the infrastructure. A discontinuous innovation is more difficult to market, since greater changes are required in the way things are done, but the rewards can be more significant.

Lynn et al [1996] point out that, in the case of discontinuous innovations, the product development process should place less emphasis on analysis and more on probing and learning from the experience. This probing process consists of experimenting potential markets with early versions of the product, learning from the probes and probing again with an improved version. This process should be seen as experimental design and exploration, rather than blind trial and error. The authors also conclude that unless the opportunity for a discontinuous innovation is a strategic imperative to the business, management will fail to persist the probing and learning process.

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Moore [1995a] added insights from the Technology-Adoption Life-Cycle Model [Rogers 1962] to the classical discussion on innovation discontinuity. According to this model, when a company introduces a new technology in the market, the customer adoption process follows a specific path in terms of the type of customer profile reached, because people differ strongly in their readiness to try new products and new technologies.

Figure 1 - The Technology Adoption Life Cycle

Source: Moore, Geoffrey [1995a]

The model is represented by a Bell Curve, with five segments representing groups of customer psychographic profiles in terms of the relative adoption time: Innovators or Technical Enthusiasts, Early Adopters or Visionaries, Early Majority or Pragmatists, Late Majority or Conservatives, and Laggards or Sceptics. Moore [1995a] argues that the explanation for the difficulties faced by many companies lies in the fact that there is a major gap in the transition between Early Adopters and Early Majority. This is because these two groups of customers are totally different in terms of underlying values and thus communication between them is almost impossible. The main difference is that the former are willing to bet on prototypes whereas the latter want to

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see whole product finished solutions before they buy. To cross the Chasm between the early market and the mainstream, a company must therefore change the market strategy [Moore 1995a]. The failure to cross this Chasm in the progression of the adoption cycle has driven many technologies and companies to oblivion. The fact that the Chasm typically goes unrecognised makes it even more dangerous. According to Moore [1995a], a company that becomes aware of being caught in the Chasm must target a very specific niche market that it can easily dominate and use as a base for broader operations. It must identify the niche that presents the most compelling reason to buy the technology and invest all its efforts and resources in becoming the niche leader. To reach this market niche it must transform the prototype under development into a whole product that has the characteristics that appeal to the chosen niche. When the company wins four or five niche customers, the word-of- mouth effect will spontaneously start, creating a very effective and inexpensive communication campaign that will help the company achieve niche leadership and cross the Chasm. Once a company manages to leave the Chasm behind and is settled as leader of a market niche, it will find itself in the Bowling Alley stage [Moore 1995a and 1995b], when it must strive to gain leadership in additional market niches. If the company implements a successful Bowling Alley strategy, it will soon find itself in the Tornado phase, climbing to conquer the pragmatists market. When this demand flow calms down, the company finds itself on the mo re stable Main Street. If the company does not adapt its strategy it will lose the opportunity to become market leader.

The evolution along the Technology-Adoption Life-Cycle for discontinuous innovations requires companies to change market strategies at the various stages, often to opposite approaches [Moore 1995a and 1995b]. This can be counterintuitive and confusing for

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the companies, making it a difficult path to follow. The challenge is likely to be greater for companies with limited business and m arketing competencies, as is often the case with new biotechnology-based SMEs. Therefore, the problems typically faced by the technology-based companies could be related with the difficulties to manage the marketing process for discontinuous innovations, especially while crossing the Chasm.

Other problems could be related to their business definition, for instance, since it is recognised that some technology-based companies tend to possess too many different strategic business areas because of their high tendency for diversification. This tendency reflects a research-oriented strategy that is found in companies whose entrepreneurs or key people had research backgrounds, since the inquisitive spirit of a scientist often drives him from problem to problem, diversifying the areas of research and crossing barriers between different subjects. This tendency to over-diversify, especially in an early stage, is often prejudicial to the company's development and success [Plaut and Ilan 1987, Mustar 1998] since it does not allow the company to concentrate its scarce resources and efforts in the same market-learning path.

Biotechnology-based companies may also face financial difficulties while they search for venture capital or corporate investments. In the cases where this process is lengthy or unsuccessful, companies may be unable to afford hiring managers and marketing managers. In these situations, or when the entrepreneurs with research background do not recognise the need for professional marketing staff, companies may lack the necessary competencies for the marketing process.

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Therefore, it can be suggested that, while this type of company shows some advantages regarding the process of biotechnology development and commercialisation, it is also likely to face specific marketing problems. These may be particularly serious when the companies are introducing discontinuous innovations and do not possess or are not able to access or acquire the competencies necessary to address this process adequately.

The above discussion allows us to conclude that the commercialisation process of the biotechnology-based companies should not be analysed through the same perspective as for companies operating in less technology- intensive fields. The specific characteristics of both the technology and the organisations developing it bring critically different features to the marketing process that should be taken into account.

3. Methodology 3.1 Research Approach This research aimed to understand the process by which the biotechno logy-based companies take biotechnology products to the market, in an European context: the case of Portugal. Assuming that the specific nature of biotechnology influences the marketing process, requiring companies to set up marketing strategies and practices adequate to the technological and organisational context where they operate, the objective is to investigate whether these biotechnology-based companies are being able to handle the specificities of their marketing process, considering both the characteristics of their technological and organisational profiles.

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The basic research question is, therefore, whether and how do biotechnology-based companies gain adequate market perceptions and set an adequate marketing process? In order to answer this generic question, the following issues were addressed: a) Are the companies able to go through the process of defining an adequate marketing strategy and of adequately implementing such strategy?; b) Do companies engage in a learning process, acquiring marketing competencies and dynamically adjusting their marketing strategy ?; c) Is companies' ability to pursue an adequate marketing process, affected by the type of innovation in presence (discontinuous or non-discontinuous)?.

