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Business to Business Marketing




                                 Yogesh Baviskar
Subject Outline:- B2B Marketing




1.   Introduction to B2B Market
2    Organizational Buying Behavior
3    Relationship Management
4    Segmenting the Business Market
5    Managing Products & New Innovations Management in B2B Market
6    Managing Services in B2B Market
7    Price Management in B2B Market
8    Channel Management in B2B Market
9    E-Commerce in B2B Market
10   Business Marketing Communication
11   Case Studies & Further Discussion
Top B2B Brands:-
Business to Business Marketing :-




•   Definition:-
    “Business Marketing is the practice of individuals, or organizations, including
    commercial businesses, governments and institutions, facilitating the sale of their
    products or services to other companies or organizations that in turn resell them,
    use them as components in products or services they offer, or use them to support
    their operations”
Industrial Vs Consumer Marketing
Areas of Difference       B2B Market                           Consumer Market
Market Characteristics    Geographically Concentrated          Geographically Disbursed

                          Relatively Fewer Buyer               Mass Market



Product Characteristic    Technical Complex                    Standardize

                          Customized



Service Characteristic    Service , timely Availability        Somewhat Important
                          extremely Important



Buying Behavior           Involvement of Various functional    Involvement of family members
                          area from both the ends
                          Purchase Decisions are performance   Purchase decisions are mostly based
                          based and rational                   on Physiological
                                                               /social/psychological needs
                          Technical Expertise                  Relatively less technical expertise is
                                                               required
                          Stable Interpersonal relationship    Non- Personal relationship
Industrial Vs Consumer Marketing

Areas of Difference          Industrial Market                    Consumer Market
Channel Characteristic       More Direct                          Indirect

                             Fewer Intermediaries                 Multiple layer of Intermediaries



Promotional Characteristic   Emphasis on Personal Selling         Emphasis on Mass Media
                                                                  (Advertising)



Price Characteristic         Competitive Bidding and Negotiated   List Price or MRP
                             Prices
                             List Price for Standard Products
B2B Distribution Channel Characteristics


                           Manufacturer




           Company Sales              Representative
               Force                     Agency




 Distribution Dealer




Customer               Customer            Customer
Characteristics of B2B Demand


•   Derived Demand:-
     – The demand for a good or service that results from the demand for another good or service.
     – Ex.:- Pig Iron ---Steel ---Steel Sheets---Automotive part companies--Automobiles--End customer


•   Demand Elasticity:-



•   Joint Demand:-
    - Demand for product or services is interdependent on each other
     – Ex:- Coffee Powder, Sugar & Milk in Making Coffee
     – Ex:- Software- Operating System, Car & Fuel
2:- Understanding B2B Market & Environment with Buyers Perspective

B2B Customers
B2B Products
        Marketing of industrial products to B2B Customers
Purchasing of Industrial Products
        Goals of Purchasing
        Purchasing Orientations
                  Buying Orientation
                  Procurement Orientation
                  Supply Chain Management Orientation
Purchasing Practices of Industrial Customers
        Commercial Business
        Government
        Institutes
        Co-operative
Environmental Analysis:-
       Types of Environment Influencing B2B Market
Understanding B2B Market & Environment with Buyers
                   Perspective
2.Understanding B2B Market
& Environment with Buyers      Raw Materials          Iron ore, Crude oil, fruits, fish
       Perspective
                                  Manufactured            Acids, Fuel oil, Steel ,
                                   Materials                   Chemicals
          Material & Parts
                                Component Parts         Gauges, TV tubes, Tyres,


                                 Subassemblies        Exhaust Pipe in Motor Cycle



                               Light equipment/
                                                           Hand tools, Dies, Jigs
                                  Accessories


                              Installation or Heavy
           Capital items                                 Machine Tools, Furnaces
                                   Equipments


                              Plants & Building           Plants, Office Building


                                                      Lubricants, Fasteners, paints
                                   Supplies
                                                           , Electrical Items

