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Marketing b2b
Marketing b2b
-- Price
* In any transaction price is the amount of money
that is agreed upon to satisfy both parties
* Price, the value of exchange is decided by the
market, not the cost incurred in creating
the product
* In B2B marketing price usually is the final step
in a complex series of activities involving
design, development, negotiation etc:-
* This is usually because products are complex
and is usually produced in a colloborative
manner
-- Place
* In a consumer markets, place is about getting
the right form ( size, packaging, quantity etc:- )
at a useful time ( retail hours ) with minimum
inconvenience
* In consumer markets economic utility refers
to consumer preferences in locational
convenience, required quantities / sizes and
acquisition convenience
* Using a car as an example, the company gains
economic utility by
-- locating dealership near population centers
-- Heavily trafficked shopping areas
-- Easy availability with minimum fuss
-- can usually drive away with the new car in
a couple of hours
* In B2B marketing economic utility takes the
form of the supply chain management,
inventory, services, material planning etc:-
* Using the same example of a car, the company
to add to the customers fleet offers cars in
various models and numbers at periodic
time intervals
* the cars are shipped to right locations with
appropriate quantities of spare parts at the
right timing
* This is not easy when production schedules have
to be matched with delivery schedules
* the manufacturing plants may not be
located near the many rental outlets of the
company
-- Promotion
* In consumer markets the promotion mix of
advertising, sales promotion, public relations
personal selling plays a major role
* In B2B marketing advertising cannot be
leveraged as Ads are a monologue a one way
* In B2B marketing personal selling is the most
effective way of promotion
* In B2B marketing as said earlier, products are
made collaboratively
* The relationship is close and long lasting
f) Organizational Capabilities
organization can be segmented on the basis of
operating capabilities
technical capabilities
financial capabilities
Purchase situation variables
a)Inventory requirements
Firms who use
MRP
JIT
Have an impact on marketing programmes
Technical/Financial overtime in buying behavior
Selling should need to be highly trained in
Negotiation
Human relations skills
Supply – true products
in time
as per schedule
Segmenting on the basis of inventory is important
b) Purchase importance
when product are applied differently
clarify according to perceived importance is useful
c)Purchasing Policy
potential customers are segmented on the basis
agreed prices
tendering
leasing vs outright purchase
d) Purchasing Criteria
performance criteria
economic criteria
adaption criteria
integration criteria
legalization criteria
e) Structure of buying center
organization can be segmented on the basis of
involvement in the buying decision
inter department personnel
when involving patterns are known
makes meaningful segmentation possible
Individual Variables
a) Personal characteristics
buying decision are ultimately made by individuals
though decisions are made an organizational variable
segmentation is possible based on individuals
some buyers take more risks than others
risk taking is directly attributed to self confidence
a sales information can be -----
send in data to enable segmentation
b) Power structures
It can be the engineering dept , in other finance etc
Strategies for restoring conflicts
Collaboration
Compromise
Avoidance
Coalition Formation
Can segment on the basis of
Power
Communication strategy
Market segmentation a step by step process
Market segmentation involves cost
The more deeper the segmentation the greater the cost
degree of segmentation depends on detail required
macro variable are relatively easy
can be obtained from secondary source
micro variable may require
research study
more and more individual contents will be needed
segmentation begins with macro variables
works towards micro variables
up to the needed level
that is one segmentation becomes good enough
it should stop
no further segmentation should be done
Evaluating potential segments
Market segmentation mainly identifies
potential opportunities
most attractive markets
use limited returns to maximum returns
Market profitability analysis
In analyzing profitability of any segment there are 4 elements:
1)Market potential
most optimistic estimation of many products you can sell
in a given time
2)Sales potential
most optimistic estimation of firm share in a given time
3)Sales forecast
expected sales in a given time
4)Profitability
difference between potential revenue (-) cost of
serving/maintaining customers.
There are many measures for measuring marketing potentials
quantities - based on available data
qualitative – based on informal judgment
When data is not available management calls on
sales force
to executives
customers
To estimate market potential
Once market has been
estimated potential
sales forecast made
It is necessary to see how customer will be accrued
Customers can be accrued only it
market programme suits customer needs
as well as competitors positions in the segmentation
Markets in sender segments may be
costly
need different programme
Before individual segmentation profitability is assessed
cost associated with
Sales force deployment
advertising
product development
pricing strategy
logistics
Competitors analysis
how good is the analysis of competitors strategy
profit analysis is made on strengths\weaknesses of
competitors in that segment
potential new entrants
In evaluating a segment following questions must be asked of
competitors :
Who
Strength
Weakness
Product innovation
Product Quality
Design Capability
Sales force capability
Competitors will always define a segment while trying to take
market share in others.
Target Markets
Profitability
Capacity to serve the market
Target the segment
undifferentiated market
Product is standardized
Sold to a broad range of industry
Undifferentiated marketing strategies is required
Firms ignore segment differentiation
Develop a single market programme
Focus is common to all
On the basis of ROI undifferentiated marketing is most
attractive
Risk is that vendors who differentiate will attack you
Make a mistake on delay in supply differentiating
vendors will step in.
Differentiated Market Selections
Firms offer this product
Diverse segments
Response to marketing programme is different
However this involves over all income is costs in
Product development
Production
Marketing
Advertising \publicity
Idea is to set higher sales and better positions in
the segment
Concentrated Marketing
Concentrates only a few segments, though many
segments exists
Gets larger share of one \two segments
Vendor will be in a strong market position
As firm gains experience
Firm turns its response to buyers requirements
Leads to advantage of competitors
Operating economics are also obtained due to knowledge in :
Production
Distribution
Publicity
Niche Marketing :
When segments \segmented to even tinier segments
Gaining grounds in industrial markets\ service markets
Vendors can offer specifically tailored products
Vendors monitor marketing closely
Emerging trends \ requirements
Develop new product to satisfy their needs
Reposition existing product for new application
Niche marketing is growing today because of
Lot of information is available today
Vendors with huge volume of data
Helps in discovering Niche.
BUSINESS STRATEGY
Strategy literally means ‘ The art of the general ‘
Sun Tzu wrote a book called ‘ the art of war ‘ 2500 years ago.
The concentrated essence of winning strategy.
A] The strategic planning process
-- As in consumer marketing, in B2B marketing also the
strategy starts with a mission statement, which is
formulated into objectives.
-- The four elements of strategy are :
1) The need for systematic decision making
2) The development of programs for their implementation
3) The measurement of performance against objectives
4) Modification of the strategy itself if needed
-- Planning imposes a degree of order upon potential chaos
-- Planning allocates resources in the most effective way
-- Planning leads to a shared sense of opportunity, direction
significance and achievement.
-- This process has four distinct stages :
1) Evaluation:
Where are we now ?
Where do we want to go ?
What resource capabilities do we have ?
2) Strategy formulation : How are we going to get there ?
3) Detailed planning :
4) Implementation & review
-- The key ideas that form the basis for strategic management
are :
1) The business strategy design seeks to have a ‘fit’ between
the business and the business environment.
2) The key element of ‘ fit ‘ in business strategy is to provide
superior value to the customer
3) Superior value means offering differentiated products from
competitors in the minds of customers
4) Differentiation is produced is by using core competitiveness to
advantage
5) The more distinct the core competency the higher the customer
value and higher the profits
6) Quality and process improvement are fundamental to provide
superior value
7) Measuring results and tracking results create learning and later
improvement
Today with rapid technological change and the internet, there is a lot
Of new thinking on strategy and strategic planning
• Change in customs, channels and competition interact to
create disturbances in the market
• While companies can influence how the market changes, they
cannot control the pace of change
• Companies need ‘ change the rules ‘ of the markets they
compete in . For this they need to develop their own
‘business model ‘ instead of the competitors
• Such change of rules are of course subject to the business
environment
• Strategists will have to identify core competences
• Such advantages are not sustainable for long. Company’s must
innovate constantly and change the rules on an ongoing basis
to stay ahead of competition
B] The Mission Statement
-- A mission statement has to be seen in the light of two
questions
1) What business are we in ?
2) What business should we be in ?