Taking into consideration the arguments put forward in the previous section, the working hypothesis was that marketing process deficiencies constitute relevant obstacles to the development of biotechnology-based companies. Additionally the following derived hypothesis were also tested: a) These marketing deficiencies are connected with the absence or difficulty to access human resources with the relevant management and marketing capabilities; b) Companies introducing discontinuous innovations reveal additional marketing difficulties. The analysis was therefore centred on the strategies devised by companies to reach the market and on the procedures adopted to handle the marketing process and the research approach followed the traditional basic strategic planning decisions and the marketing process. Given the characteristics of the actors involved, aspects known to pose difficulties to this type of company, such as business definition, market probing and learning and marketing of discontinuous innovations were addressed in greater detail. Similarly, the impacts on the marketing process of some typical characteristics of biotechnology-based companies, such as lack of resources (human and others) and excessive technological focus were also given particular attention.

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Using this research approach it will be possible to verify if the biotechnology-based companies are in fact defining and implementing adequate marketing processes and if these respect the specific needs of this type of company and products (technology) or if, as proposed, their marketing difficulties may be responsible for their lack of success.

3.2 Research Methodology In order to address this research problem, a methodological approach was defined that takes into consideration the specificities of the marketing process in this particular technological field and the characteristics of the companies that conduct it. The research looked into the marketing process developed by each company, assessing its ability to follow the steps that lead to the establishment of a strategy and its implementation, as well as its capacity to learn and adjust to a changing environment. The methodology adopted combined insights from generic marketing management theory and hightechnology marketing theories with knowledge about the behaviour of young technology- intensive biotechnology case. companies, being specifically designed to address the

This methodology was based on the notion that companies must take the necessary steps to ensure adequate strategic planning and marketing planning (or definition) and implementation. This implies that they should become engaged in recurrent analysis of the market, products, competition, etc., and decision making on the company's strategy and implementation. Thus the approach consisted of investigating whether the companies were following the basic procedures assumed to be involved in an adequate marketing process [Kotler 1991], and additionally if they made adequate options

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considering their organizational and technological profiles, including the analysis of whether the companies acknowledged the nature of the innovation in presence (continuous/dynamically continuous/discontinuous) and conducted the market

assessment process accordingly. When the companies were not performing an adequate marketing approach and considering the specificities of their profile, efforts were made to identify probable causes and consequences of this behaviour. Because the analysis would not be complete if referring only to the present situation, it was also necessary to look at the companies' ability to learn and adapt their strategy as the basis of the evolution of marketing strategy and the changes introduced to it. The manager's perceptions regarding companies' learning through time was also taken into account. The analysis focused on the identification of deficiencies in marketing as a process or mistakes in terms of strategy or implementation, rather than on assessing companies' activity against a `perfect' marketing strategy.

The methodological approach to the marketing process was divided into three analytical steps: strategic marketing definition; marketing implementation; strategy and implementation evolution. These steps separate the strategy and its implementation in order to facilitate the task of understanding the company's overall strategy and then verifying if that strategy was adequately implemented. This separation also allows the identification of the nature of problems in presence.

Strategic marketing definition: analyse if the companies are making a clear and correct strategic definition of their business and of their market approach. This phase comprehends strategic and marketing planning therefore it is critical for the marketing process, since it provides the companies with a market orientation and a set of principles

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that will guide the implementation phase. Therefore it is crucial to go through the marketing definition steps appropriately. The analysis was divided in stages. The first concerned an evaluation of the level of clarity of the companies' business definition, considering three dimensions: customer groups to be served, customer needs to be met and the technology that will satisfy these needs [Abell 1980]. There is also an assessment of the level and adequacy of the market research performed and the companies' awareness in terms of the market segmentation and competition was analysed, leading to the identification of the target market. In a second stage companies' strategic decisions regarding competitive position and geographical market scope were assessed. In a last stage an attempt was made to evaluate the overall strategic marketing definition that would be adequate to the each company's characteristics and the market it aims to serve.

Marketing implementation: analyse and evaluate companies' capacity to implement an adequate marketing strategy, verifying if they consider the relevant information and follow the strategy defined, going through the necessary steps, making the adequate decisions and reaching out for the crucial resources. The analysis was also divided in stages. The first involved the identification of the customer profile, in terms of their level of attraction for discontinuous technology, considering the type of innovation in presence, and also the evaluation of how companies introducing discontinuous innovations were managing the evolution along the Technology Adoption Life Cycle and, in particular, if they are being able to cross the Chasm. In a second stage the way the companies differentiate and position their products, services or patents was analysed and the third stage looked at the corresponding marketing mix. On the fourth stage, an attempt was made to evaluate the companies' overall strategy implementation process.

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Strategy and implementation evolution: evaluate the changes in the marketing strategy definition and/or implementation in order to identify adjustments due to a learning process. Since the definition of the companies' strategy should be a dynamic rather than a static process, of shaping and reshaping the business and products in order to match their objectives and resources with the changing market opportunities [Kotler 1991], it is important to analyse how the companies adapt their strategy through time, responding to external changes or attempting to better fit the market. A further critical issue is the extent to which companies are able to learn and accumulate knowledge in order to reshape their strategy. This analysis was performed in five stages. The first concerned the identification of areas of more intense learning. A second stage uncovered the changes of marketing strategy that occurred during the companies' lifetime. Such information was expected to provide some evidence on a learning process and on its impact upon company's behaviour. A third stage focused on the competencies possessed by the companies, to determine whether they met their needs and which skills deficits existed that could hinder the learning process. The fourth stage was centred on the learning process, addressing the mistakes identified by the companies and the new capabilities created. The last stage reviews and evaluates the companies' ability to engage in the learning process.

