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. Prahalads 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, Intels 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
customerwhich
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 firms 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.

Canons 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 firms unique innovation system
and entrepreneurial values. Producer of sandpaper 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 firms quality
performance relative to competitors and
examines customer perceptions of
competing products value

What Value Means to Business Customers

Core
Benefits
Customer Value

Add-on
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. 47.

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 companys capability
and the customer buys that capability.
4. Industrial Service : Purchase of capability in an area
such as maintenance, technical service or
management consulting.

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 todays 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 products 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

Not Important

Non-differentiating
( SB = COMP)

Differentiating
(SB > COMP)

Differentiating
(SB<COMP)

SB:SponsorBrand
COMP:
CompetingBrand
D1:Attributeisimportantaswellasdifferentiating.SB>COMP

D2:Attributeisimportantaswellasdifferentiating.SB<COMP

ND1:Attributeisimportantbutnotdifferentiating.SB=COMP

ND2:Attributeisneitherimportantnordifferentiating.

ND3:Attributeisdifferentiating(SB>COMP)butnotimportant.

ND4:Attributeisdifferentiating(SB<COMP)butnotimportant.

 Ex : Heavy vehicle industry

Durability :D1, Reliability :D2, Fuel Economy :D3.
Safety : ND1.
Strategy Matrix :
Brand Difference
Increase

Decrease

Maintain

Increase

ND2D1

ND3D1

Decrease

D2ND4

Maintain

ND1D1

D2ND1

ND4ND4
D1D1

Importance

Upper left cell ; Increase importance & brand differentiation is a

strategy requiring to (i) increase the attributes 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 firms 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 predominant.
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 companys corporate
image.

17

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 companys
standing in the industry and their
overall reputation.
18

Elements Of Brand
Trust
Probity

Competence

Continuity

Brand Trust

Value
Resonance

Caring
19

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.
20

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 companys employees are
sufficiently motivated to care about the
quality of service or performance they
deliver.
21

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.
22

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 customers
functional needs.
23

B2B Brand Equity

Brand
imagery
deals
with
the
manufacturers reputation
in
the
market.
Brand judgments focus on customers
own personal opinions and evaluations.
Brand
feelings
are
customers
emotional responses and reactions
with respect to the brand (and the
company).
24

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.

25

Brand Equity Pyramid

4. Relationships =
What about you
and me

t
pu
n
io
at

Jud
gm
ent
s

Positive,
accessible
reactions

Re

1.Identity =
Who are you?

f
r
e

a
m
r

e
c
n

rce
Fo ips
les sh
Sa tion
la
Re

3.Response =
What about
you?

2. Meaning =
What are you?

Intense,
active
loyalty

Partnership
Solutions

Salience of the
Manufacturers Brand

Strong, favorable
unique brand
associations
Deep, broad
brand
awareness
26

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.
27

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.
28

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 firms 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

Corporate Branding and Brand

Architecture

A Dynamic Model of Brand Architecture

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, FisherRosemount, 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 longterm 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