Business to Business marketing

Section 1: Business Environment

1. Business Marketing Perspective

Section 2: Managing Relationships
2. Organisational Buying Behaviour
3. CRM Strategies
Section 3: Assessing Market Opportunities

4. Segmenting the Business Market & Estimating Segment Demand

Section 4: Business Marketing Strategies
5. Business Marketing Planning
6. Strategies for Global Markets
7. Managing Products

8. Managing Innovation & New Industrial Products

9. Managing Services
10. Managing Marketing Channels
11. Supply Chain
12. Pricing Strategies

13. Communication – Advertising & Sales Promotion

14. Communication – Personal Selling
Section 5: Evaluation
15. Marketing Performance Management

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Section 1: Business Environment
Business Marketing Perspective

Flow of Products in Economy

Households

Farming
Mining Government
Manufacturing
Forest
Agriculture
Fisheries
Institutions

Extractive Industries Manufacturing Consuming unit

Business marketing
▪ Also Called B2B Marketing / Business to Business Marketing / Industrial Marketing/ Organizational
Marketing
▪ Marketing of Products & Services to Business organizations: Manufacturing Companies,
Government undertakings, private sector firms, educational institutions, trusts, hospitals,
distributors, dealers etc.
▪ ITC – B2C product Range? B2B Product Range ITC- FARM FORESTRY
▪ B2C - Tobacco, Hospitality, consumer business, foods, personal care etc. share was 17% (2012-13)
and has risen to 24% approx. (ITC Ltd)
▪ ……………..while major share is B2B business lines - food grade packaging, pharmaceutical insertions
(the description paper in the medicine pack), fine printing papers for books, electrical insulation
papers, recycled papers, boards for graphic applications and playing cards.

Characteristics of b2b marketing

▪ Functional Interdependence
▪ Derived Demand
▪ Fluctuating Demand –Acceleration Effect (e.g. Recession – small % dip in growth collapsing demand
for industrial goods….recent Auto Crisis)
▪ Joint Demand – Use of a product only with some other product (Printer & Cartridge ……)
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 ▪ Inelastic demand to some extent – With little change in prices either ways demand might not get
affected at all
▪ Reverse- Elastic demand - Sometimes with dip in prices, demand decreases in anticipation of
further dip and vice versa (Shares???)
▪ Cascading effect / Bullwhip effect – Supply Chain Problem

Characteristics of business market customer

• Business market customers are comprised of commercial enterprises, institutions, and
governments.
• A single purchase by a business customer is far larger than that of an individual consumer.
• The demand for industrial products is derived from the ultimate demand for consumer products.
• Relationships between business marketers tend to be close and enduring.
• Buying decisions by business customers often involve multiple buying influences rather than a
single decision maker.
• While serving different types of customers, business marketers and consumer-goods marketers
share the same job titles.

B2b vs B2C
▪ Demand – for Business use and Personal Use / Derived Demand / Joint Demand
▪ Markets – Geographically Concentrated vs Dispersed – Crawford Market/ Manish Market / Javeri
Bazaar/ Mangaldas Market / Bhuleshwar Market / Purohit JI ka Katla in Jaipur / Dubai Gold Souk /
Dubai Spice Souk etc….
▪ No of Customers – Relatively Few vs Large numbers e.g. petrol / diesel – Refineries vs. vehicle
owners
▪ Products –Complexity / Customized vs Standardized
▪ Service – Relative Importance of Timey Delivery and Availability e.g. Cement / Real Estate

▪ Nature of Buy – Professional vs Personal

▪ Buyer Behaviour –Decisions based on emotional/ rational aspects
▪ Buying Influence - Multiple vs Largely Single / Family
▪ Volume – Bulk vs small Units
▪ Distribution – 0-1-2 levels vs 2-3-4-5 levels

▪ Price Negotiations – Complex vs Simpler

▪ Reciprocity – Yes vs No
▪ Promotion – Push Vs Pull
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What is a B2B Market?
▪ Set of participants consisting of all organizations that purchase goods and services to use in the
creation of their own goods and services.

Types of B2B Markets

▪ Lafarge
▪ Vocalocity
▪ India Mart
▪ Market for Intermediate Products for manufacturing final consuming goods

▪ Market for Final Products

▪ Market for Business Services

Participants in B2B Market

Primary Participants

▪ OEMs-Original Equipment Manufacturers

▪ Other Manufacturers
▪ Middlemen /Brokers / Commission Merchants / Sales Agents
Secondary Participants
▪ Advertising Agencies

▪ Consulting Firms
▪ Transportation Companies
▪ Financial Institutions
▪ Service Providers

Business to Business Marketing

▪ Process of matching and combining the capabilities of the supplier with the desired outcomes of
the customers to Create Value for the Customer’s Customer, hence creating value for both the
organizations……smart boards

A Framework for Business Marketing Management

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Business to Business marketing

Section 1: Business Environment

1. Business Marketing Perspective

Section 2: Managing Relationships
2. Organisational Buying Behaviour
3. CRM Strategies
Section 3: Assessing Market Opportunities

4. Segmenting the Business Market & Estimating Segment Demand

Section 4: Business Marketing Strategies
5. Business Marketing Planning
6. Strategies for Global Markets
7. Managing Products

8. Managing Innovation & New Industrial Products

9. Managing Services
10. Managing Marketing Channels
11. Supply Chain
12. Pricing Strategies

13. Communication – Advertising & Sales Promotion

14. Communication – Personal Selling
Section 5: Evaluation
15. Marketing Performance Management

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Section 2: Managing Relationships
2. Organisational Buying Behaviour
Forces Influencing Organizational Buying Behavior

A projected change in business conditions can alter buying plans drastically.

• Economic outlook:
domestic & global
Environmental • Pace of technological
change
Forces • Global trade relations

• 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

Other Buying Decision Process Influence

▪ Track Record
▪ Amount of Vertical/Horizontal Management Involvement
▪ Attitudes of Key Persons
▪ Credit terms
▪ Relationship History

▪ Reciprocity
▪ Seller Firm’s Value System / Value Image /Certifications
▪ Risk appetite of the seller

Buying as a Process

▪ Buying is a process, not an event

▪ There are various points in the process that are referred to as “Critical Decision Points” and
“Evolving Information Requirements”
▪ It starts with “Problem Recognition”

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Organizational Buying Process

1. Problem 2. General
3. Product
Recognition Description
Specifications
of Need

5. Acquisition
4. Supplier Organizational and Analysis
Search Buying Process of Proposals

7. Selection
6. Supplier 8. Performance
of
Selection Review
Order Routine

1. Problem Recognition
Before anything is bought, most buyers need to be made aware of a problem.

Internally:
▪ A machine breaks down
▪ Someone needs to order a product
▪ Someone recognizes an opportunity that can be captured by acquiring the product
Externally:
▪ More often than not, it is the salesperson who precipitates the need for a new product
▪ Advertising also can influence purchasing
▪ Many organizations use the Push/Pull Strategy
2. General Description of Need
Once a need is recognized, the purchasing department works with the buying group to define what is
needed by asking:
▪ What is the extent of the problem?

▪ What alternatives can solve the problem?

▪ Where can the solution be purchased?
Each small decision ultimately helps define the product specifications.

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Sometimes the supplier is involved if the supplier influences the sale (i.e., the supplier makes the buyer
aware of the need).
3. Product Specifications

• Is it a New Buy?

• Is it a Straight Rebuy?

• Is it a Modified Rebuy?
This is important because it often determines how the contract is structured and the specific wording
that it uses.
4. Supplier Search

• Who will be the supplier?

• The creating influencer has a lot of say about the choice of supplier. If a salesperson creates the
need, often the specs are written so that only the salesperson’s organization is able to fulfill the
contract.

• In established businesses, often only preferred vendors are considered.

5. Acquisition and Analysis of Proposals
• This step occurs only when the buying organization lacks adequate information to make a decision.
• Proposals are presented in detail often by a team engineers, users and purchasing agents.
Successful proposals determine the supplier.
• Many times, this step is perfunctory. The buyer may have already determined the preferred
vendor, but legally it may be necessary to seek other vendor proposals to attain government
contracts.
6. Supplier Selection

At this point, negotiation includes not only monies, but also:

• Quantities

• Delivery times

• Level of service

• Warranties

• Payment schedules

• And a host of final details that determine selection

7. Selection of Order Routine
Once the supplier is selected, the order routines are established
8. Performance Review

After receipt of the product or service, a performance review asks:

1. Did the supplier meet delivery time?
2. Did the product meet the specs?
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3. Does the contract have to be modified?
4. Did the vendor live up to expectations?

