B2B PDF

B2B Marketing
Soumya Sarkar
MBA 2018-20
Term V
Course Structure
• Specialised course on Business-to-business Marketing

• Perspectives:
• Overview
• Buyer behaviour
• Relationships
• Networks
• Strategy
• Market sensing
• Marketing programmes
IIM Ranchi MBA 2018-20

Content & Process
• In-depth discussions on B2B marketing issues

• Dialogue
• Examples
• Applications
• Cases
• Queries & feedback – formal and informal

Course Administration
• Assessment
• End-term: 35%
• Open resources
• Mid-term: 25%
• Closed book
• Case analyses: 20%

• Groups will upload in Turnitin a 2-page (max) write up
on the case for the day before the class starts
• File should be named as <A/B 1-10><name of case>
• The group name should be visible on the header/footer of the file

Course Administration
• Assessment
• Group Assignment: 20% (10 + 10)
• Two-part assignment
1. Procurement
• Mail the findings
2. Marketing
• Presentations on sessions 19 & 20

Section A: Project Topics
Group No. Buyer
1 Diagnostics
2 Restaurant
3 Car repair
4 Cable operator
5 Salon
6 Travel agency
7 Theme park
8 Museum
9 Gym
10 Fashion designer
Deliverables
• Select any firm in the buyer category

• The objective of the study is to find out
• What(ever) is procured: products, services, etc.
• Who are the suppliers
• Upload the findings (.doc/.pdf) in Turnitin

Session Topic of Reading Case for discussion Deliverable
No. discussion
1 Perspective Blurring the lines (Wind)
2 Market
Major Sales: Who Really Does the Buying
3 OBB
(Bonoma)
Integrated Model of Buyer-Seller
4
Relationships (Wilson)
CRM
Case
5 Verbeek Packaging
analysis
How to Segment Industrial Markets
6
(Shapiro & Bonoma)
STP
Peak Sealing Case
7
Technologies analysis
8
Product
Management Ingersoll-Rand Case
9
(India) analysis
10 Services
11
Channels
12
Case
13 Pricing Tupelo Pricing
analysis
Marketing ‘value’ to price-sensitive
Tendering
14 customers during the Tendering process
(Singh, Nayak & Seshadri)
15
IMC Case
16 Maersk Line
IIM Ranchi MBA 2018-20 analysis
Questions?

B2B Marketing
A Perspective of B2B Marketing
Introduction
Facts
Proportion of pure B2B firms ~ 30%
Share of B2B transactions ~ 65% of Gross Output
Nature
Customer is an organisation → Organisational marketing?
Enterprises
Users
OEMs
Dealers & distributors
Institutions
Government
The B2B-B2C dichotomy
Differences in
Market structure
Buying behaviour
Marketing practices
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
The Accelerator Effect
Due to derived demand
Rate of change of secondary/tertiary demand > rate
of change of primary demand
Buying Behaviour
Buying influences
Many vs. few
Purchase cycles
Often long vs. usually short
Transaction value
Higher
Process complexity
More complex
Formal, written rules
Common vs. uncommon
Buying Behaviour Contd.
Buyer-seller interdependence
Often very close
Importance of relationships
Mostly very high
Degree of interactivity
High vs. low
Purchase professionalism
High vs. low
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
Marketing Practices Contd.
Use of relationships
Extensive vs. limited
Segmentation
Rudimentary vs. sophisticated
Product complexity
Greater
Customer Value Proposition
Particular set benefits that matter most to target customers
Demonstrate the value of this superior performance
Communicate to convey a sophisticated understanding of the
customer’s business (process, priorities)
Supply Chain
Upstream Suppliers Hindalco
Tier I Suppliers Subros
Maruti
Auto Manufacturers
Suzuki
Mandovi Dealers
Motors
Business / Individual Buyers

Classification of Goods
Entering
Raw materials – farm products, natural products
Manufactured materials & parts
Foundation
Installations
Accessories
Facilitating
Supplies / MRO items
Services
Thank You!
B2B Marketing
Module 2
The Market
B2B Market
• Commercial Enterprises
• Institutions
• Government
Commercial Enterprises
• Distribution by size
• Geographical concentration
• Purchasing organisation - strategic procurement
Size
• Buying firms are bigger in size
• MSMEs
▫ 26 million units
▫ 45% of the manufacturing
Geographical Concentration
• Concentrated marketing efforts – sales personnel,
distributors
• Warehouses and/or distribution centres – effective
coverage
• Concentrated HQ coverage
Purchasing Organisation
• 70% of costs (manufacturing firms) – straight
impact on bottomline
• Centralised procurement strategy
• Buyers – responsible for specific group of
products
▫ Development of technical expertise
▫ Emergence of purchase engineers – material
evaluation, cost studies
Goals of Purchasing
Uninterrupted flow • Materials, services, supplies to keep operations moving
Inventory • Minimise investment
Quality • Careful evaluation and selection of products and services
• Find competent suppliers

Supplier relationships • Establish collaborative relationships
Total cost • Lowest total cost
Administrative costs • Lowest possible level of purchase administration costs
Competitive position of • Reduce supply chain costs

firm • Capitalise on supplier capabilities
Procurement as Strategy
Integrated
Sell
Value Buy (Sell better)
(Consume
better)
Linked Buy
(Buy better)
Leveraged
Buy
(Buy for
less)
Strategy
• Understand items having
▫ Criticality in operations
▫ Business risk dimensions – customer’s customer’s
value
• Focus on strategic purchases
▫ High revenue & high customer value impact
• For less strategic purchases
▫ Provide complete assortment, timely
service/supply support, simplified ordering
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
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
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 favourable
terms – payment, contract completion, overruns
Institutions
• Similar to governments • Privately managed
▫ Dictated by law ▫ Broader range of purchase
▫ Constrained by political than corporates
considerations ▫ Value of efficient buying
acknowledged
• Budget limit based buying

• Staffed with professionals
▫ Dedicated materials management department
• Group purchasing
Strategy
• Evaluate budgetary status
• Attention to third-party contractors
• Cultivate professional staff for product benefits
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
Vertical Marketplace
E-Procurement
• Use of Web-based applications, decision support
tools, and associated services to streamline and
enhance strategic sourcing processes and
knowledge management
• Purchasing managers
▫ Look out for new vendors
▫ Communicate with current suppliers
▫ Transact
Evolution Internet tools

