MANAGING PROGRAMS

AND CUSTOMERS

BUSINESS-TO-BUSINESS
MARKETING MANAGEMENT

BUSINESS-TO-BUSINESS MARKETING
Senior Assist. Prof. Vanya Kraleva
Learning Outcomes
 To explain the processes involved in planning
 To describe ways of obtaining feedback
 To describe some of the problems of implementing
marketing plans
 To describe ways of developing control systems for
marketing plans
 To understand the system of marketing metrics.
The Process of Management

• Planning establishes the

direction of the organisation
• Organising divides activities Planning Organising
among work groups, allocating
the people, technological,
physical, financial and
information services required to
achieve tasks
• Leading motivates employees Control Leading
to achieve organisational goals
• Control measures and
evaluates organizational
performances
Defining the Scope of Marketing
Management
 Management is the ability to use organizational
resources to achieve organizational goals through the
functions of planning, organising, leading and control.
 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.
 Marketing management is the art and science of
choosing target markets and getting, keeping, and
growing customers through creating, delivering, and
communicating superior customer value.
The Marketing Management Tasks
 Developing and implementing marketing strategies and
plans.
 Capturing marketing insights.
 Connecting with customers.
 Building strong brands.
 Creating value.
 Taking critical marketing decisions related to pricing.
 Delivering value based on products and services.
 Communicating value.
 Managing the marketing organization for long term
success.
Becoming a Vigilant Organization
• What have been our past blind spots?
• What instructive analogies do other industries offer?
Learning • Who in the industry is skilled to picking up weak signals and acting on
from the past them?

• What important signals are we rationalizing away?

• What are our mavericks, outliers, complainers and defectors telling us?
Evaluating • What are our peripheral customers and competitors really thinking?
the present

• What future surprises could really hurt or help us?

• What emerging technologies could change the game?
Envisioning • Is there an unthinkable scenario that might disrupt our business?
the future
The Holistic Marketing Philosophy
• Internal marketing – Marketing
between all the departments in
an organization
• Relationship marketing –
Building a better relationship
with customers, internal as well
as end customers is beneficial
for holistic marketing.
• Performance marketing –
Driving the sales and revenue
growth of an organization
holistically by reducing costs
and increasing sales.
• Integrated marketing –
Products, services and
marketing should work hand in
hand towards the growth of the
organization.
Marketing Planning

Key strategic planning areas:

• Managing a company’s business as an investment portfolio
• Assessing the market’s growth rate and the company’s position
in that market
• Establishing a strategy

Strategic plans Tactical plans

 Target marketing • Product features
decisions • Promotion
 Value proposition • Merchandising
 Analysis of • Pricing
marketing • Sales channels
opportunities • Service
The Strategic Planning, Implementation,
and Control Processes
Corporate Headquarters’ Planning
Activities

Define the Establish strategic Assign resources to Assess growth

corporate mission business units (SBUs) each SBU opportunities
• What is our • SBUs can be • The methods of • Planning new
business? planned portfolio planning businesses;
• Who is the separately from assess the • Downsizing or
customer? the rest of the potential of a • Terminating older
• What is of value company; business. businesses.
to the customer? • SBUs have their
• What will our own set of
business be? competitors;
• What should our • SBUs have a
business be? manager
responsible for
strategic planning
and profit.
Business Unit Strategic Planning

Achieve How to get Activities? Who, where,

what? there? when, how?
The Marketing Plan

Content of the
Marketing Plan Evaluating the
• Executive summary Marketing Plan
• Table of contents • Is the plan simple?
• Situation analysis • Is the plan specific?
• Marketing strategy • Is the plan realistic?
• Financial projections • Is the plan complete?
• Implementation
controls
Marketing Metrics for Marketing
Decisions
Source: www.cmosurvey.org
Source: www.cmosurvey.org
The Need for Marketing Metrics

