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5/3/2015 1 TM Dr. Gary Lilien, Research Director, ISBM Dr.Ralph Oliva, Executive Director, ISBM 814 863 2782 Business-to-Business.

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Presentation on theme: "5/3/2015 1 TM Dr. Gary Lilien, Research Director, ISBM Dr.Ralph Oliva, Executive Director, ISBM 814 863 2782 Business-to-Business."— Presentation transcript:

1 5/3/2015 1 TM Dr. Gary Lilien, Research Director, ISBM Dr.Ralph Oliva, Executive Director, ISBM 814 863 2782 Business-to-Business Marketing Introduction – Summary/Wrap-up Business-to-Business Marketing MKTG 533 Fall, 2013

2 5/3/2015 2 TM Another view of “Marketing”  Marketing is the set of activities that acts to maximize the value of the firm's assets, by connecting them to the exact right demand… Marketing Endeavors to connect these to The “Exact Right:” Customers Markets Demand patterns Willingness to pay Value proposition alignment Propensity to loyalty Brand equity Learning, Etc. Capital Assets People/IP Assets Brands Brand Assets Other Assets

3 Business-to-Business Manufacturing/Tech Culture Market to value chain Technical proposition Value in use, quantifiable Small number of customers Large-unit transactions Process linkage Complex buying sequence Web of decision participants Consumer Marketing Culture Market to end of chain Perceptual proposition Value in brand relationship Large customer segments Smaller-unit transactions Transaction linkage More direct purchase Consumer decides

4 Benefit/Message Targeting Typical Customer Benefits Offered Highly Competitive prices and quality Manufacturing Plants on four Continents Internet-Based order placement, tracking and Billing System 24/7 customer response facility with radio links to trucks Customized manufacture and delivery of product to meet plant’s daily needs Sunday, holiday and 24/7 delivery when required Just-in-Time Delivery Seller Typical Purchase Team Members Warehouse Manager Purchasing Manager Logistics Officer Maintenance Manager Chief Marketing Officer CFO COO Buyer Supply chain Head CEO (On Occasion) “Benefit Stack”“Decision-Maker Stack”

5 TM 5

6 Marketing “Value - Delivery Framework” 1. Build Value Understanding 2. Strategy Formulation 3. Design Customer Value 4. Communicate and Deliver Value 5. Life-Cycle Management Segmentation, Targeting, Positioning

7 TM 7 Customer Value Definition Customer Value is the economic impact, compared to the next best alternative, a supplier’s offering has on a customer’s business. Economic impact comes from increasing a customer’s revenue flow and/or decreasing a customer’s cost of operations. Offering: Tangible Product/Service, Brand, Relationships, KnowHow, Everything… 7 6/13/11

8 Value, Costs, and Prices Customer Value Perceived Value Price Total Cost External Purchases Conceptualizing Value: Language and Taxonomy Competitive Reference Value Differentiation Value Price Incentive To Buy Incentive To Supply

9 Value, Costs, and Prices Customer Value Perceived Value Price Total Cost External Purchases Value Distributed or Economic Driving Force Margin Value Created CONCEPTUALIZE © 2005, ISBM _ Penn State Potential Value Lost Value Added The Value Salami

10 TM 10 Tools from George Cressman – Strategic Pricing Group: EVE® Value Analysis Template Competitive Alternative:Competitive Alternative: Negative Differential Value Positive Differential Value Total Differential Value Differential Value Inputs and Sources Value Formula Value Driver BenefitFeature

11  For ____________________(target customer/segment)…  …that need _________________(the problem we solve)…  Our Brand’s ____________________(the offering)…  Beats the Competition Because________(unique, quantified benefit – hits the Target Buying Incentive)…  …unlike _______________________(next best alternative).  We do this by _________(how do we do it/proof points)…  …This connects to our brand by_____________... Template for Strong Value Proposition/Positioning

12 TM Present State Behaviors Ignore Postpone Engage in Purchase Process  Desired State Functional and Economic Needs Perceived and Psychological Needs Search for options Evaluate options Choose option Purchase Option Use Option Customer Value Measurement Approaches Objective Measures of Value Perceptual Measures of Value Behavioral Measures of Value Customer Needs and Buying Process Motivation Customer Needs and Customer Value Measurement

13 TM 13

14 Loyalty Ladder May invest in you Seeks to collaborate on new product development Is willing to pay premiums Endorses Products Resists Competitive predation Wants to Grow Relationship

