Ch.

8: Developing
Product, Service and
Value of the Offering

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 Chapter Outline
• B2B Product Definition
• Types of products in B2B
• Business Product Strategy
• Product Life Cycle
• Technology Adoption Life Cycle
• Make or Buy Decisions
• New Product Development (NPD) process

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• B2B Product Definition

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1. B2B Products Definition

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1. B2B Products Definition
This includes three levels:
•The core product and benefits: essentially the value
the customer is actually purchasing.
•The product attributes: which include the brand
name, the design, the country of origin, features
quality, size or weight, packaging, and labelling.
•Support services: such as delivery, installation,
warranty and guarantee , product support and
training, financial services, and after-sales service.

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1. B2B Products Definition
• Products may be tangible goods and services.

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 1. B2B Products Definition
Products may be tangible goods and services.
•The different categories of combinations of
services and tangible goods have been identified:
[Link] tangible good: This includes products far on the left side
of our goods/services continuum, such as paper or lubricants.
 In general, a very limited amount of service is offered with this
purely tangible product.
2. Tangible goods with accompanying services: This is a
tangible product with services added.
• Highly technical products usually are more dependent upon
services such as planning, installation, training, and maintenance.

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 1. B2B Products Definition
3. Major services with supporting goods and services: In this
case, the most important part of the offering is the service,
but some goods and supporting services are required.
• For example of this would be business travellers on an
airline who buy a transportation service but also need
some tangibles such as food and tickets.
• While the service requires a capital-intensive good (an
airplane) to be effective, the primary portion of the
offering is a service.
4. Pure service: This offering is primarily a service, such as
consulting. Very little in the way of tangible goods is
required.

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• Types of products in B2B

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2. Classifying Products for the Business
Market
• Business Product Strategy

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3. Business Product
Strategy

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 3. Business Product
Strategy
Individual Product decisions

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3. Business Product
Strategy

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 3. Business Product
Strategy
• 1. Product Line Filling (within the existing range)
• Definition: Adding more items within the current range
of a product line to offer greater variety or address gaps
in customer preferences.
• Example (Egyptian B2B):
El Sewedy Electric – Within its existing medium-voltage
cable line the company introduced additional cable
sizes and insulation materials to meet the diverse
technical specifications of industrial clients.
➡️This expands options within the same range — a clear
example of line filling.

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 3. Business Product
Strategy
2. Product Line Stretching (beyond current range: upward,
downward, or both)
• Definition: Expanding the product line beyond its current
range — either downward (toward lower-end markets),
upward (toward premium markets), or both.
• Examples (Egyptian B2B): Downward Stretch Example:
Lafarge Egypt (Cement) – Originally focused on premium
cement for large infrastructure projects, Lafarge launched
economy-grade cement targeted at small and medium
contractors and local distributors.
➡️This is downward stretching — moving from premium to
lower-cost market segments.

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 3. Business Product
Strategy
2. Product Line Stretching (beyond current range:
upward, downward, or both)
•Upward Stretch Example:
Edita Food Industries (B2B suppliers to retail chains) –
Traditionally produced mid-range bakery products, but
later introduced premium, health-oriented snack lines
(with higher-quality ingredients and packaging) targeting
upscale retailers and hotel chains.
➡️This is upward stretching — expanding into a higher-
end B2B segment.

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 3. Business Product
Strategy
2. Product Line Stretching (beyond current range:
upward, downward, or both)
•Both Directions Example:
El Sewedy Electric – Initially offered standard-grade
cables, later expanded downward into affordable cable
lines for smaller contractors and upward into high-
performance, export-quality cables for multinational
projects.
➡️This shows both upward and downward stretching.

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 3. Business Product
Strategy
Product mix decisions
• Product mix width: the number of product lines.
• Product mix length: the total number of items a
company carries within its product lines.
• Product mix depth: the number of versions offered
for each product in the line.

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 3. Business Product
Strategy
1. Product Mix Width (number of product lines)
•Definition: Refers to the number of distinct product lines a company
offers.
• A wider mix means the company serves different product categories or
industries.
• Example (Egyptian B2B): El Sewedy Electric Group
• Product lines:
• Power cables
• Transformers
• Meters
• Wind energy equipment
• Building materials
➡️El Sewedy has a wide product mix, serving various industrial and
infrastructure sectors.