 Factors for increased importance of measuring marketing

performance:
 Corporate trend for greater accountability of value added
 Discontent with traditional metrics
 Availability of ICT and internet infrastructure
 Identification of new drivers of customer and firm value
 The role of marketing metrics
 To assess the efficiency and effectiveness of marketing activities
 To justify spending valuable firm resources on marketing
 To facilitate the identification of drivers of future customer and
firm value
Source: www.cmosurvey.org
“Ideal Marketing Metrics”
 Marketing metrics should be
 financial

 forward-looking

 able to measure both short-term and long-term effects

 capable of transforming data at the macro level into
micro level data
 linked in causal chains

 relative to competitors’ metrics

 able to deliver objective data

Some Marketing Metrics
External
 Awareness
 Market share
 Relative price
 Number of complaints
 Customer satisfaction
 Customer retention
 Total number of customers
 Loyalty, etc.
Internal
 Awareness of goals
 Commitment to goals
 Active support
 Resource adequacy
 Staffing levels
 Desire to learn
 Willingness to change
 Freedom to fail
 Autonomy, etc.
The Chain of
Marketing
Productivity

*EVA – Economic Value Added

**MVA – Market Value Added
Tobin’s Q Ratio

 Tobin’s Q - the market value of a company divided by the

replacement value of the firm's assets.

 An undervalued company, one with a ratio of less than one, would

be attractive to corporate traiders or potential purchasers, as
they may want to purchase the firm instead of creating a similar
company. This would likely result in increased interest in the
company, which would increase its stock price, which would in turn
increase its Tobin's Q ratio.

 As for overvalued companies, those with a ratio higher than one,

they may see increased competition. A ratio higher than one
indicates that a firm is earning a rate higher than its replacement
cost, which would cause individuals or other companies to create
similar types of businesses to capture some of the profits. This
would lower the existing firm's market shares, reduce its market
price and cause its Tobin's Q ratio to fall.
Measuring Marketing Performance and
Productivity
Counting–based Accounting– Outcome metrics
metrics based metrics
• Number of • Return on • Shareholder
complaints investment value
• Sales (ROI) • Customer
• Number of • Return on lifetime value
customers assets (ROA) (CLV or CLTV)
• Number of • Net present • Customer
orders, etc. value (NPV) referral value
(CRV)
• Customer
value added
(CVA)
• Brand equity
• Balanced
scorecard
Counting-based metrics
Accounting-based metrics
 Return on investments (ROI)

𝑛𝑒𝑡 𝑖𝑛𝑐𝑜𝑚𝑒 𝑏𝑒𝑓𝑜𝑟𝑒 𝑡𝑎𝑥

𝑅𝑂𝐼 % = x 100
𝑖𝑛𝑣𝑒𝑠𝑡𝑚𝑒𝑛𝑡

 Return on assets (ROA)

𝑛𝑒𝑡 𝑖𝑛𝑐𝑜𝑚𝑒 𝑏𝑒𝑓𝑜𝑟𝑒 𝑡𝑎𝑥
𝑅𝑂𝐴 % = x 100
𝑡𝑜𝑡𝑎𝑙 𝑎𝑠𝑠𝑒𝑡𝑠

 Net present value (NPV)

𝑛
𝑛𝑒𝑡 𝑐𝑎𝑠ℎ 𝑓𝑙𝑜𝑤
𝑁𝑃𝑉 =
(1 − 𝑑𝑖𝑠𝑐𝑜𝑢𝑛𝑡 𝑟𝑎𝑡𝑒)𝑡
𝑡=0
Shareholder Value

 Contributions of a shareholder approach to

marketing:
 Helps marketing properly define its objective
 Provides the language for integrating marketing more
effectively with the other functions of the company
 Allows marketing to demonstrate the importance of its
assets
 Protects marketing budgets from profit-maximisation
policies
 Puts marketing in a pivotal role in the strategy
formulation process

