Business to Business Marketing
What are the elements of the communication mix?
(bottom of pyramid) -public relations -advertising -sales promotions -direct marketing -trade shows -personal selling (top of pyramid)
What is the innovation funnel?
(resources provided without) Go from 100 ideas generated, 10 ideas harvested, 5 ideas developed, 2 ideas tested, 1 idea implemented
A model of communication in marketing channels?
(two outside conditions that join) Channel conditions: - structure: whether exchanges between channel members are predominately relational, with a long term perspective and high level of interdependence or discrete with short term orientation - climate: relationship atmosphere. Indicates level of trust and support between channel members. - power balance: refers to whether power is held symmetrically within a channel with power equally balance between members, or whether it is asymmetrically apportioned with a power imbalance that favours one party. communications strategy: -frequency: an excess of communication can result in 'overload' where channel members are bombarded with too frequent/repetitive information or just too much over time. Can be vice versa too. -direction: communication should be bidirectional (go to and from organization) is best, as one way communication runs risk of 'voice' of less powerful partner being ignored -modality: if communication is formal and planned or informal. -content: direct influence strategies involve specific requests or instructions to change behaviours. indirect strategies however try to change a channel member's attitudes about the appropriateness of their behaviour (both create) Qualitative channel outcomes: -coordination -satisfaction -commitment Quantitative channel outcomes: -performance
What are the network considerations in NPD?
- 'Getting into the mud': suggests to managers that a network must be learned about by working within it. Becoming a network actor yourself. - 'Getting through the mud': in industrial contexts indicates a need for 'staying power' in pursuing activities. It is vital to have sufficient resources to push projects through and to persuade other network actors of their viability. - Protecting your ideas: working closely with another org. on NPD can make it difficult to protect your own ideas. Abandon relationship if other firm uses plans. - Appearing to be neutral: can affect relations with other network actors if they perceive your firm to be closely allied with their customers etc. To hand this be involved in several NPD projects to appear unbiased in your innovation plans.
The development of the B2B marketing discipline?
- 1960's: Industrial marketing - 1980's: B2B marketing - 2000's: Organizational marketing
What is the ARA Model?
- Actor bonds: connect actors and influence how actors perceive each other and form their identities in relation to each other ex. IORs or supply chains - Resource ties: connect various resource elements (technological, material, knowledge resources and other intangibles) often manisfested as products or services - Activity links: regard technical, administrative, commercial and other activities of a company that can be connected ex. purchasing or marketing communication
What is surrounding the inside of the IM bubble? (top)
- Atmosphere: Power and dependence Cooperation Closeness Expectations
What are the types of supply chain IORs? (start with bottom of pyramid)
- Bottom: arm's length, transactional relationships - Type 1 Coordinated Partnership: coordinate activities and planning on a limited basis, typically with a short term focus and involve one functional area with each organization - Type 2 Integrated Partnership: partners move to integration of activities with a longer-term horizon. Multiple division and functions within each firm are involved. - Type 3 Extended Partnership: share significant level of integration, with each party viewing other as an 'extension' of their own firm, and no set end date involved in the IOR. - Joint Venture - Vertical Integration
What can happen with multiple channels?
- Can face inter-firm and inter-channel conflict - Risk of cannibilization: switching from firms prior channel (moving from conventional stores to the internet)
How do you categorize business product lines?
- Catalogue (proprietary products): these products are made in advance of orders in a standard format in anticipation of demand. Level of customization is very limited. ex. Car motors for commercial vehicles are ready before order - Custom-built products: these products are custom assembled for customers from pre-formed parts and components. The final configuration is then made to meet a specific client need. ex. Model homes, which are already assembled but can be configured to whatever design the customer wants. - Custom-designed products: these products are more individualized than the previous categories. They are designed to meet the specific needs of a few customers (or only one) and are often highly expensive new task purchases. ex. you can build a Ford car that is customized to your needs and is different than other cars. - Business Services: although many organizations offer a product, they almost always offer a service element in support of this product, such as technical advice or service contracts for machine installations. Some services will be highly customized to fit customers needs, other firms (such as lawyers/ accountants) offer business services as core activities. The intangibility of services means marketers have to ensure quality is maintained even though service may be different each time.
What is channel breadth?
- Concerns the numbers of each type of intermediary to be used: the greater the number, the greater the intensity of distribution. Therefore the more customers seeking a producer, the more intermediaries needed to serve them. - The INTENSIVE approach may be good for some products such as those sold at lower prices to mass markets but... - The more technical products with higher margins may necessitate SELECTIVE or even EXCLUSIVE distribution with only a few carefully appointed dealers
What is channel length?
- Concerns the optimum number of levels in the channel to ensure the desired service outputs for the end user. - It can be common in some sectors for purchases to be made from a particular type of intermediary ie. electronic parts for repairs = established channel types VS. In other sectors, there may be opportunities to develop new types of channels that fulfill unexplored customer needs ie. 24 availability of parts = new channel types
What is the product life cycle?
