B2B MARKETINGRamesh Adavi 1

FacultyRamesh Adavi

B2B MARKETINGRamesh Adavi 2

COURSE OBJECTIVES Knowledge Creation

B2B Marketing

PRIMARY CONTENT TEXT:

“INDUSTRIAL MARKETING”- Reeder, Brierty, Reeder. (PHI) “INDUSTRIAL MARKETING” – K Havaldar, TMH,

Decades of Industry Experience METHODOLOGY

Lectures – 25 Hours

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ABOUT ME IIT-B and IIM-B 30 years Experience

Alfa Laval, PSI Bull, Modi Olivetti, Motorola, ORG Systems, PowerTel Boca, Currently a Professor of Management Studies

The KNOWLEDGE CREATION agenda Leverage my experience Content beyond the book – Assignments & Cases

70% plus economy is B2B

High level of competency is required “solution selling” value selling multi-disciplinary knowledge required selling to the top

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What is Marketing?

Define the market Marketing Planning

“the industry” – the players, market forces, the environment……

Determine needs (and wants) Market research

Products and Services Product Management

Communicate to the market Promotion Selling

Deliver (Fulfill needs) Distribution Channels

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B2B Marketing is more than selling “products”.

PRODUCTS & SERVICES

INFORMATION

FINANCIAL SERVICES

RELATIONSHIP VALUES

CUSTOMERS

SUPPLIERS

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A comparison between B2B and CONSUMER Marketing. The value chain

Raw Material Manufacturer Reseller The consumer.

The B2B Marketing Span.

Consumer needs drives the whole industry.

BULL WHIP EFFECT Market distortions

Limited market visibility.

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B2B MARKETS CONSUMER MARKETS

Market Structure

Fewer buyers with strong “buying” power

Concentrated geographies

Dispersed, Mass Market

Product TechnicalCustomizedServices – an important differentiator.Product substitution barriers.

Packaging is an important differentiator.Low product substitution barriers (CHURN).

Buyer Behavior

Functional InvolvementRational motivesExpert buyers – technical, procurementRelationships very importantReciprocity

Family involvementDemographics and PsychographicsUser experience should minimize technical complexity.Non –personal relationship.

Decision Making

Distinct, Observable Stages Abstract. “Mental Models” (AIDA) A new frontier for technology?

Channels Short & Direct. Indirect, multiple linkages. A large value is locked up in the channel.

Promotion Emphasis on personal sellingWeb-Portals – a new frontier in B2B!

Pull – AdvertisingPush – channel incentives

Price Negotiated. TALK PRICE ONLY ALL OTHER ISSUES ARE CLEARED. AS THE CLOSING GAMBIT.

MRP.

Competition Visible Not clearly visible.

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B2B MARKET

Manufacturer

Sales Force Mfg. Rep.

Systems Integrator

Distributor

Customer 1 Customer 2Customer 3

Dealer

Customer 4

CHANNELMANAGEMENT•Variety of roles•Territory•Compensation•Pricing support•Conflict resolution

Manufacturer

Mfg. Rep.Sales Force

Wholesaler Wholesaler

Retailer Retailer Retailer Retailer

CONSUMERSCONSUMERS

CONSUMER MARKETCHANNELISSUES•Information Sharing•Bull Whip

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DERIVED DEMAND The demand for B2B goods is

derived from the final demand for consumer goods.

Entering Goods Raw Materials & Components Enter the final consumer goods Demand proportional to

Consumer good demand Foundation Goods

Capital goods (plant & Machinery).

A step function. Facilitating goods

Goods to support operations (e.g. computers, stationery..)

Services

CONSUMERs

The B2B Value Chain

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CROSS ELASTICITY OF DEMAND. Co-relate the demand patterns of one product (say A) with another (say B).

If they are positively co-related then A and B are substitutes E.g. in certain segments Steel and Aluminum can substitute each other.

If Steel gets expensive, Al demand increases. “sorry A is not available. Would you like to check out B”

If they are negatively co-related then complements. Cartridges and printers JOINT DEMAND “those who bought A , also bought B”

Now you know what DATA MINERS do!

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THE RESELLER MARKET Particularly in the US, this is a critical player (e.g. WALMART).

MARKET MAKERS Power to stimulate demand

One stop shop for “consumers” Complements Substitutes

The Retail Wave – waiting to happen! How will they re-shape the market ???

Small Manufacturers will benefit.

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MY “Product’s strongest” trap Prevents listening to the customer Product sellers v/s Solution providers

The “techie club” The customer doesn’t understand? User experience engineering – the web-experience!

The customer is your “innovation” ground Saturated markets “Fortune at the bottom of the pyramid”

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SUMMARY Defined “marketing” Compared B2B & Consumer Marketing Overview of players in the market place Economics of demand