and platforms to
replace
Technology
traditional
procurement
fully integrated e-
Internet tools markets,
and platforms to automatic stock
complement replenishment
traditional
Web as
procurement
communication
online supplier
channel to
Electronic databases, e-
support
systems to catalogs, web-
traditional
support enabled EDI
procurement
traditional
E-mail, websites
procurement
Traditional Mainframe, PC,
procurement ERP, EDI
mainly paper
based
Time
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
Auctions
• English – highest bidder; sale of unwanted items -
scrap
• Reverse – lowest bidder; online form of tender
purchasing
Reverse Auctions
• One buyer – several pre-qualified sellers
• Dynamic, real-time, competitive bidding
• Used for entering and facilitating goods
Suppliers Buyers
Reasons • New business • Reduced purchase price
• Market penetration • Lower administrative costs
• Cycle time reduction • Control on inventory levels
• Inventory management
Risks • Low price focus threatens • Undermines trust
long-term relationships • Reduced buyer commitment makes
• Competitive bargaining tool supplier less willing to make
for buyer relationship-related investments
• Offering unrealistic prices • Insufficient number of suppliers may
cause non-competitive scenario
Market-centred Organisation
Market
Research
Sales
Marketing
Segments
Advertising Commercial
1…n
Markets Government
Institutions
Thank You!
B2B Marketing
Module 3
Organisational Buying Behaviour
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
Organisational Factors
• Nature of business
• Business strategy
• Purchasing orientation
Nature of Business
• Unit production
▫ Bespoke
▫ Technological complexity and scale affect
competitiveness
▫ Design and production capabilities of
suppliers
• Mass production
▫ Efficiency determined by equipment,
integration among sections, raw material
costs
▫ Highly inflexible – suppliers to adjust their
logistics and processes to be compatible
▫ Suppliers contribute in NPD process, crucial
for survival and growth
Nature of Business
• Process production
▫ High volume, continuous, efficient
▫ Continuity is imperative
▫ Mostly produce intermediates & raw materials
▫ Infrequent big-ticket equipment purchases
Business Strategy
• Generic strategy guides actions
and decisions at functional level
• Product leadership
▫ Relentless innovation
▫ Technical and creative abilities
▫ Suppliers – knowledge of customer’s business; offer
design and product expertise to contribute to innovation;
responsiveness to innovativeness
• Cost leadership
▫ Ongoing process of cost containment - central theme of
dealing with suppliers
Business Strategy - Social

• Social responsibility
strategy may affect
dealing with suppliers
Purchasing a Component
Imagine you are a purchase manager for a PC
manufacturer. Your boss has asked you to order a
large quantity of an important electronic
component. There are 3 potential suppliers – A, B
& C. To the best of your knowledge, they are equal
in product quality and availability.
In each of the following situation, which supplier
would you place your order on?
Situations
Supplier A Supplier B Supplier C

Situation 1 150 per unit 155 per unit 170 per unit
More Your manufacturing More traditional design.
traditional manager says the Installation cost: 14 per unit
design. component has a
Installation special modular design
cost: 12 per that has an installation
unit cost of 5 per unit
No premium No premium expected Your marketing manager
expected says C has spent crores in
successful campaign to
promote the brand equity of
this component. Consumers
may pay extra 50 per PC for
having this component.
Purchasing Orientation
• Three types (Dobler & Burt, 1996)
▫ Buying
 Reductions in monetary value – L1; based on its own price
to the customer
 Maximises buyer power – playing a supplier against
another
▫ Procurement
 Based on total cost of ownership (TCO)
 Reducing TCO needs willingness to share information with
suppliers - target cost to supplier
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 to
outsource
Marketing Implications
• Buying orientation + less important (MRO)
→Focus on efficiency
→Innovation in the offering
• Supply management orientation + high
complexity & high risk
→Strive to become key contributor in customer strategy;
technical, human & financial resources necessary
Segmenting Purchase Decisions

High
Critical components
Advertising
High-technology
Telemarketing
products
Business risk
Materials
Office supplies
Logistics
Travel
Professional services
Low High
Purchase complexity
Purchase Process
Organisational problem recognition
Determination of specification & quantity
Search & qualification of potential sources
Proposal evaluation & supplier selection
Selection & establishment of order routine
Performance feedback & evaluation

Buying Situation
Based on familiarity with products or process
• New task
▫ Judgmental
▫ Strategic
• Modified re-buy
▫ Simple
▫ Complex
• Straight re-buy
▫ Casual
▫ Routine low priority
Buygrid Framework
New task Modified re-buy Straight re-buy

Problem recognition Yes Possibly No
Determination of Yes Yes No
specification
Source search & Extensive Limited No
qualification
Proposal evaluation & Extensive Limited No
supplier selection
Selection of order Yes Possibly No
routine
Performance feedback Yes Yes Yes
& evaluation
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
Marketing Implications Contd.

• 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 and
extinguish problems fast
▫ Out suppliers
 Ensure the purchase stays in modified re-buy as long as
possible
 Offer performance guarantees
Marketing Implications Contd.
• 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 of
ownership
Forces Shaping OBB

• Goals, objectives, strategies
• Economic outlook • Organisational position of
• Pace of technological purchasing
change
• Global trade relations
Environmental Organisational
Individual Group
• Job function • Roles, relative

• Past experience influences, and patterns
• Buying motives of interaction of buying
centre members
Environmental Forces
• Economic
▫ Shapes a firm’s 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
Organisational Forces
• Strategic priorities
▫ How can procurement be a stronger competitive
weapon?
▫ 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
Group Forces
Buying Centre
• Initiators
• Deciders
• Buyers
• Influencers
• Users
• Gatekeepers
Functions vs. Roles

Purchasing User
Influencer
Operations
Engineering Decider
Finance Buyer
Marketing Gatekeeper
Marketing to DMU
• For new task, get in touch with DMU members
at an early stage
• Identify the specific requirements / concerns
with respect to the current purchasing issue
• Satisfy individual needs and reduce the
perceived risk
• Know the key members of the DMU
Clues
• Isolate the personal stakeholders
• Follow the information flow
• Identify the experts
• Trace the connections to the top
• Understand the role of Purchase
Individual Forces
• Evaluative criteria
• Information processing
▫ Selective exposure
▫ Selective attention
▫ Selective perception
▫ Selective retention
• Risk reduction strategies
Perceived Risk
• Risk is inherent in business markets – uncertainty &
negative consequences
• Types
▫ Financial
▫ Performance
▫ Social
• Perceived risk heightens with new task or complex
modified 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
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
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
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
Thank You!
B2B MARKETING
Module 4
Customer Relationship Management
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, then
attempt to influence the behaviour favourably
• Prescriptive approach
• Neo-classical economic concepts do not hold in
business markets (?)
RELATIONSHIP MARKETING
All activities directed towards establishing,

developing, and maintaining successful
exchanges with customers and other
constituents
BENEFITS
1. 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
to understand, copy or displace
TYPES OF RELATIONSHIPS
Operational
Linkages
Transactional
Collaborative
Value
adding
CORE ELEMENTS
• Trust
Willingness to rely on an exchange partner in
whom one has confidence
• Commitment
One partner’s belief that an ongoing relationship is
so important that it deserves maximum efforts to
maintain it
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
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
RELATIONSHIP VALUE DIMENSIONS
Sourcing
Operations
Benefits
0.52 Benefits
0.21
Offering
Benefits Costs
Costs 0.08 0.03
Costs
0.10
0.07
(Ulaga & Eggert, 2006)

