Marketing business
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MAR5409_PPT_ch07.pptx0
Chapter 7 Managing Products for Business Markets
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How to build a strong business-to-business brand
The way in which sustainability strategies are transforming the competitive landscape
The strategic importance of providing competitively superior value to customers
Chapter Outline
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The various type of industrial product lines and the strategic choices that smart, connected products present
A strategic approach for managing products across the stages of the technology adoption life cycle
Chapter Outline (continued)
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Established through brand, products, and services
Brand is one of the firm’s most valuable intangible assets
Branding has emerged as a priority to marketing executives, CEOs, and the financial community
Marketplace Identity
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Brand
Name, sign, symbol, or logo that identifies and differentiates the product from competitors
Brand equity
Set of brand assets and liabilities linked to a brand, its name, and symbol
Brand and Brand Equity
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Differential effect that customer’s 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
Customer-Based Brand Equity (CBBE)
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Brand-Building Steps
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Develop deep brand identity
Establish unique brand identity by highlighting differences
Employ marketing programs to elicit positive brand responses
Build brand relationships with loyal customers
Figure 7.1 - CBBE Model
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To achieve brand identity, marketers must create brand salience
Brand salience: Tied directly to brand awareness
Brand awareness: Customer’s ability to recall or recognize the brand under different conditions
Marketers need to create a clear connection between the product and the brand name in markets where the product competes
Brand Identity
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Establishes unique association in the customer’s mind that differentiates the brand and creates competitive superiority
Types of brand associations
Brand performance: Way in which the product/service meets customers’ functional needs
Brand imagery: Ways in which the brand meets customers’ psychological or social needs
Should incorporate points of parity and differences
Brand Positioning
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Brand Response: Consumer Judgments
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Quality
Customer’s attitude towards brand’s perceived quality and their perceptions of value and satisfaction
Credibility
Extent to which customer perceives brand to be credible with respect to expertise, trustworthiness, and likeability
Consideration set
Degree to which customer finds brand a viable option and worth consideration
Superiority
Extent to which customer believes that brand offers advantages over competitive brands
Brand resonance
Strength of the psychological bond that a customer has with a brand
Degree to which this connection translates into loyalty, attachment, and active engagement with the brand
Forging Brand Relationships
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Percentage of organizational buyers who have a positive image of a company minus those with a negative opinion
Component and indicator of brand equity
Building brand attitude for high-technology firms increases the firm’s value
Firms that have developed strong brands create value for their shareholders by yielding greater returns
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Brand Attitude
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Many international companies insist that suppliers meet quality standards set out by the Geneva-based International Standards Organization (ISO)
ISO-9000 standards
Certification requires a supplier to thoroughly document its quality-assurance program
Has become a seal of approval to compete for business overseas and in the United States
Affects the entire supply chain
Product Quality
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Stage one - Centers on conformance to standards or success in meeting specifications
Stage two - Emphasizes that quality is more than a technical specialty
Stage three - Examines a firm’s quality performance relative to that of competitors
Analyses customer perceptions of the value of competing products
Stages of Quality Movement
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Emerging mega-trend that forces companies to change the way they think about products, processes, and business models
Involves the integration of economic, environmental, and societal considerations into business decision making
Integral part of value creation
Sustainability
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Distinct segments
Cautious adopters - View sustainability as a vehicle for cost cutting, resource efficiency, and risk management
Embracers - Recognize that sustainability strategies provide a means for gaining competitive advantage
Through innovation, process improvements, brand building, and access to new markets
Sustainability (continued)
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Figure 7.2 - Sustainability
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Figure 7.3 - Benefits and Sacrifices
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Core - Requirements a product must possess for a relationship to exist
Add-ons - Attributes that create differentiation and provides more value than competition
Forms of Customer Benefits
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Involves the set of all decisions concerning the products and services that the company offers
Business marketing firms attempt to satisfy customer needs and build a sustainable competitive advantage by capitalizing on core competencies
Product Policy
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Proprietary or catalog products : Offered only in certain configurations and produced in anticipation of orders
Custom-built products: Offered as a set of basic units, with numerous accessories and options
Custom-designed products: Created to meet the needs of one or a small group of customers
Industrial services: Buyer is purchasing a company’s capability in an area rather than an actual product
Types of Product Lines Defined
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Fundamental to a sound product policy decision
