Business Marketing Management: B2B

Transcription

1 Business Marketing Management: B2B lie MICHAEL D. HUTT Arizona State University THOMAS W. SPEH Miami University * rf SOUTH-WESTERN t% CENGAGE Learning- Australia Brazil Japan Korea Mexico Singapore Spain United Kingdom United States

2 CONTENTS Preface VII PARTI i 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. Grainger, Inc. 9 Business Markets versus Consumer-Goods Markets 10 What Makes a Marketing Leader? 11 Creating the Customer Value Proposition 12 Characteristics of Business Markets 14 Business and Consumer Marketing: A Contrast 15 Smucker: A Consumer and Business Marketer 16 Distinguishing Characteristics 17 A Relationship Emphasis 17 The Supply Chain 18 Supply Chain Management 19 Managing Relationships in the Supply Chain 20 Commercial Enterprises as Consumers 20 Classifying Goods for the Business Market 22 Entering Goods i 22 Foundation Goods 22 Facilitating Goods 24 Business Marketing Strategy 25 Illustration: Manufactured Materials and Parts 25 Illustration: Installations 26 Illustration: Supplies 26 A Look Ahead 27

3 Summary 28 Discussion Questions 29 Internet Exercises *! 30 Case: The Middleby Corporation 31 Discussion Questions 32 Chapter 2 Organizational Buying Behavior 35 The Organizational Buying Process 36 The Search Process 37 New Task 38 Straight Rebuy 39 Modified Rebuy 41 Environmental Forces 42 Economic Influences 43 Technological Influences 43 Organizational Forces 44 Growing Influence of Purchasing 44 Strategic Priorities in Procurement 44 Procurement Manager's Toolkit 46 Total Cost of Ownership (TCO) 46 INSIDE BUSINESS MARKETING: Use TCO to Inform Next Car Purchase 46 ; Strategy Response: Develop Value-Based Sales Tools 47 Segmenting Purchase Categories 47 E-Procurement 49 Reverse Auctions 49 Organizational Positioning of Purchasing 50 Strategy Response: Key Account Management, 50 ETHICAL BUSINESS MARKETING: Gift Giving: "Buy Me These Boots and You'll Get My Business" 51 Group Forces ' 52 The Buying Center 52_ INSIDE BUSINESS MARKETING: Innovate and Win with BMW 54 Buying Center Influence 54 Individual Forces 56 Differing Evaluative Criteria 57 Information Processing 57 Risk-Reduction Strategies 58

4 xix Summary 59 Discussion Questions 60 Internet Exercises \ 61 Case: Sealed Air Corporation: Delivering Packaging Solutions 62 Discussion Questions 63 Chapter 3 Customer Relationship Management Strategies for Business Markets 64 Relationship Marketing 65 Types of Relationships 66 Value-Adding Exchanges 67 Nature of Relationships 67 Strategic Choices 67 Managing Buyer-Seller Relationships 68 Transactional Exchange 68 Collaborative Exchange 68 Switching Costs 69 Strategy Guidelines 69 Measuring Customer Profitability 71 Activity-Based Costing 71 Unlocking Customer Profitability 71 The Profitable Few 72 Managing High- and Low-Cost-to-Serve Customers 73 INSIDE BUSINESS MARKETING: Loyalty and Customer Profitability 75 Managing Unprofitable Customers 75 Firing Customers 75 Customer Relationship Management 76 Acquiring the Right Customers 78 Crafting the Right Value Proposition 79 Instituting the Best Processes 81 Motivating Employees 82 Learning to Retain Customers 1 83 Relationship Marketing Success 84 Drivers of Relationship Marketing Effectiveness 84 Relationship Marketing (RM) Programs 86 Financial Impact of RM Programs 87 Targeting RM Programs 87