POWER OF RELATIONSHIPS
• Create a process that will call for

• short lead times
• smaller quantities produced to
decrease inventory risk
• increase the number of available styles
and/or choice
• Design, production, and
distribution - sharp response to
shifts in consumer demands
keeping exclusivity unharmed
• Design – in-house
• Manufacturing – 50% in Spain, rest from
suppliers (700 in Europe)
• Shipment to Zara stores from
distribution centres in 8 hours
CUSTOMER PROFITABILITY
• Accurate tracing of costs to individual customers

• The profitable few
• Large customers – most/least profitable, seldom
in the middle
• Low cost-to-serve customers – profitable
• High cost-to-serve customers – unprofitable,
unless paying premium for specialised services
received
CHARACTERISTICS
High cost-to-serve Low cost-to-serve

Pre-sales Extensive support Limited
(technical and sales resources) (standard pricing and ordering)
Production Custom-made products Standard

Small order quantities Large
Unpredictable ordering pattern Predictable
Manual processing Electronic
Delivery Fast Standard

Post-sales Extensive support Limited
(customer training, installation,
customer support)
THE WHALE CURVE
SALESPERSON ASSIGNMENT
REP A REP B REP C

Current A Top 20% A Middle 60% A Bottom 20% Customer
assignment customer Customer
Cost to serve Low cost to serve Varies High cost to serve
Closing the deal 30% 40% 40%
Education BA in Industrial BS in Recent MBA graduate

Psychology Business/Marketing with technical
undergraduate degree
Experience Limited to Jumps industries and Some unrelated sales
current position company for pay. experience
Years of service to 25 yrs 5 yrs 1 yr
the company
Years of service to 15 yrs 3 yrs as inside sales 0
the account
WORTHWHILE?
Sales
Carriage
Passive
trade
Bargain
Aggressive
Basement
Cost-to-serve
MANAGING COSTLY CUSTOMERS
• Look inside
• Internal processes should accommodate
customer preferences
• Sharper profit lens
• Net margin vis-à-vis cost-to-serve
→ Identify profitable customers
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
CUSTOMER RELATIONSHIP MANAGEMENT
Cross-functional process
to achieve
a continuing dialogue with customers
across
all customer touch-points
with
personalised treatment of the most valuable customers
to ensure customer retention and the effectiveness of marketing
initiatives
CRM SYSTEM
Synthesis
Salespersons • Future customer

Service teams interactions
Dealers CRM • Market forecasts
Distributors Software • Product design
Call centres • SCM
E-mails
Social media
VALUE PROPOSITION SPECTRUM
Hospital Medical
Supplies Equipment
Unbundle Augment
Pure Pure
transaction collaboration
STRATEGIC ALLIANCES
• Long-run linkage vis-à-vis JV

• Accessing complementary skills
• Benefits
• Access to markets and/or technology
• Economies of scale in manufacturing, R&D, marketing
• Reduced TTM
• Risk sharing
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)
EXTENDED ENTERPRISE – DAIMLER
Transaction Coordination Cooperation Alliance

(market-based (selective (selective (strategic
competition) competition) partnership) partnership)
Operational types Strategic types
Relationship Data Exchanging Transferring Building up to
based on information know-how specialist
knowledge
Relationship lasts Transaction Annual contract Series life cycle Life cycle and
for beyond
Extent of joint Suppliers not Integrated into Integrated into Several depts
commitment integrated NPD to limited NPD to limited integrated, joint
extent, via well- extent, interfaces NPD, investment
defined interfaces defined jointly in joint assets
Examples Office supplies Mouldings Exhaust systems Fuel cells
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
EVOLUTION OF NETWORKS
• Relationships → channels → supply chains →

networks
• Marketing & purchasing distinction is meaningless -
seamless, iterative process
• Purchasing can overlap with product development,
marketing planning
Supply
chain Supply
network
Inter-
organisational Marketing
Relationship Channel
Industrial
Network
Distribution
network
NETWORK
• Situated/embedded in a network of relationships

• Relative value is function of its position in the
network
• Change in mindset
• Interdependent
• Limit on the ability to think & act independently
• Extends capabilities beyond the boundaries of the
firm
NETWORK INDUSTRIES
• Telecom
• Broadcasting
• Finance
• ATM, bank, payment systems, clearing houses
• Exchanges – stocks, derivatives, commodities
• Airlines
THE MEDIA INDUSTRY - 2001
THE MEDIA INDUSTRY - 2006
THANK YOU!
B2B Marketing
Module 5
Segmentation, Targeting & Positioning
Segmentation
Unique Standardised
Offerings Offerings
… viewing a heterogeneous market …

as a number of smaller homogeneous
markets in response to differing product
preferences… (Wendell, 1956)

Value of Segmentation
 Facilitating better understanding of the
whole marketplace – behaviour of buyers
and why they buy
 Enabling better selection of market
segments that best fit the company’s
capabilities
 Enabling improved management of the
marketing activity
→ Know which customers to treat similarly
and which to treat differently

Criteria for Evaluation
 Measurability
 Accessibility
 Actionability
 Substantiality
 Responsiveness

Segmentation Bases
Firmographics
Macro
Operating
variables
Purchasing
approach
Situational
factors
Micro
Personal
characteristics

Firmographics
1. Industry
 Industrial classification
 Knowledge of the use for the supplier’s 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

Segmentation Services

Operating Variables
 Relatively easily observable
 First manifestations of how customer firms behave
1. Company technology
 Compatibility
2. Product & brand-use status
 Readiness to use
 Usage rate
 Customer’s knowledge of supplier products: ability to
communicate need
3. Customer capabilities
 Establish what customers are capable of doing with the
product/process

Pilkington Glass

Operating Variables
4. Firm strategic type

 Strong indicator of buying behaviour
 Difficult to ascertain
 Employee responses (socially acceptable?)
 Observation (outsiders)
 Content analysis of company plans (rare)

Purchasing Approach
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

Purchasing Approach
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

Situational Factors
1. Prevailing need - urgency
2. Usage plan
3. Order size

Innovativeness
 Willingness to purchase new products

 Level of resistance to change
 Desire to excel
 Product diffusion rate

Buyer Personal Characteristics
 Demographics – age, educational background

 Decision making style – normative / conservative
 Risk appetite
 Confidence
 Drive behind purchase behaviour
 Fastidiousness in information search
 Supplier orientation
 Evaluation
 Sharing of views with supplier personnel

Targeting
Identified Check for acceptability
Segment
Relative Yes
Attractiveness
Resource Yes
Not acceptable -
Demands
selection
unsuitable: No
select a new
Management
segment Yes
Demands
No
Organisational Yes
No
Demands
No Target
IIM Ranchi MBA 2018-20 Segment
Estimating Segment Demand
 Qualitative
 Executive judgment
 Frequent & repetitive forecasts
 Stable environment
 Small lag between decision, action &
feedback
 Sales force composite
 Delphi technique

Estimating Segment Demand
 Quantitative
 Time series: trend, seasonal, cyclical,
irregular patterns
 Regression / causal analysis
 Identify factors that affected past sales
 Fit them into a mathematical / statistical
model

