© Kotler, Keller, Marketing Management 7-1
CONNECTINGCONNECTING
WITH CUSTOMERS
PART
3
© Kotler, Keller, Marketing Management 7-2
ANALYZINGANALYZING
Business Markets
Chapter
7
© Kotler, Keller, Marketing Management 7-3
1. What is the business market & how does it differ from the
consumer market?
2...
© Kotler, Keller, Marketing Management 7-4
German SAP: leading seller to business market
Strategy - focus on what customer...
© Kotler, Keller, Marketing Management 7-5
What is Organizational Buying?What is Organizational Buying?
Organizational buy...
© Kotler, Keller, Marketing Management 7-6
What is Organizational Buying?What is Organizational Buying?
The Business Marke...
© Kotler, Keller, Marketing Management 7-7
What is Organizational Buying?What is Organizational Buying?
The Business Marke...
© Kotler, Keller, Marketing Management 7-8
What is Organizational Buying?What is Organizational Buying?
Buying SituationsB...
© Kotler, Keller, Marketing Management 7-9
What is Organizational Buying?What is Organizational Buying?
Systems Buying & S...
© Kotler, Keller, Marketing Management 7-10
What is Organizational Buying?What is Organizational Buying?
Systems Buying & ...
© Kotler, Keller, Marketing Management 7-11
Participants in the Business BuyingParticipants in the Business Buying
Process...
© Kotler, Keller, Marketing Management 7-12
Participants in the Business BuyingParticipants in the Business Buying
Process...
© Kotler, Keller, Marketing Management 7-13
Participants in the Business BuyingParticipants in the Business Buying
Process...
© Kotler, Keller, Marketing Management 7-14
Participants in the Business BuyingParticipants in the Business Buying
Process...
© Kotler, Keller, Marketing Management 7-15
Participants in the Business BuyingParticipants in the Business Buying
Process...
© Kotler, Keller, Marketing Management 7-16
Participants in the Business BuyingParticipants in the Business Buying
Process...
© Kotler, Keller, Marketing Management 7-17
AA Kodak adKodak ad targetstargets
hospital administratorshospital administrat...
© Kotler, Keller, Marketing Management 7-18
The Purchasing/Procurement ProcessThe Purchasing/Procurement Process
 Busines...
© Kotler, Keller, Marketing Management 7-19
The Purchasing/Procurement ProcessThe Purchasing/Procurement Process
 Buying ...
© Kotler, Keller, Marketing Management 7-20
The Purchasing/Procurement ProcessThe Purchasing/Procurement Process
--Types o...
© Kotler, Keller, Marketing Management 7-21
The Purchasing/Procurement ProcessThe Purchasing/Procurement Process
-- Purcha...
© Kotler, Keller, Marketing Management 7-22
Table 7.1Table 7.1 Buygrid Framework:
Major Stages (Buyphases) of Industrial B...
© Kotler, Keller, Marketing Management 7-23
Figure 7.1 Organizational Buying Behavior in Japan:
Packaging-Machine Purchase...
© Kotler, Keller, Marketing Management 7-24
Stages in the Buying ProcessStages in the Buying Process
-- Problem Recognitio...
© Kotler, Keller, Marketing Management 7-25
Stages in the Buying Process -Stages in the Buying Process - GeneralGeneral
Ne...
© Kotler, Keller, Marketing Management 7-26
Stages in the Buying Process -Stages in the Buying Process - GeneralGeneral
Ne...
© Kotler, Keller, Marketing Management 7-27
Stages in the Buying Process -Stages in the Buying Process - GeneralGeneral
Ne...
© Kotler, Keller, Marketing Management 7-28
Hewlett PackardHewlett Packard adsads
with themewith theme
“+ hp = everything ...
© Kotler, Keller, Marketing Management 7-29
Stages in the Buying ProcessStages in the Buying Process
–– Supplier SearchSup...
© Kotler, Keller, Marketing Management 7-30
The Business-to-Business (B2B)The Business-to-Business (B2B)
Cyberbuying Bazaa...
© Kotler, Keller, Marketing Management 7-31
The Business-to-Business B2BThe Business-to-Business B2B
Cyberbuying BazaarCyb...
© Kotler, Keller, Marketing Management 7-32
The Asian B2B EnvironmentThe Asian B2B Environment
 Building B2B marketplaces...
