-- Business markets consist of all organizations that purchase goods and services to use in the creation of their own goods & services -- They generally consist of fewer but larger customers than consumer markets -- Purchases are of larger value and more complex in economical, technological, and financial terms. What is Business Marketing ? -- Business Marketing is the process of matching the capability of the supplier to supply goods and services to the buyer who in turn matches the requirements of the customer -- That is, business marketing aims to create value for the customer
The Marketing Mix -- The principles of marketing are the same for consumer & B2B marketing, with some differnces Product -- In general marketing theory a product means a core product which can have additional features and options to appeal to different buyers -- Some of the differences are: * In B2B marketing the sellers product is incorporated into the buyers product to offer to their own customers. * Therefore there is considerable partnership between seller & buyer. * The product is therefore specific to the buyer * It maximizes the value creation ability of the seller * Since the product is tailor made and technical in nature, there will be a written specification
-- Price * In any transaction price is the amount of money that is agreed upon to satisfy both parties * Price, the value of exchange is decided by the market, not the cost incurred in creating the product * In B2B marketing price usually is the final step in a complex series of activities involving design, development, negotiation etc:- * This is usually because products are complex and is usually produced in a colloborative manner -- Place * In a consumer markets, place is about getting the right form ( size, packaging, quantity etc:- ) at a useful time ( retail hours ) with minimum inconvenience * In consumer markets economic utility refers to consumer preferences in locational convenience, required quantities / sizes and acquisition convenience * Using a car as an example, the company gains economic utility by -- locating dealership near population centers -- Heavily trafficked shopping areas -- Easy availability with minimum fuss -- can usually drive away with the new car in a couple of hours * In B2B marketing economic utility takes the form of the supply chain management, inventory, services, material planning etc:- * Using the same example of a car, the company to add to the customers fleet offers cars in various models and numbers at periodic time intervals * the cars are shipped to right locations with appropriate quantities of spare parts at the right timing * This is not easy when production schedules have to be matched with delivery schedules * the manufacturing plants may not be located near the many rental outlets of the company -- Promotion * In consumer markets the promotion mix of advertising, sales promotion, public relations personal selling plays a major role * In B2B marketing advertising cannot be leveraged as Ads are a monologue a one way communication
* In B2B marketing personal selling is the most effective way of promotion * In B2B marketing as said earlier, products are made collaboratively * The relationship is close and long lasting
The Marketing Concept -- In many organizations the focus is on production or sales, or even marketing -- In such organizations marketing is perceived to be a distinct but dependent part of the Org.
* It is seen as an expense rather than a generation of margin. In the marketing concept it says that to be successful should Understand customer needs Meet those needs through co-ordinated activities Do it in a way that meets organizational needs A firm that operates under this philosophy focuses all its efforts and resources towards satisfying the needs of its customers Marketing is the driving force in the organization and defines the role of other functions to meet the needs of the customers
5) Volatility and the nature of Demand. Consumer Demand i. In consumer demand it is the quantity of goods or services that the customer wants. ii. It is dependent on market conditions and is usually expressed as a function of market price. Derived Demand i. In Derived Demand it is the demand of the chain of supplies and produces that constitute to a total offering. ii. Without initial consumer demand there is no demand in the supply chain. i. Cotton is not purchased because of its inherent properties but to make cloth ii. The demand for nylon fabrics by consumer does not exist. However nylon is needed to spin yarn . To weave fabrics which are needed to make clothes. These are all derived demands arising out off the ultimate consumer demand Joint Demand When several different products go to make up another product, the demand or availability of any other products effects the manufacturing of that product
Exp : Flour , yeast sugar eggs for making bread . Each affects the other. Cross Elasticity of Demand Sometimes one product replaces another for various reasons may be price, advancement in technology, Exp : Furniture wood Steel or plastic House Construction Redwood or cedar. 6)Volatility of Demand: It partially explains the volatility of derived demand when consumer demand varies it has effect on all the contribution who go to make up the final product.
This impact or leveraging causes wide swings in demand Suppliers in the chain forecast production & inventory based on current orders in hand When consumers demand drops , chain members immediately cut production and inventory levels The initial production cut will be larger than the difference between the old and the new order . This is because: There is already some inventory being held and is enough for the new smaller order. Customer who closely monitor their inventory change order frequently sometimes daily. Thus small frequent adjustments lead to inventory problems, multiply these effects throughout the supply chain and we see why there is so much volatility in derived demand. Exp: Firestone recalled 6.5 million tyres fitted Ford Explorer SUVs . Ford had to shut down till new tyres were available. The shut down cost them $100 million and a fixed profit was less by $500 million. This had a ripple effect back through the entire supply system 7) Discontinued Demand This is a condition in which quantity demand in the market makes : Market makes large changes in the response to the market forces. The transition from on market state to another occurs in large increments rather than small incremental changes. A supplier tailors his capacity based on forecasts of demand Due to increase in consumer demand his customer makes increasing demand on the supplier and he increases his production and purchase of raw materials. When he reaches the maximum capacity a situation: where there is a discontinuity in supply till such time as the suppliers sets up additional capacity If the supplier elects to increase the capacity then the entire supply chain is impacted by increased demand. 8) Price Elasticity Price elasticity of demand refers to the percentage change in quantity demand relating to the percentage change in price If the price change produces a demand change that is less than the percentage price change then it is inelastic When demand fluctuates a lot in business markets, its also inelastic in the short term I. The customer has incorporated the suppliers goods into his finish products and may not be able to find a substitute II. If the component product is significantly differentiated from competitors product. III. If the change in the supply system that caused the price change is expected to continue for sometime , the manufacturer may eliminate the suppliers product or find alternatives
Relationships Opportunities In B 2 B Markets additional product design effect is needed to ensure that the product complexity enhances the value to the customers and not detract it. The dialogue between customer / supplier will be complex and must be quickly understood . Communication is personal in B 2 B market. The close relationship ensures that the uniqueness of the customer is emphasized and accommodated. When this uniqueness and closeness is very effective the cost becomes very high for the customer to switch supplier. This is because due to the closeness of the parties concerned there is a high matching of buying , ordering, in bound logistics and delivery systems. The personal rapport and closeness may not be as tangible as the logistical linkages , but however this binding is also very difficult to break CLASSIFYING CUSTOMERS, ORGANIZATIONS AND MARKETERS There are several standard forms of products, competition and market conditions that make up the business environment. Marketers have their own system for classifying customers. The main categories are: 1] Commercial enterprises These are those segments of profit oriented organizations. A] Industrial Distributors -- Also known as industrial wholesalers -- act as middlemen providing services to the customers in terms of form, time, place, and possession. -- Matches the product need of the customers with the manufacturers. -- Manufacturers use such middlemen when customers needs are small for direct mktg. -- They take ownership of the goods B] Value Added Resellers ( VAR ) -- The presence of these intermediaries in the market place has broadened traditional concepts -- They provide unique enhancements to manufacturing products -- Typically the provide systems to its customers tailored to their needs ( Exp. Matching software with hardware ) -- They draw goods from many manufacturers to provide systems to the customers
-- They develop unique expertise in the integration of many different products C] Original Equipment Manufacturers ( OEM ) -- Purchase goods to integrate them into goods they manufacture and sell to their customers -- B2B marketers spend the major part of their resources approaching, learning about, developing and satisfying customer -- OEMs are usually largest-volume users of goods/ services in oligopolistic markets Exp: Maruti -- buys tires from MRF HP -- buys processors from Intel -- But these also supplies the replacement markets through industrial marketers D] End User -- Manufacturers that purchase goods for consumption as supplies, capital goods, or materials for incorporation in their products such that the identity of the purchased goods is lost -- In the above example, MRF is an OEM. But when MRF buys steel to make tires the supplier views Goodyear as an end-user. -- When MRF buys fuel for its trucks, its a routine re-buy involving one purchasing individual. -- When MRF buys a robot tire plant a large number of individuals would participate in this one time purchase -- In either situation MRF is the end-user
2] a ) Government Units -- Governments, either federal or state are the largest consuming group in the country -- Widely dispersed, with a large number of players, these units are influenced by specifying agencies, legislations, evaluators and end users. -- Value as understood in the private sector takes on a completely different meaning in the public sector.
