Changes in Product Strategy

Business marketers must understand that a product

strategy is dynamic and flexible.

It changes due to changes in:

 Customer needs

 Technology

 Government Policies/Laws

 Product Life - Cycle

The behavior of the PLC depends on 3 factors:
1.Changing needs of customer

2.Changes in Technology

3.Changing Competitors
 Introduction Stage
Marketing strategy should focus on market development for
slowly accepted products. For rapidly accepted products
(Competitive pricing or Superior quality product) should be
evolved.

 Growth Stage
To take advantage of high growth of sales and profits, the
marketing strategy should concentrate on improving
product design or adding product features, improving
distribution and reducing price, as increased sales and
production reduce the costs.
 Maturity Stage
As competition increased and profits decline,
marketing strategy should concentrate on cutting
cost, keeping existing customers satisfied and
entering new
markets.

 Decline Stage
In this stage, price competition is more severe, and
concurrently the sales and profits decline.
 Develop a trend analysis for the past three to
five years
 Analyse competitors’ market share, product
performance, new product introduction
 Estimate and project sales and profits of the
products over next 3-5 years
 Evaluate the performance of all the existing
products or product lines
 Examine the relatives strengths and
weaknesses of the company’s products
 Decide the product strategies for the existing
products
Product Evaluation Matrix
The matrix combines 4 performance parameters
of a product-industry sales, market share and
profitability.
It is used to study the strengths and weaknesses
of a firm’s product in comparison to that of
competitors.
 Maintain the product and it’s marketing
strategy
 Modify the product and change marketing
strategy
 Eliminate the product

 Add new product

 New Product Development process is the

process by which the product ideas are

generated, assessed, directed and converted

intoproducts.
 Innovative and new to the world
 New to the Company

 Revisions or improvement to the existing

product
Failure
New Products do not satisfy the needs of
potential customers
Not significantly different from other existing
product
Do not deliver the expected performance

The prices are more higher than the value

perceived
 The superiority and uniqueness
 Market Knowledge

 Techical and production capabilities

The process by which potential product ideas are
generated, evaluated, directed and turned into
product,
Idea Generation:
The sales person, customers, distribution, suppliers,
design engineers, managers often conceive of new
product ideas. Industrial customers are a very
important source of the idea. Ideas are invited from
group of employees to search for an improved product.
Idea screening:
 In order to select the product ideas which are likely to
succeed, screening of new product ideas will be
undertaken. The primary purpose of this is to select those
ideas which are likely to suceed.
Major considerations in the screening of a new product idea includes :

 expected profit potential,

 the competitive situation,
 the general adoptability of the company to the new
product and
Concept Development & Testing:
 After the screening of the new product idea it
should be developed into a product concept. It’s a
detailed version of product idea that is stated in a
meaningful customer’s term.

Concept Testing:

 The new product concepts are tested in a

prospective customer organization.
 The concept can be presented by developing physical
product or three dimensional models.

 The Physical presentation of the product will

increase the reliability of the concept testing.

 The three dimensional model techniques create

computer generated three dimensional plastic
proto-types which takes very short time to get
ready.
Business Analysis:
 An estimated projection of the sales,
costs and profitability of the proposed
new product will be developed for over
5-7 years.
 It is an elaborate analysis which is expressed in
terms of investment required for the installation of
the plant, equipment, investment in working
capital; Market potential, sales forecast, customer
and competitive analysis; cost of product
development, manufacturing and marketing the
product; likely price levels, profitability and Return
on investment etc.
Product Development
 Product development is a process of creating
desired product by the technicians.

 The R&D department develops one or more

prototypes of the product concepts.

DesignProcess EngineeringTooling

ManufacturingTestingFinal Product
Market Testing:
 Market testing is done by using different
methods such as:

(a) Alpha & Beta Testing-it consists of testing the

products which are high priced or new
technologies, internally in the company.
 When a product is tested internally with in the
organization which as characteristic of high price
with new technologies such testing.

 If the results of Alpha testing is satisfactory the

company will go for the next stage of Beta testing
at the potential users‘ organization
Marketing Team
 It is the duty to identify the user firms who would
allow confidential testing of the new product at
their factories.
Trade Shows:
 One commonly used method of market testing is
introduction of the new product at trade shows
where usually large number of prospective
customers is exposed to the new product.
 limitation of testing the new product in trade shows is that it
also gets exposed to the competitors.

Dealer show rooms:

 The distributors or dealers show rooms or display

rooms can be considered as best spots for product
testing, if the new industrial product is sold through
such channel.
Test Marketing:
 This method is used by many industrial marketers through
their sales force.

 When the product is launched on full scale basis, the

market information received from test marketing will help
the company in taking effective decisions.

 After market testing, the company management takes a

decision to go ahead with the next stage i.e.
commercialization.
 The commercialization process involves execution of the
various activities developed in an action plan as a part of the
marketing plan.
 The activities such as customer service, maintaining adequate
stocks at the company warehouses and or with
dealers/distributors, introductory advertisement, price lists,
product catalogues, training of sales force etc. would be taken
up at this stage.
Innovation, Competitiveness, and Technology

Innovation and Competitiveness

Direct relationship exists between innovation and competitiveness.
Impact of Technology

Technological innovations create new products services that are new to the
world.

Company Capabilities

include the company's capability in

(a) promoting their business through Websits to customer and prospects from
anywhere in the world;
(b) collecting more information about markets, customers,prospects and
competitors by the using Internet;

(c) facilitating internal communication among the company employess by using

the internet as a private intranet;

(d) improving operations (e.g purchasing, recruiting,and training) with

substantial cost saving by using the Internet to send and recieve
informations, orders, and payments between companies,their business
partners, and their customers.
Consumer Capabilities
 The consumer capabilities have improved due to adoptation of information
technology and Internet.

 The consumer can compare the prices and products of variouse supplier on the
internet.

 The consumer can access online medical information, orders, and payments
between companies, their business partners, and their consumers.

Breakthrough and Incremental Innovation

 Breakthrough innovations, also called radical innovation,are "big" innovation

that requireintensive technology and/or applications development.

 Breakthrough invention use a new technology and creates a new market.

Classification of innovation/New Product
Disruptive Technology
Disruptive innovation in a product or service should be followed by a small
busisness unit or a separate project from the existing company with its
established customers.

High-tech Marketing

 Explain the differentiating characteristics of high-tech marketing.

 Impact of technology adoption life cycle.

 Unique nature of high-tech marketing strategy.

Differentiating Characteristics of High-tech Marketing
The two major characteristics that distinguish hi-tech marketing are:
High Technological Uncertainties
High Market Uncertainty
market uncertainty picture
Other Differentiating Characteristics of High-tech Marketing
High Competitive Volatility

These are some of the uncertainties in relation to competitors.

Short life of High-tech Products

The original products need to be improve or upgraded before competitors do.

High Development Cost

Many high-tech products have high investment or initial development cost,but

low variable costs on additional units.
Modified Technology Adoption Life Cycle
Innovators
 These are the first people to adopt any new technology.

 They take risks and follow new technology products forcefully

 They have high interest in technology and they purchase new technology
products for the pleasure of exploring the properties of new products.

Early Adopters

 Like innovators, they buy new high-tech products very early, but they are not
technologies.

 They are visionaries, who are driven by a dream that is linked to their
business.
Early Majority

These are progmatist, who evaluate the new products base on practical consideration.
Late Majority
 These people are skeptical and are called "conservative".

 Conservative want high quality, low price and rear edge technology products.
Laggards
 These person are tradition-bound and suspicious of change.
Unique nature of High-tech Marketing Strategy
1. Target a Niche Market the high-tech company
These group of prospective customer shuold have compelling reason to buy
the new high-tech products and they should be completely satisfied after the
purchase of the new product.
2.Plan Whole Product Properties
basic properties are included in the generic product,with fundamental
benefit sought by innovators aand early adopters.

3. Develop Partnership

 The new high-tech company should develop relationship slowly with

suppliers to make sure that the customers are completely satisfied with
the codeveloped new product and services.