© Kotler, Keller, Marketing Management 7-33
Stages in the Buying ProcessStages in the Buying Process
–– E-ProcurementE-Pro...
© Kotler, Keller, Marketing Management 7-34
Stages in the Buying ProcessStages in the Buying Process
–– E-ProcurementE-Pro...
© Kotler, Keller, Marketing Management 7-35
Stages in the Buying ProcessStages in the Buying Process
–– Proposal Solicitat...
© Kotler, Keller, Marketing Management 7-36
Stages in the Buying ProcessStages in the Buying Process
–– Proposal Solicitat...
© Kotler, Keller, Marketing Management 7-37
Stages in the Buying ProcessStages in the Buying Process
–– Supplier Selection...
© Kotler, Keller, Marketing Management 7-38
Table 7.2Table 7.2
An Example of Vendor Analysis
© Kotler, Keller, Marketing Management 7-39
Methods of Assessing Customer ValueMethods of Assessing Customer Value
1. Inte...
© Kotler, Keller, Marketing Management 7-40
Stages in the Buying ProcessStages in the Buying Process
–– Order-Routine Spec...
© Kotler, Keller, Marketing Management 7-41
Stages in the Buying ProcessStages in the Buying Process
–– Order-Routine Spec...
© Kotler, Keller, Marketing Management 7-42
Stages in the Buying ProcessStages in the Buying Process
–– Performance Review...
© Kotler, Keller, Marketing Management 7-43
Stages in the Buying ProcessStages in the Buying Process
–– Performance Review...
© Kotler, Keller, Marketing Management 7-44
Managing Business-to Business CustomerManaging Business-to Business Customer
R...
© Kotler, Keller, Marketing Management 7-45
Managing Business-to Business CustomerManaging Business-to Business Customer
R...
© Kotler, Keller, Marketing Management 7-46
Managing Business-to Business CustomerManaging Business-to Business Customer
R...
© Kotler, Keller, Marketing Management 7-47
Establishing Corporate TrustEstablishing Corporate Trust
& Credibility& Credib...
© Kotler, Keller, Marketing Management 7-48
Trust in online settings, stringent
requirements
Buyers worry - get products -...
© Kotler, Keller, Marketing Management 7-49
Managing Business-to Business CustomerManaging Business-to Business Customer
R...
© Kotler, Keller, Marketing Management 7-50
Managing Business-to Business CustomerManaging Business-to Business Customer
R...
© Kotler, Keller, Marketing Management 7-51
Relationship Marketing in theRelationship Marketing in the
Keiretsu & ChaebolK...
© Kotler, Keller, Marketing Management 7-52
Relationship Marketing in theRelationship Marketing in the
Keiretsu & ChaebolK...
© Kotler, Keller, Marketing Management 7-53
Institutional & GovernmentInstitutional & Government
MarketsMarkets
 Institut...
© Kotler, Keller, Marketing Management 7-54
Institutional & GovernmentInstitutional & Government
MarketsMarkets
 Governme...
© Kotler, Keller, Marketing Management 7-55
Institutional & GovernmentInstitutional & Government
MarketsMarkets
 Governme...
© Kotler, Keller, Marketing Management 7-56
Institutional & GovernmentInstitutional & Government
MarketsMarkets
 In Asia ...
© Kotler, Keller, Marketing Management 7-57
Government Procurement in KoreaGovernment Procurement in Korea
Procurement irr...
© Kotler, Keller, Marketing Management 7-58
Government Procurement in KoreaGovernment Procurement in Korea
Improvements ma...
© Kotler, Keller, Marketing Management 7-59
Institutional & GovernmentInstitutional & Government
MarketsMarkets
China - in...
© Kotler, Keller, Marketing Management 7-60
Marketing Debate
How Different is Business-to-Business Marketing?
Many busines...
Upcoming SlideShare
Loading in …5
×

Cd6813 business mkt

797 views

Published on

ini semua slide marketing strategik kelas sabtu ukm semester 1 2010/2011

0 Comments
0 Likes
Statistics
Notes
  • Be the first to comment

  • Be the first to like this

No Downloads
Views
Total views
797
On SlideShare
0
From Embeds
0
Number of Embeds
3
Actions
Shares
0
Downloads
9
Comments
0
Likes
0
Embeds 0
No embeds

No notes for slide
  • Dun forget put in4th edition
  • What do we need to place at the final discussion page? Is this supposed to be the content?
