Business marketing

defined
Industrial marketing consists
of all the activities involved in
marketing of products and
services to organizations that
uses products and services in
•Production of consumer or
industrial goods
•To facilitate the operation of
their enterprises
 Business Marketing
 Industrial Marketing is the marketing
of the products and services to
business organizations.
 Business organisation include
manufacturing companies,
government undertakings,privatre
sector, educational institution etc
 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.
business marketing is also called
business-to-business marketing, or
B2B marketing.
THE SUPPLY CHAIN
 Industrial versus consumer
marketing management
 Less number of customers but large
customers
 Geographically concentrated market

 Channels of distribution are shorter

 Highly organized and well informed

buyers
 Promotional Characteristics (Business
mktg is focused on personal selling)
 Price Characteristics: Business mktg,
price is fixed as per competitive
bidding and negotiated prices.
 Characteristics of Business
Marketing
 Business may be defined as an
enterprise engaged in the production
and distribution of goods for sale in
the market or rendering service at a
price. The chief characteristics of the
business are:
 Creation of utilities: Business
denotes creation of utility and
service for satisfaction of human
wants. Business helps in the
creation, distribution and production
of utilities.

 Recurring activities: Business

activities are recurring in nature.
Recurring purchase and sales are
regarded as identifying marks of the
business.
 Transfer of title: The goods
produced or purchased by the
business are made with the intention
of sale or transfer of title from the
seller to the buyer. Because of this
reason goods acquired for the sake
of personal consumption are
excluded from business.
 Mutual benefit: Business activities
are not one sided affairs because
both the parties are benefited. The
buyer gets the benefit of having the
goods and the seller gets the benefit
of having money.

 Expectation of earning: Business

provides a way of living to the
businessman because he intends to
earn profit.
 Types of industrial customers
Lubricants
users Coal
Commercial paper
enterprises OEMs
Original equipment mfrs Steel
Cement
Industrial Raw materials
Government
suppliers agencies Airplanes
Typewriters
guns
Institutions
Hospitals,schools etc
Products
Consumables
 Commercial enterprise: it includes
private sector, profit-seeking
organisation consisting of : Industrial
distributors or dealers
 Classification of industrial
products
 Material and parts
• Raw materials
• Components
 Capital items
• Installations(Heavy equipments)
• Accessory equipment (Light equipment)
 Supplies and services
 Supplies items includes paints,

soaps,oil and grease

 These items are generally
standardized & are marketed to a
wide cross-section of industrial
users.
 Services: It includes services like
building maintenance services,
auditing services, legal services,
marketing research services
 Market Segmentation and B2B Marketing

company size
Behaviour or Needs
Certainly large companies may be of key or strategic value to a
business but some want a low cost offer stripped bare of all services
while others are demanding in every way
 Size Segmentation Examples
 Targeting companies who see $500 million/year in revenue.
 Only targeting the largest companies in your region based on
number of employees.

 Segmenting By Vertical
 A hanger warehouse may only target companies in the retail industry, a
graphic software firm may only target design departments or design
houses

 Segmenting by Geography

 Segmenting by Behavior
 segmenting targets prospect groups based on their buying behavior. How
are your customers using your product, how often are they using it, and
what is the challenge your prospects face? Those questions, coupled with
the propensity of your prospect to actually pull the ‘buy’ trigger, is the
cornerstone of behavioral segmenting.
 Eg: selling enterprise software, you’ll probably have at least
4 sets of campaigns / messages aimed at different groups
within the company:
- business function: the department who’ll be using your
software the most, focus on use cases, user benefits,
features
- IT: how it’s technically superior, integration options,
reliability, security…
- Finance: return on investment, compliance, legal
requirements, financial credibility
- Executive: strategic, case studies, overviews, hospitality
 Chapter 2

 Nature of Demand in Industrial

Markets
 Purchasing orientation & Practice of
business customers
 Environmental analysis in
industrial/business
 Channel Characteristics
 Inventory or stock control is very
much important factor in the
business organizations' therefore the
distribution channels are needed
more direct from the manufacturer
to the customer in industrial
marketing.
 There are a few channel alternatives,
which are feasible in the industrial
market than the consumer market
Nature of Demand in
Industrial Markets

