Design innovation and marketing strategy in

successful product competition

Yen Hsu
Department of Industrial Design, MingChi University of Technology, Taishan, Taiwan

Abstract
Purpose – Taiwanese computer and electronic products possess advantages in design, innovation, rapid response, and global market flexibility. This
study aims to examine Taiwanese computer and electronics firms to explore the product marketing strategies they adopted to deal with global
competition. Furthermore, it is intended to analyze firms in different marketing strategic groups in terms of their product design strategies and how they
incorporated design and marketing strategies into design innovation. This analysis is applied as an integrated innovation model for allocating design
and marketing strategies.
Design/methodology/approach – Based on a questionnaire survey and case studies, the marketing strategies adopted by the Taiwanese computer
and electronics industry can be classified into the categories of “market leader”, “market focus”, “market challenge” and “market niche”.
Findings – Firms employing different marketing strategies employed different design innovation strategies in product design. The design strategies
adopted by enterprises in the market leader group incorporated aggressive innovation; those in the market focus group were characterized by focus
innovation in product design; those in the market challenge group exhibited strong innovation integration in product design; and those in the market
niche group exhibited flexible innovation in product design.
Originality/value – The innovation models adopted by the Taiwanese computer and electronics industry were related to enterprise scale, business
type, and product development category. Results of this study provide a valuable reference for enterprises with regard to R&D and marketing in relation
to product innovation.

Keywords Product design, Innovation, Marketing strategy, Computers, Electronics industry, Taiwan

Paper type Research paper

An executive summary for managers and executive
readers can be found at the end of this article.
1. Introduction
Design innovation is closely related to marketing (Roy and
Bruce, 1984; Souder and Moenaert, 1992; Prabhaker et al.,
1995; Woodside et al., 1999; Zhang and Ma, 2007). In
developing new products, marketing departments should
constantly interact and exchange information with design
departments (Petiot and Grognet, 2006; Lackman, 2007;
Rossler and High, 2007). An effective connection between
marketing and design activities will trigger product innovation
(Gupta and Wilemon, 1990; Sherman et al., 2000). More
importantly, numerous enterprises confer on the concept that
“product design should lead marketing to meet market
requirements”, and “firms sell both products and designs”
(Beckman and Barry, 2008). Not only can a good design help
an enterprise achieve profits, but it also offers consumers
product values associated with enterprise image (Olins,
1990).
Taiwanese made computer and electronics products possess
advantages in design, innovation, quick response, and
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flexibility in the global 3C (Computer, Communication, and
Consumer Electronics) market, and Taiwan has many famous
brands like ACER, Benq, ASUS, Mitac, PQI, and MSI.
However, intensifying market competition has considerably
impacted Taiwanese enterprises. Consequently, marketing
personnel and product designers in these enterprises should
closely monitor their competitors to cope with the conflicts
and challenges from the changing global market environment.
Additionally, such enterprises should develop new products
based on the goal of innovation in marketing strategy (Hsieh
et al., 2006; Tsai, 2006).
Souder and Moenaert (1992) posited that the successful
application of techniques depends on the integration of R&D
and marketing departments. In a study of the interaction
between R&D and marketing departments, Gupta and
Wilemon (1990) found that product innovation in the high-
tech industry depended on a close match between R&D and
marketing. Therefore, Sherman et al. (2000) pointed out that
the functional incorporation of innovation in R&D and
marketing departments was an important factor in the
product development stage. Many researchers have also
mentioned that the integration of product design procedure in
an enterprise enhances new product development
performance (Carlsson, 1991; Griffin and Hauser, 1996;
Gupta et al., 1985; Ruekert and Walker, 1997; Pinto et al.,
1993; Rusinko, 1997; Song et al., 1997; Olson, 1994; Sobek
et al., 1998; Woodside, 2005; Lau et al., 2007). Furthermore,

Journal of Business & Industrial Marketing

26/4 (2011) 223– 236 Received: October 2008
q Emerald Group Publishing Limited [ISSN 0885-8624] Revised: May 2009
[DOI 10.1108/08858621111126974] Accepted: May 2009