- Development: revenues at this stage (below line) are negative due to the investment in time and other resources required to bring a product to market. - Introduction: here the product enters the market for the first time, typically with low levels of customer awareness and thus a need for considerable investment in marketing communications, both in business media and personal selling efforts. Changes in supply chain processes for production etc. might have to take place, customer reaction will have to be monitored in this stage too. May display at trade shows, recruiting an expanded sales force etc. - Growth: if customers accept the new product, sales are thought to expand with a concurrent growth in the overall market. Marketers will need to think of ways in which their products can be differentiated, perhaps by offering modified upgraded product lines or services should a slow-moving competitors offer similar products. - Maturity: at this stage most potential buyers have adopted the product, and sales will reach their highest point. Marketing strategy often becomes focused on maintaining the volume of production in an in attempt to reach economies of scale. Competitive practice at this point can include price cutting, which may achieve short term results against the competition (but also runs risk of devaluing product as perceived by customers). Mktg managers may also try to reposition the product- perhaps with technical support etc. If this works, maturity stage of PLC will last a considerable time... or it may be impossible to revitalize business products which therefore sees a fall in sales/profits. - Decline: here the market consolidates and underperforming products may have to be withdrawn, or some distribution channels closed. Expenditure on any further R&D or promotion is usually severely curtailed.Focus of the firms remaining in market is on efficient production, especially if a key customer purchases the declining product while at the same time buying a host of other products from the selling firm.
Who are commercial customers?
- Distributors: act as intermediaries. They transfer products through the supply chain and add value while doing so. - Original Equipment Manufacturers: OEMs are firms which purchase materials or parts that they then make into products that are marketed, often with manu brand name, to the customer. Ex. GM. Deal up and down stream with suppliers and distributors. - Users: these organizations buy goods and services to support their production processes. - Retailers: retailers purchase goods to resell to consumers. They have highly developed marketing functions and budgets, in managing relationships with their consumers. Also hold most power.
What is surrounding the Interaction Model? (on outside of IM)
- Environment: The market structure Dynamism Internationalization Channel Position Social System
What are the 4 types of channel conflict?
- Goal conflict: manufacturers typically care more about the sale of their products than also allowing for the distributors overall growth through a reasonable level of profitability - Means conflict: when channel members disagree over how things will be implemented such as intro of EDI system - Conflicting perceptions: when there are difficulties in monitoring other channel members performance - Fear of being bypassed: when existing channel members fear being bypassed by channel innovations such as the Internet.
Who are institutional customers?
- Government related (hospitals/ universities): universities still focus on customer needs, by what types of computers, chairs, desks etc they purchase for students - NFP Organizations (charities/churches): some institutions are run for profit but most are not.
Who are governmental customers?
- Health: predicted by what the government disperses in money, can be private or public therefore purchasing differs - Education - Military - Transportation - Civil Service
Who are members of the buying center or DMU?
- Initiators: people who make first request for the purchase of product or service. - Buyers: people who are the actual buyers with the formal authority to order products from a supplier. - Influencers: affect decision making process by providing information and sometimes criteria for evaluating alternatives. Ex. engineer - Decision maker: those with the authority to approve purchases. - Gatekeepers: can control the flow of information to other managers within the buying organization. Ex. personal secretary
What are some marketing logistics issues?
- Inventory and JIT approaches: How much stock to meet demand? Where should stock be held in the supply chain? Implications of adopting a JIT approach? - Logistics information flow: Supply Chain transparency for rapid response. Complexity in achieving speedy, clear information flows - Reverse logistics: Moving goods 'backwards' up the supply chain Recapturing value (by recycling) or dispose of goods properly Can cut costs and help the environment
What are the levels of network management?
- Level 1: network visioning (views whole industry as network - assumes networks form environment in which actors are embedded and recognizes that understanding network structures, processes and evolution is crucial for any attempts at network management) - Level 2: focal net management (views actors in particular network - involves analysing firms' stratefic behaviours by looking at the focal nets they belong to) - Level 3: portfolio management (explores which key activities are best carried out internally and which are better undertaken via different IORs) - Level 4: relationship management (focuses on individual IORs between the focal firm and its suppliers or customers. Firm must be able to possess the core skill of being able to build IOR's)
What is a part of the interaction process in the Interaction Model?
- Long-term relationships: institutionalization, adaptions - Short-term exchange episodes: products/services, information, financial, social & Organizations and individuals on either side: -organizations composed of technology, structure, strategy - individuals composed of aims, experience and skills
What is the paradox facing managers and firms in industrial networks?
- Managerial certainty: seeking opportunities, influencing others, controlling - Managerial ambiguity: facing limitations, being influenced, never fully in control
Some ethical issues in supply/demand chain management?
- Questionable costs of supply chain efficiency: outsourcing to make products can actually cost more money - Debates over fairness in global supply chain: companies not offering workers enough money ex. Tesco - Contribution of B2B marketers to creating 'bid-down, contract-out' chains: big companies are becoming monopolies and bankrupting small companies - Unethical practices in B2B negotiations and exchanges: Swedish companies like SCA have been under fire for offering hunting trips to potential customers
What are distribution channel tasks?
- Reducing complexity: reducing number of market interactions ex. instead of having 500 suppliers building cars like Volvo did, Toyota has one that builds cars - Increasing value: producing firms rely on intermediaries to provide level of added value that meets customer requirements better than those offered by competitors - Transaction efficiency: members of distribution channel attempt to achieve routinization -- ie. standardization of transaction processes. Achieved by regulating order size, delivery cycles & pmt frequency - Quality of service: provision of services like specialist training of end-user personnel, frequent deliveries and credit facilities can represent considerable value to some customer organizations
What are some general characteristics of B2B marketing?
