Professional Documents
Culture Documents
Types of Environment
• Environmental factors / forces influence marketing decisions of selling firms & buying
decisions of buying firms.
BM/KKH-M1&2-16
Module 3
Marketing Research (MR) & Marketing
Intelligence System (MIS)
Marketing
research
studies
Internal
informatio
n system
Brand
Yes Plannin Brand Brand Brand
g And Strateg Building Auditin
To Analysi y g
Brand s
or Not
to
Brand
No Stop
Brandin
g
Decision
BM/KKH-M4-9(NIS)
Brand Building
• First find one/two value propositions important to
target customers like functional & performance
aspects. (e.g. IBM PCs)
• Allocate resources to improve on the above.
• Effectively communicate value proposition using
brand-building tools like: personal selling, direct
marketing, advertising, trade-shows, P.R.,
sponsorships.
Brand Auditing
• Periodically audit brand performance, strengths,
weaknesses, using research method.
• Successful companies like IBM, GE do continuous
brand monitoring, alternate month, thru’ field
research.
BM/KKH-M4-12(NIS)
Management of Innovations.
• In successful firms, management of innovations
are individually motivated, customer responsive,
disorderly, & interactive. Many surprises, despite
planning.
• In successful innovative companies (like 3M,
Google), innovation process is “controlled
confusion”.
• Implications for marketing managers:
• Entrepreneurial initiatives to be encouraged &
nurtured. (e.g. Google)
• Facilitate communication between business
units & functional areas (e.g. sales & R&D).
• Collect environmental (SWOT) information.
• Assume an important role in management of
BM/KKH-M4-14
New Product Development Process
It includes:
• Idea generation idea screening concept
development & testing business analysis
product development market testing
commercialisation.
Recent areas of improvements:
• 3D Design technology (or Digital prototyping)
• It allows firms to visualise, test, redesign, and
improve new product, before actually
developing.
• This saves time & resources.
• Quality function deployment (QFD) or House of
quality:
• A framework to link customer needs to product
design data.
BM/KKH-M4-15
New Product Performance Determinants about
Success/Failure
Success factors / determinants:
• Product uniqueness and superior quality (e.g.CG-
MCCB).
• Market knowledge and marketing effectiveness
(e.g. Biplus tubes).
• Technical & production capabilities (e.g. CG –
Stampings).
• Cross-functional team (e.g. CG – DOL: major
modification).
Failure factors / determinants:
• Lack of coordination between marketing &
technical teams (e.g. Sangam).
• Poor product design (e.g. Swishflow).
• High-prices relative to competitors (e.g. MMM-
stackers).
Diffusion of Innovation BM/KKH-M4-16
What is diffusion of innovation?
• Innovation: means a new product / service.
• Diffusion: a process to spread awareness & adoption of new
product to members of social system.
• Social system includes firms, their employees, &
professional change agents (e.g. consultants, architects).
• Conceptually, new product adoption process includes:
awareness, interest, evaluation, trial, adoption (e.g. LCD
Projector).
• Adoption of innovation: a model: •Typically, 5-10 years
for 50% firms adopting a
new product
BM/KKH-M4-17(NIS)
High-Tech Marketing
• High technology (high-tech) marketing is different
from other products / services because of
• High technological uncertainties.
• High market uncertainties.
Examples: products/services in
telecommunication, computer, software, biotech,
electronic industries.
• Many new high-tech products / services fail due
to differences in psychographic (psychology &
demographic) profiles of new product adopter
groups like innovators, early adopters, early
majority, etc. (‘adoption of innovation’ model by
Rogers).
BM/KKH-M4-18(NIS)
High-tech Marketing Strategy
To avoid failures of new high-tech
products/services, marketers should develop &
implement a unique high-tech marketing
strategy:
• Target a niche market (e.g. e-book)
• Plan whole product properties
• Develop partnerships – with suppliers &
customers
• Have unique positioning strategy
• Effective communication strategy – IMC
• Multi-channel distribution strategy
• Skimming pricing strategy
Product Life-Cycle (PLC) Analysis BM/KKH-M4-19
Industrial products typically follow PLC model shown below:
BCG Model
Which of the 8 products / businesses a firm should invest
and why (in the above figure)?
GE Model: Business Screen Matrix BM/KKH-M4-21
Benefits of Segmentation
• Marketers get used to studying customers needs
and potential, competition, growth, profitability of
each segment.
