Sales and B2B Session PDF

Business Marketing Management B2B A Business Marketing Perspective Chapter 1 1  Business Marketing Management Products like cell phones, office furniture, personal computers, and software are purchased in both the consumer and the business markets. What distinguishes business marketi...

Business Marketing Management B2B A Business Marketing Perspective Chapter 1 1  Business Marketing Management Products like cell phones, office furniture, personal computers, and software are purchased in both the consumer and the business markets. What distinguishes business marketing from consumer-goods marketing is the intended use of the product and the intended consumer. Sometimes the products are identical, but a fundamentally different marketing approach is needed to reach the organizational buyer. A Business Marketing Perspective Chapter 1 2  Who are Business Market Customers? Business market customers can be broadly classified into three categories: (1) commercial enterprises—that is, businesses; (2) institutions—for example, universities; (3) government. Example Dell, Inc.: The firm serves both the business market (B2B) and the consumer market (B2C). Importantly, however, more than 80 percent of its sales come from B2B customers. A Business Marketing Perspective Chapter 1 3  Commercial Enterprises as Consumer Business market customers, as noted at the outset of the chapter, can be broadly classified into three categories: (1) commercial enterprises, (2) governmental organizations, and (3) institutions. Commercial enterprises can be further divided into three categories: (1) Users (2) Original equipment manufacturers (OEMs) (3) Dealers and distributors. A Business Marketing Perspective Chapter 1 4  Commercial enterprises 1- Users: purchase industrial products or services to produce other goods or services that are, in turn, sold in the business or consumer markets. User customers purchase goods—such as computers, photocopiers, or automated manufacturing systems—to set up or support the manufacturing process. These products do not become part of the final product, but are used to manufacture them. 2- Original Equipment Manufacturers (OEMs) The OEM purchases industrial goods to incorporate into other products it sells in the business or ultimate consumer market. For example, Intel Corporation produces the microprocessors that constitute the heart of Dell’s personal computer. All these products become part of the end product that is sold to consumers and business customers. 3- Dealers and distributors include commercial enterprises that purchase industrial goods for resale (in basically the same form) to users and OEMs. The distributor accumulates, stores, and sells a large assortment of goods to industrial users, assuming title to the goods it purchases.  I. Commercial Enterprise examples Construction Manufactures Service Transportation Resellers Professional firms ex wholesalers companies companiesand retailers purchasing equipment and supplies to use in their operations 1. Manufactures 2. Construction companies 3. Service firms 4. Transportation companies 5. Professional 6. Resellers ex wholesalers and retailers purchasing equipment and supplies to use in their operations Chapter 2 & 3  Classifying Goods for the Business Market A-Entering Goods These are products and services that become part of other products 1- Raw materials farm products (wheat) and natural product (iron) 2-Manufactured materials and parts undergo more initial processing. Component materials such as textiles or sheet steel have been processed before reaching a clothing manufacturer or automaker but must be processed further before becoming part of the finished consumer product. B-Foundation Goods products that are used to make other products yet are not part of the end product 1- Installations include the major long-term investment items that underlie the manufacturing process as buildings. 2-Accessory Equipment example light factory equipment( lift trucks) and office equipment (desks and pc’s). Facilitating Goods products and services help an organization achieve its objectives (assist &support) 1-Supplies examples Operating Supplies (lubricants, paper) – Maintenance & Repair Items (paint). 2-Business Services Maintenance & Repair Services (e.g., computer repair) – Business Advisory Services (e.g., legal, advertising, management consulting, market research services) A Business Marketing Perspective Chapter 1 7  II- Government Government units generate the greatest volume of purchases of any customer category in the United States. Governmental units purchase from virtually every category of goods and services—office supplies, personal computers, furniture, food, health care, and military equipment. Business marketing firms, large and small, serve the government market. Chapter 2 & 3  III. Institutions Diversity is the key element in the institutional market. Because many institutions face strong budgetary pressures, they often outsource segments of their operations to specialists to enhance efficiency and effectiveness Group Purchasing: An important factor in institutional purchasing is group purchasing. Hospitals, schools, and universities may join cooperative purchasing associations to obtain quantity discounts. Chapter 2 & 3  Three Buying Situation New taskrebuy Modified Straight rebuy 1.New task 2.Modified rebuy 3.Straight rebuy Chapter 2 & 3 Three buying situation 1 - N e w Ta s k New task—the problem or need is totally different from previous experiences. Significant amount of information is required. Buyers operate in the extensive problem solving