-- complicated procurement laws & regulation often have social goals/ policies as the driving force. -- Socially motivated contract provisions, quotas, & other regulations that have nothing to do with the product attributes can be frustrating. -- The roles governments play in society, defense, education, disaster relief, political agenda Etc:- leads to a requirement of non- standard products. -- Competitive bidding is often resorted to, so that favoritism & undue influence is avoided. B] Nonprofit/ Not- For Profit Organizations -- Institutional customers such as , hospitals, churches, colleges, nursing homes etc:- are part of this category. -- It may appear that for this category of customers price may be a major factor. -- However this is not always true and best value offered can be decisive. -- Many of these entities are sometimes open to public scrutiny, hence their buying habits may become similar to government buying. 3] a) Raw Material Producers -- Depending on the goods/ materials in its life cycle, producers may find materials price sensitive. -- Raw material supplies that have significant competition, seek value added aspects to core products.
Example: Sugar supplied to Britannia: Texture, granule size, quick dissolving are all distinct competitive advantage. -- Items like steel, plastics, glass are usually supplied by large producers directly to consumers -- Smaller customers are supplied by industrial distributors. -- Many times raw materials loos their identity when combined into a customers product.
Examples: sheet steel to automobile bodies sugar into a soft drink rubber into tires -- That is, the commodity value of steel, sugar, rubber has been replaced by the value addition to the finished product. B] Component Parts Manufacturers -- These materials usually retain their identity even after incorporation into the customers finished products. Examples: batteries in automobiles fan motors in computers the component manufacturers core product contribution to finished products is still recognizable. C] Capital Goods Manufacturers -- Capital goods are used to produce products -- there is considerable risk involved for the purchase -- The process is lengthy and the development work is considerable.
-- sophisticated/ complex specifications are arrived at, to ensure that the customer gets what he has been promised. -- When customers invest in a capital item, they are reposing tremendous trust in the supplier -- customers of capital goods expect an offering involving installation, equipment, and accessories -- often trials/ evaluations are required
D] Accessory Equipment Suppliers -- companies that make equipment that works with some other offering are known as AES -- the accessories may be bundled by a system integrator. -- business customers may buy them separately Example: CD,s for computers -- primary product manufacturers will not make them as an independent supplier can make them more quickly and cheaper.
CLASSIFICATION OF B2B MARKET ENVIRONMENT A] Publics -- These include the various publics or communities of interested parties -- they are not direct participants as customers channel members, suppliers or competition. B] Financial Publics -- Banks, lending institutions, Venture capital firms, stock exchanges, financial analysts etc
-- These institutions seek to maximize returns on their investments in the company -- they attempt to impact on company policies due to their clout in the financial community -- most companies will be highly sensitive to the views and opinion of these entities -- B2B companies need to understand these sensitivities in order to make resources available -- B2B companies may have to make presentat- -ions to these entities to raise resources. C] Independent Press -- The media can publish news that can enhance or destroy a market position. -- companies must maintain cordial relations with the news media -- pro-active public relations effort, so that a single incident does not do serious damage D] Public Interest Groups -- many public interest groups though a minority of the population can exert enormous influence through opinion leaders and media -- this effort can draw the attention of the financial publics leading to impact on investors -- companies must recognize its socital responsibilities as these public interest groups if showing interest maybe indicative of shifts in the market. -- Example: When oil prices increased in the 70s/80s, Ford added more safety features and increased fuel economy on its SUVs E] Internal public -- Every employee is a representative of the organization to the public -- Every employee is a representative of their part of the company to other parts -- The representative of a firm or its parts greatly impacted by the attitude of employees -- The purpose of internal marketing is to promote a sense of belonging and ownership among employees 5] The Macro environment a) Demographic environment -- They are vital statistics to describe a population -- Characteristics of the people in the people in a potential geographic region -- Variables include, distribution of ages, income wealth, religion, ethnic background, living conditions etc: -- Businesses themselves have demographic characteristics like type, size, location etc: b) Economic Environment -- The macro economic environment in a region impacts on B2B customers -- These include, how fast the economy is growing ( or slowing down ) in size, level of employment, rate of unemployment, intrest ratios, exchange rates etc: -- Customers willingness to buy, influence of channel members etc:
c) Socio-cultural Environment -- The culture in which the company exists -- What people buy, why they buy, where they buy, how they use it etc: -- The business marketer must know the social and cultural trends effecting the customer, competition, partners and employees. d) The Natural Environment -- Includes natural resources, raw materials, the ecology, weather etc: -- Mainly raw materials, water and energy -- Societal preferences not to spoil the local land conditions, pollution etc: -- EXP: McDonalds changed from foamed containers to wax paper containers due to customer feelings that the former is not bio-degradable. -- However, it is another matter that the public does not know that wax coated paper is also not bio-degradable.
