DESIGNING PRODUCT AND

CHANNEL STRATEGIES

MANAGING PRODUCT
OFFERINGS

BUSINESS-TO-BUSINESS MARKETING
Senior Assist. Prof. Vanya Kraleva
Learning Outcomes
 Know what the concept of a product offering
means.
 Be able to apply portfolio planning techniques to
decisions about offering investment, development,
or divestment.
 Be able similarly to apply life cycle and portfolio
approaches to the management of product
offerings.
 Be familiar with the process and activities
associated with the development of new offerings.
How to Screw Up B2B Product Management

https://vimeo.com/96499237
Aspects of product offerings
 The word ‘product’ may only
capture a part of an overall
offering, namely its physical
attributes
Even for product categories such
The Product 
as raw materials, there are often
Offering less physical, ancillary elements
that are fundamental to the
offering
 Many developed economies
generate most of their wealth not
from tangible product
• Product manufacturing but from intangibles
services, which are increasingly
information intensive
• Service  ‘Advice giving’ constitutes another
relevant element of the design of
• Value offerings
Elements of B2B Offerings
Resources Critical to Creating Hybrid
Offerings
• Product usage and process data that enable its offerings to be more differentiated

• Product development and manufacturing assets that can be used to introduce

innovations that can reduce a customer’s cost of ownership

• Experienced product sales force and distribution network with deep understanding
of the strengths and capabilities of the products they are selling so that they can
gain privileged access to customers and build strong relationships

• Field service organization that is focused on more than just delivery and installation,
but is strong at after-sales service and can spot opportunities for pursuing new and
more complex hybrid offerings with customers
Capabilities to use with these resources
Service-related Supplier’s capacity to analyse and interpret the data on product usage and processes so
data processing that customers can be helped to achieve productivity gains and/or cost-reductions
and interpretation
capability
Execution risk Supplier’s capacity to use the product and process usage data to assess the uncertainty
assessment and of whether agreed outcomes will be met and put in place mechanisms to handle it
mitigation
capability
Design-to-service Supplier’s capacity to use its product development and manufacturing assets to come up
capability with integrated tangible and intangible elements that are meaningful and likely to be
attractive to customers such that they generate new income and/or reduce costs

Hybrid offering Supplier’s capacity to use its product sales force and distribution network effectively to
sales capability reach key customer staff and work with both parties to sell hybrid offerings, which often
demand approaches that are different to purely physical product sales and may even
require forms of co-creation activity with customers

Hybrid offering Supplier’s capacity to use its product development and manufacturing assets alongside
deployment its field service organization to successfully deploy hybrid offerings, trading off the need
capability to provide the offering in the way that the customer needs with the internal requirement
to do these things efficiently through forms of standardization
(Ulaga & Reinartz, 2011)
 The Elements of B2B Value

https://www.bain.com/insights/eric-almquist-the-elements-of-value-for-b2b-companies-video/
From Product Management to Solutions
Marketing
Identify customer needs, desires, challenges
Identify benefits
Carry out
research into Create new value proposition
customer needs. Identify
Define customer benefits, values Develop and test messaging
challenges. and features of Combine
the product that insights from Implementation
can be customer needs Translate into
adapted to and benefits salesforce
customer needs. identification messaging, Implement
Review stages. market internally by
competition. messaging, test ensuring
marketing. business-wide
adoption and
integrate into
external
marketing
materials.
Mechanisms for Creating Solutions
• The organization creates a solution from its offering
Adaptation or through adapting its portfolio to be able to offer
the solution

• Organizations that complement each other’s portfolio

Alliances and are generally not competitors might unite to
offer the solution

Channel • Sell through a channel partner with the objective of

offering a full range of products or a solution to a
partners customer

Specialized • Independent vendors or specialized channel resellers

that offer solutions for a specific sector can also be
channel resellers used by vendors to offer end-to-end solutions.
Stages in the Lifecycle of an Offering

Maturity phase
• Ultimately, the rate of
sales growth slows.
Growth Profits may continue to
phase rise in the aftermath of
the growth phase to
• Competition is maintain the profit Decline phase
likely to trend requires cost
increase, with reductions • Profit margins will
consequent decline and the
pressure on business marketer must
prices and this look for ways to
pressure extract further value
Introductory creates
phase greater
• Product may demand and
still be costing thus fuels
more money further growth
than it is
bringing in
since there is a
series of
marketing
tasks to be
carried out
The GE Portfolio Matrix
The BCG Matrix
 Applying the BCG Matrix