        Supplies & Services
                                                      Legal, Auditing, Advertising,
                                    Services
                                                       Courier, Market Research
2.Understanding B2B Market & Environment with Buyers Perspective



 Goals Of Purchasing
        Uninterrupted Flow Material
        Manage Inventory
        Improve Quality
        Developing and Managing Supplier relationships
        Achieve Lowest total cost
        Reduce Administrative cost
        Advance Firms Competitive Position
2.Understanding B2B Market & Environment with Buyers
                      Perspective
Purchase Orientation
           – Buying Orientation
           – Procurement Orientation
           – Supply chain Management Orientation
Applications of Purchase Orientation to Industrial Customers
       Industrial Customers
                Supply Chain Management
                Procurement
       Government as a Customer
                Buying Orientation

       Institutes
                Buying Orientation
2.Understanding B2B Market & Environment with Buyers Perspective


Purchasing Practices of B2B Customers
        Industrial customers
        Government
        Institutes
        Cooperative


Environmental Analysis:-

Ecological & Physical

                   1.Pollution & Conservation of Natural resources
                   2. Utilities, Manpower & Transportation
2.Understanding B2B Market & Environment with Buyers Perspective

Environment Analysis:-
Internal Environment:-
         Company Location, R&D Facilities, Production Facilities Human
         Resource and Image of the company
External Environment:-
        Micro Environment :-
                 Customers & Competitors
                 Suppliers
        Macro Environment:-
               Economic
               Technological
               Government/Political & Legal
               Cultural & Social
               Investors & NGO
3.The Nature of Industrial Buying and Buying Behavior

•   Organizational Buying Process
•   Organizational Buying Situations
•   Forces Shaping Organizational Buying Behavior
         -- Environmental Forces
         -- Organizational Forces
         -- Group Forces :-
                  - Buying Center
                           -Elements of Buying Center
         -- Individual Forces
3.The Nature of Industrial Buying and Buying Behavior

                           Problem Recognition


                             General Description
                                  of Need

                            Product Specification


                                Supplier Search


                              Acquisition &
                            Analysis of Proposal


                              Supplier Selection


                              Selection of Order
                                   Routine

                             Performance Review
3.The Nature of Industrial Buying and Buying Behavior

Organizational Buying Situations

                                     The buyer routinely re-orders the
    Straight Rebuy                 same product or service with out any
                                              modification


                                   The buyer wants to modify product
    Modify Rebuy                     specifications, price, service or
                                                 supplier



                                     The buyer purchase product or
      New Task
                                        service for the first time
3.The Nature of Industrial Buying and Buying Behavior
Forces Shaping Organizational Buying Behavior
                   Environmental Forces




                   Organizational Forces




                       Group Forces




                     Individual Forces
Group Force – Buying Center
“Buying Center can be defined as the body of all the individuals and groups
participating in the buying decision process and who have interdependent objectives
and share common risk”
3.The Nature of Industrial Buying and Buying Behavior
Roles of Buying Center
Initiator :-     Recognition of Problem or Need

Buyer :-          Obtains the quotation
                  Supplier evaluation & Selection
                  Processing purchase order
                  Expediting deliveries
                  Implement the purchasing policies of the organization
User:-            User of Product/ Services ( Could be Initiator)

Influencer :-     Individuals who could influence the purchasing decision
                  ( Technical / Design Engineers / External consultants )
Gatekeepers:-     Individuals who control the flow of information to the
                  members of buying center
Deciders:-        Individuals or group of people who make the actual purchase
                  decisions about the product or services
3.The Nature of Industrial Buying and Buying Behavior




                       B2B Buying Behavior Model
4. Buyer Seller Relationship

•   Buyer Seller Relationship :- Establish , Develop & Maintain the meaningful
                                relationship with the customer.