223
 Design innovation in successful product competition
Yen Hsu
numerous studies have shown that design represents a key
integrated resource in an enterprise, and is not merely an
important mechanism of the functional incorporation of
product development, but also a significant serial loop in the
entire enterprise value chain (Baxter, 1995; Olins, 1990;
Fujimoto, 1991; Bruce and Jevnaker, 1998; Twigg, 1997,
1998; Ge and Wang, 2007; Aydin et al., 2007; Kumar and
Kumar, 2004; Lackman, 2007). Chang and Hsu (2004) and
Hsu (2006) also found that Taiwanese enterprises have new
strategies and actions in product design innovation. However,
the literature on the practical incorporation of product
marketing strategy and product design innovation, namely the
matching of product design innovation and marketing in
enterprises is limited.
Consequently, this study cited Taiwanese computer and
electronic firms with marketing and product design
departments as examples for exploring design and marketing
strategies via questionnaire survey and case studies. This
investigation has three objectives:
1 explore current manager execution of marketing and
design strategies in the Taiwanese computer and
electronics industry;
2 analyze types of marketing strategies and practical actions
in product design innovation; and
3 provide an incorporated model for matching marketing
and design innovation strategies.
2. Literature review
2.1 Product-marketing strategy
Kotler (2003) defined marketing strategy as a set of business
principles that an enterprise uses to serve its customers and
achieve profitability. Armstrong and Kotler (2003) noted that
marketing strategy is designed to guide an enterprise to use its
resources to meet the requirements of target customers and
realize marketing goals more efficiently than its competitors.
Cravens et al. (2000) considered marketing strategy to involve
four dimensions, including branding strategy, low-cost
strategy, channel strategy, and innovation strategy. From
this perspective, marketing strategy and product innovation
are closely linked.
Although different ideas regarding types of marketing
strategy have been proposed, most researchers have explained
marketing strategy via the incorporated aspects of 4P
(Product, Price, Place, and Promotion) (Kotler, 2003). This
study employed the incorporated idea of marketing
dimensions proposed by Kotler (2003) and those ideas
proposed by Thorpe and Morgan (2007), Hughes and
Morgan (2007) and McCarthy and Perreault (2003) as
measurement variables for the questionnaire survey and the
product marketing strategy analysis. Table I lists the
measurement variables of marketing strategy considered in
this investigation.
2.2 Product design strategy
Generally, after analyzing marketing opportunities and threats
in external environment and the evaluation of its own strengths
and weaknesses, an enterprise will develop a strategy that
benefits itself. For example, Crawford (1994) observed that the
so-called product design strategy indicated the method of new
product design under the guidance of new product development
strategies. Furthermore, Olson (1994) considered product
design strategy to denote the effective allocation and
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Volume 26 · Number 4 · 2011 · 223 –236
arrangement of design innovation resources to accomplish firm
goals. Oakley (1990) thus maintained that design and enterprise
strategy were mutually dependent. Furthermore, Mozota
(1990) quoted three basic strategies proposed by Porter
(1980) to describe design strategy goals: cost oriented design,
image oriented design, and focus oriented design.
However, Kelley (1992) proposed a strategic palette based
on successful product cases, where the design strategy
comprised 12 strategic factors. Furthermore, Sung and You
(1999) considered design strategy to involve a practical
reaction to design innovation within an organization.
Integrating the strategic design factors of Kelly, Sung and
You (1999) identified ten product design innovation factors
and stressed that product design strategy comprised a series of
properties designed to achieve a specific innovation goal in
product design, and could provide an enterprise with unique
competitive advantages in design.
Above literature indicates that the design strategy indicates
the method of achieving innovation design goals. By utilizing
enterprise R&D ability, the design team can implement a
design strategy by analyzing customer needs and the impacts
of competitors in achieving enterprise performance goals
(Hsu, 2006). Because of their innovative design, rapid
response, and production flexibility, firms in the Taiwan
computer and electronics industry have created numerous
well known products and brands. This investigation thus
adopted the perspectives of Sung and You (1999) and Hsu
(2006) regarding product design strategy to investigate the
most suitable innovation approaches for the Taiwanese
computer and electronics industry. It is important to
understand how companies, with their current advantages
and resources, employed different marketing strategies to
realize their product marketing goals.
3. Methods
This investigation comprised two stages, namely
questionnaire survey and case studies.
Stage 1
Literature review
The literature review explored the variables of the new
product marketing strategy. The questionnaire was drafted
based on the marketing strategy measurement variables listed
in Table I.
Questionnaire survey
The survey was performed from March to May 2007. Based
on the enterprise database for the Taiwan computer and
electronics industry, 1,000 industry marketing departments
were selected as a sample. In total, 20 of these departments
were selected as subjects for the pilot test based on the results
of which the questionnaire survey format was adjusted.
Following questionnaire distribution and follow up, 305
copies of questionnaires were gathered, representing 30.5
percent of the total poll, for data logging.
Since most of the indicators suffer from simultaneity and
multi-colinearity, Principal Component Analysis (PCA) is
best suited for removing such difficulties because it maximizes
the variance rather than minimizing the least square distance
where any other technique (such as regression analysis) fails
to do so. In this paper, we apply the “Factor Analysis” method
in Statistical Package for Social Sciences (SPSS) to analysis
the 17 measurement variables. Through PCA, four factors
 Design innovation in successful product competition Journal of Business & Industrial Marketing
Yen Hsu Volume 26 · Number 4 · 2011 · 223 –236

Table I Measurement variables of marketing strategy considered in the case study of the Taiwan computer and electronic industry
Marketing strategy dimensions Measurement variables and their operational definitions
Product Commodities or services that meet the requirement of the target customers
Profits a product can offer to the customers in the communication of quality, function, and other core benefits
Emphasis on the appearance of products or the inner features
Emphasis on the width of a specific product line
Emphasis on the depth of a specific product line
Price Mainly focus on sales growth and market share
Mainly focus on the best profit
The price setting meets the regulation of consumer law
Price setting meets the requirements of customers in different market sections
Place Delivering products in an economical and efficient way
Adapting channels to cope with changes in the environment
Adopting channels that match the product images
Offering better rewards to the channel suppliers
Promotion Products can offer additional tempting elements to trigger customers’ intention of purchase and possession
Using promotional methods to motivate potential customers
Enhancing customers’ identification of company, brand, or product quality
Enriching the understanding and communication among customers, company, and products

