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TRANSCRIPT
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B2B Marketing
Module 1
A Perspective of B2B Marketing
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Introduction
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Facts
Proportion of pure B2B firms ~ 30%
Share of B2B transactions ~ 46% of GDP
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Nature
Customer is an organisationOrganisationalmarketing?
Enterprises
Users
OEMs
Dealers & distributors
Institutions
Government
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The B2B-B2C dichotomy
Differences in Market structure
Buying behaviour
Marketing practices
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Market Structure
Demand Derived vs. direct
Volatility of demand Greater
Elasticity of demand
Less elastic vs. more elastic perverse (?) Market size
Larger
Geographic concentration
Often clustered vs. usually dispersed
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The Accelerator Effect
Due to derived demand
Rate of change of secondary/tertiary demand
>rate of change of primary demand
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Buying Behaviour
Buying influences
Many vs. few Purchase cycles
Often long vs. usually short
Transaction value
Higher Process complexity
More complex
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Buying Behaviour Contd.
Buyer-seller interdependence Often very close
Importance of relationships Mostly very high
Purchase professionalism
High vs. low Degree of interactivity High vs. low
Formal, written rules
Common vs. uncommon
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Marketing Practices
Selling process Systems vs. product
Personal selling usage Extensive vs. limited
Promotion Customer-specific vs. mass marketing
Branding Limited vs. extensive
Market research Limited vs. extensive
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Marketing Practices Contd.
Use of relationships Extensive vs. limited
Web integration Greater
Segmentation
Rudimentary vs. sophisticated Product complexity Greater
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Customer Value Proposition
Particular set benefits that matter most to targetcustomers
Demonstrate the value of this superiorperformance
Communicate to convey a sophisticated
understanding of the customers business(process, priorities)
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Supply Chain
Upstream Suppliers
Tier I Suppliers
Auto Manufacturers
Dealers
Business / Individual Buyers
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Classification of Goods
Entering
Raw materials farm products, natural products
Manufactured materials & parts
Foundation
Installations
Accessories Facilitating
Supplies / MRO items
Services
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Planning
BusinessMarketing
Finance &Accounting
HR
Logistics
R&DPurchase
Operations
Service
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Business Marketing
StrategyFormulation
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Thank You!
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B2B Marketing
Module 2
The Market
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B2B Market
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Commercial Enterprises
Institutions
Government
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Commercial Enterprises
Distribution by size
Geographical concentration
Purchasing organisation - strategic procurement
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Size
Buying firms are bigger in size
MSMEs
26 million units
45% of the manufacturing
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Geographical Concentration
Concentrated marketing efforts sales personnel,distributors
Warehouses and/or distribution centres effectivecoverage
Concentrated HQ coverage
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Purchasing Organisation
70% of costs (manufacturing firms) straightimpact on bottomline
Centralised procurement strategy
Buyers responsible for specific group ofproducts
Development of technical expertise Emergence of purchase engineers material
evaluation, cost studies
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Procurement as Strategy
LeveragedBuy
(Buy for
less)
Linked Buy
(Buy better)
Value Buy
(Consumebetter)
IntegratedSell
(Sell better)
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Strategy
Understand items having
Criticality in operations
Business risk dimensions customers customersvalue
Focus on strategic purchases
High revenue & high customer value impact
For less strategic purchases
Provide complete assortment, timelyservice/supply support, simplified ordering
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Government
Public procurement in India
Central Government Ministries & departments
States & Union territories
Municipal and other local bodies
PSUs
25-30% of GDP
INR 18000+ billion
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Organisations
Defence vs. non-Defence
15% of government procurement
Governed by GFR (General Financial Rules,2005)
Purchasing norms
Upto INR 15,000: purchase without quotation 15,000 100,000: local purchase committee
Above 100,000: through tendering
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Strategy Understand the complex rules and standards
Develop system to keep abreast of procurement plans of
each purchasing agency Product development and R&D strategy in line with
government needs
Develop a communications strategy
Generate a negotiation strategy to secure favourableterms payment, contract completion, overruns
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Institutions Similar to governments
Dictated by law
Constrained by politicalconsiderations
Privately managed
Broader range of purchase
than corporates Value of efficient buying
acknowledged
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Budget limit based buying
Staffed with professionals Dedicated materials management department
Group purchasing
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Strategy
Evaluate budgetary status
Attention to third-party contractors
Cultivate professional staff for product benefits
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Effect of IT on Purchase Behaviour Communicating with external markets
Independent third parties
Industry consortia Electronic marketplaces Auctions, Catalogue
purchasing Types
Vertical - related to core operations Horizontal - not related
Internal coordination Inter- & intra-firm coordination - SCM
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Vertical MarketplacePGDM II 2013-15
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E-Procurement
Use of Web-based applications, decision supporttools, and associated services to streamline and
enhance strategic sourcing processes andknowledge management
Purchasing managers
Look out for new vendors
Communicate with current suppliers
Transact
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Evolution
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Traditional
procurement
mainly paper
based
Electronic
systems to
supporttraditional
procurement
Mainframe, PC,
ERP, EDI
Web as
communication
channel to
support
traditionalprocurement
E-mail, websites
Internet tools
and platforms tocomplement
traditional
procurement
online supplier
databases, e-
catalogs, web-
enabled EDI
Internet tools
and platforms toreplace
traditional
procurement
fully integrated e-
markets,
automatic stockreplenishment
Time
Technology
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Capabilities Online negotiations
Create RFP, RFQ, RFI
Conduct reverse auctions Collaboration tools
With internal stakeholders specs, priorities
Description of requirements in RFP
Knowledge management Repository of procurement data
Analytical tools
Cost and spending analysis top management
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Auctions English highest bidder; sale of unwanted items -
scrap
Reverse lowest bidder; online form of tender
purchasing
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Reverse Auctions One buyer several pre-qualified sellers
Dynamic, real-time, competitive bidding
Used for entering and facilitating goods
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Suppliers Buyers
Reasons New business Market penetration Cycle time reduction
Inventory management
Reduced purchase price Lower administrative costs Control on inventory levels
Risks Low price focus threatenslong-term relationships
Competitive bargaining toolfor buyer
Offering unrealistic prices
Undermines trust Reduced buyer commitment makes
supplier less willing to makerelationship-related investments
Insufficient number of suppliers may
cause non-competitive scenario
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Market-centred Organisation
Marketing
MarketResearch
Sales
Advertising
Markets
CommercialSegments
1n
Government
Institutions
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Thank You!
