B2B Marketing

Prepared By:

Sandeep
Assistant Professor
Kedarnath Aggarwal Institute of Management (KAIM)
R.K.Gupta Marg, P.Box No.-5,
Charkhi Dadri - 127306 (Haryana)
(M)- 9996117410
 Business to Business Marketing
 Business: Any organization or firm actively involved in the
transaction of goods and services to the consumers/end
users is known as business.
 Business to Business Marketing
 Business: Any organization or firm actively involved in the
transaction of goods and services to the consumers/end
users is known as business.

 Marketing: It is an organizational function and a set of

process for identification and anticipation of customer’s need
and wants and try to satisfy them profitably.
 Business to Business Marketing
 Business to Business Marketing: refers to the exchange of
either goods or services or both between two businesses
(organization/firm).
 For example: a small and proprietary firm, giving technical advice
(or services) to paint-manufacturers is also doing business marketing.
 The Business Market versus the Consumer Market
Business Market: the business market consists of all the
organizations that require good and services used in the
production of other products or services that are sold, rented
or supplied to the others.

 Consumer Market: It is a market that involves the sale of

goods/services to the end-users.
 if you are selling, say books, groceries, bags, or shoes, that are
purchased by customers who are going to use or consume it finally,
then you are in the consumer market.
 The Business Market versus the Consumer Market
 Characteristics of business market:
 Fewer, Larger Buyers
 Close Supplier-Customer Relationship
 Professional Purchasing
 Several Buying Influences
 Multiple Sales Calls
 Derived Demand
 Inelastic Demand
 Fluctuating Demand
 Geographically Concentrated Buyers
 Direct Purchasing
 Buying Situations
 Straight Rebuy: It is a buying situation in which the buyer
routinely reorders something without any modifications
(Like: office supplies)
 Modify Rebuy: It is a buying situation in which the buyer
wants to modify product specifications, prices, terms, or
suppliers.
 New task: It is a buying situation in which the buyer
purchases a product or service for the first time.
Types Of Business Customers
Types Of Business Products And Services
Stages in the Business Buying Process
 Stages in the Business Buying Process
 Problem Recognition: In the first stage of the business buying process. A
certain problem is recognized by someone in the organization. So that it can be
solved through the purchase of any new product or service.

 External or internal stimuli result in the creation of such a recognized

problem.
 Internal stimuli: The management of the organization may determine to
manufacture a new product. Nor any production machine becomes
damaged that needs certain new parts. Another internal reason may be
that the supplier is not providing effective goods at a fair price.
 External stimuli: The external elements may be in the form of any new
idea of a product. Even at a trade show or seeing new advertisements.
Nor any favorable offering by a salesperson, etc.
 Stages in the Business Buying Process
 General Need Description: This phase involves determination of the
characteristics and quantity of the needed item. The general characteristics could
be reliability, durability, price etc. and the marketer along with the purchasing
manager, engineers and users can describe the needs.

 The questions that could be posed are:

i. What performance specifications need to be met?
ii. What types of goods and services should be considered?
iii. What are the application requirements?
iv. What quantities would be needed?
The answers to such questions will give the marketer a general description of
the need which will be the input for the next phase.
 Stages in the Business Buying Process
 Product or Service Specification: Obtaining the input from the second
phase, the buying organisation has to develop the technical specifications of the
needed items.
 Stages in the Business Buying Process
 Supplier Search: This phase pertains to the search for the qualified suppliers
among the potential sources. This phase only involves making a list of qualified
suppliers. The marketer has to ensure that he is in the list of potential suppliers.
For this to happen,
 He has to make periodic visits to all potential companies and create
awareness.
 Brochures have to be circulated and advertisements placed in specific
media like trade journals.
 Stages in the Business Buying Process
 Proposal Solicitation: In this stage, the suppliers are asked to submit their
proposals.
 In some cases, some suppliers send only their salespersons or simple
catalogs. However, when the desired product is more expensive and complex.
Than proper formal presentations and detailed written proposals are required
from the qualified suppliers. So the marketers of business organizations
should also be skillful in writing. As well as in presentation of business
proposals to the buying organizations.
 Stages in the Business Buying Process
 Supplier Selection: In this part of the process, supplier proposals and prices
are evaluated to determine who is offering the best price and the best quality.
 Following are some of the main attributes that serve as the basis for the
selection of potential suppliers.
 Quality of product
 Delivery time
 Ethical corporate behaviour
 Reasonable price
 Honest communication
 Past performance and reputation
 Repair and maintenance services etc.
 Stages in the Business Buying Process
 Order-Routine Specification: After the suppliers have been selected, the
buyer negotiates the final order, listing the technical specifications, the quantity
needed, the expected time of delivery, return policies, warranties etc
 Stages in the Business Buying Process
 Performance Review: The final phase in the purchasing process consists of a
formal or informal review and feedback regarding product performance as well as
vendor performance.
 The buyer may contact the end user and ask for their evaluations which are
in turn given to the supplier or he may rate the supplier on several criteria
using a weighted score method or the buyer might also aggregate the cost of
poor supplier performance to come up with adjusted costs of purchase
including price
Stages in the Business Buying Process
FORCES INFLUENCING ORGANIZATIONAL BUYING BEHAVIOR
 Environmental Forces
 PESTEL forces shape organizational buying behavior.
 Changes in the environment such as business conditions,
technological advances or new legislation can affect buying plans.
 Environmental Forces - Economic Influences
 Not all companies are affected equally.
For example, high interest rates may affect housing starts but may
not affect food products, medical or transportation services.
 Since much of business is driven by derived demand,
business marketers must be sensitive to changes in the
consumer market.
 Also, the economy can determine a company’s ability or
willingness to buy. If the economy is bad, companies often
put off purchasing until they see a change.
 Finally, there is an affect from foreign competitors such
as China and India. Both have strong labor saving costs as a
competitive advantage.
 Environmental Forces - Economic Influences
Technology is changing so quickly that yesterday’s
technological advancement is today’s electronic commodity.
Example: Computers
 However, all companies need to stay alert to these
changes.
 For example, Blockbuster is feeling the pinch of Netflix, Internet
and satellite movies-on-demand.
Technological change—especially from the Internet—is
drastically changing the way companies do business.
FORCES INFLUENCING ORGANIZATIONAL BUYING BEHAVIOR
 Organizational Forces
 The role of procurement and supply chain management
have become more important.
 Growing influence of purchasing.
 Companies are outsourcing many activities such as
manufacturing, marketing, accounting, etc.
 Rising material costs and customer’s resistance to price increase.
 Organizational Forces
 The role of procurement and supply chain management
have become more important.
 Growing influence of purchasing (STRATEGIC PRIORITIES IN PURCHASING)
)
 Organizational Forces
 The role of procurement and supply chain management
have become more important.
 Growing influence of purchasing.
 Companies are outsourcing many activities such as
manufacturing, marketing, accounting, etc.
 Rising material costs and customer’s resistance to price increase.

 Organizational Positioning of purchasing.

 Centralization Vs Decentralization Purchasing

o Centralization Purchasing: A separate organizational unit has authority for

purchases at regional, divisional, or headquarters level.

o Decentralized purchasing allows local branches to purchase what they

need. This results in local control, and for many kinds of
services this makes sense.
FORCES INFLUENCING ORGANIZATIONAL BUYING BEHAVIOR
 Group Forces
 Along with multiple buying influences, group forces are
critical in organizational buying decisions.

There are three questions that need to be addressed:

o Who takes part in the buying process?

o What is each member’s relative influence in decision?

o What criteria is important to each member in evaluating the supplier?

Answering these questions puts the salesperson in a better position to become the
chosen supplier.
Decision Making Unit (DMU) or Buying Centre
It provides rich insights into the role of
groups in organizational buying behavior.
Buying Centre Roles
 Key Members of Buying Centre
 Top Management Persons The top management in a business
organisation consists of managing director, director, president, vice-
president or general manager. They are generally involved in:

 Purchase policy decisions such as diversification into a new

product/project,
 Approval of purchase or materials department annual budgets and
objectives,
 Deciding the guidelines for purchase decisions.

