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B2B MKTG

Learn about the different stages of the product life cycle and how to plan and position your value offering accordingly. Understand the key assumptions, strategies, and tactics for each stage to maximize profits and growth. Suitable for B2B marketing professionals.

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B2B MKTG

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  1. Vitale and Giglierano B2B MKTG 2002 Edition Chapter 8 Planning and Positioning the Value Offer Prepared by John T. Drea, Western Illinois University

  2. Exhibit 8-1 The Product Life Cycle

  3. Exhibit 8-2 The Technology Adoption Life Cycle

  4. Basic Assumptions About the Product Life Cycle • All products and offerings have a limited life. • All products pass through different stages of evolution • For each stage, there is an idealized marketing mix that best fits the environment in that stage. • Different stages offer different opportunities and threats – • Segmentation and targeting should reflect the changes • Profits vary over the product life cycle.

  5. Offering Development Stage • No sales volume – offering still being developed. • Product is not yet completely defined. • Profits do not exist. • Price/value are being determined. • Promotion may be oriented towards publicity about technological developments. • Heavy investment to prepare the offering to satisfy customer needs.

  6. Offering Introduction Stage • Low sales volume. • Product is somewhat basic – little need for competitive differentiation. • Profits are typically negative. • Price/value are being determined • Promotion is used to build awareness. • If many offering elements have been outsourced or are part of a first-time value network, the logistical process experiences a learning curve.

  7. Offering Growth Stage • Profits increase - new adopters accept product. • Market penetration pricing may be appropriate as competitors bring pressure on high margins. • Accordingly, product differentiation becomes important to distinguish the offering from competitors (and to help protect margins.) • Promotion serves to remind/reinforce decisions. • Distribution is often important in the training and education of customers.

  8. Market pragmatists must now play catch-up or attempt to leap-frog market visionaries. Product Acceptance Product Differentiation Total offering attributes are important to differentiate the product. Growth is likely the function of a B2B customer specifying the product for inclusion in its offering. This creates a sudden growth in volume that will require economies of scale. Economies of Scale Key Issues As a Product Enters the Growth Stage

  9. Offering Maturity Stage • Profits have peaked, competition fights over market share. • Promotion reinforces buyer decisions and focuses on supplier reputation and value. • Distribution strives to serve all market sub-segments. • Price is a major component of the marketing mix. • New customers do not replace sales volumes as old customers move to newer products

  10. Offering Decline Stage • Consolidation usually occurs among suppliers • Product line is reduced to minimize product variation – efforts are made by remaining competitors to operate at productive rates. • Promotion reduced to minimal levels to accommodate existing customers. • Price, particularly associate with a long-term contracts, is a major part of the marketing mix.

  11. How Can You Determine Where an Offering Is in the PLC? • Develop and review trend information for the past 3-5 years or business cycles. • Examine changes in the number and nature of competitors. • Review short-term competitive tactics – are competitors pricing to utilize new capacity or improve short term sales volume? • Are new product introductions aimed at segments currently served by existing offerings? • How many years before a major consolidation occurs among suppliers? • Will a competitor innovate your organization out of business?

  12. Stage1: Idea Generation The New Product Development Process Stage 2: Product Screening Stage 3: Business Case Analysis Stage 4: Product/Strategy/Plan Development Stage 5: Test Market Stage 6: Product Launch Stage 7: Hand-off to Customer Education

  13. Two Approaches to Developing New Products Focus on the Technology or Product First Extensively Involve Existing and Prospective Customers ….product concept…. ….marketing concept…. Engineering-driven philosophies minimize customer input: A customer orientationmaximizes customer input.

  14. Team Approaches to New Product Development Companies have moved from separate silos (marketing, engineering, sales, customer service, etc.) to small cross-functional teams. New products usually need a champion Team process requires high-level support Potential problems with a team approach Different levels of management need input Team composition must reflect many demands

  15. Stage Gates • Stage Gates • They are checkpoints after each stage of the product development process. • The new product development process is interrupted at certain milestones to ensure that • the original goals and objectives are still viable, • The new product development is still forecast to meet the expectations that were created as part of its initial approval.

  16. Concurrent Development Marketing New Product Development Production Engineering Sales Etc. New Product Development + + Engineering Production Marketing + Sales Concurrent Development Sequential Development (not concurrent) • Concurrent development reduces development time. • Teams are critical to effective concurrent development. • There are no short-cuts in new product development.

  17. Marketing and the Product Development Process • In a market-driven organization, marketing continuously reviews customer needs and develops new offerings to meet those needs. • However, many organizations minimize resources for marketing throughout the process. • 22% of new product development projects reported no marketing study. • Another 46% reported poorly developed marketing plans. • Test marketing was omitted in 58% of studied projects

  18. How Should Marketing Serve the Organization? Understand the Technology in Depth Define and Redefine Current and Future Customer Needs Motivate Other Company Departments & Organizations Screen andSelect Ideas from All Sources Guide New Product Development with Customer Needs Reward the Efforts of Technical & Support Staff Catalyze Company Resources to Get the Right Resources

  19. No Real Need Existed Missing Marketing Plan Overestimated Market Size or A “Me-Too” Product Didn’t Penetrate Offering Didn’t Meet Needs Adequately Market Would Not Pay Reasons Why New Products Fail

  20. Exhibit 8-3 Make-or-Buy Decisions How much does the component contribute to our product’s value image in our customer’s view? Minor Is the component unique to our markets? Major Are we good at it? No Yes No Yes No Can we own the market for it? Purchase as a commodity. Yes No Can we or do we want to protect it? Develop partnership with qualified supplier(s). Yes Is it our kind of business? -Financial justification -Risk assessment -Stability of technology Collaborate in Development with Technology-oriented Supplier(s). No Yes Make it!

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