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B2B Marketing.....................................................................................................................................

1
Framework to support the process........................................................................................................3
Business to business marketing strategy process.................................................................................4
Understand the business strategy......................................................................................................4
Environmental analysis....................................................................................................................5
Market analysis ................................................................................................................................5
Understand the customer. Determine business needs.......................................................................5
Understand the purchasing process..................................................................................................6
Understand the competition. Competitive analysis..........................................................................8
What to create in the analysis.......................................................................................................8
Designing the competitive intelligence system............................................................................9
Understand your company: self analysis .......................................................................................10
Understand the product. What do we sell?.....................................................................................10
Define the metrics to measure results.............................................................................................10
Identify markets and market opportunities.....................................................................................10
Segmentation and targeting............................................................................................................11
Formulate the positioning statement(s)..........................................................................................13
Select the competitive marketing strategy......................................................................................13
Product strategy..............................................................................................................................13
Price determination.........................................................................................................................15
Decide a channel/partnership strategy............................................................................................15
Identify the most suitable marketing communication mix.............................................................15
Structure the integrated marketing communication strategy..........................................................15
Prepare the marketing plan.............................................................................................................16
Marketing operations......................................................................................................................17
Measure the results.........................................................................................................................17

B2B Marketing
One way to understand quickly the idea of B2B marketing is to highlight the differences between business marketing
and consumer marketing. Consumer marketing belongs to everyday life, in the sense that everybody is exposed to it,
and so its concepts may be more intuitive. A comparison with B2B marketing may help udbnerstanding quicker what
B2B marketing is about.

Compared to consumer marketing, B2B marketing:


- emphasizes much more the relationship between buyer and seller. The purchases in companies are often too
critical and important to always shop around.
- Gives greater importance on personal selling. Often the purchasing processes are strategic for both buyer and
seller, resulting in processes where the sales force interacts with different players in the buying organisation.
Consultative sales of customize solutions often takes place instead of straight selling of out of the box
products.
- The distribution channels are shorter. Often a manufacturer can relate directly with the customers or the
steps in distribution are relatively few. This is possible because customers tend to be bigger, richer in budget
and fewer than consumers.
- The promotional strategies needed are unique. The complexity of the buying process and the inclusion of
several people in the process, often at different level in the organisation and coming form different functions,
means that different departments may have different needs and interests to be fulfilled. The same product may
be advertised in different ways: low cost to finance, great for consumers to marketing and high tech innovative
to the technology department.
- There are fewer customers, but each of them has generally a purchasing power that is far superior than each
individual customer.
Framework to support the process
Feed into strategy Feed into strategy

Market analysis. Identify Understand the environment


markets or macro segments where the company operates
Understand Business Unveil market opportunities PESTEL and industry
Strategy
analysis

Segmentation Positioning

Understand the company Understand the competition

Select the competitive


strategy

Understand the product Understand the customer and


Channels and partners business needs
Price strategy
strategy

Understand budget Marketing communication Understand the purchasing


Product strategy process
strategy

Strategic customer
CRM strategy
relationship strategy

Analysis internal Analysis External

Analysis should help answreing the Brand strategy Sales strategy


questions
Why
Who
What Strategy
How
How much

Prepare the marketing plan


(action plan)

Manage Web Site and Manage Agencies


Manage campaigns
content

Manage CRM Produce collateral Manage trade shows

Manage relationships Support sales Manage product lifecycle

Operations

Market share Segment share

Revenue Profit

Measure
Business to business marketing strategy process
There are 4 main phases, which are not necessarily sequential.
- analysis and information gathering
- strategy development and marketing plan preparation
- put the strategy in action / operations
- measure the results

Understand the business strategy

One fundamental insight for the development of a marketing strategy is to understand the business strategy of the
company or the strategic business unit (SBU).

Which are the goals in terms of revenue, profit margins, market share?

Which strategy the company wants to pursue?

Cost leadership
Differentiation
Focus strategy

Which flavour to give the strategy?

Operational excellence
Product leadership
Customer intimacy

How do the company wants to implement the strategy?


Market leader
Market challenger
Market follower
Market nicher

The marketing strategy has to be formulated according to the strategy to follow.


For instance a cost leadership – operational excellence business strategy will drive a marketing strategy that aims to
price sensitive consumers, builds messages emphasizing cost savings and positions the company as a provider of
reliable products or services at competitive prices, delivered with minimal difficulty or inconvenience.
A customer intimacy strategy will drive a lot of CRM attention, focus marketing on delivering a services/support biased
message and provide several means to allow customers to communicate to the company and vice versa.

Decide mark strat goals: market expansion, share expansion – try to defend or increase market share unless you are a
small business – defend market share

Identify the strategic alternatives:


- product market investments strategies
- functional areas strategies
- assets, skills and synergies

Define how revenue targets can be accomplished:

New customers Marketing for newbuys Advertising: detailed, educational;


invite to try products, substitute for
old method

Promotion: use demonstrations at


trade shows to show how it works
Offer free trial demonstrations

Selling: heavy emphasis in


understanding customers’ needs and
showing how new product satisfies
needs better than old methods
Existing customers up-sell Marketing for straight rebuys Adv: Use reminder advertising
Build image for the company

Promotions: hospitality events at


trade shows

Selling: automate the purchasing


process

Existing customer cross-sell


Competition switch overs Market for newbuys Advertising: use comparison
advertising to show differences
between your product and similar
products

Promotions: customer site


demonstrations, hospitality events at
trade shows

Churn reduction CRM techniques

Anticipate customer needs

Lock in customers increasing services


and giving complimentary services
that are attached tightly to the
products and services sold

Selling: protect relationship with


current customers, with offers,
special trade-in prices

Environmental analysis
PESTEL analysis

Market analysis
Size, project growth, profitability, entry barriers, cost structure, distribution systems, trends, key success factors.

Understand the customer. Determine business needs

This helps responding to the question why?


B2B marketing requires a deep understanding of who the customer is and what are their business needs. Why an
organisation should buy the products I produce/distribute?

Customers may be organisations but eventually it always the people within the organisation who make decisions and
buy.

Customers may be distributors, retailers, consumers. Any party the company sells to in the value chain is a customer.
Types of business customers are usually OEMs, Users, Government, Institutions and Industry distributors.

Within an organisation it is possible to find different types of customer, who differs for business needs and personal
aspirations. This leads to a the segmentation granularity that is often quite high in B2B markets (micro segments vs
macro segments)

The other imperative is finding business needs/personal needs for each target segment.

Methods:
- data mining of existing customers (why they purchased)
- focus groups
- surveys
- customer feedback via web and sales force
- customer visits
- joint product management
- joint development and testing
- product deployment or installation
- professional services
- partners
- customer support.
Customers may perceive 3 types of benefits:

Functional benefits
- technical specifications
- quality

Process benefits
- cost of transport
- reliability of supply
- installation and deployment
- services and support
- MIS, materials management

Relationship benefits
- trust
- flexibility
- customization
- risk reduction

Understand the purchasing process

In B2B marketing it is crucial to understand well the purchasing process, the organisational buyer behaviour and the
composition of the buying centre for each target segment. In other words, marketers must be aware of the DMP
(decision making process) and DMU (decision making unit). This is essential to target the marketing efforts properly.
Different behaviours lead to different strategies to be adopted in terms of positioning, message and media to reach the
targets.

DMP. The purchasing process buy-grid gives a general idea of the steps which an organisational buyer go through:

• Need recognition
• Product definition and specification
• Development of procurement strategy
o make or buy?
o formation of buying center!
o specify potential vendors
o design sourcing system
• Search/qualification of potential sources
o Simultaneous vs. sequential evaluation
o RFPs: open/closed bids, existing vendors
• Selection of suppliers - final negotiations
• Design of an order routine (contract)
• Order
• Performance feedback and evaluation.

The process should be taken as standard because it varies a lot depending on the situation (new buy, straight rebuy,
modified rebuy) and organisation (different organisations have different DMPs).

