final b2b exam summary
DESCRIPTION
Summary of important marketing concepts.TRANSCRIPT
What is the Value in Business Markets?
1. Monetary terms: dollar per unit, euros
per liter…
2. Economic, technical, service and social
Benefits: Net benefit
3. Exchange: what a customer firm gets in
exchange for the price it pays.
When does a value change?
a. when Customer’s price changes
as functionality or performance
remain the same.
b. Functionality or performance
changes as price remains the
same.
Customer incentive to purchase
Customer incentive to purchase is
the difference between value and
price.
Business market Process
“A collection of activities that
takes one or more Kinds of input
and creates an output that is of
Value to the Customer.
Can you describe how to use the busi-
ness product/ service?
-Used to manufacture other products
-Become part of other products
-Aid in the normal operations of an or-
ganization
-Are acquired for resale without change
in form.
What are customer drivers? -Are Factors that influence your decision -Offering (tangible +intangible)< price: =Tangible: Product + service +revenue (Eg. Automated, Accurate, quick, safe, good service) =Intangible: Knowledge and benefits (Qual-ity=taste, prestige, trendy). Business success: i.e. increase market
share and loyalty while maintaining/im-
proving profitability.
What are the main steps to evaluate/measure offering alternatives? 1. Identify market offering and next-best alternative 2. List all value and price elements the market offering delivers (all bene-fits And/or cost elements that a market offering provides or affects in the customer’s Usage system. These benefits and cost elements may be technical, economic, service or social in nature) 3. Categorize difference of value and price elements relative to next-best alternative in terms of: 1.Points of Parity, 2.Points of Difference 3.Points of Contention 4. Focus on points of difference. Points of contention may surface 5. Write word equations for each quantifiable point difference. 6. Gather data and assumptions
Customer Value analysis To be successful, businesses need useful and practical ways to
• capture customer needs • measure how well they’re satisfying those needs compared to the competition • Build action plans to be able to deliver this value
Customer Value Assessment Process (3 steps below)
Market Sensing: generating knowledge
about the market that individuals in busi-
ness use to inform and guide their decision
making.
.
Knowledge Management: processes and sup-
porting systems firms use to gather know-how,
best practices, and learning that potentially has
value elsewhere in the firm, convert them into a
form that can be readily found and understood,
and then made accessible for reuse more broadly
within the firm.
Market Segmentation: Partitioning a market into
groupings of firms that have similar requirements
and preferences for market offerings within each
grouping and relatively different requirements
and preferences between groupings
Measurable?-Can the size, growth, and market
potential of a segment be measured?
Profitable?-How profitable is the marketing ef-
fort likely to be? What is the payoff from each
segment?
Accessible?-Can segments be identified and
reached successfully?
Actionable?-Can effective marketing and sales
programs be formulated for attracting and serv-
ing the segment?
Market Potential: identifies the maximum units of a defined product
or service capable of being purchased within a geographic area during
a designated time period
Total Market Demand: a prediction of the actual number of units that
will be purchased. 4 steps to determine TMD.
1.Define the market,
2. Divide total industry demand into its main components,
3. Forecast the drivers of demand in each segment and project how
they are likely to change,
4. Conduct sensitivity analyses to understand the most critical assump-
tions and to gauge risks to the baseline forecast
Knowledge about competitors used in:
1)Crafting their own market strategy, 2)Anticipating competitor’s reactions
to their strategy, 3)Deciding what reactions to make in response to competi-
tor's action in the market
Value Assessment: work process of obtaining an estimate of the
worth in monetary terms of some present or proposed market offer-
ings or elements of it.
Phase 1-Conceptualize Value
Phase 2-Formulate and Substantiate value prop-
osition
Phase 2- to both formulate and substantiate the VP
it is important to be able translate.
Phase 2
Role of customer feedback
-Can remedy problems and retain a customer’s
business
-Provides early warning of changing customer re-
quirements and preferences
Feedback from three distinct customers:
New Customers, Established Customers and Cus-
tomers that recently stopped doing business
Overall Customer Satisfaction: represents a cu-
mulative evaluation of a firm’s market offering,
rather than a person’s evaluation of a specific
transaction
Understanding Firms as Customers: process of
learning how companies rely on a network of sup-
pliers to
-add value to their offerings
-integrate purchasing activities with those of
other functional areas and outside the firms
-make purchase decision
Purchasing: process of acquiring resources and
capabilities for the firm from outside providers
Purchasing Orientation: philosophy that guides
managers who make purchasing-related decisions
and delineates their domain and span of influence
Buying orientation
Central Pursuits:
-Obtain the best combination deal: price, qual-
ity, and supplier availability
-Maximize power over suppliers
-Avoid Risk whenever possible
Procurement orientation
Firm seeks to increase productivity through:
-Improving quality
-Reduced total cost of ownership
-Cooperating with suppliers
Total cost of ownership:
applies activity-based costing (ABC) concepts
and methods to quantify all expenses related to
the use of a product or service apart from price.
Learning the Customer’s Purchase
Process
Straight Rebuy: a problem or need
that is recurring or continuing re-
quirement. Buyers have experience
in the area.