were extracted from 17 measurement variables, and 69.59
percent cumulative total variance was obtained, meaning
these four factors are sufficiently typical to represent the
original 17 variables. To simplify the factor structure, the
Varimax method of orthogonal rotation (Lin, 1992) was
selected to explain the four factors, which had Eigen values
exceeding 1 (Robert and Wortzel, 1979).
This investigation employed two-stage cluster analysis
(Anderberg, 1973; Punj and Stewart, 1983). Cluster
analysis is a statistical method for finding relatively
homogeneous clusters of cases based on measured
characteristics. The aim is to maximize between-group
variance and to minimize within-group variance. It starts
with each case in a separate cluster and then combines the
clusters sequentially, reducing the number of clusters at each
step until only one cluster is left. In this paper, we apply the
two-stage cluster method in SPSS to analysis the 305
observed data. Using the factor scores of individual firms, the
method of Ward was first used to classify these companies.
From the 305 observed data, four clusters were chosen during
the second stage in which the K-means method in
nonhierarchical cluster analysis was employed. Furthermore,
samples were reassigned to the nearest seed point based on
the Euclidean distance of the three clusters obtained during
the first stage. Finally, four new design strategic groups were
identified, namely “market leader” (77 firms), “market focus”
(69 firms), “market challenge” (81 firms), and “market
niche” (83 firms), as listed in Table II.
Stage 2
Subject selection
Four firms were randomly selected from each strategic group
obtained during Stage 1. The product development or design
managers from these 16 firms were then invited for further
interviews. Table III lists the company names, product design
divisions, job titles of the interview subjects, and main
products from the case study.
Designing interview questions
This investigation conducted a semi-structured interview in
which the interview questions were set in advance. Interview
questions covered basic data of the design innovation or R&D
departments, influences of global competition on product
design innovation, relative superiority and responsive
measures, cooperation between the product design and
marketing departments, and enterprise product marketing
and design innovation strategies.
Conducting in-depth interviews
Following firm selection, managers from the product design
and development departments were contacted. To ensure a
smooth interview process, a phone call was made in advance
of the interview to inform subjects of the interview purpose.
The interviews were performed from June to September
2007. All subjects exhibited high willingness to be part of the
interview process.
Case analysis
The data and notes recorded during the interviews were
transformed into texts and tables. The content of the basic
company data and product innovation strategy was then
analyzed and inferred via content analysis. Table IV lists the
basic data of firms in each product design strategic group.

Table II Types of product marketing strategy

Types of product marketing strategy Market leader Market focus Market challenge Market niche Total
Number of companies 77 69 81 83 305
Percentage 24.84 22.26 26.13 26.77 100

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Yen Hsu Volume 26 · Number 4 · 2011 · 223 –236

Table III Company interviewed, divisions of the interviewers, titles, and main products in the case study
Company Divisions of the interviewers Title Major products
Acer Concept Design Division, Industrial Manager Notebook computer, Desktop computer, Server, LCT TV, Monitor, Projector,
Design Center Computer case, PDA, Digital camera, Keyboard, Mouse
Benq Lifestyle Design Center Design Superintendent Monitor, TV, Mobile phone, Computer, MP3 player, Digital camera, Projector,
Scanner, Multi-function business machine, CD ROM, DVD player, Keyboard,
Mouse
ASUS Product Design Department Manager Bare systems, Monitor, TV, Mobile phone, AV multimedia products, Web
communications, CD ROM, PDA, Server, Notebook computer, Desktop
computer
Mtac Product Design Department Senior Manager Notebook computer, Industrial computer, Portable AV products, Wireless
communication products, Power supply products
Liteon Technology Research Development Manager Bare systems, Monitor, CD ROM, Keyboard, Mouse, Scanner, Business
Center machine, Printer, Projector, PDA, Mobile phone, MP3 player, Digital camera,
TV box, Web communication products
Innocell Creativity Center
Genius Product Design Department Deputy Manager Mouse, Scanner, Joy sticker, Joy sticker controller, Stylus, Digital graphic
tablet, Monitor, CD ROM, Sound effect card, Video camera, Multimedia
products
Tatung Consumer Product Business Division Manager Desktop computer, Server, Plate computer, MP3Flash disc, Plasma TV,
Monitor
MSI Product Design Department Senior Manager Notebook computer, MP3 player, Flash disc, AV player, Communication
products, Server, Bare systems, Computer peripherals
Consumer Product Business Division
Importek Product Development Department Assistant Manager Web telephone, Micro camera module, USB storage, MP3, Web radio, GPS,
DVR
Moshi Product Design Department Design Superintendent Digital TV box, Card reader, Keyboard, Back packs
PQI R&D Department Manager Flash disc, Memory module, Intelligent stick, Memory module, Disk on
module, Portable multimedia player
Clevo R&D Department Manager Notebook computer, LCD monitor, Wireless internet product
Heran R&D Department Manager LCD monitor, LCD TV, PDP TV
Toongin Product Design Department Senior manager Big head-mounted headphone, Medium-sized portable headphone, Small
head phone, Blue Tooth ear phone, Small hi-fi set, Microphone
Meiloon Product Design Department Deputy Manager Amplifiers, Speaker, Speaker set
iCute Product Design Department Manager Computer case, Power supply, Keyboard, Mouse, Speaker set

4. Characteristics of firms implementing different
types of marketing strategies
4.1 Firms in the market leader group
.
Acer. Acer is a global business focused on marketing
information products. The core business of Acer includes
information products, electronic services and marketing
channels. Acer belongs to the B2C (OBM, Original Brand
Manufacturing) sector. Acer stresses “multiple suppliers,
product lines, and channels.” The Product Development
Sector of Acer belongs to the Department of Concept
Development within the Industrial Design Center of the
company, and controls product design and planning (Hsu,
Y.C., 2007).
.
Benq. Benq produces and markets computers,
communication, and other consumer information
products. Based on the concept of “Raising Enjoyment
and Quality of Life,” Benq integrates its core abilities in
product R&D, design innovation, contract production, and
brand marketing, repositioning its digital products to
promote its corporate identity and product effectiveness.
The Digital Fashion Design Center primarily oversees the
effective innovation and integration of their design resources.
Currently, the center has specialized business units for all
computer and information products (Hsu, J.L., 2007).
.
Asus. On average, one in three computers uses a main
board produced by Asus. The Industrial Design
Department of Asus dominates product design and
product conceptual development. The product design of
Asus stresses flexible specifications, creating values
customers require, in addition to pre-sales service that
meets the needs of end users. More importantly, Asus also
emphasizes flexible product development (Wu, 2007).
.
Mitac. Mitac has made constant strides in R&D on family
digital information products. The Product Design
Department of Mitac is responsible for product form and
conceptual design for all product lines. Based on the
marketing information provided by the marketing division,
particularly successful products that have already been
marketed, Mitac has extended its original product lines and
launched new product styles. Mitac has thus strengthened its
product lines and increased its profits (Liu, 2007).
4.2 Firms in the market focus group
.
Liteon. Liteon wishes to become a global leader in digital
converged devices. In Liteon, the Technical R&D Center

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 Yen Hsu

Table IV Basic data of firms in each product design strategy group

Design innovation in successful product competition

Cases
Basic data Market leader group Market focus group Market challenge group Market niche group
Year of foundation Acer Benq Asus Mitac Liteon Genius Tatung MSI Importek Moshi PQI Clevo Heran Toongin Meiloon iCute

227
Business type (%) 1976 1984 1990 1989 1975 1983 1918 1986 1999 2004 1997 1983 1993 1979 1973 1988
B2C(OBM)/B2B(ODM)/
B2B(OEM 100/0/0 90/10/0 80/20/0 80/15/5 35/50/15 40/60/0 35/45/20 35/45/20 5/50/45 100/0/0 60/10/30 10/90/0 70/30/0 5/60/35 10/30/60 65/35/0
Capital in 2007
(million $US) 1,416.7 1,140.0 1,166.7 1,333.3 1,058.0 507.0 1,666.7 833.3 300.0 213.7 310.0 266.7 38.5 200.0 116.6 19.5
2007 employees 5,600 20,000 50,000 25,000 50,000 4,600 35,000 20,500 400 120 350 1,200 150 135 380 120
Volume 26 · Number 4 · 2011 · 223 –236
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 Design innovation in successful product competition
Yen Hsu
dominates product design and development. In terms of
product categories, Liteon has established the Periphery
and Parts Business Sector, Image Business Sector,
Communication Business Sector, Computer Business
Sector, and New Business Sector, all using techniques
integrated by the Technique R&D Center to promote firm
competitiveness (Chen, C.G., 2007).
.
Genius. Genius is a world renowned manufacturer of
computer peripherals. Under the innovation concept of
“Live with Ideas”, they developed four product lines,
related to work, entertainment, music, and video. The
Product Design Department, the core unit of R&D on
new products, is responsible for the design and
development of all products at Genius. As a
technological market leader, Genius focuses on the
design and development of mouse, scanner, joy stick,
stylus, monitor, and multimedia products, and has
received numerous technical patents (Lee, Z.L., 2007).
.
Tatung. Tatung focuses on R&D on integrated family
information appliances, and portable AV products. The
ideas of Tatong regarding product innovation are based on
the concepts of “energy saving, environmental protection
and health”. The Consumer Products Business Division is
the core R&D unit that dominates industrial design,
interface design and concept development for information
products at Tatung (Chen, S.G., 2007).
.
MSI. MSI ranks first internationally in the production of
computer display cards. MSI currently stresses “Fashion,
Quality, and Service”. Through incorporating different
sectors, the Consumer Product Design Department is
currently responsible for R&D and design for numerous
consumer electronic products, including MP3 players,
mini mobile AV platforms, and PMP players (Chen, J.C.,
2007).
4.3 Firms in the market challenge group
.
Importek. Importek specializes in R&D on communication
and web products. The Product Development
Department of Importek is responsible for planning all
product lines. Particularly, Importek employs Community
Own Brand Marketing (COBM) and Integrated Original
Design Manufacturing (IDOM) to rapidly produce
innovative products. To efficiently link global business
markets and production bases, the resources of business
departments, functional organizations, and regional
managerial units are integrated (Chou, Y.G., 2007).
.
Moshi. Moshi mainly develops products compatible with
Apple. The Product Design Department of Moshi
oversees product design innovation. Products are
launched based on new product concepts from the
design department and with the collaboration of the
marketing department (Weng, 2007).
.
PQI. PQI ranks in the top ten global manufacturers of IC
memory storage products, and is a R&D oriented
enterprise. The Product R&D Department deals with
new product R&D and design. After initial proposal, a
product innovation concept is assessed by the marketing
department, and then launched in time for an appropriate
season (Huang, 2007).
.
Clevo. Clevo stresses Clone NB customers and meets user
requirements by offering fewer batches and greater
diversity in high quality and multi-function products.
The channels of Clevo can sell more competitive
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Volume 26 · Number 4 · 2011 · 223 –236
commodities. The Design Department controls product
design innovation at Clevo. Clevo is devoted to designing
and developing new products with high prices and
catering to special market segments (Lin, 2007).
4.4 Firms in the market niche group
.
Heran. Heran is engaged in R&D and production of all
types of LCD and PDP TV. In terms of marketing
strategy, Heran is currently adopting a low price strategy
to avoid direct competition with other large
manufacturers, and moreover is focusing on the 3C
outlet channels. In Heran, the R&D Department oversees
product innovation. To achieve its sales goals, Heran
stresses cost reduction in product design and
development, and consequently uses identical modes in
numerous product series (Ho, 2007).
.
Toongin. Toongin manufactures professional audio source
facilities. The reasonable prices and professionalism of
this firm have enabled it to position itself in the middle
and high end segments of the market. The Technical
Department of Toongin dominates product design and
mechanical development. Currently, product design and
development is undertaken at the Taiwan headquarters,
while production and manufacturing are conducted at
plants in Mainland China (Hsu, R.S., 2007).
.
Meiloon. Meiloon is the biggest designer and manufacturer
of speakers in Taiwan, and its main products are audio
and video electronic products, including amplifiers,
speaker sets, and multimedia speakers. Meiloon stresses
technical innovation and high quality. The R&D
department at Meiloon oversees the design and
development of audio and video products, including
industrial design, optical engineering, mechanics,
electronic software and hardware (Chou, S.H., 2007).
. iCute. iCute focuses on the design, manufacture and sale
of computer cases and power supplies. Particularly, iCute
is the leading Taiwanese manufacturer of computer cases,
and its products stress profession, innovation, and service.
The Engineering Sector oversees product design and
development within the firm (Lee, C.C., 2007).
Regarding the capitalization of firms in the Taiwanese
computer and electronics industry (Table IV), those with
capitalization exceeding 1,000 million US dollars are defined
as large-scale; those with capitalization between 201 million
and 1,000 million US dollars are defined as medium-scale;
and those with capitalization smaller than 200 million US
dollars are defined as small-scale. Table V lists company scale,
core business, and product development categories for the
firms surveyed.
5. Design strategies adopted by firms of different
marketing strategies
Following content analysis of the interview, Taiwanese
computer and electronics firms adopt the following 18
strategies regarding product innovation: reducing production
costs, facilitating manufacturing and maintenance, including
increasing product added value, uplifting product quality,
improving product design and development procedures,
enriching marketing information and response ability,
reinforcing technical cooperation, increasing product
diversity, exploring new target markets, designing better
human machine interfaces, developing unique product
 Yen Hsu

