Understanding Business Markets
 

Understanding Business Markets

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Introduction to business marketing and the importance of managing relationships within a wider network.

Introduction to business marketing and the importance of managing relationships within a wider network.

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Understanding Business Markets Understanding Business Markets Presentation Transcript

  • Understanding Business Markets Overview
  • Contents
        • To show the similarities and differences between business and consumer markets.
        • To explain problems and uncertainties of customers, the solutions they seek and the offerings of suppliers.
        • To explain the characteristics of business markets and explain the characteristics of business markets and business customers.
        • To show that business marketing is the management of customer relationships.
        • To explain how each relationship is part of a complex network of relationships.
  • How Companies and Consumers buy
    • Both are affected by their previous experience.
    • Both will bear possible future purchases in mind.
    • Both will need reassurance.
    • Both will seek advice if the purchase is difficult or complex.
    • Both will agonize over some issues.
    • Both will face implicit issues.
    • Both will make many simple, repetitive purchases with little evaluation.
    • Both will make purchases when their main concern is to minimize time .
    • More people involved in business purchases.
    • Business purchases are often much more complex.
    • The people involved in a business purchase are professional.
    • A business purchase may take a long time.
    • Each business customer is individually important.
    • A business purchase is part of a complex relationship. between customer and supplier.
    Differences between Consumer and Business purchases, Real or Not?
    • Business Marketing - is the task of selecting, developing and managing customer relationships for the advantage of both customer and supplier, with regard to their respective skills, resources, technologies, strategies and objectives.
    A Definition of Business Marketing
  • The Interaction Model - More Organization Technology Structure Strategy Individual Aims Experience Skills Interaction Process Environment Market structure Dynamism Internationalisation Channel position Social system Atmosphere Power/dependence Co-operation Closeness Expectations Organization Technology Structure Strategy Individual Aims Experience Skills Long term relationships Institutionalisation, Adaptations Short term exchange episodes Products/services Information Financial Social Source: Adapted with permission from Håkansson (1982, p24)
  • Fig 5.2 – From IOR to channel to chain to network IOR Marketing Supply/Demand Industrial Network Channel Chain Upstream suppliers Direct suppliers Manu-facturers Distributors Customers Supply network Distribution network
    • Whether or not it is critical to the company;
    • Whether it accounts for a major part of the company’s sales or purchases or whether it is only one of thousands of similar relationships;
    • Whether it is friendly or antagonistic, close or distant, complex or simple.
    A Business Relationship has to be managed by a Marketing Company:
  • Things to remember about Business Marketing
    • Our unit of analysis isn’t a sale, project, or market, but each relationship as part of a portfolio of relationships.
    • We can only make sense of a single purchase by looking at the relationship of which it forms part.
    • Business relationships are a company’s primary assets. Without them it cannot buy, sell, produce or deliver.
    • The development of relationships requires investment of time, money and resources.
    • Business relationships develop and exploit the skills, resources and technologies of both companies.  
    • Relationships link the activities of companies, tie their resources and form bonds between individuals.
    • Different relationships, have different actual and potential benefits to the supplier and to the customer.
    • Business purchasing is a similar activity to Business marketing.
    Things to remember about Business Marketing (continued)
  • The case for Close Relationships
    • They enable customers and suppliers to learn and adapt to each other.
    • They reduce uncertainties and costs of change.
  • The case against Close Relationships
    • Learning and adapting take time and are expensive. Both customer and supplier may benefit more from shopping around
    • Limiting relationship investment reduces a company’s dependence. It is also free to deal with other companies.
  • Question
    • Think of the different reasons a customer might not buy from a single supplier?
  • Problems and Concern……..
    • Rationalisation
    • Development
  • An Offering…..
    • An offering consists of different proportions of the elements of physical product, service, advice, adaptation and logistics and the costs that it involves.
  • Some Implications…
    • An offering only has value as a solution to a specific customer problem.
    • A different offering for each customer, even if all include the same physical product or service.
    • A business marketer can compete, even with an identical product by differentiating any of other offering element.
    • Sometimes neither product nor service nor logistics are most important. Instead, advice is critical
    • Other times adaptation may be important.
    • Buying an offering involves a range of costs for the customer, as well as purchase price.
    • A supplier’s offering always depends on its relationships with others.
    • An offering may be developed jointly with a customer.
  • A Solution…
    • A customer is only concerned with how effective an offering is as a solution to its problems.
  • A Marketer must………
    • CONSIDER OFFERINGS AS SOLUTIONS FOR CUSTOMERS. NOT JUST THEIR SPECIFICATIONS.
    • COMPARE HIS OFFERINGS WITH OTHER SOLUTIONS THROUGH THE EYES OF THE CUSTOMER .
    • ADVISE CUSTOMERS ON THE CHOICE OF SOLUTIONS.
    • AN OFFERING IS OF NO VALUE, UNLESS IT IS FULFILLED.
    • ACTUALLY FULFIL THE OFFERING FOR EACH CUSTOMER, AT THE PROMISED TIME, PLACE, PERFORMANCE AND CONSISTENCY .
  • The success of a Solution also depends on the Customer….
    • How clearly it can define and describe its problems.
    • Its skill in building relationships with suppliers.
    • Its skills in developing an offering with a supplier and ensuring it is fulfilled.
    • Its skill in integrating an offering with its own operations.
  • Customer uncertainties
    • Need - When the problem is difficult to determine.
    • Market - When the range of possible solutions is wide or technology is changing rapidly.
    • Transaction - When the concern is about fulfilment.
  • Supplier Abilities
    • Problem solving ability - to design and develop an offering.
    • Transfer abilities – to fulfil an offering.
  • Supplier Uncertainties
    • Capacity - How much can we sell?
    • Application – How can the offering be effectively used?
    • Transaction - Will the customer actually buy what he says?
  • Customer’s abilities
    • Demand ability – to advise on offering design and/or provide volume business.
    • Transfer ability - reliability in providing orders and information.
  • Summary
    • One company is only part of the network that provides a final consumer offering.
    • Business marketing occurs between two active companies.
    • Each business purchase is part of a relationship.
    • Each relationship is part of a portfolio and a wider network.
    • You are welcome to contact Nigel Bairstow at B2B Whiteboard your source of B2B Asia / Pacific marketing advice
    • http://www.linkedin.com/pub/nigel-bairstow/6/41b/726
    http://twitter.com/#!/b2bwhiteboard