Business-to-Business Marketing

MKTG 533.101 Fall, 2012

Business-to-Business Marketing Introduction The Value-Delivery Framework

Dr. Gary Lilien, Research Director, ISBM
Dr.Ralph Oliva, Executive Director, ISBM www.isbm.org 814 863 2782

Whats in it for you?

Youll be equipped with language, skills and tools enabling you to better understand, create, deliver and profitably harvest value in Business Markets. understand the differences between B-to-B and B-to-C markets, and how to coach B-to-B make better decisions, better allocate resources, and generate more profit in B-to-B situations

youll qualify for employment in B-to-B Marketing.

Marketing

Marketing is the activity, set of institutions, and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large
- From the American Marketing Association

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
Capital Assets

Marketing Endeavors to connect these to The Exact Right: Customers Markets Demand patterns Willingness to pay Value proposition alignment

People/IP Assets

Brands Brands Brands Brands

Other Assets

Propensity to loyalty
Brand Assets

Brand equity Learning, Etc.

Consumer
Marketing Culture Market to end of chain Perceptual proposition Value in brand relationship

Business-to-Business
Manufacturing/Tech Culture Market to value chain Technical proposition Value in use, quantifiable

Large customer segments

Smaller-unit transactions Transaction linkage More direct purchase Consumer decides

Small number of customers

Large-unit transactions Process linkage Complex buying sequence Web of decision participants

However:
The increasing power of distribution channels, the impact of supply chain innovations, and outsourcing strategies are blurring distinctions

B-to-C
B-to-B B-to-C

Consumer
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Source: www.census.gov/econ/estats/

YOUR SPONSOR

The Institute for the Study of Business Markets

Associate Membership in ISBMaccess to ISBM programs, networks, etc

Direct connection to ISBM Researchdriver of

course content All materials required provided for you See www.isbm.org for more!
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ISBM Mission

Since 1983...
A global network of leading edge researchers and practitioners. All B-to-B. Headquarters at Penn State OUR MISSION: Expand research and teaching in business-tobusiness marketing and sales in academia Improve the practice of business-to-business marketing and sales for member firms in industry
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B2B Leadership Board

Practical Academic Field Research 100 Researchers ISBM Fellows Value: Leading-Edge B-to-B Marketing Practice 76 Member Firms

New Knowledge/Insight
Analytic Tools for B-to-B Courses/Professional Development Networking/Interchange Benchmarking More 10

ISBM Membership
Actuant Arizona Chemical Arkema AT&T Avery Dennison Bayer MaterialScience Cardinal Health Carpenter Technology Corporation Celanese CenturyLink Ciba Specialty Chemicals Cisco Systems Closure Systems International Control Components Inc. Corning Cox Business Daikin Dell Deloitte Dow Chemical Dresser Inc. DuPont Eastman Chemical ExxonMobil Chemical Flowserve Gallup GE GlaxoSmithKline Grainger Gyro: Heil Environmental Henkel IBM Innography Kennametal Kimberly-Clark Professional Kodaks Graphics Comm. Lilly Lonza LORD Corporation Lubrizol Momentive Nalco National Starch New Pig NIST/Manuf Ext Partnership Panduit Parker Hannifin Philips Respironics PolyOne Porex

76 Members
PPG Industries Radiator Specialty Company RGL Forensics Rio Tinto Alcan Rogers Corporation Ryder Sabert SAP Saint-Gobain Corporation Sealed Air Sherwin-Williams Siemens Swagelok Thilmany Thomas & Betts The Timken Company Tyco UBS USS Valspar Weir WESCO Distribution Westinghouse Nuclear Xylem ZS Associates
11/11/2013

ISBM: Your Resource for Everything B-to-B

Building Networks: Friendships/ Communities of Learning and Practice Education: The largest suite of B-to-B thought leaders/ courses/learning Research: At our core. Rigorous, relevant, applicable new knowledge, tools and insight in B-to-B

ISBM Summer Meeting September 11 - 12 2012:

The Nittany Lion; Penn State University Park Campus
The New Marketing Integration: Mark your calendar now!

Keys to Alignment and Execution Going beyond a great plan - to brilliant implementation!
Getting Down to Getting it Done Principles, frameworks and cases for over-busy B-to-B marketers on how to prioritize, focus, and gain alignment to get beyond the plan to execution.

Jeff Hayzlett, Author: Running the Gauntlet

Dr Liam Fahey: Frameworks for Prioritization and Decision-Making Logic Cases - Overcoming obstacles and getting it done from: Bayer Material Science, Christine Mendoza-Frohn Executing Xiameter, Brian Chermside Kimberly-Clark Professional, Tracy Doucet Porex, Gerry DiBattista Parker-Hannifin, Steve Erickson Dr. Amir Hartman Author, Ruthless Execution

Research Insight/Case Examples: Tools - Organization Alignment Keys to Mobilizing Resources More Rapid, Effective Decisions Overcoming Cultural Inertia More

More

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You are invited to attend our entire meeting on September 11-12 Class on Sept 12 will be at the meeting at the Nittany Lion Inn Please attend as much of the Meeting as Possible! Debrief the following Monday 9/17/12

Welcome to ISBM Membership!

