Business Marketing Management: B2B - GBV
Business Marketing Management: B2B lie MICHAEL D. HUTT Arizona State University THOMAS W. SPEH Miami University * rf t% SOUTH-WESTERN CENGAGE Learning- Australia Brazil Japan Korea Mexico Singapore Spain United Kingdom United States
CONTENTS Preface PARTI VII i Chapter 1 A Business Marketing Perspective 3 Business Marketing 4 Business Market Customers Commercial Enterprises as Customers A Concentration of Customers 5 6 6 Government Units as Customers 7 Institutions as Customers Business Marketing Management 7 8 B2B TOP PERFORMERS: Jim Ryan, Chairman, President and Chief Executive Officer, W. W. Grainger, Inc. Business Markets versus Consumer-Goods Markets What Makes a Marketing Leader? Creating the Customer Value Proposition Characteristics of Business Markets Business and Consumer Marketing: A Contrast Smucker: A Consumer and Business Marketer Distinguishing Characteristics A Relationship Emphasis The Supply Chain Supply Chain Management Managing Relationships in the Supply Chain Commercial Enterprises as Consumers Classifying Goods for the Business Market Entering Goods i Foundation Goods Facilitating Goods Business Marketing Strategy Illustration: Manufactured Materials and Parts 9 10 11 12 14 15 16 17 17 18 19 20 20 22 22 22 24 25 25 Illustration: Installations Illustration: Supplies 26 26 A Look Ahead 27
Contents Summary 28 Discussion Questions Internet Exercises Case: The Middleby Corporation Discussion Questions 29 30 31 32 *! Chapter 2 Organizational Buying Behavior 35 The Organizational Buying Process The Search Process New Task 36 37 38 Straight Rebuy 39 Modified Rebuy Environmental Forces Economic Influences 41 42 43 Technological Influences 43 Organizational Forces Growing Influence of Purchasing Strategic Priorities in Procurement Procurement Manager's Toolkit 44 44 44 46 Total Cost of Ownership (TCO) 46 INSIDE BUSINESS MARKETING: Use TCO to Inform Next Car Purchase ; Strategy Response: Develop Value-Based Sales Tools Segmenting Purchase Categories E-Procurement Reverse Auctions Organizational Positioning of Purchasing Strategy Response: Key Account Management 46 47 47 49 49 50 , 50 ETHICAL BUSINESS MARKETING: Gift Giving: "Buy Me These Boots and You'll Get My Business" Group Forces ' The Buying Center 51 52 52 INSIDE BUSINESS MARKETING: Innovate and Win with BMW 54 Buying Center Influence Individual Forces 54 56 Differing Evaluative Criteria Information Processing 57 57 Risk-Reduction Strategies 58
Contents xix Summary Discussion Questions Internet Exercises \ Case: Sealed Air Corporation: Delivering Packaging Solutions 59 60 61 62 Discussion Questions 63 Chapter 3 Customer Relationship Management Strategies for Business Markets Relationship Marketing 64 65 Types of Relationships Value-Adding Exchanges Nature of Relationships 66 67 67 Strategic Choices Managing Buyer-Seller Relationships 67 68 Transactional Exchange 68 Collaborative Exchange Switching Costs Strategy Guidelines Measuring Customer Profitability 68 69 69 71 Activity-Based Costing Unlocking Customer Profitability 71 71 The Profitable Few 72 Managing High- and Low-Cost-to-Serve Customers 73 INSIDE BUSINESS MARKETING: Loyalty and Customer Profitability Managing Unprofitable Customers Firing Customers Customer Relationship Management 75 75 75 76 Acquiring the Right Customers Crafting the Right Value Proposition 78 79 Instituting the Best Processes Motivating Employees 81 82 Learning to Retain Customers Relationship Marketing Success 1 83 84 Drivers of Relationship Marketing Effectiveness Relationship Marketing (RM) Programs 84 86 Financial Impact of RM Programs Targeting RM Programs 87 87
Contents Summary Discussion Questions Internet Exercises Case: IBM Challenge: How to Serve a Diverse Mix of Demanding Customers Chapter 4 Segmenting the Business Market and Estimating Segment Demand 88 89 90 91 95 Business Market Segmentation Requirements and Benefits 96 Requirements Benefits 97 97 INSIDE BUSINESS MARKETING: How to See What's Next Bases for Segmenting Business Markets INSIDE BUSINESS MARKETING: Balancing Risk and Return in a Customer Portfolio Macrolevel Bases Microlevel Bases Illustration: Microsegmentation The Segmentation Process Choosing Market Segments Isolating Market Segment Profitability Implementing a Segmentation Strategy Estimating Segment Demand The Role of the Demand Estimation Methods of Forecasting Demand Qualitative Techniques Quantitative Techniques CPFR: A New Collaborative Approach to Estimating Demand Combining Several Forecasting Techniques Summary ' Discussion Questions Internet Exercises . Case: Federated Insurance: Targeting Small Businesses Cultivating Business Relationships Discussion Questions 98 99 100 100 103 106 107 107 108 109 109 109 111 111 113 115 115 116 116 117 118 118 119
Contents Chapter 5 Business Marketing Planning: Strategic Perspectives xxi 123 Marketing's Strategic Role The Hierarchy of Strategies 124 124 Strategy Formulation and the Hierarchy 126 Functionally Integrated Planning: The Marketing Strategy Center 128 B2B TOP PERFORMERS: Cross-Functional Relationships: Effective Managers Deliver on Promises The Components of a Business Model Customer Interface Core Strategy 129 130 131 131 B2B TOP PERFORMERS: Winning with a New Business Model at Dow Corning 132 Strategic Resources The Value Network Strategic Positioning 133 133 134 Strategic Positioning Illustrated Building the Strategy Plan 135 136 The Balanced Scorecard Financial Perspective 137 137 Customer Perspective 139 Internal Business Process Perspective 140 Strategy Map Summary Discussion Questions 142 144 145 Internet Exercises Case: Intuit's Solutions for Small and Medium-Sized Businesses Discussion Questions 146 147 147 Chapter 6 Business Marketing Strategies for Global Markets 148 Capturing Global Advantage 149 Market Access Resource Access 151 152 INSIDE BUSINESS MARKETING: How Offshore Outsourcing Affects Customer Satisfaction—and a Company's Stock Price! 154
xxii Contents Local Adaptation Network Coordination 154 155 INSIDE BUSINESS MARKETING: Made in America—Again , 156 Global Market Entry Options Exporting Contracting 156 156 158 Strategic Global Alliances (SGA) 159 Joint Ventures ; Choosing a Mode of Entry ' Multi-domestic versus Global Strategies 160 161 162 Source of Advantage: Multi-domestic versus Global Types of International Strategy 162 163 A Strategic Framework Global Strategy 165 166 Build on a Unique Competitive Position Emphasize a Consistent Positioning Strategy Establish a Clear Home Base for Each Distinct Business 166 166 166 Leverage Product-Line Home Bases at Different Locations 167 Disperse Activities to Extend Home-Base Advantages Coordinate and Integrate Dispersed Activities ' Summary 167 168 168 Discussion Questions 169 Internet Exercise 170 Case: Schwinn: Could the Story Have Been Different? Alternative Reality One: Aim High Alternative Reality Two: If You Can't Beat Them, Join Them Discussion Questions 171 171 171 172 Chapter 7 Managing Products for Business Markets Building a Strong B2B Brand Brand-Building Steps 173 J 174 175 Brand Strategy Guidelines Profiling a Strong Brand: IBM 177 178 Product Quality and Customer Value Meaning of Quality 179 180 ,
Contents Sustainability: Strategic Imperative . xxiii 180 GE's Ecomagination Marketing Campaign : Meaning of Customer Value 182 182 B2B TOP PERFORMERS: Green Is Green Product Support Strategy: The Service Connection Product Policy 183 185 185 Types of Product Lines Defined Defining the Product Market 186 186 B2B TOP PERFORMERS: BASF: Using Services to Build a Strong Brand Planning Industrial Product Strategy Product Positioning The Process Isolating Strategy Opportunities 190 Product Positioning Illustrated the Technology Adoption Life Cycle 190 191 Types of Technology Customers Strategies for the Technology Adoption Life Cycle 191 192 INSIDE BUSINESS MARKETING: The Gorilla Advantage in High-Tech Markets ' The Bowling Alley The Tornado ? 193 193 194 Main Street Summary 195 196 Discussion Questions Internet Exercise 195 197 Case: Hidden Inside: International Flavors & Fragrances, Inc. Discussion Questions 198 198 Chapter 8 Managing Innovation and New Industrial Product Development , 188 188 189 189 The Management of Innovation Induced Strategic Behavior Autonomous Strategic Behavior 199 200 ? 201 201 Product Championing and the Informal Network Conditions Supporting Corporate Entrepreneurship Managing Technology Classifying Development Projects 203 204 204 205 A Product-Family Focus 206 The Disruptive Innovation Model 206
xxiv Contents INSIDE BUSINESS MARKETING: Disrupters Pull Different Innovation Levers 208 Illustration: A New-Market Disruption Innovation Winners in High-Technology Markets The New-Product-Development Process What Drives a Firm's New Product Performance? Anticipating Competitive Reactions 209 210 212 212 214 Sources of New Product Ideas 214 B2B TOP PERFORMERS: Inviting New Product Suggestions 215 Determinants of New Product Performance and Timeliness The Determinants of Success 217 217 Fast-Paced Product Development Summary Discussion Questions 219 220 221 Internet Exercise Case: Vscan: GE Healthcare's Pocket-Sized Imaging Device Discussion Questions 222 Chapter 9 Managing Services for Business Markets 223 223 , 224 Understanding the Full Customer Experience 225 The Customer Experience Life Cycle 225 Applying the Customer Experience Map 226 Customer Experience Management A Solution-Centered Perspective 226 228 t Delivering Effective Customer Solutions 229 The Supplier's Role The Customer's Role 230 231 B2B TOP PERFORMERS: Smart Customer Solutions from IBM Choose Customers Wisely 232 232 Benefits of Solution Marketing Business Service Marketing: Special Challenges 233 233 Services Are Different 234 Tangible or Intangible? Simultaneous Production and Consumption Service Variability 235 235 236 Service Perishability 236
Contents INSIDE BUSINESS MARKETING: Do Service Transition Strategies Pay Off? Nonownership Service Quality \ xxv 237 237 238 Dimensions of Service Quality Customer Satisfaction and Loyalty Service Recovery 238 239 239 Zero Defections Return on Quality 240 240 Service Packages 241 Customer-Benefit Concept Service Concept Service Offer 241 241 242 Service Delivery System Service Personnel 243 243 Hybrid Offerings Unique Resources Manufacturing Firms Can Leverage 243 244 Distinctive Capabilities for Launching Hybrid Offerings 245 Classifying Services for Hybrid Offerings Summary Discussion Questions 246 249 249 Internet Exercises Case: Paychex, Inc. Discussion Questions 250 251 Chapter 10 Managing Business Marketing Channels 251 252 The Business Marketing Channel Direct Channels Indirect Channels Integrated Multichannel Models 253 254 255 255 Participants in the Business Marketing Channel Distributors 258 258 INSIDE BUSINESS MARKETING: W. W. Grainger: Profile of a Leading-Edge Industrial Distributor 259 Manufacturers' Representatives 261 B2B TOP PERFORMERS: Why Intel Uses Reps Channel Design 262 263 Step 1: Define Customer Segments 264 Step 2: Identify Customers' Channel Needs by Segment 265
xxvi Contents Step 3: Assess the Firm's Channel Capabilities Step 4: Benchmark to Competitors Step 5: Create Channel Solutions for\Customers' Latent Needs 266 266 266 Step 6: Evaluate and Select Channel Options Crucial Points in Channel Transformation Channel Administration 266 267 267 Selection of Channel Members 268 Motivating Channel Members Summary 268 270 Discussion Questions Internet Exercises 271 271 Case: Snap-on, Inc.: A Unique Go-to-Market Strategy Discussion Questions 272 272 Chapter 11 Supply Chain Management 273 Supply Chain Management: A Tool for Competitive Advantage 275 Supply Chain Management Goals 275 Benefits to the Final Customer 277 INSIDE BUSINESS MARKETING: When the Supply Chain Gets Disrupted The Financial Benefits Perspective 278 278 Information and Technology Drivers 279 Successfully Applying the Supply Chain Management Approach 280 Successful Supply Chain Practices 280 B2B TOP PERFORMERS: Making Supplier Relationships Work Logistics as the Critical Element in Supply Chain Management Distinguishing Between Logistics and Supply Chain Management 281 282 282 Managing Flows The Strategic Role of Logistics 282 283 Sales-Marketing-Logistics Integration Just-in-Time Systems 283 284 Total-Cost Approach Calculating Logistics Costs ? 285 286 Activity-Based Costing Total Cost of Ownership 286 286 Business-to-Business Logistical Service 287 Logistics Service Impacts on the Customer Determining the Level of Service 288 288
Contents xxvii Logistics Impacts on Other Supply Chain Participants 289 Business-to-Business Logistical Management Logistical Facilities Transportation Inventory Management 289 289 290 292 INSIDE BUSINESS MARKETING: The Profit Impact of Inventory Management Third-Party Logistics Summary Discussion Questions Internet Exercises Case: Supply Chain Issues at Optimal Medical Parts Company Discussion Questions Chapter 12 Pricing Strategies for Business Markets 293 293 294 295 296 297 298 299 The Pricing Process in Business Markets 300 Price Objectives " Demand Determinants Value-Based Pricing Illustrated 301 302 305 Cost Determinants Competition 307 309 Pricing across the Product Life Cycle Pricing New Products 311 311 INSIDE BUSINESS MARKETING: Understanding the Economic Value o'f New Products ' Legal Considerations Responding to Price Attacks by Competitors Evaluating a Competitive Threat Understanding the Rules of Competitive Strategy Competitive Bidding Closed Bidding Open Bidding j Strategies for Competitive Bidding Summary Discussion Questions Internet Exercise Case: Free-Product Competitors Challenge Microsoft Discussion Questions 313 313 314 314 316 317 317 318 318 319 320 321 322 322
