Business-to-Business marketing

Transcription

1 Business-to-Business marketing Business marketing strategy Antti Sihvonen

2 Where did (marketing) management and strategy come from? Industrialization Increasing bureaucracy Joint-stock companies Notion of professionalism Increasing complexity Warfare

3 What is strategy?

4 Common ways of defining strategy 1. Strategy is a plan, a how, a means of getting from here to there 2. Strategy is a pattern of actions over time 3. Strategy is position; that is, it reflects decisions to offer particular products or services in particular markets 4. Strategy is perspective, that is, vision and direction (Mintzberg 1994)

5 Why the role of marketing is important? According to Hutt & Speh (2010, p. 116) effective business strategies are responsive to market needs exploit the special competencies of the organization use valid assumptions about environmental trends and competitive behavior à In many cases, B2B marketer has the best knowledge of these!

6 The hierarchy of strategies and marketers role in strategy development CORPORATE STRATEGY BUSINESS-LEVEL STRATEGY FUNCTIONAL STRATEGY Why? Marketers role Defines the businesses in which company competes Assess market attractiveness of the firm, promote a customer orientation within the firm Defines how a firm competes in a given industry Provides a detailed and complete analysis of customers and competitors and the firm s distinctive skills and resources for competing in particular market segment(s) Defines how resources can be used most efficiently and effectively Allocates and coordinates marketing resources and activities to achieve the firm s objective within a specific product market (Webster, 1992)

7 Role of marketing strategy Overall what the company does? CORPORATE STRATEGY What corporate BUSINESS-LEVEL STRATEGY What corporate divisions do? divisions do? Marketing strategy Production strategy FUNCTIONAL STRATEGY Sales strategy Within the broad organizational framework functions compete with each other for resources Each function is directed towards sub-goal attainment

8 Perspectives to strategy

9 Business marketing strategy ( view of Hutt and Speh 2010 ) Segmentation Based on positional advantage STP and 4 P s as the tools to find a position Challenging in B2B as offers are more tailored and there are fewer customers What alternative ways do we have for doing strategy? Targeting Positioning Product Price Place Promotion

10 Ways to approach strategy (Eisenhardt & Sull 2001)

11 Position-based strategy Occupying a distinct position in the market is the basis of competitive advantage New customers will buy from you as they have few choices Ongoing relationships are protected fervently STP & 4P s and Porter s five forces model focus on this Works in a stable market Threat of new entrants Bargaining power of customers Rivalry among existing firms Bargaining power of suppliers Threat of substitute products or services Porter s 5 forces model

12 Position-based strategy in action Microsoft can be thought of as having been a position-based company as: Windows and Office were the standard software for PC computers At some point there were few choices Emphasis on internal compatibility Nowadays they are more diverse than that though

13 Resource-based strategy Controlling strategic resources is the basis of competitive advantage Resource picking accurate value forecasting Key resource have to be: Valuable Rare In-imitable Non-substitutable Use of key strategic resources to create value for customers Works in stable markets

14 Resource-based strategy in action Background in naval highpressure hydraulics Nowadays known for highpressure sprinkler systems The central innovation of the company rose from a customer need matched with the company resource base

15 Strategy as simple rules (Eisenhardt and Sull 2001) Should strategy be complex in the first place? Simple rules are derived from heuristics and should be followed almost religiously This creates consistency and boundaries for action Simple rules emerge from experience, especially mistakes Optimal amount of rules is somewhere between two and seven Competitive advantage rises from the difference that the rules generate

16 What kind of rules are we talking about? (Eisenhardt and Sull 2001)

17 One way to operationalize simple rules: Case Vaisala Proliferating new product search Ideation of new products A set of rules used by top management guided evaluation of product ideas Product evaluation Product evaluation Competition evaluation Market evaluation Product policy evaluation Risk evaluation Commercialization

18 Planning and implementing strategy

19 Planning business marketing strategy There are various ways to plan a marketing strategy in B2B markets Internet is full of different planning processes and plan formats! Regardless of planning process, firms that can meaningfully answer following three questions will have constructed a marketing strategy that is worth pursuing: 1. What do we know? Review past performance Analyse the value of our product offering Analyse possible market segments for our product 2. What do we want to accomplish? Set goals (long-term) and objectives (short-term) à KPIs! Find a segment of particular interest 3. How will we do it? Develop an action plan (Anderson & Narus, 2004)