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B2B MarketingModule 3
Organisational Buying Behaviour
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Introduction No firm is an island
Buying is a process generally well-drawn out
Access to supply markets is imperative
Factors for reaching supply markets & products External
Organisational
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Organisational Factors Nature of business
Business strategy
Purchasing orientation
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Nature of Business
Unit production Bespoke Technological complexity and scale affect
competitiveness
Design and production capabilities ofsuppliers
Mass production Efficiency determined by equipment,
integration among sections, raw material
costs Highly inflexible suppliers to adjust theirlogistics and processes to be compatible
Suppliers contribute in NPD process, crucialfor survival and growth
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Nature of Business
Process production High volume, continuous, efficient Continuity is imperative
Mostly produce intermediates & raw materials Infrequent big-ticket equipment purchases
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Business Strategy Generic strategy guides actions and decisions at
functional level purchasing
Product leadership
Relentless innovation Technical and creative abilities
Suppliers knowledge of customers business; offerdesign and product expertise to contribute to innovation;responsiveness to innovativeness
Cost leadership Ongoing process of cost containment - central theme of
dealing with suppliers
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Business Strategy - Social Social responsibility
strategy may affect
dealing with suppliers
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Purchasing a ComponentImagine you are a purchase manager for a PCmanufacturer. Your boss has asked you to order a
large quantity of major electronic component.There are 3 potential suppliers A, B & C. To thebest of your knowledge, they are equal in productquality and availability.
In each of the following situation, which supplierwould you place your order on?
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SituationsSupplier A Supplier B Supplier C
Situation 1 150 per unit 155 per unit 170 per unit
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Situation 2 150 per unit 155 per unit 170 per unit
Moretraditionaldesign.
Installationcost: 12 perunit
Your manufacturingmanager says thecomponent has a
special modular designthat has an installationcost of 5 per unit
More traditional design.Installation cost: 14 per unit
Situation 3 150 per unit 155 per unit 170 per unit
No premium
expected
No premium expected Your marketing manager
says C has spent crores insuccessful campaign topromote the brand equity ofthis component. Consumersmay pay extra 50 per PC forhaving this component.
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Purchasing Orientation Supply management Maximise value along the supply chain extensive
collaboration
Focus on end-customers Assessment of competencies and capabilities to determine
which activities to be done in-house and which tooutsource
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Marketing Implications Buying orientation + less important (MRO)Focus on efficiency
Innovation in the offering Supply management orientation + high
complexity & high riskStrive to become key contributor in customer strategy;
technical, human & financial resources necessary
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Segmenting Purchase Decisions
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Advertising
Telemarketing
Office supplies
Travel
Materials
LogisticsProfessional services
Critical componentsHigh-technology
products
Purchase complexity
Businessrisk
Low
High
High
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Purchase ProcessPGDM II 2013-15
Performance feedback & evaluation
Selection & establishment of order routine
Proposal evaluation & supplier selection
Search & qualification of potential sources
Determination of specification & quantity
Organisational problem recognition
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Buying Situation
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Based on familiarity with products or process New task
Judgmental Strategic
Modified re-buy Simple Complex
Straight re-buy Casual Routine low priority
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Buygrid Framework
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New task Modified re-buy Straight re-buy
Problem recognition Yes Possibly No
Determination ofspecification
Yes Yes No
Source search &qualification
Extensive Limited No
Proposal evaluation &supplier selection
Extensive Limited No
Selection of orderroutine
Yes Possibly No
Performance feedback& evaluation
Yes Yes Yes
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Marketing Implications
New task Get involved at an early stage
Obtain information on the nature of the purchasing
problem Identify specific product requirements
Formulate proposals to match the requirements
In-suppliers to monitor changing needs &support the customer in such situations
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Marketing Implications Contd.PGDM II 2013-15
Modified re-buy Happens when customer sees potential benefits from
re-looking into alternative supply solutions
In-suppliers Move decision-makers from modified to straight re-buy thus
reducing perceived benefits
Invest into understanding purchase requirement andextinguish problems fast
Out suppliers Ensure the purchase stays in modified re-buy as long as
possible
Offer performance guarantees
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Marketing Implications Contd.PGDM II 2013-15
Straight re-buy In-suppliers
Regular contact to ensure no complaints
Identify and resolve problem areas quickly
Reduce customer buying effort automated re-ordering
Out suppliers Price cutting not an attractive option for customer
Move to modified re-buy by reducing the total cost ofownership
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Forces Shaping OBB
Roles, relativeinfluences, and patternsof interaction of buyingcentre members
Job function Past experience Buying motives
Goals, objectives, strategies Organisational position of
purchasing
Economic outlook Pace of technological
change Global trade relations
Environmental Organisational
GroupIndividual
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Environmental Forces Economic
Shapes a firms ability and willingness to buy
Emerging economies turning into sourcing hubs Technological
Internet
Pace of change importance of purchasing manager
More intense but less time-intensive search
Tracking social media buzz
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Organisational Forces Strategic priorities
How can procurement be a stronger competitiveweapon?