New Task: a perceived problem or
need that is totally different from
previous experience. Buyer need
significant amount of info.
Modified rebuy: decision makers
feel there is benefit of reevaluation.
(Eg. Dissatisfaction with the sup-
plier)
The buying Organization, What are the roles in a buying center?
How do the organizational forces linfluence
the buying process
1. Type of organization
2. Size of organization
3. Structure of organization
4. Organization culture and procurement strat-
egy
Crafting a Market Strategy:
-Studying how to exploit a
business’s resources to
achieve short-term and long-
term marketplace success
-Deciding on a course of ac-
tion
-Flexibly updating it as learn-
ing occurs
Operational effectives: is defined as performing similar activities better than rivals perform them. Strategy: is defined as the creation of a unique and valuable position involving a different set of
activities
Core competence:
something a firm
does particularly
well.
Distinctive compe-
tence: something a
firm does better
than competitors.
Resource-based view
Resources are anything that generate greater value for a firm. Eg. Technical know-how
equipment, staff and capital.for a resource to
be a source of competitive advantage it has to pass 5 market tests; 1. Inimitability (how difficult the resource is to copy or the length of time of copying it) 2. Durability (How long the resource will last) 3. Appropriability (To what extent competitor can capture the value) 4. Substitutability (To what extent different resources can provide same performance) 5. Competitive superiority (How does the re-source compare to competitors’)
Options for market strategy
Defensive: Aim to retain present cus-
tomers and strengthen what already
strengths.
Offensive: Aim to gain new customers
and focus on own weaknesses
Alternative: composite of both
Fundamental value-based strategies, know where your business stands in
this model
Product Leadership:
-Relentless pursuit of innovation
Customer Intimacy:
Segmenting and targeting markets and tailoring offerings to match demands
of those niches
Operational Excellence:
-Providing customers with reliable products or services at competitive prices
and delivered with minimal difficulty
Core Competencies
Determining firm’s core competencies:
1. Provide potential access to a wide variety of market
2. Make significant contribution to the perceived customer benefits of the
end-product
3. Difficult for competitors to imitate.
Constructing Strategy
What do we know: Review recent per-
formance, Gather essential market info,
Construct scenarios
What do want to accomplish? Setting
goals(longer term strategic direction)
and objectives(near-term more measura-
ble standards)
Customer Value proposition
How will we do it:
Develop an Action Plan(Translates the mar-
ket strategy into the coordinated activities
and specific resources the firm will use to at-
tain what it wants to accomplish)
-Develop a Sales and Marketing Program
-Take Stock of Implementation Skills
-Learn and Adapt
Steps to create value for targeted segment?
Market offering
-Core product
-Minimally augmented
products
-Augmented product
-Potential Product
Flexible market offering
Service element deployment is important as it allows
choices to be made
Implement flexible marketing
Option Menu: The option menu approach makes
the flexible market offering transparent to the
customer by listing all optional elements. The cus-
tomer has the primary responsibility for tailoring
the market offering to its perceived requirements. Tailored Package: keeps the flexible market offer-
ings unexpressed to customers. Working with the
customer, the salesperson develops a list of speci-
fications and then crafts an offering based on a
menu of options than only she sees.
Branding Strategy
A brand is a descriptor of the promised value
that a market offering delivers to target cus-
tomers and a means of differentiating this
value from that of other offerings.
Business types
Product business
-No supplier insecurity
-No buyer insecurity
-Single transition
-Market segmentation
=Commodity market: Product business in
markets with low level of innovation
-Strong competition-price policy important
-Product differentiation hard to achieve
Pricing
Specialty market: Products
business in markets with low
level of standardization.
-Market can be shaped with
innovative offers
Price:
-Pricing power is considera-
bly larger
Limited comparability of
products, no direct compa-
rable market price.
-Large scope of settingprice-
value pricing
Willigness to buy
The buying organization determines ist wil-
ligness to pay
Project Business
-Passive acquisi-
tion
-Active acquisi-
tion behavior
-handover project to
owner
-settlement of punch
list
-Manage claims
for change
-Provide agreed
performance
Negotiation
Team:
-who is negoti-
ating
-How to nego-
tiate
-what is nego-
tiated()tech-
nical aspects.
Quotation
phase: Sub-
phases(budg
et inquiry,
budget ten-
der, Firm in-
quiry, Firm
tender)
OEM Business(Original Equipment Manufacturer):
a company whose products are used as compo-
nents in another company’s product
-Supplier insecurity
-Buyer insecurity
-Re-buy
-Individual buyer
Characteristics of OEM
-Long-term r/ship, customer becomes dependent.
-substitution of business partner is difficult
-Long-term interdependency
How can you manage the busi-
ness relations?
1. Entering business r/ship
2. Sustaining business r/ship
3. Termination of business/ship
Supplier selection
-Innovation potential
-Customer integration potential
-Flexibility potential
Market activities in the selection
phase
-Adapting concepts: Alignment of
customer’s requirement
-other concepts:Active influence
of customer needs by sharing
own ideas.