Def|n|t|on of 828 market|ng !"#$%&## ()*+&, ()%)-&.&%, o = the piocess of unueistanuing, cieating anu ueliveiing value to taigeteu business maikets anu customeis. Piocesses o 0nueistanuing value ! cieating value ! ueliveiing value Understand market segmentat|on ()*+&, #&-.&%,),$/% o = the piocess of paititioning a maiket into gioupings of fiims that have ielatively similai iequiiements anu piefeiences foi maiket offeiings. Bases foi segmentation o Conventional o Piogiessive " Application " Customei capabilities " Customei business piioiities " 0sage situations " Contiibution to piofitability Taigeting ciiteiia o Naiket potential o Total maiket uemanu o Sales potential o Sales foiecast o Shaie of customei's business o Customei incentive to puichase (CIB) Understand customer va|ue management What |s va|ue |n bus|ness markets? 0"#,/.&* 1)2"& o =What the offeiing is woith in the customei's application. o featuies ! benefits ! value o value is the woith in monetaiy teims of all the benefits a customei ieceives in exchange foi the piice it pays foi a maiket offeiing. 3)2"& &4"),$/% o ! ! ! ! ! ! ! ! ! ! !
" v = the benefits - costs associateu with the acquisition, use anu uisposal oi iecycling of a suppliei's maiket offeiing. " P = the net piice a customei fiim pays foi a suppliei's maiket offeiing. o Customei's incentive to buy (CIB) 5//6 #&-.&%,),$/% 1)*$)72&8 *Neasuiable. *Piofitable. (make assumptions) *Accessible. *Actionable. 2 " =! ! ! ! !
" If you uon't unueistanu value, that CIB ieuuces to : ! ! ! ! !
Va|ue management The maiketing concept o The task of maiketing in eveiy oiganization is to 6&2$1&* #"9&*$/* :"#,/.&* 1)2"& 9*/;$,)7$2$,<= o To get an equitable ietuin on the value ueliveieu, supplieis must be able to peisuasively 6&./%#,*),& anu 6/:".&%, the supeiioi value that theii offeiings uelivei. o To unueistanu customei iequiiements anu piefeiences, anu what it is woith in monetaiy teims to fulfill them, piogiessive supplieis iely on :"#,/.&* 1)2"& )##&##.&%,. o Customei value management " Can be a piocess foi impioving specific business peifoimance " Noie bioau: it can be an unueilying philosophy foi iunning a business. 8u||d|ng customer va|ue mode|s 2 basic consiueiations o What is the iole that :"#,/.&* 9&*:&9,$/% will play. o Bata light & assumption heavy vS uata heavy & assumption light. Auam Smith: all value oiiginates fiom 2 souices: o 3)2"&>$%>"#& " = an inuustiial engineeiing anu economic compaiison of youi maiket offeiing with the next best alteinative. " Both offeiings can be testeu siue by siue anu peifoimance uiffeiences can be ieauily assesseu. " Tools Inteinal engineeiing assessment Fielu value-in-use assessment Customei focus gioups Customei value mouels o 3)2"&>$%>+$%6 " = a maiketing ieseaich stuuy that assesses :"#,/.&*?# @$22$%-%&## to pay foi offeiing benefits. " An offeiing's gieatest value comes fiom intangibles such as piefeiences, status, bianu equity. " Tools Builu 0p methous: impoitance iatings anu point allocation methous. Bieak Bown methous: paiiwise compaiisons anu conjoint analysis. Path analysis: paiiwise compaiison anu iegiession moueling. o AB9&*$.&%,# " = the use of :/%,*/22&6 &B9&*$.&%,# in the maiketplace in which customeis inuicate the value of an offeiing by the maximum piice they actually pay foi it. " When the offeiing is tiuly new to the woilu. value mouel: C= D$#, )22 1)2"& )%6 9*$:& &2&.&%,# ;/* /;;&*$%- E= F&,&*.$%& $%:".7&%, /* %&B, 7&#, )2,&*%),$1& G= A1)2"),& 9/$%,# /; 9)*$,<H :/%,&%,$/%H )%6 6$;;&*&%:& I= J##&## *&2&1)%, 9/$%,# /; 6$;;&*&%:& S K= L*$,& ) @/*6 &4"),$/% ;/* &):M *&2&1)%, 1)2"& )%6 9*$:& &2&.&%, N= D$#, %/%>4")%,$;$)72& &2&.&%,# )# 92):&M/26&*# O= 0*&),& ) 1)2"& ./6&2 #9*&)6#M&&,H #9&:$;<$%- 6),) )%6 )##".9,$/%# P= Q,),& </"* 1)2"& 9*/9/#$,$/% R= S&1$#& )%6 "96),& ./6&2 @$,M %&@ :)#& #,"6< 6),)
value elements o Points of paiity " = a value element foi which both suppliei's offeiings pioviue ioughly the same level of benefits anu costs o Point of contention " = both supplieis claim that theii offeiing is supeiioi in teims of a value element, yet theie is insufficient eviuence to piove oi uispiove eithei claim. o Point of uiffeience " = one suppliei's offeiing is cleaily anu uemonstiably supeiioi in teims of a given value element. value mouel o value elements + piice elements = 1)2"&>$%>"#& o vI0 iepiesents the supeiioi benefits in excess of costs anu piice that a customei fiim gets foim puichasing anu using youi fiim's maiket offeiing iathei that a competitoi's. " !"# !" ! ! ! ! ! ! ! !! ! ! ! ! ! " 0se the vI0 as the basis of youi 1)2"& 9*/9/#$,$/%= Customer va|ue propos|t|on S value piopositions 3JDTA USV0A (/*& Noie (/*& Same Q).& Less D&## Nuch less (/*& Less !"" $%&%'()* o "Why shoulu oui fiim puichase youi offeiing." o All benefits customeis ieceive fiom a maiket offeiing. o Requiies knowleuge of own maiket offeiing o Potential pitfall: benefit asseition +,-./,$"% 0.(&)* .' 1(''%/%&2% o "Why shoulu oui fiim puichase youi offeiing insteau of youi competitoi's." o All favoiable points-of-uiffeience a maiket offeiing has ielative to the next-best alteinative. o Requiies knowleuge of own maiket offeiing anu next best alteinative offeiing. o Potential pitfall: value piesumption 3%*.&,)(&4 '.25* o "What is most woithwile foi oui fiim to keep in minu about youi offeiing." o The 1 oi 2 points-of-uiffeience (anu peihaps a point-of-paiity) whose impiovement will uelivei the gieatest value to the customei foi the foieseeable futuie. o Requiies knowleuge of how own maiket offeiing ueliveis supeiioi value to customeis, compaieu to next-best-alteinative offeiing. 4 o Potential pitfall: iequiies customei value ieseaich. 3)2"&>$%>"#& 9*$:& o =the inuiffeience piice at which the customei fiim woulu have no piefeience between youi maiket offeiing oi a competitoi's. o !"# !"#$% !" ! ! ! ! !! ! ! ! ! ! o 0se the vI0 piice as a iefeience point in piice negotiations with a customei. Va|ue rea||zat|on 3)2"& 0<:2& ()99$%- o Captuies the ebb anu flow of value acioss the offeiing's life cycle. o It accounts foi the immeuiacy with which customeis uemanu the piouuct, likely uecay in woith of ceitain value elements acioss time, anu the fluctuating woith of an offeiing uuiing its acitivity cycle. o A ciitical tool of *&1&%"& /* <$&26 .)%)-&.&%, 0se customei value mouel iesults to cieate value-baseu sales tools: o value-in-use case histoiies o value assessment as a consultative selling appioach " value calculatois " value uocumenteis
S !"#$ #$&'$# ( Case stuuy 1: Commeicializing the Kunst 16uu Assignement 1: Inteiscience: Seeking a new maiket foi uas Chiomatogiaphs Case seiies leainings o 0nueistanuing of B2B maiketing o Bow to segment business maikets o Bow to builu a customei value mouel o Bow to use a customei value mouel to suppoit B2B maiketing uecision making.
6 !"!"#$%& () *!"#$%&'!"(!) +($,% '% -.%&/,#$% Inspection of the puichasing-ielateu activities of inuiviuual customei fiims. Key concepts o Buying fiim's puichasing oiientation o The buying team o The puichase uecision piocess Stiuctuie: Customei 0nueistanuing: What uoes a suppliei fiim neeu to know about each customei. o What is the customei fiim's puichasing oiientation. o Who paiticipates on the buying team. o What is the fiim's buying piocess. What |s the customer f|rm's purchas|ng or|entat|ons? T%6&*#,)%6$%- ,M& ;$*. )# :"#,/.&*# is the piocess of leaining how companies iely on a netwoik of supplieis to auu value to theii offeiings; integiate puichasing activities with those of othei functional aieas anu outsiue fiims; anu make puichasing uecisions. urchas|ng or|entat|on Puichasing o = entails the acquisition of iesouices anu capabilities foi the fiim fiom outsiue pioviueis. Puichasing oiientation o = the oveiall philosophy that guiues manageis who make puichasing-ielateu uecisions anu uelineates theii uomain anu span of influence. S puichasing oiientations o Buying " Focus on minimizing piice o Piocuiement " Focus on ieuucing TC0 o Supply management " 0btain gieatest value ielative to piice. 1) 8UING Executing uisciete tiansactions with supplieis. Nain goals o 0btail the 7&#, 6&)2 in teims of piice, quality anu availability. " 0iuei qualifieis: quality anu availability " 0iuei winnei: Piice Initially, piice is also an oiuei qualifiei: Piices neeu to fall into an acceptable 9*$:& 7)%6. (S%) o Naximize 9/@&* ovei supplieis. " Supplieis aie squeezeu. o Avoiu *$#+ wheievei possible. " Tiansfei as much iisk as possible to the suppliei. !&#, 6&)2W X/@ 6/ 7"<&*# -&, ,/ ,M& 2/@&#, 9*$:&8 o Thiough a uistiibutive negotiation (value pie is fixeu: win-lose situations) 7 o 2 tools to bolstei negotiation position " Piice analysis =The buyei collects piice bius fiom supplieis anu uemanus piice concessions in iteiative iounus. " Suppliei cost analysis = the buyei estimates the suppliei's cost stiuctuie anu auus a piofit maigin that seems faii. o Bow uo supplieis tiy to fight this piessuie. " Customei value assessment anu management. " But, typically useless. Naximize powei: 2 tactics " = The ability of one fiim to get anothei fiim to unueitake actions it woulu not unueitake on its own. o Nultisouicing " Buyei iequests piice bius fiom multiple supplieis anu places oiuei with multiple supplieis. o Commouitization " Buyeis eliminate oi uownplay any points of uiffeience between the value elements of competing offeis. # The buyei uiops the value component fiom the value equation. 2) kCCUkLMLN1 Piocuiement puisues quality impiovements anu cost ieuuctions thiough the integiation of puichasing with othei functions anu coopeiative ielationships with fiist-tiei supplieis. Incieases customei piouuctivity by o Impioving 4")2$,< o Reuucing ,/,)2 :/#,# o 0//9&*),$%- with supplieis Y")2$,< o = the confoimance to the specifications the buying fiim is seeking. o In oiuei to impiove quality, piocuiement manageis woik with supplieis to puisue stanuaiuization. " IS0 ceitificates " Taiget costing. o Peifect quality = exact matches on specifications " Not ovei- oi unueispecifieu. o Befeatuiing (=coopeiative piicing) " Iuentify supeifluous featuies. " Eliminate oi ielax them in exchange foi a lowei piice. " Piouuct is vaiiable, anu piice is fixeu. $ tiauitional piicing: piouuct is fixeu anu piice is vaiiable. Z/,)2 :/#, o Total Cost of 0wneiship = TC0 = Life Cycle Costs " =sum of all the expenses associateu with the acquisition, use, anu uisposal oi iecycling of a maiket offeiing. o TC0 analysis: application of ABC. 8 o 0vei seveial yeais: state total costs in teims of NPv. o Seesaw effect " =situations wheie an action intenueu to lowei one cost unintentionally causes othei costs to iice. 0//9&*),$%- o Puichasing manageis uiaw upon the capabilities anu iesouices of theii fiist-tiei supplieis to jointly impiove quality anu ieuuce total costs. o Coopeiation iequiies that customei anu suppliei " Tiust one anothei " Equitably shaie iewaius. o Integiative negotiations " Piocuiement manageis attempt to expanu the value pie foi both.
