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B2B MarketingVinod JoshiMBASymbiosis International University1Understanding Buying Behaviour of B2B in Generic TermsVendor 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 NatureNature of Buying OrganizationsGrowth organizations

Troubled OrganizationsTaking high riskMake large investmentGreat hurryDecentralized decision

Minimize risksWill buy things which save costProcrastinationHighly centralized decision makingNature of Buying Organizations..2Complacent organization

Overconfident organizationsSlow decision makingToo much bureaucracyPrice haggling

Resistance to changeNon-result orientation

Buying Situations7Classifying Business Buying SituationsFirst-time/ unique purchase situationConsiderable effort by decision MakersUninformed buyerLong time for decision making

New-Task Buying PhotoDiscClassifying Business Buying SituationsRepurchasing a good or service under re-evaluationOften triggered by previous vendor failureSometimes triggered by changed needCautious buyer

Modified Rebuy PhotoDiscClassifying Business Buying SituationsRepeat buyingRoutine processZero riskTried and tested vendors

Straight/Routine Buying PhotoDisc11Buyers Effort MappingBuying situationExtent of effortNew taskExtensive problem solvingModified re-buyLimited problem solvingStraight re-buyRoutine12Risk FrameworkBuying situationBuyers involvedNew taskDecentralized with top management involvementModified re-buyDecentralized with small teamStraight re-buyOne or two from Buying departmentThe Buying StakeholdersUsersGatekeepersInfluencersCoachDeciderBuyer PhotoDiscMusical Chairs1415Power EquationsEgo Factors16How Does Buying Happen in B2B Context?Definition stageSelection stageSolutions stageEnd Game stageStage 1-Definition StageStage 2 Selection StageStage 3 Solutions DeliverySolutions developmentCustomization based on diagnositicsTesting of early versions of solutionsDelivery of prototypesTrials, installation and testing of full scale solutionTraining of buyers employees

Stage 3 Solutions DeliveryAligning the vendor logistics with buyers logisticsMatching materials planning, shipping quantities, inventory location with buyers needs Monitoring the delivery process and constant reporting to the buyerStage 4 - End GamePre-empting the buyer with an objective evaluation Deciding corrective actions for future purchasesCommence work on future RFPs Business EnvironmentEconomic outlookCost of moneySupply conditionsRate of technological changePolitical and regulatory developmentsCompetitive developments 2425Risk MinimizationNature of Risks27AnatomyOf Purchase28

Organizational Risks

PersonalRisks

Nature of Risk

Organizational Risks

Function Specific Risks

Personal Risks

29Organizational Risks

Financial RisksReputation RiskUsage / Production Risk30Function Specific Risks

Performance RiskLikely failure of customer commitmentTeams Rejection Risk31PersonalRisks

Power Risk Influence RiskCredibility RiskCareer Risk

32How Do Individuals Minimize Risks?B2B Buying Behaviour ModelBuying decision process The Buying Organization

Buyer Responses

Product or service choice Supplier choiceOrder quantities Delivery terms and timesService termsPayment terms

The Buying CenterBusinessEnvironmentRisk MinimizationUnderstanding Buying Behaviour of In terms of Product Life CycleTimeProfitsIntroductionGrowthMaturityDeclineB2B Product Life Cycle DevelopmentCompetitiveTurbulenceProduct development IntroductionGrowthCompetitive TurbulenceMaturityDecline

Economic Value System37Buying Behaviour Introduction Stage38Buying Behaviour- Growth Stage39Buying Behaviour- Turbulence Stage40Buying Behaviour- Maturity Stage41B2B Buying Behavior in Different stage of PLC42Development StageConsiderably long period

At times, it even merges with Introduction stage

Large commitment in terms of investment

Selling Strategy During Development StageTie in development with forward looking customers 44Introduction StageSlow acceptance of products

considerable market development before reaching an appropriate growth stage

Selling Strategy During Introduction StageCreate Economic value system involving other complementary products, process, people

These form organizational habits.

Organizational habits once formed are not easily changed.

Marketing Strategies Introduction StagePrice objectivesHigh trade discountsPromotional objectivesCustomer EducationInduce trialSales & Distribution objectivesExclusive and selective

Growth StageIncreasing product demand begins to lower costs substantially.

Focus on improving product design improving distribution serviceLowering price

Marketing Strategies Growth StageStrategy ObjectiveEstablish strong market positionOutlook for CompetitionEarly entrance of aggressive emulatorsProduct design objectivesDesign to facilitate new segment and use new systemsMarketing Strategies Growth StagePrice objectivesAggressive promotional pricingPromotional objectivesStrengthen brand preferenceDistribution objectivesIntensive rapid resupply of distributors

Selling Strategy During Growth StageLaunch product variants

Sell products through intermediaries

51Competitive TurbulenceDuring 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 TurbulenceStrategy ObjectiveMaintain/ strengthen market nicheOutlook for CompetitionToo many competitorsProduct design objectivesIntensive product developmentMarketing Strategies Competitive TurbulencePrice objectivesBroaden promotional pricing strategyPromotional objectivesDealer promotional schemesDistribution objectivesIntensive rapid resupply of distributors

Selling Strategy During Turbulence StageModify and sell products for verticals

Fashion FirstUSA FirstEurope First

55Maturity StageCustomers 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 requiredCompany makes up for the losses made during the development and the introduction stage.