e) The Technological Environment -- B2B marketers need to scan the technological environment for developments that can change the market -- It may include changes in the competitors products/ process -- It may be due to changes in the customers technology -- The technological environment is both a blessing and a curse Through technology customer service can be improved and more information given -- News of technological changes are available through trade journals, trade conferences, trade shows, showing future technologies and trends. Research journals, academic conferences in science and engineering. -- However technology is changing at an ever increasing pace -- It is therefore technology per say which is important. Technological advantage is fleeting
THE NATURE OF BUSINESS BUYING We will discuss the different criteria involved in business buying in this section 1] The purchasing decision process that organizational buyers apply when confronted with different buying situations 2] The various roles of influencers in the purchasing decision process, and to identify these influencers and their power The criteria that organizations apply in making buying decisions Organizational buying activities -- Buying centers experience and informations and about products and services -- When it is a routine buying process of products already in use there is not much need for information. -- But when it is buying a new untried product or supplier, then there is a need for extensive information on the product, suppliers and their experience -- Buying activities will also consist of various phases of decision making -- Depending on the type of buying situation if regular or new , these phases will vary in importance -- The focus will be on the buying situation the buyer is facing -- Understanding buying behavior is more easily understood if it is divided into various phases and analyzed under different buying situation
The BUY- GRID Model The model is bifurcated into buy phases & buy Classes BUY PHASE BUY CLASSES new modified straight task rebuy rebuy 1] Anticipation/ recognition of problem 2] determination of quantity of needed items and its charateristics 3] description of new modified straight of characteristics of needed items 4] search for qualified and suppliers potential suppliers 5] analysis of proposals 6] evaluation of proposals and selection of vendors 7] selection of an order routine Buying Situations -- Buyers have various levels of experience and information to use in buying products. -- The same purchase in two different firms may have dissimilar purchasing strategies if buying situation is different. -- A straight re-buy in one organization maybe a New-task in another. -- Therefore, marketing strategy begins with identifying the type of buying situation. New Task -- In this situation the problem or need is considerably different from past experience. -- Problems may be triggered by internal or external factors -- A change in customer requirements or a need for new equipment to meet this need. -- Both requirement are new decision makers lack the experience and product knowledge to make comparisons with alternative products and suppliers. Modified Rebuy -- When significant benefits such as quality improvements or cost reductions is possible, firms reevaluate alternatives and look at modified rebuy possibilities. -- In this situation firms have a reasonable level of knowledge of the product or services offered by the vendors. Thus a routine rebuy little new information is needed. In a new situation lots of relevant information is needed Straight Rebuy -- The most common situation in industrial purchasing is the straight rebuy. -- When recurring purchases are made there is little need for new information. -- Routine response is the normal buying pattern. -- Buyers usually have well-developed choice criteria that has been used and reused over a period of time.
Phases in the Purchasing Decision Process Phase I: Anticipation or recognition of a problem -- The purchasing decision process is based on the recognition of a problem, need or potential opportunity. -- The recognition may originate in the firm when customer needs change, outmoded machinery, equipment breaks down, current materials are unsatisfactory in quality or availability.
-- It may also originate outside the buying firm. -- A marketer who reveals a new opportunity for performance improvement. -- The marketer, particularly in a new task situation will have a distinct advantage in influencing the final decision. -- This is a distinct plus point when the final decision is made, as he is likely to get the order. -- It has been found that more often than not new product ideas originate from the buyer. Phase II : Determination of the characteristics and quantity of needed items. -- Once a problem has risen, the firm will seek answers to questions such as: -- What performance requirements are needed -- What are the application requirements ? -- What quantities will be needed ? -- The narrowing of the problem and alternatives at this phase is a task internal to the user department. Phase III : Description of characteristics and quantity of needed items -- This is often a crucial phase for the marketer -- This is the phase at which influencers and those who set specifications enter. -- At this phase influencers may change from departmental heads to engineers and manufacturing personal. -- It is at this phase, too, that buying influencer starts to look for outside suppliers for assistance in product specifications. Phase IV: Search for and qualification of potential sources -- Once the solution has been found and described the firm searches for alternative source of supplies. -- This leads to qualification of suppliers. -- However qualification will vary with type of buyer, the buying situation and buying influencers involved. Exp. A firm may need a new task primarily because of price. Hence the finance department will be the main influencer Phase V : Acquisition and Analysis of Proposals -- Identified qualified suppliers will be asked to make specific proposals. -- Phases IV & V may occur simultaneously in a in a straight rebuy situation. -- Many months may be spent exchanging proposals and counterproposals. -- In such purchase situations, the need for extensive information is needed and a great deal of time is spent on comparing products, services and cost. Phase VI : Evaluation of Proposals and Selection of Suppliers -- All the proposals of qualified competing vendors are compared -- If a firm is facing a make-or-buy situation then proposals are compared to see if the firm can make it more economically, the buying process is terminated. -- If it is not a make-or-buy situation, further negotiations may continue with one or more suppliers on terms, price, deliveries etc;- Phase VII : Selection of an Order Routine -- Order routines are given by issuing purchase orders to vendors and status reports to user departments and by inventory levels, current and what is forecast over various time periods. -- While the purchase order has been placed, the purchase phase is not over till the goods have actually been delivered and accounted for by the purchase department.
Phase VIII : Performance Feedback/ Evaluation -- This is a formal or informal review and a feedback regarding product performance and vendor performance. -- It involves the user department on whether purchased item solved the original problem -- If it has not, then some of the original screened vendors may be given consideration -- The feedback can cause members of the decision making unit to rethink their position Identifying Buying Center Members The buying center gives a good idea of who is Are involved in the buying process.
The buying center is an informal group of people From various departments who are involved in Acquisition and processing relevant purchasing Related information.
People in the buying center are there because Of formal responsibility or knowledge.
