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Chapter01 Chapter01 Presentation Transcript

  • Business Market Management 3 rd edition Guiding Principles Chapter 1
  • Section I: Introduction and Overview Business Market Management, 3 rd edition Chapter 1-
  • Chapter 1: Guiding Principles
    • Overview
      • Values as the Cornerstone of Business Market Management
      • Managing Business Market Processes
      • Doing Business Across Borders
      • Working Relationships and Business Networks
      • Summary
    Business Market Management, 3 rd edition Chapter 1-
  • Business Market Management, 3 rd edition Chapter 1- Guiding Principles Crafting Market Strategy Understanding Firms as Customers Marketing Sensing Managing Market Offerings New Offering Realization Business Channel Management Gaining New Business Sustaining Reseller Partnerships Managing Customers Regard Value as the Cornerstone Accentuate Working Relationships & Business Networks Focus on Business Market Processes Stress Doing Business Across Borders Understanding Value Creating Value Delivering Value Business Market Processes
  • Basic Concepts
    • Business Market Management is the process of understanding, creating, and delivering value.
    • Business Markets are firms, institutions, or governments that acquire goods and services. Focuses on functionality or performance.
    Business Market Management, 3 rd edition Chapter 1-
  • Guiding Principles of Business Market Management
    • Regard value as the cornerstone
    • Focus on business market management processes
    • Stress working across borders
    • Accentuate working relationships and business networks
    Business Market Management, 3 rd edition Chapter 1-
  • I. Value as the Cornerstone of Business Market Management Business Market Management, 3 rd edition Chapter 1-
  • What is Value in Business Markets?
    • Monetary
    • Economic, technical, service, and social net benefit
    • The exchange for price paid
    Business Market Management, 3 rd edition Chapter 1-
  • Fundamental Value Equation Business Market Management, 3 rd edition Chapter 1- (Value f – Price f ) > (Value a – Price a ) Offerings f Offerings a
  • Value
    • Value can only be estimated.
    • Value changes when:
      • Same functionality or performance provided while its cost changes to customer
      • Functionality or performance changes while cost remains the same
    • Customer Incentive to Purchase is the difference between value and price.
  • Assessing Value
    • Supplier firms create and deliver value to targeted market segments and customer characteristics
    • Business market management strives to both understand and capitalize on customer and market segment variations
    Business Market Management, 3 rd edition Chapter 1-
  • Value Analysis
    • Conducted by a cross-functional team with the customer firm
    • Team assesses market offering’s attributes in term of:
      • Functionality or performance
      • Total cost of specific performance or functionality
      • Identification of lower-cost alternatives
    Business Market Management, 3 rd edition Chapter 1-
  • II. Managing Business Market Processes Business Market Management, 3 rd edition Chapter 1-
  • Managing Business Market Processes
    • Business Process: a collection of activities that take one or more kinds of input and creates an output that is of value to the customer
    Business Market Management, 3 rd edition Chapter 1-
  • Processes Defined by Allaire Business Market Management, 3 rd edition Chapter 1- Management Processes
    • How the CEO runs the company
    • How management interacts with employees
    • How decisions get made
    • How communication takes place
    Business Processes
    • Focus is on reengineering efforts
    • Large, crosscutting collections of activities (product design, order fulfillment, customer service)
    Work Processes
    • Basic building blocks of business processes
    • How the work actually gets done
  • Shareholder Value
    • Shareholder Value:
    • when the economic returns generated from realizing its business strategy exceed the cost of capital employed
    • Value Drivers:
      • Sales growth rates
      • Operating profit margins
      • Income tax rate
      • Working capital investment
      • Fixed capital investment
      • Cost of capital
      • Forecast period
    Business Market Management, 3 rd edition Chapter 1-
  • Shareholder Value Business Market Management, 3 rd edition Chapter 1- Translating customer value into shareholder value critically depends on business’s ability to claim an equitable return on the value it delivers to customers.
  • Core Business Processes Business Market Management, 3 rd edition Chapter 1- Product Development Management (PDM)
    • Understanding customer requirements and preferences
    • Anticipating how they will change
    • Constructing solutions that customers are willing to pay for
    Supply Chain Management (SCM)
    • Incorporates acquisition of all physical and informational inputs
    • Efficiently and effectively transforms processes into customer solutions
    Customer Relationship Management (CRM)
    • Addresses all aspects of
      • Identifying customers
      • Creating customer knowledge
      • Building customer relationships
      • Shaping customer perceptions about the organization and its products
  • Contributions to Marketing
    • Making core business processes more market-driven can result in:
      • Accelerated and enhanced cash flow
      • Reduced time to market
      • Earlier adoption from targeted customers
    Business Market Management, 3 rd edition Chapter 1-
  • Market-Driven Processes Business Market Management, 3 rd edition Chapter 1- Business Processes Market-Driven Business Processes PDM PDM Design a technically superior product Create solution that enables customer to experience maximum value and benefit SCM SCM Best inputs at cheapest price Design, manage, and integrate firm’s supply chain with suppliers and customers CRM CRM Customer relationship is a means to sell, deliver, and service a product Customer relationship is an opportunity to learn about customers’ needs and wants and how best to create, satisfy, and sustain them
  • Why Business Marketing Management ?