Marketing Strategies Maturity StageStrategy ObjectiveDefend position against competitionOutlook for CompetitionStable competitive scenario, no new competitionProduct design objectivesCost improvement through design

Marketing Strategies Maturity StagePrice objectivesDefensive pricingPromotional objectivesTrade loyaltyDistribution objectivesIntensive rapid resupply of distributors at minimum inventory costs

Selling Strategy During Maturity Stage59Marketing Strategies Decline StageStrategy ObjectiveMilk the product at all possible profitsOutlook for CompetitionCompetition dropping outProduct design objectivesPrune the product featuresMarketing Strategies Decline StagePrice objectivesMaintenance pricing Promotional objectivesPhase outDistribution objectivesPhase out

Understanding Buying Behaviour of In terms of Product Life CycleThe Technology Adoption Life Cycle

64Buying Behavior Technophiles65Buying Behaviour - Visionaries66Buying Behaviour -Pragmatists67Buying Behaviour Conservatives68Selling Techniques6970TALC and How Technology Markets EvolveChasmA break in the sales growth curve for a new technology.A chasm occurs between visionaries and pragmatists.Bowling AlleyFocus on one segmentSegment specific sales and developmentTALC and How Technology Markets EvolveTornadoThe chaos that occurs during a period of rapid growth.A dominant supplier usually emerges from a tornado.Using the Technology Adoption Life CycleTornadoCorresponds to the late introduction/early growth stage of the PLCThe 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 CycleThe 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 TechniquesKey Steps in B2C SellingProspecting

Offering and Soliciting

Negotiating

Objection Handling

Closing76B2B Selling CyclePre-introduction stage

Introduction stage

Qualifying stage

Reference stage77Presentation stage

Negotiation stage

Objection stage

Closing stage

Relationship stage

78B2B Selling Cycle..1Pre-introduction stage

Introduction stage

Qualifying stage

Reference stage79B2B Selling Cycle..2Presentation stage

Negotiation stage

Objection stage

Closing stage

Relationship stage

80Science of Selling81Science of Selling82Steps Involved in Prospecting83Methods of Data MiningEvent Triggers

Project Triggers

Product Triggers

84First Step in ProspectingLeverage the existing customers for more businessLeverage the existing customers for selling additional productsLeveraging the existing customers for high value products

85Cross SellingUp SellingSelling vs. Key Account ManagementMutual Loyalty

Long Term

Joint value creation

Equal relationships86Transactional

High customer churn

Adversarial

Suspicion based

Might is right

87ContactTransactionInvolvementDis-satisfactionExitCustomerChurn

RecoverySelling88ContactTransactionInvolvementDis-satisfactionRecoveryRelationship

CustomerChurn

LifetimeCustomerKAMKey Account Management Principles89Key Account Management Process90Key Account Management Process91Two Identification Determinants Customer Attractiveness

Relative Strength92Two Identification DeterminantsCustomer AttractivenessWhat is that makes your customers attractive to you?

Relative StrengthWhat is that makes you attractive to your customers?93Customer AttractivenessSize business, profit, ROIGrowth potential business, profit, ROIBusiness consistencyStage of adopting productsLevel of competition Market standing94Relative StrengthPriceService QualitySpeed of responseTechnical and product innovationInvestment in new product developmentTrust and confidence ( as perceived by the customers)9596Customer AttractivenessLowLowHighHighOpportunistic AccountsLowHighRelative Strengh96Opportunistic AccountsDont treat them as nuisance

Use them as the base of your business

Pricing as per the situation and competitive pressure

No product development

Deploy juniors9798Customer AttractivenessLowLowHighHighMaintenance AccountsLowHighRelative Strength98Maintenance AccountsMost difficult customers to deal with

Constant review of performance metrics

99100Customer AttractivenessLowLowHighHighPrestige AccountsLowHighRelative Strength100Prestige AccountsIdentify internal competencies needed to increase your attractiveness

Place your best people on such accounts

Judicious deployment of resources

101102Customer AttractivenessLowLowHighHighPartner AccountsLowHighRelative Strength102Partner AccountsMaintain cross-functional contact from both sides

Keep the entire Market Chain under constant observation

Get cross-functional buy in while putting resources on new development103104Customer AttractivenessLowLowHighHighOpportunisticAccountsMaintenanceAccountsPrestigeAccountsPartnerAccountsLowHighRelative Strength104Key Account Management Process105Key Account Management Process106107Key Account Management Process108Territory Key AccountsRegional Key AccountsNational Key AccountsGlobal Key AccountsA model for identifying and rolling-up Key Accounts 110Key Account Management - best practice actionsSet account objectives Plan accountstrategy Take planned actionReview account Analyze Account Rank accounts on Improvement Potential indexRe-deploy resources to highest potential channels/accountsTarget category management efforts to accounts with capabilityUnderstand account requirements/ needs/ capabilitiesPlan account actions to fix problem P&L line itemsTarget account goals/ accountability for profit improvementMatch strategy to improvement potentialInclude customer in account planning processDevelop both internal and customer targetsTie actions/events to improvement opportunitiesMonitor performance against tactical planHold account team members accountableTie account team incentives to customer metricsReflect balanced scorecard in account metrics111Relationship Marketing113

FarmingCultivatingHarvesting

114

FarmingCultivatingHarvesting

Working PlatformBuying PlatformRelationshipPlatformThe Relationship Pyramid115116Level of Need FulfillmentScope of Need FulfillmentValue to Customer