The three steps follow a logical marketing sequence but in practice strategy definition and implementation are not necessarily distinct phases: there is a strong and continuous interaction and they are sometimes developed simultaneously. Particularly in the case of research-based companies, it has been noted that strategy is not always defined up-front, rather it evolves over a period of time [Mustar 1991]. Nevertheless, for operational

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reasons, each step was addressed separately, evolution and interactions being considered in the final step.

Having in mind the characteristics of the companies, a classical approach to the marketing process and to market assessment would not be appropriate and might not fully seize the desired information. The objective was to achieve an understanding of the market perceptions and marketing strategy concepts underlying the company's decisions. Being aware that small firms often do not have formal documents or even explicit statements concerning strategic issues, although they still carry out some form of strategic thinking [Kazanjian 1988, D'Amboise and Muldowney 1988], they were not simply inquired about formal plans or documents. Rather, the method used was speaking at length with the managers about their strategic views and their marketoriented activities, in order to gain an insight about the actual strategy. Also, marketing technical terms were avoided when the interviewees were not familiar with this language.

The strategies and practices adopted by biotechnology-based companies to commercialise their technologies in a wide range of application fields (namely beyond the pharmaceutical field) are still under-exploited areas of research. Therefore, this research was largely exploratory and based in less formalised research methods [Miles and Huberman 1984]. It had as starting point the literature about the development of a biotechnology industry, the characteristics and problems generally faced by the biotechnology-based companies and the specificities of high- technology marketing, but adopted an inductive and interactive approach, in order to allow confrontation of the empirical data obtained with the concepts present in the literature. On the other hand, it

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relied on qualitative methods to obtain in-depth information on the companies' behaviour in the marketing field. Thus, the research instruments chosen were direct interviews, based on a semi-structured questionnaire. The questionnaire included open questions, with a natural conversation flow around a common set of issues, closed questions about specific topics, questions using Likert scales and relevant quantitative data gathering.

3.3 Empirical Setting The empirical setting chosen to test the hypothesis and also the validity of the methodology was the process followed by Portuguese biotechnology-based companies to take their products to the market [Costa 2001]. A biotechnology-based company was defined as a company that bases a significant part of its products or services on third generation biotechnologies, or on second generation biotechnologies [Faulkner 1989, Walsh 1993], when the technology is non-traditional and the company assumes an active part in its development and/or specification. Sixteen companies were interviewed comprising 85% to 90% of the population at the time of the interviews (1999). Two companies were value-added resellers (VARs) that were introducing biotechnology products and services that did not exist in the Portuguese market. They were included in the analysis because their initial intention was to develop their own products or services and because they perform the important role of new market openers for other companies.

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4. The Marketing Process in the Portuguese Biotechnology-based Companies 4.1 Characterisation of the Companies All the companies analysed were SMEs, half of them created before 1996 and the other half created between 1996 and 1999. Six companies were classified as science-based and eight as engineering-based [Autio 1997]. Nine companies were created by entrepreneurs (average age of 37) and the remaining resulted from corporate investments. Six entrepreneurs had previous occupational backgrounds linked to research Jones-Evans [1995] and the most frequent motivations behind the entrepreneurial act were the exploitation of market opportunities and the possibility of working in their field of specialisation.

Concerning the initial resources of the companies, both the financial and human levels were considered. In what refers to financing, in addition to equity funds, twelve companies received some form of small grant, subsidy or prize that contributed to complement the internal investment. Nevertheless, in order to finance the heavy investments in research or to support market introduction, six companies had to obtain additional resources, through service or commercialisation activities or the production of an unrelated traditional product. This was often detrimental to companies' development, since entrepreneurs had to devote time and resources to areas that brought no knowledge accumulation in the relevant area. Other financial sources used by biotechnology companies elsewhere, like bank loans and especially venture capital, had a very low incidence. With respect to human resources, the majority of the companies had, at start-up, management experienced staff, with only four companies mentioning very limited or no experience in this area. Marketing s kills were the scarcest: only corporate investments had trained and experienced people in this area. Five companies

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employed people without marketing training but having previous market experience, four companies had no marketing experience but had benefited from short specific training courses and two companies recognised to lack marketing skills or experience.

The products, services or technologies offered by the companies were characterised according to their development stage, type of innovation in presence, degree of innovation, type of market and stage of the life-cycle achieved. Table 1 summarises some generic characteristics of the companies and presents their main product features. For confidentially reasons each company is identified by a letter of the alphabet (from A to P, attributed according to a random order). Having provided a general overview of the companies under analysis, the marketing process analysis will follow.

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Table 1 Products, Services and Patents Characteristics

ID
A B C D E

Age
1998 1996 1986 1999 1997

E/C*
E E E C E

Product/Service/ Patent
Patent Patents Product (with a service component) Pure product Product (with a service component)

Develop. Stage
Testing R&D Testing On the market Waiting for approvals Product design R&D Testing Product design Market prospecting Waiting for approvals On the market R&D Waiting for approvals (for certified product) On the market On the market On the market Product design R&D On the market On the market

Type of Innovation
Dynamically Continuous Discontinuous Dynamically Continuous Discontinuous Dynamically Continuous Discontinuous

Life -Cycle Stage

Introduction Introduction Growth Growth Growth/Maturity Introduction

F G H

1995 1998 1984

C C E

Pure product Pure product Pure product

Dynamically Continuous Dynamically Continuous Dynamically Continuous Discontinuous

Maturity Introduction Maturity Introduction/Growth

I J K L M N

1989 1992 1999 1998 1984 1995

Pure product Pure product Pure product Pure product Pure product Product with a strong service component 1997 E Product with a strong service component VAR 1994 E Product with a strong service component VAR * E Entrepreneurial investment C Corporate investment

C C C E C E

Dynamically Continuous Dynamically Continuous Discontinuous Discontinuous Dynamically Continuous Discontinuous

Maturity Maturity Introduction/Growth Introduction/Growth Growth/Maturity Introduction

On the market

Discontinuous

Introduction

On the market

Discontinuous

Introduction/Growth

4.2 Marketing Strategy Definition The analysis of the three stages here included allowed to conclude that, although exhibiting some difficulties in what refers to the business definition, 10 out of 16 companies appeared to have defined appropriate strategies. Nevertheless, six companies defined inappropriate strategic marketing plans (A, E, I, J, K, M). The main problem faced by the underperforming companies appears to be a tendency to over-diversify the activities at a too early stage of the company's development, precluding the concentration of scarce resources and efforts in the same market- learning path. Two

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such companies were facing technological blockages that limited the marketing strategy spectrum. Companies that revealed greater difficulties in the basic steps of the marketing definition process had no or low marketing competencies.

