Class 1 E-Business (HAI 3EBU)

Int. B2B Marketing - Fall 2003 - Nils Randrup

Class 2

Int. B2B Marketing - Fall 2003 - Nils Randrup

Buying behaviour

How does customers buy?

Who? Segments/needs Participants Players

Class 2

Buying Process?

Unaware VIC

Think?

Relationship Perception

Do? Behavior

Int. B2B Marketing - Fall 2003 - Nils Randrup

Consumer’s Buying System (Real life example: JWT model)

Triggering Impulses (Inspiration: Advertising, PR, Event, Situation, People, Poster, out of stock)

Considering Frame of reference (Needs: self-maintenance, expression, reward/gift, Improvement)

1.1.Think?

Think?Feel?

Feel?Do? Do?at ateach eachstage stage Experiencing Performance vs. expectations?

(Satisfaction, service)

2.2.Opportunities Opportunitiesto tocontact? contact?

3.3.Exploit which advantage?

Exploit which advantage?

Buying POS impact (Availability, Display, Price/promotion, Trial, Sales staff, After sales) Class 2

Searching Information sources (Collection and evaluation: Direct experience, WOM, Editorial, Publicity/Advertsing)

Choosing Brand Discriminators (compare and preference selection: Functual, sensual and emotional values)

Int. B2B Marketing - Fall 2003 - Nils Randrup

Buying behavior - Surgical Instrumets

• Identify the players involved in buying surgical instruments for hospitals and their influence on the buying decision • Identify the buying system for buying a surgical instrument like an arterie holder at e.g. Frederiksborg Hospital in Denmark • How would you enter the market as a new supplier?

Class 2

Int. B2B Marketing - Fall 2003 - Nils Randrup

Blackwell Water Case*

• • • • • • • • • • •

Danish Company, 8 years old Market leader since 2000 10 sales representatives 35 people working for the company in Denmark Sells non-carbonated water coolers and water refills Has own distribution of the products Sells primarily to companies and professional organisations Buy water locally, and equipment/supplies from suppliers in Scandinavia Bottle the water in-house Service the dispensers in-house but repairs done by sub-contractors Turnover in 2002 was DKK 50 mill. with a growth rate of 15% vs. 2001.

NOPAT (Net operating profit after tax) of approx 10% of turnover 5 mill.

Capital base of DKK 10 mill.

*Case is build on a real life case where the original company is disguised

Class 2

Int. B2B Marketing - Fall 2003 - Nils Randrup

Customer analysis

• How does Blackwell know who are the interesting customers in the market?

Class 2

Int. B2B Marketing - Fall 2003 - Nils Randrup

Break

Class 2

Int. B2B Marketing - Fall 2003 - Nils Randrup

Buying Behavior

• How does a typical professional customer buy water? What is the buying process? • Who are typically involved in buying water?

Class 2

Int. B2B Marketing - Fall 2003 - Nils Randrup

Sales process

• What should the selling process be in order for the company to effectively sell water to their customers?

Class 2

Int. B2B Marketing - Fall 2003 - Nils Randrup

In B2B markets, an effective marketing department’s key objective could be to supply qualified new business leads to the sales rep’s, relevant sales materials, and support sales rep’s in the relationship building efforts with current clients.

Marketing Dept. Activities

No. of qualified leads

•With •Withfinancial financialanalysis analysis data and pipeline data and pipelinedata, data, the contribution/MC the contribution/MCofof the themarketing marketing department’s department’sactivities activities can be measured, can be measured,and and therefore quantified therefore quantified •Marketing •MarketingDept.

Dept.KPI’s KPI’s can therefore be set can therefore be setand and related directly to e.g. related directly to e.g. balanced balancedscorecard scorecard Class 2

Selling activities

Relevant Sales materials

Help from marketing dept.

Signed contracts

Int. B2B Marketing - Fall 2003 - Nils Randrup

Very few companies create effectiveness through strategic sales management. Typical reasons are poor decision making, CRM system complexity, not knowing the MC results of individual customers or activities, and unclear sales process management.