- Size of market: B2B is bigger than B2C market. Ex. more than half of all jobs in US are in upstream markets - International aspects of business: B2C is dependent on tastes and cultures in certain countries whereas B2B products are less diverse in terms of functionality and performance. Ex. manufacturing steering wheels. Also trading associations have made standardized standards across world with products such as Plastics for ex. Internet has helped with greater connectivity of businesses worldwide too. - Concentration of buyer power: Consumer markets consist of millions of people, whereas there is a small number of customers that make up organizational markets. Ex. in the UK brands like Nestle and Kraft General Foods have over 78% of the market share - The nature of demand: B2B product demand is dependent on sales to the end user or external factors like business environment. Ex. when there was bad weather in Europe's summer of 2007-08, lack of sales resulted in companies not updating equipment. - Buying processes and decision making: B2B organizational buying processes typically take more people than B2C buying processes. Ex. when buying products its related to many different areas, such as someone when marketers are selling to Latin America they need to persuade finance officers too. Decisions are more rational in business buying processes too.
What is the transition to RM?
- Start with focus on customer acquisition and mktng undertaken by functional department (transactional) to then focus on customer retention & shareholders and mktng is cross functionally based (relational)
What are the levels of product attributes?
- Tangible core (middle of the circle) represent the basic functional capacity of a product. An example can be found in the ice-cream making machines produced by Italian manufacturer Carpigiani. -Tangible augmented (second layer) attributes are added to core attributes, either to enhance the products performance or to provide something (such as brand or a design feature) that helps to distinguish it from competitors' offerings. Ie. Carpigiani ice-cream machines have specialized offerings where, if requested by the customer, the ice cream can have different toppings - Intangible (outside layer) attributes are what customers perceive as enhancing the product, including warranties, financial services, delivery, staff training, and the corporate reputation of the vendor. Ie. Carpigiani offers real time telephone assistance to solve issues yet also provides organizational customers with luminous display signs and T-shirts for their retail staff.
Dimensions of service quality?
- Tangibles: refers to the physical appearance of staff, equipment, facilities, and communication materials. - Reliability: the ability of the provider to perform the promised service dependably and accurately. **most important dimension** - Responsiveness: the willingness to help customer and provide prompt service, particularly in response to unforeseen problems or service breakdowns. - Assurance: the ability of service staff to convey trust and confidence via their knowledge and courtesy - Empathy: providing individualized, caring attention to customers
What are some time goals in SCM?
- Time to market: how long does it take the organization to recognize a market opportunity and translate it into a product/service plus bring it to he market? - Time to serve: how long does it take to capture a customer's order and to deliver or install the product to the customers satisfaction? - Time to react: how long does it take to adjust the output of the business in response to volatile demand?
What are relational considerations in price negotiations?
- Transactional IORs: bundling goods/services, unbundling options, 'milking' customers, short term ROI vs lifetime value - Collaborative IORs: premium pricing opportunities, de-featuring, sharing information, value of learning, inertia, price reduction pressure and trust, umbrella agreements
Example of a supply/demand chain for cars?
- Upstream suppliers: Suppliers of materials (ex. steel makers) - Direct suppliers: Purchasers of inputs used in making parts (ex. engine makers) - Car manufacturers: Purchasers of inputs used in making finished cars (ex. Toyota) - Car distributors: Car dealerships (ex. showrooms) - Car customers: End users of cars (ex. consumers)
What are some key goals of SCM?
- Waste reduction - Flexible response - Unit Cost Reduction - Time Compression
What is a push communication strategy?
- also have a product/service focus but aimed at organizational intermediaries in the marketing channel. It is called the push strategy because it involves suppliers encouraging intermediaries to stock their goods for resale, thereby 'pushing' products down the supply chain by persuading distributors of the mutual benefits to be gained by taking on the manufacturer's output
Why would you consider postponement in SCM?
- can product be delayed until real demand is ascertained, at what level in the supply chain should inventory be held and where should the final configuration take place? - this matters because it costs more to hold finished goods in stock than unfinished goods, which can be stored more easily.
What are the formal mechanisms of responding to channel conflict?
- distributor council - third party referee - joining each other's trade associations - exchanging personnel
What is the informal mechanisms of responding to channel conflict?
- exit - voice - loyalty - aggression - neglect
What is the pull communication strategy?
- have a product/service focus and designed to influence end users lying downstream in the supply/demand chain. Intended to generate motivation from target audience who will then enquire about a sample, product etc. This strategy encourages end users customer demand that will then 'pull' products through the channel
What is the CRM value chain supported by?
- leadership and culture - data and information technology - people - processes ... which leads to customer profitability!
What ensures functional integration into B2B marketing?
- making clear strategic decisions - employing the right people -ensuring personnel remain stable -encouraging teamwork via compensation -structuring the marketing function appropriately
What are some considerations in B2B strategy-making?
- managerial challenges in network environment - internationalization strategies - risk management of relationships - tracking the value of IORS -B2B strategies for SMEs
What is Kraljic's Purchasing Matrix? ** MUST KNOW FOR EXAM**
- on the vertical axis: shows purchasings impact on the financial result - on the horizontal axis: shows supply risk Bottom left box: Routine products (low purchasing impact on financial results and low supply risk) Bottom right box: Bottleneck products (low purchasing impact on fin. results but high supply risk) **Top left box: Leverage products (high purchasing impact on financial results with low supply risk) Top right box: Strategic products (high purchasing impact on financial results but also high supply risk)
What is Kraljic's strategy for each box? How does this reduce uncertainty?