Marketing Research

Value of Information
 Characteristics of information (Gates, 1996)

 Accuracy
 Timeliness
 Relevance
 Uniqueness
 Technical (accurate) vs. managerial
(timely and relevant)
 Communication between research agency and
client

Sampling Methods
Probability Non-probability
• Simple Random • Convenience

• Stratified Random • Snowball
• Systematic • Quota
• Cluster/multi-stage • Focus groups

Probability Sampling
 Stratified
 Sub-classification of sample based on proportion
of population
 Manufacturing vs. service for different firm sizes
 Systematic
 Within a single industry sector
 Cluster
 Naturally occurring groups viz. departments
within firms

Non-probability Sampling
 Convenience
 Limited validity
 Snowball
 Association-based
 Convenient
 Quota
 Same as stratified but not randomly selected

Issues in Sampling
 Response rates
 Representativeness of the respondents to the
sample (and the population)
 Criteria affecting responses
 Sponsorship
 Covering letter
 Questionnaire
 Anonymity/confidentiality
 Contacts – appointments
 Incentives – monetary/non-monetary

Industry Classification
 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

NIC

Using MR Agencies
 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 focus – absence of MR department, reliance
on secondary data & expert opinions
 Use of information influenced by
 Exploratory research (+)
 Degree of formalisation (+)
 Degree of surprise in findings (-)

Market Research Agencies
 B2B professional service firms
 All buyer-seller relationship concepts
apply
 Determinants in successful client-agency
relationship
 Clear understanding of the management
problem prior to contacting the agency
 Close involvement ASAP
 Check credentials, experience, industry
familiarity of agency

Secondary Research
 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

Business Information Sources

Targeting Strategy
 Undifferentiated
 Differentiated
 Niche

Positioning
 Offering occupies a space in the buyer’s mind
 Relative position - basis by which comparison
is made with ideal position and also others
 Clarity about the capabilities
 Using value proposition

Value Proposition
All benefits Favourable PODs Resonating focus
What? All benefits Favourable PODs Points whose improvements
will deliver greatest value in
the foreseeable future
Answers the Why should our firm Why… What is most worthwhile for
question… purchase your … our firm to keep in mind
offering? instead of your about your offering?
competitor’s?
Requirement Knowledge of own Knowledge of own Knowledge of how own
market offering market offering and market offering delivers
NBA superior value, compared
with NBA
Pitfall Benefit assertion Value presumption Requires customer value
research

Repositioning
Nature of relationship
Completeness of offering

Thank you!

B2B MARKETING
Module 6
Product Management
B2B PRODUCT OFFERINGS
ADAPTATION SPACE

Physical
attributes
elements
Service
Core
benefit
Advice giving
CATEGORISING PRODUCT LINES

Catalogue Business
(proprietary) services
products
Custom- Custom-
built designed
products products
PRODUCT POLICY
 Set
of decisions concerning the products
and services being offered

COMMODITY PRODUCTS
 Deeper into the PLC – differentiation 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 goods
and services are differentiable” (Levitt, 1980)
PRODUCT PORTFOLIO AQUCAR™: Water treatment microbiocide portfolio
including glutaraldehyde, glut/quat blends, DBNPA,
bronopol, OPP and dimethyl-oxazolidine available
globally for use in biofouling control, anaerobic
microbial control, and fluid preservation
Agro-sciences Battery Materials: Differentiated solution for battery
Construction cycle life improvement through a proprietary coating
process.
Electronics & Communications FUELSAVER™: Antimicrobial agent for preserving

Energy Storage fuels, registered by the U.S. EPA for use as a
biocide and fuel additive for diesel oil, fuel oil or
Healthcare & Medical kerosene
Home & Office Heat Transfer Fluids: DOWTHERM™ Q Heat

transfer fluid additive for waste heat recovery in oil
Infrastructure applications
OUDRACool™: Solid epoxy resins for low
Nutrition
temperature set and long-lasting protection
Oil & Gas OUDRACure™: Curing agents offering a systems
approach to extending durability
Packaging
OUDRASperse™: Waterborne dispersions,
Personal Care & Apparel manufactured without any added solvents
Renewable Energy OUDRATherm™: Advanced epoxy resins for
extreme high temperature and harsh conditions
Transportation
OUDRATough™: Advanced epoxy resins for
Water damage tolerance, corrosion protection and
durability
PRODUCT MARKET
 Accurate definition is imperative
 Customer needs vis-à-vis ways of satisfying the

needs – constant change
 Dimensions of definition
 Customer function
 Technology
 Customer segment
 Value-added system
FUTURE GROWTH PROSPECTS
 Important customer groups providing explosive
future growth opportunities

 Non-consumers: lacking the skills, training or
resources to purchase
 Undershot consumers
 Overshot consumers
DISRUPTIVE INNOVATION
 Firms possessing the capacity

and 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 and
listened astutely to their
customers
DISRUPTIVE STRATEGIES
 Low-end test  New market test
1. Customers at low  A large population can
end of the market be defined who lack

2. Eager to purchase a money / equipment /
‘good enough’ skill to acquire the
product at a lower product / service
price and/or
3. Create a business  Present customers
model that can yield have to go to an
profits from this low inconvenient location
end of the market to use this
PRODUCT STRATEGY
 Positioning – place occupied in a particular
market

 Measuring organisational buyer’s perceptions and
preferences in relation to competition
 Perception based on bundle of attributes viz. quality,
service, etc. → emphasise on attributes having
central role
POSITIONING PROCESS
Identify Survey existing

determinant and potential
Identify relevant
attributes customers for
competitive
customers use to rating of all
products
differentiate and options against
select each attribute
Determine Examine fit

Select Positioning
product’s current between
or Repositioning
position in each preferences and
Strategy
segment current position
STRATEGY OPTIONS

Increase
Increase difference
importance of between
attribute to competition’s
customers and self’s
products
ORGANISING FOR INNOVATION
 It is not about serendipity
 Organisational innovativeness

 Create an environment where creative individuals
can operate within an inter-organisational context
that harnesses their creativity
 Features of an innovative firm
 Commitment to long-term growth
 Willingness to include risky opportunities within a
balanced portfolio of activities
 Mutual respect amongst individuals and inclination
to work across functions
 Readiness to accept change and failure
 Combination of suitable specialisation and diversity
of knowledge
PROJECT CLASSIFICATIONS
• Incremental enhancements
Derivative • Product and/or process

• Design and components shared by a
Platform product group
• Several changes in product and process
• New core product/process

Breakthrough • Fundamentally different from previous
generations
• Knowledge creation
R&D • New materials and technologies leading to
commercial development
‘CIVIC OF THE SKY’
Resisting the Steve Jobs “Innovation Temptation”
• B2C is a whole different ballgame from B2B

products

• Compare your team’s IQ (Innovation Quotient)
to Steve’s
• Uncover customer outcomes
• Don’t “just ask” customers
• Prioritize customer outcomes
• Take advantage of the profit motive
Conceptualize products customers might

need before spending on development and launch
STAGES OF NPD

Test
Idea Screening Planning Developing
marketing Launching
generating
• Analysing the • Concept

business • Features
case • Prototypes
• Business • Marketing
planning support
LACUNÆ IN B2B NPD PROCESS

