B2B Marketing

Dr. Abha Wankhede

Business to Business Marketing :-
 Definition:-
“Business Marketing is the practice of individuals, or organizations,
including commercial businesses, governments and institutions, facilitating
the sale of their products or services to other companies or organizations
that in turn resell them, use them as components in products or services
they offer, or use them to support their operations”
B2B Customers
 Is the marketing of products and services to business organizations.
◦ Commercial Enterprises-
 Original Equipment Manufacturers: Nokia, Cisco, Ashok Leyland M&M
 Users: Walia Auto Ancillary is a supplier to Tata Motors
 Industrial Distributors/Dealers
◦ Government customers
 Government undertakings: Indian Railways, State Electricity board, Defense,
MHADA
 PSUs: BHEL, ONGC
◦ Institutional Customers-
 Public Institutions: Government Hospitals, Municipality Schools
 Private Institutions: Hotels, Schools, Colleges, Academy
◦ Cooperative Societies-
 Manufacturing Units- Maharashtra Sugar cooperative Society, Kaira District
Co-operative Milk Producer.
 Non-Manufacturing Units: Co-operative Banks, Housing Co-operative
Societies.
 Characteristics of B2B Demand

 Derived Demand:-
◦ The demand for a good or service that results from the demand for another good or service.
◦ Ex.:- Pig Iron ---Steel ---Steel Sheets---Automotive part companies--Automobiles--End customer
◦ Derived from the ultimate demand for consumer goods and services in some cases.

 Joint Demand:-
- Demand for product or services is interdependent on each other
◦ Ex:- Coffee Powder, Sugar & Milk in Making Coffee
◦ Ex:- Software- Operating System, Car & Fuel
B2B Products Raw Materials Iron ore, Crude oil, fruits, fish

Manufactured Acids, Fuel oil, Steel ,

Materials Chemicals
Material & Parts
Component Parts Gauges, TV tubes, Tyres,
Industrial Products

Subassemblies Exhaust Pipe in Motor Cycle

Light equipment/
Hand tools, Dies, Jigs
Accessories

Installation or Heavy
Capital items Machine Tools, Furnaces
Equipments

Plants & Building Plants, Office Building

Lubricants, Fasteners, paints ,

Supplies
Electrical Items

Supplies & Services

Legal, Auditing, Advertising,
Services
Courier, Market Research
Business Customers’ Purchasing Orientations

◦ Buying Orientation
 Lowest Price:
 tactics like Commodification and multi-sourcing
 Eg- Government, Institutes
 Maximize power over suppliers
 Avoid risk where possible.

Development in buying
 Global Sourcing
 Target Pricing
Business Customers’ Purchasing Orientations

◦ Procurement Orientation
 Quality improvement and cost reduction:
 a) collaborative relationship with major suppliers:
 JIT delivery scheduling,
 quality assurance to attain zero defect
 Integrative negotiation (benefits both)
 b) working closely with functional areas: MRP Material Requirement
Planning
 Eg- AMUL
https://www.youtube.com/watch?v=GhGhKVuqdew
Business Customers’ Purchasing Orientations

◦ Supply chain Management Orientation

 Focuses on how to improve the whole value chain from raw material
to end users. Follows 3 philosophies
 Deliver value to end users
 Thru market research understand end user requirement
 Outsource non-core activities
 Identify the core-competency of the company
 Group strategic and non strategic systems and subsystems
 Outsource systems which are non strategic non competitive
 Involve mature technologies and qualified suppliers
 Support collaborative relationship with major suppliers
 Communication, trust, cooperation, commitment between suppliers and
buyers for mutual benefit
 Results in lower cost and sustainable business and growth.
 GE – 700,000 suppliers across thousands of entities, thru enterprise
software solution
Some key elements of SCM

SCM goals Time in SCM Postponement

• Waste • Time to • Time/place of
reduction market final product
• Flexible • Time to configuration
response service
• Unit cost • Time to react
reduction
• Time
compression

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Key drivers of long-term profitability in supply chains
Source: Adapted with permission from Christopher (1997, p37)