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 3. Business Product
Strategy
2. Product Mix Length (total number of items across all product
lines)
•Definition: The total count of products offered within all lines
combined.
If a company has 5 lines and each has 10 products, its product mix
length = 50.
•Example (Egyptian B2B): Jotun Egypt (Industrial Paints & Coatings)
•Product lines:
• Decorative paints
• Protective coatings Each line includes multiple items
• Marine coatings (e.g.,, heat-resistant paints, epoxy-
• Powder coatings
based coatings).
➡️The total number of all these items
represents Jotun’s product mix
length.
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 3. Business Product
Strategy
3. Product Mix Depth (number of versions per product in a line)
Definition: Refers to the number of variants offered of each product
within a product line, based on color, size, formulation, or
packaging.
Example (Egyptian B2B): Cemex Egypt (Cement and Ready-Mix
Solutions): Within the ready-mix concrete line, Cemex offers
multiple versions:
• High-strength concrete
• Quick-setting concrete
• Environmentally friendly concrete
• Waterproof concrete
➡️These variations within the same product line represent a deep
product mix.

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 3. Business Product
Strategy
Egyptian B2B
Concept Definition Key Point
Example
El Sewedy
Electric: Measures
Number of
Width cables, product
product lines
transformers, diversification
meters, etc.
Total number Jotun Egypt:
Measures total
Length of products in multiple paints
items offered
all lines and coatings
Cemex Egypt:
Measures
Variants within different types
Depth variety within
a product line of ready-mix
one line
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concrete
• Product Life Cycle

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 4. Product Life Cycle (PLC)

Maturity
Sales
Revenue/
period

Growth

Decline

Introduction

Time

Developmen
t
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 4. PLC: Development Stage
Continuous period between development and
introduction
• No sales volume
• Product is not yet completely defined
• Profits do not exist
• Price/value are being determined
• Heavy investment to prepare the offering that
satisfies customer needs
• Promotion may be oriented towards publicity about
technological developments

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 4. PLC: Introduction Stage
When the product is introduced for the market.
•Low sales volume
•Profits are typically negative
•Product is somewhat basic
• Pricing can be high to regain large investments (skimming) or
low to establish market share (penetration).
• This stage requires marketers to educate organizational
buyers (and channel members) as to the function of the
product.
•Promotion is used to build awareness
•The firm’s overall objective is to create awareness and trial

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 4. PLC: Growth Stage
• Increased demand boosts sales
• Profits start to increase quickly, and the overall market
expands rapidly.
• Competition is most likely to enter the market in this
stage.
• Organizations need to clearly differentiate their products.
• It includes developing particular attributes and offering a
package of support facilities.
• Pricing strategy should be built to respond to new
competitors.
• Forming strategic alliances in order to increase the
marketing channels performance.
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 4. PLC: Growth Stage
• More investment in Promotion, not just for convincing
customers to buy the product, but to establish the
benefits of one particular brand versus another.
• The firm’s overall objective is to maximize market share
or return on investment

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 4. PLC: Maturity Stage
• Demand continues to improve but at a decreasing rate.
• Profits have peaked
• Remaining major players compete in an oligopoly
• Product differentiation is even more important.
• One way to develop or refine value is to further segment
the market
• Distribution tends to become intensive in many markets
• Promotion focuses on persuading and reminding
customers, stressing the differences between brands.
• The firm’s overall objective is to hold market share or to
maximize profits by focusing on key segments.

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 4. PLC: Decline Stage
• Product line is reduced to minimize product variation
• Place moves toward selective distribution, or in many
cases, direct sales through an online catalog or website.
• Promotion reduced to minimal levels
• The firm’s overall objective is to reduce costs

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• Technology Adoption Life Cycle

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5. Technology Adoption
Life Cycle (TALC)
Exhibit 8-2

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 5. Technology Adoption Life
Cycle (TALC)
Innovators:
 These are companies who will be willing to try new
products or services and are willing to be the first
ones.
 It has been identified that 2.5 percent of
companies as falling into this category.
 These firms are the ones who accept the product
during the earliest stages (introduction stage) of
the product lifecycle.

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 5. Technology Adoption Life
Cycle (TALC)
2. Early Adopters:
After the innovators try a product, these companies
will also try it.
They are generally open to new ideas but want some
proof that the product will work.
These firms would be responsible for the growth seen
in the Growth phase of the product lifecycle.

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 5. Technology Adoption Life Cycle (TALC)
3. Early Majority:
 Firms who will buy the product once it is thoroughly tried and tested.
 These firms form the backbone of the Maturity phase of the product
lifecycle.
4. Late Majority:
 Firms who generally do not wish to try new services or products and
wait until many other firms have accepted the innovation.
 Firms like this would be responsible for maintaining the growth of
the product in the latter stages of the Maturity phase of the product
lifecycle.

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 5. Technology Adoption Life Cycle (TALC)
5. Laggards:
Those who would adopt the product only under
pressure (in the decline stage) or not adopt at all.