Going through Insufficient Lack of market Insufficient
the motions speed orientation checks
• In structuring • Unaware of • Insufficient • Making a
activities TTM customer fuzzy
• In • Not enough input business case
documenting overlapping • Irregular • Allowing
activities stages customer expenses to
• Stages left to contact rise before
single during NPD uncertainties
departments have reduced
MOST INNOVATIVE FIRMS - 2018 (FORBES)
12 month
Sales Market Cap ($ bn,
Growth as on May/Jun Innovation
Rank Firm (%) 2018) Premium
1 ServiceNow 39.02 31.6 89.22
2 Workday 36.07 29.3 82.84

3 Salesforce.com 24.88 97.0 82.27
4 Tesla 67.98 51.1 78.27
5 Amazon.com 30.80 777.8 77.40
6 Netflix 32.41 141.9 71.23
7 Incyte 38.93 28.6 70.59
Hindustan
8 11.49 50.1 67.20
Unilever
9 Naver 19.36 22.1 64.62
10 Facebook 47.09 541.5 64.42
The difference between the market capitalization and a net present value of cash flows from existing businesses
(based on a proprietary formula) = the bonus given by equity investors on the educated hunch that the company
will continue to come up with profitable new growth. 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.
RELATIONSHIPS AND INNOVATIONS
 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
‘Getting
Protecting
through the
‘Getting your ideas Appearing
mud’
into the to be
mud’ neutral

NPD THROUGH NETWORKS
 ‘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
THANK YOU!!
B2B MARKETING
Module 7
Services for Business Markets
STEELCASE
Perspective 1: Product Solutions Perspective
How is a value proposition

developed?

What is the focus of value
creation?
What is the starting point

when designing offerings?
Describe the ideal type of
company-customer
relationships?
Where is the emphasis in
quality?
How do you perceive the
suppliers role in the process/
How do you perceive the
customer’s role in the
process?
How do you best sustain
differentiation and customer
loyalty?
SOLUTION-CENTRED PERSPECTIVE
Product Solutions
Value proposition Innovative products Creating and
Enriching features of delivering superior

existing products solutions
Value creation By the firm Co-created
Designing Start with Start with customer
offerings products/services problems
Then target customer Then assemble
segments products/services to
solve
Company- Transaction-based Interaction-based
customer Centred on co-creation
relationships of solutions
Focus on quality Internal processes and Customer-firm
company offerings interactions
(adapted from Sawhney, 2004; Prahlad & Ramaswamy, 2004)
CUSTOMER EXPERIENCE
MANAGEMENT (CXM)
CUSTOMER EXPERIENCE MANAGEMENT
 Sum total of processes that capture customer’s
subjective thoughts about a firm

 Encompasses the dimensions of the offering
 Product features
 Service aspects
 Ease of use
 Advertising
 Reliability
 Way problems are resolved
 Process of becoming a customer
ACADEMIA & INDUSTRY PERSPECTIVE
 A process of strategically managing a customer’s
entire experience with a product or a company
(Schmitt, 2010)

 The practice of designing and reacting to
customer interactions to meet or exceed customer
expectations and, thus, increase customer
satisfaction, loyalty, and advocacy (Gartner)
IMPORTANCE
 Fewer & larger customers
 Contracts are never signed without due diligence

 Peer groups & WOM
 Social media
PROCESS
 Mapping the customer journey
 Convergence – CRM, DM, digital advertising, e-

commerce, customer service
 Data – volume, relevant
 Automation & mobile

TOUCHPOINTS
Pre-purchase Purchase Post-purchase

(t-n) (Time period: (t+n)
t)

Brand- Advertising Business Customer Service
owned Website development Training
SEO Salesforce Accounts
Mobile apps Packaging
Partner- Website Salesforce Customer Service
owned Media platforms Outlet Logistics
Customer- Need Payment terms Usage

owned Evaluation
Social Other customers Social media Social media
/external Independent Independent
information sources information sources
Social media Other customers
CONTINUUM
Goods Services
Dominant Dominant
Office Machinery PC Telecom Meeting Advertising Janitorial Freight Management

supplies systems & transport consulting
Lubricants hotel
cleaning
CLASSIFICATION
Product-
Marketing Professional Information Financial
related

Product
Inventory
Delivery MR Consulting purchase
management
financing
Installation
Billing
& Advertising Accountancy SCM
management
maintenance
After-sales Export Data Credit

Legal
training advice aggregation evaluation
Banking &
Warranty
insurance
SERVICE ATTRIBUTES
 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 evaluate – even after the process
is over
MARKETING IMPLICATIONS
Lack of
Intangible Perishable Variable Inseparable
ownership

Develop
systems to Effective Promote
minimise screening and advantages of
Plan capacity deviation and recruitment non-ownership
around peak human error
demand
Productisation
Training of
Automate personnel to Flexible
get it ‘right’
Pricing and
promotion to
even out
demand Prepackage the Training
Make tangible Reduced
service customers
through
concrete cues
STAGES OF SERVICISATION
Manufacturing and/or distribution
capabilities
1

Services complementing products
2
Marketing product-service combinations

3
THE GAPS

1: Customer expectation –
Company understanding
2: Company understanding –
Setting standards
3: Standards set – Service

delivery
4: Delivery – External
communication
SERVICE RECOVERY
 Procedures, policies & processes used to resolve
service failure promptly and effectively

 Satisfactory resolution often leads to rise in
customer perception of service quality → higher
supplier loyalty → zero defections
ROQ
 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 quality – diminishing

returns
 Managers - Where? How much? When to
reduce/stop?
Improvement

Effort
Service Quality
Improvement
WOM
Perceived Service
Quality & Customer
Satisfaction
Attraction of New
Customers
Customer
Retention
Cost Reduction
Revenues &
Market Share
Profitability
SERVICES MARKETING - CHALLENGES
 Realities
 Customers pay fees for services they do not always
understand

 Marketing is a challenge even to organisational buyers
who have better expertise than their consumer
equivalents
 Issues
 Buyer’s prior experience
 Levels of client sophistication
 Non-standardised offerings
 Informing client of progress
 Outcome of service delivery
 Personal relationship between client and professional
 Reputation & WOM referrals
SERVICE PACKAGES
 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 package – based on benefits
PRICING
 Can be used to manage the timing of demand and
align with capacity
 Power utilities (off-peak hours), resorts & hotels

(conferences)
 Isolate service profitability
 Cost-to-serve?
 Bundling
 Pure or mixed
PROMOTION
 Tangible cues
 Physical evidences

 Service guarantees
 Performance documentation
 Training and certification of personnel
 Corporate brand
 Trade journals
DISTRIBUTION
 Direct
 Channel members

 Internet
NEW SERVICE DEVELOPMENT
 New offerings that make best use of supplier
capabilities are matched with customers’ needs

