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Developed by Cool Pictures and MultiMe dia Presentations Copyright 2007 by South-Western, a division of Thomson Learning, Inc. All rights reserved.

Chapter One

A BusinessMarketing

Perspective

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Challenges of business marketers

1. Understanding deep customer

needs in new ways.

2. Identifying new opportunities

for organic business growth.

3. Improving value managementtechniques and tools.

4. Calculating better marketing

performance and

accountability metrics.

5. Competing and growing inglobal markets, particularly

China.

6. Countering the threat of

product and service

commoditization by bringing

innovative offerings to market

faster, and moving to morecompetitive business models.

7. Convincing c-level executives

to embrace the marketing

concept and support robust

marketing programs.

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Business problems

I would like to share a problem I am facing nowadays Ihave recently joined a company manufacturing PlasticProducts. From Last two years they have been workingon a plastic bobbin. The Bobbin is basically designed for

dyeing yarn, and this bobbin has to bear a temperatureof 150 degree c and have to bear a weight and suddenfatigue of other bobbin weighing 6 to 7 kgs. The processis that thread is first wounded over at this bobbin. Thenthis bobbin is dipped in a dye having a temperature ofmore than 150 degree centigrade. Then this bobbin is

placed on a shaft at this stage bobbin has at least 7 kilosof weight. Similar bobbin is when stacked on this bobbinthe bobbin starts cracking from its base. I have triedpolyacetal, nylon ABS and Nylon but all vent in vain

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Business Markets

Local to international

Bought by

Businesses

Government bodies

Institutions

For consumption (process material,office supplies, consulting services)

For use ( installations or equipments)

For resale

What differentiates business marketing

from consumer marketing?Intended use of products and intended

consumer.

Markets for products and services


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B2B versus B2C MarketingCharacteristic B2B Market B2C Market

Sales volume Greater Smaller

Purchase volume Greater Smaller

Number of buyers Fewer Many

Size of individual buyers Larger Smaller

Location of buyers Concentrated Diffuse

Buyer-seller relationship Closer More Impersonal

Nature of channel More direct Less direct

Buying influences Multiple Single/Multiple

Type of negotiations More complex Simpler

Use of reciprocity Yes No

Use of leasing Greater Less

Key promotion method Personal Selling Advertising

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Figure 1.2

The Consumer Market (B2C) and the Business Market (B2B) at

Dell, Inc.

B2B

Customers

B2C

Individuals &

Households

Businesses

GlobalLargecorporations

Small & Mediumsized businesses

Institutions

HealthcareEducation

Government

FederalState

Local

Selected

Products

PCs

PrintersConsumer Electronics

Simple ServiceAgreements

PCs

Enterprise StorageServers

Complex Service Offerings

Dell, Inc.

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A Market Driven Firm

Market sensing capabilitycompanys ability

to sense change and to anticipate customer

responses

Customer linkingthe ability to develop and

manage close customer relationships

Has:

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Marketings Cross Functional Relationship

Business marketing planning must

be coordinated and synchronized

with corresponding planning efforts.

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Business Market Characteristics

Derived demand

Fluctuating demand

Stimulating demand

Price sensitivity/demand

elasticity

Global Market perspective


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Relationship Marketing

All marketing activities directed toward

establishing, developing, and maintaining

successful exchanges with customers

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Michael Porter and Victor Millar observed that to gain competitive

advantage over its rivals, a company must either perform these activities at

a lower cost or perform them in a way that leads to differentiation and a

premium (more value).

The Supply Chain

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Business Market Customer

Commercial Enterprises

Three categories:

Users

OEMs Dealers and distributors

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OEMs

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Market size and estimation

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Impact

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Impact

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Classifying industrial goods by

the following questions:

How does the good or service

enter the production process?

How does it enter the cost

structure of the firm?

Classifying

Goods for the

Business

Market

Source: Adapted from PhilipKotler, Marketing

Management: Analysis,Planning, and Control, 4th ed.

(Englewood Cliffs, N.J.:

Prentice-Hall, 1980), p. 172,

with permission of Prentice-

Hall, Inc.

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A Framework forBusiness Marketing Management

Business marketing strategy

is formulated within the

boundaries establishedby the corporate

mission and

objectives.

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Financial return on marketing investment

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Innovation vs. commoditization

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Discussion

Dell Computer has excelled with a fast-paced build-to-orderapproach that involves taking customer orders online, orchestratingproduction tailored to each customer, and forging a one-to-onerelationship with the customer after the sale. Some auto industryexecutives have turned to Michael Dell, the company founder, foradvice concerning how to make their businesses look like his.Senior executives at Ford, for example, envision a future wherecustomers will order online and factories will build to order,eliminating billions of dollars of inventory costs (for example, largestocks of vehicles on hand). All of those mass produced cars sittingfor weeks on dealer lots represent a massive investment that yieldsno return until a buyer comes along.

a. Evaluate the feasibility of a build-to-order system for anautomaker like Ford and outline the key requirements that Ford mustmeet to make the strategy work for a potential customer like you.

b.How would a build-to-order system alter the way in whichsuppliers (business marketers) would serve Ford as a customer?

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Discussion

Consider some leading-edge consumer product

manufacturers like Procter & Gamble, Gillette, or Coca

Cola. What major differences would you expect to find in

comparing the marketing strategy patterns employed by

these consumer-products companies to those of leading

business marketing firms such as Intel, 3M, or Dow

Chemical? Next, describe the similarities and differences

that emerge when comparing the distinctive attributes of

a leading-edge consumer products marketer to a firmthat demonstrates superb skills serving customers in the

business market.

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