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Industrial Product: A product is all of the value

satisfaction Industrial
that a customer derives
at both organizational
Product
and personal level.
Components and levels of product:
Core product: The core product which is most fundamental level
of the product refers to the core benefit the consumer derives from
the product
Ex: Basic computer system for office applications.

Enhanced Products: Generic products are made differentiable


by adding enhanced properties. These properties are physical
additions or deletions to the generic product & include features,
styling, and qualities: Computer system( laptop, screen, memory,
network connection, advance software etc)

Augmented Properties: These are those additional benefits


connoted in the purchase of a particular product. These are usually
intangible benefits & include training, technical assistance, availability
of spare parts financing terms, brand, warranty, delivery etc

Industrial Product Strategy

Industrial Product
Features

Industrial Product Life


Cycle

New Product Strategy

Product Decisions
Market Segmentation Decision: The first product decision to be made
is the market segment decision because all other decisions i.e. Product
mix, Product specifications, and Positioning & communication decisions
depends on the target market

Product mix Decision: Product mix decisions pertains to the type of products &
product variants to be offered to the target market.

Product specifications: This involves specification of the details of each


product item in the product mix. This includes factors like styling, shape,
size and other attributed & factors like packaging & labeling.
Positioning & Communication decisions :Its an image projected of the
product in the target market. Communication refers to the promotional
message designed for the product. Both positioning and communication
are very much interrelated. How a product is promoted to the customer is
a very important part of the business marketing strategy.

Industrial Product Strategy

Industrial marketers must understand that a product

strategy is flexible and dynamic. In industrial marketing


a product is variable. Industrial firms are required to
make changes in the product strategy because of
changes IN
Customer needs: Products are made to satisfy certain
needs & wants of customers.
Technology : the changes in technology require
product modification or make existing product obsolete
Government policies: Changes in the government
policies and the laws requires change in the product
strategy.
Product life cycle ( PLC): In order to maintain growth
in sales and profits industrial firms decide to drop,
modify, to develop new( substitute) products when the
existing products reach maturity or decline stages

Industrial Product Features

Intermediate

Hard Bargaining

Technical Superiority

Capital Intensive

Less Chance of
Failure

Industrial Product Life


Cycle

Concept Similar to Consumer


Products

Generic Inputs Very Long PLC

Distinct Characteristics

Volume

Industrial Product Life


85
Cycle
75
65
55
45
35
25
15
5
-5
Introduction
-15

Growth

Maturity

Saturation

Decline

Stage
Sales Volume
Profit Margin
Additional new-product profit needed to sustain company growth

Stages in Product life cycle

Introduction stage: Some industrial products get accepted rapidly after introduction and
others are accepted slowly. Depends on changes in the user habits. For instance: Hand
held calculators replaced mechanical calculators in a very short time because use of
electronic calculators required neither new skills nor learning for users. While typewriters
took two decades after introduction to achieve market acceptance.

Features:

Low sales because it takes some time,


High cost because of the low sales & high promotional expenditure,
Absence or low competition if the product is entirely new,
Loss or negligible profits because low sales & high costs.

Strategies:

Promotion strategies: Publicity, trade journals, personal selling etc,


Exclusive distribution , high distribution margin to justify Promotional
spending
Price skimming or penetration may be adopted depend on the product &
market
Growth Stage: Products begins enter the rapid growth stage, the emphasis on product
strategy shifts to improving product design, distribution, service, lowering price, increasing
demand. As market demand increases product design and other aspects of the product
offering must be changed to meet both low end and premium market segment needs.
Features
Fast growth in sales because increasing in consumer acceptance &
expansion of market,
Profits growth because of growing sales, Increasing competition,
Market segmentation & the introduction of different versions of the
product.

Strategies:

TO achieve wider market penetrate the market,


Increase in the scale of operation may facilitate price reduction,
Increase in competition may also make sales promotion strategies,
Distribution tends more intensive & extensive, dealer margin would be high
enough to keep them, Logistics management becomes more important.

Maturity Stage: As product enters the maturity stage, the number of competitors

entering the market increase. The product strategy in maturity or saturation stage
should be: 1) Enter New Markets: ex; if product matures in domestic market it may have
a good export market.2) Keep the existing customers satisfied, 3) Cut marketing,
production and other costs to maintain profit margins.
Features:
Sales may grow slowly but @ the later fall in sales,
Intense Competition,
Falling profits because high promotional expenses,
Concerted efforts on the part of firms for cost cutting& product doep,
Strategies:

Distribution strategy may remain almost same as in past stage,


There would be efforts to cut cost and prices,
Product improvement efforts would be intensified