stage. Buyers lack well defined criteria. Lack strong predispositions toward a solution. Chapter 2 & 3  FR Three buying situation 2. S t ra i g h t re b u y Straight rebuy—the problem or need is a recurring or continuing situation. Buyers have experience in the area in question. Require little or no new information. Buyers operate in the routine problem solving stage. Chapter 2 & 3  FR Three buying situation 3. Modif ied R ebuy Modified rebuy—decision makers feel there are benefits to be derived by reevaluating alternatives. Most likely to occur when displeased with the performance of current supplier. Buyers operate in the limited problem solving stage. Buyers have well defined criteria. Chapter 2 & 3 Forces Influencing Organizational Buying Behavior Economic Outlook: Domestic & Global Environmental Pace of Technological A projected change in Change Forces business conditions Global Trade Relations can drastically alter buying plan. Goals, Objectives, and Organizational Strategies Forces Organizational Position Organizational of Purchasing Buying Behavior Roles, relative Group influence, and patterns Forces of interaction of buying decision participants Job function, past Individual experience, and buying Forces motives of individual decision participants Chapter 2 & 3  Buying Center Influence 1- Gate Keepers 2- Influencers 3- Deciders Chapter 2 & 3 Customer Relationship Management Strategies for Business Markets  Customer Relationship The ability of an organization to create and maintain profitable relationships with these most valuable customers is a durable basis of competitive advantage. Collaborative advantage by demonstrating special skills in managing relationships with key customers or by jointly developing innovative strategies with alliance partners. Customer relationship management (CRM) is the combination of practices, strategies and technologies that companies use to manage and analyze customer interactions and data throughout the customer lifecycle. The goal is to improve customer service relationships and assist in customer retention and drive sales growth. 17  Relationship Marketing Establishing, Stages of Relationship Marketing: Developing and 1. Selecting customer accounts. Maintaining 2. Developing account specific Successful exchanges with offerings. customers 3. Implementing relationships strategies. 4. Evaluating relationship strategy outcomes. 18 Types of Relationships The buyer seller relationships are positioned on a range with transactional exchange and collaborative exchange serving as the end points. The Relationship Spectrum  Types of Relationships 1- Transactional Exchange Centers on timely exchange of basic products for highly competitive market prices. Example: packaging materials or cleaning services. competitive bidding is often employed to secure the best term. No emotional commitment to sustaining the relationship in the future. Types of Relationships 2- Value-adding exchanges Between the two extremes on the relationship: Value-adding exchanges: where the focus of the selling firm shifts from attracting customers to keeping customers. The marketer pursues this objective by developing a comprehensive understanding of a customer’s needs and changing requirements, tailoring the firm’s offerings to those needs, and providing continuing incentives for customers to concentrate most of their purchases with them. 21 Types of Relationships 3- Collaborative exchange: features very close information, social, and operational linkages as well as mutual commitments made in expectation of long-run benefits. Alternatives are few, the market is dynamic (for example, rapidly changing technology) such as high-technology products—like semiconductor test equipment. Complexity of the purchase is high Transactional exchange centers on negotiations. Buyers seek close relationships with suppliers when they believe the purchase important and strategically significant Trust and commitment provide the foundation for collaborative exchange. 22 Types of Relationships Relationships that arise for important purchases are more likely to involve: 1- operational linkages 2- High levels of information exchange. 3- Switching costs are especially important to collaborative customers Operational linkages: reflect how much the systems, procedures, and routines of the buying and selling firms have been connected to facilitate operations. In considering possible changes from one selling firm to another, organizational buyers consider two switching costs: investments and risk of exposure 23 Types of Customers: 1. Transaction Customers: Transaction Collaborative Customers Customers Less Loyal or committed strong and lasting commitments to any supplier Operational linkages and information-sharing mechanisms Can easily switch suppliers Product and service offerings specialized to satisfy who offer attractive prices customer needs. or benefits Sales persons centers Sales and service personnel work not only with purchasing attention to purchasing managers but also with a wide array of managers on staff not senior executives. strategy and coordination issues. Customers do not change their suppliers to avoid switching costs 24 Market Segment Strategy Market segment  A group of present or potential customers with some common characteristic which is relevant in explaining (and predicting) their response to a supplier’s marketing stimuli. Four Criteria for Evaluating Potential Market Segments Measurability Accessibility Substantiality Responsiveness What are the benefits of segmentation? First, the marketer to become more familiar to the unique needs of customer segments. Second, focus product development efforts, develop profitable pricing strategies, select appropriate channels of distribution, develop and target advertising messages. Thus, market segmentation provides the foundation for efficient and effective business marketing strategies. Third, provides guidelines that are of significant value in allocating marketing resources.  