B2B Marketing

Sunil Chandra Sahasunilchandrasaha@gmail.comLecturer- IMT Ghaziabad CDL

Work ex:Bharti Airtel, Aditya Birla MFL, Bestseller India, Network 18,

Healthcare Start Up- Spinalogy Clinic

B2B Marketing

• What is B2B Marketing• Business Vs Consumer Marketing (B2B Vs B2C)• NATURE of B2B Demands and B2B Promotions• B2B Markets and Environment

– Types of Business Customers & Industrial Products – Environmental Analysis

• Organizational Buying and Behaviour– Purchase , Buying Process and Buying Situations– BuyGrid Framework– Multiple Buying Influence and Buying Behavior Models

• Case Study

B2B Marketing Vs B2C Marketing• Complex and High Risk

• Less in No. and Bigger Size of Purchase

• Limited

• Lead Generation and Relationship Management

• Improve Cust. acquisition by Converting prospective interactions

• Increase Volume, Higher Lead Quality and Faster Sales Cycle

• Simple and Low Risk

• Huge in No. and Small Size of Purchase

• Spread across

• Brand Building• Marketing Programs to improve

campaign engagement and communicate to larger market effectively

• Higher Frequency of purchase and increased brand recall

Decision Making Process

No. Of Consumers/Size

of Purchase

Geographical Area

FOCUS

METHOD

GOAL

B2b B2c e- Promotion Focus Areas

Channels of B2B Business

NATURE and TYPES of DEMAND is B2B• Derived Demand

– Dependent on the Customer’s Product – Eg. Textile Industry

• Fluctuating Demand : Recession: Ship Wrecking Business • Stimulating Demand – Eg. Intel ads • Joint Demand : Smartphone- Amoled Screen• Cross Elasticity Demand :

• Characteristics of B2B Demand– Price Sensitivity is Less– Ability to Pass on Cost– Dependent on Business Operations Variable

NATURE of PROMOTION is B2B

• Personal Selling

• Industry Relations

• Exhibition and Meets

• Product Details Sharing is Important

TYPES of B2B MARKETS

2. B2B RESELLER MARKETi. Whole-seller - Inventory control and mgmt- Quantity & Quality Uniformityii. Retailer- Ordering Flexibility- Seasonal Demand

3. GOVT. ORGANISATIONS- Key is to maintain relations- Lowest Bid- And Adherence to Rules

1. B2B PRODUCT MARKETi. Manufacturer (Product)- Criteria: Quality & Dependability- Eg. AIRBUSii. Service Provider- Timely Service- Unique Quality - Eg. Audit Services, Corporate

Training , HR Recruitment Firms

B2B Types Of Customers

B2B BUYING SITUATIONS

• Straight Re-Buy– Reorder– Role of Sales Person is Minimum

• Modified Re-Buy– Change of Order New Product and Qty – Higher Role of PR and Sales person and CRM

Process

• New Buy– Huge role of Sales Person

Understanding B2B BuyingBuyGrid Framework

Multiple Buying Influence

Buying Decision

Industry Environment

CASE STUDY : Amazon.com And IndiaAmazon.com the global giant and 475 billion dollar Revenue co. is all set to fight to

the top spot in India. The world's largest online retailer is also expanding the range of products that will be delivered to customers within a day, displaying the trademark aggression that marks its global operations nearly 10 months after launching services in India in 2012.

The company already has a roster of 4,000 sellers in the Online Marketplace model which has been operating in US and many other markets. These moves, coming days after the company launched a high-voltage advertisement campaign including television spots during the last edition of the IPL-2013, was aimed at getting the largest number of merchants and the widest variety of products for Amazon customers.

Market leader Flipkart, which just reached the milestone of $1 billion (over Rs 6,000 crore) in sales, also has about 4,000 sellers on its marketplace. But it follows an invite-only model to sign on sellers which is more time-consuming. India is about to have 16.5 cr internet users by 2014. And marketsize is about $3.5 billion (INR 18000 Cr) which is growing at an extreme pace.

Industry estimates Amazon India's sales at over $200 million (Rs 1,200 crore).At current growth rates, Amazon is capable of clocking sales of $1 billion (Rs 6,000 crore) by the end of March 2016. Amazon has come up with $2 Billion Investment in India in its operations. Its currently operating through 2 huge warehouses.

The company's latest delivery service, 'easy ship', will allow sellers to ask for a product to be picked up and shipped by Amazon. It will also provide cash-on-delivery for these sellers' orders, an option so far available only to those who stocked products with Amazon. The service, which has 400 sellers already registered, will be available in 30 cities to start with.