Buying Process
▪ Stages in the buying process are not as sequential as suggested by the model.
▪ Sometimes steps are skipped. For example, on straight rebuys, buyers choose to purchase almost
immediately.
▪ However, the model represents important aspects of how companies buy and evaluate business
purchases.
Marketing Element in Buying Situations

Buying Advertising Sales Promotion Personal Selling

Situation
Detailed educational; Demonstrations at Emphasis on understanding
trying to get users try Trade Shows / Offer customers’ requirements and
New Task the product, substitute Free Trials showing how the product satisfies
for old products / need and better than old method
methods
Use Comparison Customer Site Protect relationship with existing
Modified advertising to show demonstrations, customers with plant tours, special
ReBuy differences hospitality events at trade pricing and other offers
Trade Shows
Use Reminder Hospitality Events at Building Relationships, Automating
Advertising, Build Trade Shows the purchase processes, organizing
Straight ReBuy Brand Image customers and channel partners
trips

Roles in the Buying Center

Initiator Influencers Gatekeepers

Decider Purchaser Users

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Initiator Initially perceives a problem and initiates the buying process to solve it.

Affects the purchasing decision by providing technical information or other relevant

Influencer (internal or external) information.

Controls the information to be reviewed by members of the buying group.

Gatekeeper

Actually makes the buying decision, whether or not they have formal authority to do
Decider so. Could be the owner, an engineer or even the buyer.

Has formal authority to select and purchase products or services and the
Buyer responsibility to implement and follow all procurement procedures.

User Actually use the product in question. Can be inconsequential or major players in the
process.

Clues for Identifying Powerful Buying Center Members

1. Isolate personal stakeholders. Who has the most to gain and/or lose?
2. Follow the information flow. Influencers are usually the ones who actually facilitate the exchange.
3. Identify the experts. Experts ask the most questions, exhibit the most knowledge, and are often the
most influential.
4. Trace the communication to the top. Who are the decision makers?
5. Make sure you understand purchasing’s role. Often purchasers are not decision makers, but they
may be the bargainers. In repeat buying situations, they are usually dominant players because of
their specialization

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 3. CRM Strategies
▪ Relationship marketing centers on all activities directed towards establishing, developing and
maintaining successful exchanges with customers and other constituents.
▪ Types of Relationships
▪ Transactional

▪ Value Added
▪ Collaborative

Transactional Collaborative
exchange exchange
Availability of alternatives Many Few
Supply market Dynamics Stable Volatile
Importance of Purchase Low High
Complexity of Purchase Low High
Information Exchange Low High
Operational Linkage Limited Extensive

Factors influencing profitability of individual customers

▪ Activity based costing
▪ Unlocking customer profitability

▪ The profitable few

▪ Managing high and low cost to serve customers

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A sharper profit lens – Identifying profitable customers

Loyalty and customer profitability

There are 4 distinct type of customers
▪ True friends (high loyalty and high profitability)

▪ Butterflies (low loyalty and high profitability)

▪ Barnacles (high loyalty and low profitability)
▪ Strangers (low loyalty and low profitability)

CRM

Customer relationship management (CRM) is a cross functional process for achieving

▪ A continuing dialogue with customers
▪ Across all their contact and access points, with
▪ Personalised treatment of the most valuable customer
▪ To ensure customer retention and the effectiveness of marketing initiatives

To develop responsive and profitable customer strategies, special attention must be given to five areas
1. Acquiring the right customers
2. Crafting the right value proposition
3. Instituting the best processes
4. Motivating employees and

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 5. Learning to retain customers

Creating a Customer Relationship Management strategy – Oracle Corporation

Acquiring the right Crafting the right Instituting the best Motivating Learning to retain
customers value proposition processes employees customers
CRM Priorities
Determine the products
your customers need Research the best way to Identify the tools your Understand why customer
Identify your most
today and tomorrow. deliver your products or employees need to foster defect and how to win
valuable customer
Assess these for your services to the customer customer relationships them back
competition
Determine the service
Earn employee loyalty by
Calculate your share of capabilities that must be
Identify new products or investing in and training, Identify strategies
their purchases (wallet) developed and the
services that you should developing appropriate competition is using to win
for your goods and technology investments
be offering career paths for your high-value customers
services that are required to
employees
implement
CRM Technology
Analyse customer revenue Capture relevant product
Align employee incentives
and cost data to identify & service behaviour data Track defection and
Process transactions faster and performance
current and future high- from customer retention level
measures
end customers transactions
Provide better information Distribute customer
Target marketing comm. to Create new distribution Track customer service
to customer contact knowledge to employees
high value customers channels satisfaction level
employees thru the organisation
Manage logistics and the
Develop new pricing
supply chain more
models
efficiently

Drivers of Relationship Marketing Effectiveness

RM programs
▪ Social RM programs
▪ Structural RM programs
▪ Financial RM programs

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Business to Business marketing

Section 1: Business Environment

1. Business Marketing Perspective

Section 2: Managing Relationships
2. Organisational Buying Behaviour
3. CRM Strategies
Section 3: Assessing Market Opportunities

4. Segmenting the Business Market & Estimating Segment Demand

Section 4: Business Marketing Strategies
5. Business Marketing Planning
6. Strategies for Global Markets
7. Managing Products

8. Managing Innovation & New Industrial Products

9. Managing Services
10. Managing Marketing Channels
11. Supply Chain
12. Pricing Strategies

13. Communication – Advertising & Sales Promotion

14. Communication – Personal Selling
Section 5: Evaluation
15. Marketing Performance Management

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Section 3: Assessing Market Opportunities
4. Segmenting the Business Market & Estimating Segment Demand
Segmentation

A strategist at Hewlett Packard notes the following….

“Knowing customers’ need is not enough… we need to know what new products, features and services will
surprise and delight them. We need to understand their world so well that we can bring new technology to
problems that customers may not yet truly realise they have.”
High growth companies, large and small succeed by ..
▪ Selecting a well-defined group of potentially profitable customers
▪ Developing a distinctive value proposition that meets these customers needs better than
competition
▪ Focussing marketing resources on acquiring, developing and retaining profitable customers

Market / Market Segment / Market Segmentation

▪ Market
People or organizations with needs or wants, the ability to purchase and the willingness to buy.
▪ Market Segment –
A group of present or potential customers with some common characteristics which we can explain
(predict) their actions when subjected to marketing stimuli.
▪ Market Segmentation –

The process of dividing a market into meaningful, relatively similar and identifiable segments or groups

Basis for segmenting business markets

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The Segmentation process

▪ Macrosegmentation centers on characteristics of buying organisations, product application and the

purchasing situation

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▪ Microsegmentation concentrates on characteristics of organisational decision making units – for
instance, choice criteria assigned to the most importance in the purchase decision
▪ Choosing market segments
▪ Innovate through segmentation
▪ Account Based marketing

▪ Isolating Market segment Profitability

▪ Implementing a segmentation strategy
▪ Estimating Segment Demand
▪ Methods of Demand Forecasting
▪ Qualitative techniques

▪ Executive Judgement
▪ Sales Force Composite
▪ Delphi Method
▪ Quantitative techniques
▪ Time series

▪ Regression or casual
▪ CPRF – Collaborative Planning Forecasting and Replenishing

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Business to Business marketing

Section 1: Business Environment

1. Business Marketing Perspective
Section 2: Managing Relationships
2. Organisational Buying Behaviour
3. CRM Strategies
Section 3: Assessing Market Opportunities
4. Segmenting the Business Market & Estimating Segment Demand
Section 4: Business Marketing Strategies
5. Business Marketing Planning
6. Strategies for Global Markets
7. Managing Products
8. Managing Innovation & New Industrial Products
9. Managing Services
10. Managing Marketing Channels
11. Supply Chain
12. Pricing Strategies
13. Communication – Advertising & Sales Promotion
14. Communication – Personal Selling
Section 5: Evaluation
15. Marketing Performance Management

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 5. Business Marketing Planning
Hierarchy of Strategies
Market-driven firms are centered on customers; they take an outside-in view of strategy and
demonstrate an ability to sense market trends ahead of their competition.
Three major levels of strategy dominate most large multiproduct organisations:
1. Corporate strategy
2. Business level strategy
3. Functional strategy
Subcultures exist when one subunit shares different values, beliefs, and goals than another subunit,
resulting in different thought-worlds
Functionally integrated planning:
• Responsibility charting
• Marketing Strategy Center
• Managing Strategic interdependencies

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Business Model – consists of 4 major components
1. Customer interface
2. Core strategy
3. Strategic resources
4. Value Network

