B2B - (2.4) Characteristics of B2B marketing elements Flashcards
Give an overview of the B2B product mix
- BRAND MANAGEMENT
> Processing vs ingredient branding
> Low importance of brand in general - INNOVATION MANAGEMENT
> Customer integration
> Test of market acceptance
> Higher complexity of new product introduction process - MANAGEMENT OF ESTABLISHED PRODUCTS
> Considerations of international standards
> Product customization
> Particular relevance of industrial services
Explain innovation management in product decisions =
> Customer integration
> Especially for investment/project business and supplier business.
> Higher motivation to participate than in B2C
> Risk: leaking of company knowhow
> Test of market acceptance
> Not as easy as in B2C
> Especially valuable for value proposition of start-ups
> Higher complexity of new product introduction process
> Involvement of many people (buying center)
> Often very technical
What is the relevance of industrial services in B2B?
**Customers demand them = outsoursing, focus on core competencies.
**Supplier offers them to benefit from advantages:
> Product differentiation
> Reduction of price pressure
> Higher profit (service generates revenues)
> Diversification intro service sector
> Stabilization of demand
> Establishment of market entry barriers
Explain basis & value-added services
Product core < additional features < packaging and design < basic services < value added services < brand
BASIC =
* Have to be provided to sell the basic product - Ex. setting up
VALUE - ADDED =
* Not necessarily prerequisites for the acceptance of the product by the customers but substantial improvement in customer value
What is SI and how is it related to B2B and B2C?
Service Innovation = firm’s exploitation of an idea for a service that is new to the firm and intended to provide new benefits for: business customers (B2B) or individual consumers (B2C).
Why is SI-B2B necessary?
- B2B takes a large share of all markets
- Growing number of B2B are becoming service dominant because it creates long lasting relationships
- Companies depend on new services or service innovation for growth
» B2B-SI has a greater positive effect on firm value than B2C + firm risk does not get raised as much. Launching B2B-SI should always be prioritized.
(Dotzel and Shankar)
What is the impact of product innovations?
SI is used to innovate products > services are differentiated from competitors + long term relations
» Coordinate SI and PI on a strategic level, hybrid innovation where possible.
What are solutions?
Tuli et al:
* Supplier = combination of products and services that are integrated and customized to solve the specific business problems of customers (a product bundle)
* Customer = “finding what i need, meet my requirements and work well with each other, bringing this into my business and ensure that the widgets do what they are required to do”
» Requirements definition
» Customization & integration
» Deployment
» Post-deployment support
(= 4 relational processes)
What about product customization in B2B?
Determine the optimal degree of individualization, taking benefits (higher preference and longer loyalty) and complexity cost into account.
What about international standards in B2B?
- National (NBN - Belgium)
- Multinational (EN -Europe)
- International (ISO -International
Standardization Organization)
Why is brand management generally less important in B2B?
- High relevance of objective product features such as quality or specifications
- BUT Increase in importance last years
- Brands in B2B help to reduce purchase risk and to increase profitability
What is the difference between an ingredient brand and a procession brand?
Ingredient brand = visible to end customer Ex. Gore Tex
Processing brand = not visible to end customers (due to many chains in between)
Give an overview of the B2B pricing mix
- PRICE ENFORCEMENT
> Benefit selling
> Rational decisions by buying center members - PRICING OF NEW PRODUCTS
> Individual pricing
> Competitive bidding
> Auctions - PRICING OF ESTABLISHED PRODUCTS
> Pricing of industrial services
> Price differentiation and bonuses/rebates
> Price protection measures
> Limited customer manipulation
Explain individual pricing in pricing of new products =
- Each customer gets its own price
- Especially relevant for investment/project business
> Customized quotations
> Customer specific service costs
> Project-specific servive costs
Explain competitive bidding in pricing of new products =
Organizational customers get invitations to bid.
> Customer goal = best supplier at lowest price.
> Supplier goal = bid accepted at highest possible price.
» Most relevant for government organizations and institutions
» Open and closed biddings exists
Explain auctions in pricing of new products =
Increasing importance in B2B pricing»_space; ex. selling used capital goods via the internet.
Upcoming: reversed auctions
= customer initiates the auction
> Supplier bid on prices for which they would be willing to sell their products.
> Lowest offer for best product gets selected (suppliers try to undercut the offers of competitors)
Explain limited customer manipulation in pricing of established products =
Spohisticated price tracking by organizational customers = more accurate historical and current price information.
» Price changes are not an issue in the most bidding situations.
Explain price protection measures in pricing of established products =
Price changes during production process
> Compensation for future price fluctuations on the cost side
> Significant increases must be documented
Explain price differentiation and bonuses/rebates in pricing of established products =
Prices, terms of payment and financing services are often derived from price negotiations = 1st degree of price discrimination = every customer gets his own price.
» Based on purchase quantities and customer segments.
» Information exchange between customers is a problem;
» Buyers can get compensated on the discounts and bonuses they receive.
Price explosion for industrial
producer prices in 2022 and decrease in 2023. Why?
Soaring energy prices
Who is EU-20?
Name of 20 members of monetary union in 2023.
Intensity of price differentiation in
business-to-business marketing - what is driving the different price?
Quantity > Customer segment > Sales region > Sales channel > Time of purchase
Price enforcement in B2B (prijshandhaving)=
- Rational decisions by buying center but still sensitivities based on role»_space; communicate prices differently to realize max price levels
- Benefit selling : relate features of the presented product to important customer benefits = features as basis for deriving product advantages and customer benefits
» Opposite of character selling
Explain how communication decisions should be more personalized and technical in B2B =
- Vital role of tech infor > organizational customers want more info and prossess a better understanding
- Satisfying different information requirements in packages > user about options, buyer about prices and terms
- Personal character of communication, possible because of limited number of customers and direct, personal sales plays a key role
Which instruments are popular in B2B communication and marketing?
- Trade fairs > for selling and non-selling objectives
- Conventional advertising = less significant
> Use it for conveying an image and technical advantages
> Influence stakeholders - Social media use
> Reliance - info about employer brand
> Linkedin = most important - CEO’s as influencers
Explain the B2B sales decision for direct, personal selling with focus on key accounts
- Focus on direct sales channel as it is possible with limited customers, high degree of product customization and complexity
- Relationship building to major sales partners, key accounts and creation of supplier alliances
- Strong relevance of personal selling > sales employees are the reference for customer loyalty - increasing importance of call centers and video conferencing
What are key accounts?
Corporate customers that are extremely important to a selling firm due to their actual or potential purchasing volume
What are important aspects of key account management?
- Resource allocation for these specific accounts
- Organizational structures ex. key account manager
- Controlling systems
- Special offers
- Special relationship management
What are the criteria of being a key account?
- PROACTIVE
> Economic potential
> Economic importance
> Know-how
> Image
*REACTIVE
> Demand for key-account status
> Internal problems
What are sales logistics decisions in B2B?
- SUPPLY GUARANTEES
> Especially for supplier business
> Warehousing services
> No storage manufacturing approaches - INTEGRATION OF SALES LOGISTICS
> Enables faster procurement and production processes for the customers
> Can be supported by concepts such as electronic data interchange
Explain CRM and loyalty in B2B:
- Different loyalty criteria
> Quantity related (add purchases)
> Price related (high willingness)
> Resource related (relation specific investments)
>Time related (customer decision stable over time) - Different customer loyalty activities
> Reinforcement - reward for loyalty
> Tools for barriers - punish for poor loyalty
> Mixed: generate efficiency benefits, which are lost if the supplier changes
