b2b products & services strategies

7/30/2019 B2B Products & Services Strategies

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B2B

New Products/Services

Development,

Management, and Strategy


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Outline Product Strategy in Business Marketing

Product Lines Defined

Business New Product Development

Organization of the New Product Effort

Product Life-Cycle Analysis

Determinants of the Product Mix

The Product AdoptionDiffusion Process

Product Portfolio Classification, Analysis, and Strategy

Product Deletion Strategy

Marketing of Business Services Important Characteristics of Business Services

Business Service MarketingChallenges and Opportunities


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Proprietary or catalog Standard products offered to many customers and usuallyinventoried in anticipation of sales orders. For example,

the DoAll Company keeps a large inventory of model No.

C916A Band Saws to ensure quick delivery to customers.

Custom-built Different variations of accessories and options to

complement proprietary or catalog products offered. For

example, the DoAll company fills a request from a major

company for a custom, made-to-order saw with a largermotor size, larger table size, and automatic indexing.


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Custom-designed Products designed for (and usually only for) a particularuser. For example, DoAll designed a unique band saw

with a custom-fixtured table and remote-control operation

for Army to use to cut up live ammunition.

Industrial services Intangibles, e.g., maintenance, machine repair, consulting.

For example, DoAll provides a saw and coolant specialist

who makes courtesy inspections at customers plants to

assist in using DoAll in product applications.


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Custom Product Versus

Proprietary Standard Line Manufacturer

Custom:BMW designs a windshield washer fluid containerfor their new model and sends part prints to a custom

plastics component manufacturer. Manufacturer must build

production equipment but BMW owns molding dies and

rights to product. Supplier sales build relationship, workwith customer on design, finalize terms of sale.

Proprietary standard line:BMW picks a standard wheelbearing for its new model and orders it directly from

manufacturer. Manufacturer sells same wheel bearing toothers. Supplier sales build relationship, work with

customer on application, finalize terms of sale.


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New Product Approaches

Technology Push -When perceived value of particulartechnology is great; firm has only a vague notion of

possible applications, and usually not much more.

Market Pull -Primarily the result of marketing researchmethodologies of interviewing potential users about their

needs, then developing solutions to those perceived

market needs.


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The New Product Development Process

Idea and Concept Generation

Screening and Evaluation

Business Analysis

Product Development Product Testing

Product Commercialization and Introduction


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The New Product Development

Process

Idea and concept generation

Screening and evaluation

Business analysis

Product development

Product testing

Product commercialization and introduction


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Marketing Activities at Each Phase

1. Idea and concept generation: involves the search for product

ideas and concepts that meet company objectives

2. Screening and evaluation: involves analysis to determine

which ideas submitted are pertinent and merit a more

detailed study of potential feasibility and market acceptance

3. Business analysis: return-on-investment criteria are

examined along with competition and the potential for market

entry


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Marketing Activities at Each Phase (2)

4. Product development: involves taking the product from an

idea generated during a brainstorming session to a state of

readiness for product and market testing

5. Product testing: involves conducting commercial

experiments necessary to verify earlier business judgements

6. Product commercialization and introduction: includes

launching the new product through full-scale production and

sales and committing the company's reputation and

resources to the product's success


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Organization of the New Product

Effort

Product Manager Individuals responsible for marketing mix decisions for

specific product line as it travels through life cycle

New Product Manager

Plan, organize, implement, and control new productdevelopment.

New Product Committee Part-time interdisciplinary management group reviews

new product proposals; advantages outweighdisadvantages because committee is most common form

of organizational structure for managing new products.


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Organization of the New Product

Effort

New Product Department Specific department generates and evaluates new product

ideas, directs and coordinates development work, and

implements field testing and precommercialization of new

product; allows for maximum effort in new productdevelopment, but at expense of major overhead costs.

New Product Venture Team Task force representing various departments responsible

for new product development and implementation;

normally dissolved once new product is established inmarket.


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Product Manager/

Marketing Manager RoleOld View:Organize, coordinate, and control.

New View:Calculated chaos and controlled disorde

CommunicateCommunicateCommunicate: Make things happen.

Questions: What companies purchase products

from these producers? What would a Product Manager do

to facilitate these transactions andrelationships?


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Product Life-Cycle Analysis

Introduction

Market Growth

Market Maturity

Sales Decline


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7-7


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Introduction Growth Maturity Decline

ProductLife Cycle

As a strategy planning tool, a PLC diagram is a visual representation of a

tendency (many nonbusiness systems tend to same shape, such as to showincome and height). On one level, it is a reminder to planner of what is comingifan inflection point is reached, you should know what is coming (even though youonly have actual life cycle to that point). In business, PLC is often driven byexperience curve, economies of scale, competitive attraction to marketopportunities, rate of diffusion factors, and eventual market saturation. Plannersmust adjust for actual impact of these factors on a particular product.

(continued)


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Introduction Growth Maturity Decline

ProductLifeCycle

On another level, marketers continuously monitor and adjust their strategy and tacticsas products cycle progresses. As a reference, they can refer to standard mix

strategies for each PLC stage (usually represented in a table directly under PLCdiagram on most texts). Marketers objective is to adjust strategy to changing life

cycle situation to maximize the results. As maturity approaches, marketer often

decides to attempt a PLC extension by (1) finding ways to increase current marketsusage, (2) finding totally new uses, (3) finding new target segments, (4) developingnew distribution, or (5) perhaps a major product improvement and repositioning.