Attention must be given to the alternative ways to satisfy customer needs
Product strategists can be in touch with the market by including products and technology that compete for the same end-user needs
Defining the Product Market
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Dimensions of a Market Definition
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Customer function
Benefits that are provided to satisfy the needs of organizational buyers
Technological function
Alternative ways in which a particular function can be performed
Customer segment
Customer groups have distinct needs that must be served
Value-added system
Competitors serving the market can operate along a sequence of stages
Planning for today
Requires clear, precise definition of the business
Focuses on shaping up the business to meet the needs of today’s customers with excellence
Planning for Today and Tomorrow
Planning for tomorrow
Centers on how the business should be redefined for the future
Entails reshaping the business to compete more effectively in the future
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Nonconsumers - May lack the specialized skills, training, or resources to purchase the product or service
Undershot customers - For whom existing products are not good enough
Overshot customers - For whom existing products provide more performance than they can use
Important Customer Groups
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Require companies to build technology stack that includes:
Operating system embedded in the product and hardware
Software applications and network communications to provide connectivity
Product cloud that provides a platform for developing software applications
Smart, Connected Products
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Identify features that will deliver real value to target customers relative to their cost
Tailor for target segments the company elects to serve
Develop and incorporate those capabilities and features that reinforce its competitive positioning
Choosing Product Capabilities and Features to Offer
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Response time - Feature that demands a fast response, requires that the software be incorporated directly in the physical product
Automation - Fully-automated products require functionality that is embedded into the device
Factors in Deciding the Enabling Technology
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Network availability, reliability, and security
Embedding software in the product lowers the risk that confidential data will be compromised during transmission
Frequency of service or product upgrades
Companies can make product changes and upgrades easily and automatically by hosting functionality in the product cloud
Factors in Deciding the Enabling Technology (continued)
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Product data is vital to competitive advantage for smart, connected products
Costs and complexities are related to securing the rights to the data and in transmitting, storing, and analyzing it
Firms must determine how each type of data creates tangible value for functionality
Types of data that a firm decides to collect and analyze depends on its core strategy
Capturing Data
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Risks Involved in Choosing Smart, Connected Products
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Adding product features that customers do not need or value
Underestimating security and privacy risks
Failing to anticipate or recognize new competitive threats
Moving slowly and allowing competitors to gain a foothold
Overestimating internal skills and capabilities
Represents the place that a product occupies in a particular market
Found by measuring buyers’ perceptions and preferences in relation to competitors
Product Positioning
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Figure 7.4 - Positioning Process
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Discontinuous innovations
New products or services that require the end-user and the marketplace to change their past behavior, with the promise of gaining equally dramatic new benefits
Common in computer-electronics industry
Technology Adoption Life Cycle
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Types of Customers in Technology Adoption Life Cycle
| Customer | Profile |
| Technology enthusiasts (innovators) | Interested in exploring the latest innovation, these consumers possess significant influence over how products are perceived by others in the organization but lack control over resource commitments |
| Visionaries (early adopters) | Desiring to exploit the innovation for a competitive advantage, these consumers are the true revolutionaries in business and government who have access to organizational resources but frequently demand special modifications to the product that are difficult for the innovator to provide |
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Types of Customers in Technology Adoption Life Cycle (continued)
| Customer | Profile |
| Pragmatists (early majority) | Making the bulk of technology purchases in organizations, these individuals believe in technology evolution, not revolution, and seek products from a market leader with a proven track record of providing useful productivity improvements |
| Conservatives (late majority) | Pessimistic about their ability to derive any value from technology investments, these individuals represent a sizable group of customers who are price sensitive and reluctantly purchase high-tech products to avoid being left behind |
| Skeptics (laggards) | Rather than potential customers, these individuals are ever-present critics of the hype surrounding high-technology products |
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Bowling alley - Push from hitting one segment successfully carries over into surrounding segments
Product gains acceptance from mainstream market segments but is yet to be adopted widely
Tornado - Technical or infrastructure buyers in organizations who focus on the vast number of new customers entering the market at the same time
Strategies for the Technology Adoption Life Cycle
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Main street
Represents a period of aftermarket development
Focuses on developing niche-specific extensions to the basic platform for existing customers
Aims to develop value-based strategies targeted to particular end-user segments
Strategies for the Technology Adoption Life Cycle (continued)
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