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CHAPTER

3
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Managing products
for business market
Subtopics:-
3.1 Building strong B2B brand
3.2 A system model for managing brand

3.1 Building strong B2B brand

Marketplace Identity

A business marketer’s marketplace identity is established through:

• Brand
• Products
• Services

A brand is one of the firm’s most valuable intangible assets. Branding has emerged as a
priority to marketing executives.

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Product Management

Products are developed to fit the needs of the market and are modified as needs
change.
Tools such as…
• Market & demand analysis
• Business market segmentation
• Market potential forecasting

…help marketers select markets and provide products that meet their needs. Product
policy is directly related to market selection.

Marketing Function: Lead Role

Marketer’s tasks include evaluating:

1. Potential product/market fit
2. New market opportunities
3. Competition
4. Strength & Weaknesses

Marketer’s lead role is to transform the firm’s skills and resources into products & services
that will enjoy positional advantages.

Building a Strong B2B Brand

Companies need to ask:

1. What do you want your company name to stand for?
2. What do you want it to mean in the customer’s mind?

Brand & Brand Equity Defined

Brand
Name, sign, symbol, logo or anything that identifies and differentiates the product
from competitors
Brand equity

Set of brand assets and liabilities linked to a brand; it can add to – or detract from –
the value of the brand

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Customer-Based Brand Equity (CBBE)

Kevin Lane Keller defines CBBE:

As differential effect that customer brand knowledge has on their response to market
activities and programs for the brand.

Brand Power relies on:

What customers have learned, felt, seen and heard about the brand over time. How
customers link their thoughts to feelings, perception, imagination and experience of the
brand.

CBBE Pyramid

CBBE model lays out 4 steps for building a strong brand:

1. Develop deep brand identity
2. Establish unique brand identity by highlighting differences
3. Employ marketing programs to elicit positive brand responses.
4. Build brand relationships with loyal customers

Brand Identity

To achieve brand identity, marketers must create:

• Brand salience – something prominent about the product
• Brand awareness – ability to recall or recognize the brand under different conditions

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Marketers need to create a clear connection between the product and the brand name
in markets where the product competes.

Brand Positioning

Establishes an association in the customer’s mind that differentiates the brands’ meanings
There are various brand associations

Following example demonstrates two ways:

-Brand Performance – the way(s) a product/service meets customers’ functional needs
-Brand Imagery – The way(s) a brand meets customers’ psychological or social needs

Brand positioning should incorporate both points of parity (breaks even to other brands) &
points of differences.

Brand Response: Consumer Judgments

• Quality: Customer’s attitude towards brand’s perceived quality with respect to value
and satisfaction
• Credibility: Customer perceives brand to be credible with respect to expertise,
trustworthiness & likeability
• Consideration set: Extent to which customer finds brand a viable option and worth
consideration
• Superiority: Extent to which customer believes that brand offers advantages over
competitive brand

Brand Response: Consumer’s Feelings

Consumer feeling – a consumer’s emotional reaction to a brand

Numerous feelings can be tied to brands, i.e.:
• Warmth
• Fun
• Excitement
• Security
• Power
• Sexiness
• Functionality

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Consumer Brand Resonance

Final step is brand resonance, which means forging a relationship. This connection
translates into:
• Brand loyalty
• Attachment
• Active engagement
• Word-of-mouth satisfaction & advertising

3.2 A system model for managing brand

Brand Strategy Guidelines

The “Brand Mantra”

Develop a coherent branding strategy and then build on the reputation of that brand.

A firm with a strong brand can command a price premium for its products or services.
However, to sustain that premium, important points of differentiation must be clearly
communicated to target customer segments. Successful branding requires a well-
conceived market segmentation plan.

Product Quality and Customer Value

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Product Quality

International competition has made quality an important strategic issue. As a prerequisite,

suppliers need to meet ISO-9000 standards. The quest for improved quality permeates the
entire supply chain.

Meaning of Quality as It Moves through Stages

Stage One - To be successful:
 Products must conform to standards or
 Meet customer specifications and possess features the customer wants
Stage Two:
 Emphasizes that quality is more than a technical specialty and that pursuit of
quality should drive the entire business core’s processes.
 Overall value is determined by the service rendered, product performance and
products’ price relative to competitors.
Stage Three:
 Buyers focus on market-perceived quality and value verses competitors’
offerings with the objective of “not only zero product defects” but “zero
customer defections.”
 The objective is to have a cadre of suppliers that can produce quality products
that keeps customers LOYAL!