15 TM 15

16 The “Design-In” Cycle Process Initiation: Stage – Gate, Competitive Reaction, Other process Early Concept: Engineering support, management buy in, proof of value Manufacturing Prototypes: Process support, supply viability early price negotiations Final Specification: Factory rationalization and planning, supply schedule, final price negotiations, first buy Manufacture: Straight/Modified Re-buy Early Alert to Next Cycle Invest $$$ Make $$$

17 Divergent Effects: Orders and Customers What do we need to do today? The need for immediate cash What is our long-term vision? What Business are we in? Return per scarce resource unit (Control View) Core competence (Strategic View) Order Selection Customer Selection Marketing Manufacturing /Sales Big implications for sales/ marketing/ manufacturing alignment!!!

18 TM Segmentation If you’re not thinking segments, you’re not thinking. To think segments means you have to think about what drives customers, customer groups, and the choices that are or might be available to them. - Ted Levitt, Marketing Imagination

19 Segmenting by Customer Value Mktg 533 2007 Value Session 3- 19


21 Repeat after me….. Lesson # 1 NO SUCH THING There is NO SUCH THING As the Best Segmentation

22 Short term segmentation applications:  Salesforce allocation/call planning  Channel assignment  Communication program  Pricing  Today’s competitors and my current relative advantage to the customer The Many Uses of Segmentation

23 Longer term Longer term:  Emerging needs  New and evolving market segments to serve  Planning for segment development/growth  Not in kind competition/threats (satisfying customer needs in different ways)  Lead user identification and management  Market driving (vs. customer focused) The Many Uses of Segmentation

24 TM

25 When targeting customers ask....where are you fishing??

26 Remember 2008??? Which of these 50 customers should we target??? Why??

27 Switchability Segmentation Current Product-Market by Switchability Q: Where should your marketing efforts be focused? Q: How can you segment the market this way? Loyal to Us Losable Winnable Customers (business to gain) Loyal to Competitor

28 TM

29 How About Targeting by…Total Lifetime Customer Value (Valuing Customers How About Targeting by…Total Lifetime Customer Value (Valuing Customers) Total Lifetime Value of Customer Economic Value: (Risk Adjusted) Revenue Flow Less Cost-to-Serve Relationship Value: Reference Referral Learning Innovation, etc.

30 TM High Low Relationship Value LowHigh Economic Value Customer Portfolio Analysis

31 TM

32 32 Pigs Price Buyers Value Buyers Fire the pigs!

33 Ideally Business Strategy Drives Marketing and Sales Strategy Addresses all facets of the business: product lines, market sectors, all inputs, and all external stakeholders. Business Strategy Marketing Strategy Addresses the customer marketplace - satisfy key customer needs, attract, win and retain customers. 33 Sales Strategy Addresses the customer interface and organizing principles, priorities, goals and compensation for the selling force Sales Plan Provides approach for territory coverage, selling plans, call plans, Key Account Management, individual salesperson goals/assignments By product, By account, by territory, by person goals Details and documents marketing strategy and tactics. Provides important direction, information, action planning, measurement of results, ongoing market tracking 6/13/11 Marketing Plan Ongoing feedback, Market/Customer needs/insight/trends, tuning, competitive information, value chain shifts, etc. Mktg/Sales

34 Typical Inter-Dependencies: Marketing and Sales Source "Aligning Strategy and Sales," Frank Cespedes, draft book in review… From Marketing to Sales Overall market strategies and plans Program/product information and training Market research data and analysis Pricing and promotion analyses, guidelines, programs Contracts, proposals, presentations support Customization supported resources From Sales to Marketing Sales forecasts and results Relevant information Re:: buying behavior, competition Customer access and feedback re: current/new products Execution of product, pricing, promotion programs Ongoing activities are re-account management Customer service information Re: needs and opportunities

35 …They’re both Important! Focus in Time Short-TermLong-Term Sales Marketing Today’s Sale: Immediate Cashflow Sales Support/ Lead Generation Business Development Market- Driven Strategy Key Account Management

36 (C) 2009, ISBM - Penn State TM BtoB Opportunities for Quick-High ROI Success in Your Businesses  Money left on the table? (Cost versus value-based pricing?)  Where are you fishing (resource allocation)?  Customer Portfolio Analysis?  Pigs to fire?  Segmentation by Switchability?  Value-focused thinking?  Make Marketing-Sales Connection Win- Win

37 Commencement

38 Stay Connected….. On the web…. By email…. You are all now ISBM Associate Members—part of the ISBM Family.

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