Business Marketing - Day 11st Session

Course Overview

  • Course: MECN 7051A – Business-to-Business Marketing.
  • Delivery: Online via Ulwazi Canvas.
  • Attendance: Mandatory registration and 80% attendance.
  • Dates: Saturdays, March 8th to April 11th.
  • Times: 08:30 - 17:00 with breaks.
  • Reading Material:
    • Business Marketing: Connecting Strategy, Relationship, and Learning.
    • Course Pack: Selected Articles & Case Studies.
  • Group Work: Essential; marketing plan presentations (15-20 minutes).
  • Assessment:
    • Group Assignments (2): 30% (written).
    • Marketing Plan: 30% (presentation to a panel).
    • Final Exam: 40% (open book, date to be confirmed, 12:00 – 17:00).

Expectations & Introductions

  • Previous marketing experience?
  • Personal expectations from the course?
  • Current employer?
  • Personal interests and hobbies?

Learning Objectives

  • Appreciate the importance of customers.
  • Understand the difference between Business-to-Business (B2B) and Consumer Marketing.
  • Compile a Marketing Plan.
  • Compile and implement an Integrated Marketing Communication (IMC) process.
  • Evaluate marketing efforts and measure their effects on business and return on investments (ROI).
  • Enjoy Marketing.

The Firm's Functions

  • Get the Business: Market and sell products/services.
  • Administer the Business: Support functions like Finance & HR.
  • Do the Business: Operations/Manufacturing, Production/Service.
  • Innovate: Research & Development (“Specialize”).

Key Principles

  • Make “a difference that matters”.
  • Know and communicate your values.
  • Focus on the “right” customer and disregard the rest.
  • Relentlessly increase value while decreasing costs.
  • Get the basics right, balancing customer expectations and new innovations.

Case Study & Course Structure

  • Case Study: Read, Understand, Discuss.
  • Course Structure:
    • Introduction & Housekeeping
    • Business Marketing – B2B
    • The Marketing Concept

Case Study Analysis

  • In-depth examination of cases within a real-world context.

  • Steps:

    1. Read the case study quickly, including related questions.
    2. Read again carefully, considering the questions.
    3. Note key issues related to the questions.
    4. Identify alternative courses of action, using learned theory.
    5. Choose a specific course of action/answer.
    6. Implementation.
    7. Limitations of a case study? Just a static snapshot of a business situation while in real it is a dynamic environment

  • Why Use Case Studies?

    • To simulate the business environment.
    • To analyze and decide on specific actions.

  • The process of arriving at an answer is what is important, not so much the answer.

  • Conflicting opinions don't necessarily mean a right and wrong answer.

  • A record of a business issue including facts, opinions and biased views of the managers-business case study.

  • Decisions must be made with incomplete information, involving risk.

  • Apply business theory to specific business problems.

Case Study - Key Considerations

  • First read should provide an overall feel for the problem and issues.
  • Second read should rearrange information around the key issues.
  • Determine the case's purpose and intended message.
  • Do not accept all information as factual; be aware of assumptions.
  • State own assumptions if information is lacking, ensuring they are reasonable.
  • Separate problems from symptoms (e.g., declining sales).
  • Be open-minded, as there are multiple potential solutions.
  • Evaluate each alternative before recommending a specific one.
  • Chosen solutions must be thoroughly analyzed and aligned with company culture and resources.
  • Implementation: Define what needs to be done, by whom, when, and how.
  • Improper implementation can cause failure, even for excellent strategies.
  • Avoid repeating facts from the case; focus on interpretation for a plan of action.

Situation Analysis Components

  1. Nature of Demand.
  2. Environmental Climate.
  3. Extent of Demand.
  4. Nature of Competition.
  5. Distribution Structure.
  6. Financial Resources of the Firm.
  7. Skills of the Firm.
  8. Product Life Cycle Stage.

Situation Analysis - Guidelines

  • Be complete.
  • Avoid rehashing case facts.
  • Make reasonable assumptions.
  • Don’t confuse symptoms with problems.
  • Don’t confuse opportunity with taking action.
  • Deal with objectives realistically.
  • Recognize alternatives.
  • Don’t be assertive.
  • Discuss the pros and cons of each alternative.
  • Make effective use of financial and quantitative data.
  • Reach a clear decision.
  • Use evidence from situation analysis.

Course Pack Readings

  1. Note to the Student on the Case Method (pages 6 – 8).
  2. Introduction to Marketing Decision Making (pages 9 – 13).
  3. Outline of Case Analysis (pages 14 – 20).

