Unit 3

Product and Pricing Strategy for B2B Markets

Industrial Products
• Industrial Products are the products which are not directly used by the end customers but are
used by the industries. These products are used in Business to Business (B2B) scenarios
mostly.
• Types of Industrial products:
• 1. Raw Materials
• 2. Machinery
• 3. Parts
• 4. Tools & Supplies
• The types above can be classified as industrial products as they are more suited to an
industrial and B2B setup. There are certain scenarios in which the same product might be
used by both industrial and consumer groups. A computer may be used by a consumer as well
as industry but the uses of it might be very different. Similarly cold storage can be used by
both the groups but then the performance and power requirement might be very different.
Example
• Products like glue having high adhesive strength are not required by
people in day to day to life but are key requirement for various
industries like automobile, leather etc. Similarly products like heavy
machinery and robotics might be used by car manufacturers but not by
end users or customers.
• Hence, this concludes the definition of Industrial Products along with
its overview.
Industrial Product lifecycle
• The product life cycle is the succession of stages that a product goes through during its
existence, starting from development and ultimately ending in decline. It's typically
broken up into six stages. Business owners and marketers use the product life cycle to
make important decisions and strategies on advertising budgets, product prices, and
packaging.
• What are the stages of the product life cycle?
 Development
 Introduction
 Growth
 Maturity
 Saturation
 Decline
1. Development
• The development stage of the product life cycle is the research phase before a product is
introduced to the marketplace. This is when companies bring in investors, develop prototypes,
test product effectiveness, and strategize their launch. Due to the nature of this stage, companies
spend a lot of money without bringing in any revenue because the product isn't being sold yet.
• This stage can last for a long time, depending on the complexity of the product, how new it is,
and the competition. For a completely new product, the development stage is hard because the
first pioneer of a product is usually not as successful as later iterations.
• Development Stage Marketing Strategy
• While marketing typically begins in the introduction stage, you can begin to build “buzz” around
your product by securing the endorsement of established voices in the industry. You can also
publish early (and favorable) consumer research or testimonials. Your marketing goal during this
stage is to build upon your brand awareness and establish yourself as an innovative company.
2. Introduction
• The introduction stage is when a product is first launched in the marketplace. This is when
marketing teams begin building product awareness and reaching out to potential
customers. Typically, when a product is introduced, sales are low and demand builds
slowly.
• Usually, this phase is focused on advertising and marketing campaigns. Companies work
on testing distribution channels and try to educate potential customers about the product.
• Introduction Stage Marketing Strategy
• This is where the fun begins. Now that the product is launched, you can actually promote
the product using inbound marketing and content marketing. Education is highly
important in this stage. Your target consumer must know what they’re buying before they
buy it. If your marketing strategies are successful, the product goes into the next stage —
growth.
3. Growth
• During the growth stage, consumers have accepted the product in the market and
customers are beginning to truly buy in. That means demand and profits are
growing, hopefully at a steadily rapid pace.
• The growth stage is when the market for the product is expanding and competition
begins developing. Potential competitors will see your success and will want in.
• Growth Stage Marketing Strategy
• During this phase, marketing campaigns often shift from getting customers’ buy-in
to establishing a brand presence so consumers choose them over developing
competitors. Additionally, as companies grow, they'll begin to open new
distribution channels and add more features and support services. In your strategy,
you’ll advertise these as well.
4. Maturity
• The maturity stage is when the sales begin to level off from the rapid growth period. At this point, companies
begin to reduce their prices so they can stay competitive amongst growing competition.
• This is the phase where a company begins to become more efficient and learns from the mistakes made in
the introduction and growth stages. Marketing campaigns are typically focused on differentiation rather than
awareness. This means that product features might be enhanced, prices might be lowered, and distribution
becomes more intensive.
• During the maturity stage, products begin to enter the most profitable stage. The cost of production declines
while the sales are increasing.
• Maturity Stage Marketing Strategy
• When your product has become a mature offering, you may feel like you’re “sailing by” because sales are
steady and the product has been established. But this is where it’s critical to establish yourself as a leader
and differentiate your brand.
• Continuously improve upon the product as adoption grows, and let consumers know in your marketing
strategy that the product they love is better than it was before. This will protect you during the next stage —
saturation.
5. Saturation
• During the product saturation stage, competitors have begun to take a portion of the
market and products will experience neither growth nor decline in sales.
• Typically, this is the point when most consumers are using a product, but there are
many competing companies. At this point, you want your product to become the brand
preference so you don't enter the decline stage.
• Saturation Stage Marketing Strategy
• When the market has become saturated, you’ll need to focus on differentiation in
features, brand awareness, price, and customer service. Competition is highest at this
stage, so it’s critical to leave no doubt regarding the superiority of your product.
• If innovation at the product-level isn’t possible (because the product only needs minor
tweaks at this point), then invest in your customer service and use customer
testimonials in your marketing.
6. Decline
• Unfortunately, if your product doesn't become the preferred brand in a marketplace, you'll typically
experience a decline. Sales will decrease during the heightened competition, which is hard to
overcome.
• Additionally, new trends emerge as time goes on, just like the CD example I mentioned earlier. If a
company is at this stage, they'll either discontinue their product, sell their company, or innovate and
iterate on their product in some way.
• Decline Stage Marketing Strategy
• While companies would want to avoid the decline stage, sometimes there’s no helping it — especially
if the entire market reached a decline, not just your product. In your marketing strategy, you can focus
on nostalgia or emphasize the superiority of your solution to successfully get out of this stage.
• To extend the product life cycle, successful companies can also implement new advertising strategies,
reduce prices, add new features to increase their value proposition, explore new markets, or adjust
brand packaging.
• The best companies will usually have products at several points in the product life cycle at any given
time. Some companies look to other countries to begin the cycle anew.
Product Life Cycle Examples