Table V Company scale, major business type, and product development types of the interviewed firms
Market leader group Market focus group Market challenge group Market niche group
Acer Benq Asus Mitac Liteon Genius Tatung MSI Importek Moshi PQI Clevo Heran Toongin Meiloon iCute
Design innovation in successful product competition

Company scale
Large £ £ £ £ £ £
Medium £ £ £ £ £ £
Small £ £ £ £
Major business types

229
B2C (OBM) £ £ £ £ £ £
B2B (ODM) £ £ £ £ £ £ £ £ £
B2B (OEM) £
Product development categories
Electronics £ £ £ £ £ £ £ £ £ £ £ £ £ £ £
Computer peripherals £ £ £ £ £ £ £ £ £ £ £ £ £ £ £
Information products £ £ £ £ £ £ £ £ £ £ £ £ £
Mobile communications £ £ £ £ £ £
Web communications £ £ £ £
Note: “X” represents that the company belongs to the type of business categories
Volume 26 · Number 4 · 2011 · 223 –236
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 Design innovation in successful product competition
Yen Hsu
functions, increasing R&D budgets, reinforcing the R&D
divisions of counterparts, developing unique product forms,
uplifting design images of the company, uplifting brand
images of the company, emphasizing social and cultural
performance, and considering environmental design. Table VI
lists the design strategies adopted by different Taiwanese
computer and electronics firms.
Table VI clearly shows that all firms involved in the present
case study tended to adopt the following six design strategies:
reducing production costs, making it easy for manufacturing
and maintenance, including additional value to products,
uplifting product quality, improving product design and
development procedures, and enriching marketing
information and response ability. Firms strongly emphasized
these design strategies because they helped guarantee product
commercial success.
More importantly, a close investigation of the design
strategies of firms belonging to certain marketing strategic
groups, as shown in Tables V and VI, revealed a relationship
among enterprise scale, business categories, and product
development types. Specifically, in different marketing
strategic groups adopted different approaches to design
innovation.
5.1 Design innovation of firms in the market leader
group
Enterprises in the market leader group included Acer, Benq,
Asus, and Mitac. In terms of marketing, these four firms not
only engaged in the marketing of numerous product types but
were also industry leaders. These firms exploited their diverse
product lines to meet consumer needs. Moreover, these firms
also did well in launching innovative new products via
multiple marketing activities, such as increasing their
competitiveness through flexible pricing. That is, they
continuously remained at the cutting edge in marketing
their new products, employing methods such as price
adjustment, distribution channel staging, and intensive
promotion.
In product design, these firms focused on developing new
products and market segments. Monitoring market trends,
these firms spared no efforts in continuously seeking market
opportunities. Consequently, they adopted design strategies
to maintain their market leadership. Leveraging the strengths
of their brand images, these firms continued fine-tuning their
sales service system and developing innovative conceptual
products to reinforce their price advantage by increasing the
proportion of subcontracts and new market segments (Hsu,
J.L., 2007; Hsu, Y.C., 2007; Liu, 2007; Wu, 2007). These
firms applied numerous product design strategies and design
actions (Hsu, J.L., 2007; Hsu, Y.C., 2007; Liu, 2007; Wu,
2007), but shared similar enterprise scale and business
categories. Notably, all four enterprises were large in scale and
predominantly B2C (OBM) producers.
In conclusion, enterprises in the market leader group were
more likely to aggressively develop new products and seek
market opportunities. Enterprises in this group could offer
innovative products and services and were willing to perform
risky R&D. Their large scale enabled firms in this group to
offer wide product lines and intensive high techniques.
Primarily employing B2C (OBM) models, firms in this group
implemented diverse design strategies and aggressively
developed new products.
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5.2 Design innovation of firms in the market focus
group
Firms in the market focus group included Liteon, Genius,
Tatung, and MSI. The marketing efforts of these four firms
stress price flexibility and functionality over product price.
Restated, firms in this group actively adjusted their product
prices in response to product life cycles and target market
responses to rapidly expand their market shares and market
segments. To satisfy consumers in the target user group, these
firms enjoyed absolute superiority in the target market in
terms of product appearance, function, texture, and similar
aspects. Restated, firms in this group focused their marketing
resources on target user groups, product lines or regional
markets. Restated, firms in this group stressed market
response and flexibly adjusted product prices to maintain
their market share.
Firms in the market focus group offered fewer products
than those in the market leader group. In terms of innovative
product design, firms in the focus group outperformed their
competitors in terms of innovation efficiency, quality and
speed owing to the concentration of their R&D resources.
Furthermore, the timely response of firms in this group to
changes in product life cycles helped them achieve profits.
The emphasis on product innovation of market focus firms
resembled that of market leader firms. The actions of firms in
the market focus group included reducing production costs,
facilitating manufacturing and maintenance, adding value to
products, uplifting product quality, improving product design
and development, enriching marketing information and
response ability, reinforcing technical cooperation,
increasing product diversity, exploring new target markets,
designing better human machine interfaces, uplifting product
quality, and increasing R&D budget (Chen, C.G., 2007;
Chen, J.C., 2007; Chen, S.G., 2007; Lee, Z.L., 2007).
Additionally, Liteon also stressed the importance of
considering environmental design (Chen, C.G., 2007),
while Genius stressed improving firm brand image in their
design strategy (Lee, Z.L., 2007).
Though the four firms discussed here were medium to large
scale enterprises, they employed similar design strategies in
that they mainly employed B2B (ODM) business types and all
designed consumer electronic products and computer
peripherals. Based on the interview results, firms in the
market focus group focused on developing new products for
specific market segments. Firms in this group also strove to
increase the efficiency of their market responses to maximize
profits (Chen, C.G., 2007; Chen, J.C., 2007). The design
strategies implemented by this group shared the same
characteristics as those employed by the market leader and
market challenger groups. Moreover, some firms in this group
stressed aggressive innovation in specific market segments,
while others sought to maintain stable growth while
maximizing flexibility and profitability. Generally, firms in
the market focus group were medium to large scale
enterprises, primarily involved in B2B (ODM), and
developed fewer new product lines.
5.3 Design innovation of firms in the market challenge
group
The market challenge group comprised Importek, Moshi,
PQI, and Clevo. In terms of marketing, firms in this group
efficiently employed marketing activities to promote
consumer feelings regarding product image and quality.
 Table VI Design strategies adopted by different firms
Yen Hsu

Market focus Market challenge Market niche

group group group
Market leader group Acer Benq Asus Mitac Liteon Genius Tatung MSI Importek Moshi PQI Clevo Heran Toongin Meiloon iCute
Reducing the production cost of products £ £ £ £ £ £ £ £ £ £ £ £ £ £ £ £
Making it easy for manufacturing and maintenance £ £ £ £ £ £ £ £ £ £ £ £ £ £ £ £
Including additional value to products £ £ £ £ £ £ £ £ £ £ £ £ £ £ £ £
Design innovation in successful product competition

Uplifting product quality £ £ £ £ £ £ £ £ £ £ £ £ £ £ £ £

Improving product design and development procedure £ £ £ £ £ £ £ £ £ £ £ £ £ £ £ £
Enriching marketing information and responding ability £ £ £ £ £ £ £ £ £ £ £ £ £ £ £ £
Reinforcing technical cooperation £ £ £ £ £ £ £ £ £ £ £ £

231
Increasing product diversity £ £ £ £ £ £ £ £ £ £ £ £
Exploring new target market sections £ £ £ £ £ £ £ £ £ £ £ £
Design better human machine interface £ £ £ £ £ £ £ £ £
Developing unique product functions £ £ £ £ £ £ £ £ £ £ £
Increasing R&D budgets £ £ £ £ £ £ £ £
Reinforcing R&D division in counterparts £ £ £ £ £ £ £ £
Developing unique product forms £ £ £ £ £ £ £ £
Uplifting design images of the company £ £ £ £ £ £ £ £
Uplifting brand images of the company £ £ £ £ £ £ £ £ £
Emphasizing social and cultural performance £ £ £ £
Taking environmental design into consideration £ £ £ £ £
Note: “X” indicates that the company adopted the specific design strategy
Volume 26 · Number 4 · 2011 · 223 –236
Journal of Business & Industrial Marketing
 Design innovation in successful product competition
Yen Hsu
Restated, firms in this group hoped to utilize their good
product image and quality to trigger customer acceptance of
their product prices. Furthermore, firms in this group actively
promoted their product brands and packaging design, hoping
to create an identity for their product and brand images. On
the other hand, firms in this group also increased their
product lines to encourage loyal consumers to substitute new
products for repeat purchases of older products. Firms in this
group thus could challenge the market leaders and other
competitors by increasing market share at their expense.
In product design innovation, firms in the market challenge
group were identical to those in market leader and market
focus groups, specifically in terms of applying the following
seven design strategies: facilitating manufacturing and
maintenance, increasing product value, improving product
quality, improving product design and development,
enhancing marketing information and response ability, and
reinforcing technical cooperation. Additionally, these four
firms also stressed strategies for reinforcing the R&D divisions
of their counterparts, developing unique product forms, and
improving firm design and brand image. Particularly,
Importek stressed user interface design (Chou, Y.G., 2007;
Huang, 2007; Lin, 2007; Weng, 2007). Applied design
strategy in the market challenge group may be characterized
by the fact that firms in this group entered the market after
those in the market leader group, and moreover were medium
scale and primarily involved in B2B (ODM). All firms in this
group hoped to improve their brand image. In terms of
practical innovations, firms in this group first chose a specific
brand or market segment as a focus for product redesign or
innovation efforts, and then applied their design techniques to
improve the efficiency of their R&D activities and increase
their competitiveness via cooperation in product design,
R&D, and manufacturing with partners and project
subcontractors (Chou, Y.G., 2007; Huang, 2007; Lin,
2007; Weng, 2007). The strategy of these firms represents a
new trend towards innovation integration in design strategy.
5.4 Design innovation of firms in the market niche
group
In terms of design strategy, the market niche group comprised
Heran, Toongin, Meiloon, and iCute. In marketing, these
firms avoided competing directly with market leaders, as
demonstrated by their focus on LCD TVs, head phones,
speakers, and professional computer cases. Furthermore,
firms in this group stressed the differentiation of a single
product line and added product value, namely enhancing
product line depth. Following product strengths and
weaknesses, firms in this group enhanced their
competitiveness by adjusting their production. Firms in this
group promoted their products via advertisements and web
sites, thus attracting user enquiries, encouraging distributors
to place orders and extending their channels.
In design innovation, firms belonging to the market niche
group stressed product line diversity and the exploration of
new target markets, and design strategies for facilitating
manufacturing and maintenance, including increasing
product value, enhancing product quality, improving
product design and development procedures, and enriching
marketing information and response ability (Chou, S.H.,
2007; Ho, 2007; Hsu, R.S., 2007; Lee, C.C., 2007). These
firms were small scale enterprises involved in various business
categories, but focused primarily on specific product lines.
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Journal of Business & Industrial Marketing
Volume 26 · Number 4 · 2011 · 223 –236
While such firms generally offered relatively low priced
products, they achieved good profits owing to their control of
key technologies and R&D know-how (Chou, S.H., 2007;
Ho, 2007; Hsu, R.S., 2007; Lee, C.C., 2007).
To summarize, firms in the market niche group enjoyed
advantages of flexibility in terms of product R&D. Combined
with their marketing activities, such firms could rapidly
increase the depth of their product lines. The innovative
products of these firms were only marketed relatively briefly,
but their high added value meant the firms that offered them
were able to achieve profitability. Such firms thus could
achieve high profits without repeating the same actions as
firms belonging to the market leader group. Consequently, the
design strategy employed by firms in this group is termed
flexible innovation.
6. Managerial implications
Based on the strategies they employ to deal with global
competition, Taiwanese computer and electronics enterprises
can be classified into market leader, market focus, market
challenge, and market niche groups, based on the marketing
