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Business (B2B) Marketing IFMR – PGDM II Yr. (2009-10) Module 1 Overview of Business marketing S.Balachandran July 2009
Learning Objectives <ul><li>What is ‘Business Marketing’? </li></ul><ul><ul><li>Classification of B2B Products/Services, M...
Business Enterprises : Activities  July 2009 © S.Balachandran <ul><li>Outputs </li></ul><ul><li>Services </li></ul><ul><li...
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 <ul><li>Commercial Enterprises </li></ul><ul><ul><li>Users </li></ul></ul><ul><ul><li>OEMs </li></...
Some Indian B2B Enterprises <ul><li>BHEL / NTPC </li></ul><ul><li>ECC (L&T) / Hindustan Construction </li></ul><ul><li>TCS...
Value Equation July 2009 © S.Balachandran ‘ Product’ or ‘Service’ satisfies a ‘need’ or ‘want’ by providing ‘value’. Attri...
Value Creation & Delivery July 2009 © S.Balachandran  of  37
Marketing Strategy July 2009 © S.Balachandran  of 37 <ul><li>Unique to each distinct Product-Market segment </li></ul><ul>...
Value Creation & Delivery System July 2009 © S.Balachandran Provide the  value Communicate  the value Understand  Value  D...
Providing the Value July 2009 © S.Balachandran Commu- nicate  the  value Choose  the  value Provide the Value Technology D...
Communicating the Value July 2009 © S.Balachandran Choose  the  Value Provide the Value Communicate the Value <ul><li>INTE...
Value Expectations July 2009 © S.Balachandran  of 37 <ul><li>Consumer Markets </li></ul><ul><li>Monetary Benefits </li></u...
Value Hierarchy – Product Levels July 2009 © S.Balachandran  of 37 CORE BENEFIT Fundemental Benefit customer is really buy...
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 Env...
Nature of B2B Demand <ul><li>Derived    Fluctuating </li></ul><ul><ul><li>Necessity to  monitor changes  in  Demand Patte...
Complexity of Buying Process <ul><li>Strategic Importance of item </li></ul><ul><ul><li>Senior Management Involvement </li...
Concentrated Customer Base <ul><li>Direct selling </li></ul><ul><ul><li>More Economical </li></ul></ul><ul><ul><li>Custome...
Emphasis on Technology <ul><li>Constant pressure to improve/ upgrade/ innovate </li></ul><ul><li>Collaborative Design & De...
High Level of Customisation <ul><li>Inflexible technical Specifications </li></ul><ul><li>Sometimes necessary for manufact...
Differences in Emphasis : B2B vs B2C July 2009 © S.Balachandran  of 37
Nature of Products    B2B Marketing <ul><li>Manufactured Materials & Parts </li></ul><ul><ul><li>Custom-made parts </li><...
Nature of Products    B2B Marketing  (Contd.) <ul><li>Installations </li></ul><ul><ul><li>Product, Technology, Service Ca...
Nature of Products    B2B Marketing  (Contd.) <ul><li>Supplies </li></ul><ul><ul><li>Large Users: Direct Marketing </li><...
Distinctive Capabilities for B2B Marketing July 2009 © S.Balachandran  of 37 Supply Chain Management Mgmt. of Strategic Al...
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, r...
Procurement Development July 2009 © S.Balachandran  of 37 Source Negotiate Manage Info & Logistics Value Analysis & Comple...
Segmenting the Buy July 2009 © S.Balachandran  of 37 KSFs <ul><li>Demonstrated Capabilities </li></ul><ul><li>Skilled Pers...
Procurement Processes <ul><li>Source Approval </li></ul><ul><li>Contract (annual) / Non-contract </li></ul><ul><li>Invento...
Government Procurement July 2009 © S.Balachandran <ul><li>Compliance  -   requires government contractors maintain </li></...
Govt. Contracts <ul><li>Fixed-price contracts </li></ul><ul><ul><li>Price agreed to  before contract award </li></ul></ul>...