 The demand for industrial products

and services does not exist by itself.
It is derived from the ultimate
demand for consumer goods and
services.
 Industrial demand is therefore, called

derived demand.
Derived Demand:–
Industrial Customer buys goods and
services for use in producing other
goods and services.
 Ultimately whatever is finally
produced will be sold to the
consumers. Hence the demand for
Industrial goods and services is
derived from consumer goods and
services.
 Joint Demand;–
Joint demand occurs when one
industrial product is useful if other
product also exists.
 For eg: a computer cannot be
operated without the monitor.
 Cross Elasticity of Demand:–
 Elasticity is simply the change in
demand from a change in price.
Demand is “inelastic” if the %
change in quantity demand is less
than the % change in price.
 Complementary Goods
• Complementary goods are those that are often used together,
such as motor vehicles and gasoline or DVDs and DVD players.
 Complementary Illustration
 When the price of one good declines (or increases) and the
demand for a related good increases (or decreases), then the two
goods are considered complementary.

 For example, if the price of computers increases and the demand

for software declines, computers and software can be considered
complementary.
 Substitute Goods
 Substitutes are goods that are used in place of each other.
Examples include CDs and digital music files, such as MP3s
or ice cream and frozen yogurt.
 Substitute Illustration
 If a price increase for one good leads to an increase in
demand for a related good, then the two goods are
considered substitutes. An increase in beef prices, for
example, followed by higher demand for chicken or pork,
indicates that chicken or pork represent substitutes for
beef.

Purchasing orientation
& Practice of business
customers

 PURCHASING ORIENTATION
 purchasing department occupied a low position in the
management hierarchy, in spite of often managing more
than half the company’s costs.

 Recent competitive pressures have led many companies to

upgrade their purchasing department and elevate
administrators to vice presidential rank.
 Today’s purchasing departments are staffed with MBAs
who aspire to be CEOs-like Thomas Stallkamp,
Chrysler’s former executive vice president of
procurement and supply, who cut costs and streamlined the
automaker’s manufacturing processes.
 Procurement Orientation:
 Here buyers simultaneously seek quality improvements and
cost reduction. Buyers develop collaborative relationships
with major suppliers and seek savings through better
management of acquisition, conversion, and disposal costs.
They encourage early supplier involvement in materials
handling, inventory levels, just-in-time management, and
even product design.

 They negotiate long-term contracts with major suppliers to

ensure the timely flow of material. They work closely with
their manufacturing group on materials requirement
planning (MRP) to make supplies arrive on time.
 Types of Purchasing Processes :
Four product related purchasing processes are distinguished,
 1. Routine product: These products have low value and cost

to the customer and involve little risk (e.g. office supplies).

Customers will seek the lowest price and emphasize routine
ordering. Suppliers will offer to standardize and consolidate
orders.

 2. Leverage products: These products have high value and

cost to the customer but involve little risk of supply (e.g.
engine pistons) because many companies make them. The
supplier knows that the customer will compare market
offerings and costs, and it needs to show that its offering
minimizes the customer’s total cost.
 3. Strategic products: These products have high
value and cost to the customer and also involve
high risk (e.g. mainframe computers). The
customer will want a well-known and trusted
supplier and be willing to pay more than the
average price. The supplier should seek strategic
alliances that take the form of early supplier
involvement, co-development programs, and co-
investment.

 4. Bottleneck products: These products have low

value and cost to the customer but they involve
some risk (e.g. spare parts). The customer will
want a supplier who can guarantee a steady supply
of reliable products. The supplier should propose
standard parts and offer a tracking system,
delivery on demand, and a help desk.

 Buying Orientation:
 The purchaser focus is short term and tactical. Buyers are
rewarded in their ability to obtain the lowest price from
suppliers for the given level of quality and availability.

