Business to Business Marketing

Chapter: 03
Strategic planning for global business markets
Chapter Objectives
After reading this chapter, you should be able to:
1. Explain the main dimensions of strategy as they apply in B2B markets
2. Describe various approaches to strategy
3. Explain the idea of competitive advantage & competitive positions
4. Market leader’s defense strategies
5. Market challenger’s attack strategies
6. Market follower’s strategies
7. Market challenger’s specialization strategies
Growth
Growth in marketing, means increase in sales and revenue for a
company. However, it has several other dimensions:
• Grow by building your market share
• Grow by developing committed customers and stakeholders
• Grow by building a powerful brand
• Grow by innovating new products, services, and experiences
• Grow by international expansion
• Grow by acquisitions, mergers, and alliances
• Grow by building an outstanding reputation for social responsibility
• Grow by partnering with government and NGOs
STRATEGIC PLANNING PROCESS
Starts with the firm’s full understanding of the business it is in.
• What is our business?
- Who is the customer?
- What is value to the customer?
• What will our business be?
- How will the business look if it keeps operating the same way?
• What should our business be?
- What the business should look like and what changes need to be made?
MISSION, VISION AND OBJECTIVE
Vision – Big picture of what you want to
achieve.
Mission – General statement of how you will
achieve the vision.
Strategies – Strategies are the ways to achieve
the mission.
Goals – General statements of what needs to
be accomplished to implement a strategy.
Objectives – Objectives provide specific
milestones with a specific timeline for
achieving a goal.
Action Plans – These are specific Case Study on Vision Mission:
implementation plans of how you will achieve https://www.youtube.com/watch?v=EJ7cErowVbo
an objective.
Characteristics of an Effective Mission
Statement
1. They Are Short
2. They Are Unique to Your Business
3. They Create Expectations (e.g. “To provide the best customer service possible.”)
4. They Are Realistic
5. They Are Memorable
6. They Are Active
1. For example, instead of writing, “These products are made by our company to improve your life,” you
should write, “Our company makes these products to enhance your quality of life.”
7. They Are Targeted
8. They consider long-term picture
1. “To build a place where people can come to find and discover anything they might want to buy
online.” - Amazon

Please see the handout for details

Vague Mission Statement
To build total brand value by innovating and
delivering customer value faster, better, and more
completely than our competitors

GOOGLE’S Mission Statement

To organize the world’s information and make it
universally accessible and useful.
Product-Oriented versus Market-Oriented
Definitions of a Business
Company Product Definition Market Definition

Nike We make best athlete shoes. We enhance your winning sperite.

We make copying We help improve office

Xerox
equipment. productivity.
Hess
We sell gasoline. We supply energy.
Corporation
Paramount
We make movies. We market entertainment.
Pictures
Encyclopaedia
We sell encyclopedias We distribute information.
Britannica
We make air conditioners We provide climate control in the
Carrier
and furnaces. home.
Competitive Advantage
A firm's ability to produce a good or service more efficiently than its
competitors, which leads to greater profit margins.
Three basic competitive strategies:
1. Differentiation
In terms of 4Ps & others…
2. Cost leadership
Economics of scale & outsourcing
3. Focus
Don’t try to please everyone
Competitive Advantage: Examples
• In digital advertising: Google
- Google has a competitive advantage over Facebook, Twitter, and Yahoo

• In smartphones: Apple
- Apple has achieved a competitive advantage over Samsung, Microsoft, and
BlackBerry

Amazon’s competitive advantage:

https://www.youtube.com/watch?v=Efs3PyR8iBw
Differentiation Strategy

Please see the handout for details

JetBlue Airways: Stuck in the Middle!!

• Was established in 1998 as a budget airlines

• Tried to be a high-end carrier in some segments/routes
• Failed to achieve either cost leadership or differentiation
• Missed its own flight to fly high!!

Cost leadership

Differentiation
Factors to Consider for Differentiation
• Valuable: the perceived benefit exceeds the cost
• Important: delivers a benefit critical to success
• Distinctive: unique or offered in a distinctive way
• Superior: better technology, faster
• Communicates: understood and visible
• Preemptive: cannot be easily copied
• Affordable: customers can pay the higher price
• Profitable: contribution (margin times volume) exceeds cost of
difference
Please see the handout for details
Cost-Leadership Strategy
Cost-leadership is a situation where firms can keep their cost at the
lowest point in the industry while offering acceptable customer value
which leads to a competitive advantage.

