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BY. PROF. RAGHAVENDRAN V
Formulating Industrial Product Strategy
By Prof. Raghavendran V
2
Industrial Product Strategy
Industrial products have distinctive features vis-à-vis consumer products.
Product Strategy involves the managerial decisions about the product mix and the positioning and communication.
Product Planning involves not only the product strategy described above but also the product development measures.
Product Management refers to the managerial decisions pertaining to product development and product strategies through diff stages of PLC.
By Prof. Raghavendran V
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Product Decisions
Important decisions in industrial product management are: Marketing segment decision Product mix decisions Product specifications Positioning and communications decisions
Marketing segment decision: the first product decision to be made is the market segment decision because all other decisions- Pro mix decisions, Pro specifications, and positioning and communications depends- depend upon the target market.
By Prof. Raghavendran V
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Product Decisions
Product mix decision: it pertains to the type of products and product variants to be offered to the target market.
Product Specifications: involves specification of the details of each product item in the product mix. This includes factors like styling, shape, size and other attributes and factors like packaging and labeling.
Positioning and Communications Decisions: Positioning = Image & Communication = Message and these are interrelated.
By Prof. Raghavendran V
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Factors demanding change in Product Strategy
IM must understand that product strategy is flexible and dynamic.
Industrial Marketing a product variable. Industrial Firms are required to make changes in the product strategy because of changes in Customers needs Technology Government policies Product life cycle.
By Prof. Raghavendran V
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Industrial Product Life Cycle and Strategies
PLC theory or concept, used to determine marketing strategies.
Rupees
Time
Industry Sales
Industry Profits
Introduction
Growth
Maturity
Decline
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Industrial Product Life Cycle and Strategies
According to theory, products tend to go through different cycles or stages that begin, when they are launched.
The behavior of the product life cycle depends on three factors over which management has too little or no control. These are: Changing needs of customers. Changes in technology Changing competition
PLC suggests that different marketing strategies are needed at different stages of PLC. It also highlights the importance of long term planning, realization, impact on profits.
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Other shapes of the PLC for Industrial Products
Product Life-Cycle for High- Tech products
NPD Introduction and Growth stage period M
aturity
Decline
TIME
Sales
NPD: New Product Development time period
•For this cost and time are high,•Rapidly declines as technology changes faster.
By Prof. Raghavendran V
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Other shapes of the PLC for Industrial Products
Product Life-Cycle for Commodity products.
Sales
Time
•Decline is not rapid in nature•Monopolistic markets•Inelastic demand
By Prof. Raghavendran V
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International Product Life- Cycle
Exporting products to other countries takes place after a new product is launched in the home(domestic) market with successful results.
Foreign manufactures become competitive due to lower costs and start exporting the product to other countries.
FM’s lower Cost and High volumes enable them to export the product to the country where the originally innovated and launched in the present operations in International marketing.
By Prof. Raghavendran V
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Application of PLC theory to Marketing Strategies
Introduction Stages: Some industrial product get accepted slowly after introduction and others are fastly accepted. This depends upon user’s habits.
For slowly accepted products require high level of learning, marketing strategy should concentrate on market developments efforts. However for products that are accepted fast or have potential of rapid acceptance, MS evolve to meet intense competition
By Prof. Raghavendran V
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Growth Stage: Industrial marketer should focus marketing on three areas i.e.
1) Improve product design2) Improve distribution so that product
availability to customers are strong.3) Reduce the price as increased volume of
production.
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Maturity Stage: as number of competitors entering into the market is more. MS to be used in this stage are
1) Enter into new markets.2) Keep satisfying the existing customers.3) Cut marketing and production cost to
maintain profits margin.
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Decline stage: here price competition is severe. Here Industrial Marketer should withdraw the product from the market or develop the substitute product for replacement or reduce marketing
By Prof. Raghavendran V
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Locating Industrial Product in their life-cycle
The PLC are caused by time. It depends on number of factor like industry profits, rate of change in industry sales growth, and the information about competitors. The steps involved locating a product in its life are as follows.
1) Develop a trend analysis2) Analyze competitors market share, product
performance, diversification or expansion plans.3) Estimate and project sales and profits of the
product over the years.4) From above all, fix the product’s position on its
life cycle-curve.
By Prof. Raghavendran V
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Developing product strategies for existing products
Developing product strategies for existing individual products and product lines is an important part of an Imr’s Marketing Plan. The following steps should be taken by IM firms.
a) Evaluate the performance of all existing product/lines using product evaluation matrix.
b) By using perceptual mapping technique, examine the relative strength and weakness of the company.
c) Based on the above analysis, decide the product strategies for the existing product. ( to be maintained or modified or to be dropped)
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Steps involved in developing product strategies
Product Evaluation Matrix:Company sales
profitabilityInd Sales
MarS
Decline
BT Target AT
Stable
BT Target AT
Growth
BT Target AT
Dominant
Growth Average Marginal Dominant
Stable Average Marginal Dominant
Decline Average Marginal Dominant
S1 P
S
Yoram Wind & Henry Claycamp
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Perceptual Mapping Technique:High Quality
Low Quality
Strong Service
Weak Service
.B
C.
A1
A
New Position
Old Position
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Deciding Product Strategies: Based on 2 techniques, IM can now decide one of the strategy options mentioned below.
1) Maintain the product and its MS2) Modify the product and/ or change or the
product line.3) Eliminate the product or the product line.4) Add new products or product lines
By Prof. Raghavendran V
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New Product Development
One of the challenging tasks faced by an industrial firm is the development and marketing new industrial products, due to complexities & difficult.
Classifications of New products: A product that is new to the company and to the market is called a new product. They are classified
1) Products that are innovative & new to the world.2) Products are new to the company, not new to the
world.3) Revisions/improvements to the existing products
in the existing markets.
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4) Additions to the existing product lines with additional markets.
5) Repositioning existing products to new market segments.
6) Products with substantial cost reductions without reduction performance.
By Prof. Raghavendran V
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Factors Responsible for failure of New Industrial Products
New products do not satisfy the needs of many potential customers. The failure results from am inadequate coordination b/w R&D and marketing.
New products are not significantly different from existing products.
New products do not deliver the expected performance.
The companies with weak new product development process are beaten by competitors.
Prices of new products are often high prices.
By Prof. Raghavendran V
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Factors Responsible for success of New Industrial Products
Product superiority and uniqueness is the most important success factor.
Market knowledge is important.Technical and production capabilities.
By Prof. Raghavendran V
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The new product development process
The seven stage of new development process are:
I. Idea generationII. Idea ScreeningIII. Concept development & TestingIV. Business analysisV. Product DevelopmentVI. Market testing &VII. Commercialization.
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Marketing of Business Services
Classification of Industrial Services:Products supported by servicesPure servicesUnique characteristics of services and the
Marketing Implications Intangibility Inseparability Variability Perishability Non-Ownership
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Assignment time: submit on or before 29th Oct’
1. Explain the factors that influence changes in the product strategy?
2. Explain in detail of new product development process?
3. Explain in detail business services?4. Explain product evaluation matrix and
perceptual techniques in detail.
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BY PROF. RAGHAVENDRAN V
End of the Module 4