Govt. Procurement <ul><li>Agencies </li></ul><ul><ul><li>Defence Bodies </li></ul></ul><ul><ul><li>DGS&D </li></ul></ul><u...
Institutional Procurement <ul><li>Schools, health care organizations, non-profit agencies </li></ul><ul><li>Similar to gov...
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B2B Marketing - Summary

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A summary on what B2B Marketing is all about.

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B2B Marketing - Summary

  1. 1. Business (B2B) Marketing IFMR – PGDM II Yr. (2009-10) Module 1 Overview of Business marketing S.Balachandran July 2009
  2. 2. Learning Objectives <ul><li>What is ‘Business Marketing’? </li></ul><ul><ul><li>Classification of B2B Products/Services, Markets & Customers </li></ul></ul><ul><li>Differences between Consumer & Business Markets & Marketing </li></ul><ul><li>B2B Buying Orientations & Characteristics </li></ul>July 2009 © S.Balachandran of 37
  3. 3. Business Enterprises : Activities July 2009 © S.Balachandran <ul><li>Outputs </li></ul><ul><li>Services </li></ul><ul><li>Goods </li></ul><ul><li>Inputs </li></ul><ul><li>Materials </li></ul><ul><li>Components </li></ul><ul><li>Consumables </li></ul><ul><li>Services </li></ul><ul><li>Resources </li></ul><ul><li>Equipment </li></ul><ul><li>Facilities </li></ul><ul><li>Systems </li></ul><ul><li>Land </li></ul><ul><li>Human </li></ul>Either part of Output OR facilitating the Transformation <ul><li>For Consumption </li></ul><ul><li>For Use </li></ul><ul><li>For Resale </li></ul> of 37 B2B Transformation Processes 5 1 2 3 4 Consumer or B2B Markets
  4. 4. B2B Goods & Services July 2009 © S.Balachandran of 37
  5. 5. Industrial Production Categories July 2009 © S.Balachandran of 37
  6. 6. Business Services July 2009 © S.Balachandran of 37
  7. 7. B2B Markets & Customers <ul><li>Commercial Enterprises </li></ul><ul><ul><li>Users </li></ul></ul><ul><ul><li>OEMs </li></ul></ul><ul><ul><li>Resellers </li></ul></ul><ul><ul><li>Service Providers </li></ul></ul><ul><li>Institutions : Profit/Non-Profit </li></ul><ul><ul><li>Educational, Healthcare, NGOs </li></ul></ul><ul><li>Government / Quasi-Govt. Bodies </li></ul><ul><ul><li>Central, State, Local, PSUs, Defence </li></ul></ul>July 2009 © S.Balachandran of 37
  8. 8. Some Indian B2B Enterprises <ul><li>BHEL / NTPC </li></ul><ul><li>ECC (L&T) / Hindustan Construction </li></ul><ul><li>TCS / Infosys / WIPRO / CTS </li></ul><ul><li>ORG Marg / R K Swamy BBDO </li></ul><ul><li>SAIL / Tata Steel </li></ul><ul><li>MICO / Sundaram Clayton / Bharat Forge / Bimetal Bearings / Delphi TVS </li></ul><ul><li>ONGC/ Neyveli Lignite Corp. / Bharat Coking Coal </li></ul><ul><li>IPCL / Gujarat Alkalis / Tata Chemicals </li></ul><ul><li>Shipping Corporation of India / TVS Logistics </li></ul>July 2009 © S.Balachandran of 37
  9. 9. 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
  10. 10. Value Creation & Delivery July 2009 © S.Balachandran of 37
