TM

Business-to-Business Marketing
MKTG 533.101 Fall, 2008

Business-to-Business Marketing Introduction The Value-Delivery Framework

Dr. Gary Lilien, Research Director, ISBM Dr.Ralph Oliva, Executive Director, ISBM www.isbm.org 814 863 2782
1
(C) 2008, ISBM - Penn State 3/3/2013

Raw Materials: Mined; Grown Chemical Processors

B-to-B

Manufacturing Process Equipment

Packaging

Advertising
Ingredients

Transportation; Logistics

Manufacturer

Maintenance Repair and Operating (MRO) supplies

Retailer

B-to-C

Retail Point of Sale

Marketing 533: B-to-B Marketing Our First Class: Getting Started

Whats in it for You? A word from your sponsor How we select topics Course objectives Quick Student Profile Honor Code Course Playbook/Syllabus/Grading Getting Started:

TM

The Value-Delivery Framework Marketing Engineering Software

3 (C) 2008, ISBM - Penn State

Whats in it for you?

Youll be equipped with language, skills and tools enabling you to better understand, create, deliver and harvest value. Youll understand the differences between B-to-B and B-to-C markets, and skills as B-to-B Marketing Coach. Youll make better decisions, better allocate resources, and generate more profit in B-to-B situations Youll qualify for employment in B-to-B Marketing.

B-to-C
Upstream Suppliers Supply Chain (i) Supply Chain (n) Supply Chain (n+1) OEM/ Distribution (B-to-C) End Consumer Recycle/ Reclaim Focus of B-to-C Marketing

Upstream Suppliers Supply Chain (i) Key Supplier (B-to-B)

B-to-B

Span of B-to-B Marketing

OEMs OEMs OEMs OEMs Customers Customers Customers

Distribution Distribution Distribution Distribution Customers Customers Customers Recycle/ Reclaim

Consumer
Marketing Culture Market to end of chain Perceptual proposition Value in brand relationship

Business-to-Business
Manufacturing/Tech Culture Market to value chain Technical proposition Value in use, quantifiable

Large customer segments

Smaller-unit transactions Transaction linkage More direct purchase Consumer decides

Small number of customers

Large-unit transactions Process linkage Complex buying sequence Web of decision participants

Linking Decision-Makers to Benefits

Benefit Stack
Least Important
Typical Customer Benefits Offered Highly Competitive prices and quality

Decision-Maker Stack
Typical Purchase Team Members Warehouse Manager Purchasing Manager Logistics Officer

Manufacturing Plants on four Continents

Internet-Base order placement, tracking and Billing System 24/7 customer respons facility with radio links to trucks Customized manufacture and delivery of product to meet plants daily needs Sunday, holiday and 24/7 delivery when required Just-in-Time Delivery Seller

Maintenance Manager Chief Marketing Officer CFO Supply chain Head COO CEO (On Occasion) Buyer

Most Important

Benefit/Message Targeting
Benefit Stack
Typical Customer Benefits Offered Highly Competitive prices and quality

Decision-Maker Stack
Typical Purchase Team Members Warehouse Manager Purchasing Manager Logistics Officer

Manufacturing Plants on four Continents

Internet-Based order placement, tracking and Billing System 24/7 customer response facility with radio links to trucks Customized manufacture and delivery of product to meet plants daily needs Sunday, holiday and 24/7 delivery when required Just-in-Time Delivery Seller

Maintenance Manager Chief Marketing Officer CFO Supply chain Head COO CEO (On Occasion) Buyer

However:
The increasing power of distribution channels, the impact of supply chain innovations, and outsourcing strategies are blurring distinctions

B-to-C
B-to-B B-to-C

Customer
TM

10 (C) 2008, ISBM - Penn State

YOUR SPONSOR

The Institute for the Study of Business Markets

Associate Membership in ISBMaccess to ISBM programs, networks, etc

Direct connection to ISBM Researchdriver of

course content All materials required provided for you See www.isbm.org for more!
11 (C) 2008, ISBM - Penn State 3/3/2013

