B2B Marketing

Vinod Joshi
MBA
Symbiosis International University

Understanding Buying
Behaviour of B2B in Generic
Terms

Vendor Expectations vs. Reality

Expected Buyer
Responses
Product or service
Acceptance
?????????

Order quantities
Delivery terms and
times
Service terms
Payment terms

Types of Buying
Organizations By Nature

Nature of Buying
Organizations
Growth organizations

Troubled Organizations

Minimize risks
Will buy things which
save cost
Procrastination
Highly centralized
decision making

Taking high risk

Make large investment
Great hurry
Decentralized decision

Nature of Buying
Organizations..2
Complacent
organization

Slow decision
making
Too much
bureaucracy
Price haggling

Overconfident
organizations
Resistance to
change
Non-result
orientation

Buying Situations
New Task/First time Buying

Classifying Business Buying Situations

New-Task Buying

PhotoDisc

First-time/ unique
purchase situation
Considerable effort by
decision Makers
Uninformed buyer
Long time for decision
making

Classifying Business Buying Situations

Modified Rebuy

PhotoDisc

Repurchasing a good or
service under reevaluation
Often triggered by
previous vendor failure
Sometimes triggered by
changed need
Cautious buyer

Classifying Business Buying Situations

Straight/Routine
Buying

PhotoDisc

Repeat buying
Routine process
Zero risk
Tried and tested vendors

Buyers Effort Mapping

Buying
situation

Extent of effort

New task

Extensive problem solving

Modified
re-buy

Limited problem solving

Straight re- Routine

buy
11

Risk Framework
Buying situation

Buyers involved

New task

Decentralized with
top management
involvement
Decentralized with
small team

Modified re-buy
Straight re-buy

One or two from

Buying department
12

The Buying Stakeholders

PhotoDisc

Users
Gatekeepers
Influencers
Coach
Decider
Buyer

Musical Chairs

14

Power
Equatio
ns
Ego
Factors

15

Power
Nuisance
Ego
Internal
Clashes
Centers
Lobbies
Centers

16

How Does Buying Happen in

B2B Context?

Definition stage
Selection stage
Solutions stage
End Game stage

Stage 1-Definition Stage

Stage 2 Selection Stage

1. Solutions Provider Search

Stage 3 Solutions Delivery

Solutions development
Customization based on diagnositics
Testing of early versions of solutions
Delivery of prototypes
Trials, installation and testing of full
scale solution
Training of buyers employees

Stage 3 Solutions Delivery

Aligning the vendor logistics with
buyers logistics
Matching materials planning,
shipping quantities, inventory
location with buyers needs
Monitoring the delivery process and
constant reporting to the buyer

Stage 4 - End Game

Pre-empting the buyer with an
objective evaluation
Deciding corrective actions for future
purchases
Commence work on future RFPs

Business Environment
Economic outlook
Cost of money
Supply conditions
Rate of technological change
Political and regulatory developments
Competitive developments

24

Risk
Minimizat
ion

25

Nature of Risks

Anatomy
Of Purchase

27

Nature of Risk

Personal
Risks

Organizational Risks
Organizational
Risks

Function Specific Risks

Personal Risks

28

Organizational Risks
- Financial Risks
- Reputation Risk
- Usage / Production Risk

29

Function Specific Risks

- Performance Risk
- Likely failure of customer commitment
- Teams Rejection Risk

30

Personal
Risks
-

Power Risk
Influence Risk
Credibility Risk
Career Risk

31

How Do Individuals Minimize

Risks?

32

B2B Buying Behaviour Model

Buyer Responses

The Buying Organization

The Buying Center
Business
Environment

Buying
decision
process

Risk Minimization

Product or service
choice
Supplier choice
Order quantities
Delivery terms and
times
Service terms
Payment terms

Understanding Buying
Behaviour of In terms of
Product Life Cycle

B2B Product Life Cycle

Maturity
Profits

Competitive
Turbulence

Decline

Growth

Introduction
Development

Time

Product development
Introduction
Growth
Competitive Turbulence
Maturity
Decline

Economic Value System

37

Buying Behaviour
Introduction Stage
Development &

38

Buying Behaviour- Growth

Stage
Growth

39

Buying BehaviourTurbulence Stage

Turbulence

40

Buying Behaviour- Maturity

Stage
Maturity

41

B2B Buying Behavior in

Different stage of PLC

42

Development Stage
Considerably long period
At times, it even merges with
Introduction stage
Large commitment in terms of
investment

Selling Strategy During

Development Stage
Tie in development with forward
looking customers

44

Introduction Stage
Slow acceptance of products
considerable market development
before reaching an appropriate
growth stage

Selling Strategy During

Introduction Stage
Create Economic value system
involving other complementary
products, process, people

These form organizational habits.