  11. 11. Marketing Strategy July 2009 © S.Balachandran of 37 <ul><li>Unique to each distinct Product-Market segment </li></ul><ul><li>Five Main Elements </li></ul><ul><ul><li>Segmentation </li></ul></ul><ul><ul><li>Targeting </li></ul></ul><ul><ul><li>Positioning </li></ul></ul><ul><ul><li>Differentiation </li></ul></ul><ul><ul><li>Marketing Mix </li></ul></ul><ul><li>Capabilities Required </li></ul><ul><li>Market Sensing </li></ul><ul><li>Customer Linking </li></ul>Differentiation RECAP
  12. 12. 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 <ul><li>Market </li></ul><ul><li>Research </li></ul><ul><li>Customer </li></ul><ul><li>Behaviour </li></ul><ul><li>Product- </li></ul><ul><li>Market </li></ul><ul><li>Segments </li></ul><ul><li>Position </li></ul><ul><li>Differentiation </li></ul><ul><li>Product </li></ul><ul><li>Management </li></ul> of 37
  13. 13. 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 <ul><li>Source </li></ul><ul><li>Sophisti- </li></ul><ul><li>cation </li></ul><ul><li>Patents </li></ul><ul><li>Process </li></ul><ul><li>Choice </li></ul><ul><li>Function </li></ul><ul><li>Physical </li></ul><ul><li>charact- </li></ul><ul><li>eristics </li></ul><ul><li>Aesthetic </li></ul><ul><li>Quality </li></ul><ul><li>Integration </li></ul><ul><li>Raw Mtl. </li></ul><ul><li>Capacity </li></ul><ul><li>Location </li></ul><ul><li>Part Prodn. </li></ul><ul><li>Assembly </li></ul><ul><li>Channels </li></ul><ul><li>Integration </li></ul><ul><li>Inventory </li></ul><ul><li>Ware- </li></ul><ul><li>housing </li></ul><ul><li>Transport </li></ul><ul><li>MRP </li></ul><ul><li>Negotiation </li></ul><ul><li>Discount </li></ul><ul><li>Combo </li></ul><ul><li>Financing </li></ul><ul><li>Other Costs </li></ul><ul><li>Warranty </li></ul><ul><li>Speed </li></ul><ul><li>Captive/ </li></ul><ul><li>Indepen- </li></ul><ul><li>dent </li></ul><ul><li>Parts </li></ul> of 37
  14. 14. Communicating the Value July 2009 © S.Balachandran Choose the Value Provide the Value Communicate the Value <ul><li>INTEGRATED MARKETING </li></ul><ul><li>Direct Sales Force </li></ul><ul><li>Distribution Channel Partners </li></ul><ul><li>Brochures, Website, Email </li></ul><ul><li>Advertising & Promotions </li></ul><ul><li>Physical Evidence </li></ul><ul><li>Employees </li></ul><ul><li>Processes </li></ul> of 37
  15. 15. Value Expectations July 2009 © S.Balachandran of 37 <ul><li>Consumer Markets </li></ul><ul><li>Monetary Benefits </li></ul><ul><li>Look/Feel Better  </li></ul><ul><li>Aesthetics/ </li></ul><ul><li>Psychological Benefits </li></ul><ul><li>Social Benefits </li></ul><ul><li>Convenience  Place/Time </li></ul><ul><li>Quick Service </li></ul><ul><li>B2B Markets </li></ul><ul><li>Economic Benefits  </li></ul><ul><li>Cost of Procurement/ </li></ul><ul><li>Transport/ Storage/ </li></ul><ul><li>Ownership/ Usage/ </li></ul><ul><li>Maintenance/ </li></ul><ul><li>Modification/ Disposal </li></ul><ul><li>Help in Maintenance/ </li></ul><ul><li>Service/ Repair/ Upgradation/ </li></ul><ul><li>Performance Improvement </li></ul>
  16. 16. 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 !