Merchants too are happy with their experience on the site. "Margin cut at Amazon is about 6-7%, compared with 10-12% at Flipkart"

While these indicate that Amazon is chipping away at the fortress that Flipkart has built, overtaking the market leader will take some doing.

Flipkart has the people and has built processes and technology. They are fighting back powerfully. Flipkart has taken over a few smaller player as like Snapdeal. To improve the operations and range Amazon bought, a major fashion e retailer Jabong.com for a reported INR 1800 Cr to counter Flipkart-Myntra JV.

Questions

• Analyse the b2b strategies of Flipkart and Amazon and recommend Flipkart that what more than they do?

• What is your recommendation for Amazon for their $ 2 billion investment

B2b Strategy

AMAZON.in

• Marketplace operational experience

• More Sellers> More Products range and options> Products sale

• Lesser Margin Charged from Merchants

• State of Art Ware houses across Globe which has efficient system of merchant communication

FLIPKART.com

• Seller selection only by invitation

• Rate of Signing Vendors is Lesser

• Higher Margin 10-12% charged

• Have to deal with 1 day delivery which Amazon is doing 50% of their deliveries

Recommendations for 2 Billion $

• More Warehouses• Client Engagement tools• Knowledge imparting in B2B sellers to stay put

Platform for relatively lesser knowledge Indian merchants

Lecture 2

• Buyer Seller Relationship Types and Tools and Methods to Manage– RM/CRM– CRM+CLV– Customer Service

• STP in B2B : Vs • Industrial Product

– PLC and Product Strategies- NPD and Branding B2B Product– Brand Auditing: BRAND Report Card

• Marketing of B2B Services• Case Study : VOLVO Email Marketing and CRM

Integration

Buyer Seller Relationship Types

• Financial RM– Financial Benefits by Giving Discounts on Volumes– Special Pricing– But can be copied and cant be a part of Long Term Strategy

• Social Benefits RM– Personalization– Including the Customers in Social Circles

• Structural Ties RM– Changes in Structure of Customer Organization to fit the product

for a longer Term• Eg. ABB and Indian Railways• Russia and INS Vikrant

Relationship Management3 Approaches to RM: Berry and Parasuraman

CRMCRM PROCESS in B2B marketing:1. Linking CRM > Customer Database2. Selecting Customers3. Developing Relations

4. Implementing Relationship Strategy5. Evaluating Relation Objectives and

Strategies

B2B

Modes of CRM

CRM360°

SOCIAL CRM: New Age 24x7 CRM

MACROAuto

Mated

MICROHuman

1. Reciprocity- Buying from Customer Itself- Eg. Petroleum Products

2. Dealing with Customer’s Customers - Eg. Rolls Royce Aircraft engine to Singapore Airlines to

Induce Demand in Boeing and Airbus

Special Dealings Between Buyer and Seller

Segmentation and Targeting- B2B1.

Data•Research on Buying Firms•Competition Market

2. Identify •Based On Research Data/ Primary findings

3. Select

•Macro-segmentation/Broad Classification •According to Co. Objectives and Resources

4. Evaluate• Each Macro-segment is analyzed on Attractiveness/ Buying Behavior

5. Segmentation

•Meaningful Micro segment•Buying Situation/ Purchase Criteria•Personal Characteristics of DMU

6. Select Target

•Based On Analysis of Microsegment•Select the Target Market based on Co. Objective Criteria

7. Profiling

•Profile Target Market

1. Measurable 2. Substantial 3. Accessible 4. Differentiable 5. Actionable

Positioning Strategy

CONTENT AUDIENCE RELEVANCE EVALUATION

STP Example- Tyre IndustryMRF Vs BRIDGESTONE

Indian Tyre Industry

Commercial Vehicles

MHCV

HCV LCV

Passenger Vehicles

CarsMotorcycles

Scooters

Others

FarmIndustri

al Vehicles

MHCV : Medium Heavy Commercial VehiclesHCV Heavy Commercial VehicleLCV Light Commercial VehicleOTR Off the Road

30

Bridgestone - Market Specialization

M1 (Cars)

M2 (Trucks)

M3 (2-wheelers)

P1 Touring Tyres

P2 Sport Tyres

P3 Economy Tyres

Bridgestone India has focused on the Passenger Car Segment exclusively as it offers only radial tyres.

MRF : Compete Market Coverage

M1 (Cars)

M2 (Trucks)

M3 (2-wheelers)

P1 Touring Tyres Economy Tyres High Grip Tyres

P2 Sport Tyres Mileage Tyres Touring Tyres

P3 Economy Tyres Endurance Tyres

Best Fit Tyres

MRF holds a diversified portfolio of products spanning the entire tyre market.