The results of each stage of analysis that lead to the above conclusions are as follows:

Stage 1 The analysis of each company's business definition was expected to provide an insight on how the companies view themselves presently and in the future. Table 2 shows that the majority of the companies were able to offer clear business definitions, the exception being companies that denoted an excessive tendency to diversify their business activity, loosing sight of their core competencies (A, E, K, M). According to some authors, small and young companies should not invest in diversification but in specialisation [Mustar 1998 , Plaut and Ilan 1987]. A strategy based on diversification is riskier, since it requires the dispersion of the investment and resources throughout several areas. In fact, the tendency to diversify does not allow the companies to totally profit from the accumulated knowledge (both on market and technology) requiring them to develop new learning processes every time they switch to a different technology or market.

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Table 2 Strategy Definition Steps

ID
A B C D E F G H I J K L M N O P

Business Market Definition Research

Unclear Clear Clear Clear Unclear Clear Clear Clear Clear Clear Unclear Clear Unclear Clear Clear Clear Inadequate Adequate Adequate Adequate Inadequate Adequate Adequate Adequate Inadequate Inadequate Adequate Adequate Inadequate Adequate Adequate Adequate

Segmentation
Well prepared Well prepared Well prepared Well prepared Well prepared Well prepared Well prepared Well prepared Random or no segmentation Random or no segmentation Well prepared Well prepared Random or no segmentation Well prepared Well prepared Well prepared

User Needs
Identified Identified Identified Identified Identified Identified Identified Identified Unidentified Unidentified Unidentified Identified Identified Identified Identified Identified

Target Market
In accordance In accordance In accordance In accordance In accordance In accordance In accordance In accordance Pre-defined without analysis Pre-defined without analysis In accordance but hesitating In accordance Pre-defined without analysis In accordance In accordance In accordance

Competitors
Believes to have none Believes to have none Knows who they are Knows who they are Knows who they are Knows who they are Knows who they are Knows who they are Knows who they are Knows who they are Knows who they are Knows vaguely of their existence Knows vaguely of their existence Knows who they are Knows vaguely of their existence Knows who they are

An assessment of whether companies went through the necessary steps to define the company's marketing strategy (Table 2), allowed us to conclude that: a) While most companies seemed to be able to perform a minimum level of market research (sometimes in quantitative terms, but more often in qualitative terms), it was not necessarily an easy task and five companies failed to achieve it (A, E, I, J, M); b) Market segmentation, was well prepared in most cases in spite of some information deficits with the companies being able to indicate the main market segments and their relative importance (exceptions being companies I, J and M); c) Only three companies revealed clear difficulties in identifying unmet user needs that they would try to satisfy (I, J, K), one of them being a very young company, without close contact with the market; d) All but four companies (I, J, K, M) were able to give a clear notion of their target market, coherent with the previous analysis; the ones that were unable to do so, did not base their choices on an adequate analysis and were not conscious of the profile

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of the potential customers; e) The majority of the companies were able to clearly identify the main competitors and their products, being also able to compare them with their own products. Two companies that intend to sell patents (A, B) claimed to have no direct competitors, but their analysis missed the potential indirect competitors. Three companies (L, M, O) did not make an effort to identify their competition although they were aware of their existence.

Stage 2 This stage looked at the strategic decisions regarding the competitive position and the market scope. Regarding competitive position, Table 3 presents results showing that companies divided themselves mostly between those that prefer to serve niches and those that choose to be market leaders or challenge the leaders. Only three companies chose the less innovative, although not forcefully less profitable, role of market followers. Regarding the geographical scope of their strategies (Table 3), there were eight companies planning for international coverage, although some of them did not know how and when they would implement it (D, E, G, I, K). Companies that had already devised internationalisation strategies based them on agreements with multinational companies, either to license patents (A, B) or to distribute products (C). One company started with international focus but was forced to shift to the national market (J). The remaining companies mostly those with niche strategies focused primarily on the national market, although two would resort occasionally to the international market, for excess production (H, J) and four were willing to internationalise in the future (F, L, M, N).

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Table 3 Marketing Strategy

ID
A C F H D E G M B L N O P I J K

Strategy
Leader Leader Leader Leader Challenger Challenger Challenger Challenger Nicher Nicher Nicher Nicher Nicher Follower Follower Follower

National/International
International from the beginning National but already expanded National but expecting to expand National from the beginning International from the beginning International from the beginning International from the beginning National but expecting to expand International from the beginning National but expecting to expand National but expecting to expand National from the beginning National from the beginning National from the beginning International in the beginning but shifted to national International from the beginning

Stage 3 In this stage an attempt was made to evaluate the degree of appropriateness of the companies' strategic marketing definition. This evaluation was based on the way the companies developed the marketing process, therefore the focus was more on the procedures than on the content.

Considering that six companies were unable to adequately define a marketing strategy, it can be concluded that the strategy definition phase presents relevant difficulties to the biotechnology companies' development.

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4.3 Marketing Implementation Considering the four stages analysis it can be concluded that only three companies were found to have an inadequate behaviour (I, J, M), although several showed deficiencies in their marketing implementation. There was one success story for crossing the Chasm, but the remaining companies do not seem to be following the appropriate steps to address this stage. On the other hand, the underperforming companies had undifferentiated products with limited distribution and poor promotion. Two were facing technological problems due to the rupture of alliances with foreign parent companies. All of them had low marketing skills.

Because a few companies were not yet on the market (D, E, G, K, L), the analysis in those cases considered the outline definition for future implementation. The results for four stages of analysis are as follows:

Stage 1 In this stage the companies' customer profiles were established, considering the type of innovation in presence (Table 4). For companies introducing discontinuous innovations (half of the sample) the company was also located in the respective stage of the Technology-Adoption Life-cycle [Moore 1995a] (on the basis of the customers' profiles and life-cycle stage). This allows for an analysis of their situation in terms of Chasm crossing and for an evaluation of whether companies introducing discontinuous innovations were being able to cope with the associated market problems. Only company C had already crossed the Chasm (Table 4), while five other companies are starting to face the problems related to the Chasm, and three others are still starting to access their Early Market.

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Taking advantage of strong m arket knowledge and assistance from technical support and regulatory bodies and benefiting from strong word-of- mouth communication, company C quickly managed to prevail over the initial resistance of the consumers and became leader in several niches. The present need to change the strategy in order to create a wave of acceptance from the customers was understood and thus the company was preparing to consolidate leadership in the Tornado stage. One company (N) had identified the relevant market niche and was beginning to approach it. However, it was preparing itself to move forward to other market niches and to a higher production scale, ignoring the possible delays motivated by the Chasm. Two companies (E, H) are starting to approach the market but did not identify the primary market niche. Company H, opted for trying to reach the largest market segment which is the one with lower resistance to change and more capacity to absorb the technology adopting a demonstration strategy that may be appropriate for the agricultural market it targets. But its progress may be undermined by the negative role played by public regulatory bodies which unduly delay product certification. The VARs (O, P) are expanding the customer base beyond the innovators, benefiting from word-of- mouth communication. Even so, company O was not able to select a market niche to privilege and was trying to reach several segments, while company P identified a primary target, but maintained interest in other segments. However, both companies have limited influence upon their products and thus may be unable to adapt the products to specific niche requirements and cross the Chasm. Finally, Company B will not be required to cross the Chasm because it adopted a patent selling strategy, transfering the problem to the buyer. Companies K and L did not enter the market yet and have not identified a target market niche.

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Table 4 Customers Profile

ID
C E N O P H K L B A D F G I J M

Customer Profile
Late majority Innovators Innovators Innovators and Early-adopters Innovators and Early-adopters Innovators and Early majority Will be Innovators and Early adopters Will be Innovators Will be Early majority Will be Innovators Will be Innovators, Early adopters and Early majority Will be Late majority and Laggards Late majority and Laggard Will be Late majority and Laggard Late majority Late majority Late majority and Laggard

Type of Innovation
Discontinuous Discontinuous Discontinuous Discontinuous Discontinuous Discontinuous Discontinuous Discontinuous Dynamically continuous Discontinuous Dynamically continuous Dynamically continuous Dynamically continuous Dynamically continuous Dynamically continuous Dynamically continuous Dynamically continuous

Stage of the Technology Adoption Life Cycle

The Bowling Alley Early Market Chasm Early Market Chasm Early Market Chasm Early Market Chasm Early Market Chasm Will be Early Market Will be Early Market Will be Early Market -

Stage 2 The decisions on differentiation, positioning and product design process were analysed, considering: effectiveness of differentiation, ability to define and communicate a clear positioning and degree of customer involvement in the product's development. Almost all companies included customer participation or consultation in technological development, in order to direct the product to their needs (exceptions being D, F, I, J M) (Table 5). Most companies were able to base their strategies in effective differentiation, although in the case of companies E and K such differentiation was only achieved towards traditional products and not in relation to advanced competitors using a comparable technology. This problem was being addressed by company E through the introduction of clearly differentiated new products. Finally, some companies (D, M) compensated lack of product differentiation with low price positioning, adopting a market challenger position (Table 3). The effectiveness of a product's positioning is not easy to assess. Nevertheless an attempt was made to identify the companies' perspective and the customers' perception about the product, for the companies with products on the market. Most companies were able to determine a clear Page 31 of 50

positioning strategy (exceptions were E, I, J and D), although some had difficulties in expressing it in adequate terms and might not be fully aware of its importance. A positioning based exclusively on lower price arguments (D, M, B), may be difficult to maintain in a global market.

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Table 5 Implementation Steps ID

A B

Product Design
Incorporating customer needs Incorporating customer needs

Differentiation
Effective Fast technical performance Effective Performance and other technical aspects

Positioning
Intended: Clear Scientific/technical advantage Obtained: Unknown* First patents: Intended: Clear Lower price (for the final product); Obtained: Clear Lower price (for the final product) New patents: Intended: Clear Scientific/technical Intended: Clear High perceived quality Obtained: Clear High perceived quality (high price and full support service) Intended: Clear Lower price Obtained: Unknown* First products: Intended: Clear Reliability and Lower price; Obtained: Unclear Similar to competitors New products: Intended: Clear Performance, Reliability and Lower price First products: Intended: Clear Quality and Reliability; Obtained: Clear Quality and Reliability New products: Intended: Clear Effectiveness Intended: Clear Timing advantage, Lower price and Quality Obtained: Unknown* Intended: Clear Productivity, High perceived quality Obtained: Clear but could be reinforced by the product certification Intended: Unclear none Obtained: Unclear product seen as equivalent to others Intended: Clear Quality and Low Price Obtained: Unclear no conscious effort to communicate the positioning (also the price is not low compared to new competitors) Intended: Unclear not defined yet (possibly it will be based on strong image and fast delivery) Obtained: Unknown* Intended: Clear Safety, High quality, Flexibility and Low price (directed to SMEs) Obtained: Unknown* Intended: Clear Lower price Obtained: Unclear Lower reliability and efficiency Intended: Clear Low price (with maintenance), Effectiveness and superior safety Obtained: Clear Low price, Effectiveness and safety Intended: Clear Superior Performance and Safety Obtained: Not very clear for the market since it is difficult for the company to inform and do the awareness effort for the technology Intended: Clear Time utility (delivery), Service, and Quality perception Obtained: Clear Quality perception, Service