Bases for Segmenting Business Market Macro-segmentation Micro-segmentation 1- Macro-Segmentation Centers on characteristics of buying organization Variables Illustrative Breakdowns 1- Characteristics of buying organization SIZE - Small, medium, large; based on sales or GEOGRAPHIC LOCATION number of employees USAGE RATE - Usage rate Nonuser, light user, moderate user, heavy user STRUCTURE - Centralized, decentralized 2- Characteristics of Purchasing Situation Type of buying situation - New task, modified rebuy, straight rebuy Stage in purchase decision process - Early stages, late stage 2- Micro-segmentation Micro-segmentation requires a higher degree of market knowledge, focusing on the characteristics of decision-making units within each macrosegment— including buying decision criteria, perceived importance of the purchase, and attitudes toward vendors. The marketer often finds it useful to divide each macrosegment into smaller microsegments on the basis of the similarities and differences between decision-making units. Micro-segmentation Variables Illustrated breakdown Key Criteria Quality, delivery, supplier reputation -Purchasing strategies -Single source... multiple sources -Structure of decision-making unit - Major decision participants (for example, purchasing manager and plant manager) -Importance of purchase - High importance... low importance - Organizational innovativeness - Innovator... follower Personal characteristic Personal characteristics Demographics - Age, educational background Decision style - Normative, Conservative, mixed mode Risk - Risk taker, risk avoider Confidence - High... low Job responsibility - Purchasing, production, engineering Methods of Forecasting Demand 1. Qualitative Techniques: a- executive judgment method, b- the sales force composite method c- the Delphi method. 2. Quantitative Techniques: a- Time series b- causal analysis Methods of Forecasting Demand 1- Qualitative techniques: Rely on informed judgment. The sales force, top-level executives, or distributors may be called on to use their knowledge of the economy, the market, and the customers to create qualitative demand estimates. The effectiveness of qualitative approaches depends on the close relationships between customers and suppliers that are typical in the industrial mark. Qualitative techniques work well for such items as heavy capital equipment or when the nature of the forecast does not lend itself to mathematical analysis. These techniques are also suitable for new-product or new-technology forecasts when historical data are scarce or nonexistent Methods of Forecasting Demand 1. Qualitative Techniques: a- Executive judgment method: Combines and averages top executives’ estimates of future sales by applying their collective expertise, experience, and opinions to the forecast Advantage Disadvantages Easy to apply and understand Does not systematically analyze cause and effect relationships when historical data are limited or unavailable, the There is no established formula for deriving executive judgment approach may be the only estimates alternative. Most suitable for new products when data are New executives may have difficulty making unavailable. reasonable forecasts The resulting forecasts are only as good as the executives’ opinions Methods of Forecasting Demand 1. Qualitative Techniques: a- Executive judgment method: Produce accurate forecasts when (1) forecasts are made frequently and repetitively (2) The environment is stable, (3) The linkage between decision, action, and feedback is short. Methods of Forecasting Demand 1. Qualitative Techniques: b- Sales Force Composite salespeople can effectively estimate future sales volume because they know the customers, the market, and the competition. It helps sales personnel understand how forecasts are derived and boosts their incentive to achieve the desired level of sales. The composite forecast is developed by combining the sales estimates from all salespeople. By providing the salesperson with a wealth of customer information that can be conveniently accessed and reviewed, customer relationship management (CRM) systems to enhance the efficiency and effectiveness of the sales force composite. Methods of Forecasting Demand 1. Qualitative Techniques: b- Sales Force Composite The advantage of the sales force composite method is the ability to draw on sales force knowledge about markets and customers. This advantage is particularly important for a market in which buyer-seller relationships are close. This method can also be executed relatively easily at minimal cost. Methods of Forecasting Demand 1. Qualitative Techniques: b- Sales Force Composite The problem with sales force composites. They do not involve systematic analysis of cause and effect. They rely on informed judgment and opinions. Some sales personnel may overestimate sales in order to look good or underestimate them in order to generate a lower quota. Management must carefully review all estimates. As a rule, sales force estimates are relatively accurate for short-run projections but less effective for long-term forecasts Methods of Forecasting Demand 1. Qualitative Techniques: C- Delphi Method The Delphi method is a systematic interactive way of gaining