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Positioning

Communication : Superior Endurance, Strength, Sporty & Home-Grown

Punch line: Tyres with Muscle

Sponsors Cricket & Rally racing to position as high endurance and sporty

Communication : High Performance, Top Quality & International standard.

Punch line: Passion for Excellence

This communication is substantiated by association to F1 racing

PLC

Break Even

PLC – Technology Products

Customer Lifetime Value-CLV

Time>>

New Product Development- Management Process

Test Marketing

LAUNCH

DEVELOP

B2B Product Branding Strategy

B2B Branding- Why is the Need to Brand

B2B Branding

Risk Reduction Easy Info Image Creation

B2B Brand AuditingBrandAudit

Objective of Audit

Internal Description

Ext. Data: Research analysis Findings

and Report

Brand Score Card

B2B Service Marketing Characteristics

B2B SERVICE MARKETING

Steel PC Hotels Transport Legal/ IT

Tangible Intangible

B2B SERVICE MARKETING: StrategyB2B Services Marketing Strategy

Service Pricing

Service Promotion

Service Distribution

Case Study: VOLVO Construction EquipmentsOne of the success stories of B2B marketing is Volvo Heavy Construction Equipments. Volvo has a huge range of Construction Equipments. Volvo understood the research reports in 2008 that Emails will be the most effective tools for marketing of it’s products. And hence Volvo designed the whole Branding program focused on emails. It revolutionized the way emails were sent to customers and increased the click-through by 21% and saw an increase of 9% increased email subscription.Volvo opted for very strong SEO of its website and it paid off. With the help of dynamics, the revolutionary data analyzing capabilities, It enabled Volvo team to analyse, every visitor to the website, and cater to with much more efficiency and affectivity with his own needs.Volvo used alongside social media very effectively to engage and communicate back to customer. Which is in sync with website. It helps Volvo to attract customers who are looking for a specific machine for his own construction business. Volvo, focused on lead generation through website. It invites the visitors to fill up the form for subscription and Dynamics CRM helps to give the best possible result based on data entered by the customer. Quick response, Personalised approach and dedicated CRM gave the company much needed push in sales. Volvo is expecting 57% of new business to come through the websites in coming years.Extending the CRM activities, Volvo managed Email marketing by Pre Sales and Post sales startegies. Volvo runs the bi monthly, email campaigns for reselling pre-owned construction equipments which is absolutely in sync with customer’s need.

Volvo also sends and bi monthly remarketing emails to customers who opts for it. This email list the products with necessary stats which the customer may look into as options! These initiatives helps the dealers of Volvo equipments immensely as the company single marketing campaigns result in better sale of Equipments.Volvo’s email strategy helps to nurture customer’s need effectively. The email contents are dynamic in nature and invite customers to click through for more interactive functional platform of website with vedio links. The perspective buyer’s decision is hugely affected by the kind of content they have provided on website.So, by use of effective SEO, great Email Strategy execution in place with specific need based wesbite with tremendous navigation tools with social network engament Volvo has become market leader in B2B construction equipments.

Case Study: VOLVO Cont.

Question

IF YOU THE MARKETING MANAGER Of VOLVO Construction Equipments:

• What Email Strategy is used in Volvo to make it success wrt to Website Clicks/ Dymanics CRM and Pre and Post Purchase

• How do you plan to integrate – Website and SEO– Emails– Social Media Engagement

Email Focused Marketing

MOBILE DevicesFocused EmailMarketing

Sales Rep

ClickBrowsingTime on Page

WEBSITE- ERP Integration Strategy for CRM

WEBSITE Strategy for CRM

Lecture 3

• SCM– Framework– Components of SCM and Integration– Logistics– Total Cost Approach of SCM– Optimal Order

• SCM Integration• B2B Planning Control Startegy• Diversification Strategy in B2B- Vertical Integration• Global Market Entry Strategy• B2B Pricing Strategy• B2B SBU• BCG Matrix• B2B E commerce: EDI, Process and models• Case Study- Jaguar and Landrover TATA Take Over

Supply-Chain ManagementSCM is to coordinate activities between components within the Value chain to maximize the competitive advantage, by adding value (Cost Advantage- Leadership Advantage) and benefits to the ultimate consumer

Kapoor’s Furniture CHAIN

60% of sales in supply chainCurrent gross profit = INR 1,00,000TARGET : Increase profits to INR1,50,000 (50%)

CURRENT SITUATION

SUPPLY CHAIN STRATEGY

SALES STRATEGY

Sales INR 10,00,000 INR10,00,000 INR12,50,000

Cost of materials INR 6,00,000 (60%) INR 5,50,000 (55%) INR7,50,000 (60%)

Production costs INR2,00,000 (20%) INR 2,00,000 (20%) INR2,50,000 (20%)

Fixed costs INR1,00,000 (10%) INR 1,00,000 (10%) INR1,00,000 (8%)

Profit INR1,00,000 (10%) INR 1,50,000 (15%) INR1,50,000 (12%)

B2B Marketing Strategy Impacts Supply Chain Decisions

LOW COST STRATEGY

RESPONSE STRATEGY

DIFFERENTIATION STRATEGY

Primary supplier selection criteria

• Cost • Capacity• Speed• Flexibility

• Product development skills• Willing to share information• Jointly and rapidly develop

products

Supply chain inventory

• Minimize inventory to hold down costs

• Use buffer stocks to ensure speedy supply

• Minimize inventory to avoid product obsolescence

Distribution network

• Inexpensive transportation

• Sell through discount distributors/retailers

• Fast transportation

• Provide premium customer service

• Gather and communicate market research data

• Knowledgeable sales staff

Product design characteristics

• Maximize performance

• Minimize cost

• Low setup time• Rapid production

ramp-up

• Modular design to aid product differentiation

SCM Components

OPTIMAL ORDER: CB analysisTi

me

Number of facilities 1 2 3 4 5

Response time

(a) Response Time

INR

Number of facilities 1 2 3 4 5

Lowest cost

(b) Cost INR

Total logistics cost

Facility costs

Inventory costs

Transportation costs

i. Response Timeii. Cost iii. Profit- Revenue- Cost

INR

Number of facilities1 2 3 4 5

Revenue

(c) Cost, Revenue, and Profit

Total logistics cost

Max profit

OPTIMAL ORDERi. Response Timeii. Cost iii. Profit- Revenue- Cost

Customer Service In Supply Chain

During Sale ServiceKeeping Adequate StocksSpeed and Accuracy of DeliveryProduct Substitution

Post Sale ServiceProduct WarrantyMaintenance ContractInstallationRepairDamage HandlingCustomer Training

Pre Sales ServiceAdvising ServTechnical ServOrdering ServPatronage Awards

SCM Components: ERP integration

WMSPOS System

GPS, Tracking Systems, Replenishment

Request Processing SysOrder Processing Sys

Stock MgmtQuality Mgmt

Data Mgmt SysEfficient Demand

Prediction Sys

ERP

B2B Planning and Control Business Marketing:Motive and Modes of Diversification

1. GrowthLocation, Markets and Globalisation

2. Risk Reduction- Economic slowdown and recession- Lesser dependability on one sector

3. Value Creation- Produce products at lower cost- Better technology for customers 4. Change in Competitive StructureRemove comp. and economies of scale5. Improve CapabilitiesTechnology, Innovation and Access to

talent pool

EXAMPLE : Forward Vertical Integration

EXAMPLE : Horizontal Integration

B2B STARTEGIC PLANNING and CONTROL:MODES of ENTRY in OVERSEAS Market

1. TRANSACTION1. Transaction

Exporting

Spot Sales

Foreign Agent

Long Term Contract

Licensing

Licensing Patents and

IPsFranchising

MODES of ENTRY in OVERSEAS Market2. Direct Investment

2. DIRECT INVESTMENT

JV

Marketing and Distribution

Only

Fully Integrated

WHOLLY Owned

Marketing and Distribution

Only

Fully Integrated

PRICING Strategy: New influences of Decision making

Pricing Strategy

1. Cost Based Pricing– Cost-plus pricing– Target return pricing– Mark-up pricing– Break-even pricing– Demand(Willingness to Pay and Price Elasticity) Along with Competition is

Ignored

2. Competition based Pricing– Competitive price levels or on anticipated – Observed Actions of Actual/Potential competitors

3. Customer Value Based Pricing– Perceived customer value of the product

B2B Strategy: SBUs

CORPORATE OFFICE

SBUSBU

FinanceMarketing

Unit IV: Portfolio Approach & Analysis- BCG Matrix

MULTIFACTOR PORTFOLIO (MFP) MATRIX by GE

B2B E commerce- EDI

B2B E Commerce Process

B2B E Commerce Models

Case StudyThe Tata acquisition of Jaguar Land Rover is a superb example to include in research notes on

takeovers and mergers. At the time (early 2008), Tata’s investment in JLR seemed to be poorly timed and there were many critics who questioned the strategic logic of the move as well as its timing. Shortly after the takeover, demand in the global market for luxury cars collapsed as a result of the financial crisis and Tata was forced to refinance to support its investment.

