MANAGING PRODUCTS FOR BUSINESS MARKETS

 Product Management is linked to market analysis & selection.

 Core Competencies : The Roots of Industrial Products.
“ The diversified corporation is a large tree. The trunk and major Limbs are core
products, the smaller branches are business units, the leaves, flowers and fruit
are end products. The root system that provides nourishment, sustenance and
stability is the core competence.”
 Identifying Core Competencies:
1. Provides potential access to an array of markets (eg. Honda : design &
development of small motors)
2. Makes an important contribution to the perceived customer benefits of the
firms and products ( eg. Honda is in motorcycles, automobiles, lawn
mowers, Lawn tools)
3. Should be difficult for competitors to initiate. Complex harmonization of
individual technologies and production skills.( eg. Motorola – internal
pattern of coordination & learning, individualised pager within two hours of
receiving an order).
 Sustaining the Lead :
– Rareness of competence : Relative to other firms.
– How long will it take your competitors to develop the competence? (eg.
Maruti in M-800)
– Can the source of your advantage be easily understood by competition?
(eg. rich, informal process and communication networks that guide strategy
at 3M).

 C. K. Prahalad’s view :
– Competencies of a firm provide a measure of its capacity to create new
business opportunities.
– Core product share provides a measure of market influence.
“ Intel is not in the personal computer (PC) assembly business (eg. IBM,
CPQ) or purely PC marketing business (e. Dell, Packard Bell). Intel
manufactures a key module. However, Intel’s influence in the PC industry is
significantly greater than any single PC manufacture.”
Core Competencies and Selected Products at Canon
• Core competencies
embodied in superior
employee skills--
technologies they have
mastered, unique ways
that employees combine
these technologies, and
market knowledge that
the firm has accumulated.
• Canon focuses on basics
of what creates value for
customer—which includes
both technical and
organizational skills.
 Three Tests to Identify
Core Competencies
• First, a core competence provides potential access to
an array of markets.
• Second, a core competence should contribute
importantly to customers’ perceived benefits of firm’s
end products.
• Third, a core competence should be difficult for
competitors to imitate.
 Sustaining the Lead: Three Questions

• How rare or difficult to develop is our competence?

• How long would it take our competitors to develop
the competence?
• Can our competitors easily understand the source of
our advantage?
 Core Products to End Products.
– Canon’s brand has a small share of Laser printer market but
holds 80% manufacturing share in desktop Laser printer
“engines”.
– Provide core products for a variety of markets.
– Shaping new applications and developing new end markets.

 Exploiting selected Core Competencies :

– Every activity cannot be dominated, concentrate on those
that will be critical in serving customers in future.
– 3M : adhesives, abrasives and coating-boating combined with
firm’s unique innovation system and entrepreneurial values.
Producer of sand-paper in 1920s to Post-it notes, magnetic
tape, coated abrasives, photographic film etc.
 Quality Movement Stages
• Stage one: conformance to standards or success in
meeting specifications
• Stage two: emphasized that quality was more than a
technical specialty and that pursuit of quality should
drive the entire business’ core processes
• Stage three: examines a firm’s quality performance
relative to competitors’ and examines customer
perceptions of competing products’ value
 What Value Means to Business Customers

Core
Benefits
Add-on

Customer Value
Price

Sacrifices Acquisition
Costs

Operations
Costs

Source: Adapted from Ajay Menon, Christian Homburg, and Nikolas Beutin, “Understanding Customer Value,”
Journal of Business-to-Business Marketing, 12, no. 2 (2005), pp. 4–7.
• PRODUCT POLICY
Through product policy, a firm attempts to satisfy customer needs
and build sustainable competitive advantage by capitalizing on its
core competencies.

 Type of Product Lines:

1. Proprietary or catalog products : Items offered only in certain
configurations and produced in anticipation of orders.
2. Custom-built products: Items offered as a set of basic units, with
numerous accessories and options. Decisions center on offering the
proper mix of options.
3. Custom-designed products : items created to meet the needs of
one or a small group of customers. Product Line is described in
terms of the company’s capability and the customer buys that
capability.
4. Industrial Service : Purchase of capability in an area such as
maintenance, technical service or management consulting.
 Product strategy rests on the intelligent utilization of corporate
capability.
 Defining the Product Market.
A product market establishes the distinct arena in which the business
marketer competes. Four dimensions are important :
– Customer function dimension ; Benefits provided to satisfy the needs of
organizational buyers (eg. Mobile messaging).
– Technological dimension : Alternative ways a particular function can be
performed. (eg. Cell phone, pager, N/B).
– Customer segment dimension : customer groups have distinct needs (eg.
Physicians, sales reps.)
– Value-added system dimension : Sequence of stages along which
competitors serving the market can operate.

 Planning for Today & Future :

– Planning for today requires clear precise definition of the business. Planning
for tomorrow is concerned with how the business should be redefined for
the future.
– Planning for today focuses on shaping up the business to meet the needs of
today’s customers with excellence. Planning for tomorrow can entail
reshaping the business to compete more effectively in the future.
 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

• PLANNING INDUSTRIAL PRODUCT STRATEGY

Product Positioning : Examine the attributes that assume a central role in buying decisions.
Determinant Attributes : Important & Differentiating
Non-Determinant Attributes : Either one- Differentiating or Important or None.

Attribute

Determinant Non- determinant

D1 D2 ND1 ND2 ND3 ND4

Important X X X      

Not Important       X X X

Non-differentiating
( SB = COMP)     X X    
Differentiating
(SB > COMP) X        x  

Differentiating
(SB<COMP)   X       X
SB : Sponsor Brand
COMP:
Competing Brand

D1 : Attribute is important as well as differentiating. SB> COMP D2 : Attribute is important as well as differentiating. SB< COMP

ND1 : Attribute is important but not differentiating . SB= COMP ND2 : Attribute is neither important nor differentiating.
ND3 : Attribute is differentiating (SB>COMP) but not important. ND4 : Attribute is differentiating (SB<COMP) but not important.
• Ex : Heavy vehicle industry
Durability :D1, Reliability :D2, Fuel Economy :D3. Safety : ND1.

Strategy Matrix :
Brand Difference

Increase Decrease Maintain

Increase ND2→D1   ND3→D1

Importance Decrease     D2→ND4

ND1→D1 D2→ND1 ND4→ND4

Maintain     D1 →D1

Upper left cell ; Increase importance & brand differentiation is a strategy

requiring to (i) increase the attribute’s importance to customers and (ii) increase
the difference between competition and sponsor brand.
D1 is the attribute most preferred by a product manager.
D2 : Product manager attempts to convert it into a nondeterminant attribute.
 Assessing Global Product-Market Opportunities :
Market Needs
• Product Same Different
• Configuration
• Same Universal product Market segmentation
• Different Product segmentation Specialty segmentation

1. Universal or global product assumes the needs of organizational customers are

the same across countries eg. IT, Air Liners, Machine tools.
– Search for similarities as well as differences.
– Maximize the size of the common global core of the product while also providing for
local tailoring around the core.
– Designed with the global market in mind-not adapted from national products.
Canon gave up the ability to precisely meet all needs in the domestic market in order
to maximize its position in the global market.
• MANAGING PRODUCTS IN HIGH- TECHNOLOGY MARKET

– Managing a High-Tech Brand

“ Brand equity is a set of brand assets and liabilities linked to a
brand, its name and symbol that add to or subtract from the value
provided by a product or service to a firm and /or to that firm’s
customers.

– Strong Brands Promise & Deliver:

A brand is a distinctive identity that represents an enduring and
credible promise of value associated with a particular product,
service or organization.
Emphasis is generally at the corporate level or at the sub-brand
level.
Successful brand management involves promising value to customers and then
ensuring that the promise is kept through product development, production,
sales, services, and promotion.