2008 ISBM MembershipMoving to 100 (Capped) by 2010

AARP Agilent Air Products Alcoa Alfa Laval Analog Devices Arkema AT&T Avery Dennison Bayer Brinks BSN medical CEMEX Ciba Specialty Chemicals Cisco Systems ConocoPhillips Corporate Express Deloitte Dow Chemical DuPont Eastman Chemical Eka Chemicals ExxonMobil Ferro Fin/Econ First Data Flowserve Forrester Research Gallup Organization GE Grace Grainger Greif, Inc. Hercules Honeywell HSR Business to Business IBM Indium JohnsonDiversey Kennametal Kimberly Clark Professional Kodaks Graphics Comm. Lilly LORD Corporation MARKEM Milliken Monitor Group Nalco National Starch and Chemical New Pig NIST/MEP NOVA Chemicals Objective Management Group Parker Hannifin Ply Gem PPG Industries Respironics Rohm and Haas Sabert Satmetrix Square D/Schneider Electric Sherwin-Williams Siemens Slack Barshinger Solutia Swagelok 3Com Thilmany Papers Ticona, LLC Timken UBS Verizon Business Westinghouse Nuclear Xerox

74 Members

12
3/3/2013

ISBM Mission Statement

To expand and improve the understanding and practice of Business-to-Business Marketing and Sales, by supporting relevant academic research, and providing channels through which knowledge is transmitted

between and among

TM

practitioners and academics

13 13 (C) 2008, ISBM - Penn State 3/3/2013

ISBM: Your Resource for Everything B-to-B

Building Networks: Friendships/ Communities of Learning and Practice Education: The largest suite of B-to-B thought leaders/ courses/learning Research: At our core. Rigorous, relevant, applicable new knowledge, tools and insight in B-to-B

Marketing 533: B-to-B Marketing Our First Class: Getting Started

Whats in it for You? A word from your sponsor How we select topics Course objectives Quick Student Profile Honor Code Course Playbook/Syllabus/Grading Getting Started:

TM

The Value-Delivery Framework Marketing Engineering Software

15 (C) 2008, ISBM - Penn State

Data Management/ Market Research

Computing Value*

Understanding Value*
Value and Pricing* Harvesting Value
New Offering Development Channel Conflict Management Market Offerings Management Marketing Leadership Personal Competencies Business Acumen

Market Segmentation*
Targeting* Positioning*

Designing Market Strategy*

Market Planning

Market Communications* Sales Integration

Trends 2010: Out of the Field, October / November 2007 Based on an original request from Hewlett-Packard

Key B-to-B marketing leaders (Academic Researchers / Practitioners)

Critical Challenges and

Key Capabilities
B-to-B marketers must address, along

with Benchmark Examples

Over the next two to three years

2008, ISBM Penn State. Presented by HSR Business to Business.

17

Trends Study Approach

E-mail / Web survey with follow-up round:

Original study: 4Q97

Marketing Leaders
ISBM Virtual Faculty ISBM

Reworked: 1999-2001
Third Track: 2001-2003 Fourth Track: 2003-2005 Fifth Track: 2005-2007 Current (6th) Track: 2007-

Members/Practitioners

2010*

* Expanded Process: Open-ended and Quantitative Phases

2008, ISBM Penn State. Presented by HSR Business to Business.

18

ISBM Trends 2010 Study 2 Round Research Process

1
Identify first target respondents Key informants on the leading edge of B-to-B

2
Open-Ended Phase, Qualitative: Inquire with three key questions identify issues from thought leaders

3
Bucketize the data mentions, energy, etc.; manually and with NVivo Software

4
Quantitative Phase: Analysis of phase 1 issues with Marketing Engineering for Excel (MEXL) Software; 399 respondents

5
Gather additional insights/ implications/ actions publish results

2008, ISBM Penn State. Presented by HSR Business to Business.

19

ISBM Trends 2010 Study: Combined 2 Round Process Results

1. Develop approaches and methods to better understand

what CUSTOMERS REALLY NEED, beyond what they can say or articulate. Opportunities to CREATE REAL VALUE
2. Lead the charge for sensing, finding, clarifying and

assessing new opportunities for ORGANIC GROWTH

3. Build better UNDERSTANDING AND TOOLS FOR THE

COMPUTATION OF VALUE pricing strategies to harvest value; value generation / creation through the value chain
4. Construct better B-to-B marketing METRICS:

measurement and accountability proving ROI

= Course Elements

2008, ISBM Penn State. Presented by HSR Business to Business.