 Possibilities
 Improved service experiences – through the use of
new resources
 Customised expert services – fitting firm capabilities
to specific customer needs
 Planned pioneering services – developing a new
service around firm capabilities in a new context
THANK YOU!!
B2B Marketing
MODULE 8
PRICING
Customer Value
Core
Benefits
Add-on
Customer
Value Acquisition
Sacrifices Processing
Usage

Total Cost-in-Use
Price
Acquisition
Paperwork cost
Transportation cost
Expediting cost
Cost of errors in ordering
Prepurchase evaluation costs
Interest
Processing
Storage costs
Quality control
Taxes & Insurance
Shrinkage & Obsolescence
General internal handling costs
Installation
Usage
Training
User labour costs
Replacement costs
Disposal costs

Value-based Strategies
• Shift selling proposition from current prices and individual

transactions to relationships built around value and lower
total cost-in-use
• Relationship benefits display stronger potential for
differentiation than cost considerations
• Differentiator ranking (Ulaga & Eggert, 2006)
1. Service support
2. Personal interactions
3. Supplier’s know-how
4. Ability to improve customer’s TTM
5. Product quality & delivery performance
6. Operation costs
7. Price

Pricing Process
• Multi-dimensional
• Elementary considerations
• Pricing objectives
• Demand determinants
• Assessing value - Economic value
• Commodity value (PoP)
• Differentiation value (PoD)
• Price / unit of value for differentiating features >> Price / unit
of value for commodity features

3C’s of Pricing
Cost
Customer Competitor
Price

Customer
Price sensitivity Search behaviour

• Satisfied customers are • Ease of search
less price sensitive • Comparability
• Product/service Ability to pay
complexity
• High degree of
customisation
End use
• Importance of the
product/service in the
Switching costs cost structure of the End-market focus
customer’s product

Cost Determinants
• Cost-plus vis-à-vis Target costing

• Profit management tool
Market-
Consumer
driven
demands
Costing
Product-level Cost-reduction
Product specification
Target pressure
changes
Costing
Supplier cost Component-

estimates level Target
Costing
Cost Classifications & Implications
Classifications
• Attributable
• Indirect traceable
• General
Implications
• Proportion of product cost accounted for by raw
materials
• Cost variation at different production levels
• Cost advantage over competition
• Impact of ‘experience effect’ on cost projections

Competition
• Sets the upper limit on price

• Differentiation
• Hypercompetitive rivalries
• Create temporary advantages and
destroy competitors’ advantages
by creating market turbulence
• Gauging competitive response
• Estimate cost structure of direct
competitors and potential
substitute manufacturers
• Experience curve
• Behaviours to prevent price war
• Price leadership
• Price stability

Competition
• Sets the upper limit on price

• Differentiation
• Hypercompetitive rivalries
• Create temporary advantages and
destroy competitors’ advantages
by creating market turbulence
• Gauging competitive response
• Estimate cost structure of direct • Technology
competitors and potential • Economies of scale
substitute manufacturers • Product/market
• Experience curve; follower knowledge
• Behaviours to prevent price war • Shared experience
• Price leadership • Experience of
suppliers
• Price stability

Pricing?
• QSR outlets on a street in the central business

district
• Runs out of material in the early evening
• Pricing the service

Price Attacks
• Compete by providing superior value

• Rules of competition (Cressman & Nagle, 2002)
• Never participate in an engagement you cannot win
• Compete from a position of advantage – fight by your own
rules, not by the competitor’s
• Evaluate the competitive threat

Evaluation Framework
• Cost of price reduction < loss of sales

• Price cuts on customers expected to be enticed
• Price cuts in affected geography / channel
1 • Capitalise on competitive advantage to offset the higher price
• Willingness and ability of competitor to reduce again

2
• Cost of chain of responses < loss of sales
• Competitor likely to cut further prices
• Allow competitor to win in low-stake segments
3 • Create barriers to enter profitable segments
• Position of strength under jeopardy

• Value of markets lost < cost of response
4

2 More C’s
Customer
Competitor Channels
Cost Price Context

Channels
• Costs
• At each stage
• Capabilities – value addition
• Power centre
• Dependence asymmetry

Context
• Also ‘environment’
• Elements
• Economic outlook
• Currency fluctuations
• Regulatory environment
• Price discrimination

Relationships & Pricing
• Influenced by pricing structure and rules over the

expected life of the relationship
• Manufacturers gain from trusting supplier
relationships – yet pushing for regular price
reductions
• Also for suppliers to large retailers
• Discounts
• Trade discounts
• Negotiated
• Confidential

More IOR Issues
Transactional
• Bundling vis-à-vis unbundling
• Milking customers
• Short-term ROI vs. CLV
Collaborative
• Premium pricing opportunities
• De-featuring
• Information sharing & value of
learning
• Price reduction pressure and trust

Intra-organisational Aspects
Finance More control and say
Shorter-term perspective
All products and contracts must always make profit
Accounts Cost-plus
All costs fully allocated
Less inclined to respond to market pressures
Marketing Respond to competitive action
Build customer relationships
Generate demand for complementary products
Sales Informed decision on pricing – incentives based on bottomline
Lesser authority – more margins
Pricing decisions leading to sub-optimal profits
•Path of least resistance
•Insufficient knowledge of customer price sensitivity
•Price war
•More aggressive negotiation from buyers
THANK YOU!!

B2B Marketing
Module 9
Channel Management
E-commerce
Channel Management
 “Set of interdependent organisations involved in the process
of making a product or service available for use or
consumption” (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
Direct Indirect
Channels Channels
Direct Sales Online Telemarketing Agents

Marketing
Distributors
Customer Segments
Direct Channels
 Feasible when
 Customers are large, well-defined
 Sales involve extensive negotiations with customer senior
management
 Control on sales to ensure complete package is properly
implemented
 Customers insist on direct sales
 Requirements
 Highly customized solutions - complex
 Selling skill, professional account management, in-depth product
knowledge

Indirect Channels
 Found when
 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 –
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
 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
 Work independently, represent several non-competing
companies
 On commission basis
 Augment / replace the field sales force
 Expert product knowledge coupled with understanding of
market and customer needs
 When to use:
 Small/medium-sized firms
 Limited market potential
 Servicing distributors
Offerings-based Channels
 Bespoke/complex
 Direct channel
 Agents – for entering new unfamiliar geographies
 Uniform
 Lower inclination to control all exchanges with end-customer
 More fragmented and geographically dispersed customer base
 Distributors – for products
 Franchisees – for services

Channel Design
 Driven by customers
 Dynamic process – depending on customer and competitor
behaviour changes
Customer
Guarantee
Service Installation Assortment Size Financing

Information
Channel Partner
Customisation
Channel Partner
Manufacturer

Channel Choice Implications
Product Information High Low
Product customization High Low
Product quality assurance Important Unimportant
Lot size Large Small
Assortment Non-essential Essential
Availability Not critical Critical
After-sales service Not critical Critical
Logistics Complex Simple