    • Marketing work processes should take place within business market processes
    • Business market processes cut across functional areas
    • Depends upon seamless cross-functional cooperation
    Business Market Management, 3 rd edition Chapter 1-
  • Business Market Processes Understanding Value
    • Marketing Sensing: process of generating knowledge about the marketplace that individuals in the firm use to inform and guide their decision making
    Business Market Management, 3 rd edition Chapter 1-
  • Business Market Processes Understanding Value Business Market Management, 3 rd edition Chapter 1- Marketing Sensing Generating knowledge about the marketplace that individuals in the firm use to inform and guide their decision making Understanding Firms as Customers Learning how companies rely on a network of suppliers to add value to their offering, integrate purchasing activities with those of other functional areas and outside firms, and make purchase decisions Crafting Market Strategy Studying how to exploit a firm’s resources to achieve short-term and long-term marketplace success, deciding upon a course of action, and flexibly updating it as learning occurs during implementation
  • Business Market Processes Creating Value Business Market Management, 3 rd edition Chapter 1- Managing Market Offerings Putting products services, programs, and systems together in ways that create great value for targeted market segments and customer firms New Offering Realization Developing new core products or services, augmenting them to construct market offerings, and bringing them to market. Realization is all the activities used to transform ideas into a market offering that it commercializes Business Channel Management Designing a set of marketing and distribution arrangements that create superior customer value for targeted market segments and customers, and executing those arrangements either directly through supplier firm sales forces and logistics system or indirectly through resellers and third-party service providers
  • Business Market Processes Delivering Value Business Market Management, 3 rd edition Chapter 1- Gaining New Business Differentiating business opportunities, prospecting for new business, assessing the fit with supplier offerings and priorities, gaining the initial order, and fulfilling it to the customer’s complete satisfaction Sustaining Reseller Partnerships A supplier and its reseller fulfilling commitments they have made to deliver value to customer firms, strengthening this delivered value, and working progressively together to continue to fulfill changing marketplace Managing Customers Differentiating transactional and collaborative customers, delivering offerings that fulfill the respective requirements, and preferences of a portfolio of customers in a superior way, and getting a fair return in exchange
  • Business Market Management, 3 rd edition Chapter 1- Business Marketing Understanding that advances in marketing work processes & marketing relationships are needed to realize & profit from understanding of value. Marketing “ The true meaning of Marketing [is] knowing what is value for the customer .” -- Peter Drucker (1980)
  • Updated: “the four Ps” Business Market Management, 3 rd edition Chapter 1- Product Pricing
    • Flexible market offerings that consist of naked solutions
    • Offerings are responsive to customer requirements and preferences
    • What a market offering is worth to the customer
    Promotion Place
    • Marketing communications are focused
    • Tailored to varying requirements for gaining and sustaining customers & resellers
    • Shape and reinforce supplier’s value
    • Design customer-driven distribution channels
    • Channel offerings build marketplace equity
    • Implement cooperative channels arrangements that are adaptive
  • III. Doing Business Across Borders Business Market Management, 3 rd edition Chapter 1-
  • Doing Business Across Borders
    • Language and Culture
    • Cross-Border Negotiation
    • Dispute Resolution
    • Currency Exchange and Payment Risk
    Business Market Management, 3 rd edition Chapter 1-
  • Language and Culture
    • Doing business across borders does not always mean that the language and culture of managers will be different, just as doing business within the same country does not always mean that the language and the culture will be the same.
    Business Market Management, 3 rd edition Chapter 1-
  • Language and Culture
    • Determine what language to use
    • English regarded as the language of international business
    • Alternatives to English:
      • Use the language of one party
      • Use another language both parties are willing to use
      • Or, rely on interpreters
    Business Market Management, 3 rd edition Chapter 1-
  • Indian Automotive Component Manufacturers
    • India’s over 10,000 small and 500 midsize automotive component companies
      • Critical success factors:
        • Large and growing Indian middle class
        • High demand, local raw materials, low labour costs, high productivity and intense competition
        • Government focus and consequent support
    Business Market Management, 3 rd edition Chapter 1-
  • Language and Culture
    • Culture is an abstract and imprecise concept
      • Bundled characteristics that uniquely define members of a particular group
    • Culture comprises a:
      • Set of assumptions
      • Values
      • Beliefs
      • Socially instilled norms
    Business Market Management, 3 rd edition Chapter 1-
    • “ Culture is so imprecise and changeable a phenomenon that it explains less than most people realize…And within the overall mix of what influences people, behavior, culture’s role may be declining, rather than rising, squeezed between the greedy expansion of the government on one side, and globalization on the other.”
