. C h a p t e r 1 3 Products and Services for Businesses Modular: Afjal Hossain Assistant Professor, Department of Marketing PSTU McGraw-Hill/Irwin International Marketing, 13/e

Major Categories U.S. Exports Insert Exhibit 13.1

Demand in Global Business-to-Business Markets Demand in industrial markets is by nature more volatile Stages of industrial and economic development affect demand for industrial products The level of technology of products and services make their sales more appropriate for some countries than others

The Volatility of Industrial Demand Cyclical swings in demand – Professional buyers tend to act in concert – Derived demand accelerates changes in markets Measures to manage volatility: – Maintain broad product lines – Raise prices faster and reduce advertising expenditures during booms – Ignore market share as a strategic goal – Eschew layoffs – Focus on stability Derived demand can be defined as demand dependent on another source.

Derived Demand Example Insert Exhibit 13.2

Stages of Economic Development Stage 1 – the traditional society Stage 2 – preconditions for takeoff Stage 3 – take off Stage 4 – drive to maturity Stage 5 – the age of mass consumption

Technology and Market Demand Trends spurring demand for technologically advanced products: – Expanding economic and industrial growth in Asia – The disintegration of the Soviet empire – The privatization of government-owned industries worldwide The companies with the competitive edge will be those whose products are: – Technologically advanced – Of the highest quality – Accompanied by world-class service

Quality and Global Standards Perception of quality rests solely with the customer – Level of technology reflected in the product – Compliance with standards that reflect customer needs – Support services and follow-through – Price relative to competitive products Relevant quality features

Quality is Defined by the Buyer How well a product meets the specific needs of the buyer The price-quality relationship Product design must be viewed from all aspects of use – Climate – Terrain Total Quality Management (TQM) Lack of universal standards Country-specific standards The metric system

ISO 9000 Certification: An International Standard of Quality Positively affects the performance and stock prices of firms Certification of the existence of a quality control system a company has in place to ensure it can meet published quality standards Generally voluntary EU Product Liability Directive Now a competitive marketing tool in Europe and around the world The ACSI approach

Business Services For many industrial products the revenues from associates services exceed the revenues from the products – Cellular phones – Printers Leasing capital equipment Services not associated with products – Boeing at-sea-satellite-launch services – Ukrainian cargo company space rental on giant jets

After-Sale Services Installation Training Spare and replacement parts – Delivery time – Cost of parts Service personnel Crucial in building strong customer loyalty Almost always more profitable than the actual sale of the machinery or product

Other Business Services Client followers Mode of entry – Licensing – Franchising – Direct investment Protectionism Restrictions on cross-border data flows

Expansion of U.S. Law Firms in Selected Cities Worldwide Insert Exhibit 13.3

Trade Shows: A Crucial Part of Business-to- Business Marketing Secondary methods for marketing: – Advertising in print media – Catalogs – Web sites – Direct mail Trade shows have become the primary and most important vehicle for doing business in many foreign countries Total annual media budget spent on trade events: – Europeans – 22 percent – Americans – 5 percent

Trade Shows: A Crucial Part of Business-to- Business Marketing (continued) Trade shows: – Provide the facilities for a manufacturer to exhibit and demonstrate products to potential users – Allow manufacturers to view competitors products – Are an opportunity to create sales and establish relationships with agents, distributors, franchisees, and suppliers Online trade shows: – Become useful in difficult economic and/or political circumstances – Are obviously a less than adequate substitute for live trade shows

Relationship Marketing in Business-to-Business Contexts It is not a matter of selling the right product the first time, but rather of continuously changed the product to keep it right over time. The objective of relationship marketing is to make the relationship an important attribute of the transaction, thus differentiating oneself from competitors. Using the Internet to facilitate relationship building and maintenance – Cisco Systems – IBM