Industrial Marketing

Product Strategy and New Product Development

 Industrial Product Definition and Characteristics

+Product Life Cycle

+Determinants of the Product Mix

+Managing Industrial Products

+Product Innovation

+New Product Development Process

+Organizing New Product Development Initiatives

+Adoption and Diffusion of New Products

Chapter Summary

Industrial products could provide core benefits, enhanced benefits, and augmented benefits to customers. In this chapter, the product life cycle has been discussed in the context of industrial goods and the innovation and development of new products. The industrial product life cycle has five stages - introduction, rapid growth, maturity, saturation, and decline.

The characteristics of industrial product life cycle lead to certain implications for industrial marketers in the areas of pricing, promotion mix, channel development, competition, and R&D. Efficient product mix plays an important role in the achievement of overall profitability of the firm. Hence, product portfolio analysis is necessary to identify which product is performing fairly well and which product is doing poorly.

Based on this, the product line width and depth can be changed and managed accordingly. When a product is performing poorly, the firm can adopt either revitalization or elimination strategies. Innovation is the crux for competitive advantage. Innovation leads to new products and higher profits. It involves generation of new ideas and developing them into useful products. Technology plays an important role in the innovation of products.

The innovation levels in an organization are influenced by management commitment, organizational structure, market orientation, coordination mechanisms, prior success rate, and age of the organization. The attributes of a specific innovation also influence the marketer’s adoption of the innovative product or process. Every firm has their own process for developing new products.

However, product development typically starts with idea generation and idea screening, followed by business analysis, product development, product testing, and commercialization. In order to carry out new product development successfully, firms organize themselves in different ways depending upon the size, nature of business, and frequency of new product development.

This may be in the form of appointing product managers or establishing new product departments or new product committees. They may also establish specialized teams who work on different new products at a given time. The adoption of new products depends on factors like perceived risk and advantage, self-confidence of the buyers, type of industry, prior experience in buying such products, investment required, and the switching costs involved.

The diffusion of new products in industrial markets is slow compared to consumer markets due to the huge investments involved in the purchase and group decision making in the organizations. Communication, profitability, and concentration of industries have an influence on the diffusion process.

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