Business to Business Marketing

Yogesh Baviskar

Subject Outline:- B2B Marketing

1. 2 3 4 5 6 7 8 9 10 11

Introduction to B2B Market Organizational Buying Behavior Relationship Management Segmenting the Business Market Managing Products & New Innovations Management in B2B Market Managing Services in B2B Market Price Management in B2B Market Channel Management in B2B Market E-Commerce in B2B Market Business Marketing Communication Case Studies & Further Discussion

Top B2B Brands:-

Business to Business Marketing :-

Definition:“Business Marketing is the practice of individuals, or organizations, including commercial businesses, governments and institutions, facilitating the sale of their products or services to other companies or organizations that in turn resell them, use them as components in products or services they offer, or use them to support their operations”

timely Availability extremely Somewhat Important Important Buying Behavior Involvement of Various functional area Involvement of family members from both the ends Purchase Decisions are performance based and rational Technical Expertise Stable Interpersonal relationship Purchase decisions are mostly based on Physiological /social/psychological needs Relatively less technical expertise is required Non.Industrial Vs Consumer Marketing Areas of Difference Market Characteristics B2B Market Geographically Concentrated Relatively Fewer Buyer Consumer Market Geographically Disbursed Mass Market Product Characteristic Technical Complex Customized Standardize Service Characteristic Service .Personal relationship .

Industrial Vs Consumer Marketing Areas of Difference Channel Characteristic Industrial Market More Direct Fewer Intermediaries Consumer Market Indirect Multiple layer of Intermediaries Promotional Characteristic Emphasis on Personal Selling Emphasis on Mass Media (Advertising) Price Characteristic Competitive Bidding and Negotiated Prices List Price for Standard Products List Price or MRP .

B2B Distribution Channel Characteristics Manufacturer Company Sales Force Representative Agency Distribution Dealer Customer Customer Customer .

Car & Fuel . – Ex.Coffee Powder. Sugar & Milk in Making Coffee – Ex:.:.Characteristics of B2B Demand • Derived Demand:– The demand for a good or service that results from the demand for another good or service.Pig Iron ---Steel ---Steel Sheets---Automotive part companies--Automobiles--End customer • Demand Elasticity:- • Joint Demand:.Software.Operating System.Demand for product or services is interdependent on each other – Ex:.

2:.Understanding B2B Market & Environment with Buyers Perspective B2B Customers B2B Products Marketing of industrial products to B2B Customers Purchasing of Industrial Products Goals of Purchasing Purchasing Orientations Buying Orientation Procurement Orientation Supply Chain Management Orientation Purchasing Practices of Industrial Customers Commercial Business Government Institutes Co-operative Environmental Analysis:Types of Environment Influencing B2B Market .

Understanding B2B Market & Environment with Buyers Perspective .

Exhaust Pipe in Motor Cycle Light equipment/ Accessories Installation or Heavy Equipments Hand tools. Electrical Items Legal. Tyres.2. Chemicals Gauges. Auditing. Market Research Supplies Supplies & Services Services . Jigs Capital items Machine Tools. Fasteners. Crude oil. paints . Advertising. Furnaces Plants & Building Plants. Dies. Office Building Lubricants. TV tubes. fish Acids. Steel . Fuel oil.Understanding B2B Market & Environment with Buyers Perspective Material & Parts Raw Materials Manufactured Materials Component Parts Subassemblies Iron ore. Courier. fruits.

2.Understanding B2B Market & Environment with Buyers Perspective Goals Of Purchasing Uninterrupted Flow Material Manage Inventory Improve Quality Developing and Managing Supplier relationships Achieve Lowest total cost Reduce Administrative cost Advance Firms Competitive Position .

2.Understanding B2B Market & Environment with Buyers Perspective Purchase Orientation – Buying Orientation – Procurement Orientation – Supply chain Management Orientation Applications of Purchase Orientation to Industrial Customers Industrial Customers Supply Chain Management Procurement Government as a Customer Buying Orientation Institutes Buying Orientation .

Manpower & Transportation .Pollution & Conservation of Natural resources 2. Utilities.Understanding B2B Market & Environment with Buyers Perspective Purchasing Practices of B2B Customers Industrial customers Government Institutes Cooperative Environmental Analysis:Ecological & Physical 1.2.

Understanding B2B Market & Environment with Buyers Perspective Environment Analysis:Internal Environment:Company Location.2. R&D Facilities. Production Facilities Human Resource and Image of the company External Environment:Micro Environment :Customers & Competitors Suppliers Macro Environment:Economic Technological Government/Political & Legal Cultural & Social Investors & NGO .

Organizational Forces -.Individual Forces .Group Forces :- .The Nature of Industrial Buying and Buying Behavior • • • Organizational Buying Process Organizational Buying Situations Forces Shaping Organizational Buying Behavior -- Environmental Forces -.Buying Center -Elements of Buying Center -.3.