Data Management/ Market Research

Computing Value*

Understanding Value*
Value and Pricing* Harvesting Value
New Offering Development Channel Conflict Management Market Offerings Management Marketing Leadership Personal Competencies Business Acumen

Market Segmentation*
Targeting* Positioning*

Designing Market Strategy*

Market Planning

Market Communications Sales Integration

Source: ISBM Research on Kernel Capabilities: agreed by academics and practitioners as critical, Dr. Alan Stines

Course Objectives:
Understand key Differences/ Similarities: B-to-B, B-to-C Frameworks for understanding the B-to-B Marketing Process The language/taxonomy of value

Tools for Segmentation, Targeting, Positioning****

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Course Objectives (Contd):

Overview/Frameworks for Management: B-to-B Channel Strategy Critical Keys to Execution the Marketing Sales Interface Insights from cases covering a variety of B-to-B Marketing situations

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Honor CodeCritical to Our Profession/Professional Life

We, the Smeal College of business community, aspire to the

highest ethical standards and will hold each other accountable to

them. We will not engage in any action that is improper, or that creates the appearance of impropriety in our academic lives, and

we intend to hold this to the standard in our future careers.

I/We ______________________ have neither given, utilized, received, nor witnessed unauthorized data on this deliverable,

and have completed this work honestly and in accordance to

the professors guidelines.
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From the Playbook

In the first class, Monday, 27 August, we will review the presentation cases (see Section E of this document). By no later than EOD Tuesday, 28 August, email us the following information: If you have formed a team, let us know the team members, and your team's case preferences for presentation 1st through 4th choices. (One email from the team is sufficient.) If you are not part of a team, let us know you are unattached, and also your preference for cases1st through 4th choices. During the second class, Wednesday, 29 August we will provide preliminary team formation and assignment to cases. You have until EOD Friday, 31 August, to either change teams (with approval of both teams) and/or to swap case presentations with another team (again, with approval of both teams) We will try to accommodate your preferences as best we can, given the limited time available, to finalize assignments.

From the Playbook

We will be covering the following cases this term:

5 Sept
7 Sept 10 Sept 24 Sept 1 Oct 8 Oct

Account Pricing for the ABCOR 2000 (I)

Commercializing the Kunst 1600 Vacuum Pump (I, P) Amscat Corporation (I) Convergys Case (I,P) Hercules Fasteners (I) Precise Software Solutions (I,P) P=Presentation/Full Case

I= Insight /Brief Case

Note: All students will complete a Peer Evaluation Form to provide peer assessments of contribution to team assignments.
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Handing in Assignments Please

Email to roliva@psu.edu and glilien@psu.edu with copies to all participants (So that a reply all will get comments and grades to everyone...)

File name: assignment_team.doc (ppt/pdf etc.)

Put your name(s) on/in everything No assembly required put pieces together Accept changes, delete comments and be sure track changes is off when sending
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Marketing Value - Delivery Framework

1. Build Value Understanding

2. Strategy Formulation

Segmentation, Targeting, Positioning

3. Design Customer Value

Business Marketing Practice is essentially the management of a process for understanding, creating and profitably delivering value; following a value-delivery framework such as the one shown here
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4. Communicate and Deliver Value

5. Life-Cycle Management
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Strategic Marketing Plan Components

Following the Value-Delivery Framework Process leads to the outline and format below for a B-to-B marketing plan.
1. Market Situation
Market overview Customer analysis Company & competitive analysis Value chain analysis Key marketing challenges

2. Prepare STP Analysis

Identify macrosegments Define microsegments Select & profile target segment Write positioning

3. Marketing Strategy
Marketing objectives Marketing goals Marketing strategy grid

4. Marketing Decisions
Product offering Value pricing Distribution IMC Sales force Customer care management

5. Implementation
Launch marketing plan Action plans to achieve goals Marketing financials Tracking, risk analysis & contingency plans

6. Resource Needs & Rationale

Thanks to and 2011, Dr. Bob Thomas, Georgetown

ISBM Planning Template

GE: Process and skill areas summary

Identify & group customers by needs and prioritize segments Create & refine products & services to optimize customer & business value

Collect, organize and use information to set strategic directions

Drive GEs leadership in attractive market segments and innovate to expand boundaries

Gold Standard Skills

Launch customer solutions into the market. Organize, execute, and measure against needs

Inform and influence the stakeholders, enhance the reputation and brand of GE, enable growth

Identify and adopt cutting edge tools, processes, and technologies

Quantify opportunities and economic value, align territories and resources, set targets, and pay for performance

POWER Marketing

Market Sensing

Communicate & Deliver

Strategic Planning

Measure & Improve

Provide Superior Value Offering Define Business Model

Target Opportunities

Our POWER process is to become Best in Class compared to peers in B2B marketing in all 7 dimensions above by FY13 Baseline Assessment completed using an in-house built model. On criteria ranging from Aware to Best in Class we score slightly below average in most areas. Actions assigned and reviewed monthly

