B2B Marketing Introduction

New Product Development

 Learning Objectives

• Understand new industrial product development for

B2B markets.
• Discuss innovation in B2B context.
• Recognize and monitor competition in business
markets.
• Explain the technology adoption life cycle for a
breakthrough innovation.
 Classification of New Industrial Products
• They are classified as :
o Innovative and new to the market / world.
o New to the company, but not new to the market.
o Major revisions or improvements to existing products in the existing
markets.
o Additions to existing product lines with additional markets.
o Repositioning existing product to new market segment(s).
o Substantial cost reductions without affecting performance.
• New product development is complex and difficult, but it is
necessary for profitable growth of a company.
• Products in the decline stage of product life cycle need to be
replaced by new products for growth in sales and profits.
 Innovation: New Industrial Products
• .The reserch shows that about 10% of all products are truly
innovative and new to the world
• There are few companies suchas 3M, Oracle and Microsoft
who invest on innovation
• E,g, from India
• Sangam Aluminum Ltd. Manufactured and marketed
aluminum extrusions product which was a new product for
a company but not in the market
• ICICI Infotech launched new product – Orion Advantage
which is ERP for small and medium size organisations
 Factors Responsible for Success and
Failure of New Industrial Products
Many companies have conducted research to determine success and failure of the product.
Success can be defined as product achieves managements performance objective
Success Factors for New Products
- Product superiority or uniqueness.
- Marketing effectiveness.
- Technical and production capabilities.
- Cross-functional team work.
Factors Responsible for Failure of New Products
- Not satisfying the needs of many potential customers.
- Inadequate marketing research.
- Not delivering expected product performance.
- Have a weak process of new product development.
- High prices-higher than customers’ expectations.
- Inadequate coordination between ‘new product development’ group and marketing.
 The New Product Development (NPD) Process
The process by which potential product ideas are generated, evaluated,
directed and turned into new products is called NPD process.

1. Idea generation

2. Idea screening

3. Concept Development and Testing

4. Business Analysis and Preliminary Marketing strategy.

5. Product Development

6. Market Testing

7. Commercialization
 New Product Idea Screening
The primary purpose of idea screening to select those ideas that likely to succeed. Typically
following idea screening procedure is used by some of the companies
 New Product Development Process
Concept Testing - A product prototype developed or using virtual reality demos can be used to
determine which concepts can be more acceptable for new development

Business Analysis and Preliminary marketing strategy – it includes STP strategy and 4 P
strategies

Product Development –

Design > Process Engineering > Tooling > Manufacturing > Testing > Final Product

Market Testing - can be done b using different methods such as

• Alfa and Beta testing – typically for highly priced products it is tested internally
• Trade shows, Dealer showrooms and Test marketing – product is showcased and ustomer
response is captured

Product commercialisation – Product is launched

 Responsibilities of Marketing in the NPD Process
• One of the success factors of new industrial products is marketing
effectiveness.
• The responsibilities by which marketing should serve the company
are:
1. Describe and update customer needs.
2. Know the technical aspects of the new product.
3. Coordinate interactions of NPD team with customers.-interaction
with marketing team, production and purchase teams
4. Build collaborative relationships with customers and internally with
other functions.
 Innovation in B2B Context
• Innovation is defined as any product, method, service or idea that is
perceived as new by someone.
• Innovation includes all activities involved in the process of idea
generation, technology development, manufacturing and marketing of a
new (or improved) product or manufacturing process or equipment.
• Innovation contains
i) more effective distribution systems,
ii) less use of raw material,
(iii) more effective marketing communication or selling, and
(iv) more efficient manufacturing.
 Classification of Innovations
• Innovation field has two ends of the spectrum, namely, radical (or
breakthrough) innovations and incremental innovations. However, many
intermediate positions are also possible.
• Radical/Breakthrough innovations are large or big innovations that
require intensive technology and/or applications development. They use
new technologies and create new markets. Examples: transistors,
microprocessors, penicillin. Birth control pills,
• Incremental innovations are small improvements to the existing
products, methods or designs. Here, customer input is a major moving
force for improvement in product design or features. E.g. low tension
switchgear in electric motor with sleek look and thereby less cost
 Classification of Innovations
( Continued)
• Disruptive innovation is created by a new company by
introducing a new product which is based on a
technology that is substantially different from the dominant
technology in use in a market. The new company finds
new customers who want the new product. E.g.
ecommerce disrupted supply chain mgmt. , Internet
disrupted many processes across banking industry
• Sustaining innovation improves the existing dominant
technology, products or offerings. It can be incremental
changes or radical changes, but it stays on the same
technology.
 Managing Innovation

Major steps for managing & encouraging innovation are:

(i) Adopt a decentralized, flexible, with less hierarchical structure.
(ii) Develop collaborative teams where creative people work
together.
(iii) Get right people who are creative and team players. Match the
people to the type of innovation followed by a company.
(iv) Build relationships with customers, suppliers and others.
 Recognizing and Monitoring Competition
The knowledge about competitors is used in developing the company’s marketing
strategy.
Competitor Analysis
For identifying competitors Porter has suggested five sources of competition:
• Existing direct competition.
• Competition from suppliers.
• Competition from channels.
• Competition from new entrants.
• Competition from substitutes.
Information to be collected from individual competitors in four area:
• Goals
• Strategies
• Capabilities
• Assumptions
Recognizing and Monitoring Competition (Continued)
Sources of Competitive Information are :
• The Customer.
• The Internet.
• Trade and Business publications.
• Trade shows and exhibitions.
• Other sources (Competitors’ advertisements, consultants)
Competitor Intelligence System
• This system seeks, collects, analyses and interprets competitors’ data and
disseminates the resulting information for decision making.
• There is a framework for competitor intelligence system. It has three parts:
(i) Get information from secondary sources.
(ii) Use analytical tools.
(iii) Conclude and act.
 Technology Adoption Life Cycle
for a Breakthrough Innovation
Time of Adoption of innovations
Early adopters Chasm
Laggards
Innovators
Early Late
Majority Majority
13 ½ % 34% 34% 16%
2 1/2 %

• Innovators: Technology enthusiasts; Early adopters: Visionaries-outgoing

& ambitious.
• Early majority: Pragmatists; Late majority: Conservatives; Laggards:
Suspicious & tradition-bound
• Chasm is a large break in sales growth, which exists between early
adopters and early majority for new technology products.
 Video

New Product Blueprinting: A System for B2B Innovation

https://www.youtube.com/watch?v=gsPZmpbTjjA

New Product Development - Process and Stages with Examples and Case studies

https://www.youtube.com/watch?v=jWRwQX9N1Wg