CUSTOME

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BASED
MARKETIN
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STRATEGY
 THE ENVIRONMENT OF B2B

BUSINESS MARKETING
Business Marketing or Industrial Marketing are used interchangeably and
50% of all business school graduates join firms that directly compete in the
business market.
Business marketers in fact serve the largest market of all: the business market.

BUSINESS MARKET
Business markets are markets for products and services, local to
international, bought by businesses, government bodies and institutions
for incorporation, consumption, use or resale.
B2B marketers serve the biggest market of all in fact, here a single customer
can account for an enormous level of purchasing activities and so we can easily
understand that the number f customer is much lower than in the final market.
Given the fact that B2B plays in a very specific context it can be defined as a
network (environment is too generic). In the offer there is always an high level
of customization that is the result of the interaction between buyer and seller.
Behind every B2C transaction we have B2B relationship and talking about
business market we do not refer only to industrial processes.

Many large firms interact exclusively with business market customers and they
never interact directly with their ultimate consumers.
Other firms participate in both the consumer-goods and the business markets.
An example is Ballin: Italian manufacturer of luxury shoes that sells its shoes to
consumer goods. With its brand Nillab, it entered in the B2B market selling its
product to other consumer-goods firms like Chanel, Tom Ford and Jimmy Choo
that are all managed individually.
We can easily understand the difference among the two brand: first of all with
Ballin we have thousands of customers that are all treated in the same way
meanwhile with Nillab we deal with just 3 customer that are managed
individually given the high level of customization.

The business exchange is characterized by relationships. Given the high level

of customization the buyer and the seller need to cooperate so the result is
basically the result of a common development. This is in contrast with final
market that is characterized by exchange transaction.

BUSINESS PRODUCT

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A business product is every kind of product that is used to manufacture other
products or to become part of another product. Also every kind of product that
is aid in the normal operation of an organization or that is acquired for resale
without change in form.
A product purchased for personal use is considered a consumer good.

BUSINESS MARKETERS VS. CONSUMER-GOODS MARKETERS

Both marketers benefit by employing a market orientation, this means being
market driven and so they need to understand and satisfy customer needs.
A market driven firm has distinctive capabilities: market sensing capability:
companys ability to sense change and to anticipate customer responses and
than customer linking: that is the ability to develop and manage close
customer relationships.
Both types of companies view their customer as an asset, and so Marketing
expenditures, once considered expenses, are now considered investments.
Therefore, marketers need to measure performance such as ROI on their
investments.
THE MARKET STRUCTURE
The B2B market structure is
characterized by a small number
of customers that concentrate in
their hand a huge number of
transaction.
On average the 80% of sale
depends on the 20% of customer
(both upstream and downstream).

PROFESSIONAL MARKETING
MANAGERS
In a B2B reality it is important to
Employ Customer Relations Management (CRM) tools for: identifying and
categorizing customer segments determining their present and potential
needs.
To do this, it is fundamental visiting customers to learn about applications of
products.

Professional Marketers must focus on profitability: they need to understand

forces that affect profitability and then they need to align resource allocation to
revenues and profits that will be secured by future business.
They also have to partner with customer developing a form of partnership for
the purpose f serving and adding value for their consumer. This strategy can
result in becoming a preferred vendor.

CUSTOMER SATISFACTION

As we sad being a market driven firm means being completely focused on the
customer.
The final aim of a business must be the costumers satisfaction.

Satisfaction brings two different implications: a quantitative ones and a

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qualitative ones.

From a quantitative point of view customers satisfaction brings more profits

given the fact that the customer will re-buy the product generating more
margin (raise price) and it introduces the possibility of up/cross selling.
On the other hand, from a qualitative perspective, satisfaction brings growth
thanks to the fact that it allows to establish a loyalty base becoming a point of
reference for the costumer. This bring certainty for the business that will be
able to sustain an higher level of innovation.

BUSINESS VS. CONSUMER MARKETING: DIFFERENCES

1. Nature of their markets
2. Market demand
3. Buyer behavior
4. Buyer-seller relationship
5. Environmental influences (competition, political, legal)
6. Market strategy

Due to these differences, business marketers need to understand how demand

for industrial products and services differs from consumer demand.

BUSINESS MARKET DEMAND

Business market demand is characterized by different features:
-DERIVED: the demand for industrial products is derived from the ultimate
demand for consumer products. as a result, business marketers must carefully
monitor fluctuating trends and patterns in consumer markets.
-FLUCTUATING: given the fact that demand is derived, an increase or decrease
in consumer demand can create a fluctuating demand for many industrial
products.
-STIMULATING: sometimes, business marketers need to stimulate demand for
consumer goods which either incorporate their products or are used to make
consumer products.
-PRICE SENSITIVITY/ DEMAND ELASTICITY: business market demand is inelastic
An increase or decrease in the product price will not significantly affect the
demand for the product.

