B2B SCM

Business to Business Marketing
Suhas C. Mekhe
B2B Marketing by Suhas Mekhe
Subject Outline:- B2B Marketing
1. Overview of B2B Marketing

2 Organizational Buying Behavior
3 Relationship Management
4 Segmenting and Targeting the Business Markets
5 Managing Products, Services & New Innovations
Management in B2B Market
6 Pricing Strategy for B2B Market
7 Industrial Channel Management
8 E-Commerce in B2B Market
9 Business Marketing Communication

Top B2B Brands

What is B2B Marketing?
“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”

Difference between B2B and B2C sales
1. Speed of Sales Process — B2C sale is typically faster

2. Number of Decision Makers — B2B usually has more
3. Simplicity of Buying Process — B2C sale is usually simpler
4. Quantity of Leads — B2C sale starts with more leads
5. Role of Emotion — B2C sales involve emotion more than in B2B.
6. Value of Sale — B2C smaller
7. Uniformity of Offer — B2B tend to be a more customized product offering

Differences between B2B and B2C marketing
B2B B2C
Relationship driven Product driven
Maximize the value of the Maximize the value of the
relationship transaction
Multi-step buying process, longer Single step buying process, shorter
sales cycle sales cycle
Brand identity created on personal Brand identity created through
relationship repetition and imagery
Educational and awareness Merchandising and point of
building activities purchase activities
Rational buying decision based on Emotional buying decision based
business value on status, desire, or price

Differences between B2B and B2C customers
B2B buyer B2C buyer

often understands your looking for the best price
product/service better than you do
wants or needs to buy products or often looks for trusted brands
services to help their company stay
profitable, competitive, and
successful
has high interest in – and will research the competition prior
understanding of – your product to shopping
interested in quality customer interested in quality customer
service service

B2B Vs B2C Marketing
Areas of Difference B2B Market Consumer Market
Market Characteristics Geographically Concentrated Geographically Disbursed
Relatively Fewer Buyer Mass Market
Product Characteristic Technical Complex Standardize
Customized
Service Characteristic Service , timely Availability Somewhat Important

extremely Important
Buying Behavior Involvement of Various functional Involvement of family members

area from both the ends
Purchase Decisions are Purchase decisions are mostly
performance based and rational based on Physiological
/social/psychological needs
Technical Expertise Relatively less technical expertise
is required
Stable Interpersonal relationship Non- Personal relationship
B2B Vs B2C Marketing
Areas of Difference Industrial Market Consumer Market

Channel Characteristic More Direct Indirect
Fewer Intermediaries Multiple layer of Intermediaries
Promotional Characteristic Emphasis on Personal Selling Emphasis on Mass Media

(Advertising)
Price Characteristic Competitive Bidding and List Price or MRP

Negotiated Prices
List Price for Standard Products

Types of Customers in Business Marketing
• Public Sector Undertakings
• Private Companies
• Cooperatives
• Not For Profit Organizations
• Institutions
• Government Departments

Types of Industrial Goods
A) Capital Goods B) Revenue Items
• Plants & Buildings

•Raw Materials
• Machinery
• Projects •Components
• Systems •Spares
•Consumables
•Tools
•Utilities
•Services

Types of Business Market Demand
• Derived demand
• Fluctuating demand
• Stimulating demand
• Price sensitivity/demand elasticity
• Global Market perspective

Organizational Demand Analysis
Comprises of:
i) Sales forecasting
ii) Market potential analysis
Customer value in Business Markets
- Estimating Customer value
- Building Customer value proposition
- Demonstrating and documenting

Assignment 1
Pick any B2B brand that you feel is top notch.

Discuss what sets that brand apart from its rivals.

