Exam Aug 2018 Flashcards
QUESTION 1 (15 points)
Business relationships are important in business markets.
a) Explain the content of business relationships in terms of:
- Activity links
- Resource ties
- Actor bonds (6 points)
Analysis of single relationships
A relationship consists of varying parts of:
Actor bonds Individuals learn to know each other and create trust
‘Activity links JIT solutions
Resource ties; Physical ties – pipelines ’Heavy resources’ for example in the process industry System suppliers who adapt production equipment to certain customers
Actors
At different levels- from individuals to grous of companies- actos aim to increase their control of the network
Resources Resources are heterogeneous, human and hysical anc mutually dependent
Activities
Activities inlcude the tranformation act, the transaction act, activity cycles and transaction chains.
Actors—–>Resources
Actors control resources; some alone and others joingly. Actors have a certain knowledge of resources.
Actor——>Activities
Actors perform activities, actors hace a certain knowledgo of activities
Activities——>Resources
Activities link resources to each other, activities change or exchange resources through use of other resources
b) A business relationship may be described as close and collaborative. Discuss the content of such a business relationships and how the selling firm and buying firm may perceive the content in different ways (4 points)
Content
c) Discuss how business relationships are connected in business markets (5 points)
Describe how business rela
Many firms have a purchase process (referred to as the BuyGrid Framework in the course book). This process includes a number of phases (for example, problem recognition, need description, product specification, supplier search, requests for quotations (RFQs), supplier selection and performance evaluation).
BUY GRID FRAMEWORK
Problem Recognition Need Description Product Specification Supplier Search Request for Quotatios (RFQ's) Supplier Selection Performance Evaluation
Business-to-business marketers recognize that at each step in the buying process, business buyers have different needs, and different groups within the organization may be involved. Business marketers anticipate which step organi¬zational buyers are in and attempt to provide the needed information and support for that stage of decision making. Marketers who can become involved early in the decision-making process have a greater chance of being considered in the final selection process. Many organizations, includ¬ing government agencies, have formal purchasing proce¬dures incorporating the buy-grid model. Set-aside programs targeting small and minority-owned businesses and bid solicitation requirements for government offices follow a similar defined procedure for PURCHASING.
Most business-buying situations do not involve all of the steps in the buy-grip model. The number of steps varies with the buy-class, the type of buying decision. There are three buy-class categories: new buys, straight rebuys, and modified rebuys.
DIFFERENT TYPES OF REBUYS
NEW BUYS (purchases of prod¬ucts or services never used before)
STRAIGHT REBUYS
MODIFIED REBUYS
While the complete buying process is typically used for new buys (purchases of prod¬ucts or services never used before),a majority of business purchasing decisions are either straight rebuys or modi¬fied rebuys. In straight rebuy situations, only the need recognition (the company almost out of the product) and reordering steps are used. For business marketers it is critical for their products or services to be listed as approved vendors for straight rebuys. Marketers will use reminder ADVERTISING, relationship-building entertain¬ment and hospitality, and PERSONAL SELLING to maintain their status as the preferred provider. In modified rebuy decisions (where a buyer is willing to “shop around”), the buyer may go through some or all of the purchasing steps. For marketers desiring to be considered during modified rebuy situations, comparison advertising and demonstrations are used to influence business buyers. Incumbent firms will use relationships, special offers, and anticipation of or quick response to customer needs to maintain their status when business buyers are con¬sidering alternatives.
QUESTION 3 (10 points) In distribution, there are two different views on the middleman.
(1) Some would say that the middleman play an important role in distribution providing functions both for the producer and customer.
(2) Others raise opinions like “cutting out the middleman” based on arguments of the kind that the middlemen are just adding costs.
Raise arguments and motivations for both these two views of the middleman (10 points).
PROS OF THE MIDDLE MAN
1. REDUCTION OF TRANSACTIONS
- FUNCTIONS OF THE MIDDLE MAN
- FOR THE PRODUCER
- Market Coverage
- Sales Contact
- Inventory
- Order Management
- Marketing Information
- Customer Support
- Light Assembly
- FOR THE PRODUCER
2,2 FOR THE CUSTOMER
- Availability
- Assortment
- Suitable order quantity
- Technical Support
- Financial Solutions
- Service
CONS OF THE MIDDLE MAN
-Disintermediation may decrease the total cost of servicing customers and may allow the manufacturer to increase profit margins and/or reduce prices.
-Get winning
The consumer wins by having access to products at a considerably lower price than alternatives of comparable quality. The producer wins by having a competitive price advantage against its competitors in the market.
-Get personal
Consumers deal directly with the source of the product – the company. Although this isn’t usually a face-to-face transaction, in other ways it can be more personal for the buyer as they are dealing with the people who know most about the product they are buying.
-Get knowledge
Dealing directly with consumers offers you a priceless understanding of your buyers and allows you to narrow down your target market and stay on top of your customer service.
- However manufacturers will still incur distribution costs, such as the physical transport of goods, packaging in small units, advertising, and customer helplines, some or all of which would previously have been borne by the intermediary. To illustrate, a typical B2C supply chain is composed of four or five entities. These are the supplier, manufacturer, wholesaler, retailer and buyer
QUESTION 4 (20 points) Ship Inc. is a company selling ships world-wide with its main markets in Europe and North America. The ships are fuel efficient and technically advanced and known to be market leading. You have just started an internship at Ship Inc. at the marketing division and your first task is to be involved in the work with a marketing plan.
a) Explain the main contents of a marketing plan. (6 points)
Goals Target Market Price Promotion Product Place Contingencies
QUESTION 4 (20 points) Ship Inc. is a company selling ships world-wide with its main markets in Europe and North America. The ships are fuel efficient and technically advanced and known to be market leading. You have just started an internship at Ship Inc. at the marketing division and your first task is to be involved in the work with a marketing plan.
b) To develop a marketing plan, information about for example the customers is needed. Discuss suitable methods to collect information about the customers in the case of Ship Inc. (4 points)
Market’ sensing’ is’ a’ market’ driven’ process’ of’ learning’ about’ present’ and’
prospective’ customers’ and’ competitors,’ as’ well’ as’ about’ other’ actors’ that’
affect’ them’ and’ the’ business,’ such’ as’ resellers’ and’ regulatory’ agencies.’
The process of generating knowledge about the market to formulate, test, revise and refine their market views. to guide and informe decision making
2. Market Sensing Defining the Market Monitoring Competition Assessing Curotomer Value Gaining Customer Feedback
- Marketing research
Need of specific information at a certain occasion:
Market and economic analysis
Product research
Pricing research
Advertising research
Sales research
Designing the market research project
Secondary data, e.g. library, government reports, SCB.
Primary data, e.g. survey, observation and experimenta
QUESTION 4 (20 points) Ship Inc. is a company selling ships world-wide with its main markets in Europe and North America. The ships are fuel efficient and technically advanced and known to be market leading. You have just started an internship at Ship Inc. at the marketing division and your first task is to be involved in the work with a marketing plan.
c) Differentiation is crucial in business markets. Discuss with starting point in a marketing offering, alternative ways how Ship Inc. can differentiate. From this discussion, motivate which way that you would recommend. (10 points)
Flexible Marketing Offerings (FMOs)
- Bundling of existing solutions to handle the fact that different customers have different needs.
- Combining standardization and adaptation.
Standardization: Naked solution (p. 190) Base product Standardized Uniform
Adaptation: Options (p. 190) Add on Customized and tailor made
Managing market offering: is the prices of putting products, services, programs, and systems together in ways that create the greatest value for targeted market segments and customer firms,
Product Offering
Core Product: Is simply the fundamental, functional performance a generic product provides that solves a customer’s basic problem.
Minimally augmented product The least amount or number of services, programs or systems that customers consider absolutely essential for doing business with any supplier. Payment terms, delivery, and customer service for problems with the core product
The augmented product: Those services, programs , and systems a supplier offers to meet a broader set of customer requirements and preferences, or to exceed the customer’s expectations in ways that add value or reduce cost for the customer,
Market Offerings
Use of market offeting emphasizes that what a supliers brings to the market is a package composed of a core product or service and a set of augmenting services, programs, and systems. In a number of instances the augmenting services, rograms, and systmes provide the predominant part of the superior value over competitors
Mass customization. Elicitation (a mechanism for interacting with the customer and obtaining specific information); process flexibility (production technology that fabricates the product according to the information)
AUGMENTING SERVICES PROGRAMS AND SYSTEMS
Explain the meaning and consequences of the following concepts or expressions in business marketing and purchasing:
a) Marketing mix approach vs. the interaction approