Business Market Management, 3rd edition
B2B
Business Market Management, 3rd edition
BOOKS
▪ James C. Anderson (2009).
Business Market management:
Understanding, Creating and
Delivering Value, 3rd edition.
Prentice Hall.
▪ Ten Deadly Marketing Sins:
Signs and Solutions. John Wiley
& Sons.
▪ Philip Kotler (2003). Marketing
insights from A to Z: 80
concepts every manager needs
to know. John Wiley & Sons,
Inc.
Business Market Management, 3rd edition
Chapter 1
Guiding Principles
Business Market Management, 3rd edition
Business Market Management, 3rd edition
CHAPTER 1
Section I:
Introduction
and Overview
Business Market Management, 3rd edition
Overview
I. Values as the Cornerstone of Business
Market Management
II. Managing Business Market Processes
III. Doing Business Across Borders
IV. Working Relationships and Business
Networks
V. Summary
Business Market Management, 3rd edition
Business Market Processes
Business Market Management, 3rd edition
Business Market Processes
Guiding Principles
Accentuate Working Relationships & Business Networks
Focus on Business Market Processes
Stress Doing Business Across Borders
Business Market Management, 3rd edition
Basic Concepts
▪Business Market Management is the
process of understanding, creating, and
delivering value.
▪Business Markets are firms, institutions, or
governments that acquire goods and
services. Focuses on functionality or
performance.
Business Market Management, 3rd edition
Guiding Principles of Business
Market Management
▪ Regard value as the cornerstone
▪ Focus on business market management
processes
▪ Stress working across borders
▪ Accentuate working relationships and business
networks
Business Market Management,
3rd edition
I. Value as the Cornerstone
of Business Market
Management
Business Market Management, 3rd edition
What is Value in Business Markets?
1. Monetary
2. Economic, technical, service, and
social net benefit
3. The exchange for the price paid
Business Market Management, 3rd edition
Fundamental Value Equation
(Value – Price ) > (Valuea – Pricea )
f f
Offeringsf Offeringsa
Business Market Management, 3rd edition Chapter 1-14
Value
▪ Value can only be estimated.
▪ Value changes when:
▪ Same functionality or performance provided while its
cost changes to the customer
▪ Functionality or performance changes while the cost
remains the same
▪ Customer Incentive to Purchase is the difference
between value and price.
Business Market Management, 3rd edition
Assessing Value
▪ Supplier firms create and deliver value to targeted
market segments and customer characteristics
▪ Business market management strives to both
understand and capitalize on customer and market
segment variations
Business Market Management, 3rd edition Chapter 1-16
Business Market Management, 3rd edition
Value Analysis
▪Conducted by a cross-functional team
with the customer firm
▪Team assesses market offering’s
attributes in terms of:
▪Functionality or performance
▪Total cost of specific performance or
functionality
▪Identification of lower-cost alternatives
Business Market Management, 3rd edition Chapter 1-17
Business Market Management, 3rd edition
II. Managing Business Market
Processes
Business Market Management, 3rd edition Chapter 1-18
Business Market Management, 3rd edition
Managing Business Market Processes
▪ Business Process: a collection of activities that take
one or more kinds of input and create an output that is
of value to the customer
Business Market Management, 3rd edition Chapter 1-19
Business Market Management, 3rd edition
Processes Defined by Allaire
▪How the CEO runs the company
Management ▪How management interacts with employees
Processes ▪How decisions get made
▪How communication takes place
▪Focus is on reengineering efforts
Business
▪Large, crosscutting collections of activities (product design,
Processes order fulfillment, customer service)
Work ▪Basic building blocks of business processes
Processes ▪How the work actually gets done
Business Market Management, 3rd edition Chapter 1-20
Business Market Management, 3rd edition
Shareholder Value
Shareholder Value: Value Drivers:
when the economic ▪ Sales growth rates
returns generated
from realizing its ▪ Operating profit margins
business strategy ▪ Income tax rate
exceed the cost of ▪ Working capital investment
capital employed
▪ Fixed capital investment
▪ Cost of capital
▪ Forecast period
Business Market Management, 3rd edition Chapter 1-21
Business Market Management, 3rd edition
Shareholder Value
Translating
customer value into shareholder value
critically depends on business’s ability to
claim an equitable return on the
value it delivers to customers.