Organizational Buying Behaviour

Goals of Purchasing function

Managing Buyer Seller Relationship
• Typical Characteristics of Buyer Seller Relationship based on Market

Condition and Purchase Behavior
Transactional Exchange Collaborative Exchange
Availability of Alternative Many Alternative Few
Supply Market Dynamism Stable Volatile
Importance of Purchase Low High
Complexity of Purchase Low High
Information Exchange Low High
Operational Linkage Limited Extensive

Forces Shaping Organizational Buying Behavior
Environmental Forces: Group Forces:

• Pace of Technological • Roles, relative
Change influence, and patterns
of interaction of buying
• Global Trade Relations
decision participants
• Economic Outlook:
Domestic & Global
Individual Forces:
Organizational Forces: • Job function, past

experience, and buying
• Goals, Objectives, and motives of individual
Strategies decision participants
• Organizational Position
of Purchasing
Organizational Buying Process

Buying Center / Decision Making Unit
Roles of Buying Center
•Initiator: - Recognition of Problem or Need

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

Three Buying Situations
New task
 Problem or need totally different from previous experiences.
 Significant amount of information required
 Buyers operate in extensive problem solving stage
 Buyers lack well defined criteria.
 Lack strong predisposition toward solution
Modified rebuy
 Decision makers feel benefits to be derived by reevaluating alternatives.
 Most likely to occur when buyers displeased with performance of current supplier.
 Buyers operate in limited problem-solving stage.
 Buyers have well-defined criteria
Straight rebuy
 Problem or need is recurring or continuing requirement.
 Buyers have experience in area.
 Require little or no new information
 Buyers operate in routine problem-solving stage

Webster and Wind Model of

Jagdish Sheth Model of

Case Study:
India Textiles Ltd: Fulfilling Purchasing Objectives

STP and Product Strategies

Segmenting the Business Market
Criteria for the segmentation:-

• Measurable
• Assessable
• Substantial
• Computability
• Responsiveness

Bases of segmenting Business Markets
• Geography – Districts, Zones

• Industry – IT, Banking …
• Company Size, usage rate…
• Type of Enterprise – PSU, Private…
• Motive of Business – Profit / Not for Profit
• Business House – Tata, Birla
• Manufacturing Process – Continuous, Batch Type
• Purchasing Organization – Centralised / Decentralised

Macrosegmentation

Microsegmentation

Evaluating Market Segments
• Size and Growth
• Profitability Analysis
• Competitive Analysis
• Company Objectives and Resources

Targetting Market Segments
• Concentrated Marketing
• Differentiated Marketing
• Undifferentiated Marketing

Positioning
• It should be meaningful
• Convey the value proposition
• Consistent with what the Organization is
• Should form the basis of communication message

Assignment :
SAIL is a large PSU, manufacturing and marketing steel products to

Indian and International markets. What macro and micro segmentation
variables and target market segments would you suggest to SAIL?
Case Study
Govind Doors Pvt. Ltd : STP Strategy

Managing Products for Business Markets
Core Competencies: The root of industrial products
Three Tests to Identify the Core Competencies

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

Why Product strategy is critical
• Customer needs
• Technology
• Product life cycle

What Value Means to Business Customers
Four Types of Industrial product Lines:
Proprietary or catalog products

Custom-built products
Custom-designed products
Industrial services Customer Value
Benefits Sacrifices
i) Core i) Price
ii) Add-on ii) Acquisition Costs
iii) Operations Costs

Steps in the Product Positioning Process
1. Identify the relevant set of competitive products.

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

Managing New Industrial Product Development
• Innovators
• Early Adopters
• Early Majority
• Late Majority
• Laggards

New Product Development Process
• The firms emphasized upfront market and technical

assessments.
• The process featured complete descriptions of the product

concepts, product benefits, positioning, and target markets.
• Tough project go/kill decision points are included in the

process and the kill option is actually used.
• The new product process is flexible.

B2B Distribution Channel Characteristics

Direct Sales Approach is Viable When:
•The customers are large and well defined.

•The customers insist on direct sales.
•Sales involve extensive negotiations.
•Control of the selling job is necessary to ensure proper implementation of the
total product package and to guarantee a quick response to market conditions.
Indirect Distribution is Generally Found Where:
•Markets are fragmented and widely dispersed.

•Low transaction amounts prevail.
•Buyers typically purchase a number of items.

Why intermediaries?
•Buying
•Promotion and Selling
•Assorting
•Financing
•Warehousing
•Transportation
•Information
•Risk-taking
•Technical service

The Channel Design Process

Assignment :
Business Channels are usually shorter in length than channels used in

consumer goods marketing. Explain with examples.
Case Study:
Cable Systems Pvt. Ltd : Managing Channel Members

Pricing Strategy for Business Market
•To understand the factors influencing pricing of Industrial products.
•To study the approaches to pricing in B2B markets.