Best value-chain wins
Organisational position
Centralisation of procurement
Integrate procurement with corporate strategy Economise on procurement costs
Nature of supply environment
Location of key buying influences
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Group Forces
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Buying Centre
Initiators
Deciders
Buyers Influencers
Users
Gatekeepers
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Functions vs. Roles
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Operations
Purchasing
Engineering
Finance
Marketing Gatekeeper
Buyer
Decider
Influencer
User
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Marketing to DMU
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For new task, get in touch with DMU membersat an early stage
Identify the specific requirements / concernswith respect to the current purchasing issue
Satisfy individual needs and reduce theperceived risk
Know the key members of the DMU
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Clues Isolate the personal stakeholders
Follow the information flow
Identify the experts Trace the connections to the top
Understand the role of Purchase
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Individual Forces Evaluative criteria
Information processing
Selective exposure Selective attention
Selective perception
Selective retention
Risk reduction strategies
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Perceived Risk Risk is inherent in business markets uncertainty &
negative consequences Types
Financial
Performance Social
Perceived risk heightens with new task or complexmodified re-buy
With increased risk Buying centre composition changes number &
authority Increased information search Deliberate investment of effort in the buying process Suppliers with proven track records preferred
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The Individual Purchasing Manager Not perfectly rational nor objective Personal factors
Attitude towards perceived risk Handling risk Accrued rewards perception Backgrounds education, employment Information collection and processing abilities
Extrinsic factors Inter-functional coordination Inter-firm coordination supply chain issues Purchasing community - WOM Online purchasing reverse auctions
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Buyer Tasks Consulting with colleagues in other departments
Determining the necessary parts, materials,
services and supplies Calculating the required quantity
Searching for suppliers
Negotiating contracts Monitoring supplier performance
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Buyer Skills Keeping detailed and accurate records
Collecting and analysing information
Working under pressure Decision making using experience and personal
judgment
Using mathematical & analytical tools Good inter-personal skills
Negotiating and bargaining skills
Managing people supervising
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Thank You!
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Marketing Mix - Inadequacies Assumptions
Conflict of interest between marketer and customer
Focus on each individual transaction Marketer is active, customer is passive
Process consists of study of buying behaviour, thenattempt to influence the behaviour favourably
Prescriptive approach Neo-classical economic concepts do not hold in
business markets
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Relationship MarketingAll activities directed towards establishing,
developing, and maintaining successful exchanges
with customers and other constituents
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Benefits1. Loyal customers
are far more profitable than customers who are
price sensitive perceive few differences among alternative
offerings
2. Firms can secure important and durable
advantages that are hard for competitors tounderstand, copy or displace
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Types of Relationships
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Transactional
Collaborative
Value
adding
OperationalLinkages
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Core Elements Trust
Willingness to rely on an exchange partner in whom
one has confidence Commitment
One partners belief that an ongoing relationship isso important that it deserves maximum efforts to
maintain it
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Range of Buyer-Seller Relationships
Transactional Collaborative
Availability of alternatives Many Few
Supply market dynamism Stable Volatile
Importance of purchase Low High
Complexity of purchase Low High
Information exchange Low High
Operational linkages Limited Extensive
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Switching Costs Investments
Money
People Lasting assets
Procedures
Risk of exposure cost of making wrong choice
Critical to operations
Less established suppliers
Technically complex products
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Potential of Value Drivers
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Sourcing
Benefits
0.52
Costs
0.07
Operations
Benefits
0.21
Costs
0.10
Offering
Benefits0.08
Costs0.03
(Ulaga & Eggert, 2006)
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Power of Relationships Create a process that will call for short lead times
smaller quantities produced todecrease inventory risk
increase the number of availablestyles and/or choice
Maintain design, production, anddistribution to enable sharp responseto shifts in consumer demands
keeping exclusivity unharmed Design in-house
Manufacturing 50% in Spain, restfrom suppliers (700 in Europe)
Shipment to Zara stores from
distribution centres in 8 hours
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Customer Profitability Accurate tracing of costs to individual customers
The profitable few
Large customers most/least profitable, seldom in themiddle
Low cost-to-serve customers profitable
High cost-to-serve customers unprofitable, unless
paying premium for specialised services received
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The Whale Curve
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Managing Costly Customers Look inside
Internal processes should accommodate customer
preferences Sharper profit lens
Net margin vis--vis cost-to-serve
Identify profitable customers
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Profitable?
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PassiveCarriage
trade
BargainBasement
Aggressive
Sales
Cost-to-serve
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CharacteristicsHigh cost-to-serve Low cost-to-serve
Pre-sales Extensive support(technical and sales resources)
Limited(standard pricing and ordering)
Production Custom-made productsSmall order quantitiesUnpredictable orderingpatternManual processing
StandardLargePredictableElectronic
Delivery Fast StandardPost-sales Extensive support
(customer training,installation, customer support)
Limited
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Managing Unprofitable Customers Improve profitability
Reduce cost of activities for serving
Focus on the high-cost elements Loss making
Assess other benefits
New customers payback on a longer term
Opportunity for learning
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Customer Relationship ManagementCross-functional process
to achievea continuing dialoguewith customers
acrossall customer touch-points
with
personalised treatment of the most valuablecustomersto ensure customer retention and the effectiveness of
marketing initiatives
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CRM system
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CRMSoftware
SalespersonsService teams
DealersDistributorsCall centresE-mails
Futurecustomerinteractions
Marketforecasts
Product design SCM
Synthesis
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CRM MythsIt is just database marketing
It is purely a marketing process
It is just an IT issue
It is just about building loyalty
It can be implemented by any firm
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CRM Strategy
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Acquiring the right customers
Stock of current and potential customerrelationships
Collective knowledge of selecting, initiating,developing & maintaining profitable relationships
Crafting the right value proposition
Understanding how customers definevalue How benefits compare to those of the next-best
alternative
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CRM Strategy Contd.
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Instituting the best processes Sales assumes a central role Close coordination with supporting functions
logistics, technical service, customer service Motivating employees
Training & development Incentivise with customer strategy
Learning to retain customers Long-standing customer economical to serve
organisational learning Evaluation expectation mis-match!