•   Types of Buyer – Seller Relationship
•   Transactional Exchange
•   Collaborative Exchange
              – Switching Cost
Managing Buyer Seller Relationship

•   Typical Characteristics of Buyer Seller Relationship based on Market
    Condition and Purchase Behavior

                              Transactional Exchange   Collaborative Exchange

Availability of Alternative   Many Alternative         Few

Supply Market Dynamism        Stable                   Volatile

Importance of Purchase        Low                      High

Complexity of Purchase        Low                      High

Information Exchange          Low                      High

Operational Linkage           Limited                  Extensive
CRM Strategy




•   Determine which type of relationship matches the
    purchasing situation and supply-market conditions for a
    particular customer.
•   Develop a strategy that is appropriate for each strategy
    type.
Understanding Customer Profitability

 Characteristics of High Vs Low Cost-to-Serve Customers


High Cost to Serve                   Low Cost to Serve
Order Custom Products                Order Standard Products
Order Small Quantities               Order Large Quantities
Unpredictable Order arrivals         Predictable order arrivals
Customized delivery                  Standard Delivery
Frequent Changes in delivery         No changes in delivery requirement
requirement
Manual Processing                    Electronic Processing
Large amount of presales support     Little to no presales support
Require company to hold inventory    Replenish as produced
Longer credit periods                Payment on time
Creating a CRM Strategy

  Acquire the Right Customer



    Crafting the right value
  proposition for the customer


  Design the Best Process to
  deliver the product /services


  Motivating the Employees



       Retain the customer
Segmenting the Business Market
Why Segmentation:-
Criteria for the segmentation:-
         Measurable
         Assessable
         Substantial
         Computability
         Responsiveness
Benefits of Segmentation:-
         Concentrate on unique needs of target segment,
         Focus on product development,
         Develop profitable pricing strategy
         Select the appropriate channel
         Develop communication and advertising strategy

Variable of Business Market Segmentation         :-
         Macro level segmentation
         Micro level Segmentation
Macro Segmentation
Variable of Segmentation                   Breakdown of Segments
Characteristics of Buying Behavior
Size                                       Small. Medium & Large ( Based on Sales or
                                           o. Of Employees
Geographical location                      Region , Industrial zones
Usage rate                                 Non user, Light user, Moderate user, heavy
                                           user
Structure of procurement                   Centralize , Decentralize


Product/ Service Application
End market serve                           As per Product/Service
Value in use                               High , Low


Characteristics of Purchasing Situations
Types of buying situations                 New task, Modified task, Straight Rebuy
Stage in purchase situation                Early stages, late stages
Micro Segmentation
Variable of Segmentation                 Breakdown of Segments
Key Criteria                             Quality, Delivery, supplier reputation
Purchase Strategies                      Optimizer, Satisfier

Structure of decision making unit
Importance of purchase                   High , Low

Attitude towards vendor                  Favorable, unfavorable
Organizational innovativeness            Innovator, Follower
Personal Characteristics of Top
Management or Decision makers
Demographics                             Age, Educational background
Decision Style                           Normative , conservative, mixed mode
Risk                                     Risk taker, Risk avoider
Confidence                               High, low
Job responsibility                       Purchasing, production, engineering
Managing Products & New product develofor B2B Marketing
Core Competencies and Selected Products at Canon

• Core competencies are
  embodied in the superior
  skills of employees--the
  technologies they have
  mastered, the unique
  ways in which these
  technologies are
  combined, and the
  market knowledge that
  has been accumulated.
• They focus on the basics
  of what crates value from
  the customer’s
  perspective and include
  both technical and
  organizational skills.




