1. Marketing by Business Types Presentation created by Mag. Maria Peer based on the lecture BBM1 – Marketing Mag. Andreas Zehetner FH Steyr FH Steyr

2. Mag. Maria Peer2 Marketing by Business Types Transaction processes of industrial products and services are very heterogenous Transaction processes of industrial products and services are very heterogenous Example: selling standardized screws which are regularly sold to the same customer (eg. integrated supplier to the automotive industry) is to be treated differently to the Example: selling standardized screws which are regularly sold to the same customer (eg. integrated supplier to the automotive industry) is to be treated differently to the selling of complex waste water plants with high investment volume and its significantly higher risk of making a wrong decision. selling of complex waste water plants with high investment volume and its significantly higher risk of making a wrong decision.

3. Mag. Maria Peer3 B2B Marketing The most close-to-the-market business function cannot provide the same programs and tools for these different tasks The most close-to-the-market business function cannot provide the same programs and tools for these different tasks Marketing literature provides certain typologies for B2B companies Marketing literature provides certain typologies for B2B companies

4. Mag. Maria Peer4 Backhaus – defined four different types of business Supplier to industry Investment Systems Products + - - + Dependcencybetween transactions Number of potential customers

5. Mag. Maria Peer5 Backhaus – 4 different types of business - systems The vertical axis indicates if the transactions are independent from each other or if they are dependent. These can be found when customers decide on a certain system, but do not buy all relevant items at once. The vertical axis indicates if the transactions are independent from each other or if they are dependent. These can be found when customers decide on a certain system, but do not buy all relevant items at once.

6. Mag. Maria Peer6 Backhaus: 4 different types of business supplier to industry: The dependency is also strong because of suppliers regulations and quality standards supplier to industry: The dependency is also strong because of suppliers regulations and quality standards The horizontal axis shows the potential number of customers. Very low in the case of supplier to industry or with investment goods – steel plants, ships oil platforms The horizontal axis shows the potential number of customers. Very low in the case of supplier to industry or with investment goods – steel plants, ships oil platforms

7. Mag. Maria Peer7 Backhaus: 4 different types of business With products or systems: the number of potential customers can be very high. Eg. in the construction equipment industry this can be the whole sector. With products or systems: the number of potential customers can be very high. Eg. in the construction equipment industry this can be the whole sector.

8. Mag. Maria Peer8 Product business Markets in the product business are frequently rather anonymous. The buyer is free. There is no dependence on previous purchases. Markets in the product business are frequently rather anonymous. The buyer is free. There is no dependence on previous purchases.

9. Mag. Maria Peer9 Specific marketing considerations for product business Product policy: product development and innovation, range of products Product policy: product development and innovation, range of products Prices: to find the right competitive price – in relation to the benefit provided, define the price strategy carefully Prices: to find the right competitive price – in relation to the benefit provided, define the price strategy carefully Distribution policy: different sales structures, after sales service Distribution policy: different sales structures, after sales service Communication policy:  increasing trust in the product supplied (brand)  providing sufficient information  establishing and maintaining customer relationship  communicating and ensuring competitive differentiation Communication policy:  increasing trust in the product supplied (brand)  providing sufficient information  establishing and maintaining customer relationship  communicating and ensuring competitive differentiation

10. Mag. Maria Peer10 System business Also confronted with a widely anonymous market. But in contrast to product business there is a connection between purchases. The customer has a certain benefit when he decides to stay with the same supplier. Also confronted with a widely anonymous market. But in contrast to product business there is a connection between purchases. The customer has a certain benefit when he decides to stay with the same supplier. System business is found typically in the field of information technology. The decision to buy a certain server system, a software package influences later decisions dramatically. Customer is uncertain. Marketing  reduce uncertainty by standardization or increasing the customer‘s confidence. System business is found typically in the field of information technology. The decision to buy a certain server system, a software package influences later decisions dramatically. Customer is uncertain. Marketing  reduce uncertainty by standardization or increasing the customer‘s confidence.

11. Mag. Maria Peer11 Specific marketing considerations for system business Product policy: supplier has to consider compatibility with his customers existing system (releases in IT- business) Product policy: supplier has to consider compatibility with his customers existing system (releases in IT- business) Price: introductory offers – higher prices with later buyers Price: introductory offers – higher prices with later buyers Distribution: due to complexity of goods – some distribution channels cannot be used, personal sales with experienced sales people  service options, network, after sales services Distribution: due to complexity of goods – some distribution channels cannot be used, personal sales with experienced sales people  service options, network, after sales services Communication: specifies due to interdependence Communication: specifies due to interdependence  Increasing customer‘s confidence  Proving the customer to have made the right decision  Reducing the feeling of risk – provide references and testimonials

12. Mag. Maria Peer12 Supplier to industry business Single customers  long term relationship, customer becomes dependent Single customers  long term relationship, customer becomes dependent Substitution of business partners is difficult = heavy-weight-key account management Substitution of business partners is difficult = heavy-weight-key account management

13. Mag. Maria Peer13 Supplier to industy business Single customer focus: highly specialised solutions, causes advanced interaction and integration of processes on both sides. The customer influences product research and development. 3 main quality aspects: product, lifespan, availability Single customer focus: highly specialised solutions, causes advanced interaction and integration of processes on both sides. The customer influences product research and development. 3 main quality aspects: product, lifespan, availability Integration of product features – products can be used only by one customer Integration of product features – products can be used only by one customer Integration of lifespan: eg. LCD-panel of an industrial testing device – if it drops out it would be more economical to replace the whole item; the quality of seats of cars has to be guaranteed for the whole car‘s average lifespan Integration of lifespan: eg. LCD-panel of an industrial testing device – if it drops out it would be more economical to replace the whole item; the quality of seats of cars has to be guaranteed for the whole car‘s average lifespan

14. Mag. Maria Peer14 Supplier to industy business Integration of availability: the more OEMs (Original Equipment Manufacturer) reduce their own vertical range of manufacture – the more important it is to provide just in time availability  influences the production and logistics process Integration of availability: the more OEMs (Original Equipment Manufacturer) reduce their own vertical range of manufacture – the more important it is to provide just in time availability  influences the production and logistics process Longterm interdependency: products are standardized for the single customer Longterm interdependency: products are standardized for the single customer

15. Mag. Maria Peer15 Specific marketing considerations for supplier to industry business No hit-and-run situations possible No hit-and-run situations possible Product policy <- customer Product policy <- customer Price – regulated by contract and determined by longterm agreement Price – regulated by contract and determined by longterm agreement Communication – most important in the initial phase or loosing the customer Communication – most important in the initial phase or loosing the customer

16. Mag. Maria Peer16 Business of selling and establishing industrial plants Focus: single customer – very few Focus: single customer – very few The complexity of the product is much higher The complexity of the product is much higher The production and delivery process + product = result of project specific development and manufacturing The production and delivery process + product = result of project specific development and manufacturing Decision process – complicated, buying center is more complex, average duration of negotiations quite long Decision process – complicated, buying center is more complex, average duration of negotiations quite long External consulting engineers  selling center – more complex – frequently more suppliers share a project (consortium, syndicate), coordination challenge External consulting engineers  selling center – more complex – frequently more suppliers share a project (consortium, syndicate), coordination challenge Interdependence between suppliers and customers is limited to warranty and service contracts. Interdependence between suppliers and customers is limited to warranty and service contracts. Lifespan 30 years and more. Lifespan 30 years and more.