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Strategic Alliances Long-run linkage vis--vis JV
Accessing complementary skills
Benefits Access to markets and/or technology
Economies of scale in manufacturing, R&D,marketing
Reduced TTM
Risk sharing
3 5
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Alliances Non-competing firms International expansion Renault & Diesel
Nacional (Mexico)
Vertical integration Aerospatia & Thomson Diversification BMW & Rolls Royce
Competing firms Shared supplier alliance Volkswagen & Renault
(gearbox) Quasi-concentration alliance BAE, EADS Systems,
Alenia (Tornado fighter) Complementary alliance Tata & Fiat (distribution)
3 5
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3 5
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Extended Enterprise Daimler
Transaction
(market-based
competition)
Coordination
(selective
competition)
Cooperation
(selective
partnership)
Alliance
(strategic
partnership)
Operational types Strategic types
Relationship
based on
Data Exchanging
information
Transferring
know-how
Building up to
specialist
knowledge
Relationship
lasts for
Transaction Annual contract Series life cycle Life cycle and
beyond
Extent of joint
commitment
Suppliers not
integrated
Integrated into
NPD to limitedextent, via
well-defined
interfaces
Integrated into
NPD to limitedextent,
interfaces
defined jointly
Several depts
integrated,joint NPD,
investment in
joint assets
Examples Office supplies Mouldings Exhaust
systems
Fuel cells
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Before the Handshake
Some toughquestions to
ask
Does it present risks to ourbusiness?
Will it generate growth in ourcore business?
Will it create value for ourcustomers?
How compatible are we technically and culturally?
Are we committed to a long-term relationship?
What are the strengths andweaknesses of each potential
partner?
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Determinants of Success Building a dedicated alliance function
Developing a joint value proposition
Developing close working relationships Boundary-spanning connections
Integrating points of contact
Strategic
Tactical Operational
Inter-personal
Cultural
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Evolution of Networks Relationshipschannelssupply chains
networks
Marketing & purchasing distinction ismeaningless - seamless, iterative process
Purchasing can overlap with productdevelopment, marketing planning
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Inter-organisationalRelationship
MarketingChannel
Supplychain
IndustrialNetwork
Supplynetwork
Distributionnetwork
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Network Situated/embedded in a network of
relationships
Relative value is function of its position in thenetwork
Change in mindset
Interdependent
Limit on the ability to think & act independently
Extends capabilities beyond the boundaries ofthe firm
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Fujitsu
Fujitsu Sun: disk drives
Fujitsu Unisys, Tandem, Olivetti,Siemens: disk drives
Toshiba Sun: semiconductors,
optical drives Sun Xerox, Hitachi, Panasonic:
PCs & workstations
Sun Fujitsu: workstations
Fujitsu ICL: hardware & design
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Thank You!
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B2B Marketing
Module 5
Segmentation, Targeting & Positioning
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Value of Segmentation
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Facilitating better understanding of the whole
marketplacebehaviour of buyers and why theybuy
Enabling better selection of market segments that
best fit the companys capabilities Enabling improved management of the marketing
activity
Know which customers to treat similarly and which
to treat differently
PGDM II 2013-15
Criteria for Evaluation
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Measurability
Accessibility
Actionability
Substantiality Responsiveness
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Segmentation Bases
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Firmographics
Operatingvariables
Purchasing
approach
Situationalfactors
Personalcharacteristics
Macro
Micro
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Firmographics
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1. Industry
Industrial classification
Knowledge of the use for the suppliers technology
2. Customer location
Ease of reaching Presence of sales staff
Logistics
3. Firm size
Depends on the purchase item: capex vs. MRO
Supply justification
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Segmentation Services
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Operating Variables
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Relatively easily observable
First manifestations of how customer firms behave
1. Company technology
Compatibility
2. Product & brand-use status
Readiness to use
Usage rate Customers knowledge of supplier products: ability to
communicate need
PGDM II 2013-15
Operating Variables
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3. Customer capabilities
Establish what customers are capable of doing with the
product/process
PGDM II 2013-15
Pilkington Glass
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PGDM II 2013-15
Operating Variables
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4. Firm strategic type
Strong indicator of buying behaviour
Difficult to ascertain
Employee responses (socially acceptable?)
Observation (outsiders)
Content analysis of company plans (rare)
PGDM II 2013-15
Miles & Snow Typology
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Proactiveapproach
Environment dynamism
ReactorDefender
Prospector
Analyser
Innovative
No consistent
strategy
Efficient & adaptive
Efficient
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Purchasing Approach
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1. Purchasing function organisation
Unstructured in smaller firms or proprietorship firms
Centralised procurement?
2. Power structure
Importance of purchases Relative influence of departments in DMU
3. General purchasing policies
Single or multiple vendors
Vendor rating / accreditation / bidding methods /
disclosure of costs
PGDM II 2013-15
Purchasing Approach
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5. Purchasing criteria
Financial (purchase price vs. TCO)
Technological (product performance parameters)
Service level (delivery, pre-sales technical assistance,
after-sales service)
6. Buyer-seller relationships
Relationship orientation
7. Buying situation
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Situational Factors
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Prevailing need - urgency
Usage plan
Order size
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Innovativeness
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Willingness to purchase new products
Level of resistance to change
Desire to excel
Product diffusion rate
PGDM II 2013-15
Buyer Personal Characteristics
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Demographicsage, educational background
Decision making stylenormative / conservative
Risk appetite
Confidence
Drive behind purchase behaviour
Fastidiousness in information search
Supplier orientation
Evaluation Sharing of views with supplier personnel
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Targeting
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Identified
Segment
Target
Segment
Relative
Attractiveness
ResourceDemands
Management
Demands
Organisational
Demands
Check for acceptability
No
Yes
Yes
Yes
Yes
No
No
No
Not acceptable -selection
unsuitable:
select a new
segment
PGDM II 2013-15
Estimating Segment Demand
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Qualitative
Executive judgment
Frequent & repetitive forecasts
Stable environment
Small lag between decision, action & feedback Sales force composite
Delphi technique
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Estimating Segment Demand
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Quantitative
Time series: trend, seasonal, cyclical, irregular
patterns
Regression / causal analysis
Identify factors that affected past sales Fit them into a mathematical / statistical model
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MARKETING RESEARCH
PGDM II 2013-15
Value of Information
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Characteristics of information (Gates, 1996)
Accuracy
Timeliness
Relevance
Uniqueness
Technical (accurate) vs. managerial (timely and
relevant)
Communication between research agency and client
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Sampling Methods
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Probability
Simple Random
Stratified Random
Systematic Cluster/multi-stage
Non-probability
Convenience
Snowball
Quota Focus groups
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Probability Sampling
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Stratified
Sub-classification of sample based on proportion ofpopulation
Manufacturing vs. service for different firm sizes
Systematic
Within a single industry sector
Cluster Naturally occurring groups viz. departments within firms
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Non-probability Sampling
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Convenience
Limited validity
Snowball
Association-based
Convenient Quota
Same as stratified but not randomly selected
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Industry Classification
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To ensure common understanding of industry