 Buyers use two tactics namely commoditization, where they

imply that the product is a commodity and care only about
price; and multi-sourcing where they use several sources
and make them compete for share of the company
purchases.
Environmental analysis in industrial/business
 Economic What economic trends might have an impact on business
activity? (Interest rates, inflation, unemployment levels, energy
availability, disposable income, etc)

 Technological To what extent are existing technologies maturing? What

technological developments or trends are affecting or could affect our
industry?

 Government What changes in regulation are possible? What will their

impact be on our industry? What tax or other incentives are being
developed that might affect strategy development? Are there political or
government stability risks?

 Socio cultural What are the current or emerging trends in lifestyle,

fashions, and other components of culture? What are there implications?
What demographic trends will affect the market size of the industry?
(growth rate, income, population shifts) Do these trends represent an
opportunity or a threat?
 Future What are significant trends and future events? What are
the key areas of uncertainty as to trends or events that have the
potential to impact strategy?

 Internal Analysis Understanding a business in depth is the goal

of internal analysis. This analysis is based resources and
capabilities of the firm.

 Resources A good starting point to identify company resources is

to look at tangible, intangible and human resources.
 Tangible resources are the easiest to identify and evaluate:
financial resources and physical assets are identifies and valued in
the firm’s financial statements.

 Intangible resources are largely invisible, but over time become

more important to the firm than tangible assets because they can
be a main source for a competitive advantage. Such intangible
recourses include reputational assets (brands, image, etc.) and
technological assets (proprietary technology and know-how).

 Human resources or human capital are the productive services

human beings offer the firm in terms of their skills, knowledge,
reasoning, and decision-making abilities.
Organizational
Buying
 Characteristics of
organisational procurement
 Multiple influencers
 Technical sophistication

 Value analysis

 Well established procedures

 Longer term and closer

relationships.
 Closer interactions among multiple
functions.
 Supplier proximity considerations.
 Buying situations
 New task
 Modified rebuy

 Straight rebuy

organisational buying
 Buying phases
 Recognition of a problem
 Solution determination

 Determining the needed item

 Search for and qualification of

potential sources
 Acquisition and analysis of proposals
The Buy grid Framework for Organizational Buying Situations
 Buying center
 The decision making unit
 Group of individuals who come
together to make a particular
purchase decision
 Power base
 Buying center roles
 Primary roles
• Decision makers
• Influencers
 Secondary roles
• Users
• Buyers
• Gatekeepers
 Objectives in organisational
buying
 Task oriented
• Price
• Services
• Quality
• Assurance of supply
• Reciprocity
 Non task objectives
 How purchasing activities
influence buying behavior…
 Material requirement planning (MRP)
• Demand management
• Production management
• Material management
 Just-in-time purchasing (JIT)
• Only one supplier
• Long term relationships
• Frequent supplies
• Precise quantity at precise time
 Centralized purchasing
 Buyer technology
• On-line DSS, on-line order processing etc
Factors influence the size of the
buying Centre
 Characteristics of the firm
 Purchasing situation

 Perceived importance of the product

 Psychological factors
influencing decision making
 Difference in role orientation
 Difference in information exposure

 Perceived risk
 Conflict resolution strategies
competing collaborating

Own
concern
compromising

accommodating
avoiding
Others concern
 Sources of power in conflict resolution

 Reward power
• Ability to influence by granting monetary
benefits
 Coercive power
• Ability to impose punishment
 Legitimate power
• Formal authority
 Personality power
• Ability to influence with personal charm
 Expertise power
• Information or knowledge power
 Evaluation of supplier
performance
 The categorical method
 Weighted point method

 Cost ratio method

 Weighted point method

Factor Weight Actual performance Score

Quality 40 90% acceptable 40*0.9=36

Delivery 30 90% on schedule 30*0.9=27

Price 20 125% of lowest bidder 20*0.8=16

100/125=0.8

After sales 10 60% on time 10*0.6=6

Total score 85
Cost ratio method
Strategic Management
in Business marketing
McKinseys 7S model

structure

strategy systems

Shared
values

skills style

staff
Strategic
Management Process
 Opportunity matrix

10

Potential H
attractiveness

0 L H
Probability of success 10
 Threat matrix

10

Potential H
severity

0 L H
Probability of occurrence 10
 Boston consulting group model

H Question
Star
Market
mark
growth
rate
L Cash cow Dogs

H L
Market Share
 Business growth strategies
 Intensive growth
 Integrative strategies