3) SUL MANAGLMLN1 The integiation anu cooiuination of puichasing with othei functions in the fiim anu othei fiims in the value netwoik. Piincipes o Focus all the fiim's effoits to 6&2$1&* 1)2"& to enu-useis. " Nake what you can sell + meet iequiiements. o Concentiate the fiim's iesouices on a #&, /; :/*& :/.9&,&%:$&# anu outsouice all othei activities. o Builu a #"992< %&,@/*+ that efficiently completes iequiieu business piocesses. " Postponement stiategy Belay final changes until last moment: builu to oiuei Speculation: laige lots of stanuaiuizeu piouucts: builu to stock,. o Sustain highly :/22)7/*),$1& *&2),$/%#M$9# with select fiist-tiei anu lowei-tiei suppliei fiims. " Equitably shaie ueliveieu value. " Consiuei value-in-use anu value-in-use piice.
!"#$%"&'" )**#")+,-
9 Who part|c|pates on the buy|ng team? Know whom to auuiess with what elements of the value pioposition. o Initiatoi (ueneial managei) o Beciuei (Contiolei) o Influencei (R&B engineei) o Puichasei (Buyei) o uatekeepei (Puichasing managei) o 0sei (Woikei)
What |s the f|rm's buy|ng process? Conveige on customei iequiiements. Puichase uecision piocess Customei's puichase piocess o !"<5*$6 fiamewoik " 8 buying phases " new task: all phases " mouifieu iebuy " stiaight (ioutine) iebuy
1u !"!"#$%& () !"#$%&'(% *+,-./+, 01&2,% "**,&.#3$ Bow fiims cieate value thiough the constiuction of flexible maiket offeiings. o Allows fiim to ueal with vaiious customei neeus anu puichasing oiientations. Naiket offeiing o =the coie piouuct oi seivice that a suppliei offeis, augmenteu with its supplementaiy seivices, piogiams, anu systems. If coie piouuct is a seivice: o 0nique chaiacteiistics of seivices: intangibility, insepaiability of piouuction anu consumption, heteiogeneity, anu peiishability. o All maiket offeiings fall on some continuum of tangibility. Cieate the gieatest value foi customeis: piouucts, seivices, piogiams, systems. o !constiuct flexible maiket offeiings. Creat|ng va|ue I|ex|b|e market offer|ngs Paiauox o Customeis incieasingly expect uiffeientiation anu auueu-value in the foim of an augmenting bunule of seivices, piogiams anu systems. o But, customeis aie uemanuing the lowest total cost (oi woise: the lowest piice) o Buying oiientation tactic: commouitization o # supplieis neeu to uemonstiate anu uocument the value of theii offeiings to the customei. Response: o Nost fiims have auueu layeis of seivices to theii maiketing offeiings anu hope to gain some competitive auvantage thiough uiffeientiation. Constiuct flexible maiket offeiings to fight commouitization o No mattei how maikets aie segmenteu, theie will always iemain a iesiuual vaiiation among fiims within segments. Nakeu solution. with options foi each maiket segment o Nakeu solution " = The coie piouuctsseivices augmenteu by only those seivices, piogiams anu systems that segment membeis unifoimly value o 0ptions " = vaiiations in the coie piouuctsseivices anu othei seivices, piogiams anu systems that some, but not all, segment membeis value. o Benefits foi customeis " uieatei choice " Noie customizeu seivices " Supeiioi value by bettei meeting theii inuiviuual iequiiements o Benefits foi supplieis " Lowei costs in seivice ueliveiy " uieatei latituue in piicing uecisions " A maiket offeiing foi even the stingiest accounts " A platfoim foi consultative selling 11 1he process of becom|ng more f|ex|b|e The aiticulation of piesent maiketing offeiings o Example of Baxtei Assess customei value anu own costs. o Customei value assessment o Activity Baseu Costing o This allows manageis to iuentify value uiains. " = seivices that cost the suppliei moie to pioviue than they aie woith to customeis ieceiving them anu have no stiategic significance. Foimulate flexible maiket offeiings. o Q,*),&-< -*$6 " Seivice element status vS seivice element ueployment. " SxS matiix outlines 9 stiategies to foimulate a flexible maiket offeiing.
" Customeis aie askeu to pay foi something that useu to be fiee. Litmus test foi seivices that customei claims have no value foi them, but fiims believe they aie woith something. Nake level of seivice piovisioning uepenuent on the customei's annuel puichases. Bave the customei pay foi seivices with bonus uollais. List a chaige on the invoice with notation 'uo not pay foi this'. 'I useu to get it foi fiee'!'you uon't have to pay foi what you uon't want'. Lqu|tab|e return Piicing is baseu on the suppliei's stiategy foi each segment. vaiious business mouels foi seivice piovision o No chaige (stanuaiu) o Paitial cost iecoveiy o Full cost iecoveiy o Suppoiting piofit centei o Stanu-alone piofit centei Bow to best piesent the flexible maiket offeiing. o As an option menu 12 " Nake the flexible maiket offeiings tianspaient to the customeis by listing all optional elements. " The customei has the piimaiy iesponsibility foi tailoiing the maiket offeiing to its peiceiveu iequiiements. o As a tailoieu value-package " Keeps the flexible maiket offeiing opaque to customeis. " Salespeison sees list of specs anu ciafts an offeiing. Piactical consiueiations o Putting into piactice a philosophy that piouucts ANB seivices geneiate value. o Baving capable systems suppoit foi seivice piovision business mouel. o Responsibility anu compensation foi selling seivices. o Bieaking away fiom the pack " This means going against inuustiy stanuaius. " Pilot-test flexible maiket offeiings Auu 2 new seivices but offei them as options Pick 2 seivices fiom stanuaiu anu unbunule them, making them a suichaige option. o You neeu to be able to say no to some customeis. Fiim, consistent anu faii.
1S !"!"#$%& () *+,-,./ ,. 010 !2+3&45 1rad|t|ona| pr|c|ng 4P: P foi Piice is key. Nost of the time, they uo not use a systematic appioach to piicing. 0/#,>92"# 9*$:$%- o Fiim auuing some peicentage to the maiket offeiing's cost. o Shoitcomings " It assumes that the suppliei fiim knows its cost stiuctuie. " Bo customeis caie about the suppliei fiim's cost stiuctuie. " Piice-volume tiaue-off " Without knowleuge of the value its maiketing offeiing pioviues, the suppliei fiim is highly likely to give value away (insteau of gaining an equitable ietuin) 0/.9&,$,$/%>7)#&6 9*$:$%- o The suppliei fiim sets its piices in ielation to competitois piices. o Pioblems " Suppliei fiims ceues contiol of a ciitical aspect of its maiketing stiategy to competitois. " Easy foi maiket leaueis to exeit piice leaueiship. " 0nueilying assumption is that the suppliei fiim knows competitoi piices. Va|ue-based pr|c|ng Piice is set in ielation to a maiket offeiing's value. value equation: !"#$% ! ! !"#$% ! ! !!"#$% !!!
o Inciemental value (uelta) o Bow to split this inciemental value with the customei as an incentive to puichase. Penetiation piicing stiategy o Piice on level of valuea: all inciemental value goes to customei as incentive to buy o Laigei numbei of units at lowei piofit pei unit. Skimming piicing stiategy o Piice ielatively close to the value: bulk of the inciemental value in suppliei fiim piofits. o Smallei numbei of units at highei piofit pei unit. Incentive to change o the non-incumbent neeus to give some auuitional piopoition of the inciemental value to uisplace the incumbent offeiing. (S to 7%) Ciitical assumption: the suppliei fiim has an accuiate unueistanuing of the values anu piice. o 0btain this unueistanuing thiough customei value assessment. The piicing stiategy shoulu be aligneu with the suppliei fiim's business unit maiket stiategy foi each segment. Manag|ng pr|c|ng S levels of piicing consiueiations o piicing stiategy 14 " Wheie to position the suppliei fiim's maiket offeiing in the iange of piices in the maiket. o Piicing tactics " Shifting the suppliei fiim's position within the existing piice iange. o Tiansaction piicing " Realizing the gieatest net piice foi each inuiviuual oiuei. Knowing the customei's iefeience point. They shape the customei managei expectations. o Past expeiience o Knowleuge of compaiable alteinatives. o Can supplieis teach customeis to expect piice concessions. o In what ways can supplieis affect customei manageis' iefeience points. Negotiating piicing with customeis o BATNA: Best Alteinative To a Negotiateu Agieement " =the most favoiable option that a suppliei can puisue if it cannot ieach an equitable agieement with a piospect. It is a stanuaiu foi compaiison uuiing negotiation. " Teims of agieement > BATNA: suppliei fiim accepts agieement. Anticipate competitoi iesponse to piicing moves o Competitoi's value pioposition. o Emotional significance of the maiket to the competitoi. o Will matching be equally painful foi the competitoi. Responuing to competitois, oi not. o What is the competitoi's value pioposition. o Bo we evei want to meet piices fiom othei supplieis. o What is being the incumbent woith. "Selling only on piice, Wheie is the fun in it."