Sustainability: Strategic Imperative

Sustainability is an emerging megatrend that is transforming the competitive landscape,

forcing companies to change the way they think about products, processes, and business
models.

Sustainability is a “mother lode” of organizational and technological innovations that yield

both bottom-line and top-line returns. Becoming environmentally friendly lowers costs
because companies end up reducing the inputs they use.

In addition, the process generates additional revenue from better products or from new
businesses.

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Capturing Opportunities

Companies that excel in sustainability do “old things in new ways” such as outperforming
competition on regulatory compliance and environment-related cost management.

Leading performers also do “new things in new ways” such as redesigning products,
processes, and whole systems to optimize natural resource efficiencies across their value
chains.

Sustainability innovations transform core businesses and even lead to the creation of new
businesses and new sources of differentiation.

GE’s “Ecomagination” initiative provides a rich illustration of the powerful growth

opportunities.

What Value Means to Business Customers

Core

Benefits
Add-on

Customer Value
Price

Sacrifices Acquisition
costs

Operations
costs

Benefits & Sacrifices

Benefits:
1. Core – requirements a product must possess for a relationship to exist.
2. Add-ons – attributes that create differentiation & provides more value than
competition.

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Sacrifices:
1. Price.
2. Acquisition costs (e.g., ordering costs).
3. Operations costs (Can defect free parts really lower operation costs?)

What matters most?

1 - Add-ons: All qualified vendors provide equal core, so add-ons are the differentiators,
which include:
a. Differing attributes
b. Relationships
c. Advice
d. Product support: Various Services – Pre & Post sale
2 – Trust
3 – Attention to reducing customer costs.

Product Policy

Involves all decisions concerning…

 Product
 Services
…that a company offers.

Proper product policy provides the opportunity to attain and maintain a competitive
advantage by focusing on core competencies.

Industrial Product Line Defined

1. Proprietary: Comes only in certain configurations and are available in anticipation of

orders. The product decision is to add, delete or reposition it.
2. Custom-built: Product(s) offered to meet one or a small group of customers’ need. The
product decision centers on offering a proper mix of additional options.
3. Custom-designed: Unique item is created to meet one or more customers’ need. Product
is defined in terms of company’s capability, and consumer buys that capability.
4. Industrial service: Buyer buys company’s capability to do certain task (i.e., maintenance,
technical service or management consulting).

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Defining the Product Market

Defining the product market is fundamental to a sound product policy decision.

Even if a company has a successful product, it needs to always be on the alert to consider
alternative (technological) ways to satisfy customer needs.
 These forces the company to be open minded about product
innovation.
 The keeps the company in touch with the market.

Four Dimensions of a Market Definition

Customer What functional benefits does the product/service provide for the
buyer?
Function
Technological Are there alternative ways a particular function can be
Function performed?
(Example: Communications: cell phone, email, pager, notebook
computer)
Customer Various customer segments have distinct functional needs. What
Segment are they and how can they be served?
Value-Added Many services are offered by competing “service chain” of
System dimension vendors. Sometimes they are separate, but other times they merge
their services to offer a more overall competitive product.
(Example: Product provider (Motorola) aligns with service
provider (AT&T) to offer a more efficient product/service)

Planning for Today & Tomorrow

Successful companies need to plan for both today and tomorrow by assessing their
products, their markets and their customers’ future needs.

This is done by understanding:

a. The present market and its future needs.
b. WHAT the future might offer, what problems might exist, what products will solve
them?
c. WHO are the:
• Undershot consumers
• Overshot consumers
• Non-consumers
d. WHY is that?

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Marketing Plan for Industrial Products

Having a strategic marketing plan for an industrial product is most vital for a product to be
successful.

One way to start is to develop a…

“Product Positioning” strategy.

i. A product’s competitive position in the market is referred to as the product’s position.

ii. It is found by measuring buyers’ perceptions and preferences in relation to competitors.

iii. The first question is: “What are the determinant attributes that play a central role in the
buying decision?”