Marketing : -- Purchasing decisions have an impact on the marketability of a product -- Such as product material, packaging, price. -- In such cases marketing people become active influencers in the purchase decition process. -- The marketing perspective will be if it will enhance salability. Manufacturing : -- Manufacturing is responsible for the feasibility and economic considerations of producing end products. -- Thus issues on specifications, parts, etc:- are confirmed by this department. -- Equipment needs, costs and impact on current production are carefully evaluated. -- Continues feedback to purchase department on performance makes manufacturing a key influencer. Research and Development --They are initially involved in the development of products and processes. -- They set broad specifications for component and materials, minimum end product performance standards and sometimes manufacturing techniques. -- The earlier the marketer is involved in the development process the better the chances of its ideas incorporation in the final product
General Management : -- They become involved in purchasing decisions when faced with unfamiliar situations, not faced day to day activities. -- Or when purchasing decisions have major impact on the firms operations. -- Such major instances may also make the management to take decisions without seeking information from lower levels. -- They lay down criteria for furthur purchases Purchasing : -- Purchasing is not the central figure un the purchasing process. -- Purchasings dominant position is in phases IV, V and VI of the buying decision process. -- That is after the speci fication has been fixed and suppliers qualified. -- They are the dominant players in the repetitive purchase process because of their knowledge in purchase, negotiation skills and close relations with vendors.
BUYING CENTER ROLEs Primary Roles Deciders: -- Members who have formal or informal authority who actually make the buying decision. They are sometimes most difficult to identify. Influencers: -- Individuals inside or outside the firm who who influence the decision process by giving information, engineers, specialists etc:- Secondary Roles Users: -- Those who use the products or services. -- A minor but important influencers. They may even initiate the buying process and define purchase specifications. Buyers: -- Firm members who have formal authority in selection of suppliers. -- Implementing procedures involved in purhasing. Major role is negotiation, ordering Gate Keepers: -- Members who control the flow of information into the buying center -- They control printed information and advertisements, as well as by controlling which sales person is allowed to speak to individuals within the buying centers. -- They can be extremely dangerous and can spoil a firms chances of becoming a supplier INDUSTRIAL MARKET SEGMENTATION Successful market segmentation depends on -- Identifying -- Analyzing -- Evaluating Attractive market segments This is necessary to -- Allocate resources -- Funds are best used -- Which target market gives best returns
Very few firms have so much resources to -- To serve all segments -- Therefore invest in segments that give best returns on investment Once a segment has been chosen the firm has to analyze -- Its customer base -- Competition -- Technical, social, political environment Market segmentation is the first step in a series Of steps to maximize return on investment.
Industrial marketing also differs in their needs -- needs -- Resources -- Buying attitudes So first requirement is identify those group of companies -- Similar purchase requirements -- Response to similar marketing programs -- Divide into homogenous groups
Thus the firm identifies -- Different ways to segment the market -- Develop profiles of each of these segments -- Evaluate each segments attractiveness Difference between Market segmentation and Target marketing is difficult -- Great diversity of end users -- Product application -- Customer characteristics -- Buying practices So a few simple criteria is not enough. Also the number of people involved engineers, purchase department, R&D, production department etc:- For effective segmentation the variables chosen for analysis should be 1] Measurable Information should be obtainable through primary or secondary sources for chosen variable
2] Relevant Chosen variable should be relevant for significant number of potential customer groupings Also relate to differences among groupings to marketing programs 3] Operational Chosen variable for evaluation should be related to differences customer requirements. Buying behavior Marketing approaches to product, price, distribution etc:
The purpose behind segmentation is -- allow the marketer to allocate resources -- Develop marketing strategies for different segments. Before embarking on segmentation -- the costs involved to be analyzed -- gathering information is costly -- will the additional costs be covered by the end product.
Basis for segmenting industrial markets -- no magic formula segmentation -- consumer markets are segmented on the basis of demographic and psychographic -- in industrial markets the approach two fold 2) Macro segmentation, the difference in price , geographical location , product application 3) Micro segmentation , the differences directly related buying prices, behavior of individuals directly involved.
Macro Variables Listed below are some of the macro variables. The aim is to a) identify potential markets b) Evaluate potential markets during the first stage of segmentation Variables Examples ======== ========= Industry Agriculture, mining, autos manufacture Organizational buying process, Characteristics reaction to mktg. programs Size size of customers parent company. size of business. plant characteristics size of customers plant, degrees of automation Economic factors cyclicity of the cos industry
Location distance from plant state of plant. Rural suburban, urban Customers industry growth rate of ind. customers growth stage in industry. ultimate customers of your customer Competitive forces degree of competition in the industry. Ease of entry.
Purchasing factors decentralized verses centralized. Number of purchasing levels End use markets mining, highways etc: Product applications small appliances, computers, close circuit TV systems etc: Industry characteristics: Firms produce goods and services that can -- targeted to different industries. -- effective market segmentation.
This will depend on clear understanding of the Similarity and differences between industries Exp. Computer equipment and software. Banks, insurance companies, investment cos -- All are investment companies -- but needs/ applications are very different. Organizational Characteristics Demographys Industries: Organizations in the industry will have different demographic characteristics. Big companies will have different purchasing requirements Respond to market programs differently May not accept small suppliers Small companies may avoid supplying to big companies because of: -- lack of capacity -- customer location -- distance -- transportation -- warehousing -- decentralized/ centralized End Use Markets -- multitude of end uses -- bus, torches, trucks, military etc: -- banks, financial institutions lend to mining, shipping, construction etc: Product Application -- solinoid switch used in automobiles, trucks, hence segmentation is on the basis of product application.
Micro Variables Macro segmentations helps in identifying Industry Organization Endues Markets Product Applications Micro segmentation helps in Industry Specific organization buying procedures Individual criteria directly connected to buying procedure
To gather these information one needs Primary data through Sales force Special market studies Organizational Variables : a) Purchasing situation phases Market strategy is affected by purchasing situation customer is facing When they are in the decision making stage. Exp : In new task situation to penetrate one market able to assist in problem solutions provide information work with customer through purchasing decision process.