How High-Tech Brands Build Equity

 What Is B2B Branding?

• In B2B market corporate branding is pre-

dominant.
• Corporate brands differ from product brands in
that they represent the firm, and their image is
potentially constructed by everything a firm is
perceived to be doing.
• Thus, corporate brand image is synonymous
with the company’s corporate image.

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 Steps for Building Strong
B2B Brand
 Functional attributes are primary
ingredients and supplementary
features; product reliability, durability
and serviceability; service
effectiveness; style and design; and
price.
 Image associations relate to company’s
standing in the industry and their
overall reputation.

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 Elements Of Brand Trust

Probity

Competence Brand Trust Continuity

Value Caring
Resonance

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 Elements Of Brand Trust

• Competence: technical capability to

completely make the product, or
effectively deliver the service, they are
offering.
• Probity: belief that the company will
conduct its transactions with a customer
in an honest and fair way.

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 Elements Of Brand Trust
• Continuity: belief that the company has the
resources and commitment necessary to remain
in the business area relevant to the customer.
• This is particularly important in relation to
products which have a long lifetime.
• Caring: the company’s employees are sufficiently
motivated to care about the quality of service or
performance they deliver.

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 ELEMENTS OF BRAND TRUST
 Value Resonance has two levels:
 A basic level of corporate good conduct
in the sense that the company do not
violate the value consensus on ethical
and environment issues.
 A personalized level of ‘life-style
appropriateness’ and is concerned with
whether or not the vendor company
expresses values, which the individual
consumer aspires to incorporate in their
personal life style.
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 B2B Brand Equity
 The creation of significant brand equity
involves reaching the top of the brand
pyramid, and will occur only if the right
building blocks are put into place.
 Brand salience relates to how often and
easily the brand is evoked under various
purchase or consumption situations.
 Brand performance relates to how the
product or service meets customer’s
functional needs.
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 B2B Brand Equity
 Brand imagery deals with the
manufacturer’s reputation in the
market.
 Brand judgments focus on customer’s
own personal opinions and evaluations.
 Brand feelings are customer’s
emotional responses and reactions
with respect to the brand (and the
company).
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 B2B Brand Equity
 Brand resonance refers to the nature of
relationship that customers have with the
brand and the extent to which customers
feel that they are “in sync” with the brand.
 Resonance is characterized in terms of the
intensity or depth of the bond customers
have with the brand, as well as the activity
engendered by this loyalty.

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 Brand Equity Pyramid
4. Relationships = Intense,
Partnership
What about you Solutions active
and me loyalty

Sa tion
Re
s
ent

les sh
la
3.Response = Positive,

gm

Fo ips
What about accessible

Jud

rce
you? reactions
c e

Re
an

pu
rm Strong, favorable
2. Meaning =
rfo

ta
unique brand

tio
What are you? Pe associations

n
Salience of the Deep, broad
1.Identity = Manufacturer’s Brand brand
Who are you?
awareness
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 Difficulties In B2B Branding
• Building strong brand equity is a relatively long-
term process that revolves around building value
for customers first, from which comes positive
associations about the product and the
company, and building broader associations.
• The most powerful associations come from
customers’ direct experiences.

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 Difficulties In B2B Branding
• Every time customers interact with a
supplier, with its products, or interact with
customer service person, impressions are
formed about the company, the products,
and its employees.
• Strong B2B brands are, therefore, built
one customer at a time.

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 Drivers of Brand Attitude Change
• Dramatic and visible new products aggressively supported by
advertising
• Increases in brand attitude associated with appointment of
well-recognized executive officer who introduced new
strategy
• Brand attitude depends on competitive actions.
• Product problems associated with several declines in brand
attitude
• Legal actions were associated with decreases in brand
attitude
– Isolating Technology Adopters:
• Once a particular threshold of consumer acceptance
was achieved, there was a stampede.
• Discontinuous innovations.