- routine products ie. office supplies SUGGESTED STRATEGY: rationalisation -bottleneck products ie. flavours SUGGESTED STRATEGY: safety stock -leverage products ie. raw materials and semi manufactured components SUGGESTED STRATEGY: competitive bidding -strategic products ie. engines SUGGESTED STRATEGY: partnership THESE STEPS ALL: streamline processes
Whats the differences in inter organizational relationships in KAM? and how does this reduce uncertainty?
-"bow tie model" is sales person and buyer in the forefront of transaction VS -"diamond model" all the different departments (marketing, production, R&D etc) with a key account manager and purchasing department in contact reduces uncertainty because there is more touch points
What are the elements of an external marketing audit?
-Business Environment: SLEPT factors (social, legal, economical, political, technological) -The Market: total size, growth, trends, characteristics -Customers: distributors, end users, OBB -Suppliers: direct, upstream, competencies Competitors: direct, indirect, strategies
What is the framework for B2B repositioning?
-Cell 1 basic components: offers most basic offering and a limited relationship with the customer (ie. the sale of components such as nuts and bolts). Adv: simple&low cost -Cell 2 integrated components:slighty more integrated components with likely req of close relationship (ie. integrated sub-assemblies for cars or aeroplanes). May spur product dev and enhance customer relations, but likely to incur rel management costs. -Cell 3 Basic solution: involves more complete product, although no commitment beyond transactional relationship ('bundling' offerings like service applications and telecommunications support). Allows offering to become more differentiated and keeps rel costs low, but increase costs in coordinating the more complex products and services required. -Cell 4 Integrated solution: making a complete offering and developing a close relationship with the customer (ie. full-service contracts in industrial maintenance). This can bring the maximum degree of differentiation, but brings higher relationship management costs.
What are the various encounters from participation in e-markets? **** KNOW WELL .. final ques?!
-Cost of participation: will you have to pay a fee? -Information within e-market: will real time posting of prices occur? How will info be disseminated? What info will you have access to? -Confidentiality/security: how will identities be preserved? what's in place to prevent false bidding in reverse auction by buyers? -Access to e-market: is the exchange open to all firms? is group purchasing allowed? are you prohibited from rival e-marketplaces if joining? will we be able to participate again in future?
What does vertical (downstream or upstream) networks consist of for focal firm?
-Customer relationships Buyer partnerships: intermediaries, end consumers Customer markets - Supplier relationships Supplier partnerships: goods suppliers, service suppliers Supplier markets What do they both have? -Classic Market Relationships: Dyad (customer/supplier), Triad (above plus competitor), Network (distribution channels) -Special Market Relationships: The service encounter, Customer's customer relationship, monopoly relationship, electronic relationship, non-commercial relationship
What does horizontal (lateral and internal) networks consist of for focal firm?
-External relationships Lateral partnerships: competitors, non-profit orgs, government Influence market: incl. shareholders, referral market Mega relationships: personal/social relationships, mega relationships (ex. government), mega alliances (ex. NAFTA), mass media -Internal relationships Internal partnerships: business units, functional depts, employees Internal market, employee market Meta relationships: profit centres, quality, employee, marketing services, owner/financiers
What should we take from ICEBURG model?
-Important to evaluate hidden costs (those below water level of iceburg)
Bases for business market segmentation?
-Market characteristics: customer location customer size market served by customer usage rates purchase situation -Buyer characteristics: purchasing strategies purchasing policies importance of purchase attitude of risk personal characteristics of buyer
Functional inputs to B2B marketing planning?
-Purchasing Department: Monitors alternatives in the supply network, evaluates partnerships with key suppliers -Production Department: monitors quality of incoming component parts, forecasts costs of manufacturing various volumes -R&D Department:supports new product development, assesses need for external expertise -Finance Department: calculates desired ROI on new products, evaluates viability of marketing budget -Accounts Department: monitors settlement of customer accounts, provides cost history of each market segment -Logistics Department: ensures responsive delivery to customers, maintains good relations with distributors -Customer service department: monitors customer complaints and feedback, provides after sales service and training
What are the elements of an internal marketing audit?
-Sales: by segment, customer, product line... -Profitability: costs, margins -Market share: leader, follower, nicher -Management of Marketing Mix: NPD rates, sales practices -Resources: people, money, materials
What is the difference between transactional marketing and relationship marketing?
-Transactional: focus on single sales, focus on volume, short term timescales, emphasis on product features and quality, little emphasis on customer service, moderate by discontinuous customer contact -Relational: focus on customer retention, focus on customer value, long term timescales, emphasis on relationship quality, high emphasis on customer service, high level of continuous customer contact
What is a main result of early supplier involvement?
-automakers using partner process had 80% of changes complete by 14-17 months versus those using arms length approach didn't have changes complete months afterwards due to lack of coordination
What are issues in marketing of professional services?
-buyer's prior experience -different levels of client sophistication -understanding customer's needs -non-standardized offerings -interactive relationship management -personal relationship between client and professional - informing client of progress - outcomes of service delivery - reputation & WOM referrals
Are B2B sales people necessary?