20

ISBM Trends 2010 Study: Combined 2 Round Process Results

5.

Competing and growing GLOBALLY: better navigation of global markets, competition and issues, especially CHINA

6. Developing products, services and business models that

counter commoditization; IMPROVING AND SPEEDING NEW OFFERING PROCESSES AND HIT RATE
7. SELLING THE C-SUITE: developing the case for the value

and impact of marketing that is understood and embraced by top management

Download the entire annotated study at: www.isbmtrends.com

2008, ISBM Penn State. Presented by HSR Business to Business. 21

Thoughts
Our 25th Anniversary Meeting
25 Years of Research, Practice and Progress in B-to-B: >>The Most Important Lessons Weve Learned >>The Critical Things We Must Forget!
Insight from thought leaders who have had great impact on our research, practice and progress over the past 21/2 decades

August 20-21, 2008 Penn Stater Conference Center Hotel State College, Pennsylvania

22
3/3/2013

Weve been at this 2.5 decades

What are the most important things weve learned? The things that have stood the test of time, fad, and waves of the latest thing What just wont work any more or never really did?
TM

23
(c) 2008, ISBM - Penn State 3/3/2013

But what exactly is share of customer?

Customer Needs Satisfied

Other products, across the whole organization

Customer Centric

Ancillary services Additional sales, over time

Product

Referrals of colleagues, Centric family, friends

Related problems and issues

Share of customer = share of need

Customers Reached
2007 Carlson Marketing Worldwide. All rights reserved. Peppers & Rogers Group is a division of Carlson Marketing.

24

Three business laws to to Break Rules follow

Rule: With good sales leaders, you can always acquire more customers from somewhere

Truth: Customers are scarce

Rule: Value is created by offering differentiated products and services

Truth: Customers create all value

Rule: The most important goal in business is increased sales and profit this quarter

Truth: Long-term value is just as important as current profit

25

BT Adoption Begets New Market Interactions

Pre-Web or Web 1.0 Interactions

Web 2.0 Interactions

Source: May 7, 2008, Community Marketing: A New Discipline For Business Technology Marketers

28

Entire contents 2008 Forrester Research, Inc. All rights reserved.

Community Marketing Definition

The application of marketing processes and resources to assimilate a supplier into customers

adoption networks and activities in order to support

better business outcomes.

29

Entire contents 2008 Forrester Research, Inc. All rights reserved.

BT Adoption Is a Community Process

BT B2B Adoption Networks

Adoption networks are complex and collaborative

Needs emerge as problems arise

Web 2.0 enables adoption networks (need-match-engage) Participants are recruited from inside and outside companies
Source: May 7, 2008, Community Marketing: A New Discipline For Business Technology Marketers

30

Entire contents 2008 Forrester Research, Inc. All rights reserved.

25 Years of Marketing: What We Should Forget and What We Must Never Forget
ISBM Annual Meeting, August 20, 2008

Michael E. Kullman DuPont Director Corporate Marketing

32

Summary: What We Must Forget

US Focus
Market standpoint Competitive standpoint

Controlling Anything
Offerings Messaging

Safe Markets
Stable Markets We Will Get to That Later

3/3/2013

33

Summary: What We Must Never Forget

The Fundamentals are Still the Fundamentals
Customer insight Segmentation Targeting Compelling Value Propositions Effective communications and demand creation

Speed is Paramount
Markets demand it Competition requires it

Must Continually Evolve as Organizations

More market focused Less control, more empowerment Utilizing new technologies Proactively taking advantage of latest opportunities (sustainability, etc.) Becoming more competitive every day
3/3/2013

Course Objectives:
Understand key Differences/ Similarities: B-to-B, B-to-C Frameworks for understanding the B-to-B Marketing Process The language/taxonomy of value

Tools for Segmentation, Targeting, Positioning****

TM

34 (C) 2008, ISBM - Penn State

Course Objectives (Contd):

Overview/Frameworks for Management: B-to-B Channel Strategy Decision tools and approaches for resource allocation Insights from cases covering a variety of B-to-B Marketing situations

TM

35 (C) 2008, ISBM - Penn State

Honor CodeCritical to Our Profession/Professional Life

We, the Smeal College of business community, aspire to the

highest ethical standards and will hold each other accountable to

them. We will not engage in any action that is improper, or that creates the appearance of impropriety in our academic lives, and

we intend to hold this to the standard in our future careers.

I/We ______________________ have neither given, utilized, received, nor witnessed unauthorized data on this deliverable,

and have completed this work honestly and in accordance to

the professors guidelines.
TM

36 (C) 2008, ISBM - Penn State

Before you get too comfortable

60% of American employees dont trust their bosses to communicate with them honestly Only 36% of employees believe their leaders act with honesty and integrity 76% of employees have seen unethical or illegal conduct on the job in last 12 months!

2007 Carlson Marketing, Inc. All rights reserved. Peppers & Rogers Group is a division of Carlson Marketing.

37

Other Administrivia
Student Registration please complete right away to access Angel. Tutorial Sessions, Wed 4:30-6pm Room 124 (if needed)

Focus/Feedback anytime
Assessment questionnaire at 3 weeks into course

Volunteers for Feedback Ombudspersons?

Name Tents Please Use
TM

38 (C) 2008, ISBM - Penn State

Anderson and Narus:

What is Business Marketing?
Understanding Value Creating Value Delivering Value

The process of understanding, creating and delivering (and profitably harvesting) value to targeted business markets and customers who are firms

Value in Business Markets

The worth in monetary terms of the economic, technical, service and social benefits a customer firm receives in exchange for the price it pays for a market offering

TM

40 (C) 2008, ISBM - Penn State

Marketing Value - Delivery Framework

1. Build Value Understanding

2. Strategy Formulation

3. Design Customer Value

4. Communicate and Deliver Value

5. Life-Cycle Management

1. Build Value Understanding

Understand the language and concept of Value* Understand Industry, Market, Competitive Environment Market Research Develop Understanding of Customer Needs/Value - Customer Research Diagnose Sources/Potential Sources of Value Inside/Outside Firm Value-Chain Analysis Clarify/Focus: Organization Mission, Objectives, Goals
TM

42 (C) 2008, ISBM - Penn State

2. Strategy Formulation
Segmentation
Targeting

Positioning
Synthesis of Segment Strategies
Our Primary Concentration in this course
TM

43 (C) 2008, ISBM - Penn State

3. Design Customer Value

New Product/Portfolio Management Processes
Value and Pricing Strategy*

Brand Strategy and Management

TM

44 (C) 2008, ISBM - Penn State

4. Communicate and Deliver Value

Integrated Market Communications Channel/Distribution Strategy* Sales Management/Support

TM

45 (C) 2008, ISBM - Penn State

5. Life-Cycle Management
Manage Customer Relationships Measure/Track Performance Process Management/Continuous Improvement Education/Professional Development

TM

46 (C) 2008, ISBM - Penn State

Towards a Process Architecture

Improve the customer experience Increase share of wallet Monitor customer/partner satisfaction Grow through adjacency expansion Analyze market opportunities (MOA) Generate customer and market insight Monitor technology and competition Identify customer segments Develop value propositions

Sense value

Sustain value
Customer Data Adapt

Define value

Design the offer Develop offerings Launch offerings Create solutions

Communicate value
Develop messaging Define brand architecture Develop marketing campaigns Optimize communications mix Monitor results and ROMI

Realize value
Design the value chain Define value chain position Optimize routes to market Build the partner ecosystem Manage partner relationships 47

Share value
Design value-sharing schemes Optimize pricing/SKU strategy Manage Price-Value-Capture

Deliver value

Evolution of Marketing Processes

Transactional Marketing
Sense value Define value Realize value Deliver value Share value Communicate value Sustain Value Listen

Relationship Marketing
Observe

Collaborative Marketing
Co-create

Segmentation

Customization

Customerization

Products
Channel Push Transactional Pricing Persuasion, Broadcast

Solutions
Channel Partnerships Relationship Pricing Permission, dialogue

Experiences
Integrated Value Network Gain and RiskSharing Contextual, facilitation

Episodic CRM

Batch CRM

Real-Time CRM

48