8-1

Part Three

Business Marketing

8-3

PART THREE

Business Marketing Programming

• Chapter 8 Developing and Managing Products

• Chapter 9 Business Marketing Channels

• Chapter 10 Managing Customer Relationships

• Chapter 11 Communicating with the Market

• Chapter 12 IMC

• Chapter 13 Sales and Sales Management

• Chapter 14 Pricing and Negotiating for Value

Copyright © 2006 The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/Irwin

Chapter Eight

Developing and Managing Products:

What do Customers Want?

8-5

THE BENEFIT CONCEPT

COMPETITIVEADVANTAGE:

PRODUCT:A Bundle of Benefits and a Collectionof Solutions to Needs and Wants

How the Product or Service Satisfies

A NeedBENEFIT:

A Benefit That Satisfies a CustomerBetter than A Competitor’s ProductBenefits

8-6

AUGMENTING:CREATING CUSTOMER SATISFACTION

• Objective is to customize a product for a customer to exceed their expectations

8-7

PRODUCT MANAGEMENT TOOLS

• THE PRODUCT DEVELOPMENT PROCESS

• THE PRODUCT LIFE CYCLE

• PRODUCT PORTFOLIO MANAGEMENT TOOLS

• BCG MATRIX

• GE MATRIX

8-8

THE BCG MATRIX:MEASURING MARKET GROWTH

AND MARKET SHARE

Market GrowthRate

Stars

CashCows Dogs

QuestionMarks

Market Share Relative to Nearest Competitor

BCG MatrixBCG Matrix

8-9

GE MATRIX MEASURING MARKET ATTRACTIVENESS AND BUSINESS STRENGTH

Market Attractiveness• Growth• Diversity• Competitive Structure Change• Technology Change• Social Environment

Business Strength

• Size of Market & Share

• Company Growth Rate

• Profit

• Margins

• Technology Platform

• Image

• People

GE Matrix

8-10

PRODUCT MANAGEMENT LEVELS

THE PRODUCT LINE

THE PRODUCT CATEGORY

THE PRODUCT

TECHNOLOGY THE PLATFORM

8-11

KEY PRODUCTMANAGEMENT DECISIONS

1. WHICH PRODUCT TO INTRODUCE

2. WHICH PRODUCTS TO KEEP

3. WHICH PRODUCTS TO PROMOTE

4. WHAT LEVEL OF PROMOTION TO PROVIDE (LOW TO HIGH)

5. WHAT PRODUCTS TO CONTINUE OR DELETE

8-12

PRODUCT LIFE CYCLE DECISION POINTS

Rapid expansion of distributorsProduct line expansionNiche marketingContinued heavy promotionSales force incentives and managementSearch for new sources for supplyNeed to balance supply and demandStock-out and back-order damage control

Development Introduction Growth Maturity Decline Time

Strongly defend home-market nichesPrune product linesEmphasize gross contribution rather than market share and sales volumeReview logistics: prune costsReduce pioneering sale force effort, more telemarketingMore trade than consumer promotionIntroduce flankers, private labels, genericsReinvest in market research & R&DUse promotions to increase heavy-user loyaltyFreeze investment in plantProductivity reviewSpecial trade promotions to keep channels happyFocused attacks on vulnerable competitorsLong-term price reduction or at least a short-term price promotionKeep plant at maximum capacity and subcontractexcess

Cut low-gross-margin products from the lineWithdraw from channels in order of their unprofitabilityFreeze R& D and product modificationsFreeze advertising and promotionsAttempt to maintain price to the endBuy back remaining stock and redistributeMaintain spare parts and serviceConsider divesting while it is a going concern

Redirect focus & promotionInvest in expanding productionBuild inventoryExpand distributor networkTrain expanded sales forceInstitute marketing controlsInvest heavily in advertisingTarget on best prospects: innovators and enthusiastsUse most loyal distributorsUse free samplesUse public demonstrations and trade showsUse publicity and endorsementsUse specialist media & catalogs

Sales

8-13

PRODUCT LIFE-CYCLE: A NEW LOOK

Product

Develop-ment

R&D

Test Marketing

Introduction Growth Maturity Decline

Kill the product

Find New Uses

Find New Markets

Repeat LifeCycle

8-14

PRODUCT DEVELOPMENT PROCESS:A NEW LOOK

EVALUATION

LAUNCH

BETA TESTING

PRODUCT DEVELOPMENT

SPECIFYING FEATURES

SCREENING AND PRELIMINARY INVESTIGATION

IDEA GENERATION

8-15

MAKING A PRODUCT SUCCESSFUL

1. Have close ties with a well defined market to anticipate customer needs.

2. Company is highly integrated and market-oriented

3. Company has a competitive advantage in technology and production capability

4. Company has a strong marketing proficiency

5. New product launch adequately financed

8-16

WINNING THE NEW PRODUCT CONTEST

• FOCUS ON CORE COMPETENCY(WHAT YOU DO BEST FOR A COMPETITIVE ADVANTAGE)

PLUS

• PROVIDE GREATEST VALUE TO CUSTOMER

EQUALS

• SUCCESSFUL PRODUCT