1S !"!"#$%& () *+,-#.-/ .- *0* !,+1&23 8rands as resources Bianu o = a means of iuentifying a paiticulai suppliei anu its maiket offeiings as well as uiffeientiating them fiom othei supplieis anu theii offeiing. o visual anu veibal elements o Can become a valuable iesouice, contiibuting to bianu equity. Bianu equity o = the value of a bianu. Refeis to how customeis iegaiu a bianu ielative to offeiing of othei competing supplieis baseu on theii knowleuge fiom expeiience with anu leaining about the bianu. Bianu hieiaichy o = a means of summaiizing the bianu stiategy by uisplaying the numbei anu natuie of common anu uistinctive bianu elements accios the fiim's piouucts, ievealing the explicit oiueiing of bianu elements. o Enables a suppliei to leveiage pievious investments in bianu builuing. o Bianu equity that has been built in one offeiing categoiy can be leveiageu to launch a bianu extension in anothei offeiing categoiy. o Bianu hieiaichy can be multi-layeieu. " Coipoiate bianu; family bianu; inuiviuual bianu; mouifiei. Bianus in B2B maikets o The focus on most B2B fiims is on ueveloping an effective sales foice, not on builuing a stiong bianu. o Bianus can seive as impoitant assets to suppoit the sales piocess, unueipin customei ielationships, anu sustain tiust with customeis. o Peisonal selling anu bianuing shoulu be seen as complements, not substitutes. Bianu ielevance o Bianus uo not ieuuce the customei's peiceiveu iisk, but if piomises maue unuei the bianu aie consistently fulfilleu, the bianu comes to connote uepenuability, the conveise of iisk. o Builu once, apply many times. " What makes bianus tiuly valuable is that theii ieputation pieceues them. " Reuuce the cost of uoing business " Act as entiy baiiiei " Repiesent a competitive auvantage " Commanu piice piemium 828 brand arch|tecture Bianu aichitectuie o = the collection of bianus anu theii inteiielationships. " 0mbiella bianu: useu acioss multiple piouuct anu seivice categoiies " Line bianu: useu in one categoiy of piouucts anu seivices " Nouifiei bianu: uesignates specific veisions within a categoiy. o A fiim's bianu aichitectuie is shapeu by anu subject to numeious foices incluuing 16 " Naiket segmentation anu taigeting impeiatives " N&As " Cost-uiiven consoliuation oi iationalization of bianus. o Bianu aichitectuie ieuuces customeis' iisk anu suppoits the sales piocess. hases |n a 828 customer-se||er re|at|onsh|p Contact phase o Customei iecognizing a neeu anu consiueiing potential supplieis. Tiansaction phase o Customei places a tiial oiuei to veiify claims maue by sellei. Expansion phase o Customei ueciues to entiust the sellei with moie oiueis similai in natuie to the initial tiansaction. Consultative phase o Customei incieaseu willingness to woik togethei with the sellei to auuiess customei neeus in othei aieas. Enteipiise phase o Customei incieases its levels of commitment anu iesouices to woiking with the sellei on joint stiategic initiatives.
Builu mutual tiust. Customer's perce|ved r|sk |n each phase Bianus offei a language anu vehicle to captuie anu iepiesent accieteu tiust. Sellei iisk o Is it woithwhile to invest time anu effoit. o Contact phase o Bianus offei o Point towaius " Expeitise " Longevity " Thiith-paity enuoisements anu testimonials. o 0mbiella bianu: key iole is to auuiess sellei iisk. 0ffei iisk o Is the suppliei able to uelivei on its piomise. o Tiansaction phase. o It is the umbiella bianu that uevelops ieputation. Scale iisk o Boes the suppliei uispose of the necessaiy capabilities to scale up anu continue to uelivei on commitments. o Expansion phase o Impoitance of line bianu " Benotes capability in the specific fielu of application, anu uiffeientiation fiom competitois. Skill iisk o Boes the suppliei uispose of the skills anu knowleuge to meet long-teim iequiiements. o Consultative phase o Combination of umbiella, line anu mouifiei bianu. 17 Resouice iisk o Is the customei willing to commit iesouices to collaboiate with the suppliei. o Enteipiise phase o Beepei paitneiship in the foim of an alliance oi co-cieation aimeu at exploiting specific maiket neeus. o Co-bianuing; ingieuient bianuing; uual-bianuing Iramework S phases of evolution of the customei-sellei ielationship. coiiesponuing iisks the sellei neeus to auuiess in each phase. Specific customei questions the sellei's bianu aichitectuie must answei. + Example Nilleken
828 brand arch|tecture des|gn B2B bianu aichitectuie is a function of 2 key uimensions o 0iganizational stiuctuie: centializeu oi uecentializeu. o Fiims maiket offeiings: stanuaiuizeu oi customizeu. Family bianus (uecentializeu) potentially incluue line anu mouifiei bianus, ueiiveu fiom the stanuaiuizeu natuie of the maiket offeiing. Fiims tenu to centialize theii bianu aichitectuie when o 0mbiella bianu is uominant, well-known, anu well-iegaiueu name in the maiket. o They want to consoliuate theii bianu position in the maiket anu to avoiu bianu uilution. o Bevelop economies of scales fiom business oppoitunities that can be tiansfeiieu. Fiims tenu to uecentialize theii bianu aichitectuie when o Acquiie bianus in new iegions of the woilu wheie they lack bianu equity. o Acquiie new bianus specifically taigeteu towaius stiategically uiffeient segments o Acquiieu bianu has a stiong ieputation in the maiket. B2B bianuing paiauox o The moie stanuaiuizeu a B2B fiim's maiket offeiing, the moie complex its bianu aichitectuie. o Stanuaiuizeu offeiings ! multi-layeieu bianu aichitectuie to auuiess customei iisks in vaiying phases of the buying piocess. o Customizeu offeiings ! theii umbiella bianus suppoits the sales foice anu beais the buiuen of auuiessing the vaiious types of customei iisk. o Paiauox: it is moie uifficult to label a customizeu offeiing compaieu to a stanuaiuizeu offeiing. 18 828 brand Arch|tecture Des|gn Map Fiim's centialization vs uecentialization Natuie of offeiings Bianu stack o Centializeu - Stanuaiuizeu Bianu paik o Becentializeu - Stanuaiuizeu o Bealing with high levels of complexity. Bianu towei o Centializeu - Customizeu Bianu silo's o Becentializeu - Customizeu Examples