Competences and capabilities

Lost Customer Reactivation (Repositioning/Old Business management Current Customer Retention

New Customer Acquisition

(Farming/Key Account Management)

(Hunting/New Business Management)

New order acquisitions (Account Manager/Sales)

Rrelationship Development (Account Manager/Sales/Production)

Identification of new customer needs (All departments)

Order fullfillment and service (Production/Installation/Logistics, Invoicing) Order handling (Sales/Accounting)

Class 2

Lead Generation (Marketing)

Lead Qualification (Marketing)

Reputation building - Branding (CEO/Marketing)

Customer Contact (Sales) Customer Acquisition (Sales)

Strategy and decision making Activities Financial results

Int. B2B Marketing - Fall 2003 - Nils Randrup

Blackwell Water Case*

• • • • • • • • • • •

Danish Company, 8 years old Market leader since 2000 10 sales representatives 35 people working for the company in Denmark Sells non-carbonated water coolers and water refills Has own distribution of the products Sells primarily to companies and professional organisations Buy water locally, and equipment/supplies from suppliers in Scandinavia Bottle the water in-house Service the dispensers in-house but repairs done by sub-contractors Turnover in 2002 was DKK 50 mill. with a growth rate of 15% vs. 2001.

NOPAT (Net operating profit after tax) of approx 10% of turnover 5 mill.

Capital base of DKK 10 mill.

*Case is build on a real life case where the original company is disguised

Class 2

Int. B2B Marketing - Fall 2003 - Nils Randrup

The segmentation, targeting and positioning analysis must result in a positioning statement that in one sentence can outline the Value Proposition and guide the Marketing Mix and brand creation.

• “To chocolate users Milka is the brand of chocolate that gives you the most tender taste because it is made with Alpine milk” • “To cheese sandwich users, Philadelphia is the brand of fresh spreadable cream cheese, that offers the superior taste experience because of its unique fresh pure taste and creamy texture” (Performance dimension - Sensual performance) Kraft KraftFoods FoodsPositioning Positioningformula: formula: To To<target <targetaudience> audience> <brand <brandx> x>is isthe thebrand brand of of<frame <frameof ofreference> reference> that that<point <pointof ofdifference> difference> because because<product <productattribute> attribute> Class 2

Int. B2B Marketing - Fall 2003 - Nils Randrup

Blackwell Water Case*

• Positioning Statement – To professional organisations offering their employees or customers free water, – Blackwell Water is the brand of clean great tasting water by the cup as free standing vending machine with cold or room temperature water, – that offers organisations a superior symbol of care as well as cheap, healthy and carefree refreshment, – because of it’s unique • Vending machine (Danish Design) • Natural pure and clean water from Blackwell • Low net cost per liter of approx. DKK 4,• Service system where the water is delivered directly to the organisation, the vending machines are refilled and serviced

by Blackwell regulary for a minor service fee. *Case is build on a real life case where the original company is disguised

Class 2

Int. B2B Marketing - Fall 2003 - Nils Randrup

Blackwell Water Case*

•

•

Has chosen to enter the Swedish market first and launch in 3 steps – 1. Test launch their concept in Malmö, and if successful – 2. Launch their concept in the metropolitan areas of Stockholm and Göteborg so they cover the 3 largest cities (approx. 40% of population) – 3. Launch concept the rest of Sweden Malmö test launch is a 6 month test carried out by a local swedish organisation including a sales force of 2, 1 truck driver and 1 service assistant. All other functions are covered by Danish personnel.

*Case is build on a real life case where the original company is disguised

Class 2

Int. B2B Marketing - Fall 2003 - Nils Randrup

Segmentation

โ ข How should Blackwell segment the market in Malmรถ?

Class 2

Int. B2B Marketing - Fall 2003 - Nils Randrup

Categories of Segmentation variables and examples

Profile

Behavior

Needs

• Industry • Geography • No. of employees

• Sales • Product category sales • Sales growth • Sensitivity to effort •Loyalty •Response to innovation

• Product criticality to buyer • Price, technology, or service?

• Degree of centralization • Buying influence • Awareness •Role of personal relationship

Class 2

Int. B2B Marketing - Fall 2003 - Nils Randrup

Categories of Segmentation variables and examples

Profile

Behavior

Needs

• Industry • Geography • No. of employees

• Sales • Product category sales • Sales growth • Sensitivity to effort •Loyalty •Response to innovation

• Product criticality to buyer • Price, technology, or service?