For purchases of high value capital equipment, the top management in

most firms get involved in the supplier selection, as it may have a major
impact on the firm’s operations.
 Key Members of Buying Centre
 Technical Persons: The technical persons are design engineers,
production manager, maintenance manager, quality control manager,
R&D manager, and industrial engineers. They are generally involved in:,

 Product specification or description

 Technical evaluation of offers received from suppliers
 Negotiations with suppliers
 Performance feedback on products supplied
 Visiting the factories of potential suppliers to gain more
information and assurance of manufacturing capability.
 Key Members of Buying Centre
 Buyers/Purchasers (or Purchase/Materials Department) Buyers are the
persons in the purchase or materials department. They may be senior
executives or managers, and also, at junior levels, purchase officers or
assistants. They are generally involved in:

 Purchase activities
 They coordinate with technical persons, top management, accounts or
finance persons within an organisation, as well as, with suppliers or vendors
externally.
 Buyer’s influence on selection of suppliers is considerable
 They are conscious of keeping good relations with other decision
making members within the organisation and also with the suppliers.
 Key Members of Buying Centre
Accounts/Finance Persons (or Department) The contribution of
finance/accounts persons are seen while finalising commercial terms
such as:

 Modes of payment,
 Issuance of bank guarantees,
 Financial approval of capital purchases,
 Issuing payments to suppliers, and so on.
 Key Members of Buying Centre
 Marketing Function When a purchase decision has an impact on the
marketability of a firm’s product, marketing people become influencers
in the buying decision process.

 For example, a firm manufacturing and marketing electric motors had to

change its packing due to damages caused to the product in transportation.
This in turn affected the satisfaction level of the customers. The marketing
manager insisted that suppliers should use good quality and thicker wood
for packing the motors to minimise damage in transit.
FORCES INFLUENCING ORGANIZATIONAL BUYING BEHAVIOR
 Individual Forces
 Individuals make the buying decision, not organizations.
 Each member has a unique personality, experience and motive, and are
subject to risk and rewards.
 Professional marketers understand this and make sure that they learn to
recognize and match to it.
 Individual Forces
Evaluative Criteria: These are the specifications that organizational
buyers use to compare alternatives industry products and services.
 Industrial product users value:
1. Prompt delivery
2. Efficient and effective service
 Engineering values:
1. Product quality
2. Standardization
3. Testing
 Purchasing values:
1. Price advantage and economy
2. Economy in Shipping and forwarding
 Individual Forces
Evaluative Differences: Product perceptions and evaluation criteria
differ among organizational decision makers.
 Education :
1. Engineers have a different educational background than purchasing agents.
2. Exposure to different types of information from different sources, the way
they interpret and retain relevant information.
 Dispositions: Various occupations have different dispositions
1. Engineers are usually cold, analytical and suspecting.
2. Salespeople are usually warm, open and Optimistic.
FORCES INFLUENCING ORGANIZATIONAL BUYING BEHAVIOR
 Effect of IT on purchase behavior
 Purchase behaviour : It is the study of individuals, groups, or
organizations and all the activities associated with the buying and
using products.
 Effect of IT on purchase behavior
 Purchase behaviour : It is the study of individuals, groups, or
organizations and all the activities associated with the buying and
using products.