definition
Every form of economic activity put under an alpha-
numeric category
United Nations: ISIC India: NIC
US: NAICS
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NIC
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Using MR Agencies
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Product managers have more contact with
customers than MR agencies Smaller samples (mostly the universe even)
Concerned with both direct and derived demand
Presence of several buying centre members, who may
change
Less focusabsence of MR department, reliance on
secondary data & expert opinions
Use of information influenced by Exploratory research (+)
Degree of formalisation (+)
Degree of surprise in findings (-)PGDM II 2013-15
Market Research Agencies
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B2B professional service firms
All buyer-seller relationship concepts apply
Determinants in successful client-agency
relationship
Clear understanding of the management problem priorto contacting the agency
Close involvement ASAP
Check credentials, experience, industry familiarity of
agency
PGDM II 2013-15
Secondary Research
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Benefits
Cost-effective, MR budget is low in B2B firms
Derived demand study
Availability of data
Use of internet Crucial, especially with the need for secondary data
Relevance and recency issues
Care about dubiousness of data
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Business Information Sources
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PGDM II 2013-15
Targeting Strategy
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Undifferentiated
Differentiated
Niche
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Positioning
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Offering occupies a space in the buyers mind
Relative position - basis by which comparison ismade with ideal position and also others
Clarity about the capabilities
Using value proposition Resonating focus: offering based on those few elements
where performances matter most to buyer firm
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Repositioning
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Completenessofoffering
Nature of relationship
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THANK YOU!
PGDM II 2013-15
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B2B MARKETING
Module 6
Product Management
B2B PRODUCTOFFERINGS
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PGDMII201
3-15
Core
benefit
Physical
attributes
Service
elements
Advice giving
ADAPTATION SPACE
CATEGORISINGPRODUCTLINES
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PGDMII2013-15
Businessservices
Custom-designedproducts
Custom-built
products
Catalogue(proprietary)
products
PRODUCT POLICY
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PRODUCTPOLICY
Set of decisions concerning the productsand services being offered P
GDMII2013-15
COMMODITY PRODUCTS
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COMMODITYPRODUCTS
Deeper into the PLCdifferentiation gets diffused
Price is the sole differentiator
Continuous innovation in product and marketing to
show added value to customers
there is no such thing as a commodity. All goodsand services are differentiable (Levitt, 1980)
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PGDMII2013-15
PRODUCTPORTFOLIO
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Collection of all products offered by a firm
Portfolio management
Decisions regarding current and future products
Finite company resources
Portfolio elements
Items
Lines
Depth
Mix
PGDMII2013-15
AQUCAR Water treatment microbiocide portfolioincluding glutaraldehyde, glut/quat blends, DBNPA,
bronopol, OPP and dimethyl-oxazolidine available
globally for use in biofouling control, anaerobic
microbial control, and fluid preservation
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Agro-sciences
Construction
Electronics & Communications
Energy Storage
Healthcare & Medical
Home & Office
Infrastructure
Nutrition
Oil & Gas
Packaging
Personal Care & ApparelRenewable Energy
Transportation
Water
, p
Battery Materials: Differentiated solution for battery
cycle life improvement through a proprietary coating
process.
FUELSAVER Antimicrobial agent for preserving
fuels, registered by the U.S. EPA for use as a biocide
and fuel additive for diesel oil, fuel oil or kerosene
Heat Transfer Fluids:
DOWTHERM Q Heat transfer
fluid additive for waste heat recovery in oil
applications
OUDRACool
: Solid epoxy resins for low
temperature set and long-lasting protection
OUDRACure Curing agents offering a systems
approach to extending durability
OUDRASperse: Waterborne dispersions,
manufactured without any added solvents
OUDRATherm: Advanced epoxy resins for extreme
high temperature and harsh conditions
OUDRATough: Advanced epoxy resins for damage
tolerance, corrosion protection and durability
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PGDMII2013-15
PRODUCTMARKET
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O C
Accurate definition is imperative Customer needs vis--vis ways of satisfying the
needsconstant change
Dimensions of definition
Customer function Technology
Customer segment
Value-added system
PGDMII2013-15
COMPETINGFORTODAYWHILEPREPARING
FORTOMORROW ABELL, 1999
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,
Competition at technology / supplier / brand level Planning for today
Clear precise definition of businesstarget
segments, customer functions, business approach to
be taken
Redefine for future
Planning for tomorrowreshaping the business
for future
PGDMII2013-15
FUTUREGROWTHPROSPECTS
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Important customer groups providing explosivefuture growth opportunities
Non-consumers: lacking the skills, training or
resources to purchase
Undershot consumers
Overshot consumers
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PRODUCTSTRATEGY
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Positioningplace occupied in a particularmarket
Measuring organisational buyers perceptions and
preferences in relation to competition
Perception based on bundle of attributes viz. quality,
service, etc.emphasise on attributes having
central role
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POSITIONINGPROCESS
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Identify relevantcompetitive
products
Identifydeterminant
attributescustomers use todifferentiate and
select
Survey existingand potentialcustomers forrating of all
options againsteach attribute
Determineproducts currentposition in each
segment
Examine fitbetween
preferences andcurrent position
Select Positioning
or RepositioningStrategy
PGDMII2013-15
STRATEGYOPTIONS
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Increaseimportance ofattribute tocustomers
Increase
differencebetween
competitionsand selfsproducts
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ORGANISINGFORINNOVATION
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PGDMII2013-15
It is not about serendipity Organisational innovativeness
Create an environment where creative individualscan operate within an inter-organisational contextthat harnesses their creativity
Features of an innovative firm Commitment to long-term growth
Willingness to include risky opportunities within abalanced portfolio of activities
Mutual respect amongst individuals and inclination
to work across functions Readiness to accept change and failure
Combination of suitable specialisation and diversityof knowledge
B2B RELATIONSHIPSINMANAGING
INNOVATIONS
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The innovation team game extends beyond the firm Suppliers and customers can be sources of ideas as
well as capabilities
Aspects
Type of innovation project Degree of innovativeness required
Degree of knowledge- sharing
Formality of knowledge-sharing mechanism
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PROJECTCLASSIFICATIONS
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Incremental enhancementsProduct and/or processDerivative
Design and components shared by aproduct group
Several changes in product and process
Platform
New core product/process
Fundamentally different from previousgenerations
Breakthrough
Knowledge creation
New materials and technologies leading tocommercial development
R&D
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DISRUPTIVEINNOVATION
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Firms possessing the capacityand capability to innovate
may fail when the innovation
does not address the
foreseeable needs of current
customers
These firms had their
competitive antennae up,
aggressively invested in new
products and technologies andlistened astutely to their
customers
PGDMII2013
-15
DISRUPTIVESTRATEGIES
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PGDMII2013
-15
Low-end test1. Customers at low
end of the market
2. Eager to purchase a
good enough
product at a lowerprice
3. Create a business
model that can yield
profits from this low
end of the market
New market test A large population can
be defined who lack
money / equipment /
skill to acquire the
product / serviceand/or
Present customers
have to go to an
inconvenient location
to use this
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PGDMII2013
-15
If Id have asked my customers what they
Resisting the Steve Jobs Innovation Temptation
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PGDMII2013
-15
If I d have asked my customers what theywanted, they would have told me a faster horse.