Strategic Positioning

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Key Value Propositions and Customer Strategies
B2B firms typically choose any one form of differentiation in developing a value proposition
1. Low total cost
2. Product innovation and leadership
3. Complete customer solutions
4. Lock-in
Key internal processes vital to creation of customer value
1. Operations management process
2. Customer management process
3. Innovation management process

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Strategy Map
A Strategy map enables an organisation to describe and illustrate, in clear and general language, its
objectives, initiatives and targets; the measures used to assess performance (such as market share and
customer surveys); and the linkages that are the foundation for strategic directions

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6. Strategies for Global Markets
Capturing Global Advantage
A two speed world economy is emerging, sharply defined by lower growth in developed economies and
higher growth in developing economies
To achieve global leadership, integrated strategies should incorporate the following elements:

Market access
Companies can increase market access in RDE’s by
1. Increasing the number of countries served
2. Penetrating more deeply into new customer segments and new product categories in existing
markets
Reverse Innovation by GE
1. A portable PC based ultra sound machine that sells at `Rs 7.5 L vs the 5-10 Cr conventional unit
2. A Rs 50K hand held ECG device
Both these were developed for specific markets in RDE’s – namely India and China, but now widely
adopted in the US and other developed countries
Portable Ultrasound is a huge product line garnering approx. Rs 1500 Cr in revenue
Resource access
Companies have shifted their focus from ‘low-cost country sourcing’ to ‘best-cost-country sourcing’, an
approach that factors all cost components involved and trade-off is any.
Sourcing from known low cost economies is now losing steam and in the future companies will rely on a
more diversified base of low cost suppliers across multiple regions
Expanding resource access can now allow companies to develop, ‘best-cost’ supply chain that provide
competitive advantage in RDE’s and on a global scale. Large companies are using this in RDE’s to get local
access to talent and penetration in local markers

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EMC Ltd. (Electrical Manufacturing Company Ltd) is a fast growing Kolkata based company and a world
class provider of end to end power systems. It has factories in multiple states to provide best solution to its
multiple clients
A two fold strategy is the need of the hour – fill market gaps at home and follow select customers to their
new locations
Outsourcing decision is crucial in establishing a multi state / global presence.
Local Adaptation
Reaching new customers in RDE’s requires a new approach. A LGT (Local Growth Team) need to be put in
place to create new offerings for the RDE customers. The LGT model has 5 critical principles
1. Shift power to where growth is
2. Build new offering from the ground up
3. Build LGT’s from the ground up, like a new company
4. Customise objectives, targets and metrics basis the RDE
5. Provide management support to the LGT
Network Coordination
Economies of scale and scope can be advanced through process standardisation, adoption of common
technology and rapid information sharing. The key to success is simultaneous standardisation and
differentiation strategies to achieve growth.

Global Market Entry Option

The choice of entry should be guided by the firms experience overseas and the stage in the evolution of its
international involvement

Spectrum of involvement in Global Marketing

Low Commitment High Commitment

Strategic Joint Multi-domestic Global

Exporting Contracting
Alliance venture strategy Strategy

Low Complexity High Complexity

Exporting
• Least commitment and risk
• Easy access to new markets

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 • Direct control is limited for marketing programs
• Also, customers feel alienated buying products of relative ‘ghost’ companies
Contracting
• Done primarily through licensing and management contracts
• Licensing
• allows use of intellectual property in exchange of royalties
• Does not require capital investment
• Are time bound
• Management Contracts
• Package of skills that provide an integrated solution to the client
• Use effectively in service sector
Strategic Global Alliance
SGA is a business relationship between 2 companies
Works well for market entry or to shore up existing weakness and increase competitive strength.
E.g. Tata Steel has entered a strategic pack with Labrador Iron Mines Holdings, Canada.
Offer huge potential; but also have special management challenges
1. Building structure of the 2 organisations is very different; hence can lead to problems in co-
ordination and trust
2. Skill sets may be company / country specific and hence may lead to problems in implementing
alliance at a global scale
3. Technology changes may lead to redundancy of partnership over time and hence leading to
maintaining alliance over time
Need to build a dedicated Alliance function
Key to success is integrating points of contact
1. Strategic integration – board level interactions
2. Tactical integration – middle management interactions for knowledge transfer
3. Operational integration – provides information or personnel for more efficient day to day practices
4. Cultural integration – to bridge cultural difference and build communication
Joint Ventures
It involves a joint ownership arrangement between 2 companies to produce and / or market goods in a
foreign market.
It creates a new firm – eg 50-50 JV between Xerox Corporation and Fuji Photo film in the Japanese market.
Advantages
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 1. Open up new opportunities that independently the companies could not
2. Build better relationships with local organisations
Downside
1. 50% of JV’s get disbanded due to expectation mismatch
Multi-domestic strategy
• Independent subsidiaries compete independently in their home-country markets
• International HQ’s manage finance and key marketing policies
• Downstream activities (like Sales and Customer Service) are important for competitive advantage
• Competition in each country is relatively independent of other countries
Global Strategy
• Upstream activities (technology development and operations) are important for Competitive
advantage
• Seeks competitive advantage with strategic choices that are highly integrated across countries – eg
minimal local adaptation for a product eg Intel

Configuration and Co-ordination need to be examined to get more insights in the international strategy
Configuration centers on where each activity is performed, including number of locations
Coordination refers to how similar activities performed in various countries are coordinated or coupled
with each other

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Global Strategy
1. Build on a unique competitive position
2. Emphasize a consistent positioning strategy
• Establish a clear home base for each distinct business
• Leverage product-line home bases at different locations
3. Disperse activities to extend home-base advantage
4. Co-ordinate and integrate dispersed activities

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7. Managing Products
Building a strong B2B brand
Brand Equity is a set of brand assets and liabilities linked to a brand, its name, and symbol that add to or
subtract from the value provided by a product or service and / or to the firms customer.
Hence, a brand is a name, sign, symbol, or logo that identifies the product and service of one firm and
differentiates them from competition.
CBBE – Customer Based Brand Equity is the differential effect that customers brand knowledge has on
response to the marketing activities and programs for that brand.
The power of the brand is represented by all the thoughts, feelings, perception, images and experience
that become linked to the brand in the minds of the customer
A brand mantra is a short three to five word summary of the essence of the brand.

Product Quality and Customer Value

• International competition has made quality an important strategic issue.
• Rising customer expectation make product quality and customer value important strategic
priorities.
• Global buyers insist on quality certification.. ISO 9000 standards… hence TQM has gained
importance
• Sustainability involves the integration of economic, environmental and societal considerations into
business decision making… it is an integral part of value creation. Below is a flow chart showing how
sustainability affects Value creation

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 Value creation levers

Profitable Revenue growth Lower Operating costs

Stronger brand More efficient use of resources

Pricing power Greater supply chain efficiencies
Margin improvement Enhanced production efficiencies
Increased customer loyalty Increased employee loyalty
Fresh market opportunity Greater employee productivity

What value means to Business Customers

Core

Benefits

Add-ons

Customer Value
Price

Sacrifices Acquisition cost

Operations cost

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Some key insights
1. Add-on benefits more strongly influence than core benefits – they are the key differentiators
2. Trust has a stronger impact on core benefits than product characteristics
3. Importance of marketing strategies that help reduce operating cost
Product support strategy – the service connection
Post purchase service is especially important to buyers of industrial products

Product Policy
Product policy involves the set of decisions concerning the products and services offered by the company
Classification of Business Products
Capital Goods - Plant/Factory Machines - May Attract Depreciation
Expense Items - Raw Material Supplies like Fuel etc.. - Material/items which gets consumed…..
Installations- Plant & Machinery
Accessory Equipment’s - Used in Production e.g. tools, scissors, cutters, vehicles etc….
Raw Materials – directly procured from mother nature
Components Parts- finished units which, when assembled, make the complete product..e.g. steel rods,
tires, nuts & bolts….
Maintenance, Supplies- cleaning fluids, adhesives etc..
Professional Services- accounting firms, law firms, consultants…etc…
Types of product lines
1. Proprietary or catalogue products - Comes only in certain configurations and are available in
anticipation of orders. The product decision is to add, delete or reposition it.
2. Custom built products - Product(s) offered to meet one or a small group of customers’ need. The
product decision centers on offering a proper mix of additional options.
3. Custom designed products - Unique item is created to meet one or more customers’ need. Product
is defined in terms of company’s capability, and consumer buys that capability.
4. Industrial services - Buyer buys company’s capability to do certain task (i.e., maintenance, technical
service or management consulting)
A Product market establishes the distinct arena in which the business marketer competes
• Defining the product market is fundamental to a sound product policy decision.
• Even if a company has a successful product, it needs to always be on the alert to consider
alternative (technological) ways to satisfy customer needs.
• This forces the company to be open minded about product innovation.