 Business buyer behavior refers to the buying behavior of the

organizations that buy goods and services for use in production of
other products and services that are sold, rented, or supplied to others.
 Effect of IT on purchase behavior
The B2B market has been radically altered in recent years through
informational technology.
 Extensive research into problems and solutions: Digital B2B consumers
seek relevant information throughout their purchase journey – from
identifying the problem through selecting a vendor and even post-
purchase.
 Buyers expect personalized experiences: A majority of buyers expect
personalized experiences while interacting with companies.
 Decision support: Managers in the modern organization have virtually
unlimited access to information technology (IT) for their decision
support needs.
 Electronic transactions: Many transactions that once required personal
interaction can now be done electronically, with little human involvement.
 Effect of IT on purchase behavior
The B2B market has been radically altered in recent years through
informational technology.
 Mode of communication: The internet has become the
communication mode of choice and sometimes of necessity for
connecting divisions and employees located in dispersed location.
 E.g. Consider a sales person on a sales call far from his or her company
headquarters. By logging into the company's database, the sales person
can quickly find information about the product availability and order status
and even consult with his or her supervisor about important negotiation
points, such as price and discounts.
 Interactions with the supplier: Buying organizations now expect to be
freed from routine interactions with the supplier.
 Effect of IT on purchase behavior
The B2B market has been radically altered in recent years through
informational technology.
 The internet is equally useful for communication between businesses
through private exchange.
 A private exchange occurs when a specific firm (either buyer or seller)
invites others to participate in online information exchange and
transactions.
 These exchanges help streamline procurement for distribution processes
o Saves cost
o Saves time
o Efficient supply chain
 Effect of IT on purchase behavior
The B2B market has been radically altered in recent years through
informational technology.
 Online Auctions: English Auction Vs Reverse Auction
 Auction (Forward Auction / English Auction): buyers compete to obtain
goods or services by offering increasingly higher prices.
 Reverse Auction: In contrast, in a reverse auction, the sellers compete
to obtain business from the buyer and prices will typically decrease as the
sellers underbid each other.
 MARKET OPPORTUNITY ANALYSIS
The word opportunity comes from the Latin opportunitas, meaning
fitness or advantage.
 It represents a favorable circumstance for the attainment of a goal.
 MARKET OPPORTUNITY ANALYSIS
The word opportunity comes from the Latin opportunitas, meaning
fitness or advantage.
 It represents a favorable circumstance for the attainment of a goal.
 MARKET OPPORTUNITY ANALYSIS (MOA): It is the system used to
determine the attractiveness and probability of success.

Where we hear the word opportunity?

 MARKET OPPORTUNITY ANALYSIS
The word opportunity comes from the Latin opportunitas, meaning
fitness or advantage.
 It represents a favorable circumstance for the attainment of a goal.
 MARKET OPPORTUNITY ANALYSIS (MOA): It is the system used to
determine the attractiveness and probability of success.
 MARKET OPPORTUNITY ANALYSIS
The word opportunity comes from the Latin opportunitas, meaning
fitness or advantage.
 It represents a favorable circumstance for the attainment of a goal.
 MARKET OPPORTUNITY ANALYSIS (MOA): It is the system used to
determine the attractiveness and probability of success.
 MARKET OPPORTUNITY ANALYSIS
Types of Environment:
 MARKET OPPORTUNITY ANALYSIS
There are 6 key questions we get answers to when doing market
opportunity analysis:
1. What type of an opportunity is this?
 An unmet customer need
 An improvement over a product/service already on the market
 Disruptive idea or technology
 Horizontal improvement which will improve functional operations
 An opportunity that is targeted to a specific industry segment
 MARKET OPPORTUNITY ANALYSIS
There are 6 key questions we get answers to when doing market
opportunity analysis:
2. How are people meeting this need today?
 Competitors
 Substitutes
 Collaboration
 Think Porter’s 5 Forces
 MARKET OPPORTUNITY ANALYSIS
There are 6 key questions we get answers to when doing market
opportunity analysis:
3. Is another company already filling this need?
 MARKET OPPORTUNITY ANALYSIS
There are 6 key questions we get answers to when doing market
opportunity analysis:
4. If so, how can I differentiate my company’s product or service to
create a competitive advantage? If not, is there sufficient market
demand?
 MARKET OPPORTUNITY ANALYSIS
There are 6 key questions we get answers to when doing market
opportunity analysis:
5. Is this opportunity financially viable both to our customers and to
our company?
 How will this impact cash flow?
 What investment do we need to make to be in this space?
 What about distribution channels?
 Will we need to train our sales channels to market this opportunity?
 Will we need to establish partner relationships to market this product or
service?
 Can we market this to our existing customer base or will we need to
chase different customer segments?
 MARKET OPPORTUNITY ANALYSIS
There are 6 key questions we get answers to when doing market
opportunity analysis:
6. What external factors should we be considering that might impact
this opportunity?
 MARKET OPPORTUNITY ANALYSIS
 Based on the responses to the above questions, an opportunity matrix
can be developed.
 MARKET OPPORTUNITY ANALYSIS
 Some external environmental developments represent threats to an
organisation.
 MARKET OPPORTUNITY ANALYSIS
 A company should identify major opportunities and threats faced by a
specific business unit. It can then determine the business unit’s overall
attractiveness out of the following four alternatives:
 An ideal business unit is high in major opportunities and low in major
threats.
 A speculative business unit is high in both major opportunities and
threats.
 A mature business unit is low in both major opportunities and threats.
 A troubled business unit is low in opportunities and high in threats.
 MARKET OPPORTUNITY ANALYSIS
Matching Strengths with Opportunities: Matching strengths with
opportunities is called opportunity analysis
 MARKET OPPORTUNITY ANALYSIS
In the process of analysis of the strengths, the weaknesses of the Air-
conditioning company should also be identified. Some of the marketing
weaknesses are:
 after-sales-service policies are not clear, in terms of ―warranty
clause‖ or frequency of warranty service;
 the field sales people do not have an adequate technical
knowledge; and
 decision-making process is slow due to too many levels of
reporting in the organisation structure.
Corrective actions should be taken by the company wherever the
weaknesses are identified, either at SBU level or product/market (or
functional) level.
 MARKET OPPORTUNITY ANALYSIS
The word opportunity comes from the Latin opportunitas, meaning
fitness or advantage.
 It represents a favorable circumstance for the attainment of a goal.
 MARKET OPPORTUNITY ANALYSIS (MOA): It is the system used to
determine the attractiveness and probability of success.
 Relationship Marketing
 The relationship between a seller and a buyer seldom ends
when a sale is made.
 Increasingly, the relationship intensifies after the sale and helps
determine the buyer’s choice the next time around. Such dynamics
are found particularly with services and products dealt in a stream of
transactions between seller and buyer.
 Relationship Marketing
 Relationship marketing centers on all activities directed toward establishing,
developing, and maintaining successful exchanges with customers and other
constituents.
 In Relationship marketing the focus is on customer loyalty and long-term customer
engagement rather than shorter-term goals like customer acquisition and individual
sales.
 The goal of relationship marketing (or customer relationship marketing) is to create
strong, even emotional, customer connections to a brand that can lead to ongoing
business, free word-of-mouth promotion and information from customers that can
generate leads.
 Types of Relationships
• Continuum of buyer-seller relationships
• Transactional, Value-added & Collaborative exchanges
The Relationship Spectrum
 Transactional Exchange
• Centers on timely exchange of basic products at highly competitive
market prices