Buyer A is purchasing a pre-negotiated item with preset price and delivery from a single source
provider of hydraulic lifts and has secured an online account
Buyer B is in the procurement process of a highly specialized designed-to-spec order that is

nearly 15% of a product’s cost of goods sold
A high level of negotiation and involvement is required before the transaction can be processed.
Buyer C needs confirmation on current pricing and needs to authorize express delivery services
to the inside salesperson for a product that is needed on the assembly line ASAP.
Buyer D is involved in a transaction overseas that requires an import agent and requires a
distributor to repackage and re-mark the product prior to delivery.
Buyer E is procuring over 50 MRO items at catalog price.
Buyer F is procuring several parts from an OEM, but the pricing is unfavorable on some parts
due to insufficient minimum quantity order policy set in place by the OEM and is available from
the distributor
Other required parts are only available through the OEM

Structure Issues
 Length
 Optimum number of levels to serve the customer
 Established vs. new
 Breadth
 Intensity – intensive / selective / exclusive
 Multiple channels
 Inter-firm conflict
 Inter-channel conflict
 Cannibalisation

Channel Administration
 Recruitment
 Motivation
 Support to the channel
 Conflict management

Recruitment Criteria
Financial & Company strengths Product
• Ability to fund • Familiarity
• sales start-up • Product lines
• communications activities • Complimentarity
• Maintain inventory • Sophistication
• Standing amongst customers • Physical facilities
• Management team quality
Marketing skills Commitment

• Market share • Product mix volatility
• Geographic coverage • % business with single supplier
• Experience with target customers • Commitment to targets
• Salesforce • Willingness to
• Delivery performance • maintain stock
• Customer service • invest in communication
• Trade-show participation • invest in sales training
• Trade association membership • drop competing product lines
Facilitators
• Contacts with key industry players
• Experience and performance with other suppliers

Channel Performance
 Delayed differentiation
 VARs
 Outsourcing of non-value adding activities
 MRO
 3PL

Evaluation of Performance
Criterion Factors to consider
Contribution Supplier profitability
Sales growth
Competence Experience
Product knowledge
Administrative and supervisory skills
Strategic thinking of senior management
Loyalty Commitment & motivation towards supplier
Compliance Acceptance of channel policies & programmes
Adaptability Innovation in handling supplier products
Customer satisfaction Level of services
Service quality

Support to Channel
 Incentives
 Financial – commission, 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 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
 Voice
 Loyalty
 Neglect
 Aggression
 Exit
 Formal mechanisms
 Distributor council
 Third-party referee
 Trade association interaction
 Personnel exchange

E-commerce

Types
 Inter-organisational: management of
 Suppliers
 Inventory
 Distribution
 Channel
 Payment
 Intra-organisational
 Workgroup communications
 Electronic publishing
 Sales force productivity
 Industrial Internet
B2M: Companies of Things
linking to machines
 B2C

Strategic Importance
 Communication device to build customer relationships
 Medium to deliver services
 Gathering market research data
 Integrating supply chain members
 Alternative distribution channel

Implementing the new e-commerce model does not mean simply
selling something over the Internet, but incorporating the Net
into the day-to-day functioning of the company, in particular, as a
mode for B2B transactions and for building customer
relationships
Andy Grove

Trends
 Advent of m-commerce
 Online marketplaces
 SaaS for direct e-commerce sites
 Multi-channel buyers are
spending more
 Content is crucial
Deloitte
University Press

E-hubs
Systematic
sourcing
Catalog
MRO hubs
hubs
Operating Manufacturing
inputs inputs
Yield
managers Exchanges
Spot
sourcing
Functions
 Catalogues
 Aggregation of supplier catalogues
 Auctions
 Open bidding
 Negotiation
 Anonymous bidding and counter-bidding
 Exchanges
 Negotiations + financial, logistics services
 Protection of integrity

Value generated
 Market access
 Transaction costs
 Flexibility in administration
 Convenience
 Information - updated
 Customer services
 Entry into larger supply chains

Thank You!!

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(Kapferer, 2008)
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Resonance
Judgments Feelings
Performance Imagery
Salience

4. Relationships :
Partnership What about you and
solutions me?
Sales force 3. Response: What

Judgments about you?
relationships
2. Meaning:
Performance Reputation What are you?
1. Identity: Who
Salience are you?

Construct Description Concern
Corporate Identity The central, enduring, and Who we are?
distinctive characteristics
Corporate Brand The promise made What we do? What makes us
important and/or different
from our competitors?
Corporate Image The beliefs and What people think about us?
impressions held
Corporate Reputation The esteem in which Are we good/bad, admired
the firm is held and respected, better/worse
than others in the industry?

Branded House
Brand
Relationship
House of Brands

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Buy phase Objective Task Low High
Need recognition Generate Prospecting
awareness
Developing Feature Opening
product spec comprehension relationship
Search & qualify Lead generation Qualifying
suppliers prospect
Evaluation Performance Presenting sales
comprehension message
Selection Negotiation Closing sale
Purchase Reassurance Account servicing
feedback
Advertising Trade Personal
shows selling

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Customers Not worth B2C way
don’t use the trouble doesn’t apply
A Facebook Inefficient for

page is customer
sufficient service

Information Customer
Branding Sales
dissemination connect
• Brand awareness • Educate buyers • New leads into • Customer

and visibility • Build trust the funnel feedback
• Building brand and brand when coupled program
advocates - PR trust with content • Customer
opportunities, • Distribution offers care and
positive web channel for (whitepapers, loyalty
mentions, SEO content, ideas eBooks, programs
and brand and offers factsheets)
loyalty • Build
• Improve SEO individual /
by increasing enterprise
third-party reputation as
links, an industry
mentions and thought leader
interest in
brand content
B2B
customers
Industry
influencers
Social
channels
SMEs
engaged in
communities

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Product
Service Logistics
Advice Adaptation

Intrinsic value Extrinsic value Strategic value buyers
buyers buyers
Straight rebuy Product Product /

services
Modified Product Product / Logistics / adaptation /

rebuy services / advice
logistics
New task Logistics Logistics / adaptation /

advice
Selling mode Transactional Consultative Enterprise

Missionary
Frontline
Internal

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Module 10
Tendering
Material / Preparation of
Prequalification
Equipment / Enquiry
of Tenderers
Job Requisition Documents
Release of Evaluation of Receipt of

Purchase Order Tenders Tenders

Material / Preparation of
Prequalification
Equipment / Job short list of
of Tenderers
Requisition Tenderers
Negotiation with
Release of Receipt of
short-listed
Purchase Order Tenders
Tenderers

 General details
• fabrication details
• inspection details
• schedule containing size, rating, flange, stand out, elevation
 Specific details
• operating conditions
• site data
• materials required
• performance required

