Chapter 8

Developing and Managing Offerings:

What do Customers Want?EMC

Business MarketingDeveloping and Managing Products

• Portfolio and PLC Approaches to Product Management

• Internal Product Development

• Lead Users in the Product Development Process

• Supplier and Customer Partnering in Product Development

What is an Offering?– Features– Advantages– Benefits

how the product or service satisfies a need

– Product a bundle of benefits and a collectionof solutions to needs and wants

– Competitive Advantage a benefit that satisfies a customerbetter than a competitor’s product benefits

– Core Product – Augmented Product

Managing Products, p. 225Product(1310 Copier)

Product Line(imageRunner)

Product Technology Platform(digiting scanner)

Product Category(plain paper copier)

Product Management Tools

The product development processThe product life cycleProduct portfolio management

toolsBCG MatrixGE matrix

Key Product Management Decisions

1. Which product to introduce

2. Which products to keep

3. Which products to promote

4. What level of promotion to provide (low to high)

5. What products to continue or delete

Managing Products

• Product Life Cycle

• PLC and Product Strategy– Development Stage

– Leapfrogged

– Introduction Stage

– Primary Demand

– Growth Stage

– Secondary Demand

– Maturity Stage

– Decline Stage

Product Life Cycle, Ex. 8-1, p. 226

Product Portfolio Management Tools

– Product PortfoliosProduct Portfolio Management

– Market Attractiveness

– Business Strength

• Matrix cells– Stars

– Cash Cows

– Question Marks

– Dogs

BCG Product Portfolio Matrix, Ex. 8-2, p. 229

GE Directional Policy Matrix

• Projects are scored and sorted on the basis of Market attractiveness & business position.

• Weights on criteria= ?

• Surprises? Insight?

• Utility: communicate

GE Product Portfolio Matrix, Ex. 8-2, p. 229

PLC & BCG Matrix

• Products are in stages

– Development, Intro, Growth, Maturity, Decline

• Products can move in both directions

• Products finance other products:

– Cows fund stars

Criticisms of the Product Life Cycle Concept

• Products don’t always go through all steps sequentially – there’s no standard life cycle, making it a difficult concept to apply to real life.

• Too many managers follow the model blindly and then make poor decisions

• Identifying which stage a product is in can be difficult – there are no standard growth or decline rates to apply

• A life cycle exists for a particular brand, or family of brands, or a technology, or a product category, again making it difficult to apply to any particular product

New Product DevelopmentEx. 8-4, p. 232

• Risk and New Product Decisions– Investment Risk– Opportunity Risk

• New Product Development Process– Generating Ideas– Lead Users

• Screening and Preliminary Investigation

• Specify Features• Quality Function Development

(links what customer wants to how the product will deliver)

Four Phases of the Quality Function Deployment Process, Ex. 8-5, p. 234

New Product Development (cont.)

• Develop Product– Early Supplier Involvement– Outsourcing (Contract Manufacturer)

• Beta Testing (or Field Testing)

• Launch– Rolling launch

• Evaluate– Payback period– First-mover advantage– Sunk cost

Success or Failure?• Components of Success

– Core competencies– Factors Influencing New Product Success, Ex.

8-8, p. 240

1. Have close ties with a well defined market to anticipate customer needs.

2. Company is highly integrated and market-oriented

3. Company has a competitive advantage in technology and production capability

4. Company has a strong marketing proficiency

5. New product launch adequately financed

Success or Failure?• Accelerating the Development Process

– Streamline Each Stage

– Develop Products in Parallel

– Launch Products Worldwide

– Use Upgrades Strategically

• Keys to Innovation

• Challenges to New Product Success