(continued)


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Product Life Cycle

Actual PLC curves can be any shapefrom product that doesnt sellat all, to fad that grows fast but has short life, to seasonal product, etc. Companydepends on its marketers to understand what factors determine success and tomake appropriate strategic decisions. It is often tempting for new students to wan

to learn PLC superficially, but in real world many people depend on in-depthunderstanding.


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Determinants of the Product Mix

Technology

Competition

Changes in Levels of Business Activity

Operating Capacity

Market Factors

The Prod ct Adoption Diff sion


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The Product Adoption-Diffusion

Process

Stages in the Adoption Process Awareness -Buyer learns of new product or service, but

lacks information.

Interest -Buyer seeks out or requests additional

information. Evaluation -Buyer (or member of buying team)

considers/evaluates usefulness of product/service;

consideration might be given to value-analysis project or

make-buy situation.

The Product Adoption Diffusion


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Process (2)

Stages in the Adoption Process Trial -Buyer adopts product or service on limited basis.

Adoption -If trial purchase worked, then buyer decidesto make regular use of product/service.

Diffusion Process

goes beyond the adoption processand represents the spread of a new product, innovation, or

service throughout an industry over time.

The Product Adoption Diffusion


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Process (3)

Factors Influencing the Rate of Adoption-Diffusion

Perceived risk

Perceived advantage

Incompatibility with existing products/behavior

Uncertainty

Diffusion speed varies among industriesfast

in electronics, slow in domestic steel.

Product Portfolio Classification


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Product Portfolio Classification,

Analysis, and Strategy

What is a Product Portfolio? Diagnosing the Product Portfolio

Product Portfolio Strategies


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BCGSBUPortfolioBusinessStrategy

Low

High

High Low

Industry attractiveness,Market share,

Cash generation

Businessstrength,Growth rate,

Cash use

(continued)


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BCG Business SBU Portfolio Strategy

Low

High

High Low

Industry attractiveness,Market share,

Cash generation

Nurture tofeed cashto?

Use cashto makeinto star

Defendposition

Fix or abandon

Businessstrength,Growth rate,

Cash use

(continued)


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BCG Business SBU Portfolio Strategy(as might appear in your strategic planning documents)

Low

High

High Low

Market shareCash generation

Growth rateCash use

Computers

PrintersModems

TelephonesNote: Size can indicate amount of sales.

(continued)


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GE Strategic Planning Grid

Business strength axis

Self-defined as a functionof: size, growth, share,profitability, image,

position, people, and otherfactors of businessstrength or weakness

Self-defined as a function of: size, market growth, strength ofcompetitors, industry profitability, technical strength, and positiveacting market environmental factors.

High

Medium

Low

High Medium Low

High Medium Low

Industry attractiveness axis

(continued)

P bl #1


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Coca-Cola* as apart of the cola

market

*Coca-Cola does not selldirectly to consumers

Businessstrength axis

High

Medium

Low

High Medium Low

High Medium Low

Problem#1:

SBUs Can Be Repositioned byRedefining Axes

Industryattractivenessaxis

(continued)


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High

Medium

Low

High Medium Low

High Medium Low

Problem#1:

SBUs Can Be Repositioned by RedefiningAxes

Coca-Cola as a partof the soft drink

market


(continued)

P bl #1


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High

Medium

Low

High Medium Low

High Medium Low

Problem#1:

SBUs Can Be Repositioned by RedefiningAxes

Coca-Cola as apart of the all types

of drinksmarket


(continued)

Problem #1:


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Bottom line: SBU market share and market

strength change as market is redefined; also

possible that industry attractiveness changes.

Note: Coca-Cola slides are for the purpose of demonstrating the concept of

SBU position shifting as axes are redefined; they do not represent actual

strategic position of Coca-Cola.

Problem#1:SBUs Can Be Repositioned byRedefining Axes


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Problem #2:Doing What the Grid Position Indicates

When portfolio models were first introduced, marketers did whathe grid position indicated rather than using them as a tool to

help visualize companys mix of SBUs, interrelationships, relativ

strengths, etc.

If a larger percentage of business is in products in whichcompany is not strong, margins are low, and market is not

attractive, they may still be providing important coverage of fixe

overhead. Dont automatically get rid of dog-quadrant products

Bottom line: Two-factor portfolio models are not decision model

they are tools to help marketers with their thinking. Even withmultiple-factor computer decision support systems, the decision

is still the marketers.

S


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Product Deletion Strategy

Harvesting Line Simplification

Divestment

Important Characteristics of


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Business Services

Intangibility Freight forwarding, consulting, repair, etc. canseldom be tried out/tested in advance of purchase;

instead, buyers must view advertising copy, listen to

sales presentation, or consult current users to gain

insight into expected performance.

Perishability and fluctuating demand Services cannot be stored and markets fluctuate by

day, week, or season; idle service capacity is

business that is lost foreverno inventory buffer.



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Business Services

Simultaneity Production and consumption of services areinseparable; this typically puts marketer in very

close contact with customer, requiring them to be

highly professional.

Heterogeneity A service is an experience and thus cannot be

duplicated; difficult to standardize and thus output

quality may vary.

Business Service Marketing


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Challenges and Opportunities

Service Marketing Vs. Product Marketing

Positioning Strategy

Bundling of Services

Service Strategy and the Marketing Mix

Product

Price

Place Promotion



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Challenges and Opportunities

New Service Development Share Building

Market Extension

Line Extension

New Business

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