b2b merged

8/11/2019 B2B Merged

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B2B Marketing

Module 1

A Perspective of B2B Marketing


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Introduction

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Facts

Proportion of pure B2B firms ~ 30%

Share of B2B transactions ~ 46% of GDP

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Nature

Customer is an organisationOrganisationalmarketing?

Enterprises

Users

OEMs

Dealers & distributors

Institutions

Government

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The B2B-B2C dichotomy

Differences in Market structure

Buying behaviour

Marketing practices

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Market Structure

Demand Derived vs. direct

Volatility of demand Greater

Elasticity of demand

Less elastic vs. more elastic perverse (?) Market size

Larger

Geographic concentration

Often clustered vs. usually dispersed

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The Accelerator Effect

Due to derived demand

Rate of change of secondary/tertiary demand

>rate of change of primary demand

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Buying Behaviour

Buying influences

Many vs. few Purchase cycles

Often long vs. usually short

Transaction value

Higher Process complexity

More complex

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Buying Behaviour Contd.

Buyer-seller interdependence Often very close

Importance of relationships Mostly very high

Purchase professionalism

High vs. low Degree of interactivity High vs. low

Formal, written rules

Common vs. uncommon

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Marketing Practices

Selling process Systems vs. product

Personal selling usage Extensive vs. limited

Promotion Customer-specific vs. mass marketing

Branding Limited vs. extensive

Market research Limited vs. extensive

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Marketing Practices Contd.

Use of relationships Extensive vs. limited

Web integration Greater

Segmentation

Rudimentary vs. sophisticated Product complexity Greater

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Customer Value Proposition

Particular set benefits that matter most to targetcustomers

Demonstrate the value of this superiorperformance

Communicate to convey a sophisticated

understanding of the customers business(process, priorities)

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Supply Chain

Upstream Suppliers

Tier I Suppliers

Auto Manufacturers

Dealers

Business / Individual Buyers

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Classification of Goods

Entering

Raw materials farm products, natural products

Manufactured materials & parts

Foundation

Installations

Accessories Facilitating

Supplies / MRO items

Services

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Planning

BusinessMarketing

Finance &Accounting

HR

Logistics

R&DPurchase

Operations

Service

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Business Marketing

StrategyFormulation


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Thank You!

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B2B Marketing

Module 2

The Market


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B2B Market

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Commercial Enterprises

Institutions

Government


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Commercial Enterprises

Distribution by size

Geographical concentration

Purchasing organisation - strategic procurement

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Size

Buying firms are bigger in size

MSMEs

26 million units

45% of the manufacturing

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Geographical Concentration

Concentrated marketing efforts sales personnel,distributors

Warehouses and/or distribution centres effectivecoverage

Concentrated HQ coverage

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Purchasing Organisation

70% of costs (manufacturing firms) straightimpact on bottomline

Centralised procurement strategy

Buyers responsible for specific group ofproducts

Development of technical expertise Emergence of purchase engineers material

evaluation, cost studies

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Procurement as Strategy

LeveragedBuy

(Buy for

less)

Linked Buy

(Buy better)

Value Buy

(Consumebetter)

IntegratedSell

(Sell better)

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Strategy

Understand items having

Criticality in operations

Business risk dimensions customers customersvalue

Focus on strategic purchases

High revenue & high customer value impact

For less strategic purchases

Provide complete assortment, timelyservice/supply support, simplified ordering

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Government

Public procurement in India

Central Government Ministries & departments

States & Union territories

Municipal and other local bodies

PSUs

25-30% of GDP

INR 18000+ billion

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Organisations

Defence vs. non-Defence

15% of government procurement

Governed by GFR (General Financial Rules,2005)

Purchasing norms

Upto INR 15,000: purchase without quotation 15,000 100,000: local purchase committee

Above 100,000: through tendering

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Strategy Understand the complex rules and standards

Develop system to keep abreast of procurement plans of

each purchasing agency Product development and R&D strategy in line with

government needs

Develop a communications strategy

Generate a negotiation strategy to secure favourableterms payment, contract completion, overruns

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Institutions Similar to governments

Dictated by law

Constrained by politicalconsiderations

Privately managed

Broader range of purchase

than corporates Value of efficient buying

acknowledged

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Budget limit based buying

Staffed with professionals Dedicated materials management department

Group purchasing


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Strategy

Evaluate budgetary status

Attention to third-party contractors

Cultivate professional staff for product benefits

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Effect of IT on Purchase Behaviour Communicating with external markets

Independent third parties

Industry consortia Electronic marketplaces Auctions, Catalogue

purchasing Types

Vertical - related to core operations Horizontal - not related

Internal coordination Inter- & intra-firm coordination - SCM

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Vertical MarketplacePGDM II 2013-15


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E-Procurement

Use of Web-based applications, decision supporttools, and associated services to streamline and

enhance strategic sourcing processes andknowledge management

Purchasing managers

Look out for new vendors

Communicate with current suppliers

Transact

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Evolution

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Traditional

procurement

mainly paper

based

Electronic

systems to

supporttraditional

procurement

Mainframe, PC,

ERP, EDI

Web as

communication

channel to

support

traditionalprocurement

E-mail, websites

Internet tools

and platforms tocomplement

traditional

procurement

online supplier

databases, e-

catalogs, web-

enabled EDI

Internet tools

and platforms toreplace

traditional

procurement

fully integrated e-

markets,

automatic stockreplenishment

Time

Technology


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Capabilities Online negotiations

Create RFP, RFQ, RFI

Conduct reverse auctions Collaboration tools

With internal stakeholders specs, priorities

Description of requirements in RFP

Knowledge management Repository of procurement data

Analytical tools

Cost and spending analysis top management

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Auctions English highest bidder; sale of unwanted items -

scrap

Reverse lowest bidder; online form of tender

purchasing

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Reverse Auctions One buyer several pre-qualified sellers

Dynamic, real-time, competitive bidding

Used for entering and facilitating goods

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Suppliers Buyers

Reasons New business Market penetration Cycle time reduction

Inventory management

Reduced purchase price Lower administrative costs Control on inventory levels

Risks Low price focus threatenslong-term relationships

Competitive bargaining toolfor buyer

Offering unrealistic prices

Undermines trust Reduced buyer commitment makes

supplier less willing to makerelationship-related investments

Insufficient number of suppliers may

cause non-competitive scenario


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Market-centred Organisation

Marketing

MarketResearch

Sales

Advertising

Markets

CommercialSegments

1n

Government

Institutions

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Thank You!