20 Planning business marketing strategy: Challenges % of companies fall short of the success predicted from new strategies! Most companies underperformance is due to breakdowns between strategy and operations (Kaplan & Norton, 2008, pp. 3) Often breakdown occurs right at the beginning (Companies fail to translate their grand strategy into operation) For instance, what does this mean in action: We are enabling systems of engagement for enterprises. And we are leading by example (One pillar of strategy for one massive B2B company) (Kaplan & Norton, 2008)

21 Planning business marketing strategy: The management system 1) Develop the strategy 2) Translate the strategy 5) Test and adapt the strategy 3) Plan operations 4) Monitor and learn Execute processes and initiatives (Kaplan & Norton, 2008)

22 The management system (1/5): 1. Develop the strategy The management system begins with articulating the company s strategy Agreement of company s purpose (mission), its aspiration of future results (vision) and the internal compass that will guide its actions (values) Strategic analysis Commonly used tool(s): PESTEL, SWOT etc. Strategy formulation (Kaplan & Norton, 2008)

23 The management system (2/5): 2. Translate the strategy Once strategy has been developed, managers need to translate it into objectives and measures (key performance indicators, KPIs!) Mapping strategic objectives and measuring them The chain starts with long-term financial objectives (in corporate level) and then links down to objectives for customer loyalty etc. Commonly used tool(s): Strategy map, Balanced scorecard (Kaplan & Norton, 2008)

24 The management system (3/5): 3. Plan operations The company next develops an operational plan that lays out the actions that will accomplish the strategic objectives Process improvements Companies must enhance the performance of their ongoing processes (speed, quality, cost..) What do we need to measure in process/person level (in align with KPIs of the strategy)? Sales plan Resource capacity plan Budgeting (Kaplan & Norton, 2008)

25 The management system (4/5): 4. Monitor and learn & 5. Test and adapt Three types of meetings form the feedback and learning component of the management system: 1. Operational review (Monitor and learn) What: Dashboards for KPIs Who: Departments/business functions When: Daily, weekly or monthly Focus: Identify and solve short-term issues and promote continuous improvement 2. Strategy review (Monitor and learn) What: Strategy map/balanced scorecard reports Who: Senior management When: Monthly Focus: Implement strategy and fine-tuning (Kaplan & Norton, 2008)

26 The management system (5/5): 4. Monitor and learn & 5. Test and adapt Three types of meetings form the feedback and learning component of the management system: 3. Strategy testing and adapting What: Analytic studies for strategy, external and competitive analyses Who: Senior management, business unit heads When: Annually or quarterly Focus: Test and adapt new strategies, incrementally improve or transform strategy (if needed), authorize spending for strategic initiatives (Kaplan & Norton, 2008)

27 Strategy and business models

28 Strategy and business model interface Strategy does not operate in a vacuum Business model Business model defines the company as a system Strategy defines how this system faces the market Strategy therefore has to be derived from/matched with the business model Strategy

29 Business model concept (1/5): Overview Customer benefits Customer interface Fulfillment and support Information and insight Relationship dynamics Pricing structure Configurations Core strategy Business mission Product/Market scope Basis of differentiation Company boundaries Strategic resources Core competencies Strategic assets Core processes Value network Suppliers Partners Coalitions Efficient / Unique / Fit / Profit boosters (Hamel, 2000)

30 Business model concept (2/5): Customer interface Links the core strategy of the company to the customer interface 1. Fulfillment and support Channels used to reach customers Level of service support provided 2. Information and insight Creation and use of market information 3. Relationship dynamics Nature of interaction with customers 4. Pricing structure What kind of pricing choices can be implemented (Hamel, 2000)

31 Business model concept (3/5): Core strategy Determines how the firm chooses to compete 1. Business mission Defines what a company does and how it is done 2. Product/market scope Defines the domain in which the firm competes (segment, channel, technology etc.) 3. Basis for differentiation What the company does differently in comparison to competitors and how it creates value (Hamel, 2000)

32 Business model concept (4/5): Strategic resources Determines the central assets of the company 1. Core competencies A set of skills that deliver value to customers 2. Strategic assets Tangible assets that enable exercising competencies 3. Core processes The processes that enable operationalizing competencies and assets into tangible outputs (Hamel, 2000)

33 Business model concept (5/5): Value network Complements and extends the immediate competence and resource base 1. What other networks actors enable us to do? Who do we collaborate with and what do they bring to the table 2. What other network actors could enable us to do in the future? Who could we collaborate with and what could they bring to the table (Hamel, 2000)

34 3 things to remember after this class 1. What is strategy and what is the role of marketing in it 2. Understanding alternative perspectives to strategy 3. Understanding planning and implementation of strategy

35 Thank you Any questions?