Long-term profitability

Customer retention

Relationship quality

Customer service

Logistics capability
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Environment Analysis
Internal Environment:-
Company Location, R&D Facilities, Production Facilities Human
Resource, Company Structure and Image of the company
External Environment:-
Micro Environment :-
Customers & Competitors
Suppliers
Macro Environment:-
Economic: business cycles, currency rate, interest rate, fiscal policies
Demographic: population growth/degrowth
Technological: start new industries and rapidly change existing
Government/Political & Legal: Bills passed for protection..SMED
Investors & NGO: impact on public and nature
 Industrial Vs Consumer Marketing
Areas of Difference B2B Market Consumer Market
Market Characteristics Geographically Concentrated Geographically Disbursed

Relatively Fewer Buyer Mass Market

Product Characteristic Technical Complex Standardize

Customized

Service Characteristic Service , timely Availability Somewhat Important

extremely Important

Buying Behavior Involvement of Various functional Involvement of family members

area from both the ends
Purchase Decisions are performance Purchase decisions are mostly based
based and rational on Physiological
/social/psychological needs
Technical Expertise Relatively less technical expertise is
required
Stable Interpersonal relationship Non- Personal relationship
 Industrial Vs Consumer Marketing

Areas of Difference Industrial Market Consumer Market

Channel Characteristic More Direct Indirect

Fewer Intermediaries Multiple layer of Intermediaries

Promotional Characteristic Emphasis on Personal Selling Emphasis on Mass Media

(Advertising)

Price Characteristic Competitive Bidding and Negotiated List Price or MRP

Prices
List Price for Standard Products
Understanding B2B Market & Environment with Buyers
Perspective
Business Approach
Sales

Service

Technology/Pre Sales

Marketing

Strategy and Business Plan/AOP

Mission,Vission, Business Objectives

Market Sizing

Total Market

Available market

Company
Share

Company
Margins
Industrial Customer Segmentation

Strategic
Global A/C

High Touch
Accounts

Mid Market Segment

Small and Medium Enterprise

Retail and Consumer Business

 Organization Structure – Central

Business Unit
HEAD
(COO/CEO)

National National National Supply

Product System Customer
Sales Marketing Solutions Chain
Mgmt. Integrator Service
HEAD HEAD (SME*) Mgmt

* SME- Subject Matter Expert

 Organization Structure – Regional

Regional HEAD
(Director)

Various Support
Sales HEAD
Functions
(GM)
(GM)

High Mid
SME Retails
Touch Market
Accounts Channels
Accounts Accounts
Organization Structure – Regional

Regional HEAD
(Director)

Various Support
Sales HEAD
Functional
(GM)
Heads

System Post-Sales
Pre-Sales
Integrator/ Marketing Projects &
& Finance
Partner operations Delivery Customer
Solutions
Relations Service
 Organization Structure – Vertical
National Roles
BFSI Business Service Industry Manufacturing IT/ITES
HEAD HEAD Business HEAD Business HEAD
(COO/CEO) (COO/ CEO) (COO/ CEO) (COO/ CEO)

Based at Regional Offices Close to Customer’s HQ

System Post-Sales
Pre-Sales
Account Integrator/ Marketing Projects &
& Finance
Manager Partner operations Delivery Customer
Solutions
Relations Service
Sales Strategy
Strategic & Global Accounts
Approach
Strategic & Global Accounts
 Director level engagement
 1 / 2 accounts- Nationally/Globally
 B2B Strategic relationship
 Long sales cycle

e.g. Cisco Wipro (Software development)

(vendor/partner)
Cisco Wipro (Sell-thru, Sell-with)
(reseller/channel)
Cisco Wipro (Customer; Infrastructure
devices for new projects)

Win-Win
Organization Structure
Strategic / Global Accounts

Strategic
Account Global Account
Director Director

Common Roles
System
Integrator/
Partner
Relations
Post-Sales
Pre-Sales
Account Marketing Projects & Finance
&
Manager operations Delivery Customer
Solutions
Service

Strategic/ Global
Accounts
Sales Strategy
High Touch and Mid-Market Accounts
Approach
High Touch
 National account manager
 Operations-
◦ 5 / 10 accounts per head
◦ Gets credit for sales made nationally
◦ Travels across geographies
 Approach
◦ Customer industry needs
◦ Process knowledge
◦ Customer behavior and aspirations
◦ Increase wallet-share (up-sell, sell additional
services/products)
◦ Value selling
◦ Long Sales Cycle
◦ Bulk business
Approach
Mid Market
 National account manager
 Operations-
◦ 70 / 100 accounts per head
◦ Mix of national and local accounts
◦ Liaison with local support teams of other geographies for
fulfillment and assurance
 Approach
◦ Customer industry needs
◦ Process knowledge
◦ Value selling
◦ Market penetration strategy (replication of success stories)
◦ Run-rate business
◦ Short- sale cycle
Organization Structure
High Touch; Mid Market Accounts

