1. Managing Business Marketing & Sales Professor Waldemar A. Pfoertsch 弗沃德 Term 4/MBA 2006 Oct. 8 -28, 2007

2. Introduction The Course goal –Deepen their understanding of business-to-business marketing and sales force management, –Gain an appreciation of the linkages between marketing, different channels as well as other functional areas, and –Develop insights into the global scope of the managerial challenges in business marketing and sales The people –Professor –Students

3. Course Content: rigorous analysis of a large number of business marketing situations, guided by certain fundamental concepts an exposure to marketing literature and conceptualizations using the case method extensively

4. Literature: Jenster, Hayes & Smith: Managing Business Marketing & Sales: An International Perspective Copenhagen Business School Press [JHS] Vitale, Rob Giglierano, Joe; Pfoertsch, Waldemar, Business to Business Marketing: Analysis and Practice in a Dynamic Environment Western Publishing, Second Edition 2007 [VGP] Supplementary materials: Required Cases and Readings

5. Book Access The [VGP] chapters will be accessible on the CEIBS server and the [JHS] book is available in the internet: http://books.google.de/books?id=Nx_oba- icowC&pg=PP1&ots=N8mU_QdRqS&dq=j enster&sig=2OXI42cYh5aG3- iTePCZIkXYwfEhttp://books.google.de/books?id=Nx_oba- icowC&pg=PP1&ots=N8mU_QdRqS&dq=j enster&sig=2OXI42cYh5aG3- iTePCZIkXYwfE

6. Assessment: 30 % Class Participation 40 % Group Project (Max. 3 Students, Max. 20 page Academic paper on a Business marketing topic of interest to the group (format Journal of Marketing), or a case study based on your own experience/company interviews and an analysis of the resolution – due date November 2) 30 % Quiz (2 two random tests on an assigned case or Chapter)

7. Session 1 ＆ 2 2006-10-0808:40-11:50 An Overview of Business Marketing [JHS] Ch. 1 & 6 Segmentation [VGP] Ch. 7 Case: Alto Chemical Europe

8. Sales experience The jack sales 3 ton hydraulic jack used good condition U.S. NSN 5120-00-403-0953. Auto Speciaties or Black Hawk mfg

9. What is your sales experience?

10. Sales and Trust Chinas big Challenge

11. The Nature of Business Marketing ~ 50% of all transactions are business to business transactions Business strategy follows business principles Business markets have their own dynamics Business Products and Services vary greatly from Raw Material, Components, Manufactured Products, Capital and Construction Good, to MRO (Maintenance, Repair, Operating Supplies)

12. B2B ≠ B2C Complexity of Industrial Products Derived Demand

13. B2B ≠ B2C Internationality Organizational Buying Buying Situation –new task –straight re-buy –modified re-buy

14. B2B ≠ B2C Buying Center

15. Buying stages Stage 1:Problem recognition Stage 2:General need description Stage 3:Product specification Stage 4:Search for and evaluation of potential suppliers Stage 5:Proposal solicitation and analysis Stage 6:Supplier evaluation and selection Stage 7:Order-routine specification Stage 8:Performance review

16. Brand Relevance in relation to the Buying Situation and the stages in the Organizational Buying Process.

17. Human Factors in Business Decisions

18. Common Bases for Segmentation By product offered By industry in which the customer participates By size of the customer’s company By buying behavior By technology used by the customer By size of account By geographic region

19. Basic Ideas of Segmentation Marketers seek to create market segments that have the characteristics of Measureability Accessibility Substantiality Actionability

20. Measureability Can we understand the size and needs of the market segment? Accessibility Can we communicate with the segment so that serving the segment is possible? Substantiality Does the segment desire that values that an offering presents? Actionability Can we create a competitive advantage with respect to the needs of the segment?

21. Selecting Business Markets Two Stage approach of segmentation All Potential Customers Bases: Location, Size, Industry, etc. Macro Segment 1Macro Segment 2 Stage 1 Stage 2 Basis: Characteristics of the Decision-making Unit X Basis: Characteristics of the Decision-making Unit Y Micro Segment 1 Micro Segment 2 Micro Segment 3 Micro Segment 4

22. Selecting Business Markets Nested Approach to Segmentation Geographic Demographics Operating Variables Purchasing Approach Situational Factors Personal Characteristics

23. SIC and NAICS Codes The North American Industry Classification System (NAICS) has replaced the U.S. Standard Industrial Classification (SIC) system. NAICS will reshape the way we view our changing economy. NAICS was developed jointly by the U.S., Canada, and Mexico to provide new comparability in statistics about business activity across North America. http://www.census.gov/naics/2007/index.html

24. Analytic Approach to Segmentation Analytic approaches need two sets of data: 1)Information about segment size and growth Standard Industrial Classification (SIC) and North American Industrial Classification System (NAICS) codes are useful. 2)Information about each targeted segments needs and buying behavior.

25. Value-Based Segmentation Value: the sum of the benefits minus the sum of the costs Companies should try to choose and address segments that are homogenous in the kinds of value sought. Homogenous Segments Heterogenous Segments

26. Segments and the Value Chain Segment Offering Value Chain a b c d 1 2 3 4 Subgroups with differing needs ADDED VALUE INFRASTRUCTURE HUMAN RESOURCES TECHNOLOGY & TECHNOLOGY DEVELOPMENT PROCUREMENT CUSTOMER SERVICE Key elements of value chain contributing to offering – complicated chain of activities because of complicated offering Key elements of offering ad- dressing sub- groups in the market segment – complex offering Several sub- groups in the market segment due to differing needs

27. Segments and the Value Chain a b 1 2 ADDED VALUE INFRASTRUCTURE HUMAN RESOURCES TECHNOLOGY & TECHNOLOGY DEVELOPMENT PROCUREMENT CUSTOMER SERVICE Value ChainOfferingSegment Key elements of value chain contributing to offering – simpler chain of activities because of simpler offering Fewer key elements of offering ad- dressing sub- groups in the market segment Fewer sub- groups in the market segment due to more homogeneous needs

28. Segmentation by Discovery Sometimes, a business starts serving only 1-2 large customers. Over time, additional customers who seek something similar to the original offering are recruited/attracted. In this way, a new segment is “discovered.” Field marketing personnel must be coached to recognize such discovery opportunities. Proprietary information of different customers must be respected.

29. Factors in Assessing Segment Attractiveness Size of segment Growth rate of segment Intensity of unmet needs Reachability of segment through communication channels Readiness of segment to reach and adopt a solution Likelihood of competitive intensity Sufficiency of channel reach Likely value contribution by channel(s) Match between segment needs and supplier’s strengths Differentiability of supplier’s offering Opportunity to achieve strategic goal by addressing segment Opportunity to achieve learning goal by addressing segments

30. Attractiveness of Segments Market Attractiveness Competitive Attractiveness Channel Attractiveness Internal Attractiveness Attractiveness – Other Considerations

31. Market Attractiveness Market Attractiveness Competitive Attractiveness Channel Attractiveness Internal Attractiveness Attractiveness – Other Considerations Large and fast growing segments are more attractive than smaller and slow-growing segments This necessitates accurately predicting future growth. Other issues include Adaptability of market segments, Existing relationships with the buying center members, and Available customer’s budget

32. Competitive Attractiveness Market Attractiveness Competitive Attractiveness Channel Attractiveness Internal Attractiveness Attractiveness – Other Considerations What is the likely existence or emergence of competition in the market segment? Are there barriers to entry facing competitors? Does being first to market provide an advantage?

33. Channel Attractiveness Market Attractiveness Competitive Attractiveness Channel Attractiveness Internal Attractiveness Attractiveness – Other Considerations It is preferable to target customers already served by well-established marketing channels, or if an existing channel can be adapted, it may serve the segment. When there is no suitable existing channel, a market view of competition may be necessary. How is the existing need being met? Will customers switch?

34. Internal Attractiveness Market Attractiveness Competitive Attractiveness Channel Attractiveness Internal Attractiveness Attractiveness – Other Considerations A segment is more attractive when the segment’s needs can be met by the firm’s core competencies. This is identified through environmental analysis.

35. Segment Attractiveness Segment 1 Major Turnaround Segment 2: Stopping Deterioration Segment 3: Competitive Improvement Segment 4: Specific Area Improvement Potential Size in 2000 (in millions) 2 $187.5 3 $375.0 4 $562.5 4 $562.5 Growth, % by 20024 +100% 4 +100% 1 -50% 5 +150% Need strength543.5 Competitive strength3343 Channel reach5555 Communications reach 4444 Capability fit2552 Price sensitivity2343 Overall attractiveness (sum of attribute scores) 273130.529.5

36. Attractiveness – Other Considerations Market Attractiveness Competitive Attractiveness Channel Attractiveness Internal Attractiveness Attractiveness – Other Considerations Other factors that might cause a segment to rated higher or lower include: Public policy (excessive government regulation can cause a segment to be downgraded) Organizational goals (market share goals may make firms more aggressive in targeting)

37. 3 Basic Concepts in B2B Marketing SegmentingTargetingPositioning