Developed by Cool Pictures and MultiMedia Presentations
Three Tests to Identify the
      Core Competencies
• First, a core competence provides potential
  access to an array of markets.
• Second, a core competence should make an
  important contribution to the perceived customer
  benefits of the firm’s end products.
• Third, “a core competence should be difficult for
  competitors to imitate.”
Sustaining the Lead . . . Three Questions

 • How rare is our competence?
 • How long will it take our competitors to develop
   the competence?
 • Can the source of our advantage be easily
   understood by our competitors?
Quality Movement Stages
• Stage one centered on conformance to standards
  or success in meeting specifications.
• Stage two emphasized that quality was more
  than a technical specialty and that the pursuit of
  quality should drive the core processes of the
  entire business.
• Stage three examines a firm’s quality
  performance relative to competitors and examines
  customer perceptions of the value of competing
  products.
What Value Means to Business Customers




                                                                                                  Core
                                                         Benefits
                                                                                                  Add-on

    Customer Value
                                                                                                  Price

                                                         Sacrifices                               Acquisition
                                                                                                   Costs

                                                                                                  Operations
                                                                                                   Costs




Source: Adapted from Ajay Menon, Christian Homburg, and Nikolas Beutin, “Understanding Customer Value,”
Journal of Business-to-Business Marketing, 12, no. 2 (2005), pp. 4–7.
1. Proprietary or     2. Custom-built
   catalog products      products


Four Types of Industrial product Lines


3. Custom-designed    4. Industrial
   products              services
Steps in the Product Positioning Process

1. Identify the relevant set of competitive products.

2. Identify the set of determinant attributes that customers use to differentiate
   among options and determine the preferred choice.

3. Collect information from a sample of existing and potential customers concerning
   their ratings of each product on the determinant attributes.

4. Determine the product’s current position versus competing offerings for each
   market segment.

5. Examine the fit between preferences of market segments and current position of
   product.

6. Select Positioning or Repositioning Strategy.
Successful brand management involves developing a promise of value for
customers and then ensuring that the promise is kept through the way in which
the product is developed, produced, sold, services, and promoted.

              How High-Tech Brands Build Equity
New Product Development Process
Successful companies employ a high-quality new product
development process--careful attention is given to the execution of
the activities and decision points. Benchmarking characteristics:
   • The firms emphasized upfront market and technical
     assessments.
   • The process featured complete descriptions of the product
     concepts, product benefits, positioning, and target markets.
   • Tough project go/kill decision points were included in the
     process and the kill option was actually used.
   • The new product process is flexible.
Resource Commitments
                                                                                                    Three ingredients were
        important here:
                                                                                                      1. Top management
        committed the resources necessary to meet the firm’s objectives for the total product effort in the firm.
                                                                                                      2. R&D budgets were
        adequate and aligned with the stated new product objectives.
                                                                                                      3. The necessary personnel
        were assigned and were relieved from other duties.
New Product Strategy

Set aggressive new product performance goal as
a basic corporate goal and communicate it to all
employees.
Lead user projects are conducted by a cross-functional team that includes four to six
managers from marketing and technical departments; one member serves as project
leader.Team members typically spend 12 to 15 hours per week on the projects.




The Lead
User
Method
Product advantage refers to        Marketing synergy represents
customer perceptions of            the degree of fit between the
product superiority with respect   needs of the project and the
to quality, cost-performance       firm’s resources and skills in
ratio, or function relative to     marketing.
competitors.



        Four Strategic Factors
       For New Product Success
Technical synergy concerns         International orientation--new
the fit between the needs of the   products that are designed and
project and the firm’s R&D         developed to meet foreign
resources and competencies.        requirements, and that are
                                   targeted at world or nearest-
                                   neighbor export markets.
Technology Adoption Cycle
•   Innovators
    These are the people who are fundamentally committed to new technology on the grounds .
•   Early Adopters
    These are the true revolutionaries in business and government who want to use the
    discontinuity of any innovation to make a break with the past and start an entirely new
    future. Their expectation is that by being first to exploit the new capability they can achieve
    dramatic and insurmountable competitive advantage over the old order.
•   Early Majority
    These people make the bulk of all technology infrastructure purchases. They do not love
    technology for its own sake, so are different from the techies, whom they are careful,
    nonetheless, to employ. Moreover, they believe in evolution not revolution. they are
    interested in making their companies' systems work effectively and look to adopt innovations
    only after they have established a proven track record.
•   Late Majority
    These consumers are pessimistic about their ability to gain any value from technology
    investments and undertake them only under duress -- typically because the remaining
    alternative is to let the rest of the world pass them by. They are very price-sensitive, highly
    skeptical, and very demanding. Rarely do their demands get met, in part because they are
    unwilling to pay for any extra services, all of which only reconfirms their sour views of high
    tech.
•   Laggards
    This group delight in challenging the hype and puffery of high-tech marketing. They are not
    so much potential customers as ever-present critics. As such, the goal of high-tech marketing
    is not to sell to them but rather to sell around them.
•   The Marketing Strategy
    With these customer segments in mind, the typical approach is to seed new products with
    the innovators so they can help educate the early adopters. When the early adopter's are
    interested, do everything that is possible to make them happy as they will then serve as
    references for the early majority which is the group where most of the money is made from a
    new product or service. Then leverage the success with this large group so that the product
    matures and stabilizes enough to be of interest to the late adopters. All the while, ignore the
    laggards and their skepticism.

