B2B Marketing - Summary
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B2B Marketing - Summary

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A summary on what B2B Marketing is all about.

A summary on what B2B Marketing is all about.

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B2B Marketing - Summary B2B Marketing - Summary Presentation Transcript

  • Business (B2B) Marketing IFMR – PGDM II Yr. (2009-10) Module 1 Overview of Business marketing S.Balachandran July 2009
  • Learning Objectives
    • What is ‘Business Marketing’?
      • Classification of B2B Products/Services, Markets & Customers
    • Differences between Consumer & Business Markets & Marketing
    • B2B Buying Orientations & Characteristics
    July 2009 © S.Balachandran of 37
  • Business Enterprises : Activities July 2009 © S.Balachandran
    • Outputs
    • Services
    • Goods
    • Inputs
    • Materials
    • Components
    • Consumables
    • Services
    • Resources
    • Equipment
    • Facilities
    • Systems
    • Land
    • Human
    Either part of Output OR facilitating the Transformation
    • For Consumption
    • For Use
    • For Resale
    of 37 B2B Transformation Processes 5 1 2 3 4 Consumer or B2B Markets
  • B2B Goods & Services July 2009 © S.Balachandran of 37
  • Industrial Production Categories July 2009 © S.Balachandran of 37
  • Business Services July 2009 © S.Balachandran of 37
  • B2B Markets & Customers
    • Commercial Enterprises
      • Users
      • OEMs
      • Resellers
      • Service Providers
    • Institutions : Profit/Non-Profit
      • Educational, Healthcare, NGOs
    • Government / Quasi-Govt. Bodies
      • Central, State, Local, PSUs, Defence
    July 2009 © S.Balachandran of 37
  • Some Indian B2B Enterprises
    • BHEL / NTPC
    • ECC (L&T) / Hindustan Construction
    • TCS / Infosys / WIPRO / CTS
    • ORG Marg / R K Swamy BBDO
    • SAIL / Tata Steel
    • MICO / Sundaram Clayton / Bharat Forge / Bimetal Bearings / Delphi TVS
    • ONGC/ Neyveli Lignite Corp. / Bharat Coking Coal
    • IPCL / Gujarat Alkalis / Tata Chemicals
    • Shipping Corporation of India / TVS Logistics
    July 2009 © S.Balachandran of 37
  • Value Equation July 2009 © S.Balachandran ‘ Product’ or ‘Service’ satisfies a ‘need’ or ‘want’ by providing ‘value’. Attributes/ Features BENEFITS VALUE NETT VALUE = BENEFITS - COSTS of 37 VALUE DELIVERY SYSTEM
  • Value Creation & Delivery July 2009 © S.Balachandran of 37
  • Marketing Strategy July 2009 © S.Balachandran of 37
    • Unique to each distinct Product-Market segment
    • Five Main Elements
      • Segmentation
      • Targeting
      • Positioning
      • Differentiation
      • Marketing Mix
    • Capabilities Required
    • Market Sensing
    • Customer Linking
    Differentiation RECAP
  • Value Creation & Delivery System July 2009 © S.Balachandran Provide the value Communicate the value Understand Value Desires Select Targets Define Benefits/ Price Understand & Create the Value
    • Market
    • Research
    • Customer
    • Behaviour
    • Product-
    • Market
    • Segments
    • Position
    • Differentiation
    • Product
    • Management
    of 37
  • Providing the Value July 2009 © S.Balachandran Commu- nicate the value Choose the value Provide the Value Technology Design Product Distribute Service Price Procure, Manu- facture
    • Source
    • Sophisti-
    • cation
    • Patents
    • Process
    • Choice
    • Function
    • Physical
    • charact-
    • eristics
    • Aesthetic
    • Quality
    • Integration
    • Raw Mtl.
    • Capacity
    • Location
    • Part Prodn.
    • Assembly
    • Channels
    • Integration
    • Inventory
    • Ware-
    • housing
    • Transport
    • MRP
    • Negotiation
    • Discount
    • Combo
    • Financing
    • Other Costs
    • Warranty
    • Speed
    • Captive/
    • Indepen-
    • dent
    • Parts
    of 37
  • Communicating the Value July 2009 © S.Balachandran Choose the Value Provide the Value Communicate the Value
    • INTEGRATED MARKETING
    • Direct Sales Force
    • Distribution Channel Partners
    • Brochures, Website, Email
    • Advertising & Promotions
    • Physical Evidence
    • Employees
    • Processes
    of 37
  • Value Expectations July 2009 © S.Balachandran of 37
    • Consumer Markets
    • Monetary Benefits
    • Look/Feel Better 
    • Aesthetics/
    • Psychological Benefits
    • Social Benefits
    • Convenience  Place/Time
    • Quick Service
    • B2B Markets
    • Economic Benefits 
    • Cost of Procurement/
    • Transport/ Storage/
    • Ownership/ Usage/
    • Maintenance/
    • Modification/ Disposal
    • Help in Maintenance/
    • Service/ Repair/ Upgradation/
    • Performance Improvement
  • Value Hierarchy – Product Levels July 2009 © S.Balachandran of 37 CORE BENEFIT Fundemental Benefit customer is really buying BASIC PRODUCT Built around Core Benefit EXPECTED PRODUCT Attribute & conditions buyers Normally expect AUGMENTED PRODUCT Exceeds Customer Expectations POTENTIAL PRODUCT All possible augmentations & Transformations product might Undergo in future Customer Delight !
  • Framework for B2B Marketing July 2009 © S.Balachandran of 37
  • Key Differences:B2B vs Consumer Marketing July 2009 © S.Balachandran of 37 MARKETING CUSTOMER MANUFACTURING External Environment Internal Environment External Linkage Internal Linkage Derived Demand Complex Buying Process Concentrated Customer Base Emphasis on Technology High Level of Customisation Made to Order
  • Nature of B2B Demand
    • Derived  Fluctuating
      • Necessity to monitor changes in Demand Patterns of Customers’ Customers
    • Stimulation of Primary Demand & popularising new applications
    • Price Sensitivity/Demand Elasticity in B2B
      • Depends on B2C
    • Opportunities of Global Markets & Impact of Global Competition : much more in B2B than B2C
    July 2009 © S.Balachandran of 37
  • Complexity of Buying Process
    • Strategic Importance of item
      • Senior Management Involvement
    • Cost : High, Medium, Low
      • Different Buying Processes
      • Relative Importance of financial Approvals
    • Complexity of need serviced
      • Level of Customisation & Service required
      • Multi-functional Scrutiny
    • Complexity of Buying Organisation
      • Centralised vs Decentralised Authority
    July 2009 © S.Balachandran of 37
  • Concentrated Customer Base
    • Direct selling
      • More Economical
      • Customer Expectation
    • Buyer Bargaining Power 
      • Competitor Influence on Buyer
      • Management of Short Term setbacks
    • Close Relationships
      • Monitor happenings @ Customer end
      • Expectations of C, Q, D, S, R1 & R2
    July 2009 © S.Balachandran of 37
  • Emphasis on Technology
    • Constant pressure to improve/ upgrade/ innovate
    • Collaborative Design & Development
    • Product Performance Orientation
      • Performance to Price Ratio
    • Expected to provide Solution
      • Understanding of Customer Business
    • Selling : Technical / Multi-Functional Skills
    July 2009 © S.Balachandran of 37
  • High Level of Customisation
    • Inflexible technical Specifications
    • Sometimes necessary for manufacturer to redesign / re-layout operations facilities
    • Even standard products: Installation, Configuration, Service & Support may have to be highly customised
    July 2009 © S.Balachandran of 37
  • Differences in Emphasis : B2B vs B2C July 2009 © S.Balachandran of 37
  • Nature of Products  B2B Marketing
    • Manufactured Materials & Parts
      • Custom-made parts
        • Personal selling & CRM
        • Design & Supply Chain capabilities
      • Standardised Parts
        • Contractual Purchase, Large quantities
        • Price, Delivery, Support service
        • Resellers used
    July 2009 © S.Balachandran of 37
  • Nature of Products  B2B Marketing (Contd.)
    • Installations
      • Product, Technology, Service Capabilities
      • Personal Selling & Account Management
      • Less Costly, More Standardised
        • Marketing Intermediaries
      • Costly, more involved
        • Close relationships
        • Long negotiations
        • Several Executives of buyer organisation involved
    July 2009 © S.Balachandran of 37
  • Nature of Products  B2B Marketing (Contd.)
    • Supplies
      • Large Users: Direct Marketing
      • Smaller Users: Marketing Intermediaries
      • Strong eProcurement tendencies
      • Less Personal Selling
      • More of Catalogue approach
      • Price & Range critical
    July 2009 © S.Balachandran of 37
  • Distinctive Capabilities for B2B Marketing July 2009 © S.Balachandran of 37 Supply Chain Management Mgmt. of Strategic Alliances Mgmt. of Hybrid Channels
  • Goals of Purchasing July 2009 © S.Balachandran of 37
  • Total Cost of Ownership July 2009 © S.Balachandran Factors that drive total cost. Acquiring and managing costs. Quality, reliability over the life cycle. Value of product to firm/customers. of 37
  • Procurement Development July 2009 © S.Balachandran of 37 Source Negotiate Manage Info & Logistics Value Analysis & Complexity mgmt. Strategic Partnership
  • Segmenting the Buy July 2009 © S.Balachandran of 37 KSFs
    • Demonstrated Capabilities
    • Skilled Personal selling
    Cost & Range Efficient Management of Info & Logistics Strategic Partnership
  • Procurement Processes
    • Source Approval
    • Contract (annual) / Non-contract
    • Inventory Control Systems
    • eProcurement
    • Reverse Auction – eBidding
    • Tiered Structure (Ex. Fig 1.5, p15)
    July 2009 © S.Balachandran of 37
  • Government Procurement July 2009 © S.Balachandran
    • Compliance - requires government contractors maintain
    • affirmative action programs.
    • Reservation - a percentage of the contract is set aside
    • for small minority businesses.
    of 37
    • Minority-subcontracting - may require major contractors subcontract a certain percentage of the contract to minority firms.
  • Govt. Contracts
    • Fixed-price contracts
      • Price agreed to before contract award
      • Payment made at conclusion of work
      • Provides for the greatest profit potential
      • Poses greater risks
    • Cost-reimbursement contracts
      • Reimbursement of allowable costs
      • Price = Cost + Profit%
      • Disclosure of Cost Structure
    July 2009 © S.Balachandran of 37
  • Govt. Procurement
    • Agencies
      • Defence Bodies
      • DGS&D
      • PSUs
      • Committees
    • Process
      • Tendering
      • Approved Supply sources
      • Negotiation
    July 2009 © S.Balachandran of 37
  • Institutional Procurement
    • Schools, health care organizations, non-profit agencies
    • Similar to government buyers
      • Political considerations and laws
    • Similar to commercial buyers
      • Often managed like corporations
      • Broad range of purchase requirements
    • Group purchasing quite common
    July 2009 © S.Balachandran of 37