– Types of Technology Customers :

• Business marketers can benefit by putting innovative
products in the hands of technology enthusiasts.
• Visionaries have resource control but demands
special and unique product modifications.
The Technology Adoption Life Cycle : Classes of Customers

• Technology enthusiasts (innovators) : Interested, Lack control

over resource commitments.
• Visionaries (early adopters) ; Exploit the innovation for
competitive advantage, demanding.
• Pragmatists (early majority) : makes bulk of Technology
purchase, believe in evolution not revolution, seek products
from proven market leaders.
• Conservatives (Late majority) : Pessimistic , purchase to avoid
being left-behind.
• Skeptics (laggards) : Ever-present critics.
Landscape of Technology Adoption Life Cycle
– Tornado (contd.)
HP demonstrated the three critical priorities in its printer business :
1. Just “ship”.
2. Extend distribution channels.
3. Drive to the next lower price point.

– Main Street :
Aftermarket development. Frantic waves of mass-market adoption
begin to subside. Supply exceeds demand.
Develop value based strategies targeted in particular segments of end-
users. Operational excellence in production and distribution as well as
finely tuned market segmentation strategies.

– End of Life for the Technology Adoption Life Cycle :

A discontinuous innovation appears that incorporates breakthrough
technology and promises new solutions for customers.
 Brand Equity
• Differential effect that customer knowledge about a brand has on
their response to marketing activities and programs for their brand
(Keller, 2003)
• Brand Assets are (a) brand loyalty; (b) Brand Awareness;
(c) Perceived quality (d) Broad associations and (e)
other proprietary assets (Aakar, 1995)

Customer Equity
• Discounted lifetime values of a firm’s customer base. (Rust,
Zeithaml & Lemon, 2000, 2004).
• Value Equity: Utility of a brand : Quality, Price and convenience.
• Relationship Equity: Loyalty, recognition, knowledge building.
• Brand equity tends to put more emphasis on the front end of
marketing programs and intangible value. Customer equity tends
to put more emphasis on the ‘back end’ of marketing programs and
the realized value of marketing activities in terms of revenue.
 Corporate Branding and Brand Architecture

• A Dynamic Model of Brand Architecture Management

• Corporate Brand provides a visual identity to a ‘trade name’.
• Corporate Brand as business brand, distinct from a pure consumer
brand.
• Holistic Corporate Brand.
 What Great Industrial Brands do
• Unlike consumer brands, industrial brands may be household names in some industries and
unknown in others such as Hewlett-Packard, Fisher-Rosemount, DuPont, 3M, and Cummins. 
• LONG TERM PERSPECTIVE: They evoke unique values in users’ minds and remain there for
decades. Companies that own great brands constantly work to build and maintain this sense of
worth. Remaining relevant over the long-term is based on a commitment to quality.
• DEFINED CHARACTER : Great brands have a defined character, and the people who manage
the brand are very aware of what it is. The process of defining brand character involves
understanding what end-users like and dislike, and what values they associate with the core of
the brand concept.
• INVENTION : Great brands invent or reshape categories. Just as DuPont created the man-made
fibers category, when it invented Nylon. As Apple reshaped the personal computer category,
3M reshaped the engineered materials category and Cummins reshaped the OEM engine
market.
• EMOTIONAL ATTACHMENT: The common link between great industrial and consumer brands
is the ability to tap into consumer emotions. Industrial products sometimes achieve an
emotional tie-in too. Philips is one good example of such emotional appeal.
• DESIGN CONSISTENCY: Great consumer brands have a consistent look and feel. Great
industrial brands also maintain design consistency. For example, everything about HP has a
consistent design. There is a consistency of design in General Electric’s industrial products,
even across divisions. For example, GE’s industrial turbines carry design elements of its
medical imaging magnets and aircraft engines.