Business Market Management, 3rd edition Chapter 1-22
Core Business Processes
Product ▪Understanding customer requirements and preferences
Development
▪Anticipating how they will change
Management
▪Constructing solutions that customers are willing to pay for
(PDM)
Supply Chain ▪Incorporates acquisition of all physical and informational inputs
Management ▪Efficiently and effectively transforms processes into customer
(SCM) solutions
Addresses all aspects of
Customer • Identifying customers
Relationship • Creating customer knowledge
Management • Building customer relationships
(CRM) • Shaping customer perceptions about the organization
and Business
its products rd
Market Management, 3 edition Chapter 1-23
Business Market Management, 3rd edition
Contributions to Marketing
▪Making core business processes more
market-driven can result in:
▪Accelerated and enhanced cash flow
▪Reduced time to market
▪Earlier adoption from targeted
customers
Business Market Management, 3rd edition Chapter 1-24
Business Market Management, 3rd edition
Market-Driven Processes
Market-Driven Business
Business Processes
Processes
PDM PDM
Create solution that enables
Design a technically superior
customer to experience
product
maximum value and benefit
SCM SCM
Design, manage, and integrate
Best inputs at cheapest price firm’s supply chain with
suppliers and customers
CRM CRM
Customer relationship is an
Customer relationship is a opportunity to learn about
means to sell, deliver, and customers’ needs and wants
service a product and how best to create, satisfy,
Business Market Management, 3rd edition Chapter 1-25
and sustain them
Business Market Management, 3rd edition
Why Business Marketing
Management?
▪ Marketing work processes should take place
within business market processes
▪ Business market processes cut across functional
areas
▪ Depends upon seamless
cross-functional cooperation
Business Market Management, 3rd edition Chapter 1-26
Business Market Management, 3rd edition
Business Market Processes
Understanding Value
Marketing Sensing: process of generating
knowledge about the marketplace that individuals
in the firm use to inform and guide their decision
making
Business Market Management, 3rd edition Chapter 1-27
Business Market Management, 3rd edition
Business Market Processes
Understanding Value
Generating knowledge about the marketplace that
Marketing
individuals in the firm use to inform and guide their
Sensing
decision making
Learning how companies rely on a network of suppliers
Understanding
to add value to their offering, integrate purchasing
Firms as
Customers activities with those of other functional areas and outside
firms, and make purchase decisions
Studying how to exploit a firm’s resources to achieve
Crafting
short-term and long-term marketplace success, deciding
Market
Strategy upon a course of action, and flexibly updating it as
learning occurs during implementation
Business Market Management, 3rd edition Chapter 1-28
Business Market Management, 3rd edition
Business Market Processes
Creating Value
Managing Putting products services, programs, and systems together in
Market ways that create great value for targeted market segments
Offerings and customer firms
Developing new core products or services, augmenting them
New Offering to construct market offerings, and bringing them to market.
Realization Realization is all the activities used to transform ideas into a
market offering that it commercializes
Designing a set of marketing and distribution arrangements
that create superior customer value for targeted market
Business
segments and customers, and executing those arrangements
Channel
Management either directly through supplier firm sales forces and logistics
system or indirectly through resellers and third-party service
providers Business Market Management, 3 edition
rd Chapter 1-29
Business Market Management, 3rd edition
Business Market Processes
Delivering Value
Differentiating business opportunities, prospecting for new
Gaining New business, assessing the fit with supplier offerings and
Business priorities, gaining the initial order, and fulfilling it to the
customer’s complete satisfaction
A supplier and its reseller fulfilling commitments they have
Sustaining
made to deliver value to customer firms, strengthening this
Reseller
Partnerships delivered value, and working progressively together to
continue to fulfill changing marketplace
Differentiating transactional and collaborative customers,
Managing delivering offerings that fulfill the respective requirements,
Customers and preferences of a portfolio of customers in a superior
way, and getting a fair return in exchange
Business Market Management, 3rd edition Chapter 1-30
Business Market Management, 3rd edition
Business Market Management, 3rd edition Chapter 1-31
Business Market Management, 3rd edition
Updated: “the four Ps”
Product Pricing
▪Flexible market offerings that ▪What a market offering is worth to the
consist of naked solutions customer
▪Offerings are responsive to
customer requirements and
preferences
Promotion Place
▪Marketing communications are ▪Design customer-driven distribution
focused channels
▪Tailored to varying requirements for ▪Channel offerings build marketplace
gaining and sustaining customers & equity
resellers ▪Implement cooperative channels
▪Shape and reinforce supplier’s value arrangements that are adaptive
Business Market Management, 3rd edition Chapter 1-32
Business Market Management, 3rd edition
III. Doing Business Across
Borders
Business Market Management, 3rd edition Chapter 1-33
Business Market Management, 3rd edition
Doing Business Across Borders
▪ Language and Culture
▪ Cross-Border Negotiation
▪ Dispute Resolution
▪ Currency Exchange and Payment Risk
Business Market Management, 3rd edition Chapter 1-34
Business Market Management, 3rd edition
Language and Culture
Doing business across borders does
not always mean that the language
and culture of managers will be
different, just as doing business
within the same country does not
always mean that the language and
the culture will be the same.