Incorporating customer needs Technical development Incorporating customer needs

D E

Technical development Incorporating customer needs Incorporating customer needs Technical development Technical development

I J

Effective Performance (quality) and Image For the national market also Conformance to local products and additional service assistance Non-existing the product is similar to its competitors First product: Effective Reliability (compared to traditional products); Non-existing if compared to modern competitors New products: Effective Performance (specificity), Reliability and added service First products : Effective Image New products: Effective Performance, Reliability and Image Effective Timing advantage (produced in a period with lower offer) and Quality (to be achieved yet) Effective Performance (quality and productivity), Reliability. For the national market also Conformance to local products Non-existing Quality is superior but only to a small extent Effective Superior quality if compared to the main competitors (not very valued by the market) Effective (if compared to traditional products) Superior performance and control. Non-existing if compared to modern competitors Effective Performance (security and flexibility) (to be achieved yet) Non-existing the product is similar to others Effective Performance superior safety) (effectiveness and

Incorporating customer needs Incorporating customer needs Technical development Incorporating customer needs External developed by the suppliers

M N

External developed by the suppliers

Effective (if compared to traditional products) Performance (quality, safety and added service customer training, consulting service, etc.) Effective if compared to modern competitors (performance) Effective Performance (effectiveness and environmental impact) and Service (delivery, customer training, consulting service)

* Unknown because it is too soon for an evaluation.

Stage 3 With respect to the marketing mix established by the companies in order to implement their strategy, two main features were identified: a) While communication

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strategy was absent in three companies (I, J, M), three others (C, O, P) were able to create a word-of- mouth effect, which emerged as a very effective communication tool in their restricted market; b) A mix of distribution strategies was used by most companies (distributor, influencers or distribution centres, exclusively or in addition to direct shipping), with only four relying exclusively on direct distribution (F, H, K, O).

Stage 4 The global evaluation was not conducted for companies whose market implementation strategy was still in an early stage of development (D, E, G, K, L).

From the above analysis it can be concluded that the strategy implementation phase also presents relevant difficulties to the biotechnology companies' development, remarkably in the case of the companies introducing discontinuous innovations that are, in most cases, unaware of the specificities of their situation.

4.4 Strategy and Implementation Evolution

The results from this five stages show that most companies felt the need to change or adapt, in order to adjust to changing environments, to respond to modifications in the internal conditions, or as a result of a learning process about their business. Past mistakes identified by the companies are above all related to management and marketing decisions and this area accounts for the most intense capability development.

The results from each of the five stages are as follows:

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Stage 1 This stage addresses the importance of marketing and management learning. Marketing was an important learning area for almost all companies. Those who did not mention it either had not yet reached the market (D), or had not been able to maintain a consistent market path, which resulted in low market knowledge accumulation (I, M). Management learning occurred more intensely in the companies founded by entrepreneurs, who did not have previous business experience. One company also reported the accumulation of knowledge in the intellectual property rights area.

Stage 2 With respect to changes in the marketing strategy, it may be concluded that most companies that already had some contact with the market, did in fact introduce more or less radical modifications to their initial strategy, in order to adapt to the actual market conditions or to respond to other significant factors that affected them. Only three companies believed their initial strategy remained adequate (C, F, H). Main reasons for change included: closer contact with the market or contact with business experts that helped them gain a better market perception (A, B); adoption of a probe and learn process to find the adequate product and market for the technology developed (E, N); loss of a major foreign shareholder whose input was critical in technological and market terms (I, J). In the particular case of the two VARs, which planned to later develop their own products, the inability to establish alliances and obtain funds for research forced them to readjust their strategy and remain solely resellers.

Stage 3 Regarding the competencies balance between what companies recognise to need and what they could effectively access (internally or externally), it can be concluded that the most problematic area is management, and particularly marketing.

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Seven companies face serious insufficiencies in terms of management skills (A, E, I, J, L, M, P). The main reasons mentioned to explain this deficit include difficulties in finding people with management experience who are willing to work in small companies and/or lack of financial resources to pay them, although there were also some companies that did not recognise the need to recruit. These problems were particularly critical to companies that were unable to build and retain a pool of people with sufficient skills in most areas (J,M), and implied, in the most serious cases, the impossibility of accumulating both technical and management competencies (I, P).

Stage 4 Concerning the companies own assessment of the capabilities developed along time, one possible approach is to see whether they i entified mistakes derived d from lack of competencies and the learning process achieved from correcting them. Only three companies considered not to have made mistakes, two of them because of their youth (D, G) and another one because of its inability to reconstitute the past, due to high staff turnover (M). Mistakes were frequently related to lack of management competencies (in many cases in the marketing area) and only in one case to inability to build technological capabilities (J). The inability to deal with public authorities was also problematic for some firms (F, H). Regarding the new capabilities that the companies claim to have gained along the process, all but one said that the market and marketing were important areas of capabilities development. M companies also mentioned ost development of technological capabilities. Furthermore, it is also possible to conclude that most companies particularly the companies created by entrepreneurs changed significantly their initial market perception to adapt it to the market specificities.