Several years later, however, the takeover appears to be a compelling example of a successful acquisition which is generating substantial shareholder value for Tata as well as continued support from JLR’s many stakeholder groups in the UK.

Background- Jaguar Land Rover (JLR):Jaguar Cars and Land Rover bought by Ford from BMW for $1.4bn in 1989. A difficult

relationship between the UK firm and its US owners ;saw the worst times of extremely respectable brand under US firm leadership. Jaguar fell into heavy losses whilst owned by Ford (reaching up to $600million per year). However, Ford invested heavily in new model development

Tata Group:One of India’s largest private conglomerates - used to investing in the UK. Tata Bought Tetley Tea

in 2000 And also Bought Corus Steel - a big supplier to JLR - in 2007 which raised eyebrows across globe. Tata made its presence felt in almost every economy by taking over Corus. Tata Motors - was already India’s third largest car-maker, but struggling with a poor image and hampered by rising raw material costs.

The DealFord sells JLR to Tata in March 2008, just over £1bn - just a few months before a collapse in global

demand in the international car market. Tata financed the takeover with $3bn of new long-term loans. The price paid by Tata was approximately half of what Ford paid to buy Jaguar and Land Rover.; + Ford had continued to incur heavy losses in Jaguar as it failed to turn the business around. The deal took over a year to agree - which may have helped with the post-merger integration. Tata recognised that it would continue to need support from Ford who are a main supplier of car components to the two brands. No significant change proposed to the businesses by Tata. They claimed that staff, trade unions and the UK government had been kept informed about the proposed takeover and supported the move. The deal has been endorsed by trade unions, which secured a commitment from Tata to continue with JLR’s production plans until the end of 2011. This includes development of new models.

What happened next?Significant slump in new car sales in late 2008 as a result of the credit crunch; Tata had to refinance in

order to keep JLR solvent. UK government considered a financial aid package, indicating the strategic importance of JLR to the UK economy. In February 2010: Tata secures a £340million loan from the European Investment Bank to support JLR through recession. And in May 2011: Tata announces £5b five year investment programme in JLR - focused on new product development & new equipment at JLR three UK plants + investment in a planned factory in China. November 2011: JLR announces 1,000 new jobs a Land Rover plant in Solihull boosted by rising demand for SUVs in China, Russia, India and Brazil. February 2012: Soaring sales of Jaguar and Land Rover cars have helped Indian firm Tata Motors to a huge rise in profits (up 41% on 2010). JLR arm saw sales rise 37%, helped by selling 32,000 of its new RangeRover Evoque. China overtakes the UK as JLR’s biggest market. April 2012: JLR announces that it will build a successor to its previous sports cars called the F-type at its factory in Birmingham.

Questions• ENLIST the Key drivers of motives for the takeover of Financially

broken JLR during RECESSION by Tata in 2007-08 w.r.t. – Product Process Innovation Strategy– Global Strategy and Entry In Overseas Market

By 2014 Under Tata ownership, Jaguar Land Rover has launched new vehicles including the Range Rover Evoque, Jaguar F-Type, the Jaguar XF, the latest Jaguar XJ the Second-generation Range Rover Sport, the Fourth-generation Land Rover Discovery and the fourth-generation Range Rover.Jaguar Land Rover delivers best ever full year global sales performance retailing 425,006 vehicles in 2013, up 19%. Jaguar is the fastest growing brand in Germany, India and the USA in 8 countries.

Key drivers of / motives for the takeover:

i. Acquiring JLR giving Tata greater international distribution, broader product range and better customer service skills – Horizontal Integration

ii. Tata gains access to world-class engineering capabilityiii. Strengthens relationship between Tata’s steel and motoring

businesses: Vertical Integrationiv. LR also to link closer with Tata Steel to provide new lightweight steel

alloys for new car models: Vertical Integrationv. March 2012: JLR and Chery Automobile agree a joint venture that

should pave the way for production of Jaguar and Land Rover cars in China.

The Content Info

• The Structure of presentation is directly taken from IMT Ghaziabad- CDL course- material

• The Content used in form of Pictures and content is taken from various education and business websites.

• The creation is to be used for education purpose only and not for business

Thank You

Sunil SahaLecturer, IMT Ghaziabad CDL

Corporate Exp:Bharti Airtel, Aditya Birla MFL, Bestseller India, Healthcare Start Up- Spinalogy Clinic

Email: sunilchandrasaha@gmail.com

Websites: www.candidreviewstreet.com and www.sportslolz.com

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