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 • This keeps the company in touch with the market.

Planning Industrial Product Strategy

Product Positioning
• A product’s competitive position in the market is referred to as the product’s position.
• It is found by measuring buyers’ perceptions and preferences in relation to competitors.
• The first question is: “What are the determinant attributes that play a central role in the buying
decision?”
Steps in Product Positioning process
1. Identify relevant competitive products.
2. Identify determinant attributes that customers use to differentiate among options and determine
their preferred choices.
3. From sample of existing and potential customers, collect their ratings of each product on
determinant attributes.
4. Determine own product’s current position versus competing offerings for each market segment.
5. Examine fit between preferences of market segments and current product position.
6. Select positioning or repositioning strategy.
Positioning or Repositioning Strategy
I. For some attributes the product manager may want to:
a) Increase the importance of an attribute to the customer
b) Increase the difference of their attribute to that of their competitors (i.e., increased
efficiency, decreased cost, better training, etc.)
II. If the product is truly better than a competitor’s but is not perceived that way, product managers
need to do a better job of communicating the message to the market to bring it in line with reality.
III. A product’s competitive advantage can be advanced by improving its level of performance on
determinant attributes that buyers emphasize.

The Technology Adoption Life Cycle (TALC)

Fundamental to TALC are 5 classes of customers who constitute the potential market for discontinuous
innovation (new products or services that require the end-user and the marketplace to dramatically change
their past behavior, with the promise of gaining equally dramatic new benefits)
• Technology enthusiast (Innovators)
Interested in exploring latest technology
Lack resource commitment
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 • Visionaries (Early adopters)
Use technology to gain competitive advantage
Prefer customised products
• Pragmatists (Early majority)
Believe in technology evolution
Usually purchase from market leaders
• Conservatives (Late majority)
Pessimistic about technology
Price sensitive and succumb under peer pressure
• Skeptics (Laggards)
Critics of technology

Strategy for High Tech Adoption

1. Put innovative products in the hands of technology enthusiasts.
2. After a while visionaries will see the value of the new technology and will begin to view it in
business terms.
3. New technologies usually enjoy a honeymoon reception from enthusiasts and visionaries, however
sales begin to falter… a chasm forms…
 A Chasm is a period of time where sales falter (and sometimes plummet) due to differences
between Visionaries and Pragmatists.
 Visionaries want change (revolution) whereas Pragmatists want change (evolution). But
Pragmatists make most buying decisions in organizations.
 Pragmatists are the gateway to the mainstream market. If that chasm gap can’t be bridged,
often products become part of ancient history.

Strategies to Cross the Chasm

• One strategy to cross the chasm is for the marketer to provide pragmatists with 100% solutions to
their problems using the new technology.
• Too many companies only supply a part of a solution. They are trying to be something to all, not
100% to some. That is unacceptable to pragmatists.
• Goal: Win a niche foothold with a small group of pragmatists as quickly as possible … that is what
crossing the Chasm means.

16
Bowling Alley Strategy
• Each market is like a bowling pin. The momentum of moving one pin (with good technology
products) successfully carries over into surrounding segments.
• The bowling alley is where mainstream market segments begins to accept the new product, but it
still has a way to go.
• Strategy: Win one niche, then work on another.
Tornado Strategy
This strategy assumes a product has very wide
appeal.
The seller’s strategy is to:
1. Move as quickly as possible in getting the product out to the market.
2. Build distribution ASAP.
3. Drive price down to next lower price break ASAP.
This strategy demands product leadership,
operational excellence in manufacturing and
distribution.
Main Street Strategy
• The goal is to develop value-based strategies targeted to particular end user segments
• It emphasizes operational excellence in production and distribution as well as finely tuned market
segmentation strategies

17
 8. Managing Innovation & New Industrial Products
The Management of Innovation
Innovation tends to be individually motivated, opportunistic, customer responsive, tumultuous,
nonlinear, and interactive in its development. Managers can plan overall directions and goals, but
surprises are likely to abound.
Very few products are an outcome of a planned, pre-meditated process…. most new products are a
result of messy, disorderly, chaotic and disjoint process
Research suggests that strategic activity largely fall in the following categories
• Induced strategic behavior
• Autonomous strategic behavior

Induced Strategic Behavior is in line with the firms traditional concept of strategy
• By manipulating various administrative mechanisms, top management can influence the perceived
interest of managers at the organization middle and operational level and keep strategic behavior
in line with the existing strategy.
Autonomous Strategic Behavior is essentially a feature of large resource-rich firms that encourage
entrepreneurship as a part of its organizational DNA.
• E.g. 3M Company encourages employees to devote 15% of their work time to develop new ideas

Induced Vs Autonomous Strategic Behaviour

Induced Autonomous
Activation of the Identified thru the innovation cell and
Manipulation of existing parameters in
strategic decision may not be in line with the current
line with existing strategy
process organisational strategy
Formal screening if technical and market An informal network assesses technical
Nature of screening
merit is done and market merit
Type of innovation Incremental Major / diverse
Nature of Departs from Organisational workflow in
Consistent with organisational work flow
communication the early stages
Major actors Prescribed by the channel Lead by the Product Champion
Fuzzy in initial phase; well defined in
Decision roles Defined by hierarchy
later stage
Implication for Strategic alternatives considered as part
Strategic course evolves with the product
strategy of design

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Managing Technology
Technology change is a great equalizer, eroding the competitive advantage of even well entrenched firms
and propelling others to the forefront.. Many of todays great firms grew out of technological changes that
they were able to exploit… Michael Porter
4 types of development projects
• Derivatives project – incremental product, process or both enhancement
• Platform projects – involve a number of changes in product and process
• Breakthrough projects – develop new products and processes that are fundamentally different
from original
• Research & Development – creation of knowledge concerning new materials and technologies that
eventually lead to commercial development.
The Product-Family focus
• A product family is a group of related goods produced by the same company under the same brand.
A company may create a product family to leverage the loyalty of existing customers toward its
original brand.
• For example, the classic Oreo cookie has morphed into a whole product family. There are Oreos
with less filling and more cookie, more filling and less cookie, mint-flavored filling and vanilla
cookies. But every one of those variations is recognizably an Oreo, and the packaging makes that
clear to shoppers.
• Apple’s stream of innovation – its operating system first helped it to gain market share in desktop
and laptop computers. From there, new products and services appeared to just fall into place; the
iTunes store for music, new iPod models for different music videos and finally the iPhones

The Disruptive Innovation Model

A sustaining innovation targets demanding high-end customers with better performance than what was
previously available.
A disruptive innovation represents a product or service that is not as good as currently available
alternative. But disruptive technology offers other benefits – they are simple, more convenient, and less
expensive products that appeal to new and less demanding customers.
E.g. Netflix, started out as a company supplying DVD mailouts, Netflix offered a cost effective and
convenient product to an area of the market that was previously overlooked. Targeting people who were
movie buffs but not necessarily interested in new releases, Netflix was providing a tailored product to a
specific group of people. Netflix made the bold move to disrupt its own business model, moving away from
a safe space and breaking into streaming media. Their latest disruptive endeavour was in 2013 when
Netflix entered the production business. A roaring success so far, Netflix have proved that they know how
to disrupt, innovate and succeed.

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Types of Disruptive strategies
• Low-End disruption
• New Market disruption
Four distinguishing characteristics marked the innovation approach of successful firms
• Limited structures
• Real time communication and improvisation
• Experimentation – Probing into the future
• Time pacing

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New Product Development & Performance
Factors that drive a firm’s new product performance
1. Process
2. Commitment
3. Strategy
Competitors are strongly motivated to react to the new product launch, if
• The new product represents a major threat to their market
• The market is experiencing a high rate of growth

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22
9. Managing Services
Understanding the full customer experience
Customer experience encompasses every dimension of a company’s offering – product and service
features, advertising, ease of use, reliability, customer journey and post sales…
The Customer experience map enables identify;
1. The value that customers place on different levels of performance for each element of their
experience
2. The customers minimal expectation for each and every element
3. The customers perception of the firm’s performance vs that of the key competitors
The customer experience management process captures customers subjective thoughts about a particular
company.
Leading firms are now moving from products to having a solution centric mindset

Delivering Effective Customer Solutions

Customer view a solution as a set of customer-company relational processes that involve;
1. Customer requirement definition
2. Customization and integration of goods and or services
3. Their deployment
4. Post deployment customer support… all of which are aimed at meeting the customers needs

• The Suppliers Role

• The Customers Role
• Benefits of Solution Marketing

23
Relational processes comprising a customer solution

Business Service Marketing: Special Challenges

• Services are Different
• Tangible or Intangible ??
• Simultaneous production and Consumption
• Service Variability
• Service Perishability
• Non ownership

24
Service Quality
• Customers evaluate the following dimensions in evaluating service quality
• Customers satisfaction and loyalty – 4 elements of the firms offering and its customer linking
process affects the customer satisfaction
• Basic product or service
• Basic support service, that make the product easy to use and hence effective
• Recovery process for fixing product or service problems
• Extraordinary services that make the customer believe that the pdt / service is customized

• Service Recovery encompasses the procedures, policies and processes a firm uses to resolve
customer service problems promptly and effectively.. Eg IBM complain mgmt. process
• Zero Defection – The quality of service provided to business customers has a major effect on
customer defections…i.e. customers who do not come back
• Return on Quality
25
 Service Packages
The Service package can be thought of as the product dimension of service, including decisions about
the essential concept of service, the range of services provided and the quality and level of service
Level 1 – Customer Benefit Concept
Level 2 – Service Concept
Level 3 – Service Offer
Level 4 – Service-Delivery System

Hybrid Offerings
A hybrid offering represents a combination of one or more goods and one or more services that together
offer more customer benefit than if the good and service were available separately.

