1. Copyright ©The McGraw-Hill Companies, Inc. Permission required for reproduction or display
5-1

2. Part Two
Foundations for
Creating Value
McGraw-Hill/Irwin
Business Marketing, 4/e Copyright © 2009 The McGraw-Hill Companies, Inc. All rights reserved. 5-2

3. Part Two
Foundations for Creating Value
• Chapter 5
• Market Opportunities
• Chapter 6
• Marketing Strategy
• Chapter 7
• Weaving Marketing into the Fabric of the Firm
McGraw-Hill/Irwin
Business Marketing, 4/e Copyright © 2009 The McGraw-Hill Companies, Inc. All rights reserved. 5-3

4. Chapter 5
Market Opportunities:
Current and Potential Customers
McGraw-Hill/Irwin
Business Marketing, 4/e Copyright © 2009 The McGraw-Hill Companies, Inc. All rights reserved. 5-4

5. Finding Business to Business Opportunities
DEVELOP MARKETS FIND OPPORTUNITIES
AMONG CURRENT WITH EXISTING
CUSTOMERS CUSTOMERS
NEW MARKET
OPPORTUNITIES
ACQUIRE DEVELOP
NEW A RESEARCH
CUSTOMERS PROGRAM
McGraw-Hill/Irwin
Business Marketing, 4/e Copyright © 2009 The McGraw-Hill Companies, Inc. All rights reserved. 5-5

6. DEVELOP MARKETS
AMONG CURRENT CUSTOMERS
FOUR STEP PROCESS
1. RANK YOUR BEST CUSTOMERS
2. MAXIMIZE REVENUES THROUGH
COLLABORATION EFFORTS
3. DEVELOP SPECIFIC PRODUCTS FOR EACH
CUSTOMER
4. LEARN OF SPECIAL NEEDS FROM YOUR
CUSTOMER’S CUSTOMERS
McGraw-Hill/Irwin
Business Marketing, 4/e Copyright © 2009 The McGraw-Hill Companies, Inc. All rights reserved. 5-6

7. FIND OPPORTUNITIES WITH
EXISTING CUSTOMERS
FOUR STEP APPROACH
1. ESTABLISH A FORMAL FEEDBACK PROGRAM
WITH CUSTOMER CONTACT POINTS (SALES,
SUPPORT)
2. DEVELOP DATABASES
3. COMPILE DECILE REPORTS
4. DEVELOP CUSTOMER RESEARCH ASSISTANCE
PROGRAM
McGraw-Hill/Irwin
Business Marketing, 4/e Copyright © 2009 The McGraw-Hill Companies, Inc. All rights reserved. 5-7

8. RESEARCHING CUSTOMERS
FIND OUT YOUR CUSTOMER’S NEEDS THROUGH:
1. FOCUS GROUPS – best for generating ideas and
gaining customer insights
2. SURVEYS – asking questions by personal interview,
mail, telephone, internet
3. JOINT DEVELOPMENT AND TESTING – use to
adjust and adapt products after purchase
4. CUSTOMER VISITS – use on-site meetings for problem
identification
McGraw-Hill/Irwin
Business Marketing, 4/e Copyright © 2009 The McGraw-Hill Companies, Inc. All rights reserved. 5-8

9. ACQUIRE NEW CUSTOMERS
1. Calculate your current customer’s lifetime value
(CLV) to serve as yardstick for planning
2. Find customers in a new segment who “look
like” your existing customers
3. Expand into new geographic territory
4. Transfer/modify existing products for other
industries
McGraw-Hill/Irwin
Business Marketing, 4/e Copyright © 2009 The McGraw-Hill Companies, Inc. All rights reserved. 5-9

10. ScheduTrax Lifetime Value Analysis
Expected customer migrations following acquisition
Yrs. since 1st Yr. 2nd Yr. 3rd Yr. 4th Yr.
the Last Purchase Expected $ Account Acquisition after after after after
Purchase Probability Purchases Service Costs Period acquisition acquisition acquisition acquisition
0 0.60 $90 $20 100 60.0 36.0 31.2 27.4
Customers 16.0 9.6 8.3
15.0 4.8 2.9
45.6 1.9
40.5
1 0.40 $60 $10 40.0 24.0 20.8 18.2
2 0.20 $50 $ 4 24.0 14.4 12.5
3 0.10 $50 $ 2 19.2 11.5
17.3
Profit forecasts
Acq+1 [60 buyers ($90)]×.8 gr. profit–[100 accts×$20 service/acct] =
Acq+2 [36 buyers ($90)+16 buyers ($60)] .8 gr. profit- [60 accts×$20+40 accts×$10] =
Acq+3 [31.2 buyers($90)+9.6 buyers($60)+4.8 buyers($50)] .8 gr. profit- [52 accts×$20+24×$10+$24×$4] =
Acq+4 [27.4 buyers ($90)+8.3 buyers ($60)+2.9 buyers ($50)+1.9 buyers ($50)]-
[45.6×$20+20.8×$10+14.4×$4+19.2×$2] =
Discounting profits NPV @ 10 NPV @ 10% NPV @ 20%
Acq+1 $2,109 $2.017 $1,933
Acq+2 $1,455 $1.331 $1,222
Acq+3 $1,144 $1,002 $ 881
Acq+4 $ 919 $ 769 $ 649
LTV/100 customers $5,627 $5,119 $4,686
McGraw-Hill/Irwin Exhibit 5-4
Business Marketing, 4/e Copyright © 2009 The McGraw-Hill Companies, Inc. All rights reserved. 5-10

11. DEVELOPING OPPORTUNITIES
THROUGH MARKETING RESEARCH
PURPOSE OF RESEARCH
1 2
CUTOMER MANAGEMENT ACQUIRE NEW CUTOMERS
ACHIEVED BY
1. CUSTOMER RESEARCH – through focus groups and
surveys
2. INTERACTING WITH CUSTOMERS – through joint
product development and product testing
3. DEVELOPING ON-SITE VISITATION PROGRAMS
McGraw-Hill/Irwin
Business Marketing, 4/e Copyright © 2009 The McGraw-Hill Companies, Inc. All rights reserved. 5-11

12. FINDING SEGMENTS
1. USE NAICS CODES TO ASSESS INDUSTRIES’
SIZE AND NEEDS
2. EVALUATE COMPANY CHARACTERISTICS
SUCH AS SALES, NUMBER OF EMPLOYEES
3. DETERMINE A COMPANY’S BUYING
PROCESSES AND HOW THEY BUY
4. MATCH PRODUCT OFFERINGS TO
COMPANIES SEEKING WHAT PRODUCT DOES
BEST
McGraw-Hill/Irwin
Business Marketing, 4/e Copyright © 2009 The McGraw-Hill Companies, Inc. All rights reserved. 5-12

13. PERCEPTUAL MAP
BRAND C
Reasonable price
Order process BRAND A
efficiency & accuracy After-sale service
Rapid delivery
BRAND B
Helpful / informative
BRAND D Technical
performance
Exhibit 5-10
McGraw-Hill/Irwin
Business Marketing, 4/e Copyright © 2009 The McGraw-Hill Companies, Inc. All rights reserved. 5-13

14. SEGMENTATION AND
OPPORTUNITY ANALYSIS
IDENTIFY SEGMENTS THROUGH INDUSTRY
CLASSIFICATION (SIC / NAICS)
CHOOSE YOUR INDUSTRY TARGETS
CHOOSE YOUR SPECIFIC COMPANY TARGETS BY:
1. HOW THEY BUY
2. THE BENEFITS THEY SEEK
3. MEMBERSHIPS IN PROFESSIONAL / TRADE
ORGANIZATIONS
McGraw-Hill/Irwin
Business Marketing, 4/e Copyright © 2009 The McGraw-Hill Companies, Inc. All rights reserved. 5-14

15. CRITERIA FOR SUCCESSFUL
SEGMENTATION
• SEGMENT MUST BE IDENTIFIABLE-
enumerated and evaluated
+
• SEGMENT MUST BE ACCESSIBLE-
can be reached by marketing activity
+
• SEGMENT MUST BE SUBSTANTIAL-
enough to justify efforts
McGraw-Hill/Irwin
Business Marketing, 4/e Copyright © 2009 The McGraw-Hill Companies, Inc. All rights reserved. 5-15

16. ESTIMATING SEGMENT SIZE
ANALYTICAL TOOLS
FOR SEGMENT EVALUATION:
1. USE OF SCENARIOS - Articulate events and
futures
2. BUILDUP APPROACH/FACTORING –
Estimate product use in its applications
3. STATISTICAL SERIES – Use correlation
between demand and economic activities
McGraw-Hill/Irwin
Business Marketing, 4/e Copyright © 2009 The McGraw-Hill Companies, Inc. All rights reserved. 5-16