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Business to business marketing ppt

  • 1. Business to Business Marketing Yogesh Baviskar
  • 2. Subject Outline:- B2B Marketing 1. Introduction to B2B Market 2 Organizational Buying Behavior 3 Relationship Management 4 Segmenting the Business Market 5 Managing Products & New Innovations Management in B2B Market 6 Managing Services in B2B Market 7 Price Management in B2B Market 8 Channel Management in B2B Market 9 E-Commerce in B2B Market 10 Business Marketing Communication 11 Case Studies & Further Discussion
  • 4. Business to Business Marketing :- • Definition:- “Business Marketing is the practice of individuals, or organizations, including commercial businesses, governments and institutions, facilitating the sale of their products or services to other companies or organizations that in turn resell them, use them as components in products or services they offer, or use them to support their operations”
  • 5. Industrial Vs Consumer Marketing Areas of Difference B2B Market Consumer Market Market Characteristics Geographically Concentrated Geographically Disbursed Relatively Fewer Buyer Mass Market Product Characteristic Technical Complex Standardize Customized Service Characteristic Service , timely Availability Somewhat Important extremely Important Buying Behavior Involvement of Various functional Involvement of family members area from both the ends Purchase Decisions are performance Purchase decisions are mostly based based and rational on Physiological /social/psychological needs Technical Expertise Relatively less technical expertise is required Stable Interpersonal relationship Non- Personal relationship
  • 6. Industrial Vs Consumer Marketing Areas of Difference Industrial Market Consumer Market Channel Characteristic More Direct Indirect Fewer Intermediaries Multiple layer of Intermediaries Promotional Characteristic Emphasis on Personal Selling Emphasis on Mass Media (Advertising) Price Characteristic Competitive Bidding and Negotiated List Price or MRP Prices List Price for Standard Products
  • 7. B2B Distribution Channel Characteristics Manufacturer Company Sales Representative Force Agency Distribution Dealer Customer Customer Customer
  • 8. Characteristics of B2B Demand • Derived Demand:- – The demand for a good or service that results from the demand for another good or service. – Ex.:- Pig Iron ---Steel ---Steel Sheets---Automotive part companies--Automobiles--End customer • Demand Elasticity:- • Joint Demand:- - Demand for product or services is interdependent on each other – Ex:- Coffee Powder, Sugar & Milk in Making Coffee – Ex:- Software- Operating System, Car & Fuel
  • 9. 2:- Understanding B2B Market & Environment with Buyers Perspective B2B Customers B2B Products Marketing of industrial products to B2B Customers Purchasing of Industrial Products Goals of Purchasing Purchasing Orientations Buying Orientation Procurement Orientation Supply Chain Management Orientation Purchasing Practices of Industrial Customers Commercial Business Government Institutes Co-operative Environmental Analysis:- Types of Environment Influencing B2B Market
  • 10. Understanding B2B Market & Environment with Buyers Perspective
  • 11. 2.Understanding B2B Market & Environment with Buyers Raw Materials Iron ore, Crude oil, fruits, fish Perspective Manufactured Acids, Fuel oil, Steel , Materials Chemicals Material & Parts Component Parts Gauges, TV tubes, Tyres, Subassemblies Exhaust Pipe in Motor Cycle Light equipment/ Hand tools, Dies, Jigs Accessories Installation or Heavy Capital items Machine Tools, Furnaces Equipments Plants & Building Plants, Office Building Lubricants, Fasteners, paints Supplies , Electrical Items Supplies & Services Legal, Auditing, Advertising, Services Courier, Market Research
  • 12. 2.Understanding B2B Market & Environment with Buyers Perspective Goals Of Purchasing Uninterrupted Flow Material Manage Inventory Improve Quality Developing and Managing Supplier relationships Achieve Lowest total cost Reduce Administrative cost Advance Firms Competitive Position
  • 13. 2.Understanding B2B Market & Environment with Buyers Perspective Purchase Orientation – Buying Orientation – Procurement Orientation – Supply chain Management Orientation Applications of Purchase Orientation to Industrial Customers Industrial Customers Supply Chain Management Procurement Government as a Customer Buying Orientation Institutes Buying Orientation