  • Cd6813 business mkt

    1. 1. © Kotler, Keller, Marketing Management 7-1 CONNECTINGCONNECTING WITH CUSTOMERS PART 3
    2. 2. © Kotler, Keller, Marketing Management 7-2 ANALYZINGANALYZING Business Markets Chapter 7
    3. 3. © Kotler, Keller, Marketing Management 7-3 1. What is the business market & how does it differ from the consumer market? 2. What buying situations do organizational buyers face? 3. Who participates in the business-to-business buying process? 4. How do business buyers make their decisions? 5. How can companies build strong relationships with business customers? 6. How is B2B relationship marketing conducted in the Japanese keiretsu & the Korean chaebol? 7. How do institutional buyers & government agencies do their buying? In this chapter, we address the following questions:
    4. 4. © Kotler, Keller, Marketing Management 7-4 German SAP: leading seller to business market Strategy - focus on what customers want “The best run businesses run SAP” • Software helps standardize processes & automate functions
    5. 5. © Kotler, Keller, Marketing Management 7-5 What is Organizational Buying?What is Organizational Buying? Organizational buyingOrganizational buying decision making process where formal organizations establish need for purchased products & services & identify, evaluate & choose among alternative brands & suppliers
    6. 6. © Kotler, Keller, Marketing Management 7-6 What is Organizational Buying?What is Organizational Buying? The Business Market versus the Consumer MarketThe Business Market versus the Consumer Market  Business market All firms that acquire goods used in production of other products that are sold, rented or supplied to others
    7. 7. © Kotler, Keller, Marketing Management 7-7 What is Organizational Buying?What is Organizational Buying? The Business Market versus the Consumer MarketThe Business Market versus the Consumer Market Business market characteristicsBusiness market characteristics 1. Fewer, larger buyers 2. Close supplier-customer relationship 3. Professional purchasing 4. Several buying influences 5. Multiple sales calls 6. Derived demand 7. Inelastic demand 8. Fluctuating demand 9. Geographically concentrated buyers 10.Direct purchasing
    8. 8. © Kotler, Keller, Marketing Management 7-8 What is Organizational Buying?What is Organizational Buying? Buying SituationsBuying Situations Business buyer faces decisions – buying situation 3 types of buying situations: 1. STRAIGHT REBUY reorders on a routine basis 2. MODIFIED REBUY modify product, prices etc 3. NEW TASK buys product for the 1st time
    9. 9. © Kotler, Keller, Marketing Management 7-9 What is Organizational Buying?What is Organizational Buying? Systems Buying & SellingSystems Buying & Selling  Systems buying Buy total solution from 1 seller  Systems selling Key industrial marketing strategy - large-scale industrial projects eg dams, utilities
    10. 10. © Kotler, Keller, Marketing Management 7-10 What is Organizational Buying?What is Organizational Buying? Systems Buying & SellingSystems Buying & Selling  Systems contracting 1 supplier for entire MRO (maintenance, repair, operating) supplies – Supplier manages inventory - BENEFITS? – Customer - reduce cost & protect price – Seller - low operating costs - steady demand
    11. 11. © Kotler, Keller, Marketing Management 7-11 Participants in the Business BuyingParticipants in the Business Buying Process –Process – The Buying CenterThe Buying Center  The buying center decision making unit of a buying organization  May include people outside organization such as government officials, consultants
    12. 12. © Kotler, Keller, Marketing Management 7-12 Participants in the Business BuyingParticipants in the Business Buying Process –Process – The Buying CenterThe Buying Center Buying center includes:  Initiators  Users  Influencers  Deciders  Approvers  Buyers  Gatekeepers
    13. 13. © Kotler, Keller, Marketing Management 7-13 Participants in the Business BuyingParticipants in the Business Buying Process –Process –Buying Center InfluencesBuying Center Influences  Buying members - priority to different criteria  Respond to influences eg perception education  Different buying styles  Personal needs “motivate” person’s behavior but organizational needs “legitimize” buying decision  Industrial buying decisions serve both needs of organization & individual
    14. 14. © Kotler, Keller, Marketing Management 7-14 Participants in the Business BuyingParticipants in the Business Buying Process –Process –Buying Center TargetingBuying Center Targeting  Who are major decision participants?  What decisions do they influence?  What is their level of influence?  What evaluation criteria do they use?  Small sellers- key buying influencers  Large sellers - multilevel in-depth selling
    15. 15. © Kotler, Keller, Marketing Management 7-15 Participants in the Business BuyingParticipants in the Business Buying Process –Process –Buying Center TargetingBuying Center Targeting 4 types of business customers 1.Price-oriented 2.Solution-oriented 3.Gold-standard 4.Strategic-value