xxviii Contents Chapter 13 Business Marketing Communications: Advertising and Sales Promotion 323 Business-to-Business (B2B) Social Media 325 Dell's Social Media Brand The Customer Decision Journey Charting CDJ 325 326 326 The Role of Advertising Integrated Communication Programs 328 328 Enhancing Sales Effectiveness 328 T Increased Sales Efficiency Creating Awareness What Business-to-Business Advertising Cannot Do 328 329 329 Managing Business-to-Business Advertising Defining Advertising Objectives 329 330 . Written Objectives Determining Advertising Expenditures Developing the Advertising Message Selecting Advertising Media for Business Markets B2B TOP PERFORMERS: Search Engine Marketing at Google: The Right Message, the Right Time Direct Marketing Tools Measuring Advertising Effectiveness Measuring Impacts on the Purchase Decision The Measurement Program Managing Trade Show Strategy Trade Shows: Strategy Benefits Trade-Show Investment Returns " Planning Trade-Show Strategy Trade-Show Objectives Selecting the Shows Managing the Trade-Show Exhibit Evaluating Trade-Show Performance J Summary Discussion Questions Internet Exercise Case: Johnson Controls, Inc. Discussion Questions 330 331 333 334 336 337 339 339 340 341 341 342 343 343 343 344 344 345 346 347 348 348
Contents Chapter 14 Business Marketing Communications: Managing the Personal Selling Function1 Managing the Sales Force Organizing the Personal Selling Effort Key Account Management National Account Success xxix 349 351 351 352 355 B2B TOP PERFORMERS: Using Customized Strategies to Outmaneuver Rivals Isolating the Account Management Process 356 356 Account Management Success Sales Administration 357 360 Recruitment and Selection of Salespersons Training Supervision and Motivation Evaluation and Control 360 360 361 364 Deployment Analysis: A Strategic Approach Territory Sales Response Territory Alignment 366 366 367 Developing the Customer Database Sales Resource Opportunity Grid Isolating High-Opportunity Customers 368 368 369 GE's Sales Force Effectiveness Initiative Summary 370 371 r Discussion Questions Internet Exercises ' Case: Account Management at YRC Worldwide: Choosing Customers Wisely Discussion Question 371 372 373 373 EVALUATING BUSINESS MARKETING STRATEGY tAND»!ERE RMArfeE Chapter 15 Marketing Performance Measurement 377 A Strategy Map: Portrait of an Integrated Plan Developing the Strategy: The Process Maps: A Tool for Strategy Making 379 380 383 Marketing Strategy: Allocating Resources 383 Guiding Strategy Formulation 384
Contents Managing Individual Customers for Profit The Marketing Control Process Control at Various Levels "} Strategic Control Annual Plan Control Marketing Control: The Marketing Performance Dashboard B2B TOP PERFORMERS: CMO Profile Efficiency and Effectiveness Control r 384 385 385 385 388 388 391 391 Profitability Control Implementation of Business Marketing Strategy The Strategy-Implementation Fit 391 394 Implementation Skills The Marketing Strategy Center: An Implementation Guide Looking Back Summary 395 396 398 399 Discussion Questions 400 Internet Exercises Case: Danaher Corporation 401 402 402 Discussion Question 395 Name Index 403 Subject Index 412
Chapter 1 A Business Marketing Perspective 3 Business Marketing 4 Business Market Customers 5 Commercial Enterprises as Customers 6 A Concentration of Customers 6 Government Units as Customers 7 Institutions as Customers 7 Business Marketing Management 8 B2B TOP PERFORMERS: Jim Ryan, Chairman, President and Chief Executive Officer, W. W .
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the marketing plan. B2B MARKETING WORLD Step #1 - Define marketing aims Step #2 - Analyze the status quo Step #3 - Define your target group and buying center personas (BCP) Step #4 - Describe the customer journey. Your B2B Marketing Tactic. The 6 steps to create a marketing strategy in B2B are: The marketing aims are derived from the .
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B2B social media is significant to B2B marketing literature today as knowing the importance of B2B businesses embedding the tool of social media into their marketing strategy and how these marketing efforts are perceived by the B2B resellers can further create profitability for the business in the near future.
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the use of social media for B2B marketing', and hence many B2B companies plan to double their social media marketing budgets within the next five years (CMO, 2015) This growing interest in B2B social media marketing seems to be directly related to the numerous advantages deriving from the utilisation of those sites to B2B companies.
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