26
27
10. Managing Marketing Channels

The Business Marketing Channels

The Success of every go-to-market decision you make, indeed your ability to make smart go-to-market
decisions at all, depends on how well you understand your customer…. you must build an accurate
customer fact-base that clarifies who the customers are in the target market, what they buy, how they buy
it, how they want to buy it, and what would motivate them to buy more of it from you.
B2B firms need to develop a flexible multichannel approach that can seamlessly handle each transaction
cost effectively.
The link between the manufacturer and customer is the channel of distribution

Direct Channels
• Does not use intermediaries; mostly used in B2B
• Direct Channel is effective when;
• Customers are large and well defined

28
 • Customers insist on direct sales
• Sales involve extensive negotiation with Senior mgmt.
• Selling has to be controlled to ensure that the total product package is properly
implemented and guarantee a quick response
• Used for most complex sales opportunity and highly customized solutions, large customers
and complex products
• Risk perceived in the decision making is high and expertise required
• Sales hinges on Relationship management
• Business marketing firms can use E-channels as
• Information platform
• Transaction platform
• Platform to manage customer relations
Indirect Channels
• Uses at least one type of intermediary.
• Responsible for large share of sales esp in developed economies
• In India – HUL uses indirect channel
• Indirect distribution is generally found where;
• Markets are fragmented and widely dispersed
• Low transaction amt prevails
• Buyers typically purchase multiple brands in small items
• Eg IBM sales organization concentrates on large accounts / customers. Industrial distributors
service other IBM customers – SME’s. IBM supports them thru various activities
Integrated Multichannel Model
• Multiple channels perform the sales task with a single customer
• Companies like Oracle, use this method to reach large middle segment customers
• Low cost of sales
• HP has an army of channels that it deploys to provide sales, service and support to its different
market segments
• Sells directly through field sales to large enterprises
• Through channel partners and resellers to government, education and midsize markets
• Through retail stores to small business and home markets
• Customer support channels and web – customer service
• Use CRM to manage complexity and enable one customer view
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Participants in the Business Marketing Channels
Channel members assume a central role in the marketing strategies … 2 members that play a sizable
role
1. Industrial distributor
2. Manufacturers representatives
Distributor
• Play a pivotal role because of the volumes they manage (`75%)
• Heavily used for MRO (maintenance, repair and operations)
• Distributors like W W Grainger and Wesco International each generate more than $5 Bn in annual
sales and are included in Fortune 500
• Indian context MSME’s, micro, small and medium enterprises generate sizable employment growth
and account for major share of industrial production and exports
• The main objective of the Ministry is to encourage entrepreneurship in this segment
Classification of Distributors
1. General-line – akin to supermarket in consumer goods market
2. Specialist – focus on one line or few related lines … due to specialty involved
3. Combination house – operates in 2 markets – Industrial and consumer
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Distributor responsibilities

Choosing a Distributor
• Depends on manufacturer and target customer segment
• Internet is playing a catalytic role for stimulating coordination
• Internet collaboration is a critical strategic force in managing channel relationship
Distributor as a Valuable partner
• The quality of a firms distributors is often the difference between a highly successful marketing
strategy and an ineffective one
• Industrial distributors are a powerful force in the business marketing channel

Manufacturer’s Representative
For many business marketers who need a strong selling job with a technically complex product,
manufacturers representative or Reps… are the only cost effective answer
The Reps forte is superior product knowledge along with understanding of the customers and market
The Rep-Customer relationship is multifold… the stronger the bond .. The better is the Customer
connected with the company
Moslty only on commission basis.. i.e paid on every successful sale..approx. 7-15%
Reps are used in
1. Large and small firms
2. Limited market potential
3. Servicing Distributors
4. Reducing overhead costs

Channel Design
Channel design refers to those decisions involving the development of new marketing channels where
none had existed before or to the modification of existing channels.
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Channel design is best conceptualised as a series of stages that the business marketing manager must
complete to be sure that all important channel dimensions have been evaluated.
The result of this process is a Structure that provides the highest probability of achieving the
company’s objective

Marketing Channels ar often sought as a series of product and information flows that originate with the
B2B firm… The following flow chart has given this concept a spin and kept the Customer at the core of
the chain

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Channel Administration
Once a B2B channel structure is chosen; key steps
• Select channel participants
• it’s a continuous process as some members may leave and new ones may join
• Selection of channel members must be done carefully
• Continuous evaluation of performance is key
• Territorial exclusivity can also be given
• Channel member motivation
• Distributors and Reps are independent and profit oriented, hence perception and outlook
may differ significantly..
• The manufacturer must continuously seek support from intermediaries
• Channel partnership
• Dealer advisory councils
• Margins and commissions
• Build Trust
• Conflict management
• Performance evaluation

33
11. Supply Chain
Supply Chain Management
Supply Chain Management (SCM) is a technique for linking a manufacturers operations with those of all of
its strategic suppliers and its key intermediaries and customers to enhance efficiency and effectiveness.
Central to SCM are the coordination and collaboration activities performed with partners which may
include suppliers, intermediaries, third party service providers and customers.
SCM Goals
• Waste reduction
• Time compression
• Flexible response
• Unit cost reduction
• Benefits to the final customer
• Financial Benefit perspective
Role of Technology in SCM

Application of Supply Chain Management Approach

Products are broadly of 2 types from a SCM perspective basis demand pattern and hence inventory cost
• Functional – paper, office furniture etc.
• Innovative – smart phones, notepads, other high tech pdts
Partnership is a prerequisite for the Supply chain to be successful. Partners clearly need to define their
strategic objectives, understand where their objectives converge (and diverge) and resolve differences.
Once the partners agree on the supply chain strategies, performance metric can be established to measure
performance
Example: Walmart and “Big Box” Retailers
The “Big Box” store, which represents one of the major disruptions of the retail model from the last
century, thrives on size, ubiquity, and well-planned supply chains to drive out the competition. How else
would a company like Walmart make a profit on a t-shirt made overseas that retails for $5.00?

Walmart succeeds by having fewer links in its supply chain, and buying more generic goods directly from
manufacturers, rather than from suppliers with brand names and markup. It uses “Vendor Managed
Inventory” to mandate that manufacturers are responsible for managing products in warehouses owned
by Walmart. The company is also is particularly choosy with suppliers, partnering only with those who can
meet the quantity and frequency it demands with low prices, and with locations that limit transportation
needs. They manage their supply chain like one firm, with all partners operating on the same
communication network.

By buying at large enough quantities to take advantage of economies of scale, moving products directly

34
from manufacturers to warehouses, and then delivering to stores which are large enough to be distribution
centers, it reduces links in the supply chain and cost per item, translating to low prices for consumers.

Example: Amazon and “Ecommerce Platforms”

Having overtaken Walmart as the world’s largest retailer in the last decade, Amazon’s “online big box”
concept is a perfect example of unique supply chains. As an e-commerce shop, obviously they cut the retail
store out and ship from distribution center to consumer’s homes directly. Where Amazon innovates is both
in its supplier-side and its final supply chain link - delivery.

Just about anyone can sell things on Amazon because it’s a platform, not just a shop. As a result, Amazon
has more things than any other online store, so when people shop online, they think of Amazon. Then, it
produces everyday goods cheaply, and underbids suppliers. Next, their warehouses make serious use of
automation to store items going to like destinations together, ready for immediate transport. Finally, its
investments in delivery staff and technology make 2-day shipping a basic expectation, and even same-day
delivery a possibility. Amazon ditches third-party logistics (3PL) and fulfils orders itself.

