Business-to-Business Marketing Introduction

Transcription

1 Business-to-Business Marketing Introduction Antti Sihvonen

2 Agenda 1. Introduction and practicalities 2. The case exercise 3. Main characteristics of B2B markets

3 Introduction and practicalities

4 Course objective The course provides students insight into the unique features of understanding, creating and delivering value in business-tobusiness markets. Students are able to use frameworks and conceptual tools when analyzing business market opportunities and organizational buying behavior as well as formulating business marketing strategy. Students can apply all this knowledge to analyze and solve practical management problems in businessto-business environment. In essence, the course should give you tools to understand and analyze business-to-business markets and the activities companies do in them

5 Course content 1. Description of the special characteristics of business-to-business marketing and organizational buying behavior. 2. Analyses of competitive realities and opportunities related to the global marketplace; establishment and management of business relationships & networks 3. formulation of business marketing strategy (e.g. managing market offerings, supply chains, marketing communications, sales management, pricing decisions). 4. Theoretical frameworks, models and conceptual tools are applied in group exercise where students reflect real-life business-tobusiness case and design business marketing strategy for the case company.

6 Course reading We will be using a book in the course: Hutt, Michael D. & Speh, Thomas W (2013) Business Marketing Management: B2B (2013, 11 ed.) ISBN , alternatively ISBN (2010, 10 ed.) The book will be supplemented by a collection of academic journal articles The articles will be uploaded to the course website in.pdf-format When articles are assigned to a class, they will be discussed during the lecture

7 Detailed schedule Session Date 1 Mon Wed Mon Topic Readings Introduction & main Book chapter 1 characteristics of B2B marketing Organizational buying behavior Book chapters 2, 3 Book chapter 4 Business relationships & CRM Fiocca, R (1982) Account portfolio analysis for strategy development Industrial Marketing Management, 11, pp Wed Business networks Konthandaraman, P., & Wilson, D. T. (2001) The future of competition: Value-creating networks. Industrial Marketing Management, 30, pp Möller, K., Rajala, A. & Svahn, S (2005) Strategic business nets their type and management Journal of Business Research, 58, Book chapters 5, 6 5 Mon Business marketing strategy 6 Wed Customer value & product development in B2B 7 Mon Sales and marketing Book chapters 13, 14 communications in B2B markets Eisenhardt, K. M. & Sull, D. N. (2001) Strategy as simple rules Harvard Business Review, January, Book chapters 7, 8, 9 Sparring session for the course exercise Business marketing in practice Mon Guest lecture Contemporary B2B marketing Wed Book chapters 15 and marketing performance Mon Exercise presentations Wed Course wrap-up Wed 30.9.

8 Evaluation and grading Total 100 points Compulsory group exercise (50%) Examination (50%): Literature (course book), lectures, assigned articles and other material by the lecturer Student has to get at least 40% of points of each of the areas to pass the course Return your groups case report in the presentation session (12.10.) It is evaluated that on average this course consumes 162 hours of students time (this is the amount of work required) Classroom hours 24 h Class preparation 56 h Assignments 76 h Exam 4 h

9 Course material and homepage All the information can be found from the course homepage Lecture slides will be updated to the course homepage before the lectures The course homepage can be found from the MyCourses page a

10 Lectures Each lecture covers a certain topic area I try to leave approx minutes to the end of each lecture for questions, discussion and sorting out practical matters If we have assigned articles, we will discuss them in class We also have one sparring session (30.9) when we can discuss your group exercises so that you get midway feedback The case presentation session will be organized as a poster session

11 The case exercise

12 Learning objectives 1. The student can grasp the operating environment of a B2B marketing company and identify specific industry/company-related needs for B2B services. 2. The student learns how to use information relevant for B2B marketing by using primary data, and learns how to justify one s analysis based on market insights 3. The student is able to make recommendations on how to pursue opportunities in B2B markets

13 Background Credit/debit card payments are an ever increasing service There are 6.2 million EMV cards in Finland Credit/debit cards require credit card readers for transactions There are approximately credit card readers in Finland There are approximately EMV chip readers in Finland It is up to the seller to decide which card reader to use for transactions A number of companies such as Point and Nets dominate the Finnish market

14 This is what we will focus on

15 Case exercise task (50% of the grade) 1. Identify desirable customer segments for izettle from the provided market data 2. Evaluate segments and choose which segment to pursue 3. Develop a marketing strategy to izettle for pursuing the segment 4. How would you operationalize the strategy? 1. What marketing channels should the company employ and why? 2. How should the company communicate its product offering to the selected segment? 3. How could the success of these activities be measured? 4. How would you operationalize these activities through a 12 month program (timing and sequencing)

16 Material 1/2: Description of the main player in the market in comparison to izettle NETS Base price for a unit is 53,00 EUR/month Initiation cost 85 EUR 36 month fixed contract Nets takes a 0.60% cut from each transaction izettle Base price for a unit is 59,90 EUR No monthly fees or charges izettle takes % cut from each transaction: No need to consider other competitors, but threat the market as duopoly!

17 Material 2/2: Market data from Orbis database Provided as a separate file in the MyCourses page It is to be used as a starting point for analyses (questions 1 and 2) You may decide yourself how to utilize the data Description of data: All companies that you could possibly contact (no need to include further companies in your analyses) Finnish companies (annual turnover between EUR and EUR) Information given (if available): City, sector, no. of employees, no. of recorded branch locations, operating revenue, profit margin, ROE

18 Case format 1/2: Written report 40/50 points Maximum 10+1 pages font 12, line spacing 1,15 1 page executive summary + 10 pages of text (references and cover page excluded) Structure: 1. Segmentation criteria and segmentation process 2. Analysis of segments and decision on which segment to pursue 3. Marketing strategy for the chosen segment 4. Operationalization of marketing strategy Remember to justify your decisions, f. ex. 1) description, 2) analysis, 3) suggestions, 4) grounding

19 Case format 2/2: Poster session 10/50 points Make a poster of your case solution by using PowerPoint Max. 8 slides Everyone will present their poster in the poster session on 12th October Everyone will also have a possibility to see what other groups have done Posters will be graded on the basis of how you present and justify your decisions during the session

20 Instructions and grading The assignment is to be done in groups of 5 Bring a printed version of the exercise to the presentation session on October 12th The groups are responsible for fair and balanced work and task division. Should any problems arise, please contact the course teachers

21 Student group formation 5 students per group Please do not form homogenic groups As a group: Select your project manager and name for your group Exchange contact details Develop overall project plan Create flexible timetable and mark the milestones Please form the groups now (10 min) and send the information to antti.sihvonen@aalto.fi by the end of the day!

22 Central characteristics of B2B markets

23 Defining business-to-business marketing Business Markets are firms, institutions, or governments that acquire goods and services either for their own use, to incorporate into the products or services that they produce, or for resale along with other products and services to other firms, institutions, or governments. Anderson & Narus 2004, p. 4

24 Defining business-to-business marketing marketing products or services to other companies, government bodies, institutions and other organizations for incorporation (e.g. ingredient materials, components) for consumption (e.g. process materials, office supplies, consulting services) for use (e.g. installations of equipment) for resale

25 Importance of B2B markets Business markets are big the volume of transactions in the industrial market is bigger than that of the consumer markets over 50% of world economic activity is exchanges between organisations

26 Example: Chain of suppliers in the car industry Upstream suppliers (suppliers of manufactured materials and parts such as sheet metal or plastic resin) Direct suppliers (purchase input used in producing power-steering systems or car seats) Auto manufacturer (Purchase input used in creating automobiles Business markets Auto buyers (Purchase automobiles) Consumer markets

27 Characteristics of B2B markets Business markets vs. consumer markets 1. Derived demand 2. Fluctuating demand 3. Stimulating demand 4. Fewer, larger buyers 5. Professional purchasing 6. Multiple buying influences 7. Multiple sales calls 8. Direct purchasing 9. Close supplier-customer-relationships

28 Demand in B2B The demand for industrial products is derived from the ultimate demand for consumer products! Due to derived demand.. B2B marketer must monitor also demand patterns and changing buying preferences in the consumer market! (Fluctuating demand) In some cases a marketing program of a B2B company must reach the ultimate consumer directly (Stimulating demand)

29 Classification of B2B buyers 1/2 Types of business customers 1. Original Equipment Manufacturers (OEM) Companies are buying the product or service to include it into its own final product sold then in the business or ultimate consumer market 2. Users Companies are buying and using products and services to support their own business operations. These products and services do not become a part of the product, but instead help to produce it

30 Classification of B2B buyers 2/2 Types of business customers 3. Dealers and distributors Companies that buy products for resale (basically in the same form) to users and OEMs. The distributor accumulates, stores, and sells a large assortment of goods to industrial users, typically also taking the title to the goods purchased 4. Governmental Agencies and Institutions hospitals, nursing homes, schools etc. great purchasing power the buying process regulated by the law.

31 3 things to remember after this class 1. The basic similarities and differences between B2B and B2C markets The list of 9 2. Characteristics of demand in B2B markets - Derived, fluctuating and stimulating 3. Fundamental differences between four customer types in B2B markets: 1) OEM, 2) Users, 3) Dealers & distributors and 4) Governmental agencies & institutions

32 Thank you Any questions?