Business Market Management, 3rd edition Chapter 1-35
Business Market Management, 3rd edition
Language and Culture
▪ Determine what language to use
▪ English regarded as the language of international
business
▪ Alternatives to English:
▪ Use the language of one party
▪ Use another language both parties
are willing to use
▪ Or, rely on interpreters
Business Market Management, 3rd edition Chapter 1-36
Business Market Management, 3rd edition
Indian Automotive Component
Manufacturers
India’s over 10,000 small and 500 midsize automotive
component companies
▪ Critical success factors:
1. Large and growing Indian middle class
2. High demand, local raw materials, low labor costs, high
productivity, and intense competition
3. Government focus and consequent support
Business Market Management, 3rd edition Chapter 1-37
Business Market Management, 3rd edition
Language and Culture
▪ Culture is an abstract and imprecise concept
▪ Bundled characteristics that uniquely define members of a
particular group
▪ Culture comprises a:
▪ Set of assumptions
▪ Values
▪ Beliefs
▪ Socially instilled norms
Business Market Management, 3rd edition Chapter 1-38
Business Market Management, 3rd edition
Language and Culture
“Culture is so imprecise and changeable a
phenomenon that it explains less than most
people realize…And within the overall mix of
what influences people, behavior, culture’s role
may be declining, rather than rising, squeezed
between the greedy expansion of the
government on one side, and globalization on
the other.”
--The Economist, “Cultural Explanations”
Business Market Management, 3rd edition Chapter 1-39
Business Market Management, 3rd edition
Cross-Border Negotiation
▪ Considerations
▪ Profitability of the business to be gained
▪ Perceived benefits of the relationship
▪ Anticipated consequences of the negotiated deal on
supplier’s business in other
country markets
Business Market Management, 3rd edition Chapter 1-40
Business Market Management, 3rd edition
Cross-Border Negotiation
Differences from domestic negotiation
1. Culture
2. Unfamiliar and uncomfortable settings
3. Influence of ideology
4. Greater involvement of government in business
5. Defining which country’s laws govern the business transaction
6. Instability and sudden change in the foreign market
7. Dispute resolution
Chapter 1-41
8. Foreign currencies
Business Market Management, 3rd edition Business Market Management, 3rd edition
Cross-Border Dispute Resolution
▪ Negotiate first how to resolve disputes
▪ International commercial arbitration
▪ Arbitration usually occurs in a third country
▪ Specify arbitration institution when possible
Business Market Management, 3rd edition Chapter 1-42
Business Market Management, 3rd edition
Currency Exchange and Payment Risk
▪ Currency for transactions
▪ Supplier’s country currency
▪ Customer’s country currency
▪ Third party currency
▪ Letter of credit (LC)
▪ Confirm letter of credit
Business Market Management, 3rd edition Chapter 1-43
Business Market Management, 3rd edition
IV. Working Relationships
and Business
Networks
Business Market Management, 3rd edition Chapter 1-44
Business Market Management, 3rd edition
Work Teams
▪ Work Teams: a small number of people
with complementary skills who are
committed to:
▪ a common purpose
▪ set of performance goals
▪ an approach which they hold themselves
mutually accountable
Business Market Management, 3rd edition Chapter 1-45
Business Market Management, 3rd edition
Work Teams
▪ Teams create value in their collective
work-product that could not be
produced outside the team setting
Business Market Management, 3rd edition Chapter 1-46
Business Market Management, 3rd edition
EXERCISES
Business Market Management, 3rd edition