DMU. The buying centre includes members of the organisation who play any of the seven roles in the DMP:
• Initiators
• Users
• Influencers
• Deciders, that is people who decide on product requirements
• Approvers, that is people who authorize the purchase
• Buyers, people who have the formal authority to select
• Gatekeepers, coaches and enemies.
At the level of organisational buyer behaviour, there are many factors that are playing an important role during a
purchase decision. Those factors can be broken down in 4 main categories: individual, organisational, market and
environmental.

Environmental factors, PEST factors

Market factors, competition and customer availability (Porter 5 forces). Decision change depending on availability of
suppliers, availability and importance of the supply.

Organisational factors:
Roles in the buying centres.
Company policies and purchasing guidelines: minimize cost, guarantee availability, assure the correct level of quality,
minimize TCO, minimize risk.
Vertical and horizontal dimensions: vertical means the degree of people involved in the buying process from top to
bottom in the same division, department or area. Horizontal means the degree of people involve in the buying process
coming from different departments or functions.

Time dimensions, the more people are involved in the buying centre fro short period of time, the more fragmented is
the buying centre over time. This time fragmentation is an important variable to be understood by the marketer. If a
decision involves a number of people who move in and out over time, their influence is limited to only few stages. If a
marketing manager participates only marginally to the buying process, advertising in marketing magazines may be not
completely clever.

Attitude toward risk. Risk perception can be lowered by information, trials and demonstrations. Risk is also lowered by
loyalty. Loyalty leads to trust.

Individual factors:
Experience, new buy VS straight rebuy
Choice of reward (salary, promotion, personal satisfaction…)
Valence of reward, the value attached to a reward. Rewards are not similar
Probability perception: how probable to the buyer is that engaging in the buying process this will lead to the expected
reward
Reward-measurement: buyers are motivated by both intrinsic rewards (reward people give to themselves like
satisfaction) and extrinsic rewards (given by the organisation like salary and promotion)
Motivation (put effort on the purchase) = valence (degree of importance of the reward) x probability (perception that
effort put in the purchase will lead to accomplishment of performance outcomes that will in turn lead to the desired
rewards)
For marketing this means understanding the valence and act on the perceived probability, increasing buyer experience
or knowledge.

Role orientation: self orientation VS company orientation


Risk orientation, offensive (maximize gain, example discount) VS defensive strategies (minimize loss)

The individual decision passes through 4 main mental stages:


- selective exposure where the buyer select media that is likely to include information for relevance to solve her
need
- selective attention, within the selective media the buyer pays attention only to some information
- selective perception, it is the process that causes people to interpret new information in consistent manner
with what they already know
- selective retention, that means keeping in mind only the information thought important.

The marketer may use a similar framework to combine buyers into groups and recognize buying patterns, patterns that
enable marketing managers to create marketing strategies.

This is concerned with determining who participate to the decisions and work to satisfy the needs of the participants.
For instance, if in the buying process of an industrial product, the decision may involve technical engineers and upper
management. The former are concerned with performance specifications while the latter are worried about costs. A
vendor would create marketing communication campaigns aimed at the engineers separate from those campaign aimed
to upper management.
However, marketers may want also to influence who might participate to the buying process. For instance,
demonstrating to upper management that the product sold at a premium price it improves performance so much to
result, ultimately, in more revenue and less cost for the company.

In the case of buying centres or when, in general, as often happens, the purchasing process involves more people with a
different cross-functional degree, the marketer needs to understand who are (which roles in the industry/market) the
decision makers, influencers, gatekeepers, controllers and purchasing agents. This will help deciding which message to
advertise/promote and where to advertise/promote.

The targeting decision is also very much influenced by the horizontal and vertical dimensions mentioned in the above
framework. The more the horizontal dimension is important the more the marketer needs to target different groups
within an organisation and this may lead to a greater marketing effort (people in different functional roles read, watch,
consult different media or sources of information).

NOTE:
New buys = all steps are taken, emphasis on product definition and development of product specifications
Modified re-buy = less emphasis on product definition and more emphasis on seach and evaluation of suppliers
Straight rebuy = need recognition and purchase are the only 2 steps undertaken

Understand the competition. Competitive analysis.

What to create in the analysis.

Understand competitor’s:
Strategies
Objectives
Financial situation
Products
Strengths and weaknesses
How to compete

Designing the competitive intelligence system

Identify sources of information

Sales force (intelligence audit within the company)


Channels and partners
Suppliers
Market research firms
Trade shows (using fake business cards…)
Trade associations
Annual Reports and SEC Filings of companies
Former competitors’ employees
Internet (non only competitor web sites but also news, trade associations, industry trade web sites, trade show websites,
blogs, forums, social media)
Check patents
Enrol to newsletter, webinars
Speeches by executive management that provides intelligence about future strategies of the
Company. This would involve all types of communication mediums: TV, Radio, Business
Magazines, etc
Track the job changes of experts in the sector. Check job ads to see who competitions is hiring
Track guest speakers at main conferences
Monitor the formation of business contracts and alliances
Find about new business practices that save competitors money
Follow changes in pricing
Follow technological advances in emerging markets
Product Spec Sheets and other company literature distributed at trade shows, conferences, and
other events.

Collect the data

Evaluate and analyzing the data

Disseminating information
Disseminate information where it is needed.

Understand how competition is perceived by customers.


Perceptual mapping.
Perceptual Maps are strategic tools to understand how competitors in an industry are perceived by customers on key
product dimensions
• Used mainly for:
– Segmentation and Positioning
– Designing differentiation strategy
– Identify new product opportunities
– Avoid cannibalization
• Output:
– Identifies perceptual dimensions along which consumers evaluate products in the category
– Identifies the location of brands along these dimensions
– Identifies consumers’ “ideal points” (= segments).
• Limitations:
– Static (descriptive)
– Interpretation may be subjective
– Aggregation

Two approaches
• Compositional (uses product attributes)
– obtain “important” product attributes (focus groups)
– obtain ratings on attributes (survey)
– obtain “relevant” attributes (factor analysis)
• Decompositional (uses holistic evaluations)
– obtain perceived distance measures between products
– compose map (multidimensional scaling)

Benchmarking

Understand your company: self analysis

This is concerned with identifying:

performance analysis, like

- profitability
- sales volume
- market share
- customers and customer satisfaction
- product quality
- product roadmap
- relative cost
- product portfolio, for each product (product line) understand where we are in the product lifecycle.

Determinants of strategic options:

- SWOT of company and product(s)


- Strategic problems
- Employee attitude and performance
- Capabilities and constraints
- Financial resources and constraints
- Staff resources and constraints

Understand the product. What do we sell?

Understand the products we sell.


What are their features and how can we relate those features to customer needs.
What is the value proposition of the product?
Can we measure the benefits that the solution brings to customers?
How can we differentiate?

Understand the position in the product lifecycle

Collect customer/sales feedback.

Define the metrics to measure results


Define the metrics
- Type
- implementation (where and how)

Identify markets and market opportunities


This is concerned with finding new opportunities for the company to sell their products.

New opportunities may come from


- existing customers
- new customers

Existing customers

Existing customers opportunities may come from cross sell (new products) and upsell (existing products).
Marketing to existing customers may require knowledge of the accounts, so that the best customers can be treated
differently in marketing activities from less profitable customers (who gets invited to the trade show? Who gets the best
present at Christmas time?)

New customers

Find new opportunities in existing markets (this involves understanding the markets which have been more receptive of
the products a company sells). Building account profiles may help in this way.
Find new markets. This involves geographical expansion or entering new industries/verticals with modified/new
products.

Segmentation and targeting

This helps responding to the question who?

Market segmentation involves dividing a total market up into a series of sub-markets or market segments based on
customer characteristics. Target may be grouping companies, departments within companies, areas within departments
or roles. Remember that targets are always people!

Macro-segmentation: segment organizations along “traditional” variables: organization demographics


Micro-segmentation: segment the buying center (DMU) and its members along behavioral variables

Buying organization
• general company structure
• type of organization
• S.I.C., geography, size (“demographics”)
• technology used
• product application - end use - customers
• type of buying situation
• relationship to supplier (“in” or “out”, size
of order, existing contract, etc.)

Buying center
• Buying center structure
• Buying center composition
• Buying situation
• Stage of the decision process
• Types of procurement strategies (biddingvs. negotiation with “in” vendors: sequential vs. simultaneous evaluation)

Individual decision participants


• Demographics
• Psychographics
– loyalty
– attitude towards risk
– self confidence...
• Professional background
• Influence/centrality in the buying center

Targeting based on:


– Buying Organization characteristics
– Buying Center characteristics
– Individual Decision Makers’ characteristics

A market segmentation exercise involves the following steps:

1) define the relevant market to be addresses

Consider the broad customer group at which the company wants to sell its products and services. The choice may be
based on:

- the breath of the service line


- types of customers
- geographic scope
- business needs that my product/service fulfils

Overall, we need to ask ourselves if we can satisfy the needs of existing and potential customers in a clearly defined
market. Definition of the target market and its requirements is the first essential step in the segmentation process.

2) determine the criteria of the market segment viability

The segmentation has to be carried out with the following criteria that helps deciding if a market segment is viable:

- a segment has to have identifiable members (enumerated and evaluated). It must be measurable in size and
characteristics.
- a segment has to be accessible with some form a direct marketing activity and within the budget
- a segment has to be substantial (or meaningful), so promising sufficient business to merit separate marketing
attention. This needs estimation of segment sizing.
- a segment must be durable over time

3) consider the alternative bases for segmentation

Segmentation may be carried out by


- industry classification
- company size, employees, number of locations, degree of vertical integration
- geography
- buying process
- benefits sought
- service (business customers look for different level of services)
- value sought (customers may respond differently to the seller’s “value offering”)

4) choosing specific segments to focus on (targeting)

Choice of which segment to focus attention and marketing budget is critical. Criteria for choice should be existing and
potential value and profitability. Consider expected acquisition costs, profit per customers, retention rates and customer
acquisition targets. Consider also estimate of revenue and customer lifetime value (CLV).

It is subsequently important to understand the granularity of the segments, that is the level of segmentation (macro,
micro or one-to-one)

Understand who the target decision makers are (professional figures) and the roles within a buying centre (influencers,
gatekeepers).
Identify targets that need special attention, like government.

Formulate the positioning statement(s)

Define a positioning statement, a clear description of who your customer is and how you want him to see your
product. This is a statement of what you do and how you do it differently and better and more efficiently than your
competitors.

Select the competitive marketing strategy

How to compete?
Market leader
Market challenger
Market follower
Market nicher

Product strategy
Strategy for differentiation and positioning.

Differentiation is a fundamental way to avoid competition (generic strategy)


• Two basic types of differentiation
– Vertical differentiation: consumers want the same but their willingness to pay differs
– Horizontal differentiation: consumers want fundamentally different things
• Product differentiation needs to be embedded in a consistent strategy including all other elements of the marketing
mix (distribution, communication, pricing).

New Product Development Process


Idea Generation, (Market driven OR Market driving)
Idea Screening
Concept Development and Testing
Marketing Strategy Development and Business Analysis
Product Development
Test Marketing
Commercialization

Along the way, market research tools are used to guide the process:
- Focus groups, qualitative methods
- Conjoint analysis
- Perceptual maps
- Surveys and Intention analysis.

Product lifecycle considerations

Beyond idiosyncratic factors, the demand of each product/category/brand follows a systematic (“bellshaped”) pattern
over time.
Introduction (no competition, uncertainty)
– invest/ manage cash flow
– find/educate customers
• Growth (entry, “tornado”)
– compete for resources
– build market share, brand, loyalty..
• Maturity (shake-out)
– tough competition for customers
– leverage distribution /differentiation/scale
• Decline (few large players, low margins)
– milk product/brand
– improve efficiency

The diffusion of products, brands and innovations in general is mainly driven by a social process similar to the spread
of an epidemic.
Key elements:
- “innovators”
- “imitators”
- “word of mouth” communication

Industrial innovators
• Larger firms
• Financially powerful
• Faster growing
• With high R&D spending
• With a younger CEO

What promotes diffusion in industrial markets?


• Homogeneity of customer base
• Industry concentration/globalization
• “Intermediate” level of competition
• Level of professionalization
• Mobility of employees
Price determination

Decide a channel/partnership strategy


This is always drive by business needs.