National Sales
Head

Regional Sales Support

Head Functions

Post-Sales System
National Pre-Sales Projects
Marketing & Integrator/
Account & Finance Delivery
operations Customer Partner
Manager Solutions
Service Relations

High-Touch/ Mid-Market
Accounts
 Allocating sales approaches to IORs(Inter-Organizational Relationship)
Source: Adapted with permission from Cravens et al (1991, p 39)

Strength of relationship

High Low

Invest heavily & develop accounts Select best potential accounts & build

• Heavy selling for key accounts • Field force selling

• Field force selling for others • Telemarketing
High
• Direct mail
• Website

Level of 1 2
potential
3 4
Adjust investments & maintain Reduce investments & minimal support

Low • Field force selling • Telemarketing

• Telemarketing • Direct mail
• Website • Website

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Sales Strategy
SME Accounts
SME – Approach

Direct Touch
• Strategic Integration
• Marketing

OEM Channel SME

Company Partner Customer
• Training • Sales
• Empowerment • Service – L1
• SLA/ Business • Consulting
• Service – L2/ L3
• Consulting

C-Sat, Perception of partner, Brand value,

High frequency sales update (daily)
Distribution channel tasks

Increasing Transaction
value efficiency

Reducing Quality of
complexity service
Channel
tasks to be
allocated

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Some issues of channel structure

Channel Channel Multiple

length breadth channels

Optimum Optimum
intensity: Inter-firm &
number of
1. intensive inter-channel
levels to serve
2. conflict
end user
selective
3.
exclusive
Established Risk of
vs. new cannibalisatio
channel types n

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Organization Structure
SME Accounts

National
Sales Head

Support
Regional Functions
Sales Head

Post-Sales System
Pre-Sales Projects
Account & Marketing Integrator/
& Finance Delivery
Manager Customer operations Partner
Solutions
Service Relations

Channel/ Partners

SME
Accounts
Sales Strategy
Consumer Business
Approach
Consumer Market
 Distributor/Stockiest/MTO
 Territory Manager/ Zonal structure based on geography
 Brand creation thru mass media
 Feet on street/ retail reach
 Promotions
◦ Customer pull plans and schemes
◦ Distributor/dealer push plans and incentive schemes
 Price Driven, premium thru product differentiation and
positioning
 Place – availability at customer convenience
 Product – flavors/ denominations
 Tight MIS and cash flow management
 Stringent monitoring and continuous availability of
committed service level
Organization Structure
Retails/ Consumer

National Sales
Common Roles
System
Head Integrator/
Partner
Relations
Regional Sales
Head
Finance

Territory Projects
Contact Marketing
Account Delivery
Centre Operations
Manager

Pre-Sales
&
Distributors/ Stockists Solutions

Retails/ Shops/ Point of Sale

Consumers
 Variables used for Segmenting
Business Markets
Variables Macro
Type of Industry Which industry should we market our product/service?
Chemical, textile…..
Type of Government, Commercial, NGO, Institution….
Customer?
Company Size, What size of companies we should focus on? Large,
Usage rate medium, small….
Customer Customer locations nearer to the factory, or clusters of
location , customers in various urban areas…..
geographic area
End-use of Should you focus on certain applications or all the uses
application, of applications? Aluminum extrusion are used for
benefits of door/windo frames, electrical controls, TV
product antennas……….
 Variables used for Segmenting Business Markets

Variables Micro
Buying Situation: new Opportunities to enter an account, upsell and or
task, modified rebuy, sell more….
straight rebuy
Organizational Should we concentrate on customers who need
capabilities more services (prompt and quick deliveries) or
technical support or financial support (more
credit period)?
Purchasing policies Should we concentrate on customers who
prefer competitive biding, market based
negotiated prices, turn key contracts or service
contracts?
Purchasing criteria Should we focus on customers who seek
quality, service, or price?
Evaluating Market Segments
 Size and Growth- Current and future potential thru

◦ Time series analysis

◦ Regression analysis
◦ Econometric methods
◦ Experts opinion
 Profitability Analysis (of the market and Account level)