Decline Stage: In this stage price competition is more severe, and concurrently the sales
and profits decline. The strategy adopted by an industrial marketer is to either withdraw
the product from the market or develop a substitute product for replacement, or reduce
marketing & other expenses substantially to make some profits.
Features:

Entry of new products which compete with the product,


Decline in sales,
Decline in profits- profits may even become negative
Exit of some of the firms,

Strategies:

There may be pruning of product line by dropping unprofitable items,


Hardly any point increasing or maintaining the market share by incurring
loss,
Promotion would be cut to the minimum, marginal distrb would be phased
out

New Product

New but Competitive


With Existing Products

Major Modification of an
Existing and Well Established
Product

Completely New Development

One of the challenging tasks faced by an industrial firm is the


New
Product
Development
development
& marketing
new
industrial products. Though new
product development is complex and difficult, it is a vital and
necessary task for profitable growth of a firm. It tests a firms market
knowledge, technical competence, financial strength, and ability
compete. Unless products that have entered the decline stage( of
product life cycle) are replaced by new products a firm can not expect
to maintain its profitability and growth.

New to Seller but Marketed by Others


New to One Group of Customers, but Sold Successfully elsewhere by
the
Firm

New to both Firm and Market


Innovative Product
Dynamically Continuous Innovation
Adaptations
New Use
Copy

New Product
Preliminary
Appraisal
Development

Product and Market Research

Process Research

Prototype Testing

Commercialization

New Product Ideas

R & D Department

Technical Service Staff

Executive Personnel

Companys Sales Staff

Competitors

Trade Literature

Screening

New Product

Development

Testing

Commercialization

Business Analysis

Idea Generation
Concept Testing
Evaluation and Selection
Business Analysis
Product Development
Market Testing
Commercialization

Steps in New Product Development


Idea Generation: The first step in the product development is the generation
of as many new product ideas as possible. The important sources of new
product ideas are companys market research facility, company sales force,
customers, competitors, scientists, and research and educational institutions
etc.

Evaluation and selection: the second step is to evaluate the ideas generated
and to select the idea or ideas which is/are worth pursuing further

Concept Testing: Concept testing involves conceptualizing the product idea

into a product and testing its suitability and customer acceptance. For example,
if the new product idea is of a new type of emergency lamp, concept testing
would involve deciding about its size, weight, shape, and other features like
convenience in use, lighting specifications etc

Business Analysis : Analysis of commercial feasibility of the product involves


estimating production and marketing costs, sales potential and profit.

Product Development: if the business analysis reveals that the product is a

profitable proposition, the next stage development of the product in its physical
form. This stage comprises the technical aspects of product development.

Market Testing:

its common to conduct a market testing of the


product before it is commercialized. The objective is to measure the
consumer reaction to the product. Product quality, features, packaging,
price etc., ,may be subjected to test. The feedback from the test
marketing would enable the firm to improve the product and increases
the customer acceptance. Test marketing is normally conducted with a
representative sample of potential consumers or in some select
markets like some cities/ towns which are regarded representative.

Commercialization: Market testing would help to management to


decide whether the new product should be taken up and if yes whether
it should be improved or launched as it is. If the decision is in favor of
new product, improvements, if needed, are made and measure are
taken for its production. The product is then launched in the market.

Some Imp Marketing decisions pertaining to commercialization

are
When to launch the product,
Where, i.e. in which market(s) to launch the product
Whom to target the product first
How to market the product.

Determinants of Product
Mix
Technology

Competition

Operating Capacity

Market Factors

Company Attributes

Market Factors

Shift in Customers Tastes


and Preferences

Changes in Availability or Cost

Changes in Manufacturing
Process

Government Policies / Controls

Company Attributes

Market Performance

Production Capabilities

R & D Strength

Financial Capabilities

Interest and Abilities of


Executive Teams

Developing Product strategies for Existing


Products.
Developing long term product strategies for existing or established individual

products and product lines ( a group of related product items) is an important part
of an industrial marketers marketing plan.

Following steps should be taken by industrial marketing firms.


Evaluate the performance of all the existing products or product lines by using
product evaluation matrix.

By using perceptual mapping technique, examine the relative strengths and

weaknesses of the companys products in comparison to competitors products.

Based on the above analysis, decide the product strategies for the existing

products, that is which products should be continued( or maintained), which


products should be modified, which products or products should be dropped and
which new product items or product lines are to be added .

Deciding product strategies: Based on the two techniques- product

evaluation matrix & perceptual mapping, the industrial marketer can now decide
one of the strategy options mentioned below.

Maintain or continue the product and its marketing strategy.


Modify the product and change the marketing strategy
Eliminate or drop the product or the product line
Add new products or product lines

Business Service Marketing


The essence of systems marketing is that the firm is offering more than a

product than a product and the accompanying services. Systems marketing is


the marketing of a service, a service that is personalized and tailored to meet
individual customer needs. However one of the major trends has been the
remarkable growth of services in both the consumer and the industrial markets.
Marketing of industrial or business services has many unique characteristics.