 Diversification strategies
 Intensive Growth strategies

Current Market penetration Product

market development
strategy strategy

Market Diversification
New development strategy
markets strategy

New products
Current products
 Integrative growth strategies
 Forward Integration
 Backward integration

 Horizontal integration
Diversification growth strategies
 Concentric diversification
 Horizontal diversification

 Conglomerate diversification
Assessing market
opportunities

Marketing research
 Marketing research system
 Marketing research is the systematic
design, collection, analysis and
reporting of data and findings
relevant to a specific marketing
situation facing the company
Suppliers of marketing research
 Students and professors
 Internet

 Syndicated research firms

 Specialty marketing research firms

 Marketing research process
 Define the problem and research
objectives
 Develop the research plan
• Data sources
• Research approaches
• Research instruments
• Sampling plan
• Contact methods
 Collect the information
 Analyse the information
 Present Findings
Characteristics of good marketing
research
 Scientific method
 Research creativity

 Multiple method

 Value and cost of information

 Market demand
 Market demand for a product is the
total volume that would be bought
by the defined customer group in a
defined geographical area in a
defined time period in a defined
marketing environment under a
defined marketing programme
 Demand measurement and
forecasting
Types of demand measurement
Geographical
Product level
Time level
Segmentation, targeting and
positioning in Industrial
marketing
 Segmentation, Targeting &
Positioning
 Levels of Market segmentation
• Individual marketing
• Segment marketing
• Niche marketing
• Mass marketing
 Requirements for effective
segmentation
 Measurable
 Substantial

 Accessible

 Differentiable

 Actionable
Basis of segmentation in business
marketing
 Macro segmentation
 Micro segmentation
 Some Macro variables
 Industry
 Plant characteristics

 Location

 Purchasing process

 End use markets

 Some Micro variables
 Organizational variables
• Purchasing situation / phase
• Product innovativeness
• Organizational capabilities
 Purchase situation variables
• Inventory practices
• Purchasing policies
• Structure of buying centre
 Individual variables
 Market targeting
 Process of market targeting
• Evaluating the market segments
• Selecting the market segments
Product planning
What is an industrial product…
 Basic properties
 Enhanced properties