strategies they adopt. The largest of these groups is the market
niche group (26.77 percent of all Taiwanese computer and
electronics enterprises), followed by the market challenge
group (26.13 percent); market leader group (24.84 percent),
and market focus group (22.26 percent).
Six design innovation strategies were adopted by all the
firms interviewed, including reducing production costs,
simplifying manufacturing and maintenance, adding product
value, uplifting product quality, improving product design and
development, and enriching marketing information gathering
and responsiveness. These six design strategies are essential to
R successful design innovation in the Taiwanese computer
and electronics industry. Furthermore, the design innovation
models employed by different strategic groups were closely
related to enterprise scale, business type and product
development category.
An integrated model, as shown in Figure 1, illustrates the
mapping of marketing strategic types and design innovation
approaches for firms in the Taiwanese computer and
electronics industry. Figure 1 shows that firms in the market
leader group are characterized by aggressive innovation in
their marketing strategy. While employing diverse design
strategies, firms in this group share the common characteristic
of developing new products and seeking new opportunities.
These firms offer innovative products and services, and are
willing to undertake R&D risk. Because of their large scale,
firms in this group have wide product lines and intensive high
techniques. With B2C (OBM) as their major business type,
firms in this group are diverse in their product lines.
Firms in the market focus group feature the trend of
innovation focus in their marketing strategy. With their
concentrated R&D resources, firms in this group outperform
their competitors in terms of innovation efficiency, quality
and speed. The design strategies of firms in this group are the
same as those of firms in the market leader and market
challenger groups. Firms in this group stress aggressive
innovation in specific market segments and maintain stable
growth in other segments as they seek to maximize flexibility
and profitability. Firms in the market focus group are medium
and large scale enterprises, primarily involved in B2B
(ODM), and develop fewer new product lines.
 Design innovation in successful product competition
Yen Hsu
Figure 1 Integrated model for marketing strategy and design
innovation
Firms in the market challenge group display the trend of
innovation integration in marketing strategy. Firms in this
group hope to increase the popularity of their brands after
entering the market after those in the market leader group.
Firms in this group are medium scale and mostly involved in
B2B (ODM). In terms of practical innovation, firms in this
group first select specific brands or market segments for
performing product redesign or innovation. Firms in this
group then apply their design techniques to enhance the
efficiency of their R&D activities, and increase their
competitiveness by cooperating in product design, R&D,
and manufacturing with their partners and project
subcontractors.
Firms in the market niche group display flexible innovation.
This group comprises small scale enterprises. Despite diverse
product lines, firms in this group focus on specific product
lines to maximize profits because of their ability to control
R&D techniques and skills. In combination with marketing
activity, firms in this group can quickly increase the depth of
their product line owing to their flexibility and R&D
advantages. Firms in this group produce a constantly
changing array of innovative products, but can help firms
that produce them achieve profits through increasing added
value.
7. Conclusions
Based on a questionnaire survey and case studies, Taiwanese
computer and electronics firms pursue marketing strategies
that include “market leader”, “market focus”, “market
challenge” and “market niche”. Firms pursuing different
marketing strategies employ different design innovation
strategies in product design. The design strategies adopted
by enterprises in the market leader group incorporate
aggressive innovation in product design; those adopted by
firms in the market focus group focused on innovation in
product design; those in the market challenge group exhibited
strong innovation integration in product design; and those in
the market niche group displayed flexible innovation in
product design. The innovation models adopted by
enterprises in the Taiwanese computer and electronics
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Volume 26 · Number 4 · 2011 · 223 –236
industry were related to enterprise scale, business type, and
category of product development.
Competition in the global computer and electronics
product market is so intense that only enterprises with
advantages in design, innovation, rapid response and
flexibility can survive. This study discussed practical
examples involving typical Taiwanese firms. Examples of
marketing and design innovation approaches from the
Taiwanese computer and electronics industry discussed in
this investigation provide a reference for enterprise R&D and
product promotion. Besides, our findings may be applied to
other industries, such as many in consumer goods whose
business type are B2C firms, whereas computer and electronic
manufacturing industries often consist of B2B. Consumer
goods and services in industries that do not embody advanced
manufacturing technologies, such as the telecommunication
industry, banking industry, and insurance industry, generally
provide an opportunity to design innovation, thereby
approach service innovation and design trend.
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About the author
Yen Hsu is an Assistant Professor and the Chairman of the
Industrial Design Department, MingChi University of
Technology. He received his Doctoral, Master’s, and
Bachelor’s degrees in the field of Industrial Design. His
current research interests are in the area of product design,
product development and design strategies, and the product
development performance. He is teaching and interested in
the research of design management such as areas of product
design strategy, design quality evaluation, organizational