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Stage 5 Overall analysis of companies' ability to learn, acquire capabilities and consequently adapt their marketing strategy.

It can be concluded from the analysis that the companies went through important learning processes, above all in terms of market and that limitations in those processes were due to human resources problems. The marketing and even management competencies possessed by the companies seemed to have a major impact on their marketing process performance, but not all companies saw them as a priority.

4.5 Marketing Management Process Overall Evaluation As a result of the analysis and comparison of the biotechnology companies' strategic marketing process, it was possible to identify four groups, according to the adequacy of the overall marketing process: 1, 2, 3 and 4, considering a descending order of adequacy (Table 6).

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Table 6 Skills and Competencies Balance

ID Market Strategy Appropriate Appropriate Appropriate Appropriate Appropriate Appropriate Appropriate Appropriate Inappropriate Inappropriate Inappropriate Appropriate Appropriate Inappropriate Inappropriate Inappropriate Marketing Implementation Appropriate Under development Appropriate Under development Appropriate Appropriate Under development Appropriate Appropriate Under development Under development Appropriate Appropriate Inappropriate Inappropriate Inappropriate Marketing Learning No major changes Building market knowledge No major changes (too soon) No major changes Product line improvements No major changes (too soon) Radical change Support of external experts No major changes Major regulatory obstacles No major changes (too soon) Strong change Probing and learning Radical change Support of external experts Radical change Probing and learning No major changes (too soon) Strong change Less ambitious strategy Strong change Less ambitious strategy Strong change Less ambitious strategy Radical change Less ambitious strategy Radical change Probing with low learning Innovation /Chasm* D Bowling Alley DC DC DC DC D Early Market D Early Market Chasm D Early Market D Early Market Chasm DC D Early Market Chasm D Early Market D Early Market Chasm D Early Market Chasm DC DC DC Marketing Skills Sufficient Sufficient Sufficient Sufficient Insufficient Sufficient Insufficient Sufficient Insufficient Insufficient Sufficient Insufficient Insufficient Insufficient Insufficient Insufficient Management Skills Sufficient Sufficient Sufficient Sufficient Sufficient Sufficient Insufficient Sufficient Insufficient Insufficient Sufficient Sufficient Insufficient Insufficient Insufficient Insufficient

1 C
D F G B

2
H L N

3 A
E K O P

4 I
J M

* D Discontinuous innovation DC Dynamically Continuous innovation

Companies that reached Group 1 in the marketing process were able, so far, to define and implement an adequate strategy. With an adequate approach defined at an early stage, companies C and F had no need for major changes and evolution was smooth. Companies D and G are very young and not yet on the market and for that reason there were only minor adaptations to the initial strategy, which seemed consistently designed. Only one Group 1 company was introducing a discontinuous innovation and managed to overcome Chasm crossing difficulties. All Group 1 companies possessed sufficient management and marketing skills.

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Group 2 companies were those which somehow managed to define and implement strategy appropriately, but denoted difficulties in that process. Company B benefited from the support of external experts in strategy definition, learning from this experience and acquiring capabilities at this level, in spite of insufficient marketing skills. Company N went through an important probing and learning process that enabled market adjustment, but with high costs in terms of time to the market. Company L did not introduce major strategy changes because it did not reach the market yet, nevertheless the difficulties it is likely to face to introduce a discontinuous innovation, associated to a lack of marketing and management skills, predict some problems. Company H faced problems regarding regulatory issues and the inability to deal with them delayed the expected results. All Group 2 companies are introducing discontinuous innovations and facing Chasm related difficulties and all were created by entrepreneurs.

The majority of companies classified in Group 3 were not able to define adequate marketing strategies and had very weak marketing processes (A, E, K, O and P). Companies A and E were engaged in profound marketing changes, based on counselling with experts and probing and learning. Nevertheless company A still shows a tendency to loose focus and therefore it is not clear whether it absorbed the required knowledge. Company E radically changed the market approach while probing the market, but with high financial and time costs. Moreover, because the company also changed business area, learning was limited. The majority of Group 3 companies were introducing discontinuous innovations and faced difficulties in recognising and handling their requirements. The majority lacked marketing and management skills. The exception was company K, but even so it was unable to focus on one of two very different market

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segments. Companies O and P also faced technological constraints that hindered their market approach.

Finally, all three companies classified as Group 4 were unable to define and implement an acceptable marketing strategy, even though they were working with nondiscontinuous innovations (I, J and M). The reasons behind their inability to handle the marketing process are twofold: technological deficiencies blocked product

improvements, with negative consequences for their marketing strategy; and the lack of human resources with adequate management and marketing skills keep the companies from learning and evolving. Although their marketing strategies went through strong changes, there was no significant learning or business refocusing in less ambitious paths.

It was interesting to notice that the companies with the weakest performance (Group 4) were corporate investments, created before 1995, which may be surviving artificially with support from the parent company. They were unable to define and implement adequate business strategies and obtain the relevant competencies. The two VARs, that also have weak evaluations, are trapped by their technological limitations and if they remain unable to cope with this problem, they will never become integrated companies developing their own products. Finally, there was a group of companies that faced a number of difficulties regarding business strategy and/or have some limitations regarding management competencies, but their problems appear to be manageable, if the companies reassess their business orientations and make some adjustments.

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5. Conclusions This research intended to understand the process by which the biotechnology-based companies take biotechnology products to the market. The objective was to investigate whether these companies are being able to handle the specificities of their marketing process, considering both the characteristics of their technological and organisational profiles. The working hypothesis was that marketing process deficiencies constitute relevant obstacles to the development of biotechnology-based companies. These deficiencies are particularly felt by companies introducing discontinuous innovations and are largely related to the absence or difficulty to access human resources with releva nt management and marketing capabilities. A methodological approach for this analysis was proposed and was tested using the case of the Portuguese biotechnologybased companies. The methodology considered three phases of the marketing process: strategic marketing definition, marketing implementation and evolution of strategy and implementation.