 Augmented properties
Product strategy involves
continuous change
 Product strategy issues revolves
around
• Changes needed in current products
• Whether products should be added or
dropped(product mix management)
 Industrial product manager
 Forecasting sales
 Product planning
 Pricing
 Product conceptualizations
 Initiating product changes
 Product re-engineering decisions
 Product mix management
 Production planning and capacity
management
 Technical support to the selling team
 Product life cycle
– Course that a products sales and profits take over it’s
life time
– The PLC has four phases
• Introduction
• Growth
• Maturity
• Decline
– The PLC concept can be applied to
• Product class
• Product form
• Brand
 Introduction stage
 Characteristics
• Low sales
• High cost per customer
• Negative profits
• Innovators customers
• Few competitors
 Marketing objective
• Create product awareness and trial
 Introduction stage
 Strategies
 Product : Offer basic product
 Pricing : Cost plus pricing
 Distribution : Build selective distribution
 Advertising : Build awareness among early
adopters and dealers
 Sales promotion : Heavy sales promotion to
entice trial
 Growth stage
 Characteristics
• Rapidly rising sales
• Average cost per customer
• Rising profits
• Early adopters
• Growing competitors
 Marketing objective
• Maximize market share
 Growth stage
 Strategies
• Product : Product extensions, service,
warranty
• Price : Competitive pricing
• Distribution : Intensive distribution
• Advertising : Build awareness and
interest in mass market
• Sales promotion : Reduce
 Maturity stage
 Characteristics
• Peak sales
• Low cost per customer
• High profits
• Middle majority customers
• No of competitors begin to decline
 Marketing objective
• Defend the market share while maximizing
profits
 Maturity stage
 Strategies
• Product : Features
• Price : match or beat the competitors
• Distribution : more intensified
distribution
• Advertising : Stress brand differences
• Sales promotion : Increase to achieve
brand switching
 Decline stage
 Characteristics
• Declining growth rate
• Low cost per customer
• Declining profits
• Laggards customers
• Declining competitors
 Marketing objective
• Reduce expenditure and milk the brand
 Decline stage
 Strategies
• Product : Phase out weak items
• Price : Cut price
• Distribution : Selective
• Advertising : Reduce to minimal level
Product revitalization decisions
 Identifying the causes for poor
performance
• Uncompetitive price
• Production problems
• Uneconomic batches
• High cost of production
• Wrong assessment of customer
expectations
• Low selling price
Product revitalization decisions
 Corrective actions
• Product modifications (cost reduction)
• Increase the price
• Product improvement
• Decrease the price
• Development of new market
• Increased promotional expenditure
• Revamping distribution channels
 Product elimination decisions
 Factors to be considered during
product elimination decision
• Full line policy
• Corporate image
• Sales of other products
• Profitability of other products
 Service marketing
 Include all economic activities whose
output is not a physical product , is
generally consumed at the time it is
produced and provides added value
in forms that are essentially
intangible
 Some service sectors …
• Transportation
• Communication
• Retail trade
• Finance, insurance and banking
• Hotels and lodging
• Government
• Universities and educational
institutions
 Services are …
 Intangible
 Inseparability

 Heterogeneity

 Perishability
The services marketing triangle
Company
(management)

Internal marketing
External Marketing

Delivery

Employees Customers
GAPS model of service quality
 Gap 1- Difference between customer
expectation and perception
 Gap 2 – Not knowing what customers
expect
 Gap 3- Not selecting the right service
designs standards
 Gap 4- Not delivering the service
standards
 Gap 5- Not matching performance to
promise
 Strategic innovation and
new product development
 What is new product
 New to the world
 New product lines

 Product variants

 Improvements in the existing

products
 Repositioning
Where do new ideas come from
 Within the company
 Customers
New product development process
 Idea generation
 Idea screening
 Idea evaluation and preliminary
business analysis
 Product development and testing
 Formal business planning
 commercialization
 Organisational aspects in new
product development
• Product managers
• New product managers
• New product committees
• New product departments
Formulating channel
strategy
Channel participants
 What is a marketing channel
 A marketing channel is a set of
interdependent organisations
involved in the process of making a
product or service available for use
or consumption
 Key members of marketing
channels
 Manufacturer
• Producer of product or service being
sold
 Intermediaries
• Means channel member other than
manufacturer or end user (wholesaler,
retailer)
 End users
 Why marketing channels

Demand-side Supply side factors

factors • Routinisation of
• Facilitating the transactions
search • Reduction in no. of
• Assortment contacts
 Sorting • Carry inventory
 Accumulation • Demand creation
Bulk breaking

• Extend credit to end
users
• service
 Marketing flows
 Physical possession
 Ownership
 Promotion
 Negotiation
 Financing
 Risking
 Ordering
 Payment
 “Service outputs”
 Value added services created by
channel members along with the
product purchased by consumers are
called service outputs
 Typical service outputs include bulk
breaking, spatial convenience,
waiting and delivery time,
assortment etc.
 Choosing the right distributor
 What marketing functions to assign
 Product line
• Fragmented channels
• Specialized products
 Size and type of the distributor
• Large and reputed distributors
• Small distributors
 Exclusive or multiple distribution
 How to divide selling function b/w
company sales team and distributors
• House accounts and distributor accounts
 Distribution policies
Marketing logistics

Physical distribution and

customer care
 Logistics
 In the business area, Logistics refers
to the interrelation and management
of all the activities involved in
making products and raw materials
available for manufacturing and in
providing finished products to the
customers when, where and how
they are desired
Various logistical cost centres are
 Transportation
 Inventory management