      • -- The Economist , “Cultural Explanations ”
    Language and Culture Business Market Management, 3 rd edition Chapter 1-
  • Cross-Border Negotiation
    • Considerations
      • Profitability of the business to be gained
      • Perceived benefits of the relationship
      • Anticipated consequences of the negotiated deal on supplier’s business in other country markets
    Business Market Management, 3 rd edition Chapter 1-
    • Differences from domestic negotiation
    • Culture
    • Unfamiliar and uncomfortable settings
    • Influence of ideology
    • Greater involvement of government in business
    • Defining which country’s laws govern the business transaction
    • Instability and sudden change in foreign market
    • Dispute resolution
    • Foreign currencies
    Cross-Border Negotiation Business Market Management, 3 rd edition Chapter 1-
  • Cross-Border Dispute Resolution
    • Negotiate first how to resolve disputes
    • International commercial arbitration
      • Arbitration usually occurs in a third country
      • Specify arbitration institution when possible
    Business Market Management, 3 rd edition Chapter 1-
  • Currency Exchange and Payment Risk
    • Currency for transactions
      • Supplier’s country currency
      • Customer’s country currency
      • Third party currency
    • Letter of credit (LC)
    • Confirm letter of credit
    Business Market Management, 3 rd edition Chapter 1-
  • IV. Working Relationships and Business Networks Business Market Management, 3 rd edition Chapter 1-
  • Work Teams
    • Work Teams: a small number of people with complementary skills who are committed to:
      • a common purpose
      • set of performance goals
      • an approach which they hold themselves mutually accountable
    Business Market Management, 3 rd edition Chapter 1-
  • Work Teams
    • Teams create value in their collective work-product that could not be produced outside the team setting
    Business Market Management, 3 rd edition Chapter 1-
  • Working Relationships Business Market Management, 3 rd edition Chapter 1- Transactional Relationships Customer and supplier focus upon the timely exchange of basic products for highly competitive prices, and/or one end Collaborative Relationships Achieved through partnering. Customer firm and supplier firm form strong and extensive social , economic , service, and technical ties . Mutual goals: lowering total costs and/or increasing value.
  • Collaborative Relationship Agreements
    • Strategic Alliance: commercial agreement between 2 or more parties to work together in some mutual defined ways
      • Gives & Gets
      • Time Horizons
      • Pre-agreed dispute- resolution mechanism
    Business Market Management, 3 rd edition Chapter 1-
  • Collaborative Relationship Development
    • Exchange Episodes: critical incidents when parties engage in actions related to the development of a relationship
      • Defining purpose
      • Setting boundaries
      • Creating and claiming value
      • Evaluating exchange outcomes
    Business Market Management, 3 rd edition Chapter 1-
  • Business Networks
    • Business Network: a set of two or more connected business relationships
    • Alliance Network: a clique of interrelated and coordinated business relationships
    Business Market Management, 3 rd edition Chapter 1-
  • Connected Relations for Firms in a Dyadic Relationship Business Market Management, 3 rd edition Chapter 1- Customer Business Unit Other Supplier Units Other Units in Focal Customer Firm Supplier’s Supplier Other Ancillary Firms Third Parties in Common Other Ancillary Firms Supplementary Supplier Other Customers Competing Supplier Other Units in Focal Supplier Firm Other Units in Focal Supplier Firm Customer’s Customer Supplier Business Unit Focal Relationship
  • Business Network Characteristics
    • Organized around developing and realizing an envisioned market opportunity
    • Multiplex relations where firms are:
      • suppliers,
      • customers,
      • and competitors to one another
    • Increasingly international in composition
    Business Market Management, 3 rd edition Chapter 1-
  • Analyzing Business Networks Business Market Management, 3 rd edition Chapter 1- Actors Network Horizon
    • Actors: firms, customers, suppliers, regulatory agencies
    • Perform the activities and control resources
    • How extended actor’s view of the network is
    • Depends on the actor’s experience and the structural network features
    Activities Network Context
    • Transaction, order management cycle
    • Create value through transforming resources
    • Structured in terms of the actors, activities, and resources
    Resources Network Identities
    • Anything that actors explicitly value
    • Technical know-how, equipment, personnel, capital
    • How firms see themselves in the network
    • How they are seen by other network actors
    • Captures the uniqueness of each firm in its set of relationships
  • V. Summary Business Market Management, 3 rd edition Chapter 1-
  • Summary
    • Overview of business market management
    • Four guiding principles of BMM:
      • Value
      • Business market processes
      • Business across borders
      • Working relationships and business networks
    Business Market Management, 3 rd edition Chapter 1-
  • Business Market Management, 3 rd edition Chapter 1- All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of the publisher. Printed in the United States of America.