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B2B MarketingModule 3

Organisational Buying Behaviour


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Introduction No firm is an island

Buying is a process generally well-drawn out

Access to supply markets is imperative

Factors for reaching supply markets & products External

Organisational

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Organisational Factors Nature of business

Business strategy

Purchasing orientation

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Nature of Business

Unit production Bespoke Technological complexity and scale affect

competitiveness

Design and production capabilities ofsuppliers

Mass production Efficiency determined by equipment,

integration among sections, raw material

costs Highly inflexible suppliers to adjust theirlogistics and processes to be compatible

Suppliers contribute in NPD process, crucialfor survival and growth

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Nature of Business

Process production High volume, continuous, efficient Continuity is imperative

Mostly produce intermediates & raw materials Infrequent big-ticket equipment purchases

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Business Strategy Generic strategy guides actions and decisions at

functional level purchasing

Product leadership

Relentless innovation Technical and creative abilities

Suppliers knowledge of customers business; offerdesign and product expertise to contribute to innovation;responsiveness to innovativeness

Cost leadership Ongoing process of cost containment - central theme of

dealing with suppliers

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Business Strategy - Social Social responsibility

strategy may affect

dealing with suppliers

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Purchasing a ComponentImagine you are a purchase manager for a PCmanufacturer. Your boss has asked you to order a

large quantity of major electronic component.There are 3 potential suppliers A, B & C. To thebest of your knowledge, they are equal in productquality and availability.

In each of the following situation, which supplierwould you place your order on?

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SituationsSupplier A Supplier B Supplier C

Situation 1 150 per unit 155 per unit 170 per unit

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Moretraditionaldesign.

Installationcost: 12 perunit

Your manufacturingmanager says thecomponent has a

special modular designthat has an installationcost of 5 per unit

More traditional design.Installation cost: 14 per unit


No premium

expected

No premium expected Your marketing manager

says C has spent crores insuccessful campaign topromote the brand equity ofthis component. Consumersmay pay extra 50 per PC forhaving this component.


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Purchasing Orientation Supply management Maximise value along the supply chain extensive

collaboration

Focus on end-customers Assessment of competencies and capabilities to determine

which activities to be done in-house and which tooutsource

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Marketing Implications Buying orientation + less important (MRO)Focus on efficiency

Innovation in the offering Supply management orientation + high

complexity & high riskStrive to become key contributor in customer strategy;

technical, human & financial resources necessary

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Segmenting Purchase Decisions

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Advertising

Telemarketing

Office supplies

Travel

Materials

LogisticsProfessional services

Critical componentsHigh-technology

products

Purchase complexity

Businessrisk

Low

High

High


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Purchase ProcessPGDM II 2013-15

Performance feedback & evaluation

Selection & establishment of order routine

Proposal evaluation & supplier selection

Search & qualification of potential sources

Determination of specification & quantity

Organisational problem recognition


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Buying Situation

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Based on familiarity with products or process New task

Judgmental Strategic

Modified re-buy Simple Complex

Straight re-buy Casual Routine low priority


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Buygrid Framework

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New task Modified re-buy Straight re-buy

Problem recognition Yes Possibly No

Determination ofspecification

Yes Yes No

Source search &qualification

Extensive Limited No

Proposal evaluation &supplier selection

Extensive Limited No

Selection of orderroutine

Yes Possibly No

Performance feedback& evaluation

Yes Yes Yes


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Marketing Implications

New task Get involved at an early stage

Obtain information on the nature of the purchasing

problem Identify specific product requirements

Formulate proposals to match the requirements

In-suppliers to monitor changing needs &support the customer in such situations

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Marketing Implications Contd.PGDM II 2013-15

Modified re-buy Happens when customer sees potential benefits from

re-looking into alternative supply solutions

In-suppliers Move decision-makers from modified to straight re-buy thus

reducing perceived benefits

Invest into understanding purchase requirement andextinguish problems fast

Out suppliers Ensure the purchase stays in modified re-buy as long as

possible

Offer performance guarantees


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Marketing Implications Contd.PGDM II 2013-15

Straight re-buy In-suppliers

Regular contact to ensure no complaints

Identify and resolve problem areas quickly

Reduce customer buying effort automated re-ordering

Out suppliers Price cutting not an attractive option for customer

Move to modified re-buy by reducing the total cost ofownership


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Forces Shaping OBB

Roles, relativeinfluences, and patternsof interaction of buyingcentre members

Job function Past experience Buying motives

Goals, objectives, strategies Organisational position of

purchasing

Economic outlook Pace of technological

change Global trade relations

Environmental Organisational

GroupIndividual

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Environmental Forces Economic

Shapes a firms ability and willingness to buy

Emerging economies turning into sourcing hubs Technological

Internet

Pace of change importance of purchasing manager

More intense but less time-intensive search

Tracking social media buzz

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Organisational Forces Strategic priorities

How can procurement be a stronger competitiveweapon?

Best value-chain wins

Organisational position

Centralisation of procurement

Integrate procurement with corporate strategy Economise on procurement costs

Nature of supply environment

Location of key buying influences

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Group Forces

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Buying Centre

Initiators

Deciders

Buyers Influencers

Users

Gatekeepers


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Functions vs. Roles

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Operations

Purchasing

Engineering

Finance

Marketing Gatekeeper

Buyer

Decider

Influencer

User


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Marketing to DMU

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For new task, get in touch with DMU membersat an early stage

Identify the specific requirements / concernswith respect to the current purchasing issue

Satisfy individual needs and reduce theperceived risk

Know the key members of the DMU


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Clues Isolate the personal stakeholders

Follow the information flow

Identify the experts Trace the connections to the top

Understand the role of Purchase

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Individual Forces Evaluative criteria

Information processing

Selective exposure Selective attention

Selective perception

Selective retention

Risk reduction strategies

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Perceived Risk Risk is inherent in business markets uncertainty &

negative consequences Types

Financial

Performance Social

Perceived risk heightens with new task or complexmodified re-buy

With increased risk Buying centre composition changes number &

authority Increased information search Deliberate investment of effort in the buying process Suppliers with proven track records preferred

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The Individual Purchasing Manager Not perfectly rational nor objective Personal factors

Attitude towards perceived risk Handling risk Accrued rewards perception Backgrounds education, employment Information collection and processing abilities

Extrinsic factors Inter-functional coordination Inter-firm coordination supply chain issues Purchasing community - WOM Online purchasing reverse auctions

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Buyer Tasks Consulting with colleagues in other departments

Determining the necessary parts, materials,

services and supplies Calculating the required quantity

Searching for suppliers

Negotiating contracts Monitoring supplier performance

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Buyer Skills Keeping detailed and accurate records

Collecting and analysing information

Working under pressure Decision making using experience and personal

judgment

Using mathematical & analytical tools Good inter-personal skills

Negotiating and bargaining skills

Managing people supervising

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Thank You!

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Marketing Mix - Inadequacies Assumptions

Conflict of interest between marketer and customer

Focus on each individual transaction Marketer is active, customer is passive

Process consists of study of buying behaviour, thenattempt to influence the behaviour favourably

Prescriptive approach Neo-classical economic concepts do not hold in

business markets

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Relationship MarketingAll activities directed towards establishing,

developing, and maintaining successful exchanges

with customers and other constituents

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Benefits1. Loyal customers

are far more profitable than customers who are

price sensitive perceive few differences among alternative

offerings

2. Firms can secure important and durable

advantages that are hard for competitors tounderstand, copy or displace

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Types of Relationships

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Transactional

Collaborative

Value

adding

OperationalLinkages


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Core Elements Trust

Willingness to rely on an exchange partner in whom

one has confidence Commitment

One partners belief that an ongoing relationship isso important that it deserves maximum efforts to

maintain it

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Range of Buyer-Seller Relationships

Transactional Collaborative

Availability of alternatives Many Few

Supply market dynamism Stable Volatile

Importance of purchase Low High

Complexity of purchase Low High

Information exchange Low High

Operational linkages Limited Extensive

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Switching Costs Investments

Money

People Lasting assets

Procedures

Risk of exposure cost of making wrong choice

Critical to operations

Less established suppliers

Technically complex products

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Potential of Value Drivers

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Sourcing

Benefits

0.52

Costs

0.07

Operations

Benefits

0.21

Costs

0.10

Offering

Benefits0.08

Costs0.03

(Ulaga & Eggert, 2006)


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Power of Relationships Create a process that will call for short lead times

smaller quantities produced todecrease inventory risk

increase the number of availablestyles and/or choice

Maintain design, production, anddistribution to enable sharp responseto shifts in consumer demands

keeping exclusivity unharmed Design in-house

Manufacturing 50% in Spain, restfrom suppliers (700 in Europe)

Shipment to Zara stores from

distribution centres in 8 hours

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Customer Profitability Accurate tracing of costs to individual customers

The profitable few

Large customers most/least profitable, seldom in themiddle

Low cost-to-serve customers profitable

High cost-to-serve customers unprofitable, unless

paying premium for specialised services received

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The Whale Curve

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Managing Costly Customers Look inside

Internal processes should accommodate customer

preferences Sharper profit lens

Net margin vis--vis cost-to-serve

Identify profitable customers

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Profitable?

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PassiveCarriage

trade

BargainBasement

Aggressive

Sales

Cost-to-serve

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CharacteristicsHigh cost-to-serve Low cost-to-serve

Pre-sales Extensive support(technical and sales resources)

Limited(standard pricing and ordering)

Production Custom-made productsSmall order quantitiesUnpredictable orderingpatternManual processing

StandardLargePredictableElectronic

Delivery Fast StandardPost-sales Extensive support

(customer training,installation, customer support)

Limited

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Managing Unprofitable Customers Improve profitability

Reduce cost of activities for serving

Focus on the high-cost elements Loss making

Assess other benefits

New customers payback on a longer term

Opportunity for learning

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Customer Relationship ManagementCross-functional process

to achievea continuing dialoguewith customers

acrossall customer touch-points

with

personalised treatment of the most valuablecustomersto ensure customer retention and the effectiveness of

marketing initiatives

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CRM system

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CRMSoftware

SalespersonsService teams

DealersDistributorsCall centresE-mails

Futurecustomerinteractions

Marketforecasts

Product design SCM

Synthesis

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CRM MythsIt is just database marketing

It is purely a marketing process

It is just an IT issue

It is just about building loyalty

It can be implemented by any firm

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CRM Strategy

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Acquiring the right customers

Stock of current and potential customerrelationships

Collective knowledge of selecting, initiating,developing & maintaining profitable relationships

Crafting the right value proposition

Understanding how customers definevalue How benefits compare to those of the next-best

alternative

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CRM Strategy Contd.

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Instituting the best processes Sales assumes a central role Close coordination with supporting functions

logistics, technical service, customer service Motivating employees

Training & development Incentivise with customer strategy

Learning to retain customers Long-standing customer economical to serve

organisational learning Evaluation expectation mis-match!

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Strategic Alliances Long-run linkage vis--vis JV

Accessing complementary skills

Benefits Access to markets and/or technology

Economies of scale in manufacturing, R&D,marketing

Reduced TTM

Risk sharing

3 5

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Alliances Non-competing firms International expansion Renault & Diesel

Nacional (Mexico)

Vertical integration Aerospatia & Thomson Diversification BMW & Rolls Royce

Competing firms Shared supplier alliance Volkswagen & Renault

(gearbox) Quasi-concentration alliance BAE, EADS Systems,

Alenia (Tornado fighter) Complementary alliance Tata & Fiat (distribution)

3 5

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Extended Enterprise Daimler

Transaction

(market-based

competition)

Coordination

(selective

competition)

Cooperation

(selective

partnership)

Alliance

(strategic

partnership)

Operational types Strategic types

Relationship

based on

Data Exchanging

information

Transferring

know-how

Building up to

specialist

knowledge

Relationship

lasts for

Transaction Annual contract Series life cycle Life cycle and

beyond

Extent of joint

commitment

Suppliers not

integrated

Integrated into

NPD to limitedextent, via

well-defined

interfaces

Integrated into

NPD to limitedextent,

interfaces

defined jointly

Several depts

integrated,joint NPD,

investment in

joint assets

Examples Office supplies Mouldings Exhaust

systems

Fuel cells

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Before the Handshake

Some toughquestions to

ask

Does it present risks to ourbusiness?

Will it generate growth in ourcore business?

Will it create value for ourcustomers?

How compatible are we technically and culturally?

Are we committed to a long-term relationship?

What are the strengths andweaknesses of each potential

partner?

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Determinants of Success Building a dedicated alliance function

Developing a joint value proposition

Developing close working relationships Boundary-spanning connections

Integrating points of contact

Strategic

Tactical Operational

Inter-personal

Cultural

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Evolution of Networks Relationshipschannelssupply chains

networks

Marketing & purchasing distinction ismeaningless - seamless, iterative process

Purchasing can overlap with productdevelopment, marketing planning

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Inter-organisationalRelationship

MarketingChannel

Supplychain

IndustrialNetwork

Supplynetwork

Distributionnetwork

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Network Situated/embedded in a network of

relationships

Relative value is function of its position in thenetwork

Change in mindset

Interdependent

Limit on the ability to think & act independently

Extends capabilities beyond the boundaries ofthe firm

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Fujitsu

Fujitsu Sun: disk drives

Fujitsu Unisys, Tandem, Olivetti,Siemens: disk drives

Toshiba Sun: semiconductors,

optical drives Sun Xerox, Hitachi, Panasonic:

PCs & workstations

Sun Fujitsu: workstations

Fujitsu ICL: hardware & design

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Thank You!


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B2B Marketing

Module 5

Segmentation, Targeting & Positioning


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Value of Segmentation


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Facilitating better understanding of the whole

marketplacebehaviour of buyers and why theybuy

Enabling better selection of market segments that

best fit the companys capabilities Enabling improved management of the marketing

activity

Know which customers to treat similarly and which

to treat differently

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Criteria for Evaluation


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Measurability

Accessibility

Actionability

Substantiality Responsiveness

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Segmentation Bases


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Firmographics

Operatingvariables

Purchasing

approach

Situationalfactors

Personalcharacteristics

Macro

Micro

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Firmographics


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1. Industry

Industrial classification

Knowledge of the use for the suppliers technology

2. Customer location

Ease of reaching Presence of sales staff

Logistics

3. Firm size

Depends on the purchase item: capex vs. MRO

Supply justification

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Segmentation Services


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Operating Variables


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Relatively easily observable

First manifestations of how customer firms behave

1. Company technology

Compatibility

2. Product & brand-use status

Readiness to use

Usage rate Customers knowledge of supplier products: ability to

communicate need

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Operating Variables


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3. Customer capabilities

Establish what customers are capable of doing with the

product/process

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Pilkington Glass


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Operating Variables


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4. Firm strategic type

Strong indicator of buying behaviour

Difficult to ascertain

Employee responses (socially acceptable?)

Observation (outsiders)

Content analysis of company plans (rare)

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Miles & Snow Typology


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Proactiveapproach

Environment dynamism

ReactorDefender

Prospector

Analyser

Innovative

No consistent

strategy

Efficient & adaptive

Efficient

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Purchasing Approach


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1. Purchasing function organisation

Unstructured in smaller firms or proprietorship firms

Centralised procurement?

2. Power structure

Importance of purchases Relative influence of departments in DMU

3. General purchasing policies

Single or multiple vendors

Vendor rating / accreditation / bidding methods /

disclosure of costs

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Purchasing Approach


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5. Purchasing criteria

Financial (purchase price vs. TCO)

Technological (product performance parameters)

Service level (delivery, pre-sales technical assistance,

after-sales service)

6. Buyer-seller relationships

Relationship orientation

7. Buying situation

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Situational Factors


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Prevailing need - urgency

Usage plan

Order size

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Innovativeness


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Willingness to purchase new products

Level of resistance to change

Desire to excel

Product diffusion rate

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Buyer Personal Characteristics


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Demographicsage, educational background

Decision making stylenormative / conservative

Risk appetite

Confidence

Drive behind purchase behaviour

Fastidiousness in information search

Supplier orientation

Evaluation Sharing of views with supplier personnel

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Targeting


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Identified

Segment

Target

Segment

Relative

Attractiveness

ResourceDemands

Management

Demands

Organisational

Demands

Check for acceptability

No

Yes

Yes

Yes

Yes

No

No

No

Not acceptable -selection

unsuitable:

select a new

segment

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Estimating Segment Demand


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Qualitative

Executive judgment

Frequent & repetitive forecasts

Stable environment

Small lag between decision, action & feedback Sales force composite

Delphi technique

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Estimating Segment Demand


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Quantitative

Time series: trend, seasonal, cyclical, irregular

patterns

Regression / causal analysis

Identify factors that affected past sales Fit them into a mathematical / statistical model

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MARKETING RESEARCH

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Value of Information


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Characteristics of information (Gates, 1996)

Accuracy

Timeliness

Relevance

Uniqueness

Technical (accurate) vs. managerial (timely and

relevant)

Communication between research agency and client

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Sampling Methods


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Probability

Simple Random

Stratified Random

Systematic Cluster/multi-stage

Non-probability

Convenience

Snowball

Quota Focus groups

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Probability Sampling


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Stratified

Sub-classification of sample based on proportion ofpopulation

Manufacturing vs. service for different firm sizes

Systematic

Within a single industry sector

Cluster Naturally occurring groups viz. departments within firms

PGDM II 2013-15

Non-probability Sampling


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Convenience

Limited validity

Snowball

Association-based

Convenient Quota

Same as stratified but not randomly selected

PGDM II 2013-15


131/276

Industry Classification


132/276

To ensure common understanding of industry

definition

Every form of economic activity put under an alpha-

numeric category

United Nations: ISIC India: NIC

US: NAICS

PGDM II 2013-15

NIC


133/276

PGDM II 2013-15

Using MR Agencies


134/276

Product managers have more contact with

customers than MR agencies Smaller samples (mostly the universe even)

Concerned with both direct and derived demand

Presence of several buying centre members, who may

change

Less focusabsence of MR department, reliance on

secondary data & expert opinions

Use of information influenced by Exploratory research (+)