Henry Ford
Conceptualize products customers might
need before spending on development and launch
B2C is a whole different ballgame from B2B products Compare your IQ (Innovation Quotient) to Steves and
act accordingly. Learn how to attack the right market.
Uncover customer outcomes. Dont just ask customers.
Prioritize customer outcomes. Take advantage of the profit motive.
Get creative with the solutions.
STAGESOFNPD
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Idea
generating
Screening Planning DevelopingTest
marketing Launching
PGDMII2013
-15
Analysing thebusinesscase
Businessplanning
Concept Features Prototypes Marketing
support
IDEATIONPROCESS
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Some questions managers might as themselves Can we change the properties of the product?
Can the standard components be changed?
Can it be made smaller/cheaper?
Are there any new way of performing a current productfunction?
Is the products core function necessary at all?
How can we utilise the Internet to improve the
product/service?
PGDMII2013
-15
LACUNINB2B NPD PROCESS
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Going throughthe motions
In structuringactivities
Indocumentingactivities
Insufficientspeed
Unaware ofTTM
Not enoughoverlappingstages
Stages left tosingle
departments
Lack of marketorientation
Insufficientcustomerinput
Irregularcustomercontactduring NPD
Insufficientchecks
Making afuzzybusiness case
Allowingexpenses torise beforeuncertainties
have reduced
PGDMII2013
-15
MOSTINNOVATIVEFIRMS- 2012 (FORBES)
12 month
Sales
5-Year
Annualised Total Market Innovation
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RankFirm Growth (%) Return (%) Cap ( bn) Premium
1 Salesforce.com 32.1 21.6 25.85 72.8
2 Alexion Pharma 39.2 38.4 18.24 72.3
3 VMware 16.3 19.0 35.94 63.7
4 Regeron Pharma 128.3 65.8 16.75 63.1
5 ARM Holdings 22.5 47.9 19.62 61.2
6 Baidu 44.6 32.8 47.3 60.6
7 Amazon.com 23.0 31.0 119.01 60.2
8 Intuitive Surgicals 18.3 5.2 18.44 53.9
9 Rakuten 14.1 23.1 13.06 50.7
10 Natura Cosmeticos
-3.9 14.5 10.54 48.5
40 TCS 14.1 26.5 53.5 32.6
PGDMII2013
-15
A measure of how much investors have bid up the stock price of a company above the value of its existingbusiness based on expectations of future innovative results (new products, services and markets). Firms must have$10 billion in market cap, spend at least 1% of their asset base on R&D and have seven years of public data.
Getting
into the
d
Getting
through the
mud
Protecting
your ideas Appearing
to be
t l
http://ads.forbes.com/RealMedia/ads/click_lx.ads/forbes.com/specialslot/innovative-companies-11/forbes.com/technology/339148193/StoryLogo/OasDefault_v5/default/empty.gif/64644e63576c4365472f494143473162 -
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NPD THROUGHNETWORKS
Open innovation (Prahalad & Krishnan, 2008)or
distributed co-creation (Bughin et al, 2008)
Downstream co-creation
Staying power in pursuing activities Resources to push through projects
Put less optimistic projects on hold
PGDMII2013
-15
mud neutral
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THANKYOU!!