• It gives basic information for developing effective
marketing strategies.
• It gives guidelines for allocating marketing
resources to various market segments. (Example:
STI)
Limitations of Segmentation
• If market potential is small, or market includes
few customers, sales volume / profits may not
justify costs of segmentation. (Example: Elechem)
• Difficulties in segmentation due to large
differences in customer characteristics, buying
practices, and benefits required by members of
BM/KKH-M4-24
Microsegmentation
Channels.
This module includes:
• What is Business Marketing Channel
(BMC)?
• Who are the participants in BMC?
• Channel alternatives / Channel structure in
business marketing (NIS).
• How channel design is done?
• Administering / managing channel
members, including
• Selecting, motivating & evaluating
channel members.
• Controlling / managing channel conflicts
BM/KKH-
M5-2
Business Marketing Channel (BMC)
Direct Indirect
Channels Channels
Commissi
Direct *
Direct Manuf’s on
Sales Distributo
Marketing Reps. Brokers Merchant Jobbers VARs
rs
s
Tele
Direct
Internet Marketing
mail
Business Customers
Intermediaries
• Understanding perceptions, needs, and
conflicts (discuss).
• Implementing partnering concept. (e.g.
IBM)
• Implementing vendor managed inventory
(VMI) system. (e.g. Hero Cycles)
• Ensuring reasonable discounts /
commissions. (e.g. 3M)
• Establishing dealer / distribution councils.
(e.g. CGL)
• Other practices.
BM/KKH-
Controlling / Managing Channel Conflicts
M5-21
Performance
• Why evaluate performance of channel
members?
• Criteria used for evaluation (relevant to a
firm)
• Sales achieved against sales targets /
quotas.
• Customer service.
• Customer complaints.
• New customers generated.
• Market feedback.
• Use weighted factor method for evaluation
BM/KKH-
Module-6 M6-1
Supplies Manufacturing
Cash Flow
Raw
materials Business
& Planning, Productio Perform- Customer
Componen Designin Purchasi n/Operati Distributi Customer ance s or End
ts g, ng ons on service evaluatio users
Suppliers Forecasti ns
ng
Material/Service Flow
Publicity
•Job fairs.
•Other companies.
BM/KKH-M7-20
Evaluating & Selecting Recruiting
Sources
• Sources evaluated based on database built
over years.
• Evaluating factors:
• Performance of salespeople, after 2
years working.
• % of salespeople retained, after 2 years
working.
• Total cost of recruiting.
• Select most effective source at least
cost.
• For a new company, select based on
cost.
BM/KKH-M7-21
Selecting Sales Force
• Selection process consists of seven steps:
• Screening resumes.
• Application blank.
• Initial interview.
• Intensive interview.
• testing.
• Reference check.
• Physical examination.
• Firms differ on above steps, based on time
available & expenditure budget.
BM/KKH-M7-22
Selection Process Details
Screening Resumes
• Done when many resumes are received.
• If employment agency does initial
screening, this step not needed.
• Screening done by comparing resumes
with job specifications.
Application Blank (why needed?)
• Widely used for collecting relevant
information.
• Advantages of application blank:
• Easy to compare applications.
• Useful for interview sessions.
BM/KKH-M7-23
Interviews
Reference Check
• Importance due to possibilities of resume frauds
and false personal information (e.g. Wipro).
• Done by e-mails / letters / phones / visits.
• Instead of candidates’ references, previous
employees / customers / professors included.
Physical Examination
• Objective: To find physical problem that may
prevent job performance.
• Most companies want prospective employee to
undergo physical exam.’
• Few firms ask applicant to complete health
dealing form, without seeing a doctor.
BM/KKH-M7-26(NIS)
Hiring Stage
• After selection process, list of candidates
to be hired is made, to perform following
activities:
• Firm making job offer. (who does?)
• Firm persuading applicant to accept it.
Socialisation Stage
• It is a process for new salespeople to learn
values / culture of the firm.
• It starts from recruitment up to
assimilation, which is second stage of
socialisation.
• Why socialisation process important (?).
BM/KKH-M7-27
Sales Training
1) Absorption Training.
• Methods used: Supplying (a) audio cassettes;
(b) product manuals, books, articles; (c) CD-
ROMs to salespeople who read/absorb these
material.
