Business to Business Marketing

Yogesh Baviskar

Subject Outline:- B2B Marketing

1.
2
3
4
5
6
7
8
9
10
11

Introduction to B2B Market

Organizational Buying Behavior
Relationship Management
Segmenting the Business Market
Managing Products & New Innovations Management in B2B Market
Managing Services in B2B Market
Price Management in B2B Market
Channel Management in B2B Market
E-Commerce in B2B Market
Business Marketing Communication
Case Studies & Further Discussion

Top B2B Brands:-

Business to Business Marketing :-

Definition:Business Marketing is the practice of individuals, or organizations, including

commercial businesses, governments and institutions, facilitating the sale of their
products or services to other companies or organizations that in turn resell them,
use them as components in products or services they offer, or use them to support
their operations

Industrial Vs Consumer Marketing

Areas of Difference

B2B Market

Consumer Market

Market Characteristics

Geographically Concentrated

Geographically Disbursed

Relatively Fewer Buyer

Mass Market

Technical Complex

Standardize

Product Characteristic

Customized

Service Characteristic

Service , timely Availability

extremely Important

Somewhat Important

Buying Behavior

Involvement of Various functional

area from both the ends

Involvement of family members

Purchase Decisions are performance

based and rational

Purchase decisions are mostly based

on Physiological
/social/psychological needs

Technical Expertise

Relatively less technical expertise is

required

Stable Interpersonal relationship

Non- Personal relationship

Industrial Vs Consumer Marketing

Areas of Difference

Industrial Market

Consumer Market

Channel Characteristic

More Direct

Indirect

Fewer Intermediaries

Multiple layer of Intermediaries

Promotional Characteristic

Emphasis on Personal Selling

Emphasis on Mass Media

(Advertising)

Price Characteristic

Competitive Bidding and Negotiated

Prices

List Price or MRP

List Price for Standard Products

B2B Distribution Channel Characteristics

Manufacturer

Company Sales
Force

Representative
Agency

Distribution Dealer

Customer

Customer

Customer

Characteristics of B2B Demand

Derived Demand: The demand for a good or service that results from the demand for another good or service.
Ex.:- Pig Iron ---Steel ---Steel Sheets---Automotive part companies--Automobiles--End customer

Demand Elasticity:-

Joint Demand:- Demand for product or services is interdependent on each other

Ex:- Coffee Powder, Sugar & Milk in Making Coffee
Ex:- Software- Operating System, Car & Fuel

2:- Understanding B2B Market & Environment with Buyers Perspective

B2B Customers
B2B Products
Marketing of industrial products to B2B Customers

Purchasing of Industrial Products

Goals of Purchasing
Purchasing Orientations
Buying Orientation
Procurement Orientation
Supply Chain Management Orientation

Purchasing Practices of Industrial Customers

Commercial Business
Government
Institutes
Co-operative

Environmental Analysis:Types of Environment Influencing B2B Market

Understanding B2B Market & Environment with Buyers

Perspective

2.Understanding B2B Market

& Environment with Buyers
Perspective

Raw Materials

Iron ore, Crude oil, fruits, fish

Manufactured
Materials

Acids, Fuel oil, Steel ,

Chemicals

Component Parts

Gauges, TV tubes, Tyres,

Subassemblies

Exhaust Pipe in Motor Cycle

Material & Parts

Light equipment/
Accessories

Capital items

Hand tools, Dies, Jigs

Installation or Heavy
Equipments

Machine Tools, Furnaces

Plants & Building

Plants, Office Building

Supplies

Lubricants, Fasteners, paints

, Electrical Items

Services

Legal, Auditing, Advertising,

Courier, Market Research

Supplies & Services

2.Understanding B2B Market & Environment with Buyers Perspective

Goals Of Purchasing
Uninterrupted Flow Material
Manage Inventory
Improve Quality
Developing and Managing Supplier relationships
Achieve Lowest total cost
Reduce Administrative cost
Advance Firms Competitive Position

2.Understanding B2B Market & Environment with Buyers

Perspective
Purchase Orientation
Buying Orientation
Procurement Orientation
Supply chain Management Orientation

Applications of Purchase Orientation to Industrial Customers

Industrial Customers
Supply Chain Management
Procurement

Government as a Customer
Buying Orientation

Institutes
Buying Orientation

2.Understanding B2B Market & Environment with Buyers Perspective

Purchasing Practices of B2B Customers
Industrial customers
Government
Institutes
Cooperative

Environmental Analysis:Ecological & Physical

1.Pollution & Conservation of Natural resources
2. Utilities, Manpower & Transportation

2.Understanding B2B Market & Environment with Buyers Perspective

Environment Analysis:Internal Environment:Company Location, R&D Facilities, Production Facilities Human

Resource and Image of the company
External Environment:Micro Environment :Customers & Competitors
Suppliers

Macro Environment:Economic
Technological
Government/Political & Legal
Cultural & Social
Investors & NGO