-communication effectiveness -channel network structure -complexity of IORs -complexity of the offering -significance of purchase
What comes from supplier development?
-cost reduction: Administrative costs (monthly billing, reduced control costs, electronic data interchange) Logistics costs (JIT deliveries reduce inventories and waste, daily delivers or weekly)
Who do you innovate and collaborate with?
-customers (lead users): use beta testers, the show if product will be popular -suppliers -competitors: CM bought SAAB to make betters cars more cost effectively -universities and research institutes: you can get return on taxes if you use these types of businesses for prod. development)
What are the 5 C's of customer benefits derived by KAM?
-customization: meeting or anticipating specific customer needs achieved via differentiated products or services -consultancy: advising customers ie. total cost of ownership achieved via additional skills in key account team -complexity management:managing IOR in a seamless way for the customer SCM or international cross border issues -consistency: harmonizing products, prices and processes achieved across multiple customer divisions/ locations -continuity and trust: long-term secure relationships with people -openness and information sharing
The essence of customer value management?
-delivering superior value to targeted market segments and customer firms - getting an equitable return on the value delivered
What is the supply management orientation?
-focus all of the firms effort on delivering value to end users - concentrate the firms own resources on a set of core competencies and strategically outsource all other activities - build a supply network that efficiently completes required business processes - sustain highly collaborative relationships with selected supplier and subsupplier firms
Options for structuring the sales force?
-geographically based: sales reps are assigned regions -product based: different sales teams assigned to specific line of products -market based: basing sales force around the needs of specific customer groups or segments, it facilitates the sale of products with multiple applications to a wide variety of markets.
What are some common misconceptions about CRM?
-it is just database marketing -it is just an IT issue -it is purely a marketing process -it is just about building loyalty -it can be implemented by any firm
What are the key issues in B2B relationship marketing?
-long term perspective -trust -commitment -communication -customer service -mutual benefits
What are the B2B communications media?
-magazines/trade press -newspapers -televisions -radio -outdoor media -internet
What is inside-out pricing strategy? (cost based pricing)
-mark-up/break even: adding a set percentage to the production cost (or purchase price in the case of a distributor) or incorporating all direct and indirect costs vice versa -peak load pricing: takes into account various levels of customer demand. The approach of raising prices at peak demand times encourages customers to use the service at off-peak periods thus 'smoothing' demand -marginal cost pricing:used by firms to overcome the perishability of their offerings. Thus hotels for ex with high fixed costs will attempt to recover variable costs in quiet periods by generating some income through cutting prices. -suggested resale pricing: intermediaries are encouraged to maintain a certain price to pass on to their customer which effectively supports the price level (and value perception) expected by the manufacturer.
What is IMC (integrated marketing communications) in B2B Marketing?
-maximizing impact of investment -integration of all business functions -commitment to message from all staff -maintaining consistency easier for SME -more complex for industrial network -entails cultural approach towards actors
What are some considerations of B2B marketing from a network perspective?
-network embeddedness ex.if you give a benefit to one company, others expect the same - social capital ex. people who want to build strong relationships over time - defining the network boundary ex. creating strong boundaries with employees (inside network emp. can talk about lots, outside network only certain info allowed) -complexity of networks -the ARA Model and network positions
Purchasing orientation: what is the buying orientation?
-obtain best deals in terms of price, quality and availability -maximize power over suppliers -avoid risk wherever possible
What are barriers to supplier development?
-poor communication and feedback -complacency -misguided improvements objectives -credibility of customers -misconceptions regarding purchasing power -lack of clarity and commitment -lack of unified approach -misaligned sourcing and performance metrics -concealment of problems -initiative fatigue -resource limitations -'blame the supplier' culture -lack of trust -confidentiality issues -legal issues -imbalance of power in the relationship
What is outside-in pricing strategy? (value based pricing)
-price skimming: new product is launched and market compromises few competing offers - a high price can help a firm make a short-term contribution -penetration pricing: mass market perspective is taken by setting a low price during the intro of a new product. -target pricing: suppliers have to respond from target pricing from purchasing organizations. buyers take their own target selling price by conducting market research and say for an automobile, dividing car into different elements and estimating proportion of the car's price.
What are the typical tasks of sale reps?
-selling -pre-sales service -post-sales service -prospecting -CRM -market research -inbound information handling -outbound information handling -sales team cooperation
What are the innovation and collaboration types?
-strategic alliance: big names coming together can earn more -joint ventures: risk is minimized sometimes when two competitors merge -licensing: Bluetooth technology is free for anyone to use, but licensing for others to use technology for business gets royalties) -outsourcing: early outsourcing is logical next step - cheaper
Benefits of early supplier involvement in product development?
-strengthening of resources -production friendly components -increased quality -shorter time to market -reduced development costs (about 80% of the total cost is decided already in the construction phase) -cooperation strengthens ties between companies and creates stability -mutual commitments creates trust -it is very expensive to develop new business relationships. profitability is better achieved through long term -increased competitiveness
What are important aspects of supplier development?
-top management commitment -competence development -communication and involvement from different functions -a good climate in the relationship (the 9 axioms), trust -measurement
What are key drivers of long-term profitability in supply chains? (from bottom to top)
1 - Logistics capability 2 - Customer service 3 - Relationship quality 4 - Customer retention 5 - Long-term profitability
What are some approaches to marketing planning?