Degree of formalisation (+)

Degree of surprise in findings (-)PGDM II 2013-15

Market Research Agencies


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B2B professional service firms

All buyer-seller relationship concepts apply

Determinants in successful client-agency

relationship

Clear understanding of the management problem priorto contacting the agency

Close involvement ASAP

Check credentials, experience, industry familiarity of

agency

PGDM II 2013-15

Secondary Research


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Benefits

Cost-effective, MR budget is low in B2B firms

Derived demand study

Availability of data

Use of internet Crucial, especially with the need for secondary data

Relevance and recency issues

Care about dubiousness of data

PGDM II 2013-15

Business Information Sources


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PGDM II 2013-15

Targeting Strategy


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Undifferentiated

Differentiated

Niche

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Positioning


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Offering occupies a space in the buyers mind

Relative position - basis by which comparison ismade with ideal position and also others

Clarity about the capabilities

Using value proposition Resonating focus: offering based on those few elements

where performances matter most to buyer firm

PGDM II 2013-15

Repositioning


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Completenessofoffering

Nature of relationship

PGDM II 2013-15


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THANK YOU!

PGDM II 2013-15


143/276

B2B MARKETING

Module 6

Product Management

B2B PRODUCTOFFERINGS


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PGDMII201

3-15

Core

benefit

Physical

attributes

Service

elements

Advice giving

ADAPTATION SPACE

CATEGORISINGPRODUCTLINES


145/276

PGDMII2013-15

Businessservices

Custom-designedproducts

Custom-built

products

Catalogue(proprietary)

products

PRODUCT POLICY


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PRODUCTPOLICY

Set of decisions concerning the productsand services being offered P

GDMII2013-15

COMMODITY PRODUCTS


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COMMODITYPRODUCTS

Deeper into the PLCdifferentiation gets diffused

Price is the sole differentiator

Continuous innovation in product and marketing to

show added value to customers

there is no such thing as a commodity. All goodsand services are differentiable (Levitt, 1980)

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PGDMII2013-15

PRODUCTPORTFOLIO


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Collection of all products offered by a firm

Portfolio management

Decisions regarding current and future products

Finite company resources

Portfolio elements

Items

Lines

Depth

Mix

PGDMII2013-15

AQUCAR Water treatment microbiocide portfolioincluding glutaraldehyde, glut/quat blends, DBNPA,

bronopol, OPP and dimethyl-oxazolidine available

globally for use in biofouling control, anaerobic

microbial control, and fluid preservation


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Agro-sciences

Construction

Electronics & Communications

Energy Storage

Healthcare & Medical

Home & Office

Infrastructure

Nutrition

Oil & Gas

Packaging

Personal Care & ApparelRenewable Energy

Transportation

Water

, p

Battery Materials: Differentiated solution for battery

cycle life improvement through a proprietary coating

process.

FUELSAVER Antimicrobial agent for preserving

fuels, registered by the U.S. EPA for use as a biocide

and fuel additive for diesel oil, fuel oil or kerosene

Heat Transfer Fluids:

DOWTHERM Q Heat transfer

fluid additive for waste heat recovery in oil

applications

OUDRACool

: Solid epoxy resins for low

temperature set and long-lasting protection

OUDRACure Curing agents offering a systems

approach to extending durability

OUDRASperse: Waterborne dispersions,

manufactured without any added solvents

OUDRATherm: Advanced epoxy resins for extreme

high temperature and harsh conditions

OUDRATough: Advanced epoxy resins for damage

tolerance, corrosion protection and durability

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PGDMII2013-15

PRODUCTMARKET


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O C

Accurate definition is imperative Customer needs vis--vis ways of satisfying the

needsconstant change

Dimensions of definition

Customer function Technology

Customer segment

Value-added system

PGDMII2013-15

COMPETINGFORTODAYWHILEPREPARING

FORTOMORROW ABELL, 1999


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,

Competition at technology / supplier / brand level Planning for today

Clear precise definition of businesstarget

segments, customer functions, business approach to

be taken

Redefine for future

Planning for tomorrowreshaping the business

for future

PGDMII2013-15

FUTUREGROWTHPROSPECTS


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Important customer groups providing explosivefuture growth opportunities

Non-consumers: lacking the skills, training or

resources to purchase

Undershot consumers

Overshot consumers

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PRODUCTSTRATEGY


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Positioningplace occupied in a particularmarket

Measuring organisational buyers perceptions and

preferences in relation to competition

Perception based on bundle of attributes viz. quality,

service, etc.emphasise on attributes having

central role

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POSITIONINGPROCESS


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Identify relevantcompetitive

products

Identifydeterminant

attributescustomers use todifferentiate and

select

Survey existingand potentialcustomers forrating of all

options againsteach attribute

Determineproducts currentposition in each

segment

Examine fitbetween

preferences andcurrent position

Select Positioning

or RepositioningStrategy

PGDMII2013-15

STRATEGYOPTIONS


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Increaseimportance ofattribute tocustomers

Increase

differencebetween

competitionsand selfsproducts

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PGDMII2013-15

ORGANISINGFORINNOVATION


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PGDMII2013-15

It is not about serendipity Organisational innovativeness

Create an environment where creative individualscan operate within an inter-organisational contextthat harnesses their creativity

Features of an innovative firm Commitment to long-term growth

Willingness to include risky opportunities within abalanced portfolio of activities

Mutual respect amongst individuals and inclination

to work across functions Readiness to accept change and failure

Combination of suitable specialisation and diversityof knowledge

B2B RELATIONSHIPSINMANAGING

INNOVATIONS


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The innovation team game extends beyond the firm Suppliers and customers can be sources of ideas as

well as capabilities

Aspects

Type of innovation project Degree of innovativeness required

Degree of knowledge- sharing

Formality of knowledge-sharing mechanism

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PROJECTCLASSIFICATIONS


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Incremental enhancementsProduct and/or processDerivative

Design and components shared by aproduct group

Several changes in product and process

Platform

New core product/process

Fundamentally different from previousgenerations

Breakthrough

Knowledge creation

New materials and technologies leading tocommercial development

R&D

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DISRUPTIVEINNOVATION


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Firms possessing the capacityand capability to innovate

may fail when the innovation

does not address the

foreseeable needs of current

customers

These firms had their

competitive antennae up,

aggressively invested in new

products and technologies andlistened astutely to their

customers

PGDMII2013

-15

DISRUPTIVESTRATEGIES


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PGDMII2013

-15

Low-end test1. Customers at low

end of the market

2. Eager to purchase a

good enough

product at a lowerprice

3. Create a business

model that can yield

profits from this low

end of the market

New market test A large population can

be defined who lack

money / equipment /

skill to acquire the

product / serviceand/or

Present customers

have to go to an

inconvenient location

to use this


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PGDMII2013

-15

If Id have asked my customers what they

Resisting the Steve Jobs Innovation Temptation


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PGDMII2013

-15

If I d have asked my customers what theywanted, they would have told me a faster horse.