    16. 16. © Kotler, Keller, Marketing Management 7-16 Participants in the Business BuyingParticipants in the Business Buying Process –Process –Buying Center TargetingBuying Center Targeting  Price-oriented buyers - lower price, conditions – Eg: No refunds  Risk & gain sharing - offset requested price reductions from customers  Solution selling - alleviate price pressure - enhance revenues, decrease risks & costs
    17. 17. © Kotler, Keller, Marketing Management 7-17 AA Kodak adKodak ad targetstargets hospital administratorshospital administrators - offer services- offer services that streamlinethat streamline processes, integrateprocesses, integrate technologies &technologies & improveimprove productivityproductivity Business marketers -Business marketers - periodically reviewperiodically review their assumptionstheir assumptions about buying centerabout buying center participantsparticipants
    18. 18. © Kotler, Keller, Marketing Management 7-18 The Purchasing/Procurement ProcessThe Purchasing/Procurement Process  Business buyers -highest benefit for market offering’s costs  Incentive to purchase > in proportion to ratio of perceived benefits to costs  Construct profitable offering - superior customer value to target buyers
    19. 19. © Kotler, Keller, Marketing Management 7-19 The Purchasing/Procurement ProcessThe Purchasing/Procurement Process  Buying Orientation –short-term, tactical  Procurement Orientation – seek to improve quality & reduce cost  Supply Chain Management Orientation – a more strategic, value-adding operation
    20. 20. © Kotler, Keller, Marketing Management 7-20 The Purchasing/Procurement ProcessThe Purchasing/Procurement Process --Types of Purchasing ProcessesTypes of Purchasing Processes 4 product-related purchasing processes: 1. Routine products - low value & cost & little risk 2. Leverage products - high value, cost; little supply risk 3. Strategic products - high value, cost & risk 4. Bottleneck products - low value, cost some risk
    21. 21. © Kotler, Keller, Marketing Management 7-21 The Purchasing/Procurement ProcessThe Purchasing/Procurement Process -- Purchasing Organization & AdministrationPurchasing Organization & Administration  Purchasing jobs - strategic, technical, team- oriented  In MNCs – purchasing - separate divisions  Centralize purchasing – Headquarters buys centrally – Substantial savings  Business marketer - fewer & higher-level buyer
    22. 22. © Kotler, Keller, Marketing Management 7-22 Table 7.1Table 7.1 Buygrid Framework: Major Stages (Buyphases) of Industrial Buying Process in Relation to Major Buying Situations (Buyclasses)
    23. 23. © Kotler, Keller, Marketing Management 7-23 Figure 7.1 Organizational Buying Behavior in Japan: Packaging-Machine Purchase Process
    24. 24. © Kotler, Keller, Marketing Management 7-24 Stages in the Buying ProcessStages in the Buying Process -- Problem RecognitionProblem Recognition  Buying process - problem/need recognized - met by good/service  Trigger - internal or external stimuli  Events lead to problem recognition  Stimulate problem recognition - direct mail, telemarketing & calling on prospects
    25. 25. © Kotler, Keller, Marketing Management 7-25 Stages in the Buying Process -Stages in the Buying Process - GeneralGeneral Need Description & Product SpecificationNeed Description & Product Specification  Buyer - item’s features & quantity  Complex items - buyer work with others on reliability, durability or price  Business marketers - how their products meet or exceed buyer’s needs
    26. 26. © Kotler, Keller, Marketing Management 7-26 Stages in the Buying Process -Stages in the Buying Process - GeneralGeneral Need Description & Product SpecificationNeed Description & Product Specification Product value analysis (PVA)Product value analysis (PVA) Approach to cost reduction where components are studied and redesigned or standardized and/or produced with lower costs
    27. 27. © Kotler, Keller, Marketing Management 7-27 Stages in the Buying Process -Stages in the Buying Process - GeneralGeneral Need Description & Product SpecificationNeed Description & Product Specification  Buyer - develops technical specifications  Examine high-cost components  Identify those - last longer than product  Tightly written specifications - buyer can refuse if too expensive, below standards  Suppliers - PVA as tool to win account
    28. 28. © Kotler, Keller, Marketing Management 7-28 Hewlett PackardHewlett Packard adsads with themewith theme “+ hp = everything is“+ hp = everything is possible”possible” Focus - consulting & advisoryFocus - consulting & advisory capabilitiescapabilities Joint venture with the HongJoint venture with the Hong Kong Special AdministrativeKong Special Administrative Region governmentRegion government -- created Web portalcreated Web portal -- Hong Kong’s citizensHong Kong’s citizens 24-hour access to24-hour access to government servicesgovernment services
    29. 29. © Kotler, Keller, Marketing Management 7-29 Stages in the Buying ProcessStages in the Buying Process –– Supplier SearchSupplier Search  Buyer identify appropriate suppliers: – Trade directories – Contacts with companies – Trade advertisements & shows  Marketers put products, prices online  Internet purchasing - future purchasing  B2B marketing in Asia - learn from the U.S.
