Session 1 - 2 Overview of BM

Rangan Mohan Confidential

Introduction to the courseBusiness Marketing

Rangan Mohan


Course outline• Lecturer: Rangan Mohan• Number of lectures: 20 • Evaluation

– Class Participation / Attendance 10%– Mid Term 30%– End Term 40%– Assignments 10%– Quizzes 10%


Contact details• Rangan Mohan• [email protected]• Mobile 98450 28426• Classes on Friday mornings and Saturday

mornings• Available on Friday evenings and Saturday

mornings


Course objectives• To understand what business marketing is in

the networked economy.• To evaluate theories and concepts for

managing business markets.• To apply business marketing models for

managing business relationships.• To successfully carry out Business

Marketing• To understand the implications of technology

and the Internet for business marketing.


Learning objectives• Understand the characteristics of business markets and business

customers.• Explain the nature of business marketing, business solutions and

uncertainties of both customers and suppliers.• Illustrate the inter-connected nature of business relationships and

networks of relationships.• To explain how each relationship is part of a complex network of

relationships.• Understand ways of offering solutions and dealing with

uncertainties.


Definition

Business marketing is the task of selecting, developing and managing customer relationships for the advantage of both customer and supplier, with regard to their respective skills, resources, technologies, strategies and objectives (Ford et al. 2002).


Differences between consumer & business purchases - real or not?

• Fewer Customers, larger deeper longer relationships• More people involved in business purchases. • Business purchases are often much more complex.• Application of the 4P’s / 7P’s would be different• The people involved in a business purchase are

professional. • A business purchase may take a long time.• Each business customer is individually important.• A business purchase is part of a complex relationship

between customer and supplier.


Business Markets

Local to international– Bought by

• Businesses– End Users

– OEMs

– Distributors, Dealers and VARs

• Government bodies

• Institutions– For consumption

– For use

– For resale


A Market Driven Firm has :

Customer linking capability …the ability to develop and manage close customer relationships..

Market sensing capability…companies ability to sense change and to anticipate customer responses.


Business Market Characteristics

• Derived demand – the Bullwhip Effect

• Fluctuating demand

• Stimulating demand

• Price sensitivity/demand elasticity

• Global Market perspective


Types of Goods

• Entry Goods– Raw Materials

• Farm Products• Natural Products

– Manufactured Materials and Parts• Component Materials• Component Parts


Types of Goods - contd

• Foundation Goods– Installations

• Building and Land• Fixed Equipment

– Ancillary Equipment• Light Factory Equipment• Office Equipment


Types of Goods - contd

• Facilitating Goods– Supplies

• Operating Supplies • Maintanence and Repair Items

– Business Services• Maintanence and Repair Services• Business Advisory Services


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 Philip Kotler, Marketing Management: Analysis, Planning, and Control, 4th ed. (Englewood Cliffs, N.J.: Prentice-Hall, 1980), p. 172, with permission of Prentice-Hall, Inc.


Things to remember …1. Our unit of analysis isn’t a sale, project or market, but

each relationship as part of a portfolio of relationships. 2. We can only make sense of a single purchase by

looking at the relationship of which it forms part.3. Business relationships are a company’s primary assets.

Without them it cannot buy, sell, produce or deliver.4. The development of relationships requires investment

of time, money and resources.


Relationship Marketing• All marketing activities directed toward establishing,

developing, and maintaining successful exchanges with customers.


Business relationships are ways to obtain resources

• Business relationships develop and exploit the skills, resources and technologies of both companies.

• Relationships link the activities of companies, tie their resources and form bonds between individuals.

• Different relationships, have different actual and potential benefits to the supplier and to the customer.


Problem solving in business-to-business relationships

Through offering developed jointly with a customer:• An offering only has value as a solution to a specific

customer problem. • A different marketer can compete, even with an identical

product by differentiating any of other offering element. • Sometimes neither product nor service nor logistics are

most important. Instead advice is critical.• Buying an offering involves a range of costs for the

customer, as well as purchase price.


Supplier viewpoint

An offering…• A package consisting of different proportions

of the elements of physical product, service, advice, adaptation and logistics and the costs that it involves.

• The package = Product + Service + Ideas + Solutions


A Solution…A customer is only concerned with how effective an offering is as a solution to its problems.

Same Product – different solutions


Offerings and solutions• Consider offerings as solutions for customers, not just

their specifications. • Compare offerings with other solutions through the

eyes of the customer. • Advise customers on the choice of solutions. • An offering is of no value, unless it is fulfilled.• Actually fulfil the offering for each customer, at the

promised time, place, performance and consistency.


Customer’s role in successful solutions

• Customer is an active participant in developing a successful solution

• Clear problem definition.• Use the right tools in building relationships. • Skills in developing an offering with a supplier and

ensuring that it is fulfilled.• Skills in integrating an offering with its own

offering.


Uncertainties in business relationships

Supplier uncertainties• Capacity – how much

can we sell?• Application – how can

the offering be effectively used?

• Transaction – will the customer actually buy what it says?

Customer uncertainties• Need – when the problem

is difficult to determine. • Market – when the range

of possible solutions is wide or technology is changing rapidly.

• Transaction – when the concern is about fulfilment.


Abilities

Supplier abilities• Problem solving

ability – to design and develop an offering.

• Transfer abilities – to fulfil an offering

Customer abilities• Demand ability – to

advise on offering design and/or provide volume of business.

• Transfer ability – reliability in providing orders and information.


Conclusion• Business relationships require development and

management. • Both supplier and customer are active parties in a business

relationship. • Business relationships are ways to access resources. • Offerings and solutions are jointly developed in the face of

uncertainties.• Matching capabilities between supplier and customer is

critical in transfer of business solutions.

Documents

Session 1 - 2 Overview of BM