5 industrial product stratery

23/09/2012 1 Chapter 5 Industrial Product Strategy www.dinhtienminh.net Dinh Tien Minh Th.S Đinh Tiên Minh Objectives 2 Understanding the meaning of an industrial product. Know the factors influencing changes in product strategy. Learn product life-cycle theory and its applications. Understand steps involved in developing product strategies. Learn branding in business market. 23/09/2012 2 Th.S Đinh Tiên Minh Content 5.1 Definition of an industrial product 5.2 Changes in product strategy 5.3 Industrial product life-cycle and strategies 3 5.4 Developing product strategies 5.5 Branding in Business Market Th.S Đinh Tiên Minh4 5.1. Definition of an industrial product Definition: The industrial product in defined not only as a physical entity, but also as a complex set of economic, technical, legal and personal relationship between the buyer and the seller. Nguồn: Webster F.E., Jr., Industrial Marketing Strategy, John Wiley & Sons, 2 nd edition, p.106. 23/09/2012 3 Th.S Đinh Tiên Minh5 5.1. Definition of an industrial product Example of an industrial product  Product: Moulded Case Circuit Breakers.  Economical side: Price  Technical side: Specifications  Legal side: If the supplier delays delivery.  Personal relationships between itself and the suppliers. Th.S Đinh Tiên Minh10 5.2. Changes in product strategy 23/09/2012 4 Th.S Đinh Tiên Minh11 5.2. Changes in product strategy (cont’) Factors demanding changes in product strategy: 1. Customer’s needs: Monitor continuously changes of customer’s needs and continue to satisfy by making changes in its products.  Example: Increase of cost of land used for storing raw material, the firm’s need have changed for vertical stacking from 2m to 6m height in order to save space and money. Th.S Đinh Tiên Minh12 5.2. Changes in product strategy (cont’) Factors demanding changes in product strategy (cont’): 2. Technology: The change of technology can require either the product modification or make existing product obsolete.  Example: The jelly filled telecom cables are getting replaced by fiber optic telecom cables. 23/09/2012 5 Th.S Đinh Tiên Minh13 5.2. Changes in product strategy (cont’) Factors demanding changes in product strategy (cont’): 3. Government’s policies or laws  Example: Government issues orders for banning the use of wood for window, door and partition frame and recommends the use of steel and aluminum frames in order to save natural environment. Th.S Đinh Tiên Minh14 5.2. Changes in product strategy (cont’) Factors demanding changes in product strategy (cont’): 4. Change of PLC: In order to maintain growth in sales and profits, the industrial firms decide to drop, or modify, or develop new (substitute) products when existing products reach “maturity” or “decline” stages in PLC. 23/09/2012 6 Th.S Đinh Tiên Minh15 5.3. Industrial PLC and Strategies Th.S Đinh Tiên Minh16 5.3. Industrial PLC and Strategies (cont’) Nguồn: Krishna K Havaldar (2010), Business Marketing, McGraw Hill, 3rd edition, p166. A General Model of the PLC Sales and Profits + 0 _ Industry Sales Industry Profits Introduction Growth Maturity Decline Slower rates Time 23/09/2012 7 Th.S Đinh Tiên Minh17 5.3. Industrial PLC and Strategies (cont’) Nguồn: Krishna K Havaldar (2010), Business Marketing, McGraw Hill, 3rd edition, p167. The PLC for High-tech products Time Sales NPD I&G M D NPD = New Product Development cost and time are high I&G = Introduction and Growth period are long M = Maturity period is very short (rapid change in technology) D = Decline period Th.S Đinh Tiên Minh18 5.3. Industrial PLC and Strategies (cont’) The PLC for Commodity products Nguồn: Krishna K Havaldar (2010), Business Marketing, McGraw Hill, 3rd edition, p167. Time Sales The demand remains relatively inelastic, especially in monopolistic market. The sales does not experience a decline due to the absence of competition. 23/09/2012 8 Th.S Đinh Tiên Minh20 5.3. Industrial PLC and Strategies (cont’) Th.S Đinh Tiên Minh25 5.3. Industrial PLC and Strategies (cont’) But how to locate industrial products in their life cycle? 23/09/2012 9 Th.S Đinh Tiên Minh29 5.4. Developing Product Strategies Th.S Đinh Tiên Minh30 What are called new product? 1. Innovative and new to the world. 2. New to the company, but not new to the market. 3. Revisions or improvements to the existing products in the existing markets. 4. Addition to the existing product lines with additional markets. 5. Repositioning existing product to new market segments. 5.4. Developing Product Strategies (cont’) 23/09/2012 10 Th.S Đinh Tiên Minh31 New product development process: 5.4. Developing Product Strategies (cont’) Th.S Đinh Tiên Minh38 5.5. Branding in Business Markets [...]...23/09/2012 5. 5 Branding in Business Markets (con’t) Definition:  A brand is defined as a name, symbol, term, sign, design, or a combination of them, intended to identify the goods or services of one seller and differentiate them from those of competitors Krishna K Havaldar (2010), Business Marketing, McGraw Hill, 3rd edition, p172 39 Th.S Đinh Tiên Minh 5. 5 Branding in Business Markets... them from those of competitors Krishna K Havaldar (2010), Business Marketing, McGraw Hill, 3rd edition, p172 39 Th.S Đinh Tiên Minh 5. 5 Branding in Business Markets (cont’) Brand Equity 1 Brand Awareness 5 Other Values Brand Equity 4 Brand Loyalty 41 2 Perceived Quality 3 Brand Associations Th.S Đinh Tiên Minh 11 23/09/2012 www.dinhtienminh.net 12 . Tiên Minh Content 5. 1 Definition of an industrial product 5. 2 Changes in product strategy 5. 3 Industrial product life-cycle and strategies 3 5. 4 Developing product strategies 5. 5 Branding in Business. Jr., Industrial Marketing Strategy, John Wiley & Sons, 2 nd edition, p.106. 23/09/2012 3 Th.S Đinh Tiên Minh5 5. 1. Definition of an industrial product Example of an industrial product  Product: . (substitute) products when existing products reach “maturity” or “decline” stages in PLC. 23/09/2012 6 Th.S Đinh Tiên Minh 15 5.3. Industrial PLC and Strategies Th.S Đinh Tiên Minh16 5. 3. Industrial