    30. 30. © Kotler, Keller, Marketing Management 7-30 The Business-to-Business (B2B)The Business-to-Business (B2B) Cyberbuying BazaarCyberbuying Bazaar Electronic marketplacesElectronic marketplaces - several forms: 1) Catalog sites 2) Vertical markets 3) “Pure Play” auction sites 4) Spot (or exchange) markets 5) Private exchanges 6) Barter markets 7) Buying alliances
    31. 31. © Kotler, Keller, Marketing Management 7-31 The Business-to-Business B2BThe Business-to-Business B2B Cyberbuying BazaarCyberbuying Bazaar Online business buyingOnline business buying AdvantagesAdvantages: 1. Low costs for both parties 2. Reduces time: order-delivery 3. Consolidate purchasing systems 4. Close relationships 5. In Asia, increased transparency DownsideDownside: 1. Erode supplier–buyer loyalty 2. Potential security problems
    32. 32. © Kotler, Keller, Marketing Management 7-32 The Asian B2B EnvironmentThe Asian B2B Environment  Building B2B marketplaces in Asia - address & adapt to Asian business environment: Manufacturing dominates Less efficient supply chains Less well developed infrastructure Smaller markets
    33. 33. © Kotler, Keller, Marketing Management 7-33 Stages in the Buying ProcessStages in the Buying Process –– E-ProcurementE-Procurement  Vertical hubs & Functional hubs  Direct extranet links to major suppliers  Buying alliances  Company buying sites  e-procurement change purchasing strategy  Supplier - list in online catalogs, strong advertising & build good reputation
    34. 34. © Kotler, Keller, Marketing Management 7-34 Stages in the Buying ProcessStages in the Buying Process –– E-ProcurementE-Procurement Benefits: 1. Aggregate purchase -volume discounts 2. Less buying of substandard goods 3. Smaller number of purchasing staff
    35. 35. © Kotler, Keller, Marketing Management 7-35 Stages in the Buying ProcessStages in the Buying Process –– Proposal SolicitationProposal Solicitation  Qualified suppliers - submit proposals  A few make formal presentations  Written proposals - marketing documents - describe value & benefits to customer  Oral presentations - confidence & position capabilities - stand out from competition
    36. 36. © Kotler, Keller, Marketing Management 7-36 Stages in the Buying ProcessStages in the Buying Process –– Proposal SolicitationProposal Solicitation Eg: Hurdles Xerox set up to qualify supplier – To qualify - ISO 9000 – To win - Xerox Multinational Supplier Quality Survey – Then, Xerox’s Continuous Supplier Involvement process – Final- rigorous quality training & evaluation – Only 176 suppliers worldwide get 95 % rating required
    37. 37. © Kotler, Keller, Marketing Management 7-37 Stages in the Buying ProcessStages in the Buying Process –– Supplier SelectionSupplier Selection  Desired attributes & importance – Supplier-evaluation model  Marketers - how buyers get valuations  8 customer value assessment (CVA) methods to assess customer value  Buying centers to decide number of suppliers
    38. 38. © Kotler, Keller, Marketing Management 7-38 Table 7.2Table 7.2 An Example of Vendor Analysis
    39. 39. © Kotler, Keller, Marketing Management 7-39 Methods of Assessing Customer ValueMethods of Assessing Customer Value 1. Internal engineering assessment 2. Field value-in-use assessment 3. Focus-group value assessment 4. Direct survey question 5. Conjoint analysis 6. Benchmarks 7. Compositional approach 8. Importance ratings
    40. 40. © Kotler, Keller, Marketing Management 7-40 Stages in the Buying ProcessStages in the Buying Process –– Order-Routine SpecificationOrder-Routine Specification  After selection - negotiates final order  Blanket contracts rather than periodic purchase  Blanket contract - long-term relationship – Supplier promises to resupply buyer as needed – At agreed prices, over specified time
    41. 41. © Kotler, Keller, Marketing Management 7-41 Stages in the Buying ProcessStages in the Buying Process –– Order-Routine SpecificationOrder-Routine Specification  Vendor-managed inventory – Some shift ordering responsibility to suppliers  Suppliers replenish it automatically through continuous replenishment programs