• These types of transactions are autonomous, meaning that there is little

or no concern as to the needs of buyer or seller

• Example: A person comes into a store and buys a hammer. The buyer
wants a hammer and the seller sells him one. That’s all there is to it!
• The business market includes items like:
– Packaging,
– Cleaning products or
– Commodity-type products or service activity
 Transactional Exchange
 Customers are likely to prefer a transactional relationship, when:
– many suppliers are available,
– the supply market is stable,
– the purchase decision is not complex
– the purchase is considered as less important to the achievement of the
firm’s objectives.

Transaction-oriented customers show less loyalty to a particular

supplier.
 Types of Relationships
• Continuum of buyer-seller relationships
• Transactional, Value-added & Collaborative exchanges
The Relationship Spectrum
 Collaborative Exchange
 The focus of collaborative exchange or relationship here is to build
strong social, economic, service, and technical ties over a long
period of time between a customer firm and a supplier firm.
– The purpose of partnering is to lower the total costs or increase value, in
order to achieve mutual benefits. This is achieved by giving importance to
joint problem solving and multiple connections, in order to integrate the
processes of the two companies. Both the firms work toward bringing their
capabilities together and thereby provide value for each company. Such
customers are called “hard-core loyals”, as they may buy from one supplier.
 Collaborative Exchange
 Occurs when alternatives are few, market is dynamic, the purchase is
complex and the price is high
 Switching costs are extremely important to collaborative customers

 This strategy emphasizes joint-problem solving and multiple linkages

such as R&D and manufacturing.
 The foundation for collaborative relationship are commitment and trust.
 Commitment includes acceptance by both partners that the relationship is
so important that it deserves maximum efforts to continue with it.
 Trust is found when one organisation has confidence in the other firm’s
honesty and dependability.
 Types of Relationships
• Continuum of buyer-seller relationships
• Transactional, Value-added & Collaborative exchanges
The Relationship Spectrum
 Value-Added Exchanges
• Value-Added Exchanges fall between Transactional and
Collaborative Exchanges.
– The selling firm groups these customers in “B” category, who are between
the least profit potential customers of, say, “C” category, and the most
profit potential customers of, say, “A” category.