  • 14. 2.Understanding B2B Market & Environment with Buyers Perspective Purchasing Practices of B2B Customers Industrial customers Government Institutes Cooperative Environmental Analysis:- Ecological & Physical 1.Pollution & Conservation of Natural resources 2. Utilities, Manpower & Transportation
  • 15. 2.Understanding B2B Market & Environment with Buyers Perspective Environment Analysis:- Internal Environment:- Company Location, R&D Facilities, Production Facilities Human Resource and Image of the company External Environment:- Micro Environment :- Customers & Competitors Suppliers Macro Environment:- Economic Technological Government/Political & Legal Cultural & Social Investors & NGO
  • 16. 3.The Nature of Industrial Buying and Buying Behavior • Organizational Buying Process • Organizational Buying Situations • Forces Shaping Organizational Buying Behavior -- Environmental Forces -- Organizational Forces -- Group Forces :- - Buying Center -Elements of Buying Center -- Individual Forces
  • 17. 3.The Nature of Industrial Buying and Buying Behavior Problem Recognition General Description of Need Product Specification Supplier Search Acquisition & Analysis of Proposal Supplier Selection Selection of Order Routine Performance Review
  • 18. 3.The Nature of Industrial Buying and Buying Behavior Organizational Buying Situations The buyer routinely re-orders the Straight Rebuy same product or service with out any modification The buyer wants to modify product Modify Rebuy specifications, price, service or supplier The buyer purchase product or New Task service for the first time
  • 19. 3.The Nature of Industrial Buying and Buying Behavior Forces Shaping Organizational Buying Behavior Environmental Forces Organizational Forces Group Forces Individual Forces
  • 20. Group Force – Buying Center “Buying Center can be defined as the body of all the individuals and groups participating in the buying decision process and who have interdependent objectives and share common risk”
  • 21. 3.The Nature of Industrial Buying and Buying Behavior Roles of Buying Center Initiator :- Recognition of Problem or Need Buyer :- Obtains the quotation Supplier evaluation & Selection Processing purchase order Expediting deliveries Implement the purchasing policies of the organization User:- User of Product/ Services ( Could be Initiator) Influencer :- Individuals who could influence the purchasing decision ( Technical / Design Engineers / External consultants ) Gatekeepers:- Individuals who control the flow of information to the members of buying center Deciders:- Individuals or group of people who make the actual purchase decisions about the product or services
  • 22. 3.The Nature of Industrial Buying and Buying Behavior B2B Buying Behavior Model
  • 23. 4. Buyer Seller Relationship • Buyer Seller Relationship :- Establish , Develop & Maintain the meaningful relationship with the customer. • Types of Buyer – Seller Relationship • Transactional Exchange • Collaborative Exchange – Switching Cost
  • 24. Managing Buyer Seller Relationship • Typical Characteristics of Buyer Seller Relationship based on Market Condition and Purchase Behavior Transactional Exchange Collaborative Exchange Availability of Alternative Many Alternative Few Supply Market Dynamism Stable Volatile Importance of Purchase Low High Complexity of Purchase Low High Information Exchange Low High Operational Linkage Limited Extensive
  • 25. CRM Strategy • Determine which type of relationship matches the purchasing situation and supply-market conditions for a particular customer. • Develop a strategy that is appropriate for each strategy type.
  • 26. Understanding Customer Profitability Characteristics of High Vs Low Cost-to-Serve Customers High Cost to Serve Low Cost to Serve Order Custom Products Order Standard Products Order Small Quantities Order Large Quantities Unpredictable Order arrivals Predictable order arrivals Customized delivery Standard Delivery Frequent Changes in delivery No changes in delivery requirement requirement Manual Processing Electronic Processing Large amount of presales support Little to no presales support Require company to hold inventory Replenish as produced Longer credit periods Payment on time
  • 27.