    42. 42. © Kotler, Keller, Marketing Management 7-42 Stages in the Buying ProcessStages in the Buying Process –– Performance ReviewPerformance Review Review supplier performance 3 methods: 1. Contact end users for evaluations 2. Rate on criteria - weighted score 3. Aggregate poor performance cost - get adjusted costs of purchase & price
    43. 43. © Kotler, Keller, Marketing Management 7-43 Stages in the Buying ProcessStages in the Buying Process –– Performance ReviewPerformance Review  Lead buyer to decide on supplier relationship  Reward managers for good buying performance  Increase pressure on sellers for best terms
    44. 44. © Kotler, Keller, Marketing Management 7-44 Managing Business-to Business CustomerManaging Business-to Business Customer RelationshipsRelationships -- The Benefits of Vertical CoordinationThe Benefits of Vertical Coordination  Vertical coordination - buying partners & sellers to engage in activities - create more value for both  Trust between parties - prerequisite to healthy long-term relationships
    45. 45. © Kotler, Keller, Marketing Management 7-45 Managing Business-to Business CustomerManaging Business-to Business Customer RelationshipsRelationships -- The Benefits of Vertical CoordinationThe Benefits of Vertical Coordination Relationship between ad agencies & clients: 1) Formation stage - 1 partner big market growth 2) Information between partners – profit both 3) At least 1 - high barriers to entry 4) Dependence asymmetry - 1 influence the other 5) 1 partner - economies of scale
    46. 46. © Kotler, Keller, Marketing Management 7-46 Managing Business-to Business CustomerManaging Business-to Business Customer RelationshipsRelationships -- The Benefits of Vertical CoordinationThe Benefits of Vertical Coordination 8 buyer-supplier relationships:8 buyer-supplier relationships: 1) Basic buying & selling 2) Bare bones 3) Contractual transaction 4) Customer supply 5) Cooperative systems 6) Collaborative 7) Mutually adaptive 8) Customer is king
    47. 47. © Kotler, Keller, Marketing Management 7-47 Establishing Corporate TrustEstablishing Corporate Trust & Credibility& Credibility Corporate credibility - 3 factors:Corporate credibility - 3 factors: I. Corporate expertise II. Corporate trustworthiness III. Corporate likability Factors affecting trust in B2B relationship:Factors affecting trust in B2B relationship: I. Perceived competence II. Integrity III. Honesty IV. Benevolence of firm
    48. 48. © Kotler, Keller, Marketing Management 7-48 Trust in online settings, stringent requirements Buyers worry - get products - right quality to right place at right time Sellers worry - paid on time/at all - how much credit to extend  ToolsTools: automated credit-checking applications & online trust services - determine credibility of trade partner Establishing Corporate TrustEstablishing Corporate Trust & Credibility& Credibility
    49. 49. © Kotler, Keller, Marketing Management 7-49 Managing Business-to Business CustomerManaging Business-to Business Customer RelationshipsRelationships -- Business Relationships: Risks &Business Relationships: Risks & OpportunismOpportunism  Customer-supplier relation, tension between to safeguard & to adapt  Vertical coordination – strong ties but increase risk  Specific investments - spending tailored to firm & value chain partner  Supplier not monitored- might not deliver expected value
    50. 50. © Kotler, Keller, Marketing Management 7-50 Managing Business-to Business CustomerManaging Business-to Business Customer RelationshipsRelationships -- Business Relationships: Risks &Business Relationships: Risks & OpportunismOpportunism  Opportunism - cheating or undersupply relative to contract  Concern - resources to control - more productive elsewhere  Expropriation to bonding if: – Significant time horizon – Strong solidarity norms – Customer & supplier- joint benefit
    51. 51. © Kotler, Keller, Marketing Management 7-51 Relationship Marketing in theRelationship Marketing in the Keiretsu & ChaebolKeiretsu & Chaebol  Japanese keiretsu & Korean chaebol  Buy & sell among each other  Production keiretsu -vertical integration of manufacturers & suppliers  Procurement keiretsu – “Buy group products” mentality – Reciprocal purchasing prominent