Product line Market size Market size Own market Nearest rival
K€ 2017 K€ 2018 share market share
101A 5 500 5 600 10% 25%

(small office photocopier)

102A 45 000 50 000 30% 15%

(small office laser printer)

102B 95 000 95 000 12% 30%

(large office laser printer)

103A 25 000 26 000 5% 40%

(general purpose scanner)

103B 10 000 12 000 10% 15%

(professional quality scanner)

Results

Product line Growth rate Relative Classification

market share
101A 1.8% 0.4 Dog

102A 11.1% 2.0 Star

102B 0% 0.4 Dog

103A 4.0% 0.125 Dog

103B 20.0% 0.67 Question Mark

Characteristics of Innovative Firms
• Commitment to long-term growth rather than short-term profit;
• General acceptance within the firm of the value of innovation;
• Ability to be aware of its threats and opportunities;
• Willingness to invest in the long-term development of technology;
• Willingness to include risky opportunities within a balanced portfolio of
activities;
• Mutual respect amongst individuals and a willingness to work together
across functions;
• Ability both to become aware of and take effective advantage of
externally developed technology;
• Ability both to manage the tension between the need for stability within the
firm and the need for creativity, and to provide room for creativity;
• Readiness to accept change; and
• Combination of suitable specialization as well as diversity of knowledge
and skills.
(Trott, 2012)
Joint Problem Solving as Value Co-
Creation in Knowledge Intensive Services
Supplier resources Supplier roles Customer roles Customer resources

Expert knowledge Value option Co-diagnoser Information on needs

Specialist skills & techniques advisor Requirements
Project management skills Goals
Customer understanding Schedule
Diagnosing Co-designer
Value process Budget
needs
Diagnosis skills organizer
Proactive attitude Information on context
Reaction ability & willingness Co-producer Operational environment
Confidence Organizing Value-in-use Designing & Previous solutions
Ability to foresee risks process and producing
Value the solution Co-implementor Industry expertise
resources
Facilities & professional amplifier Specialist knowledge of
equipment industry
Co-marketer Conventions
Experience Regulations
Managing Implementing
Accumulated knowledge Value value conflicts the solution Production material
Ability to see larger patterns experience Co-developer
Ability to structure the Existing solutions &
support
process materials

Objectivity & integrity, Effort & time

ethical codes
Financial resources
Relational capital
Relations to actors with
complementary skills
(reproduced from Aarikka-Stenroos & Jaakkola (2012), Fig. 3, p. 22)
R&D and Innovation

Source: https://iri.jrc.ec.europa.eu/sites/default/files/2020-01/SB2019_Final_online.pdf
 Top R&D Spenders for 2019

Source: https://iri.jrc.ec.europa.eu/sites/default/files/2020-01/SB2019_Final_online.pdf
The New Offering Development
Process
Identify opportunities/generate ideas

Screen ideas and make preliminary investigations

Analyse business case

Develop the concept and specify the features

Develop prototypes and develop marketing support

Undertake limited-scale trial marketing

Take offering to commercial launch

Evaluate the process and draw lessons for next time

New product development
 Clancy and Krieg (2003) estimate that no more than 10% of
all new products or services are trading profitably three years
after launch
 Berggren and Nacher (2001) indicate that the failure rate
could be as high as 95%
 Schilling and Hill (1998) present a much broader band of
between 33% and 60% of products not generating an
economic return
 Even an optimistic estimate of failure rates for new industrial
products puts it as high as 30% (Armstrong and Kotler, 2005)
Questions for discussion
 What are the elements of a product offering and why do we
need to identify them?
 Describe the product offering life cycle stages for an industrial
offering with which you are familiar and indicate how you would
have managed the offering through the stages.
 Choosing a mature business offering, indicate how you propose to
manage it to avoid decline.
 What is the value of a portfolio analysis approach such as the
Boston Box?
 Working in small groups, decide on a business marketing firm that
you will all represent and, on the basis of your knowledge of
what the company does, initiate a new offering development
process.
Literature Key

• Brennan, R. Canning, L. &

McDowell, R. Business-to-Business
Pages
259-287 Marketing. 4th ed. Sage. 2017.

• Dwyer, R & Tanner, J. Business

Marketing. 4th ed. New York:
Chapter 8 McGraw-Hill Irwin, 2009.