• The Typewriter
• Vine
• Cable TV
• Floppy Disk
1. The Typewriter
• The typewriter was the first mechanical writing tool — a worthy successor to pen and paper.
Ultimately, however, other technologies gained traction and replaced it.
• Development: Before the first commercial typewriter was introduced to the market, the
overall idea had been developed for centuries, beginning in 1575.
• Introduction: In the late 1800s, the first commercial typewriters were introduced.
• Growth: The typewriter quickly became an indispensable tool for all forms of writing,
becoming widely used in offices, businesses, and private homes.
• Maturity: Typewriters were in the maturity phase for nearly 80 years, because this was the
preferred product for typing communications up until the 1980s.
• Saturation: During the saturation stage, typewriters began to face fierce competition with
computers in the 1990s.
• Decline: Overall, the typewriter couldn't withstand the competition of new emerging
technologies and eventually the product was discontinued.
2. Vine
• Skipping forward to the 21st century, we see the rise and fall of Vine, a short-form video-sharing app
that was the source for many memes at its peak but eventually declined due to other platforms.
• Development: Vine was founded in June 2012 and mainly competed with Instagram.
• Introduction: The app was introduced to the public in 2013. Its differentiating factor was its short-form
video format — users had only seven seconds to film something that was hilarious, absurd, or a mixture
of both.
• Growth: Only two years after its release, Vine had over 200 million active users. Its popularity led to the
advent of the phrase “Do it for the Vine.”
• Maturity: Because it was only in the market for a few years, Vine never reached the maturity stage.
While adoption was high, it was still a fairly new app.
• Saturation: Vine competed in an already saturated market. Instagram, Snapchat, and YouTube were the
preeminent names in its category, and Vine soon started to decline in use.
• Decline: When Musical.ly was introduced, Vine lost a large amount of its user base and shut down. It
was succeeded by Byte, a similar short-form video sharing platform, but none of these have been able
to surpass Tik Tok, which launched months after Vine’s end in 2016.
3. Cable TV
• Remember the days of switching TV channels to find what to watch? I do — and they feel distinctly like
something of the past. While cable TV is still around, it’s safe to say that it’s nearing the decline stage.
• Development: Cable TV was developed in the first half of the twentieth century. John Walson has been
credited with its invention.
• Introduction: The first commercial television system was introduced in 1950, and by 1962, the
technology saw the first hints of growth.
• Growth: After a decades-long freeze on cable TV’s development (due to regulatory restrictions), the
technology began gaining traction, and by 1980, more than 15 million households had cable.
• Maturity: Cable TV matured around the 1990s. Around seven in ten households had cable.
• Saturation: The start of the 21st century saw an oversaturation of this technology, and it also started to
compete with other modern developments such as on-demand services and high-definition TV
(HDTV). While the internet was still in its nascent stages, it would soon gain on cable TV as well.
• Decline: From 2015 onwards, cable TV experienced a marked decline. Online video streaming services
such as Netflix and Hulu have taken precedence — and this trend is set to continue.
4. Floppy Disk
• This relic was once a popular and convenient way to store and share data between computers. I
barely understood what they were growing up, and it astounds me to think of the very existence
of cloud data sharing and other mass memory storage means.
• Development: The first floppy disk was developed in 1970 by IBM engineers. It was an 8-inch
flexible magnetic disk in a square case with 2MB storage capacity.
• Introduction: It was introduced in 1971 and largely became known as the only way to transfer or
store data.
• Growth: The floppy disk was majorly used in the 1980s-1990s.
• Maturity: Sold well in the market during the 1990s. Improving with time, it could hold 200MB of
storage.
• Saturation: Major competitors emerged at the beginning of the 21st century. The invention of
USB cables, external hard disks, CDs and more gave people options to store their data.
• Decline: The floppy disk faced a major decline up to Hewlett-Packard stopping production for the
disk in 2009. The storage capacity for other products in the market grew to be more efficient.
 When to Use the Product Life Cycle
 Establish competitive authority. If your product is new and recently introduced to the market, you can
advertise it as a new and improved alternative to an existing product. If the product is established, you
can vouch for its long history of use in your branding.