• utility conditions
• construction details with painting, packing and shipping details
• heating and cooling requirements
• bearings and lubrication details
• instrumentation
• weight and space
• spare parts and other requirements
• piping and other connections
• quality assurance, inspection and testing
• design code references
• welding and repairs codes and standards
• material inspection requirements
 Additional requirements
• unusual conditions
• noise specifications
• vibration and axial position detectors
• casing and other connections
• accessories comprising couplings, guards and mounting plates
 Services challenges
• industry jargon
• semantics
• assumptions
• ‘the more you write, the more you leave out’
• fastidiousness counts

User /
Stores Purchasing
initiator

 Local / national / global
 Sources
• Functional department
• Procurement
• Internet
• ‘Yellow Pages’
 Basic information
 ownership of the company
 financial stability
 turnover
 geographic location
 extent of product and/or services offered
 credentials
 technical expertise
 manufacturing capacity or resources available
 membership of trade and industry associations
 contact details

Questions to be answered:
✓ Please confirm that your company will submit a tender in
accordance with the attached terms
✓ Describe your capabilities, experience and resources with XYZ
technology
✓ List relevant and verifiable current and prior experience with
similar products/projects in the last x years
✓ Mention your production capacity under different operating
conditions
✓ Describe your management structure, its relationship to the
ultimate parent company, and how this project fits into the
organization

✓ Provide documented evidence of financial capability
together with financial reports for the last 3 years
✓ Provide a letter from financial institution(s) that can provide references as
to the company’s financial capabilities, or
✓ Provide a letter from a financial institution willing to execute a
performance bank guarantee on your behalf
✓ Explain how you will execute the following key aspect to
this project
✓ Identify six problem areas or issues with the execution of this project and
describe how you will solve them

 ITT: Invitation To Tender / NIT: Notice Inviting
Tender
 RFP: Request For Proposal
 RFQ: Request For Quotation
 IFB: Invitation For Bidding
 EOI: Expression Of Interest
 LOI: Letter Of Intent

http://eprocure.gov.in/cppp/
http://tenders.gov.in/

Scope of supply
Specifications of goods/service
Delivery /completion date
Budget Access company database
Market survey
Request for information
Request for EOI
Enquiry documentation
Evaluate EOIs Contract and

Selection of tenderers commercial terms
Pre-qualification
Finalise tender shortlist
Issue enquiry
Post on website
Resolve tender queries
Closing date Log receipt of tenders /
Tenderers’ meeting
proposals
Evaluate, appraise and analyse
technical and commercial parts
Select 2/3 acceptable tenders Conduct vendor interviews
Attend contractor presentations
Negotiate with selected 2/3

tenderers
Finalize contract and

commercial terms
Pre-award Meeting
Award Contract Notify unsuccessful tenderers

Debrief tenderers
 Open tendering
 Selective tendering

 All interested parties may submit tenders
 Advertisements in the local, national or international
press
 Prospective tenderers may be asked to purchase the
enquiry documents
 For large contracts the tenderers may be asked to
deposit money (EMD) in the form of a BG/DD

BENEFITS: DISADVANTAGES:
• Gives new parties an • Some quality contractors /

opportunity to suppliers may not bid
because chances of winning
compete are significantly less
• Ensures good • Less able contractors /
competition suppliers may get the tender
• Prevents tenderers on L1 prices - consequent
poor quality in supply /
from forming cartels execution
• Industry prices may get
depressed

 Tender value ≥ INR 25 Lakhs
 Advertisement in Indian Trade Journal (ITJ)
 At least one national daily having wide circulation
 Publish at own website & NIC website
 NIT to Indian Embassies abroad as well as foreign
embassies in India
 Three weeks time from date of publication of bid

 Only those candidates invited by the client may submit
tenders
 More favoured by the private sector
 A short list of suppliers / contractors drawn up by pre-
qualification process - can also be selected by the
‘tendering team’ based on their experience of the
suppliers’ / contractors’ past performances

BENEFITS: DISADVANTAGES:
• The risks of failure and • Possibility of favouritism

the cost of tendering • Reluctance to amend lists -
are reduced, resulting selected tenderers may get
complacent
in lower prices in the • New parties with new ideas may
market place be overlooked
• Suppliers / contractors • Prices may be higher than open
can include an tender
adequate profit level • Tenderers who do not want the
and maintain a viable contract may bid high, rather than
declining
industry
• Cartelisation
• Dividing the contracts
 Value up to INR 25 Lakhs
 Bid document should be sent to registered suppliers by
speed post / registered post / courier / e-mail
 No. of supplier firms should be more than three
 Web based publicity
 Sufficient time should be given

 Used for open or selective tendering
 Also known as two-bid or two-envelope
• Techno-commercial bid
• Price bid
 Bid 1
• Checked for completeness & compliance with enquiry
• EMD
• Technical evaluation
• Commercial terms
 Bid 2
• Price

 Ifonly a particular firm is the manufacturer
 Emergent need to procure from a particular
source
 Technical reason to be recorded
 Single response to an open bid is not a Single
Tender


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B2B Marketing

• Specialised course on Business-to-business Marketing

IIM Ranchi MBA 2018-20

• In-depth discussions on B2B marketing issues

IIM Ranchi MBA 2018-20

• Case analyses: 20%

IIM Ranchi MBA 2018-20

IIM Ranchi MBA 2018-20

• Select any firm in the buyer category

IIM Ranchi MBA 2018-20

IIM Ranchi MBA 2018-20

Tier I Suppliers Subros

Business / Individual Buyers

Inventory • Minimise investment

Quality • Careful evaluation and selection of products and services

• Find competent suppliers

Total cost • Lowest total cost

Administrative costs • Lowest possible level of purchase administration costs

Competitive position of • Reduce supply chain costs

• Budget limit based buying

Effect of IT on Purchase Behaviour

Evolution Internet tools

Business Strategy - Social

Supplier A Supplier B Supplier C

Segmenting Purchase Decisions

Determination of specification & quantity

Search & qualification of potential sources

Proposal evaluation & supplier selection

Selection & establishment of order routine

Performance feedback & evaluation

New task Modified re-buy Straight re-buy

Marketing Implications Contd.

Marketing Implications Contd.

Forces Shaping OBB

• Job function • Roles, relative

Functions vs. Roles

The Individual Purchasing Manager

All activities directed towards establishing,

(Ulaga & Eggert, 2006)

• Create a process that will call for

• Accurate tracing of costs to individual customers

High cost-to-serve Low cost-to-serve

Production Custom-made products Standard

Delivery Fast Standard

REP A REP B REP C

Closing the deal 30% 40% 40%

Education BA in Industrial BS in Recent MBA graduate

Salespersons • Future customer

• Long-run linkage vis-à-vis JV

Transaction Coordination Cooperation Alliance

• Building a dedicated alliance function

• Relationships → channels → supply chains →

• Situated/embedded in a network of relationships

… viewing a heterogeneous market …

IIM Ranchi MBA 2018-20

IIM Ranchi MBA 2018-20

IIM Ranchi MBA 2018-20

IIM Ranchi MBA 2018-20

IIM Ranchi MBA 2018-20

IIM Ranchi MBA 2018-20

IIM Ranchi MBA 2018-20

IIM Ranchi MBA 2018-20

4. Firm strategic type