Process of Pricing
– Achieving a target return on investment.

– Achieving a market-share goal.
– Meeting competition.
Key Components of the Price-Setting Decision Process

•Set Strategic Pricing Objectives
•Estimate Demand and the Price Elasticity of Demand
•Determine Costs and their Relationship to Volume
•Examine Competitors’ Prices and Strategies
•Set the Price Level

Pricing Objectives
•The pricing decision must be based on objectives congruent with

marketing and overall corporate objectives.
•The marketer starts with principal objectives and adds collateral

pricing goals:
– Achieving a target return on investment.
– Achieving a market-share goal.
– Meeting competition.

Price Attacks & Competitive Bidding
Customer Value
Benefits Sacrifices
Core Benefits Add On Benefits Acquisition Costs Processing Costs Usage

Costs

Pricing New Products
Skimming
– Appropriate for a distinctly new product and provides the firm
with an opportunity to profitably reach market segments that
are not sensitive to the high initial price.
– Enables the marketer to capture early profits.
– Enables the innovator to recover high developmental costs
more quickly.
Penetration
It’s appropriate when there is:
– High price elasticity of demand,
– Strong threat of imminent competition,
– Opportunity for a substantial reduction in production costs as
volume expands.
Personal Selling
Role of Personal Selling:

• Problem solving capabilities
• Effective Customer service
• Represent the Customer at the Head Office Marketing
• Communication Mix
• Intrapreneurship
• Systems Buying and Selling

Distinctive Characteristics of Industrial Salesperson
• Trade selling
• Missionary selling
• Technical selling
• Business selling

Trends in personal selling in Business Markets
• Team selling
• Improved productivity
• Relationship selling
• Creating value
• Multiple selling units
• Inside salespeople

Personal Selling Process
 Prospecting
[Leads – Hot, Warm, Cold]
 Pre-approach
[Info gathering, Planning the call, setting call objectives, planning sales strategy]
 Approach
[Introductory, Customer benefit, Product, Question, Praise]
 Presentation and Demonstration

[Assessing buyer’s needs, Sales presentation]
 Overcoming Objections
[Query handling]]
 Closing the Sale

[Negotiation, Order]
Management of Sales Force
• Recruitment and selection of Industrial salespersons
• Training and evaluating Industrial salespersons
• Supervision and Motivation (Performance, Rewards, Satisfaction)
• Compensation
• Evaluation and Control (Quantitative, Qualitative)
• Deployment of sales force (Territories, Size, Allocation)

ABC Analysis of Customers
A Category:
• Typically 10% of the total no. of Customers
• Sales potential accounts for around 70%
B Category:
• Typically 20% of the total no. of Customers
C Category:
• Balance 70% of the total no. of Customers

Key Account Management
• Purchase in large volumes

• High Sales and profit potential
• Buying process calls for Team approach
• Expect customized solutions and services
• Expect special pricing
Key Account Manager

• Complete knowledge and understanding of KA’s business and needs
• Formulates a team of experts
• Adopts a strong relationship mngt approach
• Gets the required approvals
• Negotiates, takes orders and strategizes service

Assignment :
A salesman’s job is never over even after getting an order from the
Business customer.
Case Study
E & C Technologies: Developing new customers

CRM Strategy
Relationship Marketing Centers On:

• Establishing
• Developing and
• Maintaining
Strategies for Business Markets

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

• Corporate Strategy
– What businesses are we in?
– What are our core competencies?
– How should we allocate resources?
– What businesses should we be in?
• Business-Level Strategy
– How do we compete in a given industry?
– How should we position ourselves against our competitors?
• Functional Strategy
– How can resources be allocated to most efficiently and effectively
support business-level strategies.
– Marketing manages organization-customer connections.

Creating a CRM Strategy
Acquire the Right Customer
Crafting the right value

proposition for the customer
Design the Best Process to

deliver the product /services
Motivating the Employees
Retain the customer

Customer relationship Management
•A Continuing Dialogue with Customers,
•Across all their Contact and Access Points, with
•Personalized Treatment of the Most Valuable Customers,
•To Ensure Customer Retention and Effectiveness of Marketing
Initiatives.
Learning to Retain Customers

•Provide superior value to ensure high satisfaction.
•Nurture trust and mutual commitment.

