Global Marketing Management

Global Product DecisionsB2B

MKTG 3231-001Fall 2013

Mrs. Tamara L. Cohen

Class # 20

Global Product Decisions

B2BReading for this class: Course Pack #8

B2B is ‘big time’

The US government is the biggest single purchaser of products & services in the country, spending > $300 billion annually.

B2B accounts for > half business activity in developed countries¹

More marketing majors begin their careers in B2B than in consumer marketing.

B 2 B : Business Business

KEY TERMS

Industrial products Derived demand ISO 9000 certification Relationship marketing Content marketing

B 2 B : Business Business

KEY CONCEPTS

Effect of technology on demand Trade shows & relationship marketing

B2B interaction

s

DEMAND is different in

Global B2B Markets1. Demand in industrial markets is more

volatile.

2. Stages of industrial & economic development affect demand for industrial products.

3. Level of technology of products & services make sales more appropriate in some countries than others.

1. VOLATILITY of Industrial Demand

• Cyclical swings in demand increased – professional buyers tend

to act ‘in concert’– derived demand accelerates changes in markets

• Minor changes in consumer demand mean major changes in related industrial demande.g. Boeing

• worldwide demand for travel services related to demand for new airplanes

• commercial aircraft industry one of most volatile

2. Degree of INDUSTRIALIZATION

5-stage model of economic development:

1. Traditional society - most important B2B demand associated with extraction of natural resources; e.g. many countries in Africa & Middle East

2. Preconditions for takeoff - manufacturing is starting. Primary needs typically related to infrastructure development, like construction, telecommunications, power generation equipment; e.g. Vietnam

3. Takeoff - manufacturing of consumer goods has begun. B2B needs focus on equipment & supplies to support manufacturing; e.g. Russian & Eastern European countries

4. Drive to maturity - industrialized economies. Focus on low-cost manufacturing of various consumer goods & some industrial goods; need all categories of B2B goods & services; e.g. Korea; Czech Republic

5. Age of mass consumption - mostly service economies. High-tech products & services sought mostly from other stage 5 suppliers + consumer products from stage 3 & 4 countries; e.g. Germany; Japan

1. Traditional society

2. Preconditions for takeoff

3. Takeoff

4. Drive to maturity

5. Age of mass consumption

3. TECHNOLOGY & Market Demand

• Trends spurring demand for technologically advanced products– expanding economic & industrial growth in Asia– disintegration of Soviet empire– privatization of government-owned industries worldwide

• Companies with competitive edge will be those whose products are:– technologically advanced– highest quality– accompanied by world-class service

B2B Promotional Activity

• Internet/Electronic Media• Trade Shows/Events • Print Advertising • Promotion/Market Support • Publicity/Public Relations • Dealer/Distributor Materials• Market Research • Telemarketing • Directories

Interactive marketing is the future for B2B marketing

Social Media is up-and-

coming

“Content marketing (custom media) is the creation and distribution of educational and/or compelling content in multiple formats to attract and/or retain customers.”

e.g. white papers

case studies

videos

articles

Content Marketing

Trade Shows:Crucial Part of B2B Marketing

• Trade shows– manufacturer can exhibit & demonstrate products to potential users– manufacturers can view competitors’ products– opportunity to create sales & establish relationships with agents,

distributors, franchisees & suppliers

• Online trade shows– useful in difficult economic / political circumstances– poor substitute for live trade shows

• Secondary marketing methods - print advertising, catalogs, web sites, direct mail

• Total annual media budget on trade events:Europeans 22% Americans 5%

Trade shows

Relationship Marketing

in B2B Contexts• Not a matter of selling right product 1st time

– instead sell continuously changed product to keep it right over time

• Objective of relationship marketing – make relationship an important attribute of

transaction + differentiate from competitors• Use Internet to facilitate relationship building

and maintenance

Quality is Defined by the Buyer

• lack of universal standards• country-specific standards• metric system• ISO 9000 Certification =

International Standard of Quality ISO 9001 certification

of a fish wholesaler in

Tsukiji

• Customer – initiate inquiry

• Sales engineer – initial customer contact

• Application engineer – find best product match

• Engineering & control systems – design

• Project manager – manage project & liaise

• Manufacturing technicians – produce, assemble, test

• Customer services – installation & start-up

• Suppliers – provide materials & components

• Service engineer – after-sales service & maintenance

Global Project Team

B2B SERVICE

S

Support Services

• Deliveries • Warranty• Spare parts• Repair and maintenance• Installation• Instructions• Other related services

Marketing Consumer Services Globally

• Consumer services characteristics– intangibility– inseparability– heterogeneity– perishability

• Service can be marketed – as industrial (B B) – as consumer service (B C)

Business Services• For many industrial products, revenues from

associates services > revenues from products– cell phones– printers

• Leasing capital equipment• Services not associated with products

– Boeing at-sea-satellite-launch services– Ukrainian cargo company rents space on giant

jets– professional services (advertising, banking,

healthcare, etc.)

After-Sale Services• Installation• Training• Spare and replacement parts

– delivery time– cost of parts

• Service personnel• Almost always more profitable than actual

sale of machinery / product • Crucial in building strong customer loyalty

Services Opportunities

in Global Markets• Tourism – int’l tourism largest US services export

• Transportation• Financial services• Education – 2007: >600,000 foreign students, tuition $11 billion

• Communications – phone services

• Entertainment – sporting events sold all over the world

• Information – Internet, etc.

• Health care – foreigners come here; US facilities abroad too

Next class: Global Product Decisions B2C

Preparation: Read Course Pack #9