• The selling firms shifts from just attracting customers to keeping

them by:
1. Adding additional services
2. Developing services that are customized to meet the buyer’s needs
3. Providing continuing incentives that promote repeat business

• This category of customers are called “split loyals”, as they are

loyal to two or three suppliers.
 Types of Relationships
• Continuum of buyer-seller relationships
• Transactional, Value-added & Collaborative exchanges
The Relationship Spectrum
 Types of Relationships
Buyers and sellers craft various relationships in response to:
a) Market conditions
b) Characteristics of the purchase situation
The Relationship Development Process
The Relationship Development Process: AWARENESS
• In the awareness stage, buyer and seller independently consider the
other as an exchange partner.
• Supplier advertisements and trade show exhibits might be noticed
by the prospective buyer. At the same time, the supplier may collect
information about product specifications, buying process, and the
like at the prospective customer.
• This stage may last indefinitely, or the parties may move to the next
stage of the process by engaging each other in some form of
interaction.
• Selling Objectives:
– gain attention
– demonstrate how needs can be satisfied
 The Relationship Development Process: EXPLORATION
• In the exploration stage, we find the parties probing and testing
each other.
– The prospective buyer may attend a seminar given by the supplier.
– The supplier may make several sales calls.
• Even initial purchases can take place in this stage. They are part of a
trial process.
• In the exploration phase, a relationship is very fragile.
– The parties have not significantly invested in the exchange. Neither party
depends highly on the other. The association is easily terminated.
• Selling Objectives:
– gain initial acceptance
– build a successful relationship
 The Relationship Development Process: EXPLORATION
• But in this stage, the interplay of five enabling processes supports
the developing relationship.
 The Relationship Development Process: EXPLORATION
• Attraction:
– Attraction is the degree to which the interaction between buyer and seller
yields them net payoffs in excess of some minimum level. The payoffs are
tangible and intangible rewards from the association.
• Practically, this can be illustrated by the buyer’s purchasing director and a
supplier’s sales manager sharing college memories and striking a friendship at a
picnic in Delhi.
• Atop these social rewards from the association the buyer looks for quality,
technical know-how, a fair price, and logistical service. The supplier looks for
steady orders at a fair margin plus a chance to satisfy additional needs within the
buying organization. Both want minimal order costs, delays, and mistakes.
 The Relationship Development Process: EXPLORATION
• Communication and Bargaining:
– In the development of relationships, communication and bargaining are the
processes by which the parties rearrange the distribution of their obligations,
rewards, and costs.
• Parties to most budding relationships hesitate to clearly state their needs,
preferences, or goals. They talk around the issues or provide only vague hints of
what they are after in the exchange. Not until they develop a level of comfort and
familiarity do they begin to make disclosures. These disclosures will probably
require reciprocation—a similar action returned by the other—if the association is
to grow into a productive relationship.
 The Relationship Development Process: EXPLORATION
• Power and Justice:
– Adjustment in an exchange is a critical facet of relationship development.
Concessions sought or granted in the bargaining process result from the just
or unjust application of power.
• Power—an ability of one organization, Alpha, to get another organization, Beta, to
do what it would not do otherwise—derives from Beta’s dependence on Alpha for
valued resources that are not easily obtained elsewhere. These valued resources
can take many forms: status, economic rewards, expertise, and applied or ended
punishments.
• Justice—the rendering of what is merited or due—results from the fair and
respectful use of power. Evenhandedness and honesty characterize the just use of
power. In contrast, the unjust application of power attempts to control another’s
actions against its will or without its understanding or in the absence of fault.
 The Relationship Development Process: EXPLORATION
• Norms Development:
– Norms are standards of behavior for the parties, the guidelines
by which the parties interact.
• Some norms exist prior to and are brought to the exploratory phase.
• For example, buyer and sales rep share many elements when asked to
outline a “script” for different types of sales calls. Such scripts have less
commonality when the parties come from different cultures or
professions. As the parties interact, they customize their patterns of
interaction. Practically, this means they may teach each other the
language of their respective companies, meet with a negotiated
frequency, communicate by mutually agreeable—even automated—
channels, and begin to organize evaluation, planning, and decision-
making tasks.
 The Relationship Development Process: EXPLORATION
• Expectations:
– As the parties interact and explore the potential for ongoing
exchange, they develop expectations.
• Foremost among expectations is trust, “the belief that a party’s word or
promise is reliable and a party will fulfill his or her obligations in an
exchange relationship.”
• The trusting party derives confidence from a belief that the other party is
