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Lecture 1

Lecture 1






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    Lecture 1 Lecture 1 Presentation Transcript

    • Live Stream problems? Call 573-341-6490
    • Al Gonzalez, P.E. Smart Engineering Systems Laboratory Engineering Management Department [email_address] http://www.umr.edu/~gonzalez University of Missouri - Rolla Rolla, MO 65409 - 0370 EMGT 408 A Advance Engineering Economy
    • Lectures Monday 6:30-9:00 pm Central Time UMR Engineering Educational Center 573-341-6490 or 314-516-5431 Live Broadcast on the Internet Real Player 200Kbs Media Player 200Kbs
    • Perspective T he objective of the course is to provide the basic tools and concepts of Industrial Business Marketing Management with emphasis to Value Stream Management and Professional Selling the course is tailored to systems architecting graduate students.
    • Class Outline
      • Business Marketing Concepts
      • Perspectives on Organizational Buyer
      • Organizational Buying Behavior
      • Customer relationship Management Strategies
      • E-Commerce
      • Supply Chain Management
      • Segmenting the Business market
      • Organizational Demand Analysis
      • Business Marketing Planning
    • Class Outline
      • Strategies for Global Market
      • Managing Products for Business Market
      • Innovation and New Product Development
      • Managing Services for Business Markets
      • Managing Business Marketing Channels
      • Pricing Strategy for Business Markets
      • Business marketing Communications: Advertisement and Promotion
      • Managing the Personal Selling Function
      • Controlling Business Marketing Strategies
    • Text Business Marketing Management , A Strategic View of Industrial and Organizational Markets, by Michael D. Hutt and Thomas W. Speh, Eight Edition, Thompson South Western, ISBN 0-324-19043-3.   Textbook Purchase Information    Prints will be available from UMR Systems Engineering Graduate Program Office UMR Book Store and others    
    • Workbook
      • The Professional Selling Skills Workbook by Avila, Ingram, La Forge, Williams,
      • Driden Publishers, ISBN 0-03-016332-3
      Textbook Purchase Information    Prints will be available from UMR Systems Engineering Graduate Program Office UMR Book Store and others    
    • Grading Class participation 50 points In Class Cases & Workbook 50 Points To be announced   Item Points Date Mid-Term Exam 100 10/13/2003 Project 300 As Assigned Final Exam 200 12/13/2003
    • Class Information Temporarily, you may find class information at: http:/www.umr.edu/~Gonzalez/
    • EM351 Industrial Marketing Systems Analysis Al Gonzalez, P.E. Introduction to IMSA
    • Class Objectives
      • Class roll check
      • Review syllabus
      • Understanding of Business to Business Marketing
      • Introduction to supply chain
      • Understanding underlying structure of the business market
      • Method of classifying business products and services
    • $ $ $ $
      • What is marketing?
      • The act or process of buying and selling in a market.
          • The commercial functions involved in transferring goods from producer to consumer.
          • Marketing can be understood as…
          • The process of
          • defining,
          • developing
          • delivering value
          • Why Marketing?
    • A Business Marketing Perspective
      • Business Markets
      • A. Markets for products and services bought by business, government, or institutions
      • B. Products to be incorporated into other products, used, consumed, or resold
    • Examples of Business Markets
        • For incorporation
          • Ingredients, materials
        • For consumption
          • Process materials
          • Office Supplies
          • Consulting services
        • For use
          • Installation or equipment
        • For resale
    • Can you name samples of product and services used in the development of this products?
      • Business Marketing
          • Process of determining needs and developing marketing mixes for organizations
          • The nature of the customer and how the product is used distinguishes business and consumer goods marketing
    • Some firms produce goods that never directly interact with the ultimate consumer… What about the firms we see below? Historically a business to business marketer now HP is involved into the consumer market…why?, how?                                                      
      • Business Marketing Management
      • A. Business vs. consumer markets
      • 1.Distinctive capabilities
      • a. Market sensory capability
      • b. Customer-linking capability
      • 2. Partnering for increased value 3.Creating the value proposition
    • Example consumer-linking capability of multifunction teams working in industry Sharing delivery Product movement information Planning promotional activities Product changes Consumer good market …consumer-linking capability is crucial. This is a set of skills … abilities and processes that should be developed and if not should be created and then managed
    • What makes Coca Cola a good example of market-sensing capability?
