Chapter 5Chapter OutlineProduct Lines DefinedCustom Product Versus Proprietary Standard Line ManufacturersSelling Strategy Varies by Type of RelationshipTypical Organization Chart Showing Sales Reporting RelationshipsDoes R&D Believe in the Marketing Concept?Product Manager/ Marketing Manager RoleNew Product ApproachesPhases of New Product DevelopmentMarketing Activities at Each PhaseOrganization of the New Product EffortSlide 13Slide 14Slide 15Slide 16Stages in Adoption ProcessFactors Influencing Rate of Adoption-DiffusionSlide 19Slide 20Slide 21Slide 22Slide 23Slide 24Slide 25Slide 26Problem #2: Doing What the Grid Position IndicatesImportant Characteristics of Business ServicesChapter 6Slide 30Slide 31Different Companies, Different Pricing ObjectivesSlide 33Major Factors Influencing Price DecisionPricing MethodsZero-Based PricingPricing Across Product Life Cycle (Life-Cycle Costing)Price-Leadership StrategyCompetitive BiddingSlide 40Pricing Decision APricing Decision APricing Decision BPricing Decision BPricing Decision CSlide 46Pricing Decision DSlide 48Leasing in the Business MarketTen Don’ts of Successful SellingChapter 7Slide 52Business Marketing Channel MembersBusiness Marketing Distribution Channel MembersSlide 55Slide 56Functions of the Channel IntermediarySlide 58Direct Distribution ChannelIndirect Distribution ChannelsSlide 61Slide 62Slide 63Internet Direct Distribution ChannelSlide 65Slide 66Manufacturer’s RepresentativesChannel Transaction FacilitatorsChannel ConflictSlide 70Problem Areas in Manufacturer- Intermediary RelationshipSlide 72Conflict Resolution (A)Conflict Resolution (B)Slide 75Chapter 8Slide 77Physical DistributionLogistics ManagementSlide 80Slide 81Slide 82Functions of Traffic ManagementSlide 84Slide 85Slide 86Slide 87Slide 88Slide 89Slide 90Slide 91Major Advantages by Transportation ModeSlide 93Controllable Elements in a Logistics SystemMajor Categories of Service ComplaintsSlide 96Slide 97Chapter 5New Product Development, Management, and StrategyChapter Outline•Product Strategy in Business Marketing•Product Lines Defined•Business New Product Development•Organization of the New Product Effort•Product Life-Cycle Analysis•Determinants of the Product Mix•The Product Adoption–Diffusion Process•Product Portfolio Classification, Analysis, and Strategy•Product Deletion Strategy•Marketing of Business Services•Important Characteristics of Business Services•Business Service Marketing—Challenges and OpportunitiesProduct Lines Defined•Proprietary or catalog: Standard products offered to many customers and usually inventoried in anticipation of sales orders. For example, the DoAll Company keeps a large inventory of model No. C916A Band Saws to ensure quick delivery to customers. •Custom-built: Different variations of accessories and options to complement proprietary or catalog products offered. For example, the DoAll company fills a request from a major company for a custom, made-to-order saw with a larger motor size, larger table size, and automatic indexing. •Custom-designed: Products designed for (and usually only for) a particular user. For example, DoAll designed a unique band saw with a custom-fixtured table and remote-control operation for U.S. Army to use to cut up live ammunition. •Industrial services: Intangibles, i.e., maintenance, machine repair, consulting. For example, DoAll provides a saw and coolant specialist who makes courtesy inspections at customers’ plants to assist in using DoAll in product applications.Custom Product Versus Proprietary Standard Line Manufacturers•Custom: BMW designs a windshield washer fluid container for their new model and sends part prints to a custom plastics component manufacturer. Manufacturer must build production equipment but BMW owns molding dies and rights to product. Supplier sales build relationship, work with customer on design, finalize terms of sale.•Standard line: BMW picks a standard wheel bearing for its new model and orders it directly from manufacturer. Manufacturer sells same wheel bearing to others. Supplier sales build relationship, work with customer on application, finalize terms of sale.Selling Strategy Varies by Type of RelationshipCustomerS1S2S5S7S3S6S8S4S9S25Customer purchases from many suppliers. CustomerCustomer purchases from bid list of a few suppliers.CustomerCustomer purchases from one supplier for that product category.S1S1S2S3S4Typical Organization Chart Showing Sales Reporting RelationshipsPresidentVP Mfg.VP MarketingVP Acct.Sales Mgr.Marketing Mgr.Product Development Mgr. Customer Service Mgr.VP EngineeringDoes R&D Believe in the Marketing Concept?•It may depend on how long ago researchers graduated from college. Within past five years, some technical schools have begun teaching importance of studying customer’s needs as a first step in design process—following tenets of TQM.•Still, most technical departments aren’t known for their customer orientation.Product Manager/Marketing Manager RoleOld View: Organize, coordinate, and control.New View: Calculated chaos and controlled disorderCommunicate—Communicate—Communicate: Make things happen.Questions:•What companies purchase products from these producers?•What would a Product Manager do to facilitate these transactions and relationships?New Product Approaches•Technology push: When perceived value of particular technology is great; firm has only a vague notion of possible applications, and usually not much more.•Market pull: Primarily the result of marketing research methodologies of interviewing potential users about their needs, then developing solutions to those perceived market needs.Phases of New Product DevelopmentIdea and concept generationScreening and evaluationBusiness analysisProduct developmentProduct testingProduct commercialization and introductionMarketing Activities at Each Phase1. Idea and concept generation: involves the search for product ideas and concepts that meet company objectives2. Screening and evaluation: involves analysis to determine which ideas submitted are pertinent and merit a more detailed study of potential feasibility and market acceptance3. Business analysis: return-on-investment criteria are examined along with competition and the potential for market entry4. Product development: involves taking the product from an idea generated during a brainstorming session to a state of readiness for product and market testing5. Product testing: