STRATEGY: INDUSTRIAL MARKET SELECTION AND PRODUCT PLANNING
Industrial products are unique in that they are more technical and more complex than their consumer counterparts. Traditionally, the technicality and complexity of industrial products have made the industrial marketers to tend towards product orientation.
To address the problem of production orientation of the traditional industrial marketer, Corey (1976:40-41) proposed four key concepts that the marketer should keep in mind in market selection and product planning. They are discussed below:
- The basic and most important decisions in market /product strategies are those related to the choice of a market or markets to serve. Choice of market is a choice of the customer, competitive, technical, political and social environment in which one elects to compete.
- The form of the product is a variable not a given, in development market/product strategy. Market selection comes first and this is where the development of multiple variations of a particular product comes in.
- The “Product” is what the product does; it is the total package of benefits the customer receives when he buys. According to Corey, the point here is that, the product should not be conceived of narrowly in terms of its primary function.
- The product, in this broad sense will have different meanings to different customer. This consideration is important with regard to both market selection and product, pricing.
Products are developed to fit the need of the market and are modified as those needs change. The marketer evaluates market opportunities and selects viable market segments, which in term determines the direction of product policy.
The secret behind the success of industrial product firms is there core competencies.
According to Day (1992:326), Core competencies are embodied in the superior skills of employees, the technologies they have mastered, the unique ways in which these technologies are combined and the market knowledge that has been accumulated.
IDENTIFYING CORE COMPETENCES
There are three ways of identifying core competencies of a firm
- Core competence provides potential access to an array of markets
- A core competence should make an important contribution to the perceived customer benefits of the firm’s and product.
- A core competence should be difficult for competitors to initiate.
Even though rivals might acquire the same production equipments or some of the technologies that contribute to the competence of the company, they might encounter severe difficulty in duplicating the company’s internal pattern of coordination and learning.
Quinn (1992:185) identified three common characteristics that make core competencies difficult to imitate.
STRATEGIC CHOICES OF PRODUCT MARKET
A manufacturer usually considers his strengths and weaknesses in selecting his market. Some other strengths of an individual. Company may be:
- Company reputation
- Company size
- Company financial capability / production resources
- Managerial capability
HORIZONTAL PRODUCT/MARKET CHOICE
Some of the key decision that the marketer has to make with regards to Horizontal product/market selection is:
Diversifying into new markets, in which case answers must be found to the following pertinent questions:
(a) Does the market have high growth potential?
(b) How difficult is it for competitors to enter the market?
(c) Product Market positioning
(d) Product line proliferation
VERTICAL PRODUCT/MARKET CHOICE
It is also of strategic importance for the industrial marketer to choose the market level at which he will enter the market.
The starting point for this vertical product market choice is determination of the level at which the product concept would be meaningful. The pertinent questions are:
(a) Is there possibility that market development can be aborted by poor product quality or by product use?
(b) Where are the points in the manufacturing chain where quality risks exist?
(c) Can the company minimize risk by taxing responsibility itself for the step in the manufacturing process?
Product service is a very important competitive tool in industrial marketing. The marketer is advised to always take a total concept view of the product, recognizing the services that augment the product offering such as after-sale service.
Through their service operations manufacturers can also gather and analyze product performance data.