PGDMII2013-15
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B2B MARKETING
Module 7
Services for Business Markets
CUSTOMEREXPERIENCEMANAGEMENT
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Encompasses the dimensions of the offering Product features
Service aspects
Ease of use
Advertising
Reliability Way problems are resolved
Process of becoming a customer
Management: Sum total of processes that capture
customers subjective thoughts about a firm Surveys & targeted studies at interaction points to
identify gaps between customer expectation andexperience
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-15
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CONTINUUM
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GoodsDominant
ServicesDominant
LubricantsOffice
supplies
AdvertisingMachinery PC Janitorial
&
cleaning
Freight
transport
PGDM
II2013-15
Telecom
systemsMeeting
hotel
Management
consulting
CLASSIFICATION
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Product-related
Delivery
Installation
&maintenance
After-salestraining
Warranty
Marketing
MR
Advertising
Exportadvice
Professional
Consulting
Accountancy
Legal
Information
Inventorymanagement
SCM
Dataaggregation
Financial
Productpurchasefinancing
Billingmanagement
Creditevaluation
Banking &insurance
PGDMII2013
-15
SERVICEATTRIBUTES
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Search Can be evaluated before purchase
High for goods
Experience Can be evaluated during the service delivery process
Credence Can take a long time to evaluateeven after the process
is over
PGDMII2013
-15
FEATURESOFSERVICES
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Intangible
Perishable
Variable Inseparable
PGDMII2013
-15
MARKETINGIMPLICATIONS
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Intangible
Make tangiblethrough
concrete cues
Perishable
Plan capacityaround peak
demand
Pricing andpromotion to
even outdemand
Variable
Develop systemsto minimise
deviation andhuman error
Automate
Prepackage theservice
Inseparable
Effective
screening andrecruitment
Training ofpersonnel to get
it right
Trainingcustomers
PGDMII2013
-15
STAGESOFSERVICISATION
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1
Manufacturing and/or distributioncapabilities
2Services complementing products
3Marketing product-service combinations
PGDMII2013
-15
Responsiveness
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PGDMII2013
-15
SERVICEQUALITY
Reliability
Assurance
Empathy
Tangibles
CUSTOMERSATISFACTION& LOYALTY
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Basic product/service attributesall competitorswould provide
Basic support services that render the offering
more effective or easier to use
Recovery process for quickly fixing problems Extraordinary servicessolving unique problems
/ meeting unique needs sense of customisation
PGDMII2013
-15
THEGAPSPG
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1: Customer expectationCompany understanding
2: Company understandingSetting standards
3: Standards setServicedelivery
4: DeliveryExternalcommunication
GDM
II2013-15
SERVICEFAILURE
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When any individual gap or the sum totalof all gaps become substantially high
Desired Service
Zone of Tolerance
Adequate Service
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-15
SERVICERECOVERY
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Procedures, policies & processes used to resolveservice failure promptly and effectively
Satisfactory resolution often leads to rise in
customer perception of service qualityhigher
supplier loyaltyzero defections
PGDMII2013
-15
ROQ
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Basic assumptions (Rust, Zahorik & Keiningham, 1995) Quality is an investment
Quality efforts must be financially accountable
It is possible to spend too much on quality
Not all expenditures are equally valid
Expenditure on service qualitydiminishing
returns
Managers - Where? How much? When to
reduce/stop?
PGDMII2013
-15
PGDMII2013-15
Improvement
Effort
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5
Customer
Retention
Cost Reduction
WOM
Revenues &
Market Share
Service Quality
Improvement
Profitability
Attraction of New
Customers
Perceived Service
Quality & Customer
Satisfaction
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MARKETINGBUSINESSSERVICES
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Segmentation Narrowerservices are expected to be more
customised
Focus on what customers expect rather than need
Adjusting service capacity effectively
Total demand is made up of numerous smaller, yet
predictable, demand patterns
PGDMII2013-15
SERVICEPACKAGES
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Product equivalent of service Concept of the service
Range of services provided
Quality and level of service
Personnel
Physical product accompanying the service, if any
Service delivery process
Conceptualising the packagebased on benefits
PGDMII2013-15
CONCEPTUALISINGTHESERVICEPRODUCTPGDMII2013Level 1
What benefits
t k
Customer-benefit
C t
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3-15
Level 1
Level 2
Level 3
Level 4
Based on guidelines built
in service offerpeople,
processes, facilities, etc.
Service-delivery
System
More detailed shaping of service concept.
Decisions on & clarification of:
service elements (tangible and intangible)
service forms (in what way, how)
service levels (quantity & quality)
Service Offer
Service
Concept
What general benefits the
service firm will offer
customers seekConcept
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PGDMII2013-15
PRICING
Can be used to manage the timing of demand and
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Can be used to manage the timing of demand and
align with capacity Power utilities (off-peak hours), resorts & hotels
(conferences)
Isolate service profitability
Low marginal cost Cost-to-serve?
Bundling
Pure or mixed
PGDMII2013-15
PROMOTION
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Tangible cues Physical evidences
Service guarantees
Performance documentation
Training and certification of personnel
Corporate brand
Trade journals
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013
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DISTRIBUTION
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Direct Channel members
Internet
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NEWSERVICEDEVELOPMENT
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New offerings that make best use of suppliercapabilities are matched with customers needs
Possibilities
Improved service experiencesthrough the use of
new resources
Customised expert servicesfitting firm capabilities
to specific customer needs
Planned pioneering servicesdeveloping a new
service around firm capabilities in a new context
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THANKYOU!!
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B2B Marketing
Module 8
Channel Management
E-commerce
Channel Management
Set of interdependent organisations involved in the processf ki d t i il bl f
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of making a product or service available for use orconsumption (Coughlin et al., 2006)
The central question
Which channel task will be performed by the firm, and which, if
any, will be performed by channel members?