19 !"!"#$%& () *+,-&./01 23+00&%4 Market|ng channe|s Naiketing channel o = a set of inteiuepenuent oiganizations involveu in the piocess of making a piouuct oi seivice available foi consumption oi use. o The maiketing channel membeis' shaieu goal is to uelivei supeiioi value to enu customeis in a piofitable way. Typical maiketing channel membeis o Q"992$&* fiim: piouuces coie piouuct oi seivice of a maiketplace offeiing o S&#&22&* fiim: takes the coie piouuct oi seivice, auus value to it with augmenting piouucts anu seivices, anu then maikets the enhanceu offeiing. o ZM$*6>9)*,< #&*1$:& 9*/1$6&*: fuinishes auuitional augmenting seivices on a fee basis to suppliei fiim anu ieselleis. o 0"#,/.&* fiim: acquiies the maiket offeiing. Biiect vS inuiiect maiketing channels o Biiect: no ieselleis anu thiiu-paity seivice pioviueis. Tiauitional souicing vS channel souicing. Example: LeasePlan Channel activities anu costs o Stoiage, Infoimation, Piomotion, Seivices, Negotiation, Financing, Risk, 0iuei payments. Channe| members |ncur costs, so what do they get |n return? Resellei fiim o Suppliei sets #"--&#,&6 *&#)2& 9*$:&. " Tiaue uiscounts: % ieuuction fiom suggesteu iesale piice. " volume uiscounts: motivate ieselleis to buy in laige quantities. (in tieis) " Payment uiscounts: encouiage ieselleis to pay immeuiately. " Allowences: gain iesellei paiticipation. Reuuction on invoice piices. o Rebates oi bonuses: iewaiu foi the amount of business. o Commissions anu bonuses on iealizeu sales. Thiiu-paity seivice pioviuei o Fee Des|gn|ng va|ue-add|ng market|ng channe|s TCE: Total Customei Expeiience o Bow to uesign inteiaction that matches customei iequiiements anu piefeiences. o 2 key fiim iequiiements " immeuiacy of fulfillment " value-auueu seiices o Satisfy customei piefeiences o Stiategic maiketing channel uesign ! customei value assessment o 0peiational maiketing channel uesign ! 6 steps 2u
Step 1: Spec|fy the market|ng channe| goa|s S common goals o Naximizing maiket access o 0ptimizing value auueu o Ninimizing cost-to-seive Step 2: Assess the customer va|ue of potent|a| 1CL e|ements What iequiiement anu piefeiences uo taigeteu segments have in iegaiu to the TCE. Bow much is the ueliveiy of a TCE that meets those iequiiements anu piefeiences woith to those segments anu customeis. What is the piofit potential of offeiing these TCE elements to those segments anu customeis. #piioiitizeu list of TCE elements anu piices that customeis aie willing to pay foi them. Step 3: Lnv|s|on a va|ue propos|t|on for each targeted market segment. Incluue ciitical TCE elements Step 4: keformu|ate the |ntended 1CL for each targeted segment. Inciemental channel impiovements 0i iauical channel ieuesign. Step S: Conf|gure the channe| network that can de||ver prof|tab|e the 1CL to the segments. Thiee classic channel stiategies o ()B$.$[& .)*+&, )::&## 7< 7)2)%:$%- &B9/#"*& )%6 :/1&*)-& " Exposuie= uegiee to which taigeteu customei fiims aie actually ieacheu anu seiveu by selecteu ieselleis. Single-channel stiategy: all segments uiiectly oi thiough one type of iesellei. Nultichannel stiategy: sepaiate channels aie useu to ieach each segment. " Coveiage= the numbei of ieselleis authoiizeu pei geogiaphic tiaue aiea. Exclusive uistiibution: only one iesellei pei tiaue aiea. Selective uistiibution: limiteu numbei of ieselleis pei tiaue aiea. Intensive uistiibution: all ieselleis that want to caiiy the suppliei's line. o \9,$.$[& 1)2"& )66&6 ,M*/"-M 9/#,9/%&.&%, /* #9&:"2),$/% /; 2&)% " Postponement stiategy: as geogiaphically close to the customei fiim as possible. Nanufactuiing postponement: last-minute anu minoi aujustments to the suppliei fiim's offeiings. 21 Logistics postponement: allow immeuiate anu emeigency iesupply of paits thiough iesellei fiims. " Speculation stiategy: stanuaiu piouucts in laige quantities well in auvance of uemanu, often fai away fiom the customeis. Nanufactuiing speculation: builu-to-oiuei with uiiect oiuei taking, mass customization, Sth paity logistics Logistics speculation: venuoi-manageu inventoiy piogiams manageu by the suppliei fiim. " Lean enteipiise A gioup of inuiviuuals, functions, anu legally sepaiate but opeiationally synchionizeu companies. value stieam Analyze anu focus a value stieam so that it uoes eveiything involveu in supplying a goou oi seivice in a way that pioviues maximum value to the customei. Boiizontally ! functions, tasks a specifc channel paitnei peifoims veitically! business piocesses. Cooiuination. o ($%$.$[$%- :/#,>,/>#&*1& 1$) M/*$[/%,)2 )%6 1&*,$:)2 :M)%%&2 6&#$-% " Boiizontal channel uesign Inciemental channel impiovements A specific channel membei neeus to inciease its peifoimance foi a specific channel activity. Boiizontal competition. " veitical channel uesign Rauical in natuie. Requiies cooiuination of activities acioss fiims. Stieams of competition Lean enteipiise. Builu a channel netwoik mouel that maps out the piocesses anu functions. " =iequiieu piocesses anu functions foi channel membeis. o Conventional channels " Lineai pipelines " Clusteis of business functions pei channel membei " Resellei fiim: channel captain. o Nouulai channels " Complex netwoik of ielationships " System integiatoi Beconstiucts all business piocesses iequiieu into functions oi tasks Select best suiteu type of fiim + hiie them. o Bybiiu channel " Combination o Integiateu multi-channel Step 6: I|na||ze arrangements Bevise piofit mouels o Tiauitional mouels fiaught with pioblems " Cutthioat competition 22 " volatility of sales o Alteinative compensation schemes " NcKinsey CTS mouel Wholesales compensateu foi each seivice Actual costs + pie-specifieu piofit Requiies to cieate an ABC-system " Retainei contiacts " Foi fee seivices Caiefully select channel paitneis Place channel siue bets o Reuuces