Approaches to gain cost-leadership through minimizing cost:

1. Cost of input factors.
2. Economies of scale.
3. Learning-curve effects.
4. Experience-curve effects.
Cost-Leadership Strategy
1. Cost of input factors: access to lower-cost input factors such as raw
materials, capital, labor, and IT services.
Emirates, Etihad, and Qatar. These airlines achieve a competitive
advantage over their U.S. counterparts American, Delta, and United
airlines.
• Lower cost of inputs—
• raw materials (access to cheaper fuel),
• capital (interest-free government loans),
• labor—and fewer regulations (for example, regarding nighttime takeoffs and
landings, or in adding new runways and building luxury airports with
swimming pools, among other amenities)
• IT- outsourcing booking and online customer service to India
Cost-Leadership Strategy
2. Economies of scale: Decreases in cost per unit as output increases,
firms with greater market share might be in a position to reap
economies of scale.

What causes per-unit cost to drop:

■ Spread their fixed costs over a larger output.
- Windows 7 OS by Microsoft
■ Employ specialized systems and equipment.
- ERP software or manufacturing robots
■ Take advantage of certain physical properties.
- Electronics manufacturer in Shenzhen, China
Cost-Leadership Strategy
3. Learning-curve effects &
4. Experience-curve effect:
The difference between learning
curves and experience curves is
that learning curves only consider
time of production (only in terms of
labor costs), while experience
curve is a broader phenomenon
related to the total output of any
function such as manufacturing,
marketing, or distribution.
Competitive positions/types of competition
1. Market leader
Leaders have two basic strategic options: they can acquire smaller firms in the market, or they
can try to expand the overall market.
2. Market challengers
To attack the market leader, the challenger must have a substantial competitive advantage,
whereas attacking smaller competitors may only involve running a powerful promotional
campaign, a short price war, or a takeover policy
3. Market followers
Many companies prefer to follow rather than challenge the market leader. They avoid any direct
confrontation with the market leaders, since they are unable to sustain a competitive battle in
the long run. They pick up any segments which are too small for the market leader
4. Market nicher
They concentrate on small segments of the market, seeking to meet the needs of those
customers as closely as possible
Market Leader’s Defense Strategies
1. Expanding current market
• New users
• New uses
• More usage
2. Defending current market
• Six defense strategies……
3. Expanding total market
• Ex: Unilever’s Pureit, Dunlop tyre etc.
Market Leader’s Defense Strategies
Strategies Tasks
Position Defense Occupying the most desirable market space in consumers’ minds &
making the brand almost impregnable.
Flank Defense Protecting a weak front & support a possible counterattack
Preemptive Defense Hitting one competitor here, another there—and keeping everyone
off balance
Counteroffensive Meeting the attacker frontally and hit its flank
Defense
Mobile Defense The leader stretches its domain over new territories through market
broadening and market diversification
Contraction Defense Giving up weaker product/SBU/market and reassign resources to
stronger ones
The hidden sunglass giant:
https://www.youtube.com/watch?v=voUiWOGv8ec
Leader’s strategies in details:
https://www.youtube.com/watch?v=6Xx1ZDWrPUs
Market Challenger’s Attack Strategies
Strategies Tasks
Frontal Attack The attacker matches its opponent’s product, advertising, price, and
distribution. And usually the side with the greater resources will win.
Flank Attack Attacking the opponent’s weak points.
Encirclement Attempts to capture a wide slice of territory by launching a grand
Attack offensive on several fronts
Bypass Attack Bypassing the enemy altogether to attack easier markets
Guerrilla Attacks Small, irregular, unconventional attacks

Challenger’s strategies in details:

https://www.youtube.com/watch?v=1GCr2WzqcCE
Guerrilla Marketing: examples
Market-Follower Strategies
• The counterfeiter duplicates the leader’s product and packages and
sells it on the black market or through disreputable dealers.
• The cloner follows the leader’s products, name, and packaging, with
slight variations.
• The imitator copies some things from the leader but differentiates on
packaging, advertising, pricing, or location.
• The adapter takes the leader’s products and adapts or improves
them. The adapter may choose to sell to different markets, but often
it grows into a future challenger.
Market-Nicher Strategies
The key idea in nichemanship is specialization.
• End-user specialist
• Customer-size specialist
• Specific-customer specialist
• Geographic specialist
• Product or product line specialist
• Product-feature specialist
• Quality-price specialist
• Service specialist
• Channel specialist
Market nicher’s strategies in details:
https://www.youtube.com/watch?v=OkND3_7GYGw
Thank You!!