1) Formal rational model: -emphasis on competitive advantage -enables internal coordination & control -provides logical steps for managers 2) Resource based view: -emphasis on internal resources -encourages search for resource advantage 3)Relational/ network perspective: -emphasis on linkages -acknowledges bounded rationality -encourages external coordination
What are some problem areas in B2B NPD?
1) Going through the motions -in the structuring of NPD activities -in the documenting of NPD activities 2) Insufficient speed -unaware of 'time to market' -not enough overlapping stages -stages left to single departments 3) Lack of market orientation - insufficient customer input to process - irregular customer contact during NPD 4) Insufficient checks - making an unclear business case - allowing expenditures to increase before uncertainties have decreased
What are individual influences on organizational demand?
1) Perception of consequences: the more that a person believes they may be praised or blamed for a decision, the greater is likely to be their level of participation and their attempts to influence the direction followed by their colleagues. 2) Extent of personal influence: some managers have greater control over the flow of information and the resources available inside the firm, thus enabling them to have a disproportionate effect on how the DMU. Senior management make high-risk decisions while purchasing managers make repetitive decisions 3) Social relationships: some managers develop close relationships with suppliers either through work or like particular individuals. Or they can set out to score points.
Significance of B2B markets?
1) Purchasing power of private and public sector organizations can be huge 2) Upstream inter-organizational trading supports almost every end-user market 3) Key B2B activities are carried out 'behind the scenes' of most B2C experiences 4) B2C marketers are learning from B2B marketing practices 5) B2B activities make a major contribution to most national economies 6) B2B exchanges have a greater impact on people's lives than B2C trading
What are relational influences on organizational demand?
1) Relational approaches to inter firm relationships: relationships based on long term commitment and are trusting and mutually supportive tend to foster / be fostered by DMUs decision making units that behave in a highly cooperative and constructive manner. 2) Transactional approaches: relationships that are short term and where exchanges are sometimes built on suspicision or generally unsupportive, buying behaviours described as "arm's length"
What are some reasons IOR's don't work?
1) Relative importance of different forms of exchange: ex. Ikea offering products to company that don't last long -- but company doesn't care 2) Inter-organizational conflicts: 3) Power and dependency 4) Customer's lack of desire for relationship 5) Individual actors making mistakes
What are management approaches to B2B service delivery?
1) Service concept development: expressing the service in terms of the customer problems that the supplier must address ie. what the service will do 2) Service outcome management: determining how the service will solve the customer's problem ie. how the service will be delivered 3) Customer expectation management: for relationships between service providers and customers to be successful, it's important to manage customer expectations. Buyers may need to be advised over any unrealistic expectations they have regarding the ability of the supplier to deliver the service. 4) Physical resources and environment management: these elements of service delivery must provide the appropriate technological base for operations and support interaction with the customer. Ie. marketers need to ensure there is enough systems in place to ensure resources (staff levels) and locations (reception areas) are maintained at a high standard 5) Customer interaction management: the behaviours of both parties play a role in creating the atmosphere for the relationship. Marketers can therefore influence performance on own staff and guide customers on how to get the best out of the service on offer.
What is the significance of relationships and networks?
1) Shifting from short-term transactions to long-term relationships 2) Inter-firm collaboration underpinning effective S/DCM 3) Needing to build relationships with network of stakeholders 4) Increasing awareness of importance of personal/social networks ** Must share information between businesses**
What are the strategic choices in purchasing? ** ON FINAL MUST KNOW**
1) level of involvement with the suppliers - high or low involvement, close or arms length relationships 2) the configuration of the supplier base - ie. a portfolio approach 3) the scope of supply - ie. outsourcing or inhouse production - depending on where the added value is most important
What are the elements of a typical marketing plan?
1. Analysis -corporate mission -marketing audit -SWOT 2. Objectives -grow -maintain -harvest/divest 3. Strategies -generic competitive strategies -product/market decisions -STP -branding 4. Tactics -marketing mix programmes 5. Implementation -resources -responsibilities -timescales 6. Control -measurement -evaluation -feedback
Johan said "these are the 3 main parts of strategy?"
1. Analyze current situation (present analysis) 2. Desired situation (where you want to go) 3. How to get there
Who are the internal stakeholders in service marketing?
1. Front line staff- are key to the quality of service provision and hence customer satisfaction 2. Management - who design the appropriate service offering and communicate this to potential customers 3. Support Staff - act in a supporting role to assist the service personnel as necessary ie. clerks who provide customer address information for logistics delivery schedules
What are some strategic issues in marketing planning?
1. Generic competitive strategies -cost leadership -differentiation -focus -avoiding being "stuck in the middle" 2. Product/ market decisions -market penetration -market development -product development -diversification 3. Strategy and tactics -tactics support strategies -tactics are more operationally detailed -perspectives vary depending on managerial level
What is the traditional new product development process?