 Warehousing

 Material handling

 Order processing
 transportation
• Mode and carrier selection
 Road
 Rail

 Air

 Pipeline

 waterways

• Carrier routing
• Vehicle scheduling
 Inventory management
 Inventory carrying cost
• Inventory acquisition cost
• Inventory service cost such as insurance
• Storage space costs
• Inventory risk cost
 warehousing
• Private or public facilities
• Site location
 Market centered
 Production centered

 Intermediate
Marketing communication

Advertising and sales promotion

Sales management
 Advertising in business
marketing
 In business marketing advertising is
required for
• Reaching the buying influencers
• Creating awareness
• Enhancing the sales call effectiveness
• Increasing overall marketing efficiency
• Supporting channel members
 Industrial advertising media
 Business and trade publications
 Directory advertising

 Consumer media

 Direct marketing

• Mailers
• Telemarketing
• Catalogues and datasheets
 Sales promotion in business
marketing
 Trade shows
 Premiums

 Specialty advertising

 Incentives

 Publicity in business marketing

 Advertising funds
 What can we afford
 Objective and task

 Percentage of sales

 Experimentation

 Match the competition

 Developing message strategy
 Identifying the audience needs
 Keep the message to important
specifics
 Case histories

 Testimonials

 Comparison Ads

 Straight exposition
 Developing media plan
 Media class
 Media vehicle

 Reach

 Frequency

 Continuity (Length of the campaign)

 Scheduling
 Advertisement evaluation
 Advertisement impact assessment
• Aided recall
• Un aided recall
 TOM
 SIM

 OIM

• Message recall
• Content recall
 Sales management
 The analysis, planning,
implementation and control of sales
force activities. It includes setting
and designing sales force strategy,
recruiting, selecting, training,
compensating, routing, supervising,
and motivating the personal sales
force
Sales management
 Selling
 Sales management

 Salesmanship
 Sales as a career
 Good remuneration
 Shortest route to the top

 Other privileges
 Selling process
 The steps that the sales person
follows when selling, which include
prospecting and qualifying, pre-
approach, approach, presentation,
handling objections, closing and
follow ups.
Prospecting methods
 Inquiries from advertising
 Centers of influence
 Chain of leads
 Cold calls
 Directories and mailing lists
 Group meetings and parties
 Internal records
 Observation
 Service personnel
 Trade shows
Pre approach or planning sales call
 Planning reflects professionalism
 Planning develops goodwill
 Planning builds confidence in sales person
 Planning increases sales probability
 Approaching
 Types of approaches
• Complimentary approach
• Reference approach
• Sample approach
• Customer benefit approach
 Preparing sales presentations
 An effective sales presentation
should
• Attention
• Interest
• Desire
• Conviction
• action
 Recruiting
 Attracting the potential employees
and making them apply for the job
 Sources of people
• Persons within the company
• Competitors
• Non competing companies
• Educational institutions
• Advertisements
• Employment agencies
 The recruitment process
 Conducting job analysis
 Preparing job description

 Preparing the set of job qualifications

• Personality traits
• Qualification levels
Compensating sales personnel
 Various compensation elements
• Fixed element
• Variable element (commission, bonus,
etc.)
• Fringe elements (paid holiday, sickness
etc.)
• Reimbursement element
 Selection process
 Initial screening interviews
 Application forms
 Tests
• Intelligence tests
• Knowledge tests
• Personality tests
• Drug tests
 In-depth interviews
 Reference checks
 Sales training
 Initial sales training
 Refresher training
 Designing the sales training
programme
 Training objectives
• Initial sales training
• Refresher training
 Contents of the sales training programme
• Company knowledge
• Product knowledge
• Sales techniques and selling process
• Interpersonal skills
• Market and industry knowledge
 Methods of group training
 Lectures
 Group discussions
 Role playing
 Video conferencing
 CDs
 Methods of individual training
 On job training
 Personal conference
 Correspondence courses
 Interactive video discs
 Implementing sales training programme
 location
 home office
 Field office
 Regional office
 Central training facility
 Non company site (hotel, resort etc.)
 Types of compensation plans
 Straight salary plan
 Straight commission plan