Relationship Quality—Two Dimensions:
Trust in the salesperson.
Satisfaction with the salesperson.
Components of Sales Force Management

Methods for organizing the sales force.
Key account management.
The distinctive characteristics of high-performing
account managers.
Role of Personal Selling

Required in all 3 Stages of Sales Process –
a) Pre Sales
b) Sales
c) Post Sales

Sales force does some/all of the following tasks
i) Direct Sales
ii) Maintaining Customer Relations
iii) Market Research
v) Sales Forecasting
vi) Supporting Channel members
vii) Controlling Sales / Service people
Sales Force Organization & Management
Some types of Organising Sales Force

a) Organising by Customers
b) Organising by Products / Services
c) Organising by Regions
d) Organising by Teams

Sales Force Administration
Deciding Size of Sales Force:
Work Load Method
Revenue per Sales person
Incremental Method
Competitive Parity Method
Training:
Sales force people
Channel Partners
Sales Force Compensation:
Straight Salary Plan
Straight Commission Plan
Combination of Salary Plan & Commission Plan
Sales Force Controlling:
Reports – sales, expenses, new offers, lost
business reports etc.
Supervision
Joint Visits
Customer Feedback B2B Marketing by Suhas Mekhe
Understanding Customer Profitability
Characteristics of High Vs Low Cost-to-Serve Customers
High Cost to Serve Low Cost to Serve

Order Custom Products Order Standard Products
Order Small Quantities Order Large Quantities
Unpredictable Order arrivals Predictable order arrivals
Customized delivery Standard Delivery
Frequent Changes in delivery No changes in delivery requirement
requirement
Manual Processing Electronic Processing
Large amount of presales support Little to no presales support
Require company to hold inventory Replenish as produced
Longer credit periods Payment on time

Core Competencies and Selected Products at Canon
• Core competencies are

embodied in the superior
skills of employees--the
technologies they have
mastered, the unique
ways in which these
technologies are
combined, and the market
knowledge that has been
accumulated.
• They focus on the basics
of what crates value from
the customer’s
perspective and include
both technical and
organizational skills.
Developed by Cool Pictures and MultiMedia Presentations B2B Marketing by Suhas Mekhe
Three Tests to Identify the
Core Competencies
• First, a core competence provides potential
access to an array of markets.
• Second, a core competence should make an
important contribution to the perceived customer
benefits of the firm’s end products.
• Third, “a core competence should be difficult for
competitors to imitate.”

Sustaining the Lead . . . Three Questions
• How rare is our competence?

• How long will it take our competitors to develop
the competence?
• Can the source of our advantage be easily
understood by our competitors?

Quality Movement Stages
• Stage one centered on conformance to standards
or success in meeting specifications.
• Stage two emphasized that quality was more
than a technical specialty and that the pursuit of
quality should drive the core processes of the
entire business.
• Stage three examines a firm’s quality
performance relative to competitors and examines
customer perceptions of the value of competing
products.
What Value Means to Business Customers
Core
Benefits
Add-on
Customer Value
Price
Sacrifices Acquisition
Costs
Operations
Costs
Source: Adapted from Ajay Menon, Christian Homburg, and Nikolas Beutin, “Understanding Customer Value,”
Journal of Business-to-Business Marketing, 12, no. 2 (2005), pp. 4–7.
1. Proprietary or 2. Custom-built
catalog products products
Four Types of Industrial product Lines
3. Custom-designed 4. Industrial
products services

Steps in the Product Positioning Process
1. Identify the relevant set of competitive products.
2. Identify the set of determinant attributes that customers use to differentiate

among options and determine the preferred choice.
3. Collect information from a sample of existing and potential customers concerning

their ratings of each product on the determinant attributes.
4. Determine the product’s current position versus competing offerings for each
market segment.
5. Examine the fit between preferences of market segments and current position of
product.
6. Select Positioning or Repositioning Strategy.

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

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

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

New Product Strategy
Set aggressive new product performance goal as

a basic corporate goal and communicate it to all
employees.