3.The Nature of Industrial Buying and Buying Behavior

Organizational Buying Process

Organizational Buying Situations
Forces Shaping Organizational Buying Behavior

-- Environmental Forces
-- Organizational Forces
-- Group Forces :-

- Buying Center
-Elements of Buying Center
-- Individual Forces

3.The Nature of Industrial Buying and Buying Behavior

Problem Recognition
General Description
of Need
Product Specification
Supplier Search
Acquisition &
Analysis of Proposal
Supplier Selection
Selection of Order
Routine
Performance Review

3.The Nature of Industrial Buying and Buying Behavior

Organizational Buying Situations

Straight Rebuy

The buyer routinely re-orders the

same product or service with out any
modification

Modify Rebuy

The buyer wants to modify product

specifications, price, service or
supplier

New Task

The buyer purchase product or

service for the first time

3.The Nature of Industrial Buying and Buying Behavior

Forces Shaping Organizational Buying Behavior
Environmental
Forces

Organizational
Forces

Group Forces

Individual Forces

Group Force Buying Center

Buying Center can be defined as the body of all the individuals and groups
participating in the buying decision process and who have interdependent objectives
and share common risk

3.The Nature of Industrial Buying and Buying Behavior

Roles of Buying Center
Initiator :Recognition of Problem or Need
Buyer :-

User:-

Obtains the quotation

Supplier evaluation & Selection
Processing purchase order
Expediting deliveries
Implement the purchasing policies of the organization
User of Product/ Services ( Could be Initiator)

Influencer :Individuals who could influence the purchasing decision

( Technical / Design Engineers / External consultants )
Gatekeepers:Individuals who control the flow of information to the
members of buying center
Deciders:Individuals or group of people who make the actual purchase
decisions about the product or services

3.The Nature of Industrial Buying and Buying Behavior

B2B Buying Behavior Model

4. Buyer Seller Relationship

Buyer Seller Relationship :- Establish , Develop & Maintain

the meaningful
relationship with the
customer.

Types of Buyer Seller Relationship

Transactional Exchange
Collaborative Exchange
Switching Cost

Managing Buyer Seller Relationship

Typical Characteristics of Buyer Seller Relationship based on

Market Condition and Purchase Behavior
Transactional
Exchange

Collaborative
Exchange

Availability of
Alternative

Many Alternative

Few

Supply Market
Dynamism

Stable

Volatile

Importance of
Purchase

Low

High

Complexity of
Purchase

Low

High

Information
Exchange

Low

High

Operational Linkage

Limited

Extensive

CRM Strategy

Determine which type of relationship matches the

purchasing situation and supply-market conditions for a
particular customer.
Develop a strategy that is appropriate for each strategy
type.

Understanding Customer Profitability

Characteristics of High Vs Low Cost-to-Serve Customers
High Cost to Serve

Low Cost to Serve

Order Custom Products

Order Standard Products

Order Small Quantities

Order Large Quantities

Unpredictable Order arrivals

Predictable order arrivals

Customized delivery

Standard Delivery

Frequent Changes in delivery

requirement

No changes in delivery requirement

Manual Processing

Electronic Processing

Large amount of presales support

Little to no presales support

Require company to hold inventory

Replenish as produced

Longer credit periods

Payment on time

Creating a CRM Strategy

Acquire the Right Customer

Crafting the right value

proposition for the customer
Design the Best Process to
deliver the product /services

Motivating the Employees

Retain the customer

Segmenting the Business Market

Why Segmentation:Criteria for the segmentation:Measurable
Assessable
Substantial
Computability
Responsiveness

Benefits of Segmentation:Concentrate on unique needs of target segment,

Focus on product development,
Develop profitable pricing strategy
Select the appropriate channel
Develop communication and advertising strategy

Variable of Business Market Segmentation

Macro level segmentation
Micro level Segmentation

:-

Macro Segmentation
Variable of Segmentation

Breakdown of Segments

Characteristics of Buying Behavior

Size

Small. Medium & Large ( Based on Sales or

o. Of Employees

Geographical location

Region , Industrial zones

Usage rate

Non user, Light user, Moderate user, heavy

user

Structure of procurement

Centralize , Decentralize

Product/ Service Application

End market serve

As per Product/Service

Value in use

High , Low

Characteristics of Purchasing Situations

Types of buying situations

New task, Modified task, Straight Rebuy

Stage in purchase situation

Early stages, late stages

Micro Segmentation
Variable of Segmentation

Breakdown of Segments

Key Criteria

Quality, Delivery, supplier reputation

Purchase Strategies

Optimizer, Satisfier

Structure of decision making unit

Importance of purchase

High , Low

Attitude towards vendor

Favorable, unfavorable

Organizational innovativeness

Innovator, Follower

Personal Characteristics of Top

Management or Decision makers
Demographics

Age, Educational background

Decision Style

Normative , conservative, mixed mode

Risk

Risk taker, Risk avoider

Confidence

High, low

Job responsibility

Purchasing, production, engineering

Managing Products & New product develofor B2B Marketing

Core Competencies and Selected Products at Canon

Core competencies are
embodied in the
superior skills of
employees--the
technologies they have
mastered, the unique
ways in which these
technologies are
combined, and the
market knowledge that
has been accumulated.
They focus on the
basics of what crates
value from the
customers perspective
and include both
technical and
organizational skills.

Developed by Cool Pictures and MultiMedia Presentations

Three Tests to Identify the

Core Competencies
First, a core competence provides potential
access to an array of markets.
Second, a core competence should make an
important contribution to the perceived customer
benefits of the firms end products.
Third, a core competence should be difficult for
competitors to imitate.

Sustaining the Lead . . . Three Questions

How rare is our competence?
How long will it take our competitors to develop
the competence?
Can the source of our advantage be easily
understood by our competitors?

Quality Movement Stages

Stage one centered on conformance to standards
or success in meeting specifications.
Stage two emphasized that quality was more
than a technical specialty and that the pursuit of
quality should drive the core processes of the
entire business.
Stage three examines a firms quality
performance relative to competitors and examines
customer perceptions of the value of competing
products.

What Value Means to Business Customers

Core
Benefits
Customer Value

Add-on
Price

Sacrifices

Acquisition
Costs
Operations
Costs

Source: Adapted from Ajay Menon, Christian Homburg, and Nikolas Beutin, Understanding Customer Value,
Journal of Business-to-Business Marketing, 12, no. 2 (2005), pp. 47.

1. Proprietary or
catalog products

2. Custom-built
products

Four Types of Industrial product Lines

3. Custom-designed
products

4. Industrial
services

Steps in the Product Positioning Process

1. Identify the relevant set of competitive products.
2. Identify the set of determinant attributes that customers use to
differentiate among options and determine the preferred choice.
3. Collect information from a sample of existing and potential
customers concerning their ratings of each product on the
determinant attributes.
4. Determine the products current position versus competing
offerings for each market segment.
5. Examine the fit between preferences of market segments and
current position of product.
6. Select Positioning or Repositioning Strategy.

Successful brand management involves developing a promise of

value for customers and then ensuring that the promise is kept
through the way in which the product is developed, produced,
sold, services, and promoted.

How High-Tech Brands Build Equity

New Product Development

Process
Successful companies employ a high-quality new product
development process--careful attention is given to the execution of
the activities and decision points. Benchmarking characteristics:
The firms emphasized upfront market and technical
assessments.
The process featured complete descriptions of the product
concepts, product benefits, positioning, and target markets.
Tough project go/kill decision points were included in the
process and the kill option was actually used.
The new product process is flexible.

Resource Commitments
Three ingredients were important here:
1. Top management committed the resources
necessary to meet the firms objectives for the
total product effort in the firm.
2. R&D budgets were adequate and aligned with the
stated new product objectives.
3. The necessary personnel were assigned and were
relieved from other duties.

New Product Strategy

Set aggressive new product performance goal as
a basic corporate goal and communicate it to all
employees.

Lead user projects are conducted by a cross-functional team that

includes four to six managers from marketing and technical
departments; one member serves as project leader.Team members
typically spend 12 to 15 hours per week on the projects.

The Lead
User
Method

Product advantage refers to

customer perceptions of
product superiority with respect
to quality, cost-performance
ratio, or function relative to
competitors.

Marketing synergy represents

the degree of fit between the
needs of the project and the
firms resources and skills in
marketing.

Four Strategic Factors

For New Product Success
Technical synergy concerns
the fit between the needs of the
project and the firms R&D
resources and competencies.

International orientation--new
products that are designed and
developed to meet foreign
requirements, and that are
targeted at world or nearestneighbor export markets.

Technology Adoption Cycle

Innovators
These are the people who are fundamentally committed to new technology
on the grounds .
Early Adopters
These are the true revolutionaries in business and government who want to
use the discontinuity of any innovation to make a break with the past and
start an entirely new future. Their expectation is that by being first to
exploit the new capability they can achieve dramatic and insurmountable
competitive advantage over the old order.
Early Majority
These people make the bulk of all technology infrastructure purchases.
They do not love technology for its own sake, so are different from the
techies, whom they are careful, nonetheless, to employ. Moreover, they
believe in evolution not revolution. they are interested in making their
companies' systems work effectively and look to adopt innovations only
after they have established a proven track record.

Late Majority
These consumers are pessimistic about their ability to gain any value from
technology investments and undertake them only under duress -- typically
because the remaining alternative is to let the rest of the world pass them by.
They are very price-sensitive, highly skeptical, and very demanding. Rarely do
their demands get met, in part because they are unwilling to pay for any extra
services, all of which only reconfirms their sour views of high tech.
Laggards
This group delight in challenging the hype and puffery of high-tech marketing.
They are not so much potential customers as ever-present critics. As such, the
goal of high-tech marketing is not to sell to them but rather to sell around
them.
The Marketing Strategy
With these customer segments in mind, the typical approach is to seed new
products with the innovators so they can help educate the early adopters.
When the early adopter's are interested, do everything that is possible to make
them happy as they will then serve as references for the early majority which
is the group where most of the money is made from a new product or service.
Then leverage the success with this large group so that the product matures
and stabilizes enough to be of interest to the late adopters. All the while,
ignore the laggards and their skepticism.