The research findings confirm that the methodological approach used is useful in the assessment of the marketing process management in biotechnology-based companies. The methodology fulfilled the objectives of respecting the specific characteristics of the technology and of the companies commercialising it, allowing us to draw conclusions regarding the research question and to verify the research hypothesis.

Concerning strategic marketing definition, the empirical research revealed that most companies managed to get through the relevant phases of strategy definition: only five failed to do so. But several experienced difficulties along the process, particularly science-based companies whose entrepreneurs or directors had a research background.

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Deficiencies were found at the following levels: performing or acquiring market research, market segmentation, identification of customer critical needs or identification of competitors. But the main problem was the attainment of an adequate business definition, neither too broad nor too narrow. Indeed, some science-based companies revealed a tendency to over-diversify their business activity, following a typical research-oriented behaviour, less adequate to the business world. Hence, the strategy definition phase also presented some difficulties for the biotechnology-based companies, especially in what refers to the critical stage of business definition.

A similar conclusion can be reached regarding the phase of marketing implementation. Although only three companies were unable to describe conceptually acceptable plans, several showed some deficiencies. These included: neglecting customers' involvement in product development process, absence of product differentiation, risky low price strategies, unclear positioning, no communication strategy. Nevertheless, it should also be pointed out that three companies performed quite well, having such positive impact on the market that they benefited from a strong word-of- mouth communication.

Because companies introducing discontinuous innovations face particular challenges, their case was analysed in more detail. So far, only one out of the 9 companies had a success story for crossing the Chasm. The remaining companies seemed unable to recognise the problems associated to their situation, having difficulties in defining and implementing Chasm crossing strategies. Their main problem was the incapacity to identify or focus on the critical market niche to privilege, followed by inadequate pricing and regulatory problems. For companies offering dynamically continuous innovations, the market access process is usually less demanding in terms of marketing

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expertise and effort. In fact, in average, this type of companies (seven cases) faced more straightforward paths to market, although some of them experienced other types of problems. It can thus be concluded that the strategy implementation phase also presented some difficulties to biotechnology companies' development, remarkably in the case of the companies introducing discontinuous innovations that were, in most cases, unaware of the specificities of their situation and unprepared to deal with it.

In what concerns the companies' capacity to modify their market strategy, most companies felt the need to adapt their strategies, in order to adjust to external or internal change and/or as a result of a learning process about their business. The most commonly mentioned causes behind significant changes were: the counsel of external experts, the results of probe and learn processes aiming to identify the market receptivity, and the inability to develop or sustain alliances. The main mistakes identified by companies concern management and marketing decisions and this area also accounts for the most intense learning. In fact, most companies mentioned intense learning related to the market and the strategies to access it, which enabled them to identify past mistakes and to reorientate their strategies accordingly. Strategic changes, resulting from these learning processes, occurred more frequently in entrepreneurial companies, possibly due to their lower access to specialised marketing competencies at an early stage. Exceptions to this trend were a few companies that appeared to lack the capacity to absorb new knowledge, due to the absence of the necessary skills and competencies or lack of ability to access them. Although this was particularly evident in the management and marketing areas, it also occurred in technological areas, with a very serious impact on companies' performance.

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An overall analysis of the adequacy of companies' marketing process enabled us to define and characterise four groups: Group 1 companies able to define and implement an adequate strategy from an early stage and possessing the required competencies; Group 2 companies introducing discontinuous innovations that somehow managed to define and implement a strategy appropriately, but that mentioned difficulties in that process and experienced intense learning; Group 3 mostly companies introducing discontinuous innovations, unable to define adequate marketing strategies, having a very weak marketing processes and experiencing profound changes; Group 4 companies introducing non-discontinuous innovations, unable to define and implement an acceptable marketing strategy, as well as to learn from mistakes, mostly due to incapacity to overcome competence deficiencies. In conclusion, only 4 companies (Group 1) were able to straightforwardly handle the marketing process without significant problems.

Summing up, it can be considered that, in addition to the generic difficulties that the Portuguese biotechnology companies face in terms of technology, finance and other non- market related issues, the market assessment factors also place relevant problems to the companies, confirming the initial research hypothesis. Although most companies had adequate perceptions about the market and the manner to reach it, most of them still struggled to achieve an adequate management of their marketing process and, despite their learning processes, several are still far from dealing adequately with this area. Companies introducing discontinuous innovations experienced particular difficulties in becoming aware of the obstacles in their path and in finding strategies to overcome them, which also supports the hypothesis.

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It is equally relevant to point out that the biotechnology-based companies have been able to evolve, learn and adapt. Most companies, especially the entrepreneurial ones, introduced changes in their market strategy in an attempt to adjust their market perceptions. They engaged in intense tacit learning processes, particularly in the management and marketing areas, in order to reorient or refine their business strategy. Starting- up with limited management and marketing competencies, many companies underwent trial and error processes, along which they strived with greater or lesser success to acquire or obtain elsewhere missing skills and develop new competencies. The fact that companies with skills deficits had more problems supports the hypothesis.

This discussion brought some light to the market behaviour of biotechnology-based companies, uncovering some of the problems they face and identifying the main obstacles in their path to the market. However, because it used the case of Portuguese companies as empirical setting, the results may be influenced by the environmental factors relative to the Portuguese context, which influence the nature and performance of the companies analysed. Nevertheless, this analysis enabled us to develop and test a methodology that was found to be adapted to address this problem and could therefore be applied to analyse marketing strategy behaviour of the biotechnology-based companies in other settings.

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