Tasks
Reducing complexity
Increasing value Transaction efficiency
Quality of service
Marketing Channels
Manufacturer
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Direct
Channels
Indirect
Channels
Agents
Distributors
TelemarketingOnlineMarketing
Direct Sales
Customer Segments
Direct Channels
Feasible when
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Customers are large, well-defined Customers insist on direct sales
Sales involve extensive negotiations with customer senior
management
Control on sales to ensure complete package is properlyimplemented
Requirements
Highly customized solutions - complex
Selling skill, professional account management, in-depth productknowledge
Indirect Channels
Found when
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Markets fragmented and dispersed Transaction amounts low
Buyers typically purchase number of items in one
transaction, often of various brands
Distributors
Key organisational customers of manufacturers
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purchase and hold stock Absorb financial, credit, selling and logistic risks
Source of market information and demand knowledge
Suitable for firms having multi-locational manufacturing
Service focus
Automatic replenishment
Product assembly
In-plant stores
Help in designing and operating supply networks
Classification
General line
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Broad array of industrial products Specialists
One product category or industry
Combination house
Operates in business and consumer markets
Agents
Do not take title and/or inventory of goods
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Work independently, represent several non-competingcompanies
On commission basis
Augment / replace the field sales force
Expert product knowledge coupled with understanding of
market and customer needs
When to use:
Small firms, and large
Limited market potential
Servicing distributors
Offerings-based Channels
Bespoke/complex
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Direct channel Agentsfor entering new unfamiliar geographies
Uniform
Lower inclination to control all exchanges with end-customer
More fragmented and geographically dispersed customer base Distributorsfor products
Franchiseesfor services
Channel Design
Driven by customers
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Dynamic processdepending on customer and competitorbehaviour changes
Customer
Service Financing
Guarantee
Size
Customisation
Information
AssortmentInstallation
Channel PartnerChannel Partner
Manufacturer
Structure Issues
Length
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Optimum number of levels to serve the customer Established vs. new
Breadth
Intensityintensive / selective / exclusive
Multiple channels Inter-firm conflict
Inter-channel conflict
Cannibalisation
Channel Administration
Recruitment
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Motivation Support to the channel
Conflict management
Recruitment Criteria
Financial & Company strengths
Ability to fund
Product
Familiarity
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sales start-up
communications activities Maintain inventory
Standing amongst customers
Management team quality
y
Product lines
Complimentarity
Sophistication
Physical facilities
Marketing skills
Market share
Geographic coverage
Experience with target customers
Salesforce
Delivery performance
Customer service
Trade-show participation
Trade association membership
Commitment
Product mix volatility
% business with single supplier Commitment to targets
Willingness to
maintain stock
invest in communication
invest in sales training
drop competing product lines
Facilitators
Contacts with key industry players
Experience and performance with other suppliers
Channel Performance
Delayed differentiation
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VARs Outsourcing of non-value adding activities
MRO
3PL
Evaluation of Performance
Criterion Factors to consider
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Contribution Supplier profitabilitySales growth
Competence Experience
Product knowledge
Administrative and supervisory skills
Strategic thinking of senior managementLoyalty Commitment & motivation towards supplier
Compliance Acceptance of channel policies & programmes
Adaptability Innovation in handling supplier products
Customer satisfaction Level of servicesService quality
Support to Channel
Incentives
Financial commission discounts
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Financialcommission, discounts
Bonuses
Territorial exclusivity
Providing resources
Involvement of sales team in dealing with clients
Sharing of MR information
Marketing communications
Training of staff
Working relationship approach in dealing
Joint strategic planning
Signalling of long-term commitment
Channel Conflicts
Conflict one channel member perceives anothers
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Conflictone channel member perceives another s
actions to be impeding the achievement of its goals (Gaski,1984)
Types
Goal
Means
Fear of being bypassed
Conflicting perceptions
Conflict Management
Informal mechanisms
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Exit Voice
Loyalty
Aggression
Neglect Formal mechanisms
Distributor council
Third-party referee
Trade association interaction Personnel exchange
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E-commerce
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Types
Inter-organisational: management of
Suppliers
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Suppliers
Inventory
Distribution
Channel
Payment
Intra-organisational Workgroup communications
Electronic publishing
Sales force productivity
B2M: Companies linking to machines via Internet
B2C
Channel Considerations
Channel efficiencies
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Automation of back-office sales functions Personnel and accuracy enhancements
Current marketing intermediaries
Disintermediation
Re-intermediation Channel advantages for potential buyers
Customise contact as per buyers needs
Wide range of referral sources
Always open
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Effect of Internet on Marketing Variables
Pricing
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Buyers bargaining power
Geographical advantages
Commodificationservice-enrichment / branding
Sales force
Complimentarityfocus on problem-solving & relationship-building
Customise product presentations
Incentivise online initiatives
Promotion Search-engine marketing
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Thank You!!
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Rank Brand Value ($ billion) Sales ($ billion)
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1 Coca-Cola 77.8 48.022 Apple 76.6 164.7
3 IBM 75.5 104.5
4 Google 69.7 50.2
5 Microsoft 57.9 72.96 GE 43.7 147.4
7 McDonald's 40.1 27.6
8 Intel 39.4 53.3
9 Samsung 32.9 187.810 Toyota 30.3 224.5
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(Kapferer, 2008)
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Salience
Resonance
FeelingsJudgments
ImageryPerformance
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4. Relationships :
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Partnership
solutions
Sales force
relationshipsJudgments
ReputationPerformance
1. Identity: Who
are you?
2. Meaning:
What are you?
3. Response: What
about you?
4. Relationships :
What about you and
me?
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Salience
Construct Description Concern
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Corporate Identity The central, enduring,and distinctivecharacteristics
Who we are?
Corporate Brand The promise made What we do? Whatmakes us important
and/or different?Corporate Image The beliefs and
impressions heldWhat people thinkabout us?
Corporate Reputation The esteem in whichthe firm is held
Are we good/bad,admired and respected,better/worse than ourcompetitors?
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BrandRelationship
Branded House
House ofBrands
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Buy phase Objective Task
Need recognition Generate Prospecting
Low High
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Need recognition Generateawareness
Prospecting
Developing
product spec
Feature
comprehension
Opening
relationship
Search & qualify
suppliers
Lead generation Qualifying
prospect
Evaluation Performance
comprehension
Presenting sales
message
Selection Negotiation Closing sale
Purchase
feedback
Reassurance Account servicing
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Advertising Trade
shows
Personal
selling
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Information on
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Customers &Prospects
Name / Contactdetails
Company size /Activities /
Purchase process
Key decisionmakers &
influencers
Transactions
Frequency /Timescale
Amount
Productcategories
Promotions
Campaignsexposed
Resultsleads /sales
ProductsIndustry / Market /
Geography
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Product
Logistics
AdaptationAdvice
Service
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Intrinsic value
buyers
Extrinsic value
buyers
Strategic value buyers
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buyers buyers
Straight rebuy Product Product /
services
Modifiedrebuy Product Product /services /
logistics
Logistics / adaptation /advice
New task Logistics Logistics / adaptation /
advice
Selling mode Transactional Consultative Enterprise
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Mi i
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Missionary
Frontline
Internal
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Experience
Commitment
High
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Commitment
Adaptation
Distance
Uncertainty
Time
Low
Pre-relationship
Early
Development
Long-term
Final
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(Millman & Wilson 1995)
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(Millman & Wilson, 1995)
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92Volume of potential business
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29
48
55
61
78
Management discretion
Industry of customers
Size of customer
Comeptitor's actions
Volume of past sales
0 20 40 60 80 100
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