 Decide on a pricing strategy. Depending on the life cycle stage your product is in, you’ll choose how to
price the product. A new product may be priced lower to entice more buyers, while a product in the
growth stage can be priced higher.

 Create a marketing strategy. Your product life cycle stage will determine which strategy to pursue.
Maturity and audience knowledgeability play a big role in the type of content you publish on your site
and social media profiles.
 Respond before the product begins its decline
• There’s no worse feeling than watching your product slowly become
obsolete or be displaced by a competing product. By keeping the life
cycle stages in mind, you can create a strategy that keeps you ahead of
the curve as you reach the saturation and decline stages.
• The product life cycle benefits businesses because they can shift their
wording and positioning to best market the product at the stage it is in.
If your product has recently been introduced and you try to market it
as a long-established solution, consumers will see right through it and
trust you less as a result.
Product life cycle strategies
The product life cycle contains six distinct stages: Development, introduction, growth,
maturity, saturation and decline. Each stage is associated with changes in the product's
marketing position, You can use various marketing strategies in each stage to try to
prolong the life cycle of your products.
 Product Development Stage:

• Focus is on product
• Emphasis is on cost reduction
• Trials are the main tools
• Publicity of the product
• Minimum expenses to be maintained during this period
• Production capacity must be looked after
• Quality must be checked
Product introduction strategies

• Marketing strategies used in the introduction stages include:

• rapid skimming - launching the product at a high price and high
promotional level
• slow skimming - launching the product at a high price and low promotional
level
• rapid penetration - launching the product at a low price with significant
promotion
• slow penetration - launching the product at a low price and minimal
promotion
Product introduction strategies

• During the introduction stage, you should aim to

• establish a clear brand identity
• connect with the right partners to promote your product
• set up consumer tests, or provide samples or trials to key target
markets
• price the product or service as high as you believe you can sell it, and
to reflect the quality level you are providing
Product growth strategies
• Marketing strategies used in the growth stage mainly aim to increase profits. Some of
the common strategies to try are:
• improving product quality
• adding new product features or support services to grow your market share
• entering new markets segments
• keeping pricing as high as is reasonable to keep demand and profits high
• increasing distribution channels to cope with growing demand
• shifting marketing messages from product awareness to product preference
• skimming product prices if your profits are too low
• The growth stage is when you should see rapidly rising sales, profits and your market
share. Your strategies should seek to maximise these opportunities.
Product Maturity Strategies