• Degree of centralization • Buying influence • Awareness •Role of personal relationship

Class 2

Int. B2B Marketing - Fall 2003 - Nils Randrup

Example of segmentation based on potential behavior and needs

Segmentation variables

Range of values High Medium Low

Volume

+200

199-126

Growth potential

+100%

99-50%

Degree of centralization

1 POC

Shared

Class 2

125-51

50%-1%

Very low 51-5

0%-

Decentralized

Int. B2B Marketing - Fall 2003 - Nils Randrup

From target market to leads

• What customers should Blackwell select to focus on?

– Segmentation and target market selection

• What customers should Blackwell visit the first month?

– Names of specific customers to engage – 2 sales people x 20 working days x 5 visits a day = 200 visits a month (max.)

• How much does Blackwell sell for the first month?

– Hit rate – Time from visit to order to invoice

Class 2

Int. B2B Marketing - Fall 2003 - Nils Randrup

For budgetting and fixing future sales problems, a pipeline analysis is relevant. It lets a company know ahead of time when it will run into sales problems and helps identify where the business is heading Client/project potentials

Leads

Qualified leads

Meetings and presentations

A B

100

50

25

C

Offers

15

Contract negotiations

7

Signed contracts

3

•Estimates •Estimatesby byno, no,value, value,likelihood, likelihood,time time •Improve •Improveconverstion converstionrates rates Customer hunting and Customer hunting and farming farmingprinciples principlesapply apply

Class 2

•Forcast budget and income •Forcast sales sales budget and income •ID •IDbest bestpractice practiceconsultants consultantsand andactivities activities • •Especially good to manage new business Especially good to manage new business • •Must be supplemented by account plans Must be supplemented by account plans

Int. B2B Marketing - Fall 2003 - Nils Randrup

Sales process

â&#x20AC;˘ What should the selling process be in order for the company to effectively sell water to the customer?

Class 2

Int. B2B Marketing - Fall 2003 - Nils Randrup

Very few companies create effectiveness through strategic sales management. Typical reasons are poor decision making, CRM system complexity, not knowing the MC results of individual customers or activities, and unclear sales process management.

Competences and capabilities

Lost Customer Reactivation (Repositioning/Old Business management Current Customer Retention

New Customer Acquisition

(Farming/Key Account Management)

(Hunting/New Business Management)

New order acquisitions (Account Manager/Sales)

Rrelationship Development (Account Manager/Sales/Production)

Identification of new customer needs (All departments)

Order fullfillment and service (Production/Installation/Logistics, Invoicing) Order handling (Sales/Accounting)

Class 2

Lead Generation (Marketing)

Lead Qualification (Marketing)

Reputation building - Branding (CEO/Marketing)

Customer Contact (Sales) Customer Acquisition (Sales)

Strategy and decision making Activities Financial results

Int. B2B Marketing - Fall 2003 - Nils Randrup

Example of a plan for sales meeting

Opening Analysis Presentation Objections Closing End Followup

Class 2

Int. B2B Marketing - Fall 2003 - Nils Randrup

Negotiation Preparation

Buyer BATNA price = 60 ε

Desired price = 20 ε

Negotiation Zone BATNA price = 50 ε

Desired price = 100 ε

Seller

Class 2

Int. B2B Marketing - Fall 2003 - Nils Randrup

SPIN sales technique – Especially relevant for Customer analysis phase

• S - The seller uses situation questions to establish a context • P - The seller uses problem questions so that the buyer reveals implied needs • I - The implied needs are developed by implication questions which makes the buyer feel the problem more clearly and acutely • N - The seller uses need/payoff questions so that the buyer states explicit needs • Which allow the seller to state benefits which are strongly related to sales success

Class 2

Int. B2B Marketing - Fall 2003 - Nils Randrup

In B2B markets, an effective marketing department’s key objective could be to supply qualified new business leads to the sales rep’s, relevant sales materials, and support sales rep’s in the relationship building efforts with current clients.

Marketing Dept. Activities

No. of qualified leads

•With •Withfinancial financialanalysis analysis data and pipeline data and pipelinedata, data, the contribution/MC the contribution/MCofof the themarketing marketing department’s department’sactivities activities can be measured, can be measured,and and therefore quantified therefore quantified •Marketing •MarketingDept.

Dept.KPI’s KPI’s can therefore be set can therefore be setand and related directly to e.g. related directly to e.g. balanced balancedscorecard scorecard Class 2

Selling activities

Relevant Sales materials

Help from marketing dept.

Signed contracts