Global Business Products

7/27/2019 Global Business Products

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Products and Services

for Businesses


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Learning Objectives

The importance of derived demand in industrial markets

How demand is affected by technology

Characteristics of an industrial product

The importance of ISO 9000 certification The growth of business services and nuances of their marketing

The importance of trade shows in promoting industrial goods

The importance of relationship marketing for industrial products

and services


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Global Perspective

Intel, the Boom and the Inescapable Bust

In industrial markets, including global ones, what goes up must

come down

The majority of export sales for industrialized countries is

technology

Issues of standardization versus adaptation have less relevance to

marketing industrial goods than consumer goods

Factors accounting for greater market similarities in industrial

goods customers versus consumer goods customers:

- The inherent nature of the product

- The motive or intent for the user differs


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Major Categories U.S. Exports

Insert Exhibit 13.1


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Demand in Global Business-to-Business

Markets

Demand in industrial markets is by nature more volatile

Stages of industrial and economic development affect demand for

industrial products

The level of technology of products and services make their sales

more appropriate for some countries than others


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Current Microsoft Ads in Mexico and Germany

Your Potential. Our Passion


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The Volatility of Industrial

Demand

Cyclical swings in demand

- Professional buyers tend to act in concert

- Derived demand accelerates changes in markets

Measures to manage volatility:

- Maintain broad product lines

- Raise prices faster and reduce advertising expenditures during

booms

- Ignore market share as a strategic goal

- Eschew layoffs

- Focus on stability

Derived demand can be defined as demand dependent on

another source.


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Derived Demand Example

Insert Exhibit 13.2


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Stages of Economic Development

Stage 1the traditional society

Stage 2preconditions for takeoff

Stage 3take off

Stage 4drive to maturity Stage 5the age of mass consumption


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Technology and Market Demand

Trends spurring demand for technologically advanced products:

- Expanding economic and industrial growth in Asia

- The disintegration of the Soviet empire

- The privatization of government-owned industries worldwide

The companies with the competitive edge will be those whose

products are:

- Technologically advanced

- Of the highest quality

- Accompanied by world-class service


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Quality and Global Standards

Perception of quality rests solely with the customer

- Level of technology reflected in the product

- Compliance with standards that reflect customer needs

- Support services and follow-through

- Price relative to competitive products

Relevant quality features


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Quality is Defined by the Buyer

How well a product meets the specific needs of the buyer

The price-quality relationship

Product design must be viewed from all aspects of use

- Climate- Terrain

Total Quality Management (TQM)

Lack of universal standards

Country-specific standards The metric system


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ISO 9000 Certification: An International

Standard of Quality

Positively affects the performance and stock prices of firms

Certification of the existence of a quality control system a

company has in place to ensure it can meet published quality

standards

Generally voluntary

EU Product Liability Directive

Now a competitive marketing tool in Europe and around the world

The ACSI approach


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ISO 9000 Certification: An International

Standard of Quality

Japanese Bridgestone/Firestone Plant in Costa Rica


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Business Services

For many industrial products the revenues from associates services

exceed the revenues from the products

- Cellular phones

- Printers

Leasing capital equipment

Services not associated with products

- Boeing at-sea-satellite-launch services

- Ukrainian cargo company space rental on giant jets


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After-Sale Services

Installation

Training

Spare and replacement parts

- Delivery time

- Cost of parts

Service personnel

Crucial in building strong customer loyalty

Almost always more profitable than the actual sale of themachinery or product


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Other Business Services

Client followers

Mode of entry

- Licensing

- Franchising

- Direct investment

Protectionism

Restrictions on cross-border data flows


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Expansion of U.S. Law Firms in Selected Cities

Worldwide

Insert Exhibit 13.3


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Trade Shows: A Crucial Part of Business-to-

Business Marketing

Want to buy a jet

fighter? The Paris

Air Show is thelargest in the world.


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Business Marketing

Secondary methods for marketing:

- Advertising in print media

- Catalogs

- Web sites

- Direct mail

Trade shows have become the primary and most important

vehicle for doing business in many foreign countries

Total annual media budget spent on trade events:

- Europeans22 percent

- Americans5 percent


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Business Marketing (continued)

Trade shows:

- Provide the facilities for a manufacturer to exhibit and demonstrate

products to potential users

- Allow manufacturers to view competitors products

- Are an opportunity to create sales and establish relationships with

agents, distributors, franchisees, and suppliers

Online trade shows:

- Become useful in difficult economic and/or political circumstances

- Are obviously a less than adequate substitute for live trade shows


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Relationship Marketing in Business-to-Business

Contexts

It is not a matter of selling the right product the first time, but

rather of continuously changed the product to keep it right over

time.

The objective of relationship marketing is to make the

relationship an important attribute of the transaction, thus

differentiating oneself from competitors.

Using the Internet to facilitate relationship building and

maintenance

- Cisco Systems

- IBM


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Solar Turbines Inc.

Caterpillar

subsidiary,

Caterpillar is one of

the US largest

exporters

A supplier to

the Russian oil

& gas industry

for over 30

years


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Solar Turbines Inc.

Trade shows

are critical to

international

sales

Large projects

like $60 MVenezuelan oil

and gas

platform are

typical


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Summary

Industrial marketing requires close attention to the exact needs of

customers.

Industrial goods marketers must pay close attention to the level of

economic and technological development of each market to

determine the buyers assessment of quality.

The demand for products and services in business-to-business

markets is by nature more volatile than in most consumer markets.

The demand also varies by level of economic development and the

quality of educational systems across countries.


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Summary (continued)

Product or service quality is defined by customers.

Global quality standards such as ISO 9000 are being developed.

After-sale services are an important aspect of industrial sales.

Trade shows are an especially important promotional medium inbusiness-to-business marketing.

Documents

Global Business Products