Managing Business Marketing

1
Managing Business Marketing Sales

• Professor Waldemar A. Pfoertsch???
• Term 4/MBA 2006 Oct. 8 -28, 2007

2
Introduction

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

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Course Content

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

4
Literature

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

5
Book Access

• The VGP chapters will be accessible on the
  CEIBS server and the JHS book is available in
  the internet
• http//books.google.de/books?idNx_oba-icowCpgPP
  1otsN8mU_QdRqSdqjenstersig2OXI42cYh5aG3-iTeP
  CZIkXYwfE

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Assessment

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

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Session 1 2

• 2006-10-080840-1150
• An Overview of Business Marketing JHS Ch. 1 6
• Segmentation VGP Ch. 7
• Case Alto Chemical Europe

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Sales experience

• The jack sales

3 ton hydraulic jack used good condition U.S.
NSN 5120-00-403-0953. Auto Speciaties or Black
Hawk mfg
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What is your sales experience?
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Sales and Trust

• Chinas big Challenge

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The Nature of Business Marketing

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

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B2B ? B2C

• Complexity of Industrial Products
• Derived Demand

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B2B ? B2C

• Internationality
• Organizational Buying
• Buying Situation
• new task
• straight re-buy
• modified re-buy

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B2B ? B2C

• Buying Center

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Buying stages

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

16
Brand Relevance in relation to the Buying
Situation and the stages in the Organizational
Buying Process.
17
Human Factors in Business Decisions
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Common Bases for Segmentation
By industry in which the customer participates
By product offered
By geographic region
By size of account
By size of the customers company
By buying behavior
By technology used by the customer
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Basic Ideas of Segmentation
Measureability
Marketers seek to create market segments that
have the characteristics of
Accessibility
Substantiality
Actionability
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Can we understand the size and needs of the
market segment?
Measureability
Can we create a competitive advantage with
respect to the needs of the segment?
Actionability
21
Selecting Business Markets
All Potential Customers
Stage 1
Bases Location, Size, Industry, etc.
Macro Segment 1
Macro Segment 2
Basis Characteristics of the Decision-making
Unit X
Basis Characteristics of the Decision-making
Unit Y
Stage 2
Micro Segment 1
Micro Segment 2
Micro Segment 3
Micro Segment 4
Two Stage approach of segmentation
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Selecting Business Markets
Geographic
Demographics
Operating Variables
Purchasing Approach
Situational Factors
Personal Characteristics
Nested Approach to Segmentation
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SIC and NAICS Codes

• The North American Industry Classification System
  (NAICS) has replaced the U.S. Standard Industrial
  Classification (SIC) system. NAICS will reshape
  the way we view our changing economy.
• NAICS was developed jointly by the U.S., Canada,
  and Mexico to provide new comparability in
  statistics about business activity across North
  America.

http//www.census.gov/naics/2007/index.html
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Analytic Approach to Segmentation

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

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Value-Based Segmentation
Value the sum of the benefits minus the sum of
the costs Companies should try to choose and
address segments that are homogenous in the kinds
of value sought.
Homogenous Segments
Heterogenous Segments
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Segments and the Value Chain
Segment
Offering
Value Chain
Subgroupswith differingneeds
Key elements of offering ad-dressing sub-groups
in themarket segment complex offering
Several sub-groups in the market segment due to
differing needs
27
Segments and the Value Chain
Value Chain
Offering
Segment
1
2
Key elements of value chain contributing to
offering simpler chain of activities because
of simpler offering
Fewer sub-groups in the market segment due to
more homogeneous needs
28
Segmentation by Discovery

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

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Factors in Assessing Segment Attractiveness

• Size of segment
• Growth rate of segment
• Intensity of unmet needs
• Reachability of segment through communication
  channels
• Readiness of segment to reach and adopt a
  solution
• Likelihood of competitive intensity
• Sufficiency of channel reach
• Likely value contribution by channel(s)
• Match between segment needs and suppliers
  strengths
• Differentiability of suppliers offering
• Opportunity to achieve strategic goal by
  addressing segment
• Opportunity to achieve learning goal by
  addressing segments

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Attractiveness of Segments
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Market Attractiveness

• Large and fast growing segments are more
  attractive than smaller and slow-growing segments
• This necessitates accurately predicting future
  growth.
• Other issues include
• Adaptability of market segments,
• Existing relationships with the buying center
  members, and
• Available customers budget

Market Attractiveness
Competitive Attractiveness
Channel Attractiveness
Internal Attractiveness
Attractiveness Other Considerations
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Competitive Attractiveness

• What is the likely existence or emergence of
  competition in the market segment?
• Are there barriers to entry facing competitors?
• Does being first to market provide an advantage?

Market Attractiveness
Competitive Attractiveness
Channel Attractiveness
Internal Attractiveness
Attractiveness Other Considerations
33
Channel Attractiveness

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

Market Attractiveness
Competitive Attractiveness
Channel Attractiveness
Internal Attractiveness
Attractiveness Other Considerations
34
Internal Attractiveness

• A segment is more attractive when the segments
  needs can be met by the firms core competencies.
• This is identified through environmental analysis.

Market Attractiveness
Competitive Attractiveness
Channel Attractiveness
Internal Attractiveness
Attractiveness Other Considerations
35
Segment Attractiveness
Segment 1 Major Turnaround Segment 2 Stopping Deterioration Segment 3 Competitive Improvement Segment 4 Specific Area Improvement
Potential Size in 2000 (in millions) 2 187.5 3 375.0 4 562.5 4 562.5
Growth, by 2002 4 100 4 100 1 -50 5 150
Need strength 5 4 3.5 3.5
Competitive strength 3 3 4 3
Channel reach 5 5 5 5
Communications reach 4 4 4 4
Capability fit 2 5 5 2
Price sensitivity 2 3 4 3
Overall attractiveness (sum of attribute scores) 27 31 30.5 29.5
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Attractiveness Other Considerations

• Other factors that might cause a segment to rated
  higher or lower include
• Public policy (excessive government regulation
  can cause a segment to be downgraded)
• Organizational goals (market share goals may make
  firms more aggressive in targeting)

Market Attractiveness
Competitive Attractiveness
Channel Attractiveness
Internal Attractiveness
Attractiveness Other Considerations
37
3 Basic Concepts in B2B Marketing
Segmenting
Targeting
Positioning