Henry Ford

Conceptualize products customers might

need before spending on development and launch

B2C is a whole different ballgame from B2B products Compare your IQ (Innovation Quotient) to Steves and

act accordingly. Learn how to attack the right market.

Uncover customer outcomes. Dont just ask customers.

Prioritize customer outcomes. Take advantage of the profit motive.

Get creative with the solutions.

STAGESOFNPD


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Idea

generating

Screening Planning DevelopingTest

marketing Launching

PGDMII2013

-15

Analysing thebusinesscase

Businessplanning

Concept Features Prototypes Marketing

support

IDEATIONPROCESS


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Some questions managers might as themselves Can we change the properties of the product?

Can the standard components be changed?

Can it be made smaller/cheaper?

Are there any new way of performing a current productfunction?

Is the products core function necessary at all?

How can we utilise the Internet to improve the

product/service?

PGDMII2013

-15

LACUNINB2B NPD PROCESS


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Going throughthe motions

In structuringactivities

Indocumentingactivities

Insufficientspeed

Unaware ofTTM

Not enoughoverlappingstages

Stages left tosingle

departments

Lack of marketorientation

Insufficientcustomerinput

Irregularcustomercontactduring NPD

Insufficientchecks

Making afuzzybusiness case

Allowingexpenses torise beforeuncertainties

have reduced

PGDMII2013

-15

MOSTINNOVATIVEFIRMS- 2012 (FORBES)

12 month

Sales

5-Year

Annualised Total Market Innovation


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RankFirm Growth (%) Return (%) Cap ( bn) Premium

1 Salesforce.com 32.1 21.6 25.85 72.8

2 Alexion Pharma 39.2 38.4 18.24 72.3

3 VMware 16.3 19.0 35.94 63.7

4 Regeron Pharma 128.3 65.8 16.75 63.1

5 ARM Holdings 22.5 47.9 19.62 61.2

6 Baidu 44.6 32.8 47.3 60.6

7 Amazon.com 23.0 31.0 119.01 60.2

8 Intuitive Surgicals 18.3 5.2 18.44 53.9

9 Rakuten 14.1 23.1 13.06 50.7

10 Natura Cosmeticos

-3.9 14.5 10.54 48.5

40 TCS 14.1 26.5 53.5 32.6

PGDMII2013

-15

A measure of how much investors have bid up the stock price of a company above the value of its existingbusiness based on expectations of future innovative results (new products, services and markets). Firms must have$10 billion in market cap, spend at least 1% of their asset base on R&D and have seven years of public data.

Getting

into the

d

Getting

through the

mud

Protecting

your ideas Appearing

to be

t l
http://ads.forbes.com/RealMedia/ads/click_lx.ads/forbes.com/specialslot/innovative-companies-11/forbes.com/technology/339148193/StoryLogo/OasDefault_v5/default/empty.gif/64644e63576c4365472f494143473162


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NPD THROUGHNETWORKS

Open innovation (Prahalad & Krishnan, 2008)or

distributed co-creation (Bughin et al, 2008)

Downstream co-creation

Staying power in pursuing activities Resources to push through projects

Put less optimistic projects on hold

PGDMII2013

-15

mud neutral


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THANKYOU!!

PGDMII2013-15


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B2B MARKETING

Module 7

Services for Business Markets

CUSTOMEREXPERIENCEMANAGEMENT


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Encompasses the dimensions of the offering Product features

Service aspects

Ease of use

Advertising

Reliability Way problems are resolved

Process of becoming a customer

Management: Sum total of processes that capture

customers subjective thoughts about a firm Surveys & targeted studies at interaction points to

identify gaps between customer expectation andexperience

PGDMII2013

-15


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CONTINUUM


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GoodsDominant

ServicesDominant

LubricantsOffice

supplies

AdvertisingMachinery PC Janitorial

&

cleaning

Freight

transport

PGDM

II2013-15

Telecom

systemsMeeting

hotel

Management

consulting

CLASSIFICATION


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Product-related

Delivery

Installation

&maintenance

After-salestraining

Warranty

Marketing

MR

Advertising

Exportadvice

Professional

Consulting

Accountancy

Legal

Information

Inventorymanagement

SCM

Dataaggregation

Financial

Productpurchasefinancing

Billingmanagement

Creditevaluation

Banking &insurance

PGDMII2013

-15

SERVICEATTRIBUTES


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Search Can be evaluated before purchase

High for goods

Experience Can be evaluated during the service delivery process

Credence Can take a long time to evaluateeven after the process

is over

PGDMII2013

-15

FEATURESOFSERVICES


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Intangible

Perishable

Variable Inseparable

PGDMII2013

-15

MARKETINGIMPLICATIONS


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Intangible

Make tangiblethrough

concrete cues

Perishable

Plan capacityaround peak

demand

Pricing andpromotion to

even outdemand

Variable

Develop systemsto minimise

deviation andhuman error

Automate

Prepackage theservice

Inseparable

Effective

screening andrecruitment

Training ofpersonnel to get

it right

Trainingcustomers

PGDMII2013

-15

STAGESOFSERVICISATION


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1

Manufacturing and/or distributioncapabilities

2Services complementing products

3Marketing product-service combinations

PGDMII2013

-15

Responsiveness


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PGDMII2013

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SERVICEQUALITY

Reliability

Assurance

Empathy

Tangibles

CUSTOMERSATISFACTION& LOYALTY


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Basic product/service attributesall competitorswould provide

Basic support services that render the offering

more effective or easier to use

Recovery process for quickly fixing problems Extraordinary servicessolving unique problems