3.The Nature of Industrial Buying and Buying Behavior Problem Recognition General Description of Need Product Specification Supplier Search Acquisition & Analysis of Proposal Supplier Selection Selection of Order Routine Performance Review .

3.The Nature of Industrial Buying and Buying Behavior Organizational Buying Situations The buyer routinely re-orders the same product or service with out any modification Straight Rebuy Modify Rebuy The buyer wants to modify product specifications. service or supplier New Task The buyer purchase product or service for the first time . price.

The Nature of Industrial Buying and Buying Behavior Forces Shaping Organizational Buying Behavior Environmental Forces Organizational Forces Group Forces Individual Forces .3.

Group Force – Buying Center “Buying Center can be defined as the body of all the individuals and groups participating in the buying decision process and who have interdependent objectives and share common risk” .

The Nature of Industrial Buying and Buying Behavior Roles of Buying Center Initiator :Recognition of Problem or Need Buyer :Obtains the quotation Supplier evaluation & Selection Processing purchase order Expediting deliveries Implement the purchasing policies of the organization User of Product/ Services ( Could be Initiator) Individuals who could influence the purchasing decision ( Technical / Design Engineers / External consultants ) Individuals who control the flow of information to the members of buying center Individuals or group of people who make the actual purchase decisions about the product or services User:Influencer :Gatekeepers:Deciders:- .3.

3.The Nature of Industrial Buying and Buying Behavior B2B Buying Behavior Model .

Develop & Maintain the meaningful relationship with the customer. Buyer Seller Relationship • Buyer Seller Relationship :.4.Establish . Types of Buyer – Seller Relationship Transactional Exchange Collaborative Exchange – Switching Cost • • • .

Managing Buyer Seller Relationship • Typical Characteristics of Buyer Seller Relationship based on Market Condition and Purchase Behavior Transactional Exchange Availability of Alternative Supply Market Dynamism Importance of Purchase Complexity of Purchase Many Alternative Stable Low Low Collaborative Exchange Few Volatile High High High Extensive Information Exchange Low Operational Linkage Limited .

.CRM Strategy • • Determine which type of relationship matches the purchasing situation and supply-market conditions for a particular customer. Develop a strategy that is appropriate for each strategy type.

Understanding Customer Profitability Characteristics of High Vs Low Cost-to-Serve Customers High Cost to Serve Order Custom Products Order Small Quantities Unpredictable Order arrivals Customized delivery Frequent Changes in delivery requirement Manual Processing Large amount of presales support Require company to hold inventory Longer credit periods Low Cost to Serve Order Standard Products Order Large Quantities Predictable order arrivals Standard Delivery No changes in delivery requirement Electronic Processing Little to no presales support Replenish as produced Payment on time .

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Creating a CRM Strategy Acquire the Right Customer Crafting the right value proposition for the customer Design the Best Process to deliver the product /services Motivating the Employees Retain the customer .

Focus on product development.Segmenting the Business Market Why Segmentation:Criteria for the segmentation:Measurable Assessable Substantial Computability Responsiveness Benefits of Segmentation:Concentrate on unique needs of target segment. Develop profitable pricing strategy Select the appropriate channel Develop communication and advertising strategy Variable of Business Market Segmentation Macro level segmentation Micro level Segmentation :- .

Medium & Large ( Based on Sales or o. Straight Rebuy Early stages. Modified task. late stages . Industrial zones Non user. Moderate user. Of Employees Region .Macro Segmentation Variable of Segmentation Characteristics of Buying Behavior Size Geographical location Usage rate Structure of procurement Small. Low Characteristics of Purchasing Situations Types of buying situations Stage in purchase situation New task. Decentralize Breakdown of Segments Product/ Service Application End market serve Value in use As per Product/Service High . Light user. heavy user Centralize .

production. unfavorable Innovator. Risk avoider High. conservative.Micro Segmentation Variable of Segmentation Key Criteria Purchase Strategies Structure of decision making unit Importance of purchase Attitude towards vendor Organizational innovativeness Personal Characteristics of Top Management or Decision makers Demographics Decision Style Risk Confidence Job responsibility Age. Satisfier . engineering High . Follower Breakdown of Segments Quality. mixed mode Risk taker. Low Favorable. supplier reputation Optimizer. Delivery. Educational background Normative . low Purchasing.

Managing Products & New product develofor B2B Marketing .

and the market knowledge that has been accumulated. • They focus on the basics of what crates value from the customer’s perspective and include both technical and organizational skills. Developed by Cool Pictures and MultiMedia Presentations . the unique ways in which these technologies are combined.Core Competencies and Selected Products at Canon • Core competencies are embodied in the superior skills of employees--the technologies they have mastered.

• Second. a core competence should make an important contribution to the perceived customer benefits of the firm’s end products.” . • Third.Three Tests to Identify the Core Competencies • First. a core competence provides potential access to an array of markets. “a core competence should be difficult for competitors to imitate.

Sustaining the Lead . . Three Questions • How rare is our competence? • How long will it take our competitors to develop the competence? • Can the source of our advantage be easily understood by our competitors? . .

• Stage three examines a firm’s quality performance relative to competitors and examines customer perceptions of the value of competing products. • Stage two emphasized that quality was more than a technical specialty and that the pursuit of quality should drive the core processes of the entire business.Quality Movement Stages • Stage one centered on conformance to standards or success in meeting specifications. .

“Understanding Customer Value. Christian Homburg. and Nikolas Beutin. 12. 4–7.What Value Means to Business Customers Core Benefits Customer Value Add-on Price Sacrifices Acquisition Costs Operations Costs Source: Adapted from Ajay Menon. 2 (2005). no. .” Journal of Business-to-Business Marketing. pp.

Industrial services . Custom-designed products 4.1. Custom-built products Four Types of Industrial product Lines 3. Proprietary or catalog products 2.

Determine the product’s current position versus competing offerings for each market segment. 2. . Identify the relevant set of competitive products. Collect information from a sample of existing and potential customers concerning their ratings of each product on the determinant attributes. Select Positioning or Repositioning Strategy. Identify the set of determinant attributes that customers use to differentiate among options and determine the preferred choice. Examine the fit between preferences of market segments and current position of product. 3.Steps in the Product Positioning Process 1. 4. 5. 6.

services. How High-Tech Brands Build Equity . sold.Successful brand management involves developing a promise of value for customers and then ensuring that the promise is kept through the way in which the product is developed. and promoted. produced.

product benefits. . positioning. • Tough project go/kill decision points were included in the process and the kill option was actually used. and target markets. • The process featured complete descriptions of the product concepts. • The new product process is flexible. Benchmarking characteristics: • The firms emphasized upfront market and technical assessments.New Product Development Process Successful companies employ a high-quality new product development process--careful attention is given to the execution of the activities and decision points.

2. The necessary personnel were assigned and were relieved from other duties. R&D budgets were adequate and aligned with the stated new product objectives.Resource Commitments Three ingredients were important here: 1. . 3. Top management committed the resources necessary to meet the firm’s objectives for the total product effort in the firm.

.New Product Strategy Set aggressive new product performance goal as a basic corporate goal and communicate it to all employees.

The Lead User Method .Team members typically spend 12 to 15 hours per week on the projects.Lead user projects are conducted by a cross-functional team that includes four to six managers from marketing and technical departments. one member serves as project leader.

or function relative to competitors. Marketing synergy represents the degree of fit between the needs of the project and the firm’s resources and skills in marketing. . Four Strategic Factors For New Product Success Technical synergy concerns the fit between the needs of the project and the firm’s R&D resources and competencies.Product advantage refers to customer perceptions of product superiority with respect to quality. cost-performance ratio. International orientation--new products that are designed and developed to meet foreign requirements. and that are targeted at world or nearestneighbor export markets.

Technology Adoption Cycle .

Early Adopters These are the true revolutionaries in business and government who want to use the discontinuity of any innovation to make a break with the past and start an entirely new future. whom they are careful. Their expectation is that by being first to exploit the new capability they can achieve dramatic and insurmountable competitive advantage over the old order. . Moreover. nonetheless. They do not love technology for its own sake. so are different from the techies. they are interested in making their companies' systems work effectively and look to adopt innovations only after they have established a proven track record. to employ.• • • Innovators These are the people who are fundamentally committed to new technology on the grounds . Early Majority These people make the bulk of all technology infrastructure purchases. they believe in evolution not revolution.

the typical approach is to seed new products with the innovators so they can help educate the early adopters. Laggards This group delight in challenging the hype and puffery of high-tech marketing. in part because they are unwilling to pay for any extra services.• • • Late Majority These consumers are pessimistic about their ability to gain any value from technology investments and undertake them only under duress -. The Marketing Strategy With these customer segments in mind. They are very price-sensitive. highly skeptical. and very demanding. They are not so much potential customers as ever-present critics. all of which only reconfirms their sour views of high tech. All the . Rarely do their demands get met. When the early adopter's are interested. do everything that is possible to make them happy as they will then serve as references for the early majority which is the group where most of the money is made from a new product or service.typically because the remaining alternative is to let the rest of the world pass them by. the goal of high-tech marketing is not to sell to them but rather to sell around them. As such. Then leverage the success with this large group so that the product matures and stabilizes enough to be of interest to the late adopters.

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