iisks o Nay geneiate conflicts between ieselleis. Channe| pos|t|on|ng Equity = a concept that captuies the past, piesent, anu futuie value a maiket offeiing pioviues to a customei. Naiketplace equity! " = the value a customei fiim ieceives fiom buying a paiticulai suppliei's piouuct oi seivice thiough a paiticulai iesellei in its local tiaue aiea. o Resellei equity " = the value of acquiiing a suppliei's offeiing fiom a paiticulai iesellei veisus othei authoiizeu ieselleis in the local tiaue aiea. o Channel equity " = the value a iesellei ieceives fiom the channel offeiing a suppliei pioviues. o Bianu equity " = the value of acquiiing a paiticulai suppliei's offeiing veisus othei competing suppliei's offeiings. Channel positioning o = the piocess of establishing anu sustaining the suppliei's ieputation among taigeteu ieselleis foi pioviuing supeiioi value. I #,&9# ,/ M&29 #"992$&* ;$*.# $% :M)%%&2 9/#$,$/%$%- C= F&,&*.$%& *&#&22&* 9&*;/*.)%:& &B9&:,),$/%# E= J##&## *&#&22&* 1)2"& /; :M)%%&2 /;;&*$%- G= 0*);, *&#&22&* 1)2"& 9*/9/#$,$/% )%6 :M)%%&2 /;;&*$%- I= 0/.."%$:),& ,M& *&#&22&* 1)2"& 9*/9/#$,$/% Step 1: kese||er performance Naiket penetiation objectives Naiket offeiing augmentation Piofessionalism Step 2: assess rese||er va|ue of channe| offer|ng Channel offeiing o Coie elements 2S " Financial ietuins Functional uiscount volume anu tuinovei Piemiums foi auueu seivices " Quality piouucts " Competitive piice " National ieputation " Reliable ueliveiy o Capability-builuing piogiams " Piomotional suppoit " Responsiveness systems " Tiaining " Technical assistance " Company policies " Naiket ieseaich o Incentive piogiams " Nanufactuie's sales foice incentives " Bistiibutoi-fiim incentives " Bistiibutoi-sales foice incentives Wheie uoes a suppliei fiim uiffeientiate. o 0n the capability-builuing piogiam level because the othei 2 aie easy to copy. Channel positioning matiix o 0ffeiing of suppliei o Resellei iequiiements o Competitoi's offeiing to ieselleis. o (spiff = small immeuiate bonus foi a sale) Step 3: craft a rese||er va|ue propos|t|on uevelop a channel offeiing Step 4: Commun|cate the rese||er va|ue propos|t|on communicate the iesellei value pioposition ueploy full iange of piomotional tools available anu appiopiiate to the inuustiy conuuct iesellei satisfaction stuuies.
24 !"!"#$%& () !"# %&'(!"''"') *+, D|fferent|at|ng bus|ness opportun|t|es Two types of business oppoitunities o 0iueis: pieueteimineu anu little can be uone to change them. Customei fiim pushes the suppliei fiim into a tiansactional moue. o Customeis: suppliei fiim has to cieate uemanu by euucating the customei. Thiee types of customeis o volume customeis o Naigin customeis o Stiategic consiueiation customeis Suppliei's uecision to fill an oiuei: baseu on availability of iesouices: capacity uecision. o Choice of customeis uefines theii skill set ovei time. o Sometimes bettei to just say nu to inuiviuual business oppoitunities. rospect|ng for new bus|ness Winnowing piocess = piospecting funnel. " Laige pool of potential customeis ! piofitable new customeis o Leaus: names fiom uatabase. o Inquiiies: customei-initiateu business contacts. o Piospects: qualifieu as having significant sales anu piofit potential. " Piospecting Integiateu Naiketing Communications (INC) o = a concept of maiketing communications planning that iecognizes the auueu value of a compiehensive plan. Such plan evaluates the stiategic iole of a vaiiety of communications uisciplines anu combines them to pioviue claiity, consistency anu maximum communications impact thiough the seamless integiation of uisciete messages. o 4 closely cooiuinateu activities to ieach the taiget maiket " setting sequential communication objectives " ueveloping a mix of piomotional tools " communicate value pioposition " synchionize effoits anu builu consistency of messages. Piompting anu gatheiing inquiiies. o Tools to encouiage anu piocess inquiiies. " Biiect iesponse auveitisement " Biiect mail " Nixing online & offline communication channels " Inteiactive meuia foimats " 0nline catalog sites. o Effectiveness of an INC appioach is incieaseu by builuing stiong bianus. Qualifying leaus anu inquiiies 2S o Qualify eaily in the piocess o Subsequently piioiitize piospects Assess|ng f|t between |ts sk|||s and capab|||t|es and the bus|ness opportun|ty
Typology of customei benefits o 0nueistanu the value they aie able to cieate in the situation at hanu. o Customei's ability to compiehenu anu appieciate the value offeieu o 4 types of customei benefits o Rules fiom this Typology of customei benefits. " Foi oiueis, focus on economic, tangible benefits anu leveiage maiket ieputation anu bianu equity to cieate uiffeientiation. " Acquiie new business. Fiist establish competitive paiity on ec, tangible benefits anu use non-ec, tangible benefits to uiffeientiate youi offeiings. " Builu stiong customei ielationships anu ensuie continuity of oiueis stieams by migiating customei focus fiom ec anu non-ec, tangible benefits towaius non-ec, intangible benefits. Finu a way to communicate the value of the offeiing o Bifficult in business maikets " value piopositions aie complex " Puichase by complex units that employ multistage puichase piocesses. " Inuiviuual membeis of the customei's puichasing unit aie only exposeu to some paits of the value pioposition. 0sing the value stack as fiamewoik o Iuentify motivations anu powei bases foi membeis of BN0. " Iuentify the value elements on which each is focuseu. o Communicate the total value by stacking the benefit elements one on top of the othei. Deve|op|ng sa|es approaches Tiansactional selling: focuses on gaining an oiuei as quickly as possible. Consultative selling: Sales iepiesentative is a long-teim tiusteu anu value auuing iesouice foi the customei fiim. Enteipiise selling: useu to elaboiate the benefits of combining anu shaiing complementaiy competences anu capabilities acioss fiims. 0ffeiing is a paitneiship.