• When your sales peak, your product will enter the maturity stage. This often
means that your market will be saturated and you may find that you need to
change your marketing tactics to prolong the life cycle of your product.
Common strategies that can help during this stage fall under one of two
categories:
• market modification - this includes entering new market segments, redefining
target markets, winning over competitor's customers, converting non-users
• product modification - for example, adjusting or improving your product's
features, quality, pricing and differentiating it from other products in the
marking
Product Saturation Strategies
1. Adding new features in products 
2. Improving services 
3. Reinforce the brand 
4. Improving price
5. Offer some discounts
6. Identify the root cause
7. Research competitors
Product decline strategies
• During the end stages of your product, you will see declining sales and profits. 
• This can be caused by changes in consumer preferences, technological advances and alternatives
on the market. At this stage, you will have to decide what strategies to take. If you want to save
money, you can:
• reduce your promotional expenditure on the products
• reduce the number of distribution outlets that sell them
• implement price cuts to get the customers to buy the product
• find another use for the product
• maintain the product and wait for competitors to withdraw from the market first
• harvest the product or service before discontinuing it
Another option is for your business to discontinue the product from your offering. You may choose
to:
• sell the brand to another business
• significantly reduce the price to get rid of all the inventory
Product Marketing strategies for New
Products
• strategies for B2B product marketing to boost leads and conversions:
• 1. Research & defining your niches and key personas.
• As a B2B product or service, you likely have a multi-faceted product that
can be of value to a number of customers. But don’t make them figure that
out themselves. Know who your key customers are and tailor your product
marketing strategy to reach and engage them. The best place to start with
this is persona development. Developing personas means creating a
complete profile of your target customers including their demographics,
where they spend time online, how they purchase, what they are searching
for, and their biggest questions and problems. With SaaS B2B,
2. Offer something of value for your target
markets.
• The buying process for B2B customers is typically a bit more rigorous than B2C customers.
Often times there are others who need to sign off, existing business processes to consider,
and much more research and time involved before actually purchasing.
• You will want to present your brand as authoritative, as the solution to your customers’
problems, and stay top of mind to potential customers. In this case, content is still king. 62%
 of B2B buyers say they can make a business decision based on online content alone. 
• Your company should have a focused and useful blog for your target customers. This helps
to build brand awareness but also showcase expertise in your area. Customers genuinely
appreciate when a company shares invaluable knowledge. It’s important your content
speaks directly to your customer segments and shows your product/brand as their solution.
• Offer something of value for free with an exchange of an email. Make it focused on a
customer segment and use targeted landing pages for each. This way, your potential lead
gets something helpful from your team that adds to your credibility while you get a way to
contact that and begin the sales process in the future.
• Some examples of what you can create are:
• Guides
• E-Books
• Trainings
• Webinars
• For example, if one of your target customer groups is marketing teams, you can offer a
free guide on influencer marketing in exchange for an email and include how your tool can
help them with their process.
What is the Experience Curve?

• Introduced by the Boston Consulting Group, Experience Curve is a

concept that states that there is a consistent relationship between the
cumulative production quantity of a company and the cost of
production. The concept implies that the more experienced a company
is in manufacturing a specific product, the lower its cost of production.
• When the total production capacity (from the first unit to the last)
doubles, the value-added costs decline by a constant percentage. The
value-added costs include the cost of manufacturing, marketing,
distribution, and administration.
• Bruce Henderson, the group’s founder, led a study into a leading manufacturer of
semiconductors to analyze the relationship between cost behavior and production
quantity. 

• The research found that when the manufacturer doubled the volume of production,
there was a 25% decline in the overall cost of manufacturing.

• The curve shows that as the company increases its overall cumulative production
quantity, the unit costs decline at a constant rate. The decline goes on without limit
and is surprisingly consistent, even from one industry to another. In some cases, the
absence of experience in some industries may be viewed as an outcome of
mismanagement.
Implications of the Experience Curve

• A company that benefits from the effects of an experience curve enjoys several
advantages over its competitors. As the business grows and lowers its unit
production costs, it will gain a bigger market share over its rivals. It means that
it will control a bigger portion of the market, increasing its profit potential.

• Since the company enjoys cost advantages over competitors due to the
reduced cost of production, it can develop a penetrative pricing strategy by
setting a low price to attract more customers to purchase its products. Other
strategies used to increase market share include increasing investment in
marketing, production capacity, hiring more sales personnel, etc.
Criticisms of the Experience Curve
• 1. Complacency
• One of the criticisms of the experience curve is that it makes market
leaders complacent with their achievements. By getting the benefits of
experience curve effects, the companies become reluctant to continually
innovate and lower the unit costs because of their experience.

• 2. Inability to measure its effects

• Another criticism of the experience curve is the inability to measure its
effects or inaccuracy