-- A mission statement should be capable of :
* A powerful integrating function
* A statement of core corporate values
* Framework within which individual business units
prepare their plans
A worthwhile mission statement should be capable of
providing all personal in the organization with a shared sense
of :
-- Direction
-- Opportunity
-- Significance
-- Achievement
-- The mission statement in the overall planning process
is represented by the acronym MOST
MISSION
OBJECTIVE
STRATEGY
TACTICS
-- The characteristics of a good mission statement should be :
* Short on numbers
* Long on rhetoric
* Remaining succinct
-- A mission statement is not a one off exercise
* It will change over time
* Because of internal contradictions , external factors
such as opportunities and threats
* A mission statement developed in 1980 may not be
appropriate today
* The company itself may be in a different business
Rate low
Cash cows Dogs
a) stars :
High growth rate
Invest heavily
Maintain mkt. share
market ownership is the objective
b) Cash Cows :
Relatively slow growth
prominent mkt. share
generates cash which fuels other parts
usually in late growth, maturity
or early decline stage
c) Dogs :
Slow or negitive growth
less than prominent mkt. share
can occur at any stage of product life
cycle
1 2 3
High
Market
Medium 4 5 6
Attractiveness
Weak
7 8 9
Business Strength
Step 1. Protect your leading position from
competition
2) Very attractive – invest to build
3) Attractive – build selectively
4) mkt. attractiveness is medium , but you are
strong – build selectively
5) -- ditto -- ( or manage for earnings )
6) mkt. is attractive, but you are weak – limited
Expansion
7) You are strong but mkt. attractiveness is low
Limited expansion
8) mkt. attractiveness is low and your strength is
medium – manage for earnings
9) mkt. attractiveness is low and you are also
weak – divest.
• Technical Feasibility
R&D • Commercial Feasibility
Commercialization
Developing Product Strategy
• The focus in this chapter is on the following :
1) To understand products from the industrial
customer’s point of view
2) Product strategies over the industrial product
life cycle
3) Managing the industrial product line
4) The differences between marketing products
and systems
5) The special problems and strategic
alternatives involved in marketing of
proffesional services.
• What is an Industrial Product ?
• Basic properties : Basic properties are those
that constitute the generic product and
connote the various benefits sought by
buyers. A “pump” is a specific generic product
that will be thought of by alternative
purchasers as providing different benefits
• Enhanced Properties : generic products are
made differentiable by adding or deleting
some features, styling or quality.
• A purchaser of computers will expect to buy a
basic model with some add on software and
the ability to tie into existing equipment
• A deletion involves enhancing a product by
removing properties, such as to make it less
expensive and user friendly
* Augmented Properties : Those additional
benefits connoted in the purchase of a product
• They are usually intangible and may include
training, technical assistance, availability of
spare parts, maintenance and repair services.
Product Strategy involves continual change :
• Product offerings are to satisfy customer need
• Any change in customer need changes the
firms product
• Customer need changes as his environment
changes
• Technological change makes products change
as old products become obsolete
• Changing laws and regulations, change in the
environment changes customer needs and so
products too have to change.
• Product obsolescence leads to new product
opportunities
• Products also change as it moves through the
product life cycle
• Product strategy therefore involves a
continuous process of evaluating a product
and market conditions to determine
1) Whether changes are needed in current
product
2) Whether products should be added or
dropped
• Industrial Product Management :
• Product policies
• Setting product objectives
• Modify existing products
• Providing pre & post sale servicing
• Phasing out old products
• Search for new product additions
• Maintain the proper product mix
• Meet changing market needs
• Industrial Products Life Cycle :
• Introduction Stage: Acceptance of an
industrial product at introduction is
considerably different from consumer market
• Exp. Hand held electronic calculators replaced
mechanical calculators practically overnight,
where as electric type writers took over two
decades to replace mechanical ones.
• Product acceptance in industrial markets
depends on the “fit” in the buyers total use
system.
• Use systems involves other products, other
persons and a developed systems that is
termed as “ habitual skills “
• Habit systems, once developed, are not easily
changed.
• When products have potential for rapid
acceptance, then the marketer has to be ready
for vigorous competition
• Growth Stage : when products enter rapid
growth stage, product strategy shifts to
improving product design, distribution, lower
price
• Due to increasing product demand and by
accumulated production experience costs
lower substantially
• Experience has shown that when prices are
lowered, entering competition is discouraged.
• Maturity Stage : By this stage industrial buyers
are mostly satisfied with existing vendors.
• They are neither searching for new vendors
nor paying much attention to promotion of
other offerings
• Marketing strategy is to keep current users
and look for new customers by changes in the
marketing mix
• Decline Stage : changes in customer needs,
better offerings, better technology etc. lowers
sales and profits
• The marketer is then faced with the choice of
either phasing out the product or embark on a
milking strategy.
Locating products in their PLC :
1)Develop trend information for the past 3 or 5
years on unit and Rupee sales, profit margin,
market share, prices
2) Examine recent trends in the no. andnature of
competitors, their market share and product
performance
3) Analyze short-term competitors tactics such
as new product offerings and plant expansion
4) Obtain & analyze historical information of the
life cycles of similar or related products.
5) Project sales for the next 4/5 yers based on
steps from 1 to 4 and estimated profit ratios for
each of those years
6) Estimate the no. of profitable years in the PlC
And fix it in the life cycle