 Competitive Analysis
◦ S & W of existing and/or potential competitors both domestic and
foreign.
 Company Objectives and Recourses
◦ Success factors for automobile industry are quality and after sales service.
…
Simple Matrix structure for selecting Target
Market
Factors Automobile Bicycle Electric appln Housing
Size
Growth
Profitability
No of Competitors
Major competitors
strengths
weakness
Company strength
Success factors
Compatibility with
company’s long
term objectives
Target Market Strategies
 Concentrated Marketing- Focusing on a
single or few segment/s
◦ Narrow range of products
◦ High quality and High price
◦ Selective distribution and promotional strategies
Can be done by companies whose recourses are
limited. Company focuses its strategies to increase
its knowledge and tailors its strategies to serve a
particular segment.
Target Market Strategies
 Differentiated Marketing- targets several
markets segments
◦ Develop several marketing strategies for chosen
segments
◦ Leads to higher sales and higher cost
 Undifferentiated Marketing- targets several
markets segments
◦ Develop single marketing plan that will be common
to all segments
◦ Reduces cost (advertising, research, inventory and
production) but may face decline in sales.
Guidelines for choosing Target
Market Strategies
 Company recourses are limited- Concentrated
marketing strategy
 New product is in introduction stage-

undifferentiated or concentrated marketing strategy.

 Mature stage of PLC- Differentiated marketing

strategy
 Major competitor follows differentiated marketing

strategy- follow the same.

 Competitor uses undifferentiated marketing

strategy- Company may gain by following

Differentiated or Concentrated marketing strategy.
Sales Territory
Management
Options for structuring the sales force

Sales force
structures

Geographically
Product based Market based
based

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Designing Territories
 Determine location and potential of the customer
 Evaluate the effectiveness/capability of the sales
personnel.
 Define territorial boundaries/accounts
 Assign salespeople to territories
 Set up territorial coverage plans for the sales force
 Determine the sales expenses and the frequency
of call based on the account/visit objective.
 Evaluate the effectiveness on continuous basis.
5Cs of customer benefits derived from KAM
Source: Adapted with permission from Ryals and Holt (2007, p 410)

• Meeting or anticipating specific customer needs

Customization • Achieved via differentiated products or services

• Advising customers e.g. on total cost of ownership

Consultancy • Achieved via additional skills in key account team

Complexity • Managing IOR in a seamless way for the customer

• e.g. SCM or international cross-border issues
management
• Harmonizing products, prices, processes
Consistency • Achieved across multiple customer divisions/locations

Continuity and • Long-term secure relationships with people

• Openness & information sharing
trust

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Pricing Decisions
 The total cost of ownership
Source: Adapted with permission from Christopher (1997, p49)

Purchase
price

Transaction Maintenance
cost cost

Inventory
cost
Technical
support
Operating Training cost
cost cost
Disposal cost

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 Customer account profitability
Source: Adapted with permission from Christopher (1997)
Gross sales value

Trade discount
Direct
Net sales value
Indirect
Production costs
Production Customer-related
contribution costs (direct)
e.g. sales calls,
merchandising
Marketing/sales
costs
Overhead costs
Marketing
(indirect)
contribution
e.g. national advertising
Distribution
service costs
Customer-related
Customer Costs (direct)
gross profitability e.g. transportation

Other customer-
related costs
Untraceable costs
e.g. warehousing
Customer contribution to
company overhead profit © Oxford University Press,
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 Company Factors affecting
price setting
Costs
Corporate objectives
Marketing plans
Product range
Competitors Customers
Offerings Value perceptions
Pricing/costs Perceptions of product/firm
Competitive structure Ability to pay

Price
Setting

Context/
Channels Environment
Costs Economy
Capabilities Regulations
Currency
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Outside-in and inside-out pricing strategies

• Price skimming
Outside- • Penetration pricing
in • Target pricing
pricing

Mark-up/break-even
Inside-
•
• Peak load pricing
out • Marginal cost pricing
pricing • Suggested resale
pricing

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Participation in e-marketplaces

Cost of participation
• Fee?

Confidentiality/Security
• Identity secret?
• False bidding?

Information within e-market

• Real time?
• Dissemination?
• Access?

Access to e-market
• Open to all?
• Group buying?
• Rival e-marketplaces?
• Future participation?

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Thank You!