  • 28. Creating a CRM Strategy Acquire the Right Customer Crafting the right value proposition for the customer Design the Best Process to deliver the product /services Motivating the Employees Retain the customer
  • 29. Segmenting the Business Market Why Segmentation:- Criteria for the segmentation:- Measurable Assessable Substantial Computability Responsiveness Benefits of Segmentation:- Concentrate on unique needs of target segment, Focus on product development, Develop profitable pricing strategy Select the appropriate channel Develop communication and advertising strategy Variable of Business Market Segmentation :- Macro level segmentation Micro level Segmentation
  • 30. Macro Segmentation Variable of Segmentation Breakdown of Segments Characteristics of Buying Behavior Size Small. Medium & Large ( Based on Sales or o. Of Employees Geographical location Region , Industrial zones Usage rate Non user, Light user, Moderate user, heavy user Structure of procurement Centralize , Decentralize Product/ Service Application End market serve As per Product/Service Value in use High , Low Characteristics of Purchasing Situations Types of buying situations New task, Modified task, Straight Rebuy Stage in purchase situation Early stages, late stages
  • 31. Micro Segmentation Variable of Segmentation Breakdown of Segments Key Criteria Quality, Delivery, supplier reputation Purchase Strategies Optimizer, Satisfier Structure of decision making unit Importance of purchase High , Low Attitude towards vendor Favorable, unfavorable Organizational innovativeness Innovator, Follower Personal Characteristics of Top Management or Decision makers Demographics Age, Educational background Decision Style Normative , conservative, mixed mode Risk Risk taker, Risk avoider Confidence High, low Job responsibility Purchasing, production, engineering
  • 32. Managing Products & New product develofor B2B Marketing
  • 33. Core Competencies and Selected Products at Canon • Core competencies are embodied in the superior skills of employees--the technologies they have mastered, the unique ways in which these technologies are combined, and the market knowledge that has been accumulated. • They focus on the basics of what crates value from the customer’s perspective and include both technical and organizational skills. Developed by Cool Pictures and MultiMedia Presentations
  • 34. Three Tests to Identify the Core Competencies • First, a core competence provides potential access to an array of markets. • Second, a core competence should make an important contribution to the perceived customer benefits of the firm’s end products. • Third, “a core competence should be difficult for competitors to imitate.”
  • 35. Sustaining the Lead . . . Three Questions • How rare is our competence? • How long will it take our competitors to develop the competence? • Can the source of our advantage be easily understood by our competitors?
  • 36. Quality Movement Stages • Stage one centered on conformance to standards or success in meeting specifications. • Stage two emphasized that quality was more than a technical specialty and that the pursuit of quality should drive the core processes of the entire business. • Stage three examines a firm’s quality performance relative to competitors and examines customer perceptions of the value of competing products.
  • 37. What Value Means to Business Customers Core Benefits Add-on Customer Value Price Sacrifices Acquisition Costs Operations Costs Source: Adapted from Ajay Menon, Christian Homburg, and Nikolas Beutin, “Understanding Customer Value,” Journal of Business-to-Business Marketing, 12, no. 2 (2005), pp. 4–7.
  • 38. 1. Proprietary or 2. Custom-built catalog products products Four Types of Industrial product Lines 3. Custom-designed 4. Industrial products services
  • 39. Steps in the Product Positioning Process 1. Identify the relevant set of competitive products. 2. Identify the set of determinant attributes that customers use to differentiate among options and determine the preferred choice. 3. Collect information from a sample of existing and potential customers concerning their ratings of each product on the determinant attributes. 4. Determine the product’s current position versus competing offerings for each market segment. 5. Examine the fit between preferences of market segments and current position of product. 6. Select Positioning or Repositioning Strategy.