35
Logistics as the Critical Element in SCM

Key differences Logistics Supply Chain Management

Goals and Aims Customer Satisfaction Competitive advantage

Organizations Involved Single Organization Involved Multiple Organizations Involved

Evolution and Development Traditional Modern

Relationship with One

Within Supply Chain Management Incorporates Logistics
Another

Relationship With Other Minimal Relationship with other Significant Interactions with other
Departments Departments Departments

• Managing Flows – Use of reverse supply chain by Xerox and Canon, onsite delivery of steel by Tata
Steel
• Sales-Marketing-Logistics integration – DHL
• Just-in-Time systems
• Just-in-Time relationship
• Elements of a Logistical systems
• Total Cost approach

Controllable elements of a Logistics system

Customer Material Production

Service handling planning

Plant and
Order
Packaging warehouse
processing
location

Logistics
Inventory
communicatio
control
n

Transportation Warehousing

36
Logistics system
Calculating Logistics cost
• Activity-Based Costing (ABC)
• Total Cost Ownership (TCO)
B2B Logistical services
• Impact on customer
• Determining the level of service
• Logistics impact on other SCM participants
B2B Logistical management
• Logistical facilities
• Serving other supply chain members
• Transportation
• Inventory management
• Third party logistics
Future focus: The Green supply chain

37
12. Pricing Strategies
Pricing strategies
No simple formula for pricing industrial products and services.
Key determinants that play a pivotal role are
1. Pricing objectives
2. Demand determinants
3. Cost determinants
4. Competition
All pricing processes demonstrate 3 principles
• Value based
• Proactive
• Profit driven

Pricing Objective

Set strategic Pricing Objectives

Estimate Demand and the price elasticity of Demand

Determine costs and their relationship with volume

Examine competitors Price and strategies

Set the price level

Price Objective – should always be in line with the marketing and overall corporate objectives.
The marketer starts with a principal objective and then adds the collateral pricing goals
• Achieving a target return on investment
• Achieving a market share goal
• Meeting competition
Each organisation has a unique set of internal and external factors that influence pricing and hence
have unique strategies
E.g. Dow Chemicals – Low price – High MS
DuPont – High price – Low MS and then reduce price, when market expands

38
Demand determinants
Potential demand, sensitivity to price and potential profitability vary markedly across segments.
A prudent marketers will focus first on the value a customer places on a product or service … this then
reverses the typical process that gives immediate attention to the product cost and desired markup.
Differentiating through value creation
Capturing Value
Isolating value drivers in key customer segments
Value Research
• Elasticity varies by market segment
• Satisfied customers are less price sensitive
• Search behaviour and switching cost
Value-based segmentation (Sealed Air India Pvt. Ltd)

Define the key market segment

Isolate the most significant driver of value in customers business

Quantify the impact of your product or service on each value driver in customers
business

Estimate the incremental value created by your product or service, particularly for
those features that are unique and different from competitors offerings

Develop the pricing strategy and marketing plan

Cost determinants
A strict cost plus pricing philosophy overlooks customer perception of value, competition, and the
interaction of volume and profit.
Many firms like Canon, Toyota and HP, use target costing to capture a significant competitive
advantage.
Target Costing
Target costing features a design-to-cost philosophy that begins by examining market conditions.
- The firm identifies and targets the most attractive market segments.
- It then determines the level of quality and type of product attributes required to succeed in each
segment, given a predetermined target price and volume level.
- Post this the allowable costs are established.

39
Classifying Costs
Goals are as follows
1. Properly classify cost into fixed and variable
2. Link them to their activity
Types
• Direct traceable
• Indirect traceable
• General

Competition
Competition establishes an upper limit on price
Hypercompetitive Rivalries
In hypercompetitive environments, successful companies pursue strategies that create temporary
advantage and destroy the advantage of rivals by constantly disrupting the markets equilibrium. Eg
Intel keeps on disrupting the micro-processor segment
Leaders in this market, constantly seek new sources of advantage, further escalating competition and
contributing to hyper-competition

Pricing across Product Life Cycle

• Skimming
• Penetration
• Product Line consideration
• Legal considerations
Responding to Price attacks by Competitors

40
Competitive Bidding
• Closed Bidding
• Open Bidding
• Strategies for Competitive Bidding

41
13. Communication – Advertising & Sales Promotion
Social Media
B2B Social media refers to the various channels of the Social Web where customer prospects and
businesses communicate across platforms as diverse as discussion forums, blogs, wikis and social
networks, engaging with each other through the exchange of content.
• Discussion forum
• Blog
• Wiki
• Social Networks
B2B companies are using social media to monitor what prospects are saying about their company,
capture interest, coordinate marketing and sales follow-up.
E.g, Dell is a highly respected PC brand and its social media communication carries that forward. It’s
dignified and warm. The brand has presence on Facebook, Twitter and YouTube and is leveraging all
three of them to their maximum potential. Being a technologically forward company, they have got the
hold of it real quick.
A deep dive into the details of their social media strategy.
Platform-wise Strategy
Facebook
Dell’s Facebook strategy is simple – Be helpful and interesting. The page publishes updates once a day
mostly and the updates are a mix of helpful tips and fun activities.
Twitter
Dell is doing a fair job with its Twitter profile. On one hand its broadcasting the updates that are similar
to its Facebook’s content and on other it’s also managing customer queries.
The communication is humane and warm. They have mastered the art of empathy on social media and
are doing a noteworthy job at it.
YouTube
A breath of fresh air, Dell’s YouTube channel is focussed more on content than TVCs. With a good mix
of helpful tips, fun ‘masti’ videos and reviews, there are hardly any TVCs you can come across.
Nice to see a brand using YouTube the way it should be used. Now if only they start promoting these
videos aggressively.
Comparison with Competitor
HP India, on the other hand has a miniscule social media presence when compared to Dell. Not only it
has a tenth of Dell’s community, it also lacks in relative engagement.
And HP India doesn’t have its own Twitter channel for addressing people’s queries. There is only one
mouthpiece for the entire brand, @HPnews
Neither does it have a presence on YouTube.
42
Customer Decision Journey (CDJ)
According to a survey .. The single most impetus to buy is someone else’s advocacy… In todays world…
there is a mismatch on where advertising is done and where the prospect / consumer can be found
Charting CDJ
Survey shows that prospects and customers spent much more time on Social media sites than on the
manufacturers or distributors site
1. Isolating Customer Touchpoints
CDJ includes 2 critical steps that have been neglected
• Inspiration
• Sharing
2. Transform the Strategy – basis where your customer is
3. Lessons learned – B2B customer travels Social media, Company's sales Executive and company to
satisfy a need or query

Role of Advertising
1. Integrated Communication Programs
2. Enhancing Sales Effectiveness
3. Increased Sales Efficiency
4. Creating Awareness
5. What B2B Advertising cannot do

Managing B2B Advertising

Advertising is just one component of the B2B marketing plan and needs to get well integrated with the
overall strategy.
Overall B2B marketing has the following 10 components
1. Research. ...
2. Niche-driven Strategy. ...
3. A High Performance Website. ...
4. Search Engine Optimization (SEO) ...
5. Social Media. ...
6. Advertising. ...
7. Referral Marketing
8. Marketing automation, CRM and Lead nurturing
43
9. Testing and Optimisation
10. Analytics and Reporting
Business-to-business advertising, or B2B advertising, takes place between companies that are typically
found in the middle of the supply chain for any product or service that does not reach the average
consumer.
The best marketers don’t just know more about the latest channel, tool or tactic. They know more
about… people. You can find plenty of crafty ways to get your message in front of prospects, but if you
want those people to actually pay attention—rather than just ignoring you—you better do your
research. — Katelyn Bourgoin, Growth Strategist & Trainer

Determining B2B Advertising Expenditure

Leading B2B are international telecommunication firms such as Verizon, AT&T, high-tech firms like IBM,
HP and Microsoft and others like GE and FedEx.
Typically Business marketers use a blend of intuition, judgement, experience and very rarely advanced
decision making tools to determine the advertising budget.
• Rule of the thumb – 1% of Sales

44
 • Objective-Task method – This method links the advertising spent to the objective; since
establishing a direct link between sales and advertising expense… this method focuses on
the communication effectiveness and not on the sales effects

Managing B2B Advertising

Presently B2B social media advertising is also a bit less competitive than other marketing channels. 72%
of B2B content marketers use social media advertising or promoted posts according to the 2020 CMI
report.