/ meeting unique needs sense of customisation

PGDMII2013

-15

THEGAPSPG


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1: Customer expectationCompany understanding

2: Company understandingSetting standards

3: Standards setServicedelivery

4: DeliveryExternalcommunication

GDM

II2013-15

SERVICEFAILURE


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When any individual gap or the sum totalof all gaps become substantially high

Desired Service

Zone of Tolerance

Adequate Service

PGDMII2013

-15

SERVICERECOVERY


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Procedures, policies & processes used to resolveservice failure promptly and effectively

Satisfactory resolution often leads to rise in

customer perception of service qualityhigher

supplier loyaltyzero defections

PGDMII2013

-15

ROQ


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Basic assumptions (Rust, Zahorik & Keiningham, 1995) Quality is an investment

Quality efforts must be financially accountable

It is possible to spend too much on quality

Not all expenditures are equally valid

Expenditure on service qualitydiminishing

returns

Managers - Where? How much? When to

reduce/stop?

PGDMII2013

-15

PGDMII2013-15

Improvement

Effort


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5

Customer

Retention

Cost Reduction

WOM

Revenues &

Market Share

Service Quality

Improvement

Profitability

Attraction of New

Customers

Perceived Service

Quality & Customer

Satisfaction


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MARKETINGBUSINESSSERVICES


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Segmentation Narrowerservices are expected to be more

customised

Focus on what customers expect rather than need

Adjusting service capacity effectively

Total demand is made up of numerous smaller, yet

predictable, demand patterns

PGDMII2013-15

SERVICEPACKAGES


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Product equivalent of service Concept of the service

Range of services provided

Quality and level of service

Personnel

Physical product accompanying the service, if any

Service delivery process

Conceptualising the packagebased on benefits

PGDMII2013-15

CONCEPTUALISINGTHESERVICEPRODUCTPGDMII2013Level 1

What benefits

t k

Customer-benefit

C t


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3-15

Level 1

Level 2

Level 3

Level 4

Based on guidelines built

in service offerpeople,

processes, facilities, etc.

Service-delivery

System

More detailed shaping of service concept.

Decisions on & clarification of:

service elements (tangible and intangible)

service forms (in what way, how)

service levels (quantity & quality)

Service Offer

Service

Concept

What general benefits the

service firm will offer

customers seekConcept


193/276

PGDMII2013-15

PRICING

Can be used to manage the timing of demand and


194/276

Can be used to manage the timing of demand and

align with capacity Power utilities (off-peak hours), resorts & hotels

(conferences)

Isolate service profitability

Low marginal cost Cost-to-serve?

Bundling

Pure or mixed

PGDMII2013-15

PROMOTION


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Tangible cues Physical evidences

Service guarantees

Performance documentation

Training and certification of personnel

Corporate brand

Trade journals

PGDMII2013-15

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013

-15


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PGDMII2013-15

DISTRIBUTION


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Direct Channel members

Internet

PGDMII2013-15

NEWSERVICEDEVELOPMENT


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New offerings that make best use of suppliercapabilities are matched with customers needs

Possibilities

Improved service experiencesthrough the use of

new resources

Customised expert servicesfitting firm capabilities

to specific customer needs

Planned pioneering servicesdeveloping a new

service around firm capabilities in a new context

PGDMII2013-15


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THANKYOU!!

PGDMII20

13-15


201/276

B2B Marketing

Module 8

Channel Management

E-commerce

Channel Management

Set of interdependent organisations involved in the processf ki d t i il bl f


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PGDM II 2013-15

of making a product or service available for use orconsumption (Coughlin et al., 2006)

The central question

Which channel task will be performed by the firm, and which, if

any, will be performed by channel members?

Tasks

Reducing complexity

Increasing value Transaction efficiency

Quality of service

Marketing Channels

Manufacturer


203/276

PGDM II 2013-15

Direct

Channels

Indirect

Channels

Agents

Distributors

TelemarketingOnlineMarketing

Direct Sales

Customer Segments

Direct Channels

Feasible when


204/276

PGDM II 2013-15

Customers are large, well-defined Customers insist on direct sales

Sales involve extensive negotiations with customer senior

management

Control on sales to ensure complete package is properlyimplemented

Requirements

Highly customized solutions - complex

Selling skill, professional account management, in-depth productknowledge

Indirect Channels

Found when


205/276

PGDM II 2013-15

Markets fragmented and dispersed Transaction amounts low

Buyers typically purchase number of items in one

transaction, often of various brands

Distributors

Key organisational customers of manufacturers


206/276

PGDM II 2013-15

purchase and hold stock Absorb financial, credit, selling and logistic risks

Source of market information and demand knowledge

Suitable for firms having multi-locational manufacturing

Service focus

Automatic replenishment

Product assembly

In-plant stores

Help in designing and operating supply networks

Classification

General line


207/276

PGDM II 2013-15

Broad array of industrial products Specialists

One product category or industry

Combination house

Operates in business and consumer markets

Agents

Do not take title and/or inventory of goods


208/276

PGDM II 2013-15

Work independently, represent several non-competingcompanies

On commission basis

Augment / replace the field sales force

Expert product knowledge coupled with understanding of

market and customer needs

When to use:

Small firms, and large

Limited market potential

Servicing distributors

Offerings-based Channels

Bespoke/complex


209/276

PGDM II 2013-15

Direct channel Agentsfor entering new unfamiliar geographies

Uniform

Lower inclination to control all exchanges with end-customer

More fragmented and geographically dispersed customer base Distributorsfor products