    • Partnering to increase value… Before the sale After the sale Work as a partner…Intimate knowledge of client operation… Contributing unique value to that customer business Customer-linking capabilities, align product decisions, delivery Handling, service and other supply chain activities
    • How to create Value Proposition? Customer Company Competitor Marketing Strategy based on assessment of: Develop a strategy on how the organization Plans to deliver superior value to customer Based on identifying those opportunities defined By the process of defining, developing and delivering value
      • Cross-functional working relationships
        • Key drivers of effective relationships are;
        • Communication,
          • Perspective taking,
          • Response behavior, and
          • Compatibility
      • Reputationally-effective managers when he or she is responsive to:
        • Needs
        • Demands
        • Expectations of managers across functions
      B.  Cross-functional relationships
    • What makes a successful business marketing manager? Operating in Isolation…only if he/she wants to fail Knows company’s capability in: Apply this strength in developing marketing strategies in order to meet client needs Integrator !.the successful marketing manager is an integrator. Customer service Research and Development Manufacturing/construction
    • Integrator…How? Building relationships with customers daily Building one on one Relationships daily (functional areas)
      • Daily …Cross Functional working relationships
      • Communication
      • Perspective talking
      • Responsive behavior
      • Compatibility
    • Finance Accounting Logistics Business Marketing Planning R & D Procure- ment Manufac- turing Customer Service Formulation of Business Marketing Strategy
            • 1. Derived demand
            • Business demand is derived from consumer demand for the final products of which they become a part
          • 2. Fluctuating demand:
            • Since demand is derived, the business marketer must monitor and forecast demand in final consumer markets
          • 3. Stimulating demand:
            • Some firms develop marketing programs to reach the ultimate consumer
      Characteristics of Business Markets Different from consumer-goods marketing
      • 4. Price sensitivity :
        • The derived nature of demand also affects the elasticity of demand for business products
      • 5.Demand on a global scale
        • a. Most business products are sold on an international scale, and assessment of competition from all international fronts is required
        • b. Business firms will have to focus on markets whose needs they can satisfy and whose competitors they can handle
      Characteristics of Business Markets continuation
    • Examples of Characteristics of Business Markets Derived demand: Fluctuating Demand: Stimulating demand Price sensitivity Global market perspective
      • Business and Consumer Marketing:
      • A Contrast
      • A. Smucker: A consumer and business marketer
      • B. Distinguishing characteristics of business marketing
      • 1. Emphasis on personal selling
      • 2. The service component of the product offering plays a key role
      • 3. Protracted price negotiations for individual products are common
      • 4. Business marketers typically sell direct to large accounts
    • Smucker…marketing… Marketing Mix 1. Personal selling 2. Product/Service 3. Price 4. Promotion 5. Advertisement 6. Distribution Pricing Nature of demand Cost Behavior of competition Promotional plans to include Media advertisement Coupons Special offers Incentives for retailers
    • Marketing Mix…”The Offering” Four Ps Product Price Promotion Place* Reference Marketing, Third Edition, by Sandhusen, Barrons Publishers, ISBN 0-7641-1277-5 * Channels of distribution , Physical distribution
    • Marketing Mix…”The Offering” Five Ps Product Price Promotion Positioning Publicity Packaging Pass along Permission Reference Fast Company, February 2002 Issue, page 76 “ Actually, there are more than five everybody select their favorite handful ”
    • Distinguishing characteristics… What to do?
      • Individual industrial sales person must…
          • Understand technical aspect of the organization requirements
          • How those technical requirements can be satisfied
          • Who influence the buying decision
          • Why this person or group influence the buying decision
      MAD Money, Authority, Desire
    • Distinguishing characteristics… What is better for my organization?
      • Use trade journals and direct mail for the foundation of a sales call
      • Use a small portion of the business
      • promotional budget for advertisement
      • Service is an important component
      • Price negotiation is a very important aspect of industrial buying/selling process
      • Product made to a particular quality must be individually prized
    • Distinguishing characteristics… What is better for my organization?
      • Direct distribution to large customers strengthen relationships between buyer and seller.
      • Manufacturer reps and industrial distributors should handle smaller accounts in a profitable manner.
      • Business and Consumer Marketing:
      • A Contrast continuation
        • 5. Relational emphasis
            • a. Often requires synchronizing operations closely with customers
            • b. Building a long-term relationship is the goal
      • Internet and the supply chain
          • 1. A virtual marketplace
          • 2. Build to order
      $80B/yr Supply chain: close buyer-seller interaction to create quality level required by the market
      • Business and Consumer Marketing:
      • A Contrast continuation
        • E. Procurement trends and the supply chain
          • 1. Longer term and closer relationship with fewer suppliers
          • 2. Closer interactions among multiple suppliers
          • 3. Supplier proximity to allow just in time delivery to facility etc.
        • F. Managing supply chain relationships
          • 1. Concurrent marketing
      50 suppliers, 85% of purchasing (looking for quality eng. support)
      • Business Market Customers
      • A. Commercial enterprises
      • 1. Users
            • a. Purchase goods for use in making other products
            • b. Buy equipment and machinery that are employed to manufacture other products
          • 2. Original equipment manufacturers OEM’s
            • a. Buy products which will be incorporated into a finished product 
      • Business Market Customers
      • 3. Dealers and distributors
            • a.Purchase business products for the purpose of reselling them to users and OEM's
            • b.Business middlemen which facilitate the distribution process
      • Business Market Customers
        • 4. Understanding the classifications provides guidelines for effective strategy formulation
        • a. Users and OEM's may have different buying motives
        • b. Different types of buyers require different emphasis on each element of the marketing mix
        • B. Understanding buying motivations
      • Classifying Goods for the Business Market
      • A. Basis for classification
          • How does the product/service enter the production process?
          • How will the product/service be treated in the cost structure?
      • Classifying Goods for the Business Market
      • 1. Entering goods
          • a. Become part of the finished product of the purchaser
          • b. Raw materials and manufactured goods
          • c.Treated as expense items
      Business product categories
      • Classifying Goods for the Business Market continuation
            • Used to produce products
            • Include installations (buildings, equipment) and accessory equipment (light factory equipment, office equipment)
            • Treated as capital items
      2. Foundation goods
      • Classifying Goods for the Business Market continuation
      • 3.Facilitating goods
        • a. Supplies and services to support the organization's operations
        • b. Include supplies, repair, and maintenance items and services
        • c.Treated as expense items
      • Raw Materials
      • Farm products
      • (e.g. wheat)
      • Natural products
      • (e.g. iron ore, lumber)
      • Manufactured Material
      • & Parts
      • Component materials
      • (e.g. steel)
      Entering Goods Foundation Goods Installations - Building & Land rights (e.g. offices) - Fixed Equipment (e.g. computers, elevators) Accessory Equipment - Light factory equipment (e.g. lift trucks) -Office equipment (e.g. desks, pc’s)
      • Supplies Business Services
      • Operating Supplies – Maintenance & Repair Services
      • (e.g lubricants, paper) (e.g. computer repairs)
      • - Maintenance and repair items – Business Advisory services
      • (e.g., paint, screws) (e.g., legal, advertisement,
      • management consulting)
      Facilitating Goods
      • Business Marketing Strategy
      • The business goods classification scheme is valuable because different product categories require different marketing strategies
      • B. The physical nature of the product and its intended use by the customer dictate marketing program requirements
    • Customers Consumer goods Marketing Business goods Marketing Numerous widely Dispersed geographically Few, concentrated geographically Buying Behavior Individual decisions Group decisions Many buying influences Buyer/Seller Very Little contact Very Close working relationship Interact in product design and problem solving Product Standardized Complex; technical; Detailed specifications Accompanying bundle of services important
    • Promotion Consumer goods Marketing Business goods Marketing Heavily oriented to Mass advertisement Primarily role given to personal selling Channels Indirect, many intermediaries at each level Direct, fewer Intermediaries at Each level
    • Discussion Questions
      • Explain how a company such as GE might be classified by some business marketers as a user customer by others as an OEM customer.
    • A manufacturer of drill presses would view G.E. as a "user" because G.E. purchases the drill press to be used in the process of producing their final products, such as appliances or jet engines. A manufacturer of steel coil , on the other hand, views G.E. as an OEM because the coil will become an actual part of a toaster or some other appliance. Thus, the distinction is whether G.E. used the product to produce their final products or whether it becomes part of , or is incorporated into, the final product.
    • The Professional Selling Skills Workbook Module One Discovering Professional Selling as a Career
    • Experiential Exercise 1.1 Five factors critical to selling
      • Empathy
      • Ego Drive
      • Ego Strength
      • Verbal communication Skills
      • Enthusiasm
    • Empathy
      • Ability to see things as other would see them
    • Ego Drive
      • The degree of determination that an individual has to achieve goals and overcome obstacles in striving for success
    • Ego Strength
      • The degree to which an individual is self-assured and self-accepting
    • Verbal Communication Skills
      • The skill an individual possesses in effective listening and questioning
    • Enthusiasm
      • A general zest for life’s everyday occurrences and a genuine passion for personal selling
    • Complete in class exercise 1.1
    • Experiential Exercise 1.2
      • What type of selling do you prefer?
        • Sales Support
        • New Business sales
        • Existing Business sales
        • Inside sales
        • Direct-to Consumer sales
        • Combination Sales Jobs
    • Sales Support
      • Missionary or detail sales people
        • Missionary are customary in the grocery industry
        • Detail commonly found in the pharmaceutical industry
      • Technical support sales people
        • Assist in design
        • Installation
        • Training
        • Follow up services
      Typically not directly involved in actual selling process
    • New Business Sales
      • Pioneers
        • New products
        • New customers
      • Order getters
        • Highly competitive environments
        • Sell to existing customers new or additional items in the product line
      Insightful and creative selling skills… very important
    • Existing business sales
      • Maintaining relationships with existing customers is the primary role of existing business people
      • Easier to maintain and retain existing customers
      • Strengths:
        • Reliability
        • Competence
        • Ability to provide customers with assurance
      • Non-retail salespeople who works with customers inside the organization.
    • Inside sales
      • Active
        • Involved in the complete selling process
          • Part of telemarketing
          • Customer comes to visit facilities to make a purchase
      • Passive
        • Acceptance rather than solicitation of customer orders
      Non-retail salespeople who works with customers inside the organization.
    • Direct to Consumer Sales
      • Retail people
      • Professional stock brokers
    • Combination Sales Job
      • Selling positions that include some combination of the preceding 5 types of selling
    • Program Completed University of Missouri-Rolla © 2003 Curators of University of Missouri