 Trus and commitment are important in developing partnering

relationships with key suppliers of goods and services.
4.Unique Positioning Strategy
It is important to understand that initially while developing early markets by selling to
innovators, the new company should position its products as hving a strong
technology advantage.

5.Communication strategy

In high-tech marketing, word of mouth communication is the most effective tool to

promote a new product, as the buying behaviour suggest extensive use of
references.

6.Distribution Strategy

The right choice of distribution channel initially for high-tech marketers is direct sale
force, (0r direct sales) because it creates control,gives maximum demands, and
builds long terms relationship.
7.Pricing Strategy
As the products gets stablished andcompetition increases over a period of
time, for marketing to price sensitive late majority group of potential
customers, the price may have to be brought down.

Marketing Industrial Services

Classification of Industrial (Business) Services

the services in industrial (business) market can be classified into two group:

1.Product supported by services

2.Pure services
Product Supported by Services
The service component can be a major, an equal, or a minor part of the total
offer from thencompany.

Pure Services

These are marketed without association with physical products.

Unique Characteristics of Services and the Marketing Implications
Services have some unique characteristics that make them distinc from a
product . These include:

(i) Service are intangible, but products are intangible

(ii) Service are consumed at the time of production (i..e. inseparable) but i case
of products there is a time gap between production and consumption.

(iii) Services cannot be stored (i..e.perishability) but products can be stored.

(iv) Service re highly variable (i.e variability) but many products are highlt
standardise.
People-- Indicating the qualifications and experience of people who conduct
management development programmes, or the courteous behaviour of
people working inthe hotel or the airlines.
Place-- The exterior and interior of the financial institution or of the bank
including the layout of furniture, indicating clean and efficient working
environment.
Equipment or infrastructure-- The type of furniture ,a nd the effective air-
conditioning and lightning system will help the industrial buyer to take a
favourable decision of hiring the conference hall.
Inseparable--The effective interaction between the clients and the service
provider is very important for building an effective buyer -seller relationship .
Variability-- Services are highly variable because service are provided by
different individual within a service firm.

Industrial marketers in service firms can take the following:

1. A good system of recruitment, training and development of service
providers.
2. Preparation of a service blueprint (or a service-performace process) which
should indicate the service events and process in a flow-chart.
3. Regularly collecting information on customer satisfaction.

Perishability--When the demand for service is steady, it s not difficult for service
firm to cope with the problems.
Some of the methods used by service firm to achieve a closer match between
demand and supply are:
1. Shift some demand from peak to off-peak periods by adoptin differential
pricing.
2. Reservation system are used to manage the demand by some service firms
like airlines, hotels and railways.
3. Part-time employees are hired to serve the peak demand .

Non-owners-- Unlike physical products, when the service buyer purchases the
service, the buing organisation uses the service but does not own the
service.

Marketing Strategies for Industrial ervice Firms

Three types of Marketing in Industrial Service Firm
Segmenting and Targeting Industrial Service
Service Differentiation-- Compared to the marketers of products,
marketers of service have more difficult task in differentiating their services.
Some of the major ways of differentation are:
1. Industrial customer choose those service firms whose percieve quality of
service meet or exceed the expected quality of service.
2. The service package can include innovative features to differentiate it from
the competiting offers.
3. Service delivery can be a differentiating factor.
4. Specialisation and experience are considered to asssess the service
provider's capabilities over the competitors.
Service package--The service package is the product tool of service marketing.
a service firm develops the service package (or service offer) based on certain
procedure or steps. They are:
Step1: In developing a new service package or evaluating an existing service,
the service firm must find out (through marketing research) the core
benefits the customers will derive from the service.
Step2: To decide what benefits (or attributes) the industrial service firm will
focus.
Step3: To spell out the details of the benefits the service firm will offer.
Step4: To decide how the service provided to the customer (i.e service delivery
system), which consist of people facilities and system.
Service Pricing-- Generally, pricing strategies and policies have common
approaches in product and service pricing.

Service Promotion --The promotional strategies for service are generally similar
to those for products. However, there are some special consideration to be
remembered while marketing services to industrial customers.

Service Distribution-- The most common method is direct selling in which either
service providing firms go to the service buying firms go to service providing
firm.
 THE END

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