B2B Marketing Perspectives Anand G Khanna

Business to Business Marketing Course Outline and Session Plan October 2010 to January 2011 Sl. NoSessionTopics 11Introduction to B2B Marketing Ch. 1 # 22&3Understanding Business customers Buying Process and Behavior Ch 2&3 34Segmentation of Business Markets Ch 4&6 45New Product Development & Management Ch 9&10 56Case Study 67&8Competitive Intelligence (own presentation ) 79Pricing Perspectives in B2B Products Ch Distribution channels for Industrial Products Ch 12

Business to Business Marketing Course Outline and Session Plan October 2010 to January 2011 Sl. NoSessionTopics 911IMC for B2B Marketing Ch 15& &13Personal Selling of Industrial Products (own presentation ) 1114&15CRM in B2B Ch &17Key Account Management (Guest lecture ) 1318Case Study 1419Project Presentations 1520Project Presentations

Definition B2B Marketing is also often referred to as Industrial Marketing& few as Secondary Marketing Involves marketing of goods and services to other Business enterprises, governmental and other institutional needs for secondary processing Marketing of goods and services to be sold to the end consumer through the use of a Intermediaries –Processing or Reselling

DEFINITION Definition (CMA) “ Markets for Products & Services to be used for meeting the demands of ultimate consumer by Businesses, Government, Institutions & Resellers”

MAJOR TRENDS IN MARKETING-2010 Recession still continues in the Global Market Place Oversupply in manufactured goods - Developing shortages in commodities –Steel,Oil, Cement Price and margin compression Rising customer expectations Financial resources getting tighter – interest rates High etc

MAJOR TRENDS IN MARKETING-2010 Technology acceleration and shorter product life cycles Rapid innovation and product launch,imitation –me to Rapid loss of competitive advantage Consolidation and convergence in distribution channels

MARKETING TRANSITIONS These market trends have necessitated new ways of thinking: From: To: Transactions Relationships Lowest purchase price Highest delivered value Occasional Monolog Ongoing dialog Economies of scale Economies of scope Customer acquisition Customer retention What benefits might co-operations contribute to marketers in light of these challenges?

Challenges Facing B2B Marketers 1.Understanding deep customer needs in new ways 2.Identifying new opportunities for growth 3.Improving Value Management 4.Competing and growing in Domestic and Global Markets 5.Countering the threat of product and service commoditization – Innovations 6.Convincing C-Level executives to embrace the Marketing Concept and support Marketing programs

Challenges of Business Marketing Business Market composition – Environment -Stakeholders Customers- OEM, Corporate, Distribution Channels,Resellers Market Processes –T&C of Business Business Relationships Business Networks

Challenges of Business Marketing  Exchanges  Information  Technological (Superseding innovations)  Financial (Credit)  Social (Trust)  (Maintaining relationships over long period)  (Tiding over short-term difficulties)

Challenges of Business Marketing Marketing Strategies have to be well defined  Value Analysis  Market Life Cycle  Technology Audit  New Product Development  Segmentation  Role of Internet  What is not different? CONSUMERS People are different and they are different at different times

4Ps Price?Promotion? Place? Product? Challenges of Business Marketing  Why is Business Marketing different?  Difference in customers and all the P’s Each has its own idiosyncrasies

The C’s of Marketing CCustomer –Needs, Solutions, Care CConvenience CCompany (Sales ) Policies CCost CConformance –Specifications &Quality CCompliance –Delivery, Implementation CCash Flows –Working Capital –Profit etc CCompetitor Knowledge

Industrial Vs Consumer Marketing CRITERIAIndustrial MarketsConsumer Markets Market Structure GeographicallyConcentratedDispersed RelativelyFew CustomersMass Customers CompetitionOligopolisticMonopolistic Products Technically More Complex/ Customized Less Complex/ Standardized Service/Delivery/ Availability Very ImportantSomewhat Important

Industrial Vs Consumer Marketing CRITERIAIndustrial MarketsConsumer Markets Buyer Behavior InvolvementFunctionalFamily Predominant Task Motives Rational/ Technical Psychological/ social, less technical RelationshipsInterpersonalNon-personal ReciprocityExpectedNot expected Decision making Distinct, stages observable Unobservable mental stages

Industrial Vs Consumer Marketing CRITERIAIndustrial MarketsConsumer Markets Channel Shorter, more direct, fewer linkages Indirect, multiple linkages Promotion Emphasis on personal selling Emphasis on advertising Price Competitive bidding, Negotiations List prices

B2B Marketing MarketingCustomerManufacturing  Derived Demand  Complex buying processes  Concentrated customer base  Emphasis on technology  High level of customization  Made to order External EnvironmentInternal Organization External LinkageInternal Linkage

Contribution of Marketing within Firm Corporate/Business Unit level The Policy Question - Marketing’s Answer - Tools - Product level Executional Level The Policy Question - Marketing’s Answer - Tools - The Policy Question - Marketing’s Answer - Tools - HOW TO DEVELOP A CUSTOMER FOCUS? Bring the voice of the customer into the organization Market Research, Customer Visits, Market Orientation Audits HOW TO BEST ADAPT TO THE MARKET? Develop a value proposition and competitive positioning based on customer needs Customer and competitor analysis HOW TO BEST TAKE THE PRODUCTS TO MARKET? Develop a value proposition and competitive positioning based on customer needs Consumer Research, Product Testing, Communications Research, Channel Audits, etc. * Marketing Management, The McGraw-Hill Lal, Quelch, Rangan

Customer Development Process Product-Centric Approach Customer- Centric Approach

Customer Development Process Prospects Suspects Disqualified First-time customers Repeat customers ClientsMembers Partners Ex-customers

Market Driven Vs Market Driving Market Driven StrategyMarket Driving Strategy Nature of Product/Service Incremental InnovationBreakthrough Innovation CreatesNew Product, Line ExtensionTruly New Product Platform Customer GoalSatisfy/Delight Current Customers Create Customers Nature of customer Needs ExpressedLatent Nature of Market Research Quantitative Research Methods (e.g. customer surveys, test markets Qualitative Research Methods (e.g. lead-user observations. Focus groups) MOVING UP THE VALUE CHAIN

Paradigm Shift People move purchases to suppliers that give them more for their money -value for money On the internet any person regardless of the position he or she has in and organization will be able to find the best information available on any product,services,providers etc Customers often know exactly what they want – this makes it more difficult for the sales person to influence the choice

Challenges  Enter electronic market as quickly as possible  Learn to make use of new technologies to save money and to increase creativity  Work at maximum speed and discard long term strategic thinking  Develop multiple concepts 24

Challenges Rethink strategies and support systems for the Market Place Customers can change suppliers easily and frequently E-Business,E-Commerce overtaking the present system –Brick & mortar

Challenges  Make strategic alliances  Work upon hybrid channels  Arrest the commodity trend  Manage across national boundaries 26

What do we have to understand? Purchasing (Buying ) Organization Buying Processes Roles of Buying team members (Cross Functional Teams ) Delegation of Powers of Buying Team members – Financial etc Life cycle costing –Value Analysis,Performance Evaluation, Productivity etc Cost of Ownership