12e

Chapter 7
Managing Products for Business Markets

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 Agenda
 9:30-9:45 Individual Quiz
 9:45-10:00 Group Quiz
 10:00-10:15 Discuss Group Quiz
 10:15-11:15 Ch. 7
 11:15-11:30 Break
 11:30-12:20 Ch. 9

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 Marketplace Identity

 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

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 Brand and Brand Equity
 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

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 Customer-Based Brand Equity (CBBE)

 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

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 Brand-Building Steps

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

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 Figure 7.1 - CBBE Model
Customer Based Brand Equity

psychologic
al bond

How they feel

about the brand
How they
(excited –Apple),
evaluate
secure - IBM
the brand

functional
social
needs
needs

degree to which a brand is

considered or noticed when a
© 2017 Cengagecustomer is innota be
Learning®. May buying situation
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permitted in a license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management
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 Brand Identity
 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

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 Brand Positioning
 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 difference (the factors of
goods or services that establish differentiation) and
points of parity (the attributes or functionalities or
benefits or any other marketing mix elements that are
not unique to the brand)
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 Brand Response: Consumer
Judgments
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

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 Forging Brand Relationships
 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

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 Brand Attitude
 Percentage of organizational buyers who have a
positive image of a company minus those with a
negative opinion
 Component and indicator of brand equity
 Firms that have developed strong brands create
value for their shareholders by yielding greater
returns

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 Product Quality
 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

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 Sustainability
 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

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 Sustainability (continued)
 2 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

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 Figure 7.2 - Sustainability
Value drivers for
sustainability
investements

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 Figure 7.3 - Benefits and Sacrifices
Requirement
for customer to
consider it

Attributes that
differentiate
suppliers

A business customer’s
overall assessment of a
relationship with a supplier
based on perceptions of
benefits received and
sacrifices made

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 Forms of Customer Benefits
 Core - Requirements a product must possess for a
relationship to exist
 Add-ons - Attributes that create differentiation and
provides more value than competition

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 Product Policy
 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

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 Types of Product Lines Defined
 4 types of product lines
 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
 Eg: (management consulting, technical service,
maintenance)
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 Dimensions of a Market Definition
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
•Eg: Value added system for smart phones includes Nokia and Apple and
service providers like AT&T
•May indicate threats or opportunities from changes in system
(alliances)

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 Planning for Today and Tomorrow

Planning for today Planning for tomorrow

 Requires clear, precise  Centers on how the
definition of the business business should be
 Focuses on shaping up the redefined for the future
business to meet the  Entails reshaping the
needs of today’s business to compete more
customers with excellence effectively in the future

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 Important Customer Groups
 Non-consumers - 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

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 Capturing Data
 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

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 Risks Involved in Choosing Smart,
Connected Products

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

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 Product Positioning
 Represents the place that a product occupies in a
particular market
 Found by measuring buyers’ perceptions and
preferences in relation to competitors

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 Figure 7.4 - Positioning Process

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 Technology Adoption Life Cycle
 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

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 Types of Customers in Technology
Adoption Life Cycle

Customer Profile
Technology Interested in exploring the latest innovation, these
enthusiasts consumers possess significant influence over how
(innovators) products are perceived by others in the organization but
lack control over resource commitments
Visionaries Desiring to exploit the innovation for a competitive
(early adopters) 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 Making the bulk of technology purchases in organizations,
(early majority) 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 Pessimistic about their ability to derive any value from
(late majority) 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 Rather than potential customers, these individuals are ever-

(laggards) present critics of the hype surrounding high-technology
products

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