consistent, honest, fair, responsible, and helpful. These expectations can
be shaped in part by the other party’s image advertising and reputation in
the industry.
 The Relationship Development Process: EXPLORATION
• But in this stage, the interplay of five enabling processes supports
the developing relationship.
 The Relationship Development Process: EXPANSION
• Expansion is the process when the supplier wins customer’s faith
and customer falls under huge interdependence of the supplier. This
is time when there are more chances of business with that
particular customer and expand business.
• Parties have experienced benefits of relationship and want
expanded interaction.
• Selling Objectives:
– Get to know customer better
– Look for additional ways to help client. Account development, cross-selling,
and up-selling are sign of the expansion phase.
The Relationship Development Process: COMMITMENT
• Commitment is a powerful stage when suppliers learn to
adapting business rules and goal to excel.
• Establishing a sole or nearly sole supplier relationship.
• Buyer and seller may exchange employees in order to fully
identify with the trading partner.
• Selling Objectives
– early supplier involvement in need process
– long term focus to relationship
– multi level interaction
 The Relationship Development Process: DISSOLUTION
• Dissolution is a stage when customer requirement suddenly changes and he looks
for better perspectives. This sudden change is the end of relationship.
• Decision to limit or leave relationship
• Selling Objectives:
– look for warning signals
– attempt to reinitiate the relationship
• Relationship can come to an end due to many reasons like - customer is not
satisfied with the services of supplier or customer diverges to other better brands
and products. Suppliers can also prefer to break relationships due to customer
failing to be a part to increase sales volume or when the suppliers are entangled
with fraud cases.
The Commitment–Trust Theory of Relationship Marketing
 The Commitment–Trust Theory of Relationship Marketing
• Broadly there can be two distinguished attributes of a developed
relationship between supplier and customer:
– Trust: Trust means confidence and security in any relationship and can be treated as the
biggest investment in building long term relationships. Trust is developed between the
two parties when they experience flawless and satisfied motives between each other. As
a result of knowing more about each other, all the doubts and risks are minimized and
leads to inevitably smooth business. Lack of trust on the other hand weakens the
relationship foundation and chances of uncertainty and conflicts increases.
– Commitment: Commitment is yet another milestone that should be achieved to set a
long term mutual relationship. Commitment can only be attained when there is mutual
trust and the two parties share each other’s values. In a committed relationship both
suppliers and customers strive to uphold the relationship and never want to exit which
in turn results in building the relationship stronger and sharper. There is, in fact, huge
cost which is incurred in switching from committed relationships of one supplier and
build new relationships with other suppliers from scratch.
 Customer Relationship Management
Customer Relationship Management (CRM) is a cross-functional
process for achieving…
a. Continuing dialog with customers across all contact and
access points
b. Personalized service to the most valuable customers
c. Increased customer retention through continuous feedback
d. Improved marketing effectiveness through superior customer
approaches
 Customer Relationship Management Process
 The CRM process involves four steps:
 Segment and profile the market
 Design communication strategy
 Implement
 Evaluate
 Customer Relationship Management Process
 Segment and profile the market : Customer segmentation is all about
dividing a company’s customer base into different groups that share specific
characteristics based on ownership (private, public, nonprofit, or governmental),
geographies, buying behavior etc; customer profiling aims to know customers
better and describe their types (personality).
 This is the first step of he process.
 Segments are created by grouping similar customers together, and segments
are created by marketers for many different reasons.
 Even in that segment, there are subsegments, buyers who respond and want
to interact with us in different ways.
 Then design a product to meet that segment’s needs.
 Customer Relationship Management Process
 Design communication strategy:
 In the second step, a communication strategy is designed.
 Typically, the strategy involves multiple channels of communication, channels
such as direct mail, e-mail, print advertising, trade shows, and even field sales
efforts.
 Strategy also involves what offers are made.
 Customer Relationship Management Process
 Implement the strategy: Strategy implementation is the process by which
an organisation translates its chosen strategy into action plans and activities,
which will steer the organisation in the direction set out in the strategy and
enable the organisation to achieve its strategic objectives.
 Supplying resources, in sufficient quantity
 Developing policies which encourage strategy.
 Allocate budgetary resources
 Evaluate: When the strategy is evaluated, the various campaigns are tallied and
other measures of performance such as customer satisfaction are considered.
 Based on these data, segments may be altered or strategies changed.
 CRM Strategy - Priorities

