B2B Marketing Features

No matter how successful you are, to maintain market dominance you have to innovate. Even the best selling product becomes obsolete one day – just ask Kodak and Polaroid, both of which were so focused on maintaining dominance of the traditional camera market they failed to spot the emergence of digital photography. Product development is no less important in B2B - but it is notoriously difficult to get right. There are a few reasons for this. Some organisations fail to recognise the importance of product development while others struggle to assign it to one department and let it fall between marketing, sales, and operations. Those that do assign it with high priority and allocate it to the right people, are however, unaware of how to do it properly.

Look to the future

“Businesses tend to be over-reliant on existing products,” says David James, executive professor of marketing and growth management at Henley Management College.

“They worry about how to sell their existing products and how to improve margins on those products, but forget to look to the future. B2B marketers need to think not only about how their customers' needs will change, but also about how the needs of their customers' customers will change.”

David Thorpe

David Thorp, director of research and information at the Chartered Institute of Marketing, quotes Peter Drucker who famously said there are only two profit-generating parts to a business – innovation and marketing – and everything else is cost. “You can run a profitable company without new products, but if you want your organisation to grow significantly, you need to look at new product development.”

Thorp adds, “Without new product development, you're risking your products falling out of favour with the customer and you're relying on past performance. Building a portfolio of products is a healthy way of avoiding putting all your eggs into one basket, and adding to that portfolio keeps the company fresh and dynamic.”

The right person for the job

Large consumer businesses tend to have product development departments full of people who dedicate their working lives to building this portfolio of products. For smaller, B2B firms it is usually less clear who is responsible for product development, and this can become a significant problem if everyone assumes that product development is someone else's responsibility.

The central problem is that product development cannot be assigned to one department. Everyone has a role to play. Given that it goes right to the core of the company's future success, the chief executive ought to be heavily involved. Operations, or those who will manufacture or deliver the product, must be involved. Sales and customer service should have the best feel for what customers want, and there is little point producing a new product that no customer wants.

Marketing also has a vital role to fulfil in this process. Not only can we comment on what our existing customers want, we can also spot gaps in the market and so ensure our new product brings expands our customer base. We can do this by observing competitor activity, researching trends, and keeping our finger on the pulse of our market. By working together with colleagues in operations, sales, customer service and executive management we can help ensure our new product is as successful as possible.

Yet, even if we succeed in building the right team for product development, there are still many pitfalls on the path to success. Following these six golden rules of product development should help you to avoid most of those pitfalls.

1. Don't copy your competitors

Even though it pays to stay abreast of what your competitors are doing in product development, it can be dangerous to focus too heavily on them. Darren Evans, creative director at the Engine Room, says, “There is a tendency to go down the 'me too' route. Companies that fall into this trap will struggle to differentiate themselves, and will soon find themselves fighting a losing battle against more established competitors.

Companies should be looking to develop innovative products rather than copy what the competition is doing. A more holistic approach would bring new ideas to the table. By involving people from all parts of the business you get different perspectives. We've seen a couple of our clients introduce multi-disciplinary 'innovation groups' where ideas are discussed and then put forward for development as commercially viable products.”

2. Build capability as well as product

For Stan Elphick, senior lecturer in B2B marketing and strategy at Manchester Metropolitan University's Business School, the greatest challenge B2B marketers face is avoiding commoditisation.

He says, “Innovation is vital, but if B2B marketers focus on products they will soon find themselves producing commodities, and suffering from dwindling margins. The key for them is to recognise that, while innovation is crucial, they shouldn't actually be producing products.

B2B sales is predominantly to order, so rather than worry about products you should focus on developing capabilities and skills to meet the needs of your customers. For example I recently worked with an iron foundry that made everything to order. It didn't need to develop products; it needed to ensure it had the relationships with customers to receive orders from them, and the skills to deliver on those orders.”

3. Remember it's all about the customer

Regardless of whether you are developing products or looking at customer service, staff training, logistics or some other element of your capabilities, you need to remember that if it does not result in something your customers want you will not receive a return on your investment of time and money. This is where the input of the marketing department is crucial.

James adds, “The customer must be built into the design phase of your new products. Increasingly companies are recognising the importance of value co-creation with their customers.

Dell's Idea Storm is a great example of this. It's an online forum where Dell's personal and business customers can tell them what new developments they'd like to see. There's no reason why the concept couldn't be used by other B2B marketers to great effect.”

4. Keep your feet on the ground 

Amidst all the excitement of co-creation with our customers it is very easy for marketers to forget that someone has to physically produce these new products.

Miro Walker, CEO at Cognifide, a pan-European software development consultancy, offers this advice on relating your customers' demands and your creative vision to the technical teams. “Clarity is essential. Don't try to be all things to all people. Rather ensure that the core values of the product vision are coherent, well understood and achievable.

If technical teams can understand what's really needed, rather than just what's being asked for, they can anticipate and innovate to come up with a truly superior product.

Without a dream you'll never build anything worthwhile, but if the dream isn't grounded in reality you'll never build anything at all.”

5. Test products rigorously

In the same way, it is easy to get so excited about your new product that you rush it to market.

Tim Gibbon, director at Elemental, a media communications consultancy, stresses the importance of thorough product testing. “You should create scenarios where you can test the product amongst the target audience in its environment.

These allow you to make any changes at the test stage, rather than releasing them too early. Any mistakes remaining in the product once it is out there can prove extremely costly.”

6. A culture of continual innovation

It can be tempting to see product development as an occasional activity, undertaken at set dates or in response to market developments.

However, as Heather Westgate, chief executive at marketing agency TDA, points out, it should be ongoing. “Markets are always moving and product development should do the same. It will never be possible for products and services to be future-proofed.

Proactive collaboration between departments will ensure the overall offering is relevant, interesting and accessible to customers for the long term. Ideally, new ideas should also be road-tested with a selection of businesses before rollout. When marketing and product development work collaboratively with customers throughout the entire process the result is a more nimble and effective product development strategy.”

 

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