 Combination of salary and incentive

plan
 Bonuses

 Fringe benefits
 Sales meetings
 Sales meetings are important for
communication and motivational
purposes
 Exchange of information and ideas

 Occasions for management to

stimulate the sales force to raise the
performance standards
 Evaluating sales performance
 Quantitative performance standards
• Quotas
• Selling expense ratios
• Net profit ratio
• Territorial market share
• Sales coverage index
• Calls frequency / calls per day
• Average cost per call
 Qualitative performance
standards
 Job factors
• Product knowledge
• Understanding customer needs
• Service
 Personal factors
• Punctuality
• Attitude
• Cooperation
• Adaptability
• Reliability
CRM and CB
 CRM and CB
 There are three ways to increase the
profitability
• Acquire more customers
• Optimize the value from existing customers
• Retain the right customers longer
 Of these three choices above, acquiring
new customers is the most expensive
affair and retaining the existing
customer is the most economical
 Before we understand CRM, we should
know the concepts of “life time value of
customer” and “consumer touch points”
 CRM
 While organizations should continue
looking for customers new
customers, they should also know it
is worth a significant investment to
keep them. CRM is the way to it.
 With CRM suppliers generate loyalty,
this in turn translates in to additional
business at increasingly higher
margins.
Evolution of CRM
 Mass marketing
 Target marketing

 CRM
 Types of CRM
 Win back or save
 Prospecting

 Loyalty

 Cross selling / upselling

 CRM is a multifaceted strategy that helps
companies understand, anticipate and
manage customer needs.
 CRM comprises the acquisition and
deployment of knowledge about customers
to enable a company to sell more of their
product or services more efficiently
 Major thrust of CRM involves segmenting
the customers on their value and offering
appropriate differentiated services for each
of these levels
 CRM ensures that individual customer
needs are profitably satisfied at the right
time in the right channel with right offer
The CRM begins with
 In-depth analysis of customer
behavior and attributes to achieve
the complete knowledge of the
customers, their habits and desires,
and their needs.
 Then applying the knowledge to the
formulation of marketing campaigns
and strategies
 The CRM cycle
 An assessment phase
 A planning phase

 An execution phase
Benefits of CRM
 With CRM practice, both suppliers
and customers win
 Prevents overspending on low value
customers and under spending on
high value customers
 Improves customer retention

 Inoculates customers from

competition
 Improves marketing return on
investment
 Customers get the best offer to meet their
needs at the right time
 Customers get more appropriate mix of
marketing message balanced with
information
 Offers are made based on understanding
customer profitability
 Products are packed according customer
purchase patterns
 Service channels are customized to
customer needs
 Sales and point of contact staff have
detailed information about customer
value, needs and attitude
 Implementation of CRM

 Strategy
• Channel, segmentation, pricing,
branding and advertising
 Segmentation
 Technology

 Process

 organization
Pricing policies
 Pricing
 Factors that influence pricing
strategy
• Customer demand
• Competition
• Cost and profit relationships
• Government regulations
 Cost analysis
 Fixed cost and variable cost
 Economies of scale

 The learning curve

 Scale of economy

uc

Production rate
 Learning curve
10,000 units

20,000 units
unit
cost

30,000 units

Production rate
 Pricing strategies
 New product introduction
• Market skimming
 Product has a patent protection
 Highly valuable innovation

 Product has a short life span

 Potential competitors are distant in time

 Uncertainty regarding markets price

sensitivity
• Market penetration
 Market is highly price sensitive
 Strong competition exist

 Company’s goal is high market share

 Pricing policies
 Discount pricing
• Trade discounts
• Quantity discounts
• Cash discounts
 Geographical pricing
 Major and national accounts
Centralised Decentralised
purchasing
purchasing
Large
customers Major National
A/c A/c

Minor
small
customers
A/c
?