5 Summary 88 Discussion Questions 89 Internet Exercises 90 Case: IBM Challenge: How to Serve a Diverse Mix of Demanding Customers 91 Chapter 4 Segmenting the Business Market and Estimating Segment Demand 95 Business Market Segmentation Requirements and Benefits 96 Requirements 97 Benefits 97 INSIDE BUSINESS MARKETING: How to See What's Next 98 Bases for Segmenting Business Markets 99 INSIDE BUSINESS MARKETING: Balancing Risk and Return in a Customer Portfolio 100 Macrolevel Bases 100 Microlevel Bases 103 Illustration: Microsegmentation 106 The Segmentation Process 107 Choosing Market Segments 107 Isolating Market Segment Profitability 108 Implementing a Segmentation Strategy 109 Estimating Segment Demand 109 The Role of the Demand Estimation 109 Methods of Forecasting Demand 111 Qualitative Techniques 111 Quantitative Techniques 113 CPFR: A New Collaborative Approach to Estimating Demand 115 Combining Several Forecasting Techniques 115 Summary ' 116 Discussion Questions 116 Internet Exercises. 117 Case: Federated Insurance: Targeting Small Businesses 118 Cultivating Business Relationships 118 Discussion Questions 119

6 xxi Chapter 5 Business Marketing Planning: Strategic Perspectives 123 Marketing's Strategic Role 124 The Hierarchy of Strategies 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 129 The Components of a Business Model 130 Customer Interface 131 Core Strategy 131 B2B TOP PERFORMERS: Winning with a New Business Model at Dow Corning 132 Strategic Resources 133 The Value Network 133 Strategic Positioning 134 Strategic Positioning Illustrated 135 Building the Strategy Plan 136 The Balanced Scorecard 137 Financial Perspective 137 Customer Perspective 139 Internal Business Process Perspective 140 Strategy Map 142 Summary 144 Discussion Questions 145 Internet Exercises 146 Case: Intuit's Solutions for Small and Medium-Sized Businesses 147 Discussion Questions 147 Chapter 6 Business Marketing Strategies for Global Markets 148 Capturing Global Advantage 149 Market Access 151 Resource Access 152 INSIDE BUSINESS MARKETING: How Offshore Outsourcing Affects Customer Satisfaction and a Company's Stock Price! 154

7 xxii Contents Local Adaptation 154 Network Coordination 155 INSIDE BUSINESS MARKETING: Made in America Again 156 Global Market Entry Options 156 Exporting 156 Contracting 158 Strategic Global Alliances (SGA) 159 Joint Ventures 160 Choosing a Mode of Entry ; ' 161 Multi-domestic versus Global Strategies 162 Source of Advantage: Multi-domestic versus Global 162 Types of International Strategy 163 A Strategic Framework 165 Global Strategy 166 Build on a Unique Competitive Position 166 Emphasize a Consistent Positioning Strategy 166 Establish a Clear Home Base for Each Distinct Business 166 Leverage Product-Line Home Bases at Different Locations 167 Disperse Activities to Extend Home-Base Advantages 167 Coordinate and Integrate Dispersed Activities ' 168 Summary 168 Discussion Questions 169 Internet Exercise 170, Case: Schwinn: Could the Story Have Been Different? 171 Alternative Reality One: Aim High 171 Alternative Reality Two: If You Can't Beat Them, Join Them 171 Discussion Questions 172 Chapter 7 Managing Products for Business Markets 173 Building a Strong B2B Brand J 174 Brand-Building Steps 175 Brand Strategy Guidelines 177 Profiling a Strong Brand: IBM 178 Product Quality and Customer Value 179 Meaning of Quality, 180

8 xxiii Sustainability: Strategic Imperative. 180 GE's Ecomagination Marketing Campaign 182 Meaning of Customer Value B2B TOP PERFORMERS: Green Is Green 183 >: Product Support Strategy: The Service Connection 185 Product Policy 185 Types of Product Lines Defined 186 Defining the Product Market 186 B2B TOP PERFORMERS: BASF: Using Services to Build a Strong Brand 188 Planning Industrial Product Strategy 188 Product Positioning 189 The Process 189 Isolating Strategy Opportunities 190 Product Positioning Illustrated 190 the Technology Adoption Life Cycle 191 Types of Technology Customers 191 Strategies for the Technology Adoption Life Cycle 192 INSIDE BUSINESS MARKETING: The Gorilla Advantage in High-Tech Markets ' 193 The Bowling Alley 193 The Tornado 194 Main Street 195 Summary 196 Discussion Questions 195? Internet Exercise 197 Case: Hidden Inside: International Flavors & Fragrances, Inc. 198 Discussion Questions 198 Chapter 8 Managing Innovation and New Industrial Product Development 199, The Management of Innovation 200 Induced Strategic Behavior? 201 Autonomous Strategic Behavior 201 Product Championing and the Informal Network 203 Conditions Supporting Corporate Entrepreneurship 204 Managing Technology 204 Classifying Development Projects 205 A Product-Family Focus 206 The Disruptive Innovation Model