  • 40. Successful brand management involves developing a promise of value for customers and then ensuring that the promise is kept through the way in which the product is developed, produced, sold, services, and promoted. How High-Tech Brands Build Equity
  • 41. New Product Development Process Successful companies employ a high-quality new product development process--careful attention is given to the execution of the activities and decision points. Benchmarking characteristics: • The firms emphasized upfront market and technical assessments. • The process featured complete descriptions of the product concepts, product benefits, positioning, and target markets. • Tough project go/kill decision points were included in the process and the kill option was actually used. • The new product process is flexible.
  • 42. Resource Commitments Three ingredients were important here: 1. Top management committed the resources necessary to meet the firm’s objectives for the total product effort in the firm. 2. R&D budgets were adequate and aligned with the stated new product objectives. 3. The necessary personnel were assigned and were relieved from other duties.
  • 43. New Product Strategy Set aggressive new product performance goal as a basic corporate goal and communicate it to all employees.
  • 44. Lead user projects are conducted by a cross-functional team that includes four to six managers from marketing and technical departments; one member serves as project leader.Team members typically spend 12 to 15 hours per week on the projects. The Lead User Method
  • 45. Product advantage refers to Marketing synergy represents customer perceptions of the degree of fit between the product superiority with respect needs of the project and the to quality, cost-performance firm’s resources and skills in ratio, or function relative to marketing. competitors. Four Strategic Factors For New Product Success Technical synergy concerns International orientation--new the fit between the needs of the products that are designed and project and the firm’s R&D developed to meet foreign resources and competencies. requirements, and that are targeted at world or nearest- neighbor export markets.
  • 47. Innovators These are the people who are fundamentally committed to new technology on the grounds . • Early Adopters These are the true revolutionaries in business and government who want to use the discontinuity of any innovation to make a break with the past and start an entirely new future. Their expectation is that by being first to exploit the new capability they can achieve dramatic and insurmountable competitive advantage over the old order. • Early Majority These people make the bulk of all technology infrastructure purchases. They do not love technology for its own sake, so are different from the techies, whom they are careful, nonetheless, to employ. Moreover, they believe in evolution not revolution. they are interested in making their companies' systems work effectively and look to adopt innovations only after they have established a proven track record.
  • 48. Late Majority These consumers are pessimistic about their ability to gain any value from technology investments and undertake them only under duress -- typically because the remaining alternative is to let the rest of the world pass them by. They are very price-sensitive, highly skeptical, and very demanding. Rarely do their demands get met, in part because they are unwilling to pay for any extra services, all of which only reconfirms their sour views of high tech. • Laggards This group delight in challenging the hype and puffery of high-tech marketing. They are not so much potential customers as ever-present critics. As such, the goal of high-tech marketing is not to sell to them but rather to sell around them. • The Marketing Strategy With these customer segments in mind, the typical approach is to seed new products with the innovators so they can help educate the early adopters. When the early adopter's are interested, do everything that is possible to make them happy as they will then serve as references for the early majority which is the group where most of the money is made from a new product or service. Then leverage the success with this large group so that the product matures and stabilizes enough to be of interest to the late adopters. All the while, ignore the laggards and their skepticism.