B2B Marketing Essentials

Business to Business Marketing

Contents
Business-to-Business basics
Making sense of customers and markets
Business-to-Business marketing - International
Business-to-Business marketing specifics
Business-to-Business marketing models
Strategies Business-to-Business management
Marketing evaluation and control
Implementing a value-creating organization
Copyright © 2008 - 2012

Introduction
Originally, business to business marketing started as a special case of marketing, heavily
borrowing concepts and techniques from consumer marketing. Business to business
marketing has evolved into a mature marketing discipline, with a distinct identity, separate
from consumer marketing. The importance of business to business marketing is often
underestimated. Successful application of business to business marketing concepts and
methods requires insight into the characteristics of business to business market and how
they shape business to business marketing approaches.Copyright © 2008 - 2012

Nature of Business to Business marketing
Business to business marketing is the marketing of
products or services to companies, government
bodies, institutions and other organizations that use
them to produce their own products or services or
sell them to other business to business customers.
This definition of business to business marketing
emphasizes the nature of business customers and
the purpose for which B2B products are bought. B2B
customers are organizations instead of consumers
varying from small family operated local companies
to large multinational conglomerates with several
business units and gigantic purchasing budgets.
Copyright © 2008 - 2012

B2B marketing for consumer marketers
Knowledge about B2B
marketing is also
relevant to
manufacturers of
consumer products,
such as Unilever, P&G.
Although these manufacturers use
consumer marketing to sell their consumer
brands through various retail chains, these
retail chains are large organizations whose
buying behavior is often quite similar to
that of B2B customers.
They employ professional
purchasers, negotiate about
delivery and payment
conditions and sign long-
term blanket contract with
suppliers.
There is a second
reason why B2B
marketing is useful
for manufacturers
of consumer
products.
These manufacturers buy
large quantities of
materials and components
to manufacturer their
common products that are
marketed by their
suppliers using B2B
marketing.
Copyright © 2008 - 2012

Business to Business customers
Business to Business customers can be classified into 3 groups – Commercial enterprises,
Government agencies and institutions. Each of these 3 groups of Business to business
customer has its own characteristics and should be approached differently by vendors.
A 3rd group of B2B
customers encompasses
the numerous institutions
purchasing B2B products
to perform their function.
A significant number of
B2B products and
services are bought by
government agencies.
It covers both local and
central government
levels. In addition,
state-owned
companies, such as
utilities and national
railway companies,
frequently display
similar purchasing
behavior
There are 3 types –
users, original equipment
manufacturers and
resellers
Commercial
enterprises
Copyright © 2008 - 2012

Business to Business products
The diversity of B2B
markets is also reflected
in the broad range of B2B
products, varying from
office supplies, lubricants
and electronic tools etc.
Raw and processed
materials: Raw materials
are farm and natural
products that are used by
customers with little or no
alterations, such as corn,
wheat, milk, iron, natural
gas and compressed air.
Processed materials are
raw materials that have
undergone some sort of
conversion.
Copyright © 2008 - 2012

Characteristics of Business to Business markets
In B2B marketing, one or more of the following characteristics may be important.
The demand for B2B
products depends on the
demand for other
downstream product.
There are few,
geographically
concentrated,
customers
The demand for B2B
products is related to
the demand for
other B2B products
Organizational buying
behaviour is complex
Copyright © 2008 - 2012

Market characteristics drive marketing strategy
Together, these characteristics of B2B markets
determine the vendor’s marketing approach.
When there are only a few B2B customers,
each of them representing a significant
transaction volume, vendors develop close
personal relationships with key members.
In these close relationships, a vendor’s
offering is frequently customized, while
key customers are involved in the
vendor’s product development.
Copyright © 2008 - 2012

Selling to consumers and Business to Business
customers
Many companies sell more or less the same product to consumers and B2B customers. Car
manufacturers sell cars to consumers and fleet owners. Food manufacturers sell products to
consumers, hospitals, schools and companies. Vendors that want to sell their products to
both consumers and B2B customers must make two kinds of marketing decisions.
• How will we target both markets?
− Can we sell the same product in
both markets or should we offer
two versions of the same
product?
− Which sales channels are most
appropriate for both markets?
• How will we organize marketing
function internally?
− Should we create 2 separate
marketing departments?
− Which market gets priority in
case of product shortages?
− Do we need different people
for each marketing group?
Copyright © 2008 - 2012

Creating value for customers
B2B customers do not need
products, but they do need the
value offered by these products
to produce their own products
and services. Value is defined as
the benefits minus costs that
customers receive in exchange
for the purchase price. Every
customers will assess whether
the net benefits offered by the
vendor outweigh the purchase
price that has to be paid to
enjoy them. Thus, successful
B2B marketing depends on a
vendor’s detailed understanding
of what customers value.
Copyright © 2008 - 2012

Understanding Business to Business customers
Successful business marketers understand the needs of their customers and are able to
translate these needs into superior value. There are 3 types of customer needs.
Basic needs are the basic
requirements that each
vendor needs to meet to
be in business.
Satisfier needs are needs that a
customer would like to see fulfilled but
which do not impact customer buying
behaviour
Attract needs are needs that,
if performed best in the
industry, deliver such superior
value to customers that they
are willing to switch vendors.
Copyright © 2008 - 2012

The customer activity cycle
Customer
decision
making
Disposal Problem
recognition
Orientation
and evaluation
Purchase
Delivery and
installation
Use
Maintenance
and repair
Expansion and
upgrading
Customer keeps
it going
Customer decides
what to do
Customer does it
Copyright © 2008 - 2012

The organizational buying process
Stage 1 – Product specification and requests for proposals
Activities of vendors Stages of buying process Activities of buying organization
Make customer aware of problems,
focus on customer situation.
Involve various functions, analyze
consequences for various business
units.
Need recognition
Offer specialized knowledge,
influence specifications, assist at
value analysis.
Translate functional user requirements
into technical specification, plan
manufacturing.
Formulating
specifications
Develop relationship, build trust,
influence selection process.
Combine internal and external
information.Identifying potential
vendors
Influence RFP, match proposal with
specifications, suggests
improvements.
Determine number of proposals,
provide clear information.Requests for
proposal
Stay in touch, offer suggestions,
provide additional information,
modify proposal.
Trade-off between criteria and
objectives, request additional
information.
Evaluation of
proposal
Copyright © 2008 - 2012

The organizational buying process
Stage 2 – Negotiations and selections
Activities of vendors Stages of buying process Activities of buying organization
Be flexible, build trust, develop
relationship.
Dialogue about various topics, combine
short and long term.Negotiation with
vendors
Stay in touch, be flexible,
demonstrate commitment.
Trade-off between criteria and
objectives, decide on single/dual/
multiple sourcing.
Selection of
vendor(s)
Clear and unambiguous
agreements, possibly
exclusiveness.
Formulate negotiated terms in legal
contract.Drawing up the
contract
Stage 3 – Order fulfillment and evaluation
Keep promises, inform purchasing
about progress, solve problems
immediately, manage daily
contracts.
Monitoring by purchasing,
communication with other department.Order fulfillment
and evaluation
Solve problems, handle
complaints, suggest product
improvements.
Continuous evaluation of product and
performance, formulate supplier
development programme.
Evaluation and
feedback
Copyright © 2008 - 2012

Market sensing
But many B2B firms are too focused on their
internal processes or they feel that they
already know all about their markets and the
best way to serve them.
Effective market sensing requires open-
minded inquiry, widespread information
distribution and mutually informed mental
models that guide interpretation.
The process of collecting market
information and making sense of all this
information is called “market sensing”.
Copyright © 2008 - 2012

Collecting information about customers
Aggregated information about all
customers in the market
Whole
market
Market
segment
Customers are grouped into more or less homogeneous
segments and the information concerns all customers in
the segment
Organiza-
tion
Detailed information about individual customers, share
of customers, age of production equipment, location,
industry
Buying
center
Number of individuals, power, structure, roles, external
influencers, buying motives, communication needs
Individual
Detailed information about individuals. Risk aversion,
personality buying motives, relative power and influence
Copyright © 2008 - 2012

Public sources
Much information about B2B customers can be gleaned from public sources,
such as
• International government
organization
• Market research agencies
• Industry associations
• Trade journals and business
periodicals
• National and international
newspapers
• Online directories
Copyright © 2008 - 2012

Market research
B2B market research has several characteristics that distinguish it from customer
market research.
Most B2B market research is exploratory and uses secondary data and
subjective estimates
B2B market research uses relatively small samples
B2B market research uses interviews and surveys, rather than observation
and experiments
B2B market research is plagued by a number of practical problems
Most B2B market research is global
Copyright © 2008 - 2012

Business to Business market segmentation variables
The potential segmentation variables can be grouped into 3 categories
Characteristics of the buying organization – type of
organization, number of employees, sales volume,
industry, geographic location, product application,
degree of source loyalty.
Characteristics of the buying centre – Buying roles,
number of decision-makers, degree of formalization,
degree of centralization, stage in buying process,
decision-making style.
Characteristics of individual decision-makers – Age,
education, organizational position, role and influence
in buying centre, degree of self-confidence, buying
criteria.
Copyright © 2008 - 2012

The nested approach
Bonoma and Shapiro proposed this model. Their nested approach consists of 5 categories of
increasingly detailed information about an organization’s buying behavior.
Demographics (industry,
size, location)
Process characteristics describing the
organization’s operations (technology
employed, whether or not the organization
uses the vendor’s product, financial stability)
Purchasing approach (organization of the buying
centre, power structure, purchasing policies,
relation with competitors)
Situational factors – urgency,
order size, product application
Personal characteristics – motivation, risk
perception, relationship with vendor
Copyright © 2008 - 2012

Global outsourcing and manufacturing
Low Labour cost
Low Infrastructure cost
Availability of technology
Availability of raw materials
Proximity to the markets
Companies have been outsourcing their raw materials and
components for a long time now, since the second quarter
of the twentieth century due to the following reasons:
Certain countries of the East and South, which that are either
under developed or are developing have low cost labour that helps
in low cost manufacturing. This becomes big incentive for the
western business gaints to get the labour intensive work down in
such locations
Copyright © 2008 - 2012

Shoe manufacturing companies – an example
Adidas and Nike of USA
found that as their own
labour cost was high as
compared to some eastern
nations, they started
outsourcing the manufacture
of shoes to these countries.
As a rough comparison the
costs of rich and poor
countries manufacturing is
shown here:
5
2 1
50
20
5
Labor cost per
shoe pair
Infrastructure
per shoe
Transport per
shoe
In USD
Poor countries
Rich countries
Copyright © 2008 - 2012

Business organization matrix
Private ownership Mixed/joint ownership
Public or government
ownership
Market control
Market driven
private ownership
Market driven
joint ownership
Market driven
government
ownership
Mixed
Mixed control/
Private ownership
Mixed control/
joint ownership
Mixed control/
government
ownership
Government
control
Government
control/
Private ownership
Government
control/
joint ownership
Government
control/
government
ownership
Copyright © 2008 - 2012

Mixed economies
For e.g., In India, the mixed economy was created with the joint sector ventures, were the private and
government were both partners. While such firms tried to get the best of both i.e. easy government
approvals and speedier decision-making process associated with the private sector
Production and productivity
The competiveness of the countries in
the international market depends on the
following factors
Demand and its
management
Production factors are based on:
• Capital resource
• Human resource
• Information resource
• Infrastructure
• Physical resource
• Management
Copyright © 2008 - 2012

Countries classifications
Quality of Life or
Life style
Countries are
classified on the
following basis
Copyright © 2008 - 2012