Framework for Case Analysis

  • Problems and Opportunity
  • Situation Analysis
  • Generation and evaluation of alternatives
  • Financial analysis of alternatives
  • Decision

The Marketing Concept

  • Marketing is a process by which companies create value for customers & build strong customer relationships in order to capture value from customer in return
  • Managing profitable (value-adding) customer relationships. Goals:
    1. Attract new customers by promising superior value.
    2. Keep and grow current customers by delivering satisfaction.
    3. Understand what “problems are solved” ( satisfy NEEDS!) and /or “good feelings” ( satisfy WANTS!) in your customers your offering provides

The 4Ps of Marketing

  • Product: Item that satisfies customer's needs/wants (tangible or intangible).
  • Price: Amount customer pays/sacrifice to acquire a product; impacts revenue.
  • Place: Providing customer access and convenience.
  • Promotion: Marketing communication to make the offer known and persuade customers.

Detailed 4Ps

  • Product:
    • The Offering, product variety, how it meets customer needs
    • Product design – features, quality, sizes
    • Product assortment – product range, product mix, product lines
    • Branding – brand name
    • Packaging and labeling
    • Services (complimentary service, after - sales service, service level)
    • Guarantees and warranties
    • Returns
    • Managing products through the life - cycle
  • Price:
    • The cost to customer
    • The cost + profit to seller
    • List price/discounts/payment period/ credit terms
    • Price strategy
    • Price tactics
    • Price-setting
    • Allowances – e.g. rebates for distributors
    • Discounts – for customers
    • Payment terms – credit, payment methods
  • Place:
    • The way product meets customer needs
    • How product gets to customer, where
    • Channel, coverage, assortment, locations, inventory, transport
    • Strategies such as intensive distribution, selective distribution, exclusive distribution
    • Franchising;
    • Market coverage
    • Channel member selection and channel member relationships
    • Assortment
    • Location decisions
    • Inventory
    • Transport, warehousing and logistics
  • Promotion:
    • How product benefits and features are conveyed to the potential buyer – sales promotion
    • Advertising, sales force, public relations, direct marketing
    • Promotional mix - appropriate balance of advertising, PR, direct marketing and sales promotion
    • Message strategy - what is to be communicated
    • Channel/ media strategy - how to reach the target audience
    • Message Frequency - how often to communicate

"Cheat Sheet" for the 4Ps

  • Product + Services = Offering
  • Value-based pricing
  • Learn + Access + Apply = Experience
  • Engage and sustain = Relationship

Types of Marketing

  1. Consumer Marketing (B2C): Public as End-User – Coca Cola.
  2. Retail Marketing: Distribution Mechanism Space Utilisation, Store Layout, Merchandising etc.
  3. Services Marketing: Intangible Products/Services: as you are exposed to them, they are used Legal Services, Medical Services, Consulting Service.
  4. Business Marketing (B2B): Marketing to parties that are not consumers High unit volume but fewer customers.
  5. Global Marketing: Corporations now source, produce and sell across the globe.
  6. Internet or Online Marketing: (1) Tools/Platform/Mechanism used by Amazon, Takealot.com, Shop2Ship etc.

Segmentation & Target Marketing

  • The market is an amorphous mass of customers with similar wants & needs.
  • Segregate them into groups or segments.
  • Deliver value to selected segments by developing specific offerings.
  • Allocate the resources by means of the appropriate marketing strategy.

Customer-Centric Approach

  1. Collect relevant data on customers and potential customers
  2. Construct a customer profile model based on pre-selected criteria (Segmentation)
  3. Customize the offering to meet different customer needs - on a one-to-one basis
  4. Focus on customer retention

Marketing Essentials

  • Relationship orientation
  • IMC (Integrated Marketing Communication)
  • Customer retention through database marketing
  • Must be BOTH: RETAIN customers and ACQUIRE customers
  • ROMI (Return on Marketing Investment)

Key Marketing Concepts

  1. Customer Satisfaction:
    • Is about product’s performance meeting customer expectations
  2. Customer Acquisition:
    • Customer tries a product for the first time – rarely profitable
  3. Customer Retention:
    • Satisfaction can lead to customer retention
  4. Customer Loyalty:
    • The longer the repeat purchase the more profitable (loyalty)
    • The very part of Marketing
      • Increase the volume
      • Increase the range (extra products) of they’re buying i.e. full product offerings
      • Increase Sales

Selling vs. Marketing Concepts

  • Selling Concept:
    • Starting point: Factory
    • Focus: Existing Products
    • Means: Selling and Promoting
    • Ends: Profits through sales volume
  • Marketing Concept:
    • Starting point: Market
    • Focus: Customer Needs
    • Means: Integrated marketing
    • Ends: Profits through customer satisfaction

Market Segmentation

  • What is segmentation?
  • Why segment the market?
  • How can a company divide a market into segments?
  • What are the requirements for effective segmentation?

STP Model

  • Segmentation
    1. Identifying basis for segmenting the market
    2. Develop segment profiles
  • Target Market
    1. Selecting which segment(s) / markets to serve
  • Positioning
    1. Develop positioning for target market (s)
    2. Develop a Marketing Mix for each target market
      • Place
      • Promotion
      • Product
      • Price

Business-to-Business (B2B) Marketing

  • B2B marketing, also known as business-to-business marketing, is simply businesses selling at scale to buyers in other companies.
  • In doing so, B2B marketers must define their target market, target accounts, and ideal buyer; create products and services to meet the needs of those buyers; and correctly position, price, and promote their products and services in the marketplace.
  • Sales drives the business, and in the B2B world, these sales can be large, complex deals that involve multiple buyers, users, and influencers across several departments, including legal, procurement, and others, making the process convoluted and complicated.

B2B Marketing Characteristics

  • Varying buyer-seller relationships.
  • Shorter distribution channels.
  • Greater emphasis on personal selling.
  • Greater web integration.
  • Unique promotional activities.
  • Importance of customer’s customer.
  • Marketing research quality.
  • Critical to use IMC (Integrated Marketing Communication).

B2B vs. B2C Markets

FeatureB2B MarketsB2C Markets
CustomersFewer CustomersMany Customers
Transaction ValueLarger-value TransactionsSmaller-value Transactions
ProductsCustomized ProductsMass-Produced Products
PriceNegotiated PriceFixed Price
Selling ProcessLengthy, ComplexBrief, Retail-focused
Value DeterminationUsage Determines ValueMultiple Factors Influence
Buying Decision-MakersMultipleIndividual
DemandDerived DemandMedia Stimulated Demand

Segmenting for Business Markets - DEEP DIVE

  • Demographic
  • Operating
  • Value
  • Purchasing Approaches
  • Situational Factors
  • Personal Characteristics

Segmentation Variables for Business Markets

  • Demographic
    1. Industry: which industries should we serve?
    2. Campany size: What size companies should we serve?
    3. Location: What geographical areas should we serve?
  • Operating Variables
    1. Technology: What customer technologies should we focus on?
    2. User or nonuser status: Should we serve heavy users, medium users, light users, or nonusers?
    3. Customer capabilities: Should we serve customers needing many or few services?
  • Purchasing Approaches
    1. purchasing-function organization: Should we serve companies with a highly centralized or decentralized purchasing organization?
    2. Power structure: Should we serve companies that are engineering dominated, finacially dominated, and so on?
    3. Nature of existing relationship: Should we serve companies with which we have strong relationships or simply go after the most desirable companies?
    4. General purchasing policies: Should we serve companies that prefer leasing? Service contract? Systems purchases? Sealed bidding?
    5. Purchasing criteria: Should we serve companies that are seeking quality? Service? Price?
  • Situational Factors
    1. Urgency: Should we serve companies that need quick and sudden delivery or service?
    2. Specific application: Should we focus on a certain application of our product rather than all applications?
    3. Size or order: should we focus on large or small orders?
  • Personal Characteristics
    1. Buyer-seller similarity: Should we serve companies whose people and values are similar to ours?
    2. Attitude toward risk: Should we serve risk-taking or risk-avoiding customers?
    3. Loyalty: Should we serve companies that show high loyalty to their suppliers?

Creating Viable Segments (Identifiable, Measurable, Accessible, Substantial)

  • (1) Buying Behaviour
  • (2) Different Needs/Usage Rate
  • (3) Industries/Markets
  • (4) Geographic Location
  • (5) Psychographics
  • (6) Customer Profile

4 Major Categories of Customers

  1. Producers: O.E.M’s (Original Equipment Manufactures)
  2. Government agencies (National Party, Municipalities, etc.)
    • Government organizations include thousands of federal, state, and local buying units; e.g. account for 20 percent of the U.S. gross domestic product, a substantial market.
  3. Institutions (Schools, Hospitals, Churches, Unions, Civic Clubs & NGOs)
  4. Distributors – Resellers (Wholesaler/Retailer)
    • The reseller market consists of retail and wholesale businesses that buy finished goods and resell them for a profit.