Drive Kennametal To The Top Of Its Peer Group

2010 Kennametal Inc. l All rights reserved. l Proprietary and Confidential l 26

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SMP 2.0 Framework

11/11/2013 DUPONT INTERNAL USE ONLY

1. Build Value Understanding

1. Build Value Understanding

Understand the language and concept of Value* Understand Industry, Market, Competitive Environment Market Research Develop Understanding of Customer Needs/Value - Customer Research Diagnose Sources/Potential Sources of Value Inside/Outside Firm Value-Chain Analysis Clarify/Focus: Organization Mission, Objectives, Goals
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Identifying Trends

Political Changes

Economic Changes

Opportunity
Want to be electronic hub in living room

Technological
Changes

Social Changes

I skate to where the puck is going to be, not where it has been. Wayne Gretsky
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Identifying Macro Trends (contd)

Political
Political stability Intellectual property protection Trade regulations Tax policies Anti-trust laws Pricing regulations

Economic
Macroeconomic conditions Economic growth rate Unemployment rate Inflation rate Interest rates Sources of growth

Social
Demographics Culture Gender roles Attitudes (health, lifestyles, etc.)

Technological
Recent technological developments Technologys impact on product offering Impact on cost structure Rate of technological diffusion/acceptance Mobile computing Shift to cloud computing Voice technologies that enable you to locate call centers around the world Technology that enables you to locate resources where they are least costly
11/11/2013 DUPONT INTERNAL USE ONLY

Ecological
Environmental consciousness Land use Climate change/pollution

Market Analysis
1. Customer Company Analysis Analysis

4. Company Channel Analysis Analysis

Core Marketing Challenges

2. Competitor Customer Analysis Analysis

Channel/ 3. Value Chain Compe titor Analysis Analysis

The B-to-B Buyer: The Decision Making Unit (DMU)

An influencer map Sponsor Approver contains roles connected by Reccos. Approval relationships Direction/ Reccos. Typical roles are: Counsel Approver Internal External Buyer Influencer Influencer Input Policy Buyer Input Gate-keeper Vendor Requirements Short-list Management Influencer Requirements Sponsor Users Gate-Keeper Procurement User
User Requirements
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Commercial Requirements
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Buying Process Analysis

Customers often follow a buying process, which describes the steps taken by the organization to acquire products or services to meet needs in different buying situations

New Task
Need Information search for options Evaluate options Decide Purchase Use and feedback

Modify Rebuy
Need Evaluate options Decide Purchase Use and feedback

Straight Rebuy
Need Purchase Use and feedback

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2. Strategy Formulation
2. Strategy Formulation

Segmentation
Targeting

Positioning
Synthesis of Segment Strategies
Our Primary Concentration in this course
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The Core of Marketing Strategy: Segmentation, Targeting, Positioning

Market segmentation is a decision process that helps you find a market-based long-term sustainable competitive advantage and make better marketing decisions

By identifying one or more groups of customers whose needs (or response) within-groups are similar and whose needs (or response) between-groups are different . . .

Segment

And who can be targeted and reached efficiently and effectively with a focused marketing program

Target

To build a strong brand position that achieves organizational objectives and goals.
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Position
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Thanks to Dr. Bob Thomas, ISBM Fellow, Georgetown

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Segmentation
Segments are DISCOVERED or DISCERNED, not made Segmentation is intended to let us treat clusters of customers DIFFERENTLY Offering Channel Sales approach

Cost to serve, etc

Conceptualize Market Structure for STP

Think of Markets as Hierarchies of Customers Mass Market Non-Segmentation After studying segmentation of market decide to treat every customer the same Customer Categorization Classify customers into logical categories then target and allocate resources geography, product usage, customer size Segments Classify customers by their needs, problems, attitudes, and behaviors then select targets and allocate resources Segments of One Customize offering to each customer costly, but ultimate marketing!
Thanks to: Dr. Bob Thomas, Georgetown
6/13/11

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3. Design Customer Value

3. Design Customer Value

New Product/Portfolio Management Processes

Value and Pricing Strategy*

Brand Strategy and Management

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3. Individual Offering Decisions

There are several design dimensions that can be considered to address individual product/service gaps/opportunities

Brand Name... Ancillary services & accessories

Packaging...

Warranty...

Offering Decisions

Product Functionality...

Safety, Regulatory, Social... Quality...

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Service/ Experience

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4. Communicate and Deliver Value

4. Communicate and Deliver Value

Integrated Market Communications Channel/Distribution Strategy* Sales Management/Support

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Integrated Strategic Communications Planning Framework:

1.

Conduct Situation Analysis Establish Communication Objectives/Strategies Focus on Target Audience(s) Build Behavioral Timeline Plan

2. 3. 4.

5.

Develop Key Messages Based on Value Propositions/

Prepare Agency Brief

6. 7. 8.

Select and Orchestrate Communications Tactics Build Budget and Execution Plan Measure Results Build Database Learn/Iterate
41 The Behavioral Timeline is a Registered Trademark of Dr. Robert Lauterborn, USC 6/13/11

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5. Life-Cycle Management
5. Life-Cycle Management

Manage Customer Relationships

Measure/Track Performance Process Management/Continuous Improvement Education/Professional Development

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