45
Direct Marketing Tools
• Direct Mail
• Normally used for Corporate image promotion, product and service promotion, sales force
support, distribution channel communication and special marketing problems.
• E.g. HUL uses direct mail for Denim Aftershave… target … members of the elite clubs in
metros
• Direct Email
• IBM’s customer relationship program, called Focusing on You, rests on a simple but
powerful idea… ask customers what information they want … and give it to them. They
have found huge success with this as it is not only cost effective, but also connect real time
with the customer
Measuring Advertising Effectiveness

46
For B2B marketers the traditional vanity metrics aren’t suited for giving an accurate read on the
business impact on ad campaigns.
Standards such as click-through rate, cost-per-click, and even total clicks and impressions can provide
with a nice feeling of accomplishment but beyond that, they aren’t all that telling. In fact, they can be
outright misleading as indicators of success.

Managing Trade Show Strategy

Despite being "old school," trade shows can still provide so much value to B2B marketers.
Trade shows are now infused with tech.
Trade shows are no longer just halls filled with people, furniture and temporary structures. They have
evolved into hotbeds of technology. Exhibits now often include interactive booth activities that help
attract, engage and retain booth visitors, and let exhibitors better wow crowds and persuade individual
prospects.
For example, exhibitors can use large touchscreens for tailored, highly personalized presentations to a
team of buyers. They can use social media to attract attendees to their booth, and then create an
Instagrammable event in their booth to get attendees to share their company brand with their peers.
Exhibitors can create activities that educate buyers about their products and services. Augmented
reality and virtual reality are getting a footing with high-end exhibitors who really want to stand out.
47
These tech advances have helped exhibitors remain relevant to younger, "digital native" attendees who
expect tech as part of their day-to-day experiences.
Benefits
1. An effective message can be delivered to a large and interested audience at one time
2. New products can be introduced to a mass audience
3. Customers can get hands-on experience with the product in a one-on-one selling situation
4. Potential customers can be identified, providing sales personnel with qualified leads
5. General goodwill can be enhanced
6. Free publicity is often generated for the company
Trade-show investment returns
Trade-show objectives
Selecting the show
Managing the Trade-show exhibit
Evaluating Trade-show performance

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14. Communication – Personal Selling
Managing Sales Force
Effective management of the B2B Sales Force is fundamental to the firm’s success.
Strategic components of Sales force management are
1. Methods for organising the sales force
• Geographical organisation
• Product organisation
• Market-centered organisation
2. Key Account Management
• Customer Unique value proposition / Prioritization
• Key Accounts Vs Regular Accounts
3. Distinctive characteristics of high performing account managers

Isolating the Account Management Process

Account management success hinges on
• Building internal relationships
• Aligning resources to Client needs
• Forging relationships with the customer organisation

49
 • Managing the Customer engagement process
• Aligning and Crafting
• Enhanced internal reputation

Salesforce Administration
Successful Sales force administration involves recruitment and selecting Salespersons, then training,
motivating, supervising, evaluating and controlling them.
The industrial firm should foster an organisational climate that encourages the development of a
successful sales force.
Key steps
• Recruitment & selection of Salespersons
• Training
• Supervision & Motivation
• Evaluation & Control

50
Deployment Analysis: A Strategic Approach
Proper deployment requires a multistage approach to find the most effective and efficient way to assign
sales resources (Sales call, # of salespersons, percentage of salesperson’s time) across all of the PCU’s
(Planning & Control Units).
• Territory Sales Response
• Territory Alignment
• Developing the Customer Database
• Sales Resource Opportunity Grid
• Isolating High-opportunity customers

GE’s Sales Force Effectiveness Initiative

Four sales force effectiveness priorities established.. for any firm..small or large
1. Customer potential and prioritization
• Establishing a customer database
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 • Calculating customer potential
• Prioritising customers and prospects
2. Territory alignment
• Evaluating account quality/ potential
• Examining account density
• Implementing changes to enhance sales force effectiveness and efficiency
3. Target setting and potentialization
4. Variable incentive compensation

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Business to Business marketing

Section 1: Business Environment

1. Business Marketing Perspective
Section 2: Managing Relationships
2. Organisational Buying Behaviour
3. CRM Strategies
Section 3: Assessing Market Opportunities
4. Segmenting the Business Market & Estimating Segment Demand
Section 4: Business Marketing Strategies
5. Business Marketing Planning
6. Strategies for Global Markets
7. Managing Products
8. Managing Innovation & New Industrial Products
9. Managing Services
10. Managing Marketing Channels
11. Supply Chain
12. Pricing Strategies
13. Communication – Advertising & Sales Promotion
14. Communication – Personal Selling
Section 5: Evaluation
15. Marketing Performance Management

1
Section 5: Evaluation
15. Marketing Performance Management

A Strategic Map: an integrated plan

A Strategic Map provides a visual representation of the cause-and-effect relationship among the
components of a company’s strategy. Shows the interrelationship between four perspectives of a
company's balanced scorecard.

Developing the Strategy: The Process

Step 1: Define the Financial Objectives and establish the Growth and Productivity Goals
Step 2: Define the Customer Value Proposition for the Target Customer Segment
Step 3: Establish the TimeLine for Results
Step 4: Identify the Critical Strategic Themes and Internal Processes with the Greatest Impact on the
strategy
Step 5: Identify the Human, Information and Organisational Resources required to support the strategy

2
Step 6: Develop an Action plan and provide required funding for each of the separate initiatives (Strategic
themes)
Strategy results
Step 4 - E.g. Infosys approach to accelerate innovation
With the aim to future proof it business in a constantly changing world of technology, the following 7 key
areas were identified by Infosys
1. Digital consumers
2. Emerging economies
3. Healthcare economy
4. New commerce
5. Pervasive computing
6. Smarter organisation
7. Sustainable tomorrow

Controls at various levels

• Marketing Performance Management (MPM) Strategies

• MPM – The Dashboard – Marketing metric
• Efficiency and Effectiveness control
• Profitability control

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Implementation of Business Marketing Strategy
• Marketing implementation is the process that translates marketing plans into action assignments
and ensure that such assignments are executed in a manner that accomplishes a plan’s defined
objective.
• Implementation skills
• The Marketer’s role

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Negotiation is a critical part of the sales process and many sales professionals tend to
make several common mistakes during a negotiation, in particular when faced with
adversarial tactics.

Tactics are behaviors - actions used by the negotiator to serve a purpose or to pursue an
objective. Tactics can be verbal and/or nonverbal. One of the first things that negotiators
or anyone skilled in communication learns is that every piece of behavior communicates.
Whether we want to or not our behavior speaks louder than the words we use. For
example, have you ever developed a series of assumptions about people just by watching
them enter a room, shake hands, etc. without their uttering a single word.

Negotiation tactics can work to strengthen the relationship or can be used to intimidate,
discourage, anger or upset the other party. Tactics can be skilfully planned or just
happen in the course of a negotiation. Tactics that are intended to intimidate, surprise,
or tip the power balance.

Successful vs. Average Negotiators

Average negotiators make three common mistakes when they encounter adversarial
tactics:

1. Average negotiators concede too much, too soon, on price.

2. Lower their expectation level for the overall negotiation.

3. Become intimidated or flustered, and make a bad agreement just to escape the
situation.

By contrast, successful negotiators are flexible and creative when they respond to
adversarial tactics. In general, successful negotiators respond to adversarial tactics as
follows:

• Remain calm

• Suggest a break (or caucus), if needed

• Ask more questions to explore for alternative options

• Make a concession only if the other side reciprocates

• Hold firm on price but offer an elegant currency instead

• Warn, but not threaten the other person about the consequences of the adversarial
tactic

• Get their needs met elsewhere

THE 25 MOST DIFFICULT ADVERSARIAL TACTICS

Adversarial tactics, if used by the other side, would be most likely to cause you some
difficulty.

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1. Big Pot tactic…this refers to the creation and use of imaginary negotiating issues by
the other side. Their hope is that the number of issues will dampen your aspiration level
and establish a climate of toughness. Then, when they retract one of the imaginary
issues, they hope to set up the feeling that you now owe them a concession. You can
offset it by ignoring some of their issues (concentrate on those that are important to you)
or by introducing numerous issues of your own.

2. Budget or “Bogey” tactic (“This is all I’ve got…”) …the other side tries to convince you
that they have a dollar limit or some other restriction placed on them by their
organization. For example, everyone is familiar with budget constraints so it is very
believable and effective when the other side protests accordingly. Possible
countermeasures: test it since most budgets are flexible; disengage and study the
problem; change the payment terms; find out who the decision maker is (who controls
the budget).