Perceptual Map and Positioning Strategy for Levi Strauss Products

Steps in Product Positioning Process

1. Identify relevant competitive products.

2. Identify determinant attributes that customers use to differentiate among options and
determine their preferred choices.
3. From sample of existing and potential customers, collect their ratings of each product
on determinant attributes.
4. Determine own product’s current position versus competing offerings for each market
segment.
5. Examine fit between preferences of market segments and current product position.
6. Select positioning or repositioning strategy.
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Positioning or Repositioning Strategy

If change is needed, what strategy(s) should be employed?

For some attributes the product manager may want to:

a. Increase the importance of an attribute to the customer
b. Increase the difference of their attribute to that of their
competitors (i.e., increased efficiency, decreased cost, better
training, etc.)
If the product is truly better than a competitor’s but is not perceived that way, product
managers need to do a better job of communicating the message to the market to bring
it in line with reality. A product’s competitive advantage can be advanced by improving
its level of performance on determinant attributes that buyers emphasize.

Technology

Discontinuous Innovations: Truly new products that require the marketplace to dramatically
change their behavior with the promise of gaining dramatic new benefits.
 Examples:
o Cars replaced horse-drawn carriages
o Computers opened the doors to revolutionary new products
o Internet changed the way we do business

Innovation: Classes of Customers

Technology enthusiasts

• Innovators:
a. Explore latest innovations
b. Possess a significant influence over product perception by others
c. Usually lack resource commitments
d. Try things out but move on to new ideas as they come about
• Visionaries – early adopters
a. These customers desire to exploit innovation for a competitive advantage.
b. These customers are true revolutionaries in business, but new technologies
need to be more customized for this group (i.e., expensive).
c. Government visionaries have access to resources but usually demand
modifications to the product that are difficult for innovators to provide.
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 • Pragmatists – Early Majority

These customers:
a. Make the bulk of technological purchases
b. Believe in technological evolution (not revolution)
c. Seek products that have proven themselves

• Conservatives – Late Majority

These customers are:

a. Pessimistic about receiving any benefits from new technologies
b. A sizable group who are price sensitive
c. Reluctantly purchase technological products to avoid being left behind
• Skeptics - Laggards
 These are potential customers
 They are ever-present critics of hype around new technology

Strategy for High Tech Adoption

1. Put innovative products in the hands of technology enthusiasts.

2. After a while visionaries will see the value of the new technology and will begin
to view it in business terms.
3. New technologies usually enjoy a honeymoon reception from enthusiasts and
visionaries; however sales begin to falter… a chasm forms…
Chasm

 A Chasm is a period of time where sales falter (and sometimes plummet) due to
differences between Visionaries and Pragmatists.
 Visionaries want change (revolution) whereas Pragmatists want change
(evolution). But Pragmatists make most buying decisions in organizations.
 Pragmatists are the gateway to the mainstream market. If that chasm gap can’t
be bridged, often products become part of ancient history.

Strategies to Cross the Chasm

• One strategy to cross the chasm is for the marketer to provide pragmatists with
100% solutions to their problems using the new technology.

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 • Too many companies only supply a part of a solution. They are trying to be
something to all, not 100% to some. That is unacceptable to pragmatists.
• Goal: Win a niche foothold with a small group of pragmatists as quickly as
possible … that is what crossing the Chasm means.

Bowling Alley Strategy

• Each market is like a bowling pin. The momentum of moving one pin (with good
technology products) successfully carries over into surrounding segments.
• The bowling alley is where mainstream market segments begins to accept the
new product, but it still has a way to go.
• Strategy: Win one niche, and then work on another.

Tornado Strategy

This strategy assumes a product has very wide appeal. The seller’s strategy is to:
1. Move as quickly as possible in getting the product out to the market.
2. Build distribution ASAP.
3. Drive price down to next lower price break ASAP.

This strategy demands product leadership, operational excellence in manufacturing and

distribution.

Main Street

Once the mainstream has adopted the product, the aftermarket phenomenon occurs:
a. Mass marketers of the products begin to subside.
b. Competitors force supply to exceed demand.
c. Prices fall.
d. High tech product becomes a commodity.
e. Profit growth can no longer come from selling the commodity.
f. Profit can only come from extending the platform of the product to other
niche-specific needs.

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