i n t e r n a t i o n a l m a r k e t i n g products and services for businesses chapter 13 1 4 t h...
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I n t e r n a t i o n a l M a r k e t i n g I n t e r n a t i o n a l M a r k e t i n g
Products and Services for Businesses
Chapter 13
1 4 t h E d i t i o nP h i l i p R. C a t e o r a
M a r y C. G i l l yJ o h n L . G r a h a m
McGraw-Hill/IrwinInternational Marketing 14/e
Copyright © 2009 by The McGraw-Hill Companies, Inc. All rights reserved.
13-2
What Should You Learn?What Should You Learn?
• The importance of derived demand in industrial markets
• How demand is affected by technology
• Characteristics of an industrial product
• The importance of ISO 9000 certification
13-3
What Do I Need to Know?What Do I Need to Know?
• The growth of business services and nuances of their marketing
• The importance of trade shows in promoting industrial goods
• The importance of relationship marketing for industrial products and services
13-4
Global Perspective Intel, the Boom and the Inescapable Bust
Global Perspective Intel, the Boom and the Inescapable Bust
• In industrial markets, including global ones, what goes up must come down
• Issues of standardization versus adaptation – Less relevance to marketing industrial goods than consumer
goods
• Factors accounting for greater market similarities in customers of industrial goods versus consumer goods – The inherent nature of the product– The motive or intent for the user differs
13-5
Major Categories U.S. ExportsMajor Categories U.S. Exports
Exhibit 13.1
13-6
Demand in Global Business-to-Business Markets
Demand in Global Business-to-Business Markets
• Demand in industrial markets is by nature more volatile
• Stages of industrial and economic development affect demand for industrial products
• The level of technology of products and services make their sales more appropriate for some countries than others
13-7
The Volatility of Industrial Demand
The Volatility of Industrial Demand
• Cyclical swings in demand
– Professional buyers tend to act in concert– Derived demand accelerates changes in markets
• Derived demand can be defined as demand dependent on another source
• Minor changes in consumer demand mean major changes in related industrial demand
– Boeing► Worldwide demand for travel services related to demand for new airplanes ► Commercial aircraft industry one of the most volatile
13-8
Derived Demand ExampleDerived Demand Example
Exhibit 13.2
13-9
Stages of Economic DevelopmentStages of Economic Development
• Stage 1 – the traditional society
• Stage 2 – preconditions for takeoff
• Stage 3 – take off
• Stage 4 – drive to maturity
• Stage 5 – the age of mass consumption
13-10
Technology and Market DemandTechnology and Market Demand
• Trends spurring demand for technologically advanced products
– Expanding economic and industrial growth in Asia– The disintegration of the Soviet empire– The privatization of government-owned industries worldwide
• The companies with the competitive edge will be those whose products are:
– Technologically advanced– Of the highest quality– Accompanied by world-class service
13-11
Quality and Global StandardsQuality and Global Standards
• Perception of quality rests solely with the customer
– Level of technology reflected in the product– Compliance with standards that reflect customer needs– Support services and follow-through– Price relative to competitive products
• Quality standards vary with level of country’s industrialization
13-12
Quality is Defined by the BuyerQuality is Defined by the Buyer
• How well a product meets the specific needs of the buyer
• The price-quality relationship
• Product design must be viewed from all aspects of use
– Climate– Terrain
13-13
Quality is Defined by the BuyerQuality is Defined by the Buyer
• Total Quality Management (TQM)
• Lack of universal standards
• Country-specific standards
• The metric system
13-14
ISO 9000 Certification – An International Standard of Quality
ISO 9000 Certification – An International Standard of Quality• Positively affects the performance and stock
prices of firms
• Certification of the existence of a quality control system a company has in place to ensure it can meet published quality standards
– Describes three quality system models – Defines quality concepts – Gives guidelines for using international standards in quality
systems
• Generally voluntary
13-15
ISO 9000 Certification – An International Standard of Quality
ISO 9000 Certification – An International Standard of Quality• EU Product Liability Directive
• Now a competitive marketing tool in Europe and around the world
• The ACSI approach
13-16
Business ServicesBusiness Services
• For many industrial products the revenues from associates services exceed the revenues from the products
– Cellular phones– Printers
• Leasing capital equipment
• Services not associated with products
– Boeing at-sea-satellite-launch services– Ukrainian cargo company space rental on giant jets– Professional services (advertising, banking, healthcare, etc.)
13-17
After-Sale ServicesAfter-Sale Services
• Installation
• Training
• Spare and replacement parts
– Delivery time– Cost of parts
• Service personnel
• Almost always more profitable than the actual sale of the machinery or product
• Crucial in building strong customer loyalty
13-18
Other Business ServicesOther Business Services
• Client followers
• Mode of entry
– Licensing– Franchising– Direct investment
• Protectionism
• Restrictions on cross-border data flows
13-19
Expansion of U.S. Law Firms in Selected Cities Worldwide
Expansion of U.S. Law Firms in Selected Cities Worldwide
Exhibit 13.3
13-20
Trade Shows: A Crucial Part of Business-to-Business MarketingTrade Shows: A Crucial Part of
Business-to-Business Marketing• Secondary methods for marketing:
– Advertising in print media– Catalogs– Web sites– Direct mail
• Trade shows have become the primary and most important vehicle for doing business in many foreign countries
13-21
Trade Shows: A Crucial Part of Business-to-Business MarketingTrade Shows: A Crucial Part of
Business-to-Business Marketing• Total annual media budget spent on trade
events:
– Europeans – 22 percent– Americans – 5 percent
13-22
Trade Shows: A Crucial Part of Business-to-Business MarketingTrade Shows: A Crucial Part of
Business-to-Business Marketing• Trade shows
– Provide the facilities for a manufacturer to exhibit and demonstrate products to potential users
– Allow manufacturers to view competitors products– Are an opportunity to create sales and establish relationships
with agents, distributors, franchisees, and suppliers
• Online trade shows
– Become useful in difficult economic and/or political circumstances
– Are obviously a less than adequate substitute for live trade shows
13-23
Relationship Marketing in Business-to-Business Contexts
Relationship Marketing in Business-to-Business Contexts
• Not a matter of selling the right product the first time– Instead selling a continuously changed the product to keep it
right over time
• The objective of relationship marketing – To make the relationship an important attribute of the transaction
► Differentiating oneself from competitors
• Using the Internet to facilitate relationship building and maintenance– Cisco Systems– Solar Turbines Inc.
13-24
The Global Project TeamThe Global Project Team
• Customer
• Sales engineer
• Application engineer
• Engineering and control systems
• Project manager
• Manufacturing technicians
• Customer services
• Suppliers
13-25
SummarySummary
• Industrial marketing requires close attention to the exact needs of customers
• Industrial goods marketers must pay close attention
– To level of economic and technological development of each market to determine the buyer’s assessment of quality
• The demand for products and services in business-to-business markets is by nature more volatile than in most consumer markets
13-26
Summary Summary
• Demand also varies by level of economic development and the quality of educational systems across countries
• Product or service quality is defined by customers
• Development of ISO 9000 global quality standards
• After-sale services are an important aspect of industrial sales
• Trade shows are an especially important promotional medium in business-to-business marketing
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