OFFER VALUE
Businesses final aim must be creating programs that include products,
services, ideas and solutions to problems that offer value and provide
opportunities for their customers.
So, in order to reach success and to satisfy customers, firms must align their
value proposition with customers expectation.
In any case it is important to understand different customers needs that even if
they play in the same industries they could have different need.
An example can be panda and ml

The product sold also has to provide opportunities:

All marketing activities directed toward establishing, developing, and

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maintaining successful exchanges with customers

GOODS CLASSIFICATION
-ENTERING GOODS: raw materials and manufactured materials and parts that
become part of the finished product.

-FOUNDATION GOODS:

-FACILITATING GOODS:

ORGANIZATIONAL BUYING BEHAVOIR

Business market customers are comprised of commercial enterprises,

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

BUYING PROCESS
Buying is a process, not an event.
There are various points in the process that are referred to as Critical Decision
Points and Evolving Information Requirements
This process starts with Problem Recognition

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-PROBLEM RECOGNITION: buying process starts with the customer that
become aware of a problem because of internal drivers (machine that breaks
down, someone needs to order product or is dissatisfied of something or
someone recognizes an opportunity that can be captured by acquiring the
product) or because of external drivers (the salesperson who precipitates the
need for a new product, advertising also can influence purchasing).

-GENERAL DESCRIPTION OF NEED: once a need is recognized, the

purchasing department works with the buying group to define what is needed
by asking: what is the extent of the problem, what alternatives can solve the
problem and where can the solution be purchased.
Each small decision ultimately helps define the product specifications.

-PRODUCT SPECIFICATION:

-SUPPLIER SEARCH: means deciding who will be the supplier.

Influencer has a lot of say about the choice of supplier. If a salesperson creates
the need, often the specs are written so that only the salespersons
organization is able to fulfill the contract.
In established businesses, often only preferred vendors are considered.

-ACQUISITION AND ANALYSIS OF PROPOSALS: This step occurs only when

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

-SUPPLIER SELECTION: at this point, negotiation includes not only monies,

but also: quantities, delivery times, level of service, warranties, payment,
schedules and a set of final details that determine selection (financial situation
of the supplier, interest in investing in the relationship, reliability, brand etc.)

-SELECTION OF ORDER ROUTINE: once the supplier is selected, the order

routines are established.

-PERFORMANCE REVIEW: vendor rating

BUYING SITUATION
-NEW TASK: we deal with a perceived problem or need that is totally different
from all previous experiences. To solve it, buyers need a significant amount of
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information. This buying process is long and involve many actors.
Buyers & Influentials operate in a stage of decision- making known as
extensive problem solving because they lack a Well-defined criteria and a
strong predisposition toward a particular solution.
In this case marketers should intervene to initiate problem recognition and to
get involved early in the decision making and procurement processes. In so
doing it has to understand the buying organizations behavior patterns.

If a marketer is already established with an account, often he or she can

leverage that situation into further business.
This is why present suppliers continue to develop further business with their
customersthey understand their prospects buying philosophy, developing
situations and contacts.
They can also create need since the prospect trusts them.

-STRAIGHT REBUY: we deal with a problem or need that is recurring or a

continuing requirement.
In this case, buyers have experience in the area and so they require little or no
new info given the fact that they operate in routine problem-solving stage.
Straight rebuy is a short term process in which are involved few persons. The
so called MOR (maintenance, operation and reapir) items fall into this category
of buying process.

-MODIFIED REBUY: in this case decision makers feel that there is a benefits to
reevaluating alternatives.
The main reason that push the use this kind of process is that buyers feel they
can make significant advances if thereview their buying situation or because
there is dissatisfaction with present supplier.

ROLES in the BUYING CENTER

-INITIATOR: initially perceives a problem and initiates the buying process to
solve it.

-INFLUENCER: Affects the purchasing decision by providing technical

information or other relevant (internal or external) information.

-GATEKEEPER: Controls the information to be reviewed by members of the

buying group. (For example, buyer may screen advertising material and even
salespeople.)

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

-BUYER: has formal authority to select and purchase products or services and
the responsibility to implement and follow all procurement procedures.

-USER: Actually use the product in question. Can be inconsequential or major

players in the process.

EVALUATION PROCESS
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BUYERS STRATEGIC APPROACH TO SUPPLIERS
In order to approach and serve effectively the buyer it is necessary to consider
the buyers approach to the suppliers.

-BUYING APPROACH
This type can be considered an adversarial approach given the fact that the
buyer wants to maximize power over suppliers getting the best deal.
Nowadays, thanks to the globalization, we have many potential suppliers that
can be found on a global sourcing or throughout the E-sourcing.

-PURCHASING APPROACH
This is a cooperative approach based on the search for quality and continuous
improvement. Only selected suppliers can face this type of relationship and we
have a decrease in the total cost of ownership.

-STRATEGIC APPROACH
This approach is based on customer centrality and we have an high level of
involvement with very selected suppliers. Co-makership + technologicak and
strategic integration.