9 xxiv Contents INSIDE BUSINESS MARKETING: Disrupters Pull Different Innovation Levers 208 Illustration: A New-Market Disruption 209 Innovation Winners in High-Technology Markets 210 The New-Product-Development Process 212 What Drives a Firm's New Product Performance? 212 Anticipating Competitive Reactions 214 Sources of New Product Ideas 214 B2B TOP PERFORMERS: Inviting New Product Suggestions 215 Determinants of New Product Performance and Timeliness 217 The Determinants of Success 217 Fast-Paced Product Development 219 Summary 220 Discussion Questions 221 Internet Exercise 222 Case: Vscan: GE Healthcare's Pocket-Sized Imaging Device 223 Discussion Questions 223 Chapter 9 Managing Services for Business ^^, Markets 224 Understanding the Full Customer Experience 225 The Customer Experience Life Cycle 225 Applying the Customer Experience Map 226 Customer Experience Management t 226 A Solution-Centered Perspective 228 Delivering Effective Customer Solutions 229 The Supplier's Role 230 The Customer's Role 231 B2B TOP PERFORMERS: Smart Customer Solutions from IBM 232 Choose Customers Wisely 232 Benefits of Solution Marketing 233 Business Service Marketing: Special Challenges 233 Services Are Different 234 Tangible or Intangible? 235 Simultaneous Production and Consumption 235 Service Variability 236 Service Perishability 236

10 xxv INSIDE BUSINESS MARKETING: Do Service Transition Strategies Pay Off? 237 Nonownership 237 Service Quality \ 238 Dimensions of Service Quality 238 Customer Satisfaction and Loyalty 239 Service Recovery 239 Zero Defections 240 Return on Quality 240 Service Packages 241 Customer-Benefit Concept 241 Service Concept 241 Service Offer 242 Service Delivery System 243 Service Personnel 243 Hybrid Offerings 243 Unique Resources Manufacturing Firms Can Leverage 244 Distinctive Capabilities for Launching Hybrid Offerings 245 Classifying Services for Hybrid Offerings 246 Summary ^ 249 Discussion Questions 249 Internet Exercises 250 Case: Paychex, Inc. 251 Discussion Questions ^ 251 Chapter 10 Managing Business Marketing Channels 252 The Business Marketing Channel 253 Direct Channels 254 Indirect Channels 255 Integrated Multichannel Models 255 Participants in the Business Marketing Channel 258 Distributors 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 262 Channel Design 263 Step 1: Define Customer Segments 264 Step 2: Identify Customers' Channel Needs by Segment 265

11 xxvi Contents Step 3: Assess the Firm's Channel Capabilities 266 Step 4: Benchmark to Competitors 266 Step 5: Create Channel Solutions for\customers' Latent Needs 266 Step 6: Evaluate and Select Channel Options 266 Crucial Points in Channel Transformation 267 Channel Administration 267 Selection of Channel Members 268 Motivating Channel Members 268 Summary _ 270 Discussion Questions 271 Internet Exercises 271 Case: Snap-on, Inc.: A Unique Go-to-Market Strategy 272 Discussion Questions 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 278 The Financial Benefits Perspective 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 281 Logistics as the Critical Element in Supply Chain Management 282 Distinguishing Between Logistics and Supply Chain Management 282 Managing Flows 282 The Strategic Role of Logistics 283 Sales-Marketing-Logistics Integration 283 Just-in-Time Systems 284 Total-Cost Approach? 285 Calculating Logistics Costs 286 Activity-Based Costing 286 Total Cost of Ownership 286 Business-to-Business Logistical Service 287 Logistics Service Impacts on the Customer 288 Determining the Level of Service 288