Professional Service Marketing: Problems and Strategies


The marketing of professional services however presents a unique set of
problems, that require a different marketing approach.

Services have some unique characteristics that makes them distinct from a
product.

Services are Intangible: They can not be seen, tasted, felt, heard or
smelled.

Services are Inseparable: Can not be separated from their space,


Services are Heterogeneity: Quality depends not only provider but when &
where
Services are Perishability: They can not be saved and stored.

Services in the
Business-to-Business Market
Two distinct groups:
1. Products supported by services
The wide range of service elements that
accompany the physical product are
frequently as important as the technical
solutions offered by the product itself.
2. Pure services
Those that are marketed in their own right
without necessarily being associated with a
physical product.

Differences
Between
Goods and Services
Intangibility Heterogeneity

Simultaneous
Production
Perishability
and
Consumption

Implications of
Intangibility
Services cannot be inventoried
Services cannot be patented
Services cannot be readily
displayed or communicated
Pricing is difficult

Implications of
Heterogeneity

Service delivery and customer

satisfaction depend on
employee actions
Service quality depends on
many uncontrollable factors
There is no sure knowledge
that the service delivered
matches what was planned and
promoted

Implications of
Simultaneous Production
and Consumption
Customers participate in and
affect the transaction
Customers affect each other
Employees affect the service
outcome
Decentralization may be
essential
Mass production is difficult

Implications of
Perishability
It is difficult to synchronize

supply and demand with


services
Services cannot be returned or
resold

Services are
Different

Goods

Services

Tangible

Intangible

Resulting Implications

Services cannot be inventoried.


Services cannot be patented.
Services cannot be readily
displayed or communicated.
Pricing is difficult.
Standardized Heterogeneous Service delivery and customer
satisfaction depend on employee
actions.
Service quality depends on many
uncontrollable factors.
There is no sure knowledge that the
service delivered matches what
was planned and promoted.
Production
Simultaneous
Customers participate in and affect
separate from production and the transaction.
consumption
consumption
Customers affect each other.
Employees affect the service
outcome.
Decentralization may be essential.
Mass production is difficult.
Nonperishable Perishable
It is difficult to synchronize supply
and demand with services.
Services cannot be returned or
resold.

Business Product-Service
Classification Based on Tangibility

Business services are those market offerings that are


intangible-dominant. Few services are totally
intangible--they often contain elements with tangible
properties.

Unique Service Characteristics

The Dimensions of Service Quality

Customers focus on five dimensions in


evaluating service quality.
Among these dimensions, reliability-delivery on promises--is the most
important to customers.

SUPPORT
(Service )
PRE-SALES
Technical Assistance

Consultancy

AFTER - SALES
Services
Repair Service
Parts

Value added Services


Standardized Parts
Un-standardized Parts

Increases Augmented Product Value


Can be used for competitive advantage
Primarily relevant for Technically complex products /
services

CUSTOMER SUPPORT LANDSCAPE


AFTER - SALES
Satisfaction
Drivers

Commissioning

Warrantee
Service

Satisfaction -cumRevenue
Drivers

Post
warranty
service
Preventive Advise
Breakdown Service
Spares Supply

Replace /
repair

Revenue cum
Satisfaction
Drivers

Value Added
Packages e.g
AMC
Reconditioning
Services

Professional Service Firms


Marketing Programs
1. Pre-establish a relationship with a
client.
2. Advance its reputation as a leader in the
field.
3. Strengthen its relationships with existing
clients.

Systems Marketing
Systems marketing means; the supplier not only sells a
system of interrelated products, but a system of operating
procedures, management routines, inventory control, and
other service components to meet buyers needs. Ex : IBM
includes maintenance, emergency repairs, and training
services.

Systems marketing is service marketing. The essence of


systems marketing is that the firm is offering more than a
product and the accompanying services. Systems marketing
is the marketing of a service, that is personalized and
tailored to meet individual customer needs.

Diffusion of innovation
Diffusion of Innovationsis a theory that seeks to explain how, why, and at what
rate newideasandtechnology spread through cultures.Three key factors triggered
this dramatic change in market composition.

Microelectronic building blocks have made the production simple


Computer technology and creative personnel can improve the design for competitive
innovators product to produce consistently and economically

Intend to be major players by developing vertically integrated technological


capabilities.

Technology Can Help to Alter The Trends

Design For Manufacturability And Assembly (DFMA)

Necessary Changes In Research Methods And Goals

A Series of Small Steps

Research as a Team Effort

R&D Linked Corporate Strategy