Organizational habits once formed
are not easily changed.

Marketing Strategies
Introduction Stage
Price objectives
High trade discounts

Promotional objectives
Customer Education
Induce trial

Sales & Distribution objectives

Exclusive and selective

Growth Stage

Increasing product demand begins to

lower costs substantially.

Focus on
improving product design
improving distribution service
Lowering price

Marketing Strategies
Growth Stage
Strategy Objective
Establish strong market position

Outlook for Competition

Early entrance of aggressive emulators

Product design objectives

Design to facilitate new segment and
use new systems

Marketing Strategies
Growth Stage
Price objectives
Aggressive promotional pricing

Promotional objectives
Strengthen brand preference

Distribution objectives
Intensive rapid resupply of distributors

Selling Strategy During

Growth Stage
Launch product variants
Sell products through intermediaries

51

Competitive Turbulence
During this stage, products high
profitability and growth attracts more
competition
A number of firms get into get into
the field
Many of them exit as quickly as they
enter.

Marketing Strategies
Competitive Turbulence
Strategy Objective
Maintain/ strengthen market niche

Outlook for Competition

Too many competitors

Product design objectives

Intensive product development

Marketing Strategies
Competitive Turbulence
Price objectives
Broaden promotional pricing strategy

Promotional objectives
Dealer promotional schemes

Distribution objectives
Intensive rapid resupply of distributors

Selling Strategy During

Turbulence Stage
Modify and sell products for verticals
Fashion First
USA First
Europe First

55

Maturity Stage
Customers settle down with the
vendor and stop searching for other
offering.
Quality and delivery commitments
Need to be stringently followed.
Some product modifications may be
required
Company makes up for the losses
made during the development and
the introduction stage.

Marketing Strategies
Maturity Stage
Strategy Objective
Defend position against competition

Outlook for Competition

Stable competitive scenario, no new
competition

Product design objectives

Cost improvement through design

Marketing Strategies
Maturity Stage
Price objectives
Defensive pricing

Promotional objectives
Trade loyalty

Distribution objectives
Intensive rapid resupply of distributors
at minimum inventory costs

Selling Strategy During

Maturity Stage

59

Marketing Strategies
Decline Stage
Strategy Objective
Milk the product at all possible profits

Outlook for Competition

Competition dropping out

Product design objectives

Prune the product features

Marketing Strategies
Decline Stage
Price objectives
Maintenance pricing

Promotional objectives
Phase out

Distribution objectives
Phase out

Understanding Buying
Behaviour of In terms of
Product Life Cycle

The Technology Adoption

Life Cycle

Laggards
Conservatives
Pragmatists
Visionaries
Technophiles

64

Buying Behavior
Technophiles
Tech as Toy

65

Buying Behaviour Visionaries

Risk Takers

66

Buying Behaviour
-Pragmatists
Follow Visionaries

67

Buying Behaviour
Conservatives
Follow Pragmatists

68

Selling Techniques
Technophiles

69

Pragmatists

70

TALC and How Technology Markets

Evolve
Chasm
A break in the sales growth curve for a
new technology.
A chasm occurs between visionaries and
pragmatists.

Bowling Alley
Focus on one segment
Segment specific sales and development

TALC and How Technology Markets

Evolve
Tornado
The chaos that occurs during a period of
rapid growth.
A dominant supplier usually emerges from
a tornado.

Using the Technology Adoption

Life Cycle
Tornado
Corresponds to the late introduction/early growth
stage of the PLC
The market wants to support the market leader
it reduces uncertainty for pragmatists.
The market leader has the chance to become the
gorilla the gorilla can do what it wants as
long as it stays close to what pragmatists desire.

Using the Technology Adoption Life

Cycle

The vendor of an innovation passes through

technophiles and visionaries before
establishing a foothold among pragmatists.
Crossing the chasm (called the market
development gap) between visionaries and
pragmatists is related to a change in the
entire marketing mix.
There are changes in type of customer and
what the customers perceives as being of
value.

Selling Techniques

Key Steps in B2C Selling

1. Prospecting
2. Offering and Soliciting
3. Negotiating
4. Objection Handling
5. Closing

76

B2B Selling Cycle

Pre-introduction stage
Introduction stage
Qualifying stage
Reference stage
77

 Presentation stage
Negotiation stage
Objection stage
Closing stage
Relationship stage

78

B2B Selling Cycle..1

Pre-introduction stage
Introduction stage
Qualifying stage
Reference stage
79

B2B Selling Cycle..2

Presentation stage
Negotiation stage
Objection stage
Closing stage
Relationship stage

80

Science of Selling

81

Science of Selling

82

Steps Involved in
Prospecting
Business Intelligence

83

Methods of Data Mining

Event Triggers
Project Triggers
Product Triggers

84

First Step in Prospecting

Leverage the existing
customers for more
business
Cross Selling
Leverage the existing
customers for selling
Up Selling
additional products
Leveraging the existing
customers for high value
products
85

Selling vs. Key Account

Management
Transactional

Mutual Loyalty

High customer
churn

Long Term
Joint value creation

Adversarial
Equal relationships
Suspicion based
Might is right

86

Selling
Contact
Transaction
Involvement
Dis-satisfaction
Exit

Customer
Churn

Recovery

87

KAM
Contact
Transaction
Involvement
Dis-satisfaction

Customer
Churn

Recovery
Relationship
88

Lifetime
Customer

Key Account Management

Principles

89

Key Account Management

Process

90

Key Account Management

Process

91

Two Identification
Determinants
Customer Attractiveness
Relative Strength

92

Two Identification
Determinants
Customer Attractiveness
What is that makes your customers
attractive to you?

Relative Strength
What is that makes you attractive to
your customers?

93

Customer Attractiveness
Size business, profit, ROI
Growth potential business, profit,
ROI
Business consistency
Stage of adopting products
Level of competition
Market standing
94

Relative Strength

Price
Service
Quality
Speed of response
Technical and product innovation
Investment in new product development
Trust and confidence ( as perceived by the
customers)

95

High

Low
Relative Strengh
High

Customer
Attractiveness

Low

Opportunistic
Accounts
Low

High
96

Opportunistic Accounts
Dont treat them as nuisance
Use them as the base of your business
Pricing as per the situation and
competitive pressure
No product development
Deploy juniors

97

High

Low
Relative Strength
High

Customer
Attractiveness
Maintenance
Accounts
Low
Low

High
98

Maintenance Accounts
Most difficult customers to deal with
Constant review of performance
metrics

99

High

Low
Relative Strength
High

Prestige
Accounts

Customer
Attractiveness

Low
Low

High
100

Prestige Accounts
Identify internal competencies
needed to increase your
attractiveness
Place your best people on such
accounts
Judicious deployment of resources
101

High

Low
Relative Strength
High

Partner
Accounts

Customer
Attractiveness

Low
Low

High
102

Partner Accounts
Maintain cross-functional contact
from both sides
Keep the entire Market Chain under
constant observation
Get cross-functional buy in while
putting resources on new
development
103

High

Low
Relative Strength
High

Prestige
Accounts

Partner
Accounts

Customer
Attractiveness

Low

Opportunistic
Accounts
Low

Maintenance
Accounts
High
104

Key Account Management

Process

105

Key Account Management

Process

106

Identify Strategic Value

107

Key Account Management

Process

108

Target Management

110

Key Account Management - best practice actions

Rank accounts on Improvement Potential index

Re-deploy resources to highest potential
channels/accounts
Target category management efforts to accounts with
Understand
capability
Tie account team
account
Analyze
AnalyzeAccount
Account
incentives to customer
requirements/
metrics
needs/ capabilities
Reflect balanced
Plan account
Set
account
scorecard in account
Set
account
actions to fix
Review
metrics
objectives
Reviewaccount
account
objectives
problem P&L line
items
Target account
goals/
accountability for
Plan
account
Monitor
Take
planned
Plan
account
Take planned
profit improvement
strategy
performance against
action

strategy
Match strategy to
action
tactical plan
improvement
Hold account team
potential
Include customer in account
planning
members
process
accountable
Develop both internal and customer
targets
Tie actions/events to improvement
opportunities

Relationship Marketing

Harvesting

Cultivating

Farming

113

Harvesting

Relations
hip
Platform
Buying
Platform

Cultivating

Farming

Working
Platform

114

The Relationship Pyramid

Relationship Building
through Value
Strategic
through
Enhancement
Professional
Partnership
Information Recognition
Sharing

115

Value to Customer

Level of Need
Fulfillment
Scope of Need
Fulfillment
116