1. Idea generating - have a supportive culture in which ideas are supported from all areas of the firm (R&D, sales force) 2. Screening - takes place in relation to predetermined criteria in order to 'weed out' the most unrealistic prospects. The criteria should meet obj. of selling firm 3. Business Planning - an outline business plan should be developed to determine profitability of new product at early stage. Includes predicted sales patterns, profit forecasts manufacturing costs etc. 4. Product Development - any prototypes are refined and tested in terms of their functional performance, design, and manufacturing req's and any support req from members of the distribution channel. It can take time. Need to weigh risks of not being "first to market" or launching a failing product. 5. Test marketing - test the product in a limited marketplace but under real market conditions. Can test within particular geographic region or specific segment of customers in order to refine tactics before releasing product onto the whole market. 6. Product launching - a plan that takes into account the needs of a series of stakeholders such as end users, distributors, logistics providers and advertising agencies.
What are the characteristics of business services?
1. Intangibility: services cannot be touched or owned prior to or during delivery - marketers need to provide tangible evidence or clues for customers 2. Inseperability: services are produced and consumed simultaneously, making it hard to separate provider/client - marketers need to prepare front-line staff & educate customers 3. Perishability: services cannot be stored - marketers need to try to manage demand via promotion and/or price, and manage supply ie. via part time employees 4. Heterogeneity: services involve the interaction of many individuals in production & consumption - marketers need to ensure consistency via standardization or skilled staff
What are the 8 potential stages in the organizational buying process?
1. Problem recognition 2. General need description 3. Specification 4. Supplier search 5. Proposals submission 6. Supplier selection 7. Order process specification 8. Performance review
What are the various services in B2B markets?
1. Product related: delivery services, installation and maintenance, after-sales training, warranty services 2. Marketing services: market research services, advertising agencies, export advice 3. Professional services: consulting services, accountancy services, legal advice 4. Information services: inventory management, supply chain management, data aggregation 5. Financial services: financing of product purchases, managing billing processes, credit evaluation, banking and insurance
What are external influences on organizational demand?
1. Socio-economic changes: B2B marketers need to be aware of customers as well as up supply chain because it affects it. Ex. When the confidence in banking system was lost it had a huge impact on people trying to obtain mortgages, thus affecting finance services,building mtls etc. 2. The globalization of business: firms are trying to develop "end to end" supply/demand chains - providing international product flow 3. Increasing customer sophistication and power: customer firms tend to be better informed and purchasing power is becoming more concentrated through takeovers/ mergers. Ex. Lenovo buying IBM division 4. Market stagnation: mature markets in N.A. & Europe with overcapacity, increased competition and shrinking profit margins 5. A process, rather than a product, mentality: suppliers are marketing less on the basis of a ready made tangible product, and more on a marketing approach based on their reputation to meet strict client specifications in manu and service delivery.
What are the stages of servicisation?
1. The firm must possess the capability to manufacture or distribute goods. 2. It offers additional services that complement the product portfolio 3. It practices servicization by marketing different product/service combinations
What are internal influences on organizational demand?
1. The nature of a firms business: organization can be categorized depending on how it organizes its activities: whether they are based on unit, mass or process production technology 2. The structure of purchasing: centralized purchasing to facilitate greater consistency and control vs decentralized purchasing allows buyers to meet needs more closely - product modifications & response rates 3. Purchasing policy: business can be affected by customer organization's plans to adopt certain strategies such as senior mngmt signing off on buying decisions 4. Purchasing Ethics: increasingly common for ethical considerations being incorporated into purchase decision making 5. Purchasing systems: using information systems and JIT methods to differentiate suppliers 6. Purchasing technology: the internet facilitates the search by customers for potential suppliers, it allows firms to become networked with other firms in related industries etc.
What are the nine axioms for superior customer-supplier alliances?
1. shared specific focus on satisfying their common end customer 2. alignment of vision 3. fundamental level of cooperation and perf to commit (trust) 4. there is open and effective communication 5. decisions are made by maximizing the use of competencies and knowledge on both sides of the relationship 6. all stakeholders are commited to generate long term mutual benefits 7.there is a common view of how success is measured 8. both sides are commited to continuous improvement and breakthrough advancements 9. whatever competitive pressures that exist in the environment are allowed to exist in the relationship
What is positioning by value proposition?
1. the all benefits approach: suppliers list all the potential benefits they believe their product or srevice might provide for target segments 2. favourable points of difference: managers need more detailed knowledge of their offering in order to be able to differentiate it from the next best alternative 3. resonating focus proposition: selling firm makes its offerings superior on the few elements where performance matters most to customers.
A customer pays a price to receive value through:
1. the value of the offering 2. the value of the relationship A. activity links that have value in providing a degree of activity co-ordinated between the companies B. resource ties. each party may adapt to each others resources C. actor bonds. Value from the social exchange and mutual learning (compare with the ARA network model)
What are the factors affecting price setting?
5 C's -Company: costs, corporate objectives, marketing plans, product range -Customers: value perception, perceptions of product/firm, ability to pay -Context/environment: economy, regulations, currency -Channels: costs, capabilities, locus of power -Competitors: offerings, pricing/costs, competitive structure
What is the rule Johan talked about?
80% of the value you purchase is only from 20% of suppliers - so treat those suppliers differently
What are stages in KAM?
Bottom: Pre KAM: identifying relationships that are important Early KAM: two parties establish suitability as potential partners with initial sales transactions Mid KAM: increasing number of contacts from each organization communicate with each other. Partnership KAM: high level of mutual commitment btw two org's. Top of Pyramid: Synergistic KAM: value of IOR is so great the two firms effectively begin to act as one exchanging significant resources (large amounts of info and personnel)
What is radical innovation also called?