• For introducing basic material / strengthening
previous training.
2) On-the-Job Training.
• Most companies use this, since sales trainees
are in realistic sales situations.
• Typically, sales trainee is assigned to a senior
salesperson for specific period of time.
• Job rotation: For grooming salespeople for
management positions.
BM/KKH-M7-33
Selecting Training Method
Motivational Theories
• Team selling.
• Relationship management.
• Support from senior management.
(Examples: MMM-TVS, STI-Hero Cycles).
BM/KKH-M8-1
Module – 8
Pricing Decisions in Business Marketing
Government Regulations
Pricing Strategies
• Pricing strategies vary for different product
/ market situations, like:
• Competitive bidding in competitive
markets.’
• Pricing new products.
• Pricing across product life cycle (PLC).
Competitive Bidding
Followed mostly for government units /
public sector firms.
• Orders finalised on lowest price bidders.
• Can be closed or open tenders
(Meaning?).
BM/KKH-M8-13
Strategy for Competitive Bidding
Called ‘Probabilistic Bidding’, with two
assumptions:
• Pricing objective of seller is profit
maximisation.
• Order decided on lowest price bidder by
customer.
Basic equation: E(A)=P(A)XT(A), where
A=Bid price, E(A)=Expected profit at bid
price ‘A’, P(A)=Probability of acceptance of
bid price ‘A’, T(A)=Profit if bid price ‘A’ is
accepted.
Most difficult task: to estimate P(A)
Example of Competitive Bidding Strategy BM/KKH-M8-14
A govt. closed bid tender for supply of cable joining kits.
Tender est. value=Rs. 600 million, 18 # bidders; Firm:
Elechem.
Bid Price Total Cost Probability of Profit (Rs) Expected
(Rs) (A) per unit (Rs) acceptance T(A)=(A)-(C) Profit (Rs)
(C) at the bid EA=P(A)xT(A
price: P(A) )
450 350 0.00 100 0
430 350 0.15 80 12.00
410 350 0.40 60 24.00
400 350 0.50 50 25.00
390 350 0.60 40 24.00
370 350 0.85 20 17.00
350 350 0.92 0 0
330 350 1.00 (20) (20.00)
Behaviour
• Which are the most important factors that
influence organisational/business buyers?
• Under what situation personal factors
become more important than
organisational factors? (e.g. Rourkela Steel
Plant).
• Comprehensive models:
• Webster & Wind model.
• Sheth model.
• Lilien & Choffrey model.
BM/KKH-Ch.4-
Chapter-4 1(NIS)
Buyer-Seller Relationship
Focus of business marketing is on buyer-
seller relationship. It includes:
• A conceptual framework of buyer-seller
interaction. (Prof. Sheth’s)
• Types of relationships: transactional,
value-added, and partnering /
collaborative.
• Relationship marketing.
• Customer relationship management
(CRM).
• Special dealings: reciprocity, dealing
with customer’s customers.
BM/KKH-Ch.4-
Buyer-Seller Interaction - Framework
2(NIS)
Transactional Relationships
• One-time transaction and relationship. (e.g. Govt.
& others)
• Price and availability main factors.
• Low profitable customers, large numbers, ‘C’
category.
Value-Added Relationships
• ‘B’ category, medium profitable customers.
• Understand and meet customer needs better than
competitors – get higher share (e.g. TI: Hero)
BM/KKH-Ch.4-
4(NIS)
Collaborative/Partnering Relationships
• ‘A’ category, high sales & profit potential
customers.
• Both supplier & buyer should have trust &
commitment.
• Build strong social, economic, service,
technical ties.
• Long-term, mutually beneficial
relationship.
• Joint teams to solve problems – superior
value to final customers.
• Integrate business processes.
(e.g. Automotive industry).
BM/KKH-Ch.4-
5(NIS)
Relationship Marketing (RM)
• Select: high sales & profit potential
customers. (e.g. Key accounts, OEM
customers, ‘A’ category).
• Also applicable to major suppliers &
intermediaries.
• Focus: long-term, mutually beneficial
relationship.
• Build strong economic, social, service,
technical ties with key parties.
• Objective: Superior value to ultimate
customer.
• Both parties should have trust &
BM/KKH-Ch.4-
6(NIS)
Customer Relationship Management (CRM)