  17. 17. Framework for B2B Marketing July 2009 © S.Balachandran of 37
  18. 18. 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
  19. 19. Nature of B2B Demand <ul><li>Derived  Fluctuating </li></ul><ul><ul><li>Necessity to monitor changes in Demand Patterns of Customers’ Customers </li></ul></ul><ul><li>Stimulation of Primary Demand & popularising new applications </li></ul><ul><li>Price Sensitivity/Demand Elasticity in B2B </li></ul><ul><ul><li>Depends on B2C </li></ul></ul><ul><li>Opportunities of Global Markets & Impact of Global Competition : much more in B2B than B2C </li></ul>July 2009 © S.Balachandran of 37
  20. 20. Complexity of Buying Process <ul><li>Strategic Importance of item </li></ul><ul><ul><li>Senior Management Involvement </li></ul></ul><ul><li>Cost : High, Medium, Low </li></ul><ul><ul><li>Different Buying Processes </li></ul></ul><ul><ul><li>Relative Importance of financial Approvals </li></ul></ul><ul><li>Complexity of need serviced </li></ul><ul><ul><li>Level of Customisation & Service required </li></ul></ul><ul><ul><li>Multi-functional Scrutiny </li></ul></ul><ul><li>Complexity of Buying Organisation </li></ul><ul><ul><li>Centralised vs Decentralised Authority </li></ul></ul>July 2009 © S.Balachandran of 37
  21. 21. Concentrated Customer Base <ul><li>Direct selling </li></ul><ul><ul><li>More Economical </li></ul></ul><ul><ul><li>Customer Expectation </li></ul></ul><ul><li>Buyer Bargaining Power  </li></ul><ul><ul><li>Competitor Influence on Buyer </li></ul></ul><ul><ul><li>Management of Short Term setbacks </li></ul></ul><ul><li>Close Relationships </li></ul><ul><ul><li>Monitor happenings @ Customer end </li></ul></ul><ul><ul><li>Expectations of C, Q, D, S, R1 & R2 </li></ul></ul>July 2009 © S.Balachandran of 37
  22. 22. Emphasis on Technology <ul><li>Constant pressure to improve/ upgrade/ innovate </li></ul><ul><li>Collaborative Design & Development </li></ul><ul><li>Product Performance Orientation </li></ul><ul><ul><li>Performance to Price Ratio </li></ul></ul><ul><li>Expected to provide Solution </li></ul><ul><ul><li>Understanding of Customer Business </li></ul></ul><ul><li>Selling : Technical / Multi-Functional Skills </li></ul>July 2009 © S.Balachandran of 37
  23. 23. High Level of Customisation <ul><li>Inflexible technical Specifications </li></ul><ul><li>Sometimes necessary for manufacturer to redesign / re-layout operations facilities </li></ul><ul><li>Even standard products: Installation, Configuration, Service & Support may have to be highly customised </li></ul>July 2009 © S.Balachandran of 37
  24. 24. Differences in Emphasis : B2B vs B2C July 2009 © S.Balachandran of 37
  25. 25. Nature of Products  B2B Marketing <ul><li>Manufactured Materials & Parts </li></ul><ul><ul><li>Custom-made parts </li></ul></ul><ul><ul><ul><li>Personal selling & CRM </li></ul></ul></ul><ul><ul><ul><li>Design & Supply Chain capabilities </li></ul></ul></ul><ul><ul><li>Standardised Parts </li></ul></ul><ul><ul><ul><li>Contractual Purchase, Large quantities </li></ul></ul></ul><ul><ul><ul><li>Price, Delivery, Support service </li></ul></ul></ul><ul><ul><ul><li>Resellers used </li></ul></ul></ul>July 2009 © S.Balachandran of 37
  26. 26. Nature of Products  B2B Marketing (Contd.) <ul><li>Installations </li></ul><ul><ul><li>Product, Technology, Service Capabilities </li></ul></ul><ul><ul><li>Personal Selling & Account Management </li></ul></ul><ul><ul><li>Less Costly, More Standardised </li></ul></ul><ul><ul><ul><li>Marketing Intermediaries </li></ul></ul></ul><ul><ul><li>Costly, more involved </li></ul></ul><ul><ul><ul><li>Close relationships </li></ul></ul></ul><ul><ul><ul><li>Long negotiations </li></ul></ul></ul><ul><ul><ul><li>Several Executives of buyer organisation involved </li></ul></ul></ul>July 2009 © S.Balachandran of 37