12 xxvii Logistics Impacts on Other Supply Chain Participants 289 Business-to-Business Logistical Management 289 Logistical Facilities ^ 289 Transportation 290 Inventory Management 292 INSIDE BUSINESS MARKETING: The Profit Impact of Inventory Management 293 Third-Party Logistics 293 Summary 294 Discussion Questions 295 Internet Exercises 296 Case: Supply Chain Issues at Optimal Medical Parts Company 297 Discussion Questions 298 Chapter 12 Pricing Strategies for Business Markets 299 The Pricing Process in Business Markets 300 Price Objectives " 301 Demand Determinants 302 Value-Based Pricing Illustrated 305 Cost Determinants 307 Competition 309 Pricing across the Product Life Cycle 311 Pricing New Products 311 INSIDE BUSINESS MARKETING: Understanding the Economic Value o'f New Products ' 313 Legal Considerations 313 Responding to Price Attacks by Competitors 314 Evaluating a Competitive Threat 314 Understanding the Rules of Competitive Strategy 316 Competitive Bidding 317 Closed Bidding 317 Open Bidding j 318 Strategies for Competitive Bidding 318 Summary 319 Discussion Questions 320 Internet Exercise 321 Case: Free-Product Competitors Challenge Microsoft 322 Discussion Questions 322

13 xxviii Contents Chapter 13 Business Marketing Communications: Advertising and Sales Promotion 323 Business-to-Business (B2B) Social Media 325 Dell's Social Media Brand 325 The Customer Decision Journey 326 Charting CDJ 326 The Role of Advertising 328 Integrated Communication Programs 328 Enhancing Sales Effectiveness T 328 Increased Sales Efficiency 328 Creating Awareness 329 What Business-to-Business Advertising Cannot Do 329 Managing Business-to-Business Advertising 329 Defining Advertising Objectives 330. Written Objectives 330 Determining Advertising Expenditures 331 Developing the Advertising Message 333 Selecting Advertising Media for Business Markets 334 B2B TOP PERFORMERS: Search Engine Marketing at Google: The Right Message, the Right Time 336 Direct Marketing Tools 337 Measuring Advertising Effectiveness 339 Measuring Impacts on the Purchase Decision 339 The Measurement Program 340 Managing Trade Show Strategy 341 Trade Shows: Strategy Benefits 341 Trade-Show Investment Returns " 342 Planning Trade-Show Strategy 343 Trade-Show Objectives 343 Selecting the Shows 343 Managing the Trade-Show Exhibit 344 Evaluating Trade-Show Performance J 344 Summary 345 Discussion Questions 346 Internet Exercise 347 Case: Johnson Controls, Inc. 348 Discussion Questions 348

14 xxix Chapter 14 Business Marketing Communications: Managing the Personal Selling Function Managing the Sales Force 351 Organizing the Personal Selling Effort 351 Key Account Management 352 National Account Success 355 B2B TOP PERFORMERS: Using Customized Strategies to Outmaneuver Rivals 356 Isolating the Account Management Process 356 Account Management Success 357 Sales Administration 360 Recruitment and Selection of Salespersons 360 Training 360 Supervision and Motivation 361 Evaluation and Control 364 Deployment Analysis: A Strategic Approach 366 Territory Sales Response 366 Territory Alignment 367 Developing the Customer Database 368 Sales Resource Opportunity Grid 368 Isolating High-Opportunity Customers 369 GE's Sales Force Effectiveness Initiative 370 Summary 371 r Discussion Questions ' 371 Internet Exercises 372 Case: Account Management at YRC Worldwide: Choosing Customers Wisely 373 Discussion Question 373 EVALUATING BUSINESS MARKETING STRATEGY tand»!ere RMArfeE Chapter 15 Marketing Performance Measurement 377 A Strategy Map: Portrait of an Integrated Plan 379 Developing the Strategy: The Process 380 Maps: A Tool for Strategy Making 383 Marketing Strategy: Allocating Resources 383 Guiding Strategy Formulation 384

15 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 Profitability Control Implementation of Business Marketing Strategy The Strategy-Implementation Fit Implementation Skills The Marketing Strategy Center: An Implementation Guide Looking Back Summary Discussion Questions Internet Exercises Case: Danaher Corporation Discussion Question r Name Index Subject Index