Franchiseesfor services

Channel Design

Driven by customers


210/276

PGDM II 2013-15

Dynamic processdepending on customer and competitorbehaviour changes

Customer

Service Financing

Guarantee

Size

Customisation

Information

AssortmentInstallation

Channel PartnerChannel Partner

Manufacturer

Structure Issues

Length


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PGDM II 2013-15

Optimum number of levels to serve the customer Established vs. new

Breadth

Intensityintensive / selective / exclusive

Multiple channels Inter-firm conflict

Inter-channel conflict

Cannibalisation

Channel Administration

Recruitment


212/276

PGDM II 2013-15

Motivation Support to the channel

Conflict management

Recruitment Criteria

Financial & Company strengths

Ability to fund

Product

Familiarity


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PGDM II 2013-15

sales start-up

communications activities Maintain inventory

Standing amongst customers

Management team quality

y

Product lines

Complimentarity

Sophistication

Physical facilities

Marketing skills

Market share

Geographic coverage

Experience with target customers

Salesforce

Delivery performance

Customer service

Trade-show participation

Trade association membership

Commitment

Product mix volatility

% business with single supplier Commitment to targets

Willingness to

maintain stock

invest in communication

invest in sales training

drop competing product lines

Facilitators

Contacts with key industry players

Experience and performance with other suppliers

Channel Performance

Delayed differentiation


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PGDM II 2013-15

VARs Outsourcing of non-value adding activities

MRO

3PL

Evaluation of Performance

Criterion Factors to consider


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PGDM II 2013-15

Contribution Supplier profitabilitySales growth

Competence Experience

Product knowledge

Administrative and supervisory skills

Strategic thinking of senior managementLoyalty Commitment & motivation towards supplier

Compliance Acceptance of channel policies & programmes

Adaptability Innovation in handling supplier products

Customer satisfaction Level of servicesService quality

Support to Channel

Incentives

Financial commission discounts


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PGDM II 2013-15

Financialcommission, discounts

Bonuses

Territorial exclusivity

Providing resources

Involvement of sales team in dealing with clients

Sharing of MR information

Marketing communications

Training of staff

Working relationship approach in dealing

Joint strategic planning

Signalling of long-term commitment

Channel Conflicts

Conflict one channel member perceives anothers
http://ads.forbes.com/RealMedia/ads/click_lx.ads/forbes.com/specialslot/innovative-companies-11/forbes.com/technology/339148193/StoryLogo/OasDefault_v5/default/empty.gif/64644e63576c4365472f494143473162


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Conflictone channel member perceives another s

actions to be impeding the achievement of its goals (Gaski,1984)

Types

Goal

Means

Fear of being bypassed

Conflicting perceptions

Conflict Management

Informal mechanisms


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PGDM II 2013-15

Exit Voice

Loyalty

Aggression

Neglect Formal mechanisms

Distributor council

Third-party referee

Trade association interaction Personnel exchange


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E-commerce

PGDM II 2013-15

Types

Inter-organisational: management of

Suppliers


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PGDM II 2013-15

Suppliers

Inventory

Distribution

Channel

Payment

Intra-organisational Workgroup communications

Electronic publishing

Sales force productivity

B2M: Companies linking to machines via Internet

B2C

Channel Considerations

Channel efficiencies


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PGDM II 2013-15

Automation of back-office sales functions Personnel and accuracy enhancements

Current marketing intermediaries

Disintermediation

Re-intermediation Channel advantages for potential buyers

Customise contact as per buyers needs

Wide range of referral sources

Always open


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PGDM II 2013-15

Effect of Internet on Marketing Variables

Pricing


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PGDM II 2013-15

Buyers bargaining power

Geographical advantages

Commodificationservice-enrichment / branding

Sales force

Complimentarityfocus on problem-solving & relationship-building

Customise product presentations

Incentivise online initiatives

Promotion Search-engine marketing


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Thank You!!

PGDM II 2013-15


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PGDM II 2014-15

Rank Brand Value ($ billion) Sales ($ billion)


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PGDM II 2014-15

1 Coca-Cola 77.8 48.022 Apple 76.6 164.7

3 IBM 75.5 104.5

4 Google 69.7 50.2

5 Microsoft 57.9 72.96 GE 43.7 147.4

7 McDonald's 40.1 27.6

8 Intel 39.4 53.3

9 Samsung 32.9 187.810 Toyota 30.3 224.5


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(Kapferer, 2008)

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Salience

Resonance

FeelingsJudgments

ImageryPerformance

PGDM II 2014-15

4. Relationships :


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Partnership

solutions

Sales force

relationshipsJudgments

ReputationPerformance

1. Identity: Who

are you?

2. Meaning:

What are you?

3. Response: What

about you?

4. Relationships :

What about you and

me?

PGDM II 2014-15

Salience

Construct Description Concern


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PGDM II 2014-15

Corporate Identity The central, enduring,and distinctivecharacteristics

Who we are?

Corporate Brand The promise made What we do? Whatmakes us important

and/or different?Corporate Image The beliefs and

impressions heldWhat people thinkabout us?

Corporate Reputation The esteem in whichthe firm is held

Are we good/bad,admired and respected,better/worse than ourcompetitors?


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BrandRelationship

Branded House

House ofBrands

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Buy phase Objective Task

Need recognition Generate Prospecting

Low High


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Need recognition Generateawareness

Prospecting

Developing

product spec

Feature

comprehension

Opening

relationship

Search & qualify

suppliers

Lead generation Qualifying

prospect

Evaluation Performance

comprehension

Presenting sales

message

Selection Negotiation Closing sale

Purchase

feedback

Reassurance Account servicing

PGDM II 2014-15

Advertising Trade

shows

Personal

selling


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Information on


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PGDM II 2014-15

Customers &Prospects

Name / Contactdetails

Company size /Activities /

Purchase process

Key decisionmakers &

influencers

Transactions

Frequency /Timescale

Amount

Productcategories

Promotions

Campaignsexposed

Resultsleads /sales

ProductsIndustry / Market /

Geography


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PGDM II 2014-15


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Product

Logistics

AdaptationAdvice

Service

PGDM II 2014-15

Intrinsic value

buyers

Extrinsic value

buyers

Strategic value buyers


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buyers buyers

Straight rebuy Product Product /

services

Modifiedrebuy Product Product /services /

logistics

Logistics / adaptation /advice

New task Logistics Logistics / adaptation /

advice

Selling mode Transactional Consultative Enterprise

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Mi i


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Missionary

Frontline

Internal


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Experience

Commitment

High


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Commitment

Adaptation

Distance

Uncertainty

Time

Low

Pre-relationship

Early

Development

Long-term

Final


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(Millman & Wilson 1995)


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(Millman & Wilson, 1995)


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92Volume of potential business


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29

48

55

61

78

Management discretion

Industry of customers

Size of customer

Comeptitor's actions

Volume of past sales

0 20 40 60 80 100


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b2b merged

Documents