  27. 27. Nature of Products  B2B Marketing (Contd.) <ul><li>Supplies </li></ul><ul><ul><li>Large Users: Direct Marketing </li></ul></ul><ul><ul><li>Smaller Users: Marketing Intermediaries </li></ul></ul><ul><ul><li>Strong eProcurement tendencies </li></ul></ul><ul><ul><li>Less Personal Selling </li></ul></ul><ul><ul><li>More of Catalogue approach </li></ul></ul><ul><ul><li>Price & Range critical </li></ul></ul>July 2009 © S.Balachandran of 37
  28. 28. Distinctive Capabilities for B2B Marketing July 2009 © S.Balachandran of 37 Supply Chain Management Mgmt. of Strategic Alliances Mgmt. of Hybrid Channels
  29. 29. Goals of Purchasing July 2009 © S.Balachandran of 37
  30. 30. 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
  31. 31. Procurement Development July 2009 © S.Balachandran of 37 Source Negotiate Manage Info & Logistics Value Analysis & Complexity mgmt. Strategic Partnership
  32. 32. Segmenting the Buy July 2009 © S.Balachandran of 37 KSFs <ul><li>Demonstrated Capabilities </li></ul><ul><li>Skilled Personal selling </li></ul>Cost & Range Efficient Management of Info & Logistics Strategic Partnership
  33. 33. Procurement Processes <ul><li>Source Approval </li></ul><ul><li>Contract (annual) / Non-contract </li></ul><ul><li>Inventory Control Systems </li></ul><ul><li>eProcurement </li></ul><ul><li>Reverse Auction – eBidding </li></ul><ul><li>Tiered Structure (Ex. Fig 1.5, p15) </li></ul>July 2009 © S.Balachandran of 37
  34. 34. Government Procurement July 2009 © S.Balachandran <ul><li>Compliance - requires government contractors maintain </li></ul><ul><li>affirmative action programs. </li></ul><ul><li>Reservation - a percentage of the contract is set aside </li></ul><ul><li>for small minority businesses. </li></ul> of 37 <ul><li>Minority-subcontracting - may require major contractors subcontract a certain percentage of the contract to minority firms. </li></ul>
  35. 35. Govt. Contracts <ul><li>Fixed-price contracts </li></ul><ul><ul><li>Price agreed to before contract award </li></ul></ul><ul><ul><li>Payment made at conclusion of work </li></ul></ul><ul><ul><li>Provides for the greatest profit potential </li></ul></ul><ul><ul><li>Poses greater risks </li></ul></ul><ul><li>Cost-reimbursement contracts </li></ul><ul><ul><li>Reimbursement of allowable costs </li></ul></ul><ul><ul><li>Price = Cost + Profit% </li></ul></ul><ul><ul><li>Disclosure of Cost Structure </li></ul></ul>July 2009 © S.Balachandran of 37
  36. 36. Govt. Procurement <ul><li>Agencies </li></ul><ul><ul><li>Defence Bodies </li></ul></ul><ul><ul><li>DGS&D </li></ul></ul><ul><ul><li>PSUs </li></ul></ul><ul><ul><li>Committees </li></ul></ul><ul><li>Process </li></ul><ul><ul><li>Tendering </li></ul></ul><ul><ul><li>Approved Supply sources </li></ul></ul><ul><ul><li>Negotiation </li></ul></ul>July 2009 © S.Balachandran of 37
  37. 37. Institutional Procurement <ul><li>Schools, health care organizations, non-profit agencies </li></ul><ul><li>Similar to government buyers </li></ul><ul><ul><li>Political considerations and laws </li></ul></ul><ul><li>Similar to commercial buyers </li></ul><ul><ul><li>Often managed like corporations </li></ul></ul><ul><ul><li>Broad range of purchase requirements </li></ul></ul><ul><li>Group purchasing quite common </li></ul>July 2009 © S.Balachandran of 37

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