Identify the most suitable marketing communication mix

Understand sources of information available to the buyers in the industry and most importantly which sources of
information the target is using.

Personal Impersonal
Commercial Personal selling Websites
(controlled by the Trade shows Blogs
marketer) Telemarketing On-line forums
E-mail Sales literature
Conferences Advertising and advertorials
Company events RSS feeds
Webinars Sponsoring events
Virtual trade shows Online video b2b campaigns
Interviews Outdoor marketing. Airports,
Entertainment stations…
News releases and other PR
activities
Thought leadership material

Non commercial Word of mouth from colleagues, Trade publications


(outside the control consultants and co-workers Analysts
of the marketer) Internet forums Viral marketing

Structure the integrated marketing communication strategy


Set communication goals

Who is the audience?


This is determined by previous segmentation and by understanding the segment organisations buyer behaviour
Determine the touchpoints between you and your audience.

What should the communication say and do?


In other words: what the audience is intended to do with that information?

Goals can be set bearing in mind the hierarchy of effects (AIDA model)

1 awareness: buyers become aware through articles in trade publications that Intel is introducing a new Pentium
processor
2 interest: buyer become interest in seeing Pentium 3 when they receive an invitation to visit the Intel booth at the
consumer electronic show
3 desire: buyers desire the Pentium 3 processor when the visit the Intel booth, see the video, receive list of
software/computer making booth to visit to see the processor in action
4 action: buyers who indicated that a decision is approaching receive a letter shortly after the show with a special offer.
Action is taken when the salesperson calls to visit the buyer.

Goals can be organized according to the following matrix


Positioning (goals aimed at changing Action (goals aimed to seek actions
minds like corporate image or beliefs like repeat purchase or call to set an
about a specific product) appointment)
Strategic (what Product awareness Increase market share
you want the Brand awareness Increase total sales
overall strategy Intel takes you where you want to go Increase new customer sales
to accomplish) with your computer Increase leads
Tactical (desired Remember the Intel theme after Number of visitor in a booth
outcomes for leaving a trade show
specific
communications)

Note: branding is building a mental association with a brand, like positioning for a product.

Choose the marcomm mix

Depending on the goals set for the marcomm strategy, the use of the marketing mix changes. For instance if the goal is
to build more brand awareness, advertising may be the best choice. However, if the goal is to generate leads, maybe a
direct mailing campaign may help.

Create Messages

There is usually a primary message that conveys more strongly to your customers what you do and the benefit it offers
to them, supported by a number of secondary messages, each of which may have a number of supporting arguments,
facts and figures.

Messages need to be created according to

Objectives of the communication strategy

What buyers already think and do. Knowing how buyers purchase and what they already think is important to design an
effective communication strategy. For instance, if the purchase of plastic is not so important for a company, the buyer
won’t shop around too much. So the communication strategy may emphasize that it is easy to purchase from the
marketer’s company.

What information they need. The information needs are related to the buyer business needs. If the business need is an
issue to be solved, they would be attracted by information that details a solution. However information needs may
change depending on the media buyer is using. For instance research shows that when buyers attend trade shows they
have 3 sets of information needs:
• they need to find vendor for a particular product
• they need to explore different possible solutions for a problem they are facing
• the need to stay abreast of the latest technology in their filed.

What are the competitor’s actions. At the same time a marketer is trying to create a position in the mind of the
customer, so competition does the same. Marketer should consider what competition is doing and how likely they are
going to respond.

Create a strategy for retention and one for acquisition

Customer retention communication


Customer acquisition communication

Create and manage a budget for communication

Prepare the marketing plan


Prepare the plan of campaigns with timings, deadlines, budget allocation …
Marketing operations
Manage the campaigns

Measure the results

Briefing an agency, A standard briefing document is usually a good idea for briefing an agency. As well as focusing the
agency on what's important to you and your campaign, it serves as a checklist of all the important things to consider as
part of your brief. Typical elements to an agency brief are: Your objectives, target market, target audience, product,
campaign description, your product positioning, graphical considerations, corporate guidelines, and any other
supporting material and distribution.