    52. 52. © Kotler, Keller, Marketing Management 7-52 Relationship Marketing in theRelationship Marketing in the Keiretsu & ChaebolKeiretsu & Chaebol  Long-term cooperative relationships developed  Interdependence, social ties & trust  Competition & downturn 1990s – Keiretsu firms expand outside group  Convergence - supplier polices of Japanese & Western automakers
    53. 53. © Kotler, Keller, Marketing Management 7-53 Institutional & GovernmentInstitutional & Government MarketsMarkets  Institutional market - provide for people in their care (schools, hospitals)  Low budgets & captive clienteles  GovernmentGovernment Major buyer goods & service  Suppliers – take lowest bid  Negotiated contract basis – complex projects
    54. 54. © Kotler, Keller, Marketing Management 7-54 Institutional & GovernmentInstitutional & Government MarketsMarkets  Government spending - public review – Considerable paperwork – Justify cost - major consideration – Show bottom-line of offerings  Suppliers - ways to cut through red tape
    55. 55. © Kotler, Keller, Marketing Management 7-55 Institutional & GovernmentInstitutional & Government MarketsMarkets  Government procurement - price  Win government contracts - revenue & spillover benefits - others may follow – Eg Growth of Linux expected strong in key Asian markets – Government endorsements boost visibility
    56. 56. © Kotler, Keller, Marketing Management 7-56 Institutional & GovernmentInstitutional & Government MarketsMarkets  In Asia - some governments favor local companies - award contracts  Government purchase – kickback, bribery  Tie up with influential local business - effective way to penetrate government market
    57. 57. © Kotler, Keller, Marketing Management 7-57 Government Procurement in KoreaGovernment Procurement in Korea Procurement irregularitiesProcurement irregularities uncovered in procedures: 1. Preferential treatment to firms when establishing specifications & contract methods 2. Preferential access to tender information when making order 3. Apply procedures to select successful bidders & conduct private contract negotiations arbitrarily 4. Wrongdoings of contract officers
    58. 58. © Kotler, Keller, Marketing Management 7-58 Government Procurement in KoreaGovernment Procurement in Korea Improvements made:Improvements made: 1. Change specific procurement to general ones 2. Reduce private contract & restricted competition tenders 3. Actively publicize tender information 4. Establish contract procedures criteria to prevent arbitrary implementation 5. Online digitalizing of procurement process 6. Increase officials’ awareness on corruption
    59. 59. © Kotler, Keller, Marketing Management 7-59 Institutional & GovernmentInstitutional & Government MarketsMarkets China - innovative market economy PrinciplesPrinciples: 1) Interact with all government levels 2) Develop relations through organizations 3) Guanxi not enough for good relations 4) No one-size-fits-all solution  Form government marketing department
    60. 60. © Kotler, Keller, Marketing Management 7-60 Marketing Debate How Different is Business-to-Business Marketing? Many business-to-business marketing executives lament the challenges of business-to-business marketing, maintaining that many traditional marketing concepts & principles do not apply. For a number of reasons, they assert that selling products & services to a company is fundamentally different from selling to individuals. Others disagree, claiming that marketing theory is still valid & only involves some adaptation in the marketing tactics. Take a position: Business-to-business marketing requires a special, unique set of marketing concepts & principles versus Business-to- business marketing is really not that different & the basic marketing concepts & principles apply. Marketing Discussion Consider some of the consumer behavior topics from Chapter 6. How might you apply them to business-to-business settings? For example, how might non-compensatory models of choice work? Final discussion

    ×