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• Make or Buy Decisions

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6. Make or Buy Decisions
Exhibit 8-4
Minor
How much does the component
contribute to our product’s value Is the component
Image in our customers’ view?
unique to our markets?
Major
No Yes No
Are we good at it?

Yes Purchase as a
Commodity
Can we own the market for it? No

Yes
Can we or do we want to protect it? No Develop Partnership
with qualified
supplier(s)
Yes
Is it our kind of business?
-Financial justification
-Risk assessment Collaborate in
-Stability of technology No development with
Yes technology-oriented
supplier(s)
Make it!

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 6. Make or Buy Decisions

 In summary, the flowchart helps a company decide

whether to internally produce, partner with
suppliers, collaborate on development, or simply
purchase a component depending on its value
contribution and market uniqueness.
 This strategic approach aligns sourcing and
production decisions with competitive advantage and
business goals.

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• New Product Development (NPD)
process

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 Traditional New Product
Development Model
Stage 1
Stage 4 Stage 5

Stage 7

Stage 2 Stage 3 Stage 6

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 Traditional New Product
Development Model
the New Product Development (NPD) process,
Stage 1: Idea Generation
• Purpose: Identify new product opportunities by generating a
wide range of ideas.
• Sources: Can come from customers, employees, competitors,
R&D, distributors, or market trends.
• Goal: Create a large pool of ideas without immediate
evaluation—quantity over quality at this point.

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 Traditional New Product
Development Model
 Stage 2: Product Screening
 Purpose: Evaluate and filter ideas to identify those with the
highest potential.
 Criteria: Feasibility, alignment with company strategy, market
potential, and resource availability.
 Goal: Eliminate weak or unrealistic ideas early to focus on the
most promising ones.
 Stage 3: Business Case Analysis
 Purpose: Assess the commercial viability of the product idea.
 Includes: Market analysis, cost estimates, sales forecasts,
profitability projections, and risk assessment.
 Goal: Determine whether the idea is financially and
strategically worthwhile before major investment.
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 Traditional New Product
Development Model
 Stage 4: Product/Strategy/Plan Development
• Purpose: Turn the concept into a detailed product and marketing
plan.
• Activities: Prototype design, technical development, production
planning, and marketing strategy formulation (target market,
positioning, pricing, and distribution).
• Goal: Prepare a comprehensive plan for how the product will be
made, marketed, and delivered.
 Stage 5: Test Market
 Purpose: Introduce the product on a limited scale to assess
performance in a real market setting.
 Focus: Customer acceptance, sales potential, and marketing mix
effectiveness.
 Goal: Identify and correct issues before a full-scale launch,
45 reducing the risk of failure.
 Traditional New Product
Development Model
 Stage 6: Product Launch
 Purpose: Commercially introduce the product to the full market.
 Activities: Full-scale production, advertising, sales promotions,
and distribution roll-out.
 Goal: Maximize awareness, adoption, and sales while
monitoring early performance indicators.
 Stage 7: Hand-Off to Innovation Translation / Customer Education
Team (Market Development)
• Purpose: Ensure successful adoption and long-term market
growth.
• Activities: Training sales teams, educating customers, gathering
feedback, and supporting product integration.
• Goal: Transition the innovation from introduction to sustained
market performance and expansion.
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Notes on Product Development:
Customer/Market Orientation

Two development approaches:

• Engineering Driven (assumes customers buy
technology). Relate to the “Product Concept” of
Marketing.
• Market/Customer Driven (assumes customers seek
solutions). Relate to the “Marketing Concept” of
Marketing.

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 Role of Marketing in
Product Development
 We believe that the role of marketing in the new
product development process cannot be
overemphasized.
 Too often, a firm that does not give full regard to
the marketing function will create new products
without marketing input

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 Role of Marketing in
Product Development
We believe that the role of marketing in the new product
development process cannot be overemphasized.
Understand the technology in depth
Define and redefine current and future customer needs and
guide development with this process
Motivate other company departments and organizations
Screen and select ideas from all sources
Reward the efforts of the technical and support staff
Catalyze company resources to get the right talent on the
job
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 Why Do New Products Fail?
Reducing the Risk of New Product Failures
The text cites data related to the frequency of new
product failures. The failure rate for consumer
products is much higher than for business-to-business
products, likely because BTB products are often
created through a direct collaboration with the
customer(s), while consumer products often will have
input from a sample of the market.

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 Why Do New Products Fail?
 The missing marketing plan
 No real need exists
 The market size is overestimated or a “Me
Too” product fails to penetrate the market
 The offering fails to meet needs adequately
 Market will not pay
 Contrary perceptions of innovation

A good marketing plan is a

solution to all of these!
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