Business-to-Business Marketing New Product Strategy

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Business-to-Business MarketingNew Product
Strategy

• Haas School of Business
• UC Berkeley
• Fall 2008
• Week 9
• Zsolt Katona

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Overview

• Week 3 Pricing
• Week 5 RD
• Week 6 Sales Force
• Week 7 Differentiation
• Week 8 Branding
• Today New Product Strategy
• Case Discussion Biopure
• A few thoughts on PLC
• Industrat Decision 7
• Week 10 Key Account Management
• Case Wesco

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Product Life Cycles (PLC)
Beyond idiosyncratic factors, the demand of each
category/product/brand follows a systematic
(bell-shaped) pattern over time.
Sales/ Period
Introduction
Growth
Maturity
Decline
Sales
Profits
Time
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Derived PLC
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The spread of products into U.S. households
Sources U.S. Bureau of Census (1970 and various
years), Cellular Telecommunications Industry
Association (1996), World Almanac and Book of
Facts (1997)
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Typical patterns
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Theory behind PLC

• The diffusion of products, brands and innovations
  in general is mainly driven by a social process
  similar to the spread of an epidemic.
• Key elements
• innovators
• imitators
• word of mouth communication

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The Bass model

• Describes sales, s, at time t as a function of
  cumulative sales, S

Where a innovation coefficient b imitation
coefficient M market potential
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Innovator characteristics(consumer goods)

• wealthier
• younger
• more educated
• cosmopolitan
• mobile
• risk takers
• opinion leaders

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Industrial innovators

• larger firms
• financially powerful
• faster growing
• with high RD spending
• with a younger CEO

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What promotes diffusion?(consumer markets)

• homogeneity of social system
• cultural norms (religion)
• language
• ethnic homogeneity
• social mobility
• density of social system
• physical and social mobility within the social
  system
• wealth

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What promotes diffusion in industrial markets?

• homogeneity of customer base
• industry concentration/globalization
• intermediate level of competition
• level of professionalization
• Mobility of employees

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Takeaway

• Demand for existing similar products might be
  significantly different than for a new product
• Carefully analyze decision makers and segments,
  when introducing a new product
• Product Life Cycle largely depends on your
  customers products success.
• Do not naturally expect the typical diffusion
  curve in B2B

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Industrat Stock Prices
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T4 Deal
Firm 2 has announced completion of a KOREX
prototype based on Technology 4.
Product Technology Project Res Sus BCost
- 4 PKEA 10000 50 160 Firm 2 is
offering the following standard licensing
contract to any interested party Annual fee
500,000, royalty 10
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