McGraw-Hill/Irwin Copyright © 2009 by the McGraw-Hill Companies, Inc. All rights reserved.

Business Marketing Programming Part Three

Business Marketing Programming Chapter 8 Developing and Managing Products Chapter 9 Business Marketing Channels Chapter 10 Creating Customer Dialogue Chapter 11 Communicating via Advertising, Trade Shows, and PR Chapter 12 The One-to-One Media Chapter 13 Sales and Sales Management Chapter 14 Pricing and Negotiating for Value

Chapter 8 Developing and Managing Offerings: What do Customers Want?

THE OFFERING CONCEPT COMPETITIVE ADVANTAGE: PRODUCT: A Bundle of Benefits and a Collection of Solutions to Needs and Wants How the Product or Service Satisfies a Need BENEFIT: A Benefit That Satisfies a Customer Better than a Competitor’s Product Benefits 8-5

ACTIVITIES IN MANAGING PRODUCTS UNDERSTAND THE PRODUCT LIFE CYCLE (PLC) AND APPLY IT TO PRODUCT STRATEGY UNDERSTAND THE CONCEPT OF PRODUCT PORTFOLIOS KNOW WHEN TO HARVEST A PRODUCT 8-6

PRODUCT LIFE CYCLE DECISION POINTS Rapid expansion of distributors Product line expansion Niche marketing Continued heavy promotion Sales force incentives and management Search for new sources for supply Need to balance supply and demand Stock-out and back-order damage control DevelopmentIntroductionGrowthMaturity Decline Time Strongly defend home-market niches Prune product lines Emphasize gross contribution rather than market share and sales volume Review logistics: prune costs Reduce pioneering sale force effort, more telemarketing More trade than consumer promotion Introduce flankers, private labels, generics Reinvest in market research & R&D Use promotions to increase heavy-user loyalty Freeze investment in plant Productivity review Special trade promotions to keep channels happy Focused attacks on vulnerable competitors Long-term price reduction or at least a short-term price promotion Keep plant at maximum capacity and subcontract excess Cut low-gross-margin products from the line Withdraw from channels in order of their unprofitability Freeze R& D and product modifications Freeze advertising and promotions Attempt to maintain price to the end Buy back remaining stock and redistribute Maintain spare parts and service Consider divesting while it is a going concern Redirect focus & promotion Invest in expanding production Build inventory Expand distributor network Train expanded sales force Institute marketing controls Invest heavily in advertising Target on best prospects: innovators and enthusiasts Use most loyal distributors Use free samples Use public demonstrations and trade shows Use publicity and endorsements Use specialist media & catalogs Sales Exhibit

THE BCG MATRIX: MEASURING MARKET GROWTH AND MARKET SHARE Market Growth Rate Stars Cash Cows Dogs Question Marks Market Share Relative to Nearest Competitor BCG Matrix Exhibit

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 Exhibit 8-3 Unattractive Weak Strong Attractive 8-9

Exhibit 8-4 PRODUCT DEVELOPMENT PROCESS: A NEW LOOK EVALUATION LAUNCH BETA TESTING PRODUCT DEVELOPMENT SPECIFYING FEATURES SCREENING AND PRELIMINARY INVESTIGATION IDEA GENERATION 8-10

QUALITY FUNCTION DEPLOYMENT Exhibit 8-5 Customers’ desired benefits Linked to product characteristics Broken down into component part characteristics Process Characteristics Production Controls 8-11

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.STRONG FINANCIAL SUPPORT Exhibit

KEYS TO PRODUCT INNOVATION AN INNOVATIVE COMPANY MUST HAVE A CORPORATE CULTURE THAT SUPPORTS INNOVATION – a desire for growth, improvement A FOCUS ON OPPORTUNITY RISK INSTEAD OF INVESTMENT RISK A VISION OF WHAT THE NEW PRODUCT IS TO ACCOMPLISH A STRUCTURED DEVELOPMENT PROCESS A LONG-TERM PERSPECTIVE 8-13

KEY PRODUCT MANAGEMENT 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 8-14

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 8-15