Business Process Reengineering
What are the potential relationship life cycle stages?
Commitment | Expansion | Exploration | Awareness Dissolution
What is B2B communication via the Internet?
Company website: +Benefits - global reach, 24/7 access, interactivity +Limitations - global differences can make pricing difficult, poor site org etc. +Business blogs +'Flick to Click' see it in store first, then you go online to buy instead (shops losing importance) Email: +ensuring effectiveness +handling responses
What is value as benefits vs costs: some examples?
Costs: potential risks, 'hidden' and internal costs, purchase price Benefits: recognition gained by buying manager, convenient payback period, reliability of service, functional gains from product
All in all, focal firms (in the middle with a competitor on one side and indirect (or non) competitor on the other) can...
Have a potential vertical relationship: partnership Have a potential horizontal relationship: collaboration
What is the total cost of ownership?
ICEBURG MODEL Above the surface: purchase price Below the surface: transaction cost maintenance cost inventory cost operating cost training cost technical support cost disposal cost
What is the adoption process?
Innovators: create status for products after others come out to perceive it as being better Early adopters: high status purchasers and have money Early majority: here and below usually breakeven Late majority Laggards
What are the offerings in a business markets?
Input Products: -Raw materials (agricultural products ie. soya and natural products ie. copper ore) -Manufactured materials & parts (component materials ie. aluminium and component or OEM parts ie. disc drives) Foundation Products: -Capital equipment or installations (buildings & land ie. factories and fixed equipment ie. machine tools) -Accessory equipment (light factory equipment ie. bar code scanners and office equipment ie. furniture) Facilitating or MRO supplies: - Tangible supplies (operating supplies ie. lubricants and maintenance items ie. fastenings) -Business services (maintenance/repair services ie. PC repairs and advisory services ie. consultancy)
What is cannibilisation?
Market cannibalization refers to a situation where a new product "eats" up the sales and demand of an existing product.
What are multiple versus single sourcing advantages?
Multiple: avoid supplier dependence, bargaining leverage, insurance against disrupted supply, not limited to capacity of single supplier, access to more supplier data, stimulus to competition, greater prompt to innovation Single: one relationship to manage, greater commitment, clearer responsibilities, more leverage over supplier, simplified monitoring, easier supplier training, cheaper tooling costs, simplified scheduling
Broad differences between B2C and B2B buying behaviours?
Number of buyers: Normally large / Normally Small Size of orders: Small / Large Value of orders: Normally Low / Normally High Evaluating criteria: social, ego, utility / price, value, utility Purchase initiation: Normally self / Normally others Level of risk: low to medium / medium to high Complexity of decision: low to medium / medium to high Information search: normally short / normally long
What is the relationship ladder of loyalty?
Partner: somebody in a mutual partnership with your organisation Member: somebody with a great affinity to your organisation, and who is truly loyal Advocate: somebody who actively recommends your organisation to others Supporter: somebody who is positive towards your organisation, but only passively Client: somebody who has done repeat business with you, but may be neutral or even negative towards your organisation Customer: somebody who has done business with you, but only once Prospect: somebody who may be persuaded to do business with your organisation
What are supplier development 4 stages?
Phase 1 supply base reduction Phase 2 information exchange integration and simplification Phase 3 supplier development Phase 4 timely product development (comes from early supplier involvement)
Objectives when working with suppliers in product development?
Short term: shortened development time, reduced development and product cost, increased product quality Long term: access to new technology, development of new technology
What are the stages of the CRM value chain?
Stage 1, customer portfolio analysis: to identify the actual and potential customers to service in the future Stage 2, customer intimacy: to explore the profile, history, expectations, and preferences of these customers Stage 3, network development: to manage relationships with the individuals and organizations that contribute to the value creation for the chosen customers Stage 4, value proposition development: to identify sources of value for customers that meet their expectations and even exceed them Stage 5, manage the customer life cycle: by considering processes of customer acquisition, retention and development, and structural questions about how the firm is organized **five stages are repetitive, continuous and reflexive**
Allocating sales approaches to IORs?
Strength of relationship and level of potential is: HIGH -invest heavily and develop accounts (heavy selling key accounts) LOW and HIGH -select best potential accounts and build (telemarketing etc.) HIGH and LOW -adjust investments and maintain (website) LOW and LOW -reduce investments and minimal support
What is B2B marketing?
The marketing activities of any kind of organization which has exchange relationships with other organizations or businesses.
What does the value equation mean?
The value of our firms offer minus the price of the same should exceed the value minus the price of the alternative (competing) offerings. V (f) - P (f) > V (a) - P (a)
What does value have to do with it?
Value in business markets is the worth in monetary terms of the economic, technical, service and social benefits a customer firm receives in exchange for the price it pays for a market offering.
What is radical innovation?
a completely new design unlike existing solutions
What is the definition of dominant design?
a product design used by a majority of the manufacturers, resulting in the stable architecture that the industry will focus it's resources on
What is incremental innovation?
innovation resulting in minor changes to existing solutions
What did Johan say about e-commerce?
online presence drives offline behaviour and vice versa
What is the procurement orientation?
seeks to improve its productivity by: -improving quality -reducing total costs -co-operating with suppliers