b) Customer experience when customer is unfamiliar with product delegate to person competent competent to deal with the uncertainty involved attracted by the package offered how proven is the technology As they become familiar with product application delegate to purchase department become more price sensitive good time for out supplies to set a chance c)Customer interaction needs In complex/important products
final purchase decision is dependent on how buyer respond to vendor stimulation during decision making process Product package have to be adapted to buyer needs considerable interactions between buyers/sellers The duration of this association will depend on buyer capacity to identify needs this is dependent on the sellers ability to understand these needs. Micro segmentation on the basic different needs identify during the interaction period is a useful for complex needs d) Customer needs Benefit segmentation on the basis of similar customer needs product attribution within group of buyers gives an idea of customer needs Such identifications helps in product design pricing distributions This also gives an opportunities to look at competitors product technology service offerings insight into competitors weak areas c) Product innovation the buying needs/practices of innovation is very different innovators more open to ideas/suggestions large groups of people across depts involved vendors can influence at this stage once implementation stage is reached less influence unless a real innovation comes up
In followers the opposite happens during innovative stage difficult to influence cant be done informally may need formal presentation High tech products go through different life cycles more rapidly than in others Micro segmentation on organization innovations allow the vendor to identify those to be targeted first when introducing new products
f) Organizational Capabilities organization can be segmented on the basis of
operating capabilities technical capabilities financial capabilities Purchase situation variables a)Inventory requirements Firms who use MRP JIT Have an impact on marketing programmes Technical/Financial overtime in buying behavior
Selling should need to be highly trained in Negotiation Human relations skills Supply true products
in time as per schedule Segmenting on the basis of inventory is important b) Purchase importance when product are applied differently clarify according to perceived importance is useful c)Purchasing Policy potential customers are segmented on the basis agreed prices tendering leasing vs outright purchase d) Purchasing Criteria performance criteria economic criteria adaption criteria
integration criteria legalization criteria e) Structure of buying center organization can be segmented on the basis of involvement in the buying decision inter department personnel when involving patterns are known makes meaningful segmentation possible Individual Variables a) Personal characteristics buying decision are ultimately made by individuals though decisions are made an organizational variable segmentation is possible based on individuals some buyers take more risks than others risk taking is directly attributed to self confidence
a sales information can be ----- send in data to enable segmentation b) Power structures It can be the engineering dept , in other finance etc Strategies for restoring conflicts Collaboration Compromise Avoidance Coalition Formation Can segment on the basis of Power Communication strategy Market segmentation a step by step process Market segmentation involves cost The more deeper the segmentation the greater the cost degree of segmentation depends on detail required macro variable are relatively easy can be obtained from secondary source micro variable may require research study more and more individual contents will be needed segmentation begins with macro variables works towards micro variables up to the needed level that is one segmentation becomes good enough it should stop no further segmentation should be done Evaluating potential segments Market segmentation mainly identifies potential opportunities
most attractive markets use limited returns to maximum returns Market profitability analysis In analyzing profitability of any segment there are 4 elements: 1)Market potential most optimistic estimation of many products you can sell in a given time 2)Sales potential most optimistic estimation of firm share in a given time 3)Sales forecast expected sales in a given time 4)Profitability difference between potential revenue (-) cost of serving/maintaining customers. There are many measures for measuring marketing potentials quantities - based on available data qualitative based on informal judgment When data is not available management calls on sales force to executives customers To estimate market potential Once market has been estimated potential sales forecast made It is necessary to see how customer will be accrued Customers can be accrued only it market programme suits customer needs as well as competitors positions in the segmentation
Markets in sender segments may be costly need different programme Before individual segmentation profitability is assessed cost associated with Sales force deployment advertising product development pricing strategy logistics Competitors analysis how good is the analysis of competitors strategy profit analysis is made on strengths\weaknesses of competitors in that segment potential new entrants In evaluating a segment following questions must be asked of competitors : Who Strength Weakness Product innovation Product Quality Design Capability Sales force capability Competitors will always define a segment while trying to take market share in others. Target Markets Profitability Capacity to serve the market Target the segment
undifferentiated market Product is standardized Sold to a broad range of industry Undifferentiated marketing strategies is required Firms ignore segment differentiation Develop a single market programme Focus is common to all On the basis of ROI undifferentiated marketing is most attractive Risk is that vendors who differentiate will attack you Make a mistake on delay in supply differentiating vendors will step in. Differentiated Market Selections Firms offer this product Diverse segments Usage is different Response to marketing programme is different However this involves over all income is costs in Product development Production Marketing Advertising \publicity Idea is to set higher sales and better positions in the segment Concentrated Marketing Concentrates only a few segments, though many segments exists Gets larger share of one \two segments Vendor will be in a strong market position As firm gains experience Firm turns its response to buyers requirements Leads to advantage of competitors
Operating economics are also obtained due to knowledge in : Production Distribution Publicity Niche Marketing : When segments \segmented to even tinier segments Gaining grounds in industrial markets\ service markets Vendors can offer specifically tailored products Vendors monitor marketing closely Emerging trends \ requirements Develop new product to satisfy their needs Reposition existing product for new application Niche marketing is growing today because of Lot of information is available today Vendors with huge volume of data Helps in discovering Niche.
BUSINESS STRATEGY Strategy literally means The art of the general Sun Tzu wrote a book called the art of war 2500 years ago. The concentrated essence of winning strategy. A] The strategic planning process -- As in consumer marketing, in B2B marketing also the strategy starts with a mission statement, which is formulated into objectives. -- The four elements of strategy are : 1) The need for systematic decision making 2) The development of programs for their implementation 3) The measurement of performance against objectives 4) Modification of the strategy itself if needed -- Planning imposes a degree of order upon potential chaos -- Planning allocates resources in the most effective way
-- Planning leads to a shared sense of opportunity, direction significance and achievement. -- This process has four distinct stages : 1) Evaluation: Where are we now ? Where do we want to go ? What resource capabilities do we have ? 2) Strategy formulation : How are we going to get there ? 3) Detailed planning : 4) Implementation & review -- The key ideas that form the basis for strategic management are : 1) The business strategy design seeks to have a fit between the business and the business environment.
2) The key element of fit in business strategy is to provide superior value to the customer 3) Superior value means offering differentiated products from competitors in the minds of customers 4) Differentiation is produced is by using core competitiveness to advantage 5) The more distinct the core competency the higher the customer value and higher the profits 6) Quality and process improvement are fundamental to provide superior value 7) Measuring results and tracking results create learning and later improvement
Today with rapid technological change and the internet, there is a lot Of new thinking on strategy and strategic planning Change in customs, channels and competition interact to create disturbances in the market While companies can influence how the market changes, they cannot control the pace of change Companies need change the rules of the markets they compete in . For this they need to develop their own business model instead of the competitors Such change of rules are of course subject to the business environment Strategists will have to identify core competences Such advantages are not sustainable for long. Companys must innovate constantly and change the rules on an ongoing basis to stay ahead of competition
B] The Mission Statement -- A mission statement has to be seen in the light of two questions 1) What business are we in ? 2) What business should we be in ? -- A mission statement should be capable of : * A powerful integrating function * A statement of core corporate values * Framework within which individual business units prepare their plans A worthwhile mission statement should be capable of providing all personal in the organization with a shared sense of :
-- Direction -- Opportunity -- Significance -- Achievement -- The mission statement in the overall planning process is represented by the acronym MOST MISSION OBJECTIVE STRATEGY TACTICS -- The characteristics of a good mission statement should be : * Short on numbers * Long on rhetoric * Remaining succinct -- A mission statement is not a one off exercise * It will change over time * Because of internal contradictions , external factors such as opportunities and threats * A mission statement developed in 1980 may not be appropriate today * The company itself may be in a different business
Hierarchy of Business Strategy 1) -- Strategy is largely hierarchical -- Strategy is a general means to achieve a general purpose -- The difference between strategy and tactics depends on ones view point -- If you are a CIO , corporate goals and corporate objectives define strategy, everything else is tactics -- If you are a customer service specialist ( back office ) your strategy will be designed to support customer service of your business unit Corporate Strategy I --------------------------------------------------------- I I Business Unit Strategy I ------------------------------------------ I I Production Strategy Functional area Strategy 2] Strategic Resource Allocation : -- The strategist chooses businesses or markets to persue and allocates resources for it -- However the strategist also has the problem of choosing a future vision to follow -- This vision also then envisages the requirement for future core competencies -- This competency may not be available and has to be built up or accrued -- So corporate strategy will also have to include their core competency so that they will become available 10/ 15/20 years hence -- Development of these competencies cannot happen overnight -- Successful corporate strategy must include a developmental path to create new competencies -- Resources need to be allocated for creation of personal skills and reward there application -- All of this is structured to address the organizations Strategic Intent 3] Strategic Business Units : -- Once corporate strategy is determined, a strategic architecture is formed that will guide the organization over the next 5 / 10 / 15 years -- Business strategic units are the next step in the hierarchy that will guide the organization -- SBUs are organizational entities within the firm that address a single ( usually ) business -- Strategy in the SBU is to determine goals and objectives are to be met, markets and how to address them -- The strategy of the SBU will be aligned with corporate mission, objectives and budgets 4) Marketing Function : -- Usually along with the SBU there will ba marketing function -- The strategy of this market function will be choice of marketing segments and positioning of its products or services -- Marketing strategy will have to operate in concert with product line and product level -- This strategy will generally address the customers to be targeted and how to compete for their business -- The customers within the target audience may exist at a pre strategy state of mind ( unaware, aware, liking etc. ) -- Strategy is to make them aware and so on. There are also layers below this such as : * Product strategy * Product development strategy * Communication starategy * Sales strategy * Channel strategy * Partnership strategy * Pricing strategy etc. All these strategy must be knitted together to form a cohesive plan for the SBU. C] Analysis : 1) Opportunity analysis -- The opposite of threat analysis The firm tries to anticipate favorable situation in its domain in the present and future -- Enables an organization to capitalize on its capabilities to develop , maintain and defend its position in the market -- This involves : a) Monitoring the external environ ment * forces likely to effect marketing * demand for current and future products b) An internal analysis for * strength & weakness of its management * organizational structure * current position in the market * identifying future capabilities c) The determination of : * market opportunities that must be persued * which are the threats to be assessed * their implication for planning and marketing decisions d) Monitoring the external environment : * micro environment * macro environment e) Differential advantage analysis : Differentiation is at the heart of successful marketing strategy. Its rewards are :
c) Tools for designing strategy 1) The growth share Matrix This was developed by the Boston Consulting Group ( BCG ) almost 30 years ago. Relative mkt. share high low Mkt. high Growth Rate low
Stars ?
Cash cows
Dogs a) stars : High growth rate Invest heavily Maintain mkt. share market ownership is the objective b) Cash Cows : Relatively slow growth prominent mkt. share generates cash which fuels other parts usually in late growth, maturity or early decline stage
c) Dogs : Slow or negitive growth less than prominent mkt. share can occur at any stage of product life cycle
divest the business/ continue to harvest d) Question mark : mkt. potential high, but not much share significant investment required invest or divest ? Some of the limitations of the growth share matrix are : 1)Relationship between mkt. share and profitability is suspect. This tends to undermine the validity of the analysis and its implications 2)There is an inherent subjectivity in the analysis There are no universal rules An SBUs position in the matrix can be compared with only another SBU in the same organization 3) The matrix is a snapshot in time. Current mkt. growth rate may have nothing to do with future mkt. growth rate.
Multifactor Portfolio Matrix : Unlike growth share matrix , the future business strength can be defined. This gives a higher score to a business or products that uses resources better. 1 2 3 4 5 6 7 8 9 Strong Medium Weak High
Medium
Weak M a r k e t
A t t r a c t i v e n e s s
Business Strength Step 1. Protect your leading position from competition 2) Very attractive invest to build 3) Attractive build selectively 4) mkt. attractiveness is medium , but you are strong build selectively 5) -- ditto -- ( or manage for earnings ) 6) mkt. is attractive, but you are weak limited Expansion 7) You are strong but mkt. attractiveness is low Limited expansion 8) mkt. attractiveness is low and your strength is medium manage for earnings 9) mkt. attractiveness is low and you are also weak divest.
Performing Strategic Management in the B2B Company : Step 1: Develop goals & objectives While defining, goals are general in nature, Objectives are specific or vice versa so long as you are consistant. For exp. A firms management may state that it wants superior profitability and leadership in its industry. This is a goal. Objectives are the specific expression of these goals. The members of the management may then say that by the year ending 2012 they want to achieve : -- an ROI of 20 % after taxes -- Achieve 35 % of market share in product A -- they should be the bench mark for the mkt -- the objective should be reachable, challenging and internally consistant.
Step 2 : Environmental Analysis In this step the current situation and future possibilities are explored. At any level the environment includes the following elements. 1) market, segments and customers 2) Competition 3) Internal company environment 4) Effects of the economy 5) Effects of technology change 6) Public policy At corporate level, environment includes stake holders, financial & investment organizations.
Step 3: strategy Design --In this step strategy planners decide how to meet or exceed the objectives they have set. --They create alternative strategies and choose the best of the alternatives. -- they begin formulating strategies as they do the SWOT analysis and by the end of this they usually end up with one strategy. -- so strategies at the corporate level includes : Vision of the industry & its future The choice of goals and objectives The choice of which business to persue
Allocation of resources across businesses Which strategies to build for the future Allocation of resources to build strategic competencies. Step 4 : Implementing Plan Design : -- after the strategy is defined, planners must decide what actions are to be taken. -- they will decide who will do what, when, with whom, and at what cost. -- once plan is laid out, the costs, personal resources, skills needed and time required must be assesed. Step 5 : Monitoring of Environment & Performance Results : -- Data and information must be gathered and analysed -- Analyses will pinpoint implementation failures, sub objectives and trade progress to meeting high level performance targets. -- Data to be collected regarding the business environment. -- Change in knowledge can lend to change in implementation or strategy. Step 6: Analysis of Performance : -- Here performance is tracked relative to objective -- Any variance from desired performance levels needs to be analysed. -- Both underperformance and overperformance needs to be analysed. Step 7 : Adjustments : -- Based on analysis of performance, adjustments m,ay be needed on: strategy, implementation, environmental knowledge, other planning elements. -- small adjustments can be made at the next planning cycle. -- big adjustments may require an entirely new plan -- most strategy planners continue this cycle every planning cycle. New Product Development Booz, Allen and Hamilton have identified six categories of new products. The task of developing a new product is one of balancing efforts devoted to three objectives. 1) product performance extent to which it meets customer requirments. 2) speed to market : unsatisfied need how quickly met 3) product cost total cost of delivering the product to the customer.
Core Products and Benefits : 1) fundamental to all products is a core benefit or value. They are appearance, quality and ability to satisfy customer needs. 2) The core benefit having been found, the company now tries to make a basic or generic version of the product. 3) The third aspect is the set of attributes customer seeks. 4) By adding additional services and benefits, the company turns an expected product into an augmented product.
5) Product differentiation is related to the image and its ability to give a premium. -- low differentiation rice, salt, sugar etc. -- medium -- branded foods, consumer durables etc. -- high -- clothing, perfume, etc. 6) Evolutionary process : -- future innovations through which the product may pass. This is an evolutionary proses. Role of Product Design : Definition of product design is (1) designation of the key benefits the product is to provide.
2 The psychological positioning of these benefits verses competitors products 3 fulfillment of the product promise by physical features PRODUCT PROMISE & DESIGN : Quality is what the customer thinks it is Design contributes to it Quality contributes to customer satisfaction By providing quality companies must also benifit
This means you have to break down customer demands to its different components and see how each of these elements provide an edge over competition. Innovation & Evolution of Markets : Competition in markets based on innovation has led to products which perform old functions better or make new functions possible. Exp. Teflon, Velcro, Synthetic wash & wear clothes There is seldom a single dominant product technology in a market.
Companies can adopt different technologies that is incremental or radical Big companys with large market share seldom make radical technology or innovations. This is because of the large investments involved. On the other hand small companies are more likely to make radical innovations. Exceptions are there off course. Exp. 3M However large companies can go in for radical innovations with a combination of strategies. 1- Break through innovation is a strategic priority -- Set goals that can be achived by doing thinks differently -- set goals to increase proportional revenue with new products 2 Create information labs within the company. -- Provide innovators with time, flexibility and R & D funds -- Modify performance assessment so that radical ideas are not penalized because of no immediate pay offs. 3 Establish Knowledge Markets within the organization : -- Small team of internal entrepreneurs who are responsible for driving radical innovations -- Collect the best ideas through out the organization and develop and market likely winners. Product Development Strategy : New product development strategy starts with an unsatisfied need A product evolves from an idea to a commercial reality Three questions have to be considered sequence 1 Is there a market for the idea 2 Can the idea be transf0rmed into a physical product 3 Can the physical product be manufactured and marketed profitably. Each of these questions give rise to several criteria that must be addressed before a decision is taken. A] Market Criteria : Present size Growth potential Current / new customers Amount of competition Strength of competition Price sensitivity Technical services required Are present channels sufficient Variety of end uses known Impact on current products B] Product / Technology Criteria : Degree of innovation Differential advantage Lead time over competition Patentable product / process Estimated product life Amount of research know how Experience with the technology Technical feasibility Competing technologies Other resources needed
C] Financial Criteria : Initial investment Expected sales revenue Profit- to- sales ratio Estimated ROI Manufacturing cost- to- price ratio Pay back period Net gain / loss on other products --However it may be noted that most organizations dont like taking risks. -- to them innovation and change is perceived as risky.
Aggressive innovators take risks and sometimes they are the cause of change itself. They thrive on change and look at it as an opportunity. To Centralize or Decentralize R & D : Advantages of Centralization. No time constraints & pressure of line operatars Atmosphere conducive to creative effort All basic research is in a centralized location More visible to operating division Encourages exchange of ideas Operation division picks up new technology to enhance business Drawbacks : R&D must be closely aligned to the firms strategic direction Scientists tend to put too much effort in technology that are not readily applicable Are more interested in research that are not really of strategic importance Therefore they have to be given a framework within which to work
New Business Development Department : Innovators are not always technical May be interested in finding business opportunities unrelated to current products It may however give competitive advantage Exp. GM bought electronic data systems (EDS) to give greater expertise in computer aided design and manufacturing Alternatives for New Product Development New Product Committee : Ideas originate anywhere in the company Examined,evaluated,funded or rejected by the committee. The committee will include managers from engineering, manufacturing, marketing, finance etc. The committee meets at regular intervals The primary strengths of the committee are : -- Members view each other as expert pros. -- Work in a balanced and consensus way -- Bureaucratic delay is minimized as they usually deal directly with top management -- Members can be added or removed as necessary.
The disadvantages are : -- The committee members are not development specialists -- Development activities are secondary to daily operating problems & decisions -- Though they may reach a consensus it may not have much strategic value Task Force : Similar to the committee Differs in that they deal only with one project If more than one project, multiple task forces.
The common characteristics of task forces are: Membership limited to ten or less Reporting levels / seniority of members are proportional to importance of the project Tenure is usually for about six months Voluntary membership . No staff is assigned Work in an informal way Management usually expects preliminary results in around three months New Product Development Department : * This is usually in firms that constantly come up with innovations Substantial authority over development functions from idea generation to commercialization. This department will have -- Own engineering -- Own costing -- Pilot line production capacity -- Specialized marketing function -- Can call up on additional talent from within the company -- Full scale production is by manufacturing Venture Teams : Evolved in the sixties Most autonomous Members drawn from different departments Unlike task force, members are full time A study of 98 such venture teams indicated some common features -- Organizationally separated from the rest of the company -- Members are from all relevant function areas -- Team managers report to top management
-- Existing lines of authority dont apply to venture teams -- They have authority to take major decisions -- Free od deadlines, they remain until project is completed -- Freedom from time pressures foster creativity and innovation The New Product Development Process : 1) Idea generation : Any new product idea must focus on a) Solving a specific problem b) Provide definite customer benefits c) Support and enhance firms overall strategic thrust This means that the firm must decide what business it wants to be in and the qualitative goals it seeks to achieve. These goals determines the product idea Exp. In the 1960s Texas Instruments set several criterion for all new semi conductor products it hoped to market.
15 % compound growth over its life cycle 25 % pre-tax returns on assets New products must stem from unique design Fabrication techniques to give performance advantage 2) Idea screening Eliminate ideas that are likely to fail -- No market need -- Competition already has a better product -- Investment too heavy Recognize those ideas with potential Optimize the remaining stages of the development process Limitations are not in ideas but in the capacity of the firm to develop the idea into a successful product 3) Idea Evaluation : Ideas that pass screening stage need additional evaluation Ideas of internal origin must be checked for market needs and volume potential
Ideas from a market need / specific customer need -- feasibility to develop the product The idea generated should be prioritized depending on the firms marketing and technical criteria Exp. Priority maybe on -- Market position -- Increase sales volume -- Improve profits -- Diversify business portfolio -- Broadening product line 4) Marketing & Engineering Agreement : -- This is a critical stage -- It is about Customer satisfaction & Technical feasibility -- There are two aspects to this agreement a) Marketing should decide their requirements -- Customer benefits -- Performance characteristics -- Not product features -- Describe the product in terms of what it does
These benefits are further sub-divided in terms of: 1) Essential benefits -- This cannot be compromised -- They represent the products primary advantage 2) Desirable benefits -- Benefits remain only if they do not retract from the essential Exp. While miniaturization is desirable, only if the product reliability is not compromised
3) Trade Offs There are benefits that impact each other negatively Price verses performance b) The second aspect is regarding the limit of marketings inputs. They should be limited to -- Customer needs -- Competitors capabilities -- General market conditions The description of the physical product be limited to -- Features for customer satisfaction
-- Competitive positioning Engineers should have the freedom to use technology to optimize performance and profitability 5) Preliminary Business Analysis : At this stage in new product development the firm will have enough information on -- Customers -- Competition -- Volume potential -- Tentative pricing
-- Technology -- Investment levels -- Estimated production costs * The first financial analysis can now be made Determine weather or not the product idea should become a physical entity This conversion of idea to product can be a substantial part of total development cost 6) Product Development & Testing : R&D converts the idea to a physical product Proving its technical feasibility
Manufacturing will then confirm whether it can produce or cannot within cost / performance criteria Marketing will then approach selected customers with samples to check if it meets customer needs 7) Test Marketing : Major potential users will evaluate the product Interact with the entities who made the buying decision Interact with technical people who will actually evaluate the product Due to the oligopolistic nature of most industries, acceptance of a product by a few users gives assurance of success Generation, refinement, screening Continuous systematic search for the new product Ideas Technical Feasibility Commercial Feasibility R&D Test Market, Financial and Sales Forecast, positioning
Market Research Business and market analysis, profit margin development costs Business & Market Plans Product is developed and tested, packaged Physical product design, packaging and performance Commercialization
Developing Product Strategy The focus in this chapter is on the following : 1) To understand products from the industrial customers point of view 2) Product strategies over the industrial product life cycle 3) Managing the industrial product line 4) The differences between marketing products and systems 5) The special problems and strategic alternatives involved in marketing of proffesional services. What is an Industrial Product ? Basic properties : Basic properties are those that constitute the generic product and connote the various benefits sought by buyers. A pump is a specific generic product that will be thought of by alternative purchasers as providing different benefits Enhanced Properties : generic products are made differentiable by adding or deleting some features, styling or quality. A purchaser of computers will expect to buy a basic model with some add on software and the ability to tie into existing equipment A deletion involves enhancing a product by removing properties, such as to make it less expensive and user friendly * Augmented Properties : Those additional benefits connoted in the purchase of a product They are usually intangible and may include training, technical assistance, availability of spare parts, maintenance and repair services. Product Strategy involves continual change : Product offerings are to satisfy customer need Any change in customer need changes the firms product Customer need changes as his environment changes Technological change makes products change as old products become obsolete Changing laws and regulations, change in the environment changes customer needs and so products too have to change. Product obsolescence leads to new product opportunities Products also change as it moves through the product life cycle Product strategy therefore involves a continuous process of evaluating a product and market conditions to determine 1) Whether changes are needed in current product 2) Whether products should be added or dropped
Industrial Product Management : Product policies Setting product objectives Modify existing products Providing pre & post sale servicing Phasing out old products Search for new product additions Maintain the proper product mix Meet changing market needs Industrial Products Life Cycle : Introduction Stage: Acceptance of an industrial product at introduction is considerably different from consumer market Exp. Hand held electronic calculators replaced mechanical calculators practically overnight, where as electric type writers took over two decades to replace mechanical ones. Product acceptance in industrial markets depends on the fit in the buyers total use system. Use systems involves other products, other persons and a developed systems that is termed as habitual skills Habit systems, once developed, are not easily changed. When products have potential for rapid acceptance, then the marketer has to be ready for vigorous competition Growth Stage : when products enter rapid growth stage, product strategy shifts to improving product design, distribution, lower price Due to increasing product demand and by accumulated production experience costs lower substantially Experience has shown that when prices are lowered, entering competition is discouraged. Maturity Stage : By this stage industrial buyers are mostly satisfied with existing vendors. They are neither searching for new vendors nor paying much attention to promotion of other offerings Marketing strategy is to keep current users and look for new customers by changes in the marketing mix Decline Stage : changes in customer needs, better offerings, better technology etc. lowers sales and profits The marketer is then faced with the choice of either phasing out the product or embark on a milking strategy. Locating products in their PLC : 1)Develop trend information for the past 3 or 5 years on unit and Rupee sales, profit margin, market share, prices
2) Examine recent trends in the no. andnature of competitors, their market share and product performance 3) Analyze short-term competitors tactics such as new product offerings and plant expansion 4) Obtain & analyze historical information of the life cycles of similar or related products. 5) Project sales for the next 4/5 yers based on steps from 1 to 4 and estimated profit ratios for each of those years 6) Estimate the no. of profitable years in the PlC And fix it in the life cycle