opinions/forecasts from a panel of independent experts over 2 or more rounds. The responses to this first questionnaire are used to produce a second. The objective is to provide feedback to the group so that first-round estimates and information available to some of the experts are made available to the entire group. Methods of Forecasting Demand 1. Qualitative Techniques: C- Delphi Method The Delphi technique is applied to long-term forecasting of demand, particularly for new products or situations not suited to quantitative analysis. This approach can provide some good estimates of demand when the products are new or unique and when there is no other data available. Like all qualitative approaches to estimating demand, it is difficult to measure the accuracy of the estimates Methods of Forecasting Demand 2- Quantitative Techniques Also known as systematic or objective forecasting. a- Time Series techniques Use historical data ordered chronologically to project the trend and growth rate of sales. The rationale behind time series analysis is that the past pattern of sales will apply to the future. A time series of sales may include trend, seasonal, repeated, and irregular patterns. Only suitable for short term forecast. Methods of Forecasting Demand 2- Quantitative Techniques b- Regression or causal analysis Identifying factors that have affected past sales and implementing them in a mathematical model. Demand is expressed mathematically as a function of the items that affect it. A forecast is derived by projecting values for each of the factors in the model, inserting these values into the regression equation, and solving for expected sales causal models are more reliable for intermediate than for long-range forecasts because the magnitude of each factor affecting sales must first be estimated for some future time, which becomes difficult when estimating farther into the future. Case Study Videos https://youtu.be/NfvOX7AXHcE https://youtu.be/MSOfOHvAbaI https://youtu.be/aRUjXpCj-sI Chapter 2 & 3  Case: The Tablet PC for Nurses: A Mobile Clinical Assistant Intel Corporation and Motion Computing, Inc., are demonstrating the result of a joint effort to increase the productivity of nurses—the Motion C5 Mobile Clinical Assistant—a tablet-style personal computer designed for use in hospitals and clinics. The idea for the product emerged from ethnographic studies that Intel conducted in the health-care setting. Here researchers observed the round-the-clock flow of activities in a hospital and meticulously recorded the key tasks performed by the nurses and professional staff, tracing their every movement. The C5 benefited from the rich insights uncovered by Intel’s study as well as from similar research that Motion Computing had completed in prior years. The companies believe that the device will help nurses handle chores such as remotely calling up medical records and doctors’ orders, charting vital signs, and exchanging information with other professionals. Chapter 2 & 3  The Motion C5, which is priced at $2,199, provides a sure-grip handle, a sealed case for easy cleaning and disinfecting, a lightweight design for portability, a 10-inch screen for easily viewing clinical information, rugged construction, and a pen and stylus input so clinicians can enter text and navigate the software without being tied to a keyboard. The innovative device also incorporates such features as integrated bar code and radio frequency identification (RFID) readers for patient identification and/ or electronic medication administration, an integrated camera, and built-in wireless connectivity. When the Motion C5 was released in 2007, about 16 percent of U.S. hospitals were using tablet PCs, and 24 percent had smaller handheld computers. Some hospitals prefer what they call COWs—computers on wheels— that can be rolled into patients’ rooms. One of the first U.S. adopters of the Motion C5 was Island Hospital, located in Anacortes, Washington. Rick Kiser, assistant director of information systems for Island Hospital, was centrally involved in the buying decision. Chapter 2 & 3  Though Island’s buying team had initially recommended adding COWs for every patient room, the nursing staff had concerns about COWs’ limitations. Kiser noted: “The single biggest issue was the COWs are impossible to clean. The sanitary aspect was a nightmare.” Holly Hoskinson, RN and clinical infomatics specialist, also noted the COWs were difficult to maneuver from room to room. “We tried a variety of cart styles but they are all still big and heavy.” Another Island RN, Chris Storm, agreed: “We wanted a device in each room and based on our budget we would have to move COWs from room to room. That option was not acceptable.” While other brands of PC tablets were evaluated, the buying team determined that the Motion C5 best met Island’s needs. Concerning the decision, Rick Kiser observed: “The thing that cinched it was that this tablet was designed for the medical environment. They are drop resistant and easy to clean and other tablets didn’t offer anything near what we needed.” Chapter 2 & 3 Discussion Questions: 1. Suggest strategies that Motion Computing might follow to speed the adoption of the Motion C5 device by hospitals. 2. Potential members of the buying center for a tablet PC purchasing decision might include hospital administrators, nurses, doctors, information technology (IT) specialists, and purchasing managers. Describe how the buying criteria emphasized by hospital administrators or purchasing managers might differ from those embraced by IT specialists or members of the medical staff. Chapter 2 & 3