1. Acquire the right customer

2. Craft the right value proposition
3. Institute the best processes
4. Motivate employees
5. Learn to retain customers
 CRM Technology
• CRM programs are software systems that capture information and
integrate sales, marketing and customer service information.

• CRM programs can gather information from many sources including

email, call centers, service and sales reps.

• The information is available to the right people in the organization

in real time.
– Everyone has the same 360 degree view of a customer
 CRM Technology
 In general, the following information may be included in customer
databases:
 Basic information: name, address, mail ID, telephone—land and mobile
numbers.
 Company information: buying centre members, products and services
purchased, type of customer (government, private sector, institution,
cooperative sector), financial position, and so on.
 Psychographic information: values, personality, lifestyle of buying centre
members.
 Transaction history: transactions carried out by customers, frequency of
purchases, payments made.
 Other relevant information: satisfaction, loyalty, inquiries sent, orders
received, type of service required, and so on.
 Network Analysis And Business Management
 ‘Network‘ in the business literature focuses on the ties or relations that one
entity has with various other entities, abstracting from the ties among those
other entities or with others not directly tied to the business of interest.
Or
 It is typically the set of people or firms with whom one business or business
person has relationships
 The entities of interest are either individuals, people in businesses or markets; or
groups such as firms, or associations in markets (for example: suppliers,
customers, lenders, mentors, or even competitors; in the marketplace, or in
affiliations such as a local industry association)
 The relations of interest include transactions for goods or services; exchanges of
assets, information, or trust; and so on.
 Network Analysis And Business Management
 ‘Network‘ in the business literature focuses on the ties or relations that one
entity has with various other entities, abstracting from the ties among those
other entities or with others not directly tied to the business of interest.
 Network Analysis And Business Management
 The Network Perspective: The focus of network analysis is in understanding
of relationships (Trust and commitment) between various entities and how it
can affect behavior of network members.
 Network Analysis And Business Management
 Direct ties : Pair-wise, or first-degree relationships of a entity with suppliers,
customers, employees, mentors, competitors and a financier.
 Interpersonal ties: Usually associated with interpersonal ties--among the
employees themselves, between an employee and one competitor, between
a competitor and one of the business’s suppliers, and even between a mentor
and a competitor.
 Network Analysis And Business Management
 Interpersonal ties:
 More information follows here
 Undergird information flows are particularly important for the vitality of a business.
 Businesses whose employees have good interpersonal ties among themselves retain
valuable employees at lower costs. And businesses in which interpersonal information ties
are effective are better organized for innovation.
 A unique information source may be novel but it is also unverifiable. If there is at least one
other source of similar information, the information is potentially verifiable and more
reliable.
 Network Analysis And Business Management
 Information on the characteristics of network members:
 Network size (e.g., number of strategic alliances)
 Frequency of interaction (e.g., number of times a month information is
sought from a personal source),
 Relationship type (e.g., whether a strong or weak recommendation
source is used).
 Network structure (e.g., Decentralized or Centralized)
 Influential members (e.g., reference groups)
Prepared By:

Sandeep
Assistant Professor
Kedarnath Aggarwal Institute of Management (KAIM)
R.K.Gupta Marg, P.Box No.-5,
Charkhi Dadri - 127306 (Haryana)
(M)- 9996117410