creativity enhancement and product design processes. Yen
Hsu can be contacted at: erickshi@ms1.hinet.et
Executive summary and implications for
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Competition in the global computer and electronics product
market is so intense that only enterprises with advantages in
design, innovation, rapid response and flexibility can survive.
As design innovation is closely related to marketing,
marketing departments should constantly interact and
exchange information with design departments. An effective
connection between marketing and design activities will
trigger product innovation. Not only can a good design help
an enterprise achieve profits, but it also offers consumers
product values associated with enterprise image.
Taiwanese-made computer and electronics products possess
advantages in design, innovation, quick response, and
flexibility in the global 3C (computer, communication, and
consumer electronics) market, and Taiwan has many famous
brands like ACER, Benq, ASUS, Mitac, PQI, and MSI.
However, intensifying market competition has considerably
impacted Taiwanese enterprises. Consequently, marketing
personnel and product designers in these enterprises should
closely monitor their competitors to cope with the conflicts
and challenges from the changing global market environment.
In “Design innovation and marketing strategy in successful
product competition” Yen Hsu studies Taiwanese computer
and electronic firms with marketing and product design
departments to explore design and marketing strategies; to
analyze types of marketing strategies and practical actions in
product design innovation; and to provide an incorporated
model for matching marketing and design innovation
strategies.
Based on the strategies they employ to deal with global
competition, Taiwanese computer and electronics enterprises
can be classified into market leader, market focus, market
challenge, and market niche groups. The largest is the market
niche group (26.77 percent of all Taiwanese computer and
electronics enterprises), followed by the market challenge
group (26.13 percent); market leader group (24.84 percent),
and market focus group (22.26 percent).
Six design innovation strategies were adopted by all the
firms studied: reducing production costs, simplifying
manufacturing and maintenance, adding product value,
uplifting product quality, improving product design and
development, and enriching marketing information gathering
and responsiveness.
Enterprises in the market leader group included Acer,
Benq, Asus, and Mitac. As industry leaders, they marketed
numerous product types, exploiting diverse product lines to
meet consumer needs. They also did well in launching
innovative new products via multiple marketing activities,
such as increasing their competitiveness through flexible
pricing. They continuously remained at the cutting-edge in
marketing their new products, employing methods such as
price adjustment, distribution channel staging, and intensive
promotion. In product design, these firms focused on
developing new products and market segments. Monitoring
market trends, these firms spared no efforts in continuously
seeking market opportunities. Consequently, they adopted
design strategies to maintain their market leadership.
Enterprises in the market leader group were more likely to
aggressively develop new products and seek market
opportunities. Enterprises in this group could offer
innovative products and services and were willing to
perform risky R&D.
Firms in the market focus group included Liteon, Genius,
Tatung, and MSI. Their marketing efforts stress price
 Design innovation in successful product competition
Yen Hsu
flexibility and functionality over product price. Firms in this
group actively adjusted their product prices in response to
product lifecycles and target market responses to rapidly
expand their market shares and market segments. To satisfy
consumers in the target user group, these firms enjoyed
absolute superiority in the target market in terms of product
appearance, function, texture, and similar aspects. Firms in
this group focused their marketing resources on target user
groups, product lines or regional markets. They stressed
market response and flexibly adjusted product prices to
maintain their market share. Firms in the market focus group
offered fewer products than those in the market leader group.
In terms of innovative product design, firms in the focus
group outperformed their competitors in terms of innovation
efficiency, quality and speed owing to the concentration of
their R&D resources.
The market challenge group comprised Importek, Moshi,
PQI, and Clevo. Firms in this group efficiently employed
marketing activities to promote consumer feelings regarding
product image and quality. They hoped to utilize their good
product image and quality to trigger customer acceptance of
their product prices. Furthermore, firms in this group actively
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Journal of Business & Industrial Marketing
Volume 26 · Number 4 · 2011 · 223 –236
promoted their product brands and packaging design, hoping
to create an identity for their product and brand images. On
the other hand, firms in this group also increased their
product lines to encourage loyal consumers to substitute new
products for repeat purchases of older products. Firms in this
group thus could challenge the market leaders and other
competitors by increasing market share at their expense.
In terms of design strategy, the market niche group
comprised Heran, Toongin, Meiloon, and iCute. In
marketing, these firms avoided competing directly with
market leaders, as demonstrated by their focus on LCD
TVs, headphones, speakers, and professional computer cases.
Furthermore, firms in this group stressed the differentiation
of a single product line and added product value, namely
enhancing product line depth. They enjoyed advantages of
flexibility in terms of product R&D. Combined with their
marketing activities, such firms could rapidly increase the
depth of their product lines.
(A précis of the article “Design innovation and marketing strategy
in successful product competition”. Supplied by Marketing
Consultants for Emerald.)