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

Product advantage refers to Marketing synergy represents
customer perceptions of the degree of fit between the
product superiority with respect needs of the project and the
to quality, cost-performance firm’s resources and skills in
ratio, or function relative to marketing.
competitors.
Four Strategic Factors

For New Product Success
Technical synergy concerns International orientation--new
the fit between the needs of the products that are designed and
project and the firm’s R&D developed to meet foreign
resources and competencies. requirements, and that are
targeted at world or nearest-
neighbor export markets.

Technology Adoption Cycle

Understanding B2B Market & Environment with Buyers
Perspective

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

2.Understanding B2B Market & Environment with Buyers Perspective
Purchasing Practices of B2B Customers

Industrial customers
Government
Institutes
Cooperative
Environmental Analysis:-
Ecological & Physical
1.Pollution & Conservation of Natural resources

2. Utilities, Manpower & Transportation

2.Understanding B2B Market & Environment with Buyers Perspective
Environment Analysis:-
Internal Environment:-
Company Location, R&D Facilities, Production Facilities Human
Resource and Image of the company
External Environment:-
Micro Environment :-
Customers & Competitors
Suppliers
Macro Environment:-
Economic
Technological
Government/Political & Legal
Cultural & Social
Investors & NGO
3.The Nature of Industrial Buying and Buying Behavior
• Organizational Buying Process

• Organizational Buying Situations
• Forces Shaping Organizational Buying Behavior
-- Environmental Forces
-- Organizational Forces
-- Group Forces :-
- Buying Center
-Elements of Buying Center
-- Individual Forces

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

B2B SCM

Uploaded by

Document Information

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

B2B SCM

Uploaded by

Copyright:

Available Formats

Business to Business Marketing

1. Overview of B2B Marketing

B2B Marketing by Suhas Mekhe

B2B Marketing by Suhas Mekhe

“Business Marketing is the practice of individuals, or organizations,

B2B Marketing by Suhas Mekhe

1. Speed of Sales Process — B2C sale is typically faster

B2B Marketing by Suhas Mekhe

B2B Marketing by Suhas Mekhe

B2B buyer B2C buyer

B2B Marketing by Suhas Mekhe

Relatively Fewer Buyer Mass Market

Product Characteristic Technical Complex Standardize

Service Characteristic Service , timely Availability Somewhat Important

Buying Behavior Involvement of Various functional Involvement of family members

Areas of Difference Industrial Market Consumer Market

Fewer Intermediaries Multiple layer of Intermediaries

Promotional Characteristic Emphasis on Personal Selling Emphasis on Mass Media

Price Characteristic Competitive Bidding and List Price or MRP

B2B Marketing by Suhas Mekhe

• Public Sector Undertakings

• Not For Profit Organizations

B2B Marketing by Suhas Mekhe

• Plants & Buildings

B2B Marketing by Suhas Mekhe

• Price sensitivity/demand elasticity

• Global Market perspective

B2B Marketing by Suhas Mekhe

ii) Market potential analysis

Customer value in Business Markets

- Estimating Customer value

- Building Customer value proposition

- Demonstrating and documenting

B2B Marketing by Suhas Mekhe

Pick any B2B brand that you feel is top notch.

B2B Marketing by Suhas Mekhe

B2B Marketing by Suhas Mekhe

B2B Marketing by Suhas Mekhe

• Typical Characteristics of Buyer Seller Relationship based on Market

Transactional Exchange Collaborative Exchange

Availability of Alternative Many Alternative Few

Supply Market Dynamism Stable Volatile

Importance of Purchase Low High

Complexity of Purchase Low High

Information Exchange Low High

Operational Linkage Limited Extensive

B2B Marketing by Suhas Mekhe

Environmental Forces: Group Forces:

Organizational Forces: • Job function, past

B2B Marketing by Suhas Mekhe

Roles of Buying Center

•Initiator: - Recognition of Problem or Need

B2B Marketing by Suhas Mekhe

B2B Marketing by Suhas Mekhe

B2B Marketing by Suhas Mekhe

B2B Marketing by Suhas Mekhe

India Textiles Ltd: Fulfilling Purchasing Objectives

B2B Marketing by Suhas Mekhe

B2B Marketing by Suhas Mekhe

Criteria for the segmentation:-

B2B Marketing by Suhas Mekhe

• Geography – Districts, Zones

B2B Marketing by Suhas Mekhe

B2B Marketing by Suhas Mekhe