26 1ransact|ona| se|||ng Closes to gain the oiuei o Assumption close o Alteinative close o Stanuing ioom-only close o Last-chance close o 0iuei-blank close Suppliei must fiist gain appioveu-venuoi status. o Piouuct samples o Eviuence of quality o Pioof of capability anu technical competence. Consu|tat|ve se|||ng SPIN sequence of questions: useu to conveit implieu iequiiements into explicit iequiiements o Situation questions o Pioblem questions o Implication questions o Neeu-Payoff questions Manag|ng customer re|at|onsh|ps Balance the effoits to gain new business with activities to ietain anu expanu the business shaie of existing customeis. Customei ielationship management (CRN) o = bunuling of customei stiategy anu piocesses foi the puipose of impioving customei loyalty anu eventually coipoiate piofitability. o = The set of tools anu piocesses a fiim uses to iuentify, attiact anu ietain customeis anu to leveiage its ielationships with customeis. o Nanageis can builu a piofile of uesiiable piospective customei fiims thiough CRN systems. o Impeiatives of CRN " Acquiiing the iight customeis " Ciafting the iight value pioposition " Instituting the best piocesses " Notivating employees " Leaining to ietain customeis Loyal customeis favoiable behavioi o uieatei piopensity to puichase o Woiu-of-mouth effect o Resistance to competitois' seuuctions o Pay a piice piemium o Collaboiate with suppliei to impiove peifoimance anu uevelop new piouucts o Invest in a ielationship. Loyalty-effoit fiamewoik o Position on the loyalty lauuei vS cost to seive a customei. o Example: migiation stiategy. 27 Emeiging CRN applications o Allocating maiketing iesouices to the following tasks in piopoition to theii piofit potential " Customei acquistions " Customei ietention " Customei giowth o Synchionizing opeiations, maiketing anu seivice activities ! all manageis who 'touch the customei' shoulu woik in haimony o 0puating ueliveieu value " Seaich foi significant changes in customei iequiiements " What have we N0T uone lately.
28 !"!"#$%& () !"!"#$%&## L-sourc|ng Compaiison agents oi shopping bots o = softwaie piogiams that enable a customei fiim to seaich the inteinet. Electionic iequest foi quotation (eRFQ) o = supplieis fiom aiounu the woilu can then electionically submit quotes foi the oiuei. Electionic ieveise auctions (ERA) o Biuuing system o 0utcomes " Piice savings fiom 1u-Su% " Negative impact on piouuct anu ielationship quality o Tiauitional tiaue-off between piice savings anu negative quality impact. o Seveial factois have an impact on ERA outcomes " Piice visibility " Closing stiategy " Reseive piice " Numbei of lots " Bemanu aggiegation " Numbei of supplieis " Level of supply maiket competition " Piouuct complexity " Size of the puichase contiact " Repeat natuie of the auction o Case stuuy ieseaich finuings " New influencing factois Top management suppoit, oiganizational commitment Cioss-functional team composition, pioject team expeitise, pioceuuial faiiness. " ERA pioject satisfaction iuentifieu as key in buying fiim's evaluation. |ann|ng e-8us|ness In|t|at|ves 4 majoi steps 1. Ident|f|cat|on of potent|a| |n|t|at|ves 2 types of benefits fiom e-business o value cieation oi value enhancement o Lowei costs of pioviuing goous anu seivices to the maiketplace. The e-business planning piocess shoulu be pait of a coipoiation's stiategic planning piocess. o Baseu on the ielevant competitive stiategy (cost leaueiship oi uiffeientiation) 2. Iunct|ona| scope = the set of business piocesses a company can suppoit foi a paiticulai e-business initiative. Tiaue piocesses o Seaich: 29 o Authentication o valuation o Payment o Logistics o Customei seivices Becision suppoit piocesses o Configuiation o Collaboiation o Business intelligence Integiation piocesses o Bata integiation o Application integiation 3. Susta|nab|||ty of benef|ts from e-bus|ness |n|t|at|ves Assess the sustainability of competitive auvantage that might be ueiiveu fiom e-business initiatives. 6 featuies that assess the sustainability of e- business initiatives (baiiieis to entiy, FNA) 4. r|or|t|ze e-bus|ness |n|t|at|ves Tiauitional cost-benefit analysis Consiuei scope anu inteiuepenuence with othei activities!
New bus|ness opportun|t|es Auuing infoimation featuies Selling infoimation as a piouuct Selling knowleuge as a piouuct Finuing new maikets o Exploit the long tail = the potentially laige numbei of entities that might be attiacteu to a company's piouucts anu seivices, but aie not seiviceable at piofitable levels in a tiauitional business enviionment. Applying the planning piocess: papei Soc|a| med|a and e-bus|ness processes Social meuia seivices aie geaieu piimaiily towaius peei inteiactions among inuiviuuals, iathei than between consumeis anu companies. Facilitate bioaucast messages to the senuei's social netwoik, iathei than uiiecteu messages to specific inuiviuuals oi gioups. Bow can oiganizations use social meuia seivices foi e-business piocess suppoit. Social Neuia consist of peei-to-peei technology enableu mechanisms that allow useis to connect, anu to geneiate anu uistiibute content in an online social netwoik. Su LinkeuIn (2uuS); Facebook (2uu4); Youtube (2uuS); Twittei (2uu6) Social meuia as 2-siueu online platfoims o Social meuia seivices " Platfoim pioviuei " 0sei base " Selleis of piouucts anu seivices " Application uevelopeis. Social meuia engagement levels o Nonitoi 0uC o Auveitise thiough the social meuia platfoim o Bistiibute fiim geneiateu content o Launch viial W0N campaigns o }oin the conveisation