Shareholder value = company value – debts

Company value = present value of all future cash flows + value of non-operating assets
Customer Lifetime Value
 A metric to acquire, grow and retain the ‘right’ customers
 CLV (or CLTV) is seen as the series of transactions between a company and
a customer over a period of time that the customer remains with the
company
 CLV is measured as the present value of the future net cash flows that are
expected to be received over the lifetime of a customer, consisting of the
revenue obtained from the customer less the cost of attracting, serving and
satisfying the customer

pt = price paid by a customer at time t

ct = direct cost of servicing the customer at
time t
i = discount rate
T = expected lifetime of a customer
AC = acquisition cost
Increasing CLV
 Increasing customer life
 Increasing retention rate
 Membership-based programmes
 Loyalty-based programmes
 High degree of customer contact
 Ability to differentiate
 Increasing sales to customers
 Raising the firm’s share of the customer’s purchases
 Raising the customer’s referral rate
 Cutting the costs of serving a customer
 ‘Outsourcing to the customer’ - getting the customer to perform
some of the work involved in service delivery
Increasing the value of a customer
during his lifetime
Customer Referral Value
 Positive word-of-mouth is the key to business growth
 Referral rate might be approached through customer
survey

𝑛
𝑅𝑉𝑥 = 𝑖=1 𝑃𝑗 ∗ 𝑊𝑗 ∗ 𝑂𝐿𝑥 ∗ 𝐶𝑆𝑥 ∗ 𝑅𝑅𝑥

𝑅𝑉𝑥 = referral value of customer x

𝑃𝑗 = number of referral communications in social sphere j
𝑊𝑗 = weighting index of communication intensities within
social sphere j
𝑂𝐿𝑥 = opinion leader index of customer x
𝐶𝑆𝑥 = customer satisfaction index of customer x
𝑅𝑅𝑥 = industry-specific referral volume (average purchase
volume * net average referral rate)
Customer Value Added (CVA)

 Key metric for indicating marketing financial performance

 When CVA is high, the company is perceived to add value
to society and will probably show strong financial
performance
 CVA predicts contribution

CVA = perceived value – incremental unit cost for a product

or service

Perceived value = the maximum a customer is willing to pay

for a product or service
Brand Equity

 Important intangible asset with psychological

and financial value
 Conceptualized as the added value endowed
to products and service by the brand name

 Two primary perspectives

 Financial outcomes for the company
 Consumer-based perceptions of company
performance
 Indirect approach – measurement of potential sources of brand equity
by identifying and tracking consumer brand knowledge structures
 Direct approach – assessing the added value of a brand through
experiments
 • cash flow
• sales growth
• operating income
• return on equity
The Balanced Scorecard
• cycle time
• unit cost
• new product
introductions
approach

• percent of sales from

new products
• on time delivery
• share of important
customers’ purchases
• ranking by important
customers
• time to develop new
generation of products
• life cycle to product maturity
• time to market versus
competition
Managing strategy: four processes
Sample Customer-Performance Scorecard Measures

 % of new customers to average #

 % of lost customers to average #
 % of win-back customers to average #
 % of customers in various levels of satisfaction
 % of customers who would repurchase
 % of target market members with brand recall
 % of customers who say brand is most preferred
Common Measurement Paths

Customer Metrics Unit Metrics Cash-flow Brand Metrics

Pathway Pathway Metrics Pathway Pathway
• Looks at how • Reflects what is • Focuses on how • Tracks the
prospects known about well marketing development of
become sales of expenditures the longer-term
customers product/service are achieving impact of
short-term marketing
returns through brand
equity
measures
Marketing Dashboards

 An instrument for visually displaying real-time

market and customer indicators

 Two key market-based scorecards must be included:

 A customer-performance scorecard records how well
the company is doing year after year on customer-
based measures.
 A stakeholder-performance scorecard tracks the
satisfaction of various constituencies who have a critical
interest in and impact on the company’s performance
including employees, suppliers, banks, distributors,
retailers, and stockholders.
Example of a Marketing Dashboard
Literature Key

• Kotler, Philip et al. Marketing

Management. Pearson, 3rd ed.,
Pages
70-112 2016

• Kotler, Philip; et al. Marketing

Pages
Management. Pearson, 3rd ed.,
836-861 2016.