Macroeconomic factors – The GDP
Developing countries - India Developed countries – U.K.
30%
Agriculture
30%
Industry
25%
Manu-
facturing
15%
Service
2%
Agriculture
32%
Industry
22%
Manu-
facturing
66%
Service
Copyright © 2008 - 2012

Distributor
Distribution patterns – Industrial goods
Manufacturer Customer
Technicalities have to be explained to the customer, which
are best done by the manufacturer
Mostly large sums of money are involved and customer
wants best price without middleman’s commission
Installation and commissioning of the equipment is involved
but done by the manufacturer’s engineers
After sales, service is complicated
Copyright © 2008 - 2012

Distribution patterns – consumer goods
Manufacturer Customer
Sole
Distributor
Manufacturer
Sole
distributor’s
own channel
Area
distributor
Manufacturer
Dealer/
Retailer
Very small firms who have limited market, like bakeries may
resort to direct selling to their customers. Very large firms
have sole distributors with their own network of dealers and
retailers
Copyright © 2008 - 2012

Other distribution methods include the following
Own shops
Franchise outlets
Mail order
Catalogue sales
Web marketing
Agency operation
Stockists
Consignment
agents
Copyright © 2008 - 2012

International markets of the 21st century
When a firm enters the market, it has some commitments to its customers, and those are
based on the utility, need and performance of its product. The nature of commitment of
firms has to widen just not to cope with international competition but also in order to beat
them in their own countries as well
In-depth or intensive marketing
within the country
Extension of geographic
boundaries of the markets
Penetrating pricing strategy
Strong merchanidizing effort
Advertising, promotion or
strategy
New product plans
New products to be sold in new
markets
Vertical integration of
manufacturing base
Copyright © 2008 - 2012

Strategies for markets
Feedback
Copyright © 2008 - 2012

Implementation of strategies
Steps to be taken by the firm
• Team members to remain totally motivated, committed to their tasks
• Team should be fully in the know of their qualitative and quantitative targets
• Qualitative targets like improvement in brand image, training of team members
should be taken as seriously as quantitative targets
• Individual members of the team perform their roles as also assist other members
whenever necessary
• Team members should act as more as a coordinator than a monitor. His actions
should inspire the team
• Assessment of achievement must be made first by each member and then for the
team jointly by the team at regular intervals without waiting for the year to end
• Success story of any member must be circulated within the team to inspire others
and also to learn from the methods used to achieve the success. Failures also
should be discussed, not to push the people down but to learn from any mistakes
the losing team may have made
Copyright © 2008 - 2012

New challenges in the 21st century for markets
Quality
standards at
par
internationally
ISO9000
series
Low labor
costs
A large
technical
work force
English as a
known
language
IT, software
expertise
Presence of
several
multi-
national
companies
already in
the country
Spread of
internet in
the country
Emergence
of
e-signatures
leading to
e-commerce
Copyright © 2008 - 2012

Marketing plan
Marketing
research to
identify the
market
Define market
segment/s
Planning
marketing
program
Feedback
Controlling the
program
Program
implementation
Copyright © 2008 - 2012

The market plan should contain
Market Plan
Executive Summary giving the highlights of the plans,
especially the control points
General and competitive environment factors, new
products from competition, market growth forecasts
and summary of the findings of market research
Comparative statement of strengths and weaknesses
of the firm vis-à-vis competitors, with emphasis on the
customer benefits derived from the usage of products
from the firms, both its own and competitors
Profitable sales plan for the entire product available for
sale, either by manufacture or by purchase, taking the
4Ps and people into account
Fixing individual quantitative and qualitative targets,
qualitative targets could be in the nature of continuous
training programs, market feedbacks
Profit picture derived out of sales revenue and
marketing expense budgets
Copyright © 2008 - 2012

Management game
The best way to look at the imperative of improving performance is
through the Mackenzie’s 7s model
Shared
vision
Structure
System
StyleSkills
Staff
Strategy
Copyright © 2008 - 2012

The customer needs
Business to Business marketing has several variants as well
as approaches to combat competition
Existing product-
competitive
product/
S-comparative
assessment
1
Best fit as per
customer
requirement
2
Assessment of
modification
needs, if any
3
Redesign the
product – test it
with customers’
requirements
4
Give samples
for trials with the
customers
5
Get customer’s
feedback and
act on it
6
Get a long-range
business
perspective for
the product
7Copyright © 2008 - 2012

Business to Business market advantage
Customer satisfaction
Customer relationship
management
Providing options to
customers
Add value to the product
Promote supplies or
Just-in-Time supplies if
required
Copyright © 2008 - 2012

Overselling
In the Business-to-Business marketing sales persons tend to
oversell the company. The promise options, product specifications
and terms of business that cannot be sustained by the company
Sales person tells the customer, “We can offer diesel model
of the car in the next two weeks”, when the company has no
plan to make the diesel model
Customer gets the option of mobile phone with camera and
blue tooth when the company can give only with camera
Customer is told he need not pay a down payment for the
product and give only in instalments, when the company
rules do not permit such credit at all
A customer buying an air conditioning plant is given
commissioning date of the plant when the company knows
fully well that it would not be possible to adhere to the date
It is always prudent to
offer less and deliver
more; this way the
customer would feel
delighted and look
forward to doing further
business with the
company
Copyright © 2008 - 2012

Different approach to B-to-B marketing
Consumer marketing and industrial marketing differ in several
ways. Industrial buyer looks for benefits that accrue from product
usage where as consumer buyers want ‘good value for money’
Industrial buyers sees the following benefits
Low overall purchase cost
Ease of storage
Easy inventory management
Ease of product usage
Training the seller in product usage
Longer shelf life of the product
J-I-T supplies by the supplier
Copyright © 2008 - 2012

B-to-B advertising is important mainly for creating
awareness about the company, improving its
corporate brand image and for providing products
technical specifications. Companies can opt for
technical journals pertining to the buyers business as
media, besides, at times newspapers, and TV can also
be used
B-to-B advertising
Copyright © 2008 - 2012

Business-to-Business pricing
Pricing strategy is the foremost importance because in the
competitive business buyers prefer the low cost supplier,
everything else being common. The hidden costs could be as
given below
Cost of certain spare parts essential to the product
Cost of accessories required
Cost of transportation
Cost of installation and commissioning of the equipment of the product
Cost of user manuals and other documents
Cost of training of the buyer personnel into proper usage of product
Copyright © 2008 - 2012

Pricing formula
Companies must workout pricing formulas individually for each bid they make because each
case is different
Customer’s location and its distance from the sellers place to workout the actual transport costs to
the customer
Cost of mobilization of resources, including manpower at the customer’s site
Cost of pipelines, ducting, power needs, water supply required and local labor force costs
Cost of taxes to be paid in the customer’s location (for example, CST of the customer’s premises
are in different state than the seller’s location)Copyright © 2008 - 2012

The purchase committee
Managing
Director
Who chairs
the committee
Purchase
Manager
Who is the
convener of the
committee
Production Manager
Who looks at the
product from the point
of its match with the
rest of the existing
equipment and its
case iofuse
R&D Manager
Who decides if
the product is
latest ‘state of the
art’ product or not
Finance
Manager
Who scrutinizes
the financial
implications of the
bids
Technical
Manager
Looks at the
technical aspects
of the bids
Copyright © 2008 - 2012

Market demand
Demand of B-to-B business are generated in the most unpredictable manner and hence
demand analysis by the sellers is a difficult task. It is therefore important to find out where
the market exists. One should seek answers to the below questions
Who wants the product?
When does he want it?
Where does he want it?
What price he is willing to pay for it?
What is the purpose for which he is
buying the product?
What does the product do for him in
his life?
What are the factors influencing the
purchase?
Who is the competitor?
What are his plans?
Copyright © 2008 - 2012

For each firm, there are following categories of
customers
The buyers The non-
buyers who
buy
competitive
products
The non-
buyers who do
not buy the
product at all
The non-buyers
who buy the
product only
rarely
The vacillators
who keep
shifting
purchase
between the
firm and
competition
Copyright © 2008 - 2012

Knowing about various elements of business
Own products, their plus and minus points
Competitor’s products, their plus amd minus points
Niche markets, and its business potential
Relevant customer group, the buyers, users and the
purchase decision makers
Market dynamics
Copyright © 2008 - 2012

Marketing goals achievement channels
Customers
mindsets/socio -
economic
considerations
Pricing
3
Advertising
2
Personal
selling
1
Distribution
channels
4
Promotion
5
Restraining Force
1
•Example text
•Fill in your own
•Example text
Competition
6
Res
•Example text
•Fill in your own
•Example text
Packaging
7
Marketing situation
Copyright © 2008 - 2012

How the advertising works?
Advertising works on many levels
• On eyes and ears for receiving the message
• On the mindset for understanding the message
• On the heart where feelings create the goodwill and proper response
Copyright © 2008 - 2012

How the advertising works?
For the eyes and ears
• Did the advertisement reach?
• Did it catch the customer attention?
• Did it bring in the top of the mind recall?
• Was it seen or heard or both?
For the mindset
• Was the advertisement understood in a
way it was meant to be understood?
• Did the customer get the message?
• Were the message and brand read
together?
• Was the message not clear
For the heart
• Was the product accepted by
customer?
• Did it change the customer attitude
about brand in its favor?
• Did the feelings change after
seeing the advertisement?
• Did the brand perception change?
• Did it change the perception of
competing brands against them?
• Did the purchase action take
place?
Copyright © 2008 - 2012

Advertising plus and minus points
Economic growth, helps develop
competition
Expenditure can be avoided, creates
competition on items other than price
like brand equity
New product market development,
competition keeps firms on their toes
Creates entry barriers, for competition
can equate business possibilities
Helps in marketing effort, increases
market chances
Can raise costs and prices
Provides information to the customers,
ensures quality of the product,
increases demand
Wrong information to customers,
Puffery
Copyright © 2008 - 2012

The expert marketing model
The Expert Marketing Model’s four necessary
points are
The expert
marketing
model
Any service business can use this expert model. Service businesses need to showcase their
ideas and vision and the best way to do this is to create awareness which is what this model
strives to achieve Copyright © 2008 - 2012

You need to be found
The
expert
marketing
model
To be found
• There are probably hundreds,
even thousands of businesses
providing the same service as
you so it is vital that your
business can be found among
the flurry of competitors
• What makes businesses step
out from the rest is reputation
• If you can be seen as an
expert for the provision of the
service you are in, potential
customers will be far more
inclined to contact you
• A good way of sharing your
expertise with the world is to
write. Create a blog and fill it
with interesting and useful
content that your target
audience will want to know
Copyright © 2008 - 2012

You need to be seen as an expert
The
expert
marketing
model
As an expert
• You also need to publish free
guides, paid for guides and
white papers; items that your
prospects can download (in
exchange for their email
address) that show the depth
of your expertise in your
subject matter in addition to
the articles you have posted in
your web site
• You want your clients to be
convinced that you really do
know what you are talking
about so that you become the
only person they ask to help
them
Copyright © 2008 - 2012

You need to be heard
The
expert
marketing
model
Need to be heard
• Local seminars and
conferences will promote your
services in your local area
• However webinars or
teleseminars will get your
vision and ideas heard on a
much wider scale
• Speaking out about your
vision and presenting your
knowledge is a very powerful
medium as it allows for
another level of connection
with your prospects
• Good presentations are those
which are told with passion
and enthusiasm
• Use your most resourceful
equipment – your knowledge.
This is what will really capture
your prospects.
Copyright © 2008 - 2012

You need to be quoted
The
expert
marketing
modelNeed to be quoted
• An expert needs to be quoted
• Do not expect immediate
results, marketing strategies
often take months to really
take off
• Be consistent and the results
will follow
Copyright © 2008 - 2012

Business to business models – Electronic exchanges example
These hubs are sites on the Internet where buyers and sellers can come together to
exchange information and buy and sell products and services.
Copyright © 2008 - 2012

Examples of business models
Business model by which a
company integrates both
offline (bricks) and online
(clicks) presences. One
example of the bricks-and-
clicks model is when a chain
of stores allows the user to
order products online, but lets
them pick up their order at a
local store
Business organization or
association typically composed
of relatively large numbers of
businesses, tradespersons or
professionals in the same or
related fields of endeavor,
which pools resources, shares
information or provides other
benefits for their members
The removal of intermediaries in a
supply chain: "cutting out the
middleman". Instead of going
through traditional distribution
channels, which had some type of
intermediate (such as a distributor,
wholesaler, broker, or agent),
companies may now deal with
every customer directly, for
example via the Internet
Bricks and clicks
business model
Collective business
models
Cutting out the middle
man model
Copyright © 2008 - 2012

Examples of business models
Direct selling is marketing and
selling products to consumers
directly, away from a fixed retail
location. Sales are typically made
through party plan, one-to-one
demonstrations, and other
personal contact arrangements.
Business model which works
by charging the first client a fee
for a service, while offering that
service free of charge to
subsequent clients
Franchising is the practice of using
another firm's successful business
model. For the franchisor, the
franchise is an alternative to
building 'chain stores' to distribute
goods and avoid investment and
liability over a chain
Direct sales model Fee in, free out Franchise
Copyright © 2008 - 2012

Competitive analysis
Tics
Size of the
market
Level of customer
satisfaction
Sales
performance
Capacity/its
utilizatiion
Market analysis Firm’s analysis
Competitive
analysis
Competitive
analysis
Growth prospects Brand loyalty Market share Product-wise
market share
Profitability Product quality Brand equity
status
Segment-wise
sales
Cost structure Service quality Objectives/goals Channels/sales
force
Channels Brand association Marketing
strategies
Advertising/
promotion
Trends Relative costs Organizational
costs
Reaction time
Key success
factors
New product
activities
Cost structure Experience
curve/exit barriers
Manager’s
capabilities and
performance
Strengths and
Weaknesses
Value chain
Copyright © 2008 - 2012

Strategic marketing planning process
Understanding the formal process needed for planning marketing
strategies in today’s competitive age. Plans made should be
(a) short-term (b) long-term
The following steps are needed for making the plans
• Analysis of external environment
• Study of the firms internal strengths and weaknesses
• Idea generation for planning
• Brainstorming for prioritizing the ideas generated
• Customer behaviour analysis
• Competitor analysis
• Market analysis
• Draft annual and short-term plan
• Final plans with forecasting of sales and cashflow
Copyright © 2008 - 2012

Strategies to know - Customer’s analysis
We have discussed earlier why, how, where, when and how
much the customers buy, which can be ascertained with a
degree of accuracy through market research.
Let us take a
simple Customer
Behavior Pattern.
It includes the
following elements
of internal
information
processing, guided
by external
information and
stimuli
Customer
Behaviour
Copyright © 2008 - 2012

Strategies to know - Customer behavior
Customer
Behaviour
It comes from a
customer’s product
recognition as a
desirable product
based on his intuition
and information
gathered on sensory
plane
It is the customer’s
way of thinking about
the product, his firm
opinion about it
Out of his belief,
perception and
attitude the customer
makes his
performance of one
product over other
products, and tries to
buy it
It is the customer’s
conviction and firm
opinion of a
product/brand
Copyright © 2008 - 2012

Strategic objectives
Tics
Product Add promotion plans Increase share by
2% p.a.
Marketing mix
factors
Strategies for
marketing
Marketing
objectives
Price Increase advertising
efforts
Increase brand recall
by 10% p.a.
Placement Appoint dealers in
uncovered areas
Increase geographic
coverage by 20% p.a.
Promotion Build dealer relations,
higher margins, better
care, quick response
to complaints
Improve dealer
relationships
People Training of marketing
personnel
Copyright © 2008 - 2012

Formulating and implementing marketing strategy
STRATEGY
Successful B2B marketing starts with formulation of an effective marketing strategy. Marketing
strategy formulation and implementation are not independent from each other. Management may
select a strategy that is easy to implement because a required corporate ROI causes them to focus
on short term results. And a strategy is doomed to fail if management neglects the strategy’s
consequences for employees. Strategy implementation is a complex process that encompasses
much more than simply communicating the new strategy to the organization’s employees and
other stakeholder. Copyright © 2008 - 2012

Marketing control
Corporate strategy
Marketing strategy
Marketing objectives
Performance standards
Implementation of marketing
activities
Comparison of results with
performance standards
Corrective actions
Marketing plan
Copyright © 2008 - 2012

Analysis of customer relationships
At the individual customer level, management can assess
the quality of relationship using metrics such as
Share of customer: Ratio between revenues from
customer X and total purchases by customer X in this
product category.
Relationship size: Ratio between revenues from
customer X and the average revenues per customer in the
market segment that customer X belongs to.
Share of order: Ratio between the number of orders from
customer X and the total number of order.
Share of revenues: Ratio between the revenues from
customer X and total revenues.
Share of contribution: Ratio between contributes
generated by customer X and the firm’s total contribution
to profits.
Copyright © 2008 - 2012

Control of the marketing function
A key task of marketing is to develop and improve the marketing function. A marketing audit
provides a detailed examination of firm’s marketing function. A good marketing audit will allow
for control of the marketing function and has 4 characteristics.
Periodic
A marketing audit
is frequently
initiated in time of
crisis, but it is
advisable to
periodically conduct
a marketing audit
that allows the firm
to track perfor-
mance over time
and measure the
effects of
implemented
improvements.
Indepen-
dent
It is better to hire
an outside firm
with broad
experience is
several industries,
some familiarity
with the industry,
time and
attention to
conduct high-
quality audit.
Systematic
A marketing audit
looks at the firm’s
marketing environ-
ment, marketing
objectives, marke-
ting strategies,
marketing systems
and marketing
activities.
A marketing
audit covers all
major marke-
ting activities
and the
relationships
between them.
Compre-
hensive
Copyright © 2008 - 2012

Designing a value-creating organization
Customer
wants/
needs
Process
capabilities
• Order fulfillment
• Product
development
• Logistics
Supporting infrastructure
• Organization structure
• Business practice
• Measures/rewards/culture
• Technology
Interaction moments
Best of breed/world-class: service
standards performance capabilities
Best of breed/world-class: infrastructure
design points
Copyright © 2008 - 2012

Role of marketing in a value-creating organization
B2B marketing is all about
creating superior value for
customers, which helps them
to be more successful.
B2B marketing concerns a
large number of strategic
decisions that impact firm
performance.
This begs the central
question: what exactly
is the role of marke-
ting in a value-
creating organization?
The central role of marketing is to keep
all business units, departments and
outside partners focused on customers
and their changing definition of value in
the market place.
Copyright © 2008 - 2012

Coordination between marketing and other business
functions
A defining characteristics of a value-
creating organization is the presence of
effective interface between
organizational units. Business functions
and department operate as isolated
silos and focus on their own objectives
that only rarely involve the customer.
An “us vs. them” attitude prevails,
resulting in a lack of communication
and misunderstanding. Many B2B firms
experienced toughest parts of
implementing a value-creating
organization is to align all functional
areas towards the same objective:
creating superior value for
customers.
Copyright © 2008 - 2012

Business-to-Business marketing summary
In this topic you learnt that:
The process by which businesses employ a multi-layered strategy consisting
of web communications, email, media campaigns, and relationship
management for the purpose of converting targeted business prospects into
customers
B-to-B marketing is a transaction between two businesses, whether it is a
manufacturer to wholesaler or wholesaler to retailer
B2B stands for Business to Business. When you are working on selling to another
business rather than an end user or consumer, you are engaged in B2B marketing
Copyright © 2008 - 2012

B2B Marketing Essentials

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