The products and services that an industrial company has to offer are generally organized around its customers’ needs in addition to the level of expertise and production capabilities of the firm. Creating a strategy for product development is an important and often multifaceted segment of running a successful enterprise, and it brings together a range of different principles, such as research and development, marketing, engineering, design, materials, and manufacturing. In most cases, an industrial product development strategy will depend on two main goals: keeping the new product or product line within the company’s overall objectives and marketing philosophy, and developing a system for assessing the performance of an existing product. For evaluating the success of an existing product, factors such as sales, customer response, profits, competition, and market acceptance are usually involved.
Product development is usually based upon these criteria, and putting together a strategy helps to determine which products need to be modified, continued, or discontinued. In addition, development analysis can set guidelines for new products to be introduced. When working on product development, it can be helpful to remember that an industrial product is often more than just a tangible good, but also a set of technical, economic, legal, and personal relations between the consumer and the seller. Elements such as price, product specifications, purchasing contracts, and a customer’s personal interpretation of a company’s brand and reputation are all significant influences on a product’s overall performance.
Consumers can evaluate a product along several levels. Its basic characteristics are inherent to the generic version of the product and are defined as the fundamental advantages it can offer to a customer. Generic products can be made distinct by adding value through extra features, such as quality or performance enhancements. The final level of consumer perception involves augmented properties, which offer less tangible benefits, such as customer assistance, maintenance services, training, or appealing payment options. In terms of competition with other products and companies, consumers greatly value these added benefits when making a purchasing decision, making it important for manufacturers to understand the notion of a “total package” when marketing to their customers. For example, when manufacturing automotive parts, a high-performing product will provide the customer base with basic benefits, while adding spare parts, technical assistance, and skill training will offer enhanced properties to create a total package with increased appeal to consumers.
Changing Product Strategies
In industrial product development, a marketing strategy that is flexible and adaptive to changing market circumstances stands a greater chance of being effective in the long-term. Products and consumer perceptions are variable, so changes in strategy may be required to better address customer needs, technological developments, new laws and regulations, and the overall product life-cycle. By monitoring external conditions and shifting product development accordingly, a company can better target its consumers and learn to react to their needs. The major factors that can necessitate a change in product strategy include:
Customer Preferences: Fluctuations in the cost of materials, new application requirements, and changing brand awareness are just a few of things that can cause consumer needs to change. Keeping close track of customer response to a product and taking their demands into consideration are important for maintaining market share.
Technological Advances: A new technological development can engender a change in a product line, causing products to need modification in order to remain competitive or rendering some products obsolete. For example, fiber optic cables have replaced older cables in certain applications and many businesses have switched from main frame computers to personal computers. Being aware of these advances can help a business stay ahead of the curve.
Laws and Regulations: The implementation of new governmental regulations can cause certain products or manufacturing methods to be restricted, limiting their consumer appeal. Conversely, new laws can also lend an advantage to certain business and deregulation can sometimes benefit production standards. Product development strategies must shift according to the legal landscape.
Product Life-Cycles: To preserve the rate of growth in profit and sales, many industrial companies decide to alter, discontinue, or replace older products with newer models or more recent upgrades. These changes are usually made periodically, allowing existing products that reach maturity or decline to be phased out or modified, thus retaining their appeal.