3. Cherry Picking…this refers to when a customer gets multiple bids, and then tries to
get the best or lowest offer on each item by playing one supplier off the others. For
example, suppose Supplier A gives the best price, Supplier B gives the best terms, and
Supplier C gives the best warranty. The buyer starts the next round of negotiation by
asking each supplier to make a proposal at A’s price, B’s terms, and C’s warranty.
Possible countermeasures: make a small concession on price only; know your
competition and have the courage to either say no; caucus.

4. Company Policy…the other person cites a company policy over which he or she
allegedly has no control. For example: “We have to use our contract form” or “Standard
payment terms are 60 days for everyone.” This tactic is often combined with the Non-
Negotiable Demand tactic. Counter by saying you have similar constraints or offering an
acceptable alternative such as mark-up-the-document. In other words, we’ll use your
contract but only with some changes.

5. Deadline Pressure…they force action. Time is power. Use deadlines to your advantage.
Don’t accept them blindly if the other side puts deadline pressure on you. Is it real?
What are the consequences if you decline? Both sellers and buyers use deadlines on the
other. Sellers say: “the price goes up January 1”; “I can’t guarantee availability, etc.
unless you agree by Friday”; “this offer expires in two weeks.” Buyers say: “I need your
answer by tomorrow”; “if we can’t agree, I’ll talk to your competitor”; “the money won’t be
in the budget after next week.”

6. Deadlock…perhaps the most powerful and uncomfortable tactic and situation to face.
It leaves one with a sense of failure. In addition, how do you explain the deadlock to
others inside your organization? It is usually effective to caucus and try to come up with
a face-saving solution. Neither side wants to deadlock if they truly wanted to reach an
agreement. Remember: No deal is better than a bad deal!

7. Divide and Conquer…the other side involves multiple negotiators making side deals
with various parts of the vendor organization. For example, the procurement manager
works with the sales rep to get a better deal on price while the systems manager cuts a
side deal with the vendor’s development engineer to include some special software or
services. Each concession looks small but the aggregate contract may look like a “bad
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deal” from the vendor’s perspective. Best response: plan and coordinate with all
members of your team that will have contact with the customer.

8. Emotional Outbursts…where the other party erupts into anger, which can be directed
at the other party or toward their own colleague. Most emotional outbursts during the
negotiation are staged to gain some advantage. Many people are uncomfortable with
emotional displays and may move to placate or make concessions to ‘keep the peace’.
The most effective way to deal with emotional outburst is to remain calm. When things
settle down, ask what specifically the problem is? If the outburst is real then you can
deal with the issue. Otherwise, to appease may put you at a disadvantage.

9. End Run…suppose one side doesn’t want to deal with the other’s primary negotiator?
Besides using the Change, the Negotiator technique, an option is to go around the other
person or escalate to a higher authority. Some possible ways that it is often done:
initiate boss-to-boss contact; say, “This is bigger than both of us” and propose that other
people need to be brought in; change the site to where other contacts may be.

10. Fait Accompli…the other side takes a surprise action. It works if the other side
thinks that it is easier to ask for forgiveness rather than ask for permission. Tends to
affect the balance of power. Could occur after the deal is signed. For example, the other
side inserts or deletes penalties for non-compliance in the written contract.

11. False Authority…the other side misleads you about his or her authority. For
example, after you have already made several concessions and thought that an
agreement was in place, the other person says “I have to take this to my manager for
approval.” This tactic is designed to wear you out, both physically and psychologically.
Be prepared for last minute authority changes. Raise the issue early! Some additional
options are to test it, counteract with an authority escalation of your own, and be willing
to walk away.

12. Good guy, Bad guy…can occur in a team negotiation when one person acts tough
and unreasonable and their partner acts nice and reasonable. Remember, if the other
side is using this on you, neither side is really the good guy. You can react by walking
out, protesting, ignoring the bad guy, or using your own bad guy. Humour can
sometimes work (“hey, I know what you’re doing…I saw that on TV”).

13. Heckling (or Personal Attack) …this refers to negative attacks by the other person on
you, often at a personal level. Best responses: dissociate yourself from the problem or
issue. Be calm, try to ignore it. Negotiate to end it. If it persists, walk out and protest as
loudly and as high up as you can. You do NOT have to take abuse.

14. Intentional Delay…this is a tactic where the other side uses time pressure against
you, but they don’t explicitly express a deadline. It is usually used either at the
beginning or end of the negotiation. For example, you show up on time at the other
person’s location, and they make you wait in the lobby an exceptionally long time. Or,
late in the negotiation, the other side procrastinates or “misplaces” a critical document.
If the other side learns that time pressure exists for you, such as the need to catch an
airline flight, they can use it to their advantage.

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15. Killer Phrase (“You’ve got to do better than that”) …those seven words work well
against average negotiators, who tend to make an immediate and unilateral concession.
Some good responses are to remain firm and get the other party to offer a counter-
proposal if they haven’t yet expressed their position. Another alternative is to make a
concession, but only if the other side makes a concession in return.

16. Missing Man Maneuver…person with final authority disappears near the end of the
agreement. This is a delaying tactic, signalling that they are going to competition. If it
happens, consider walking out; put a time limit on your offer; go higher.

17. Nibbling (or Add-on) …this refers to when one party asks for a relatively minor
concession or throw-in, typically at the conclusion of the ‘big’ negotiation. It works. For
example, ask for slightly extended payment terms…or a less than usual down
payment…or an extended warranty. Resist the tendency to give in. With tactful firmness,
you can decline the nibble or trade it for a larger concession.

18. Non-Negotiable Demands…tends to be perceived as adversarial if the other side

takes this position on all or most issues. This tactic works because it lowers your
expectations. Possible counter-measures: conduct off the record talks; explain why you
feel otherwise; treat the demands as negotiable and suggest alternatives; caucus. If you
opt to use it, this tactic is especially effective if the non-negotiable demands are included
with reasonable demands.

19. Outrageous Initial Demand…the customer opens at a very low price or the seller
opens at a very high price. On its own, this tactic is intended to influence the
expectations of the other side. Used in combination with split-the-difference, it works to
the advantage of the “outrageous” side. Some responses include walkaway, have the
courage to stick to your original opening, or reschedule.

20. Phony Facts… In plain English, the other person lies to you. Be alert to indications
that they are deliberately lying. If you suspect it, don’t attack the person; instead, use
face saving techniques such as trust-but-verify.

21. Physical setting…this tactic is not as prevalent as it once was, but don’t be surprised
if the other side tries purposely to make the physical setting of the negotiation as
uncomfortable as possible for you. Some classic examples: the infamous sun-in-your-
eyes, or uncomfortable chairs, or a lot of background noise and interruptions. A more
recent example of this tactic is to conduct the negotiation in a public setting such as the
other side’s lobby, so that other people overhear what you are saying.

22. Split the Difference…it is hard to say no because this appears to be so reasonable. In
some cases, this tactic has a positive effect. However, if used in combination with
Outrageous Initial Demand, it favors one side much more than the other. If the splitting
the difference makes the agreement unacceptable, simply say no.

23. Take Back What You Gave Earlier…purpose is to reduce other side’s aspiration level.
When it is restored or returned, it makes the other side feel as if they have gained
something. But all that’s happened is a return to status quo.

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24. Take It or Leave It …signals that the other side has reached their limit. The other
person might say something such as “…this is our last and final offer”. If the other side
uses this tactic on you, you can respond by introducing new alternatives, explaining the
true cost of deadlock to both of you, or move to a different solution.

25. Threats…every negotiation involves a degree of threat. The problem is when it is

explicit and punitive. Threats usually lead to counter-threats. Threats can be real or
imaginary; treat them as real if the other side has other alternatives and can live without
you. Otherwise, consider the fact that they may be bluffing. Possible counter moves: fait
accompli; protest to higher management; prove that the threat can’t hurt you; be
irrational; show the threatener that they have more to lose.

THREE CATEGORIES OF TACTICS

Stone Walls (the other side refuses to budge)

1. Budget (or Bogey)

2. Company Policy
3. Deadline Pressure
4. Deadlock Fait Accompli
5. Non-Negotiable Demand
6. Take It Or Leave It (or Last and Final Offer)

Attacks (pressure and posturing tactics by the other side to intimidate you)

1. Divide-and-Conquer
2. Emotional Outburst
3. End Run
4. Heckling (or Personal Attack)
5. Intentional Delay
6. Killer Phrase
7. Outrageous Initial Demand
8. Physical Setting
9. Threats

Tricks (tactics to mislead you)

1. Big Pot
2. Cherry Picking
3. False Authority
4. Good Guy, Bad Guy
5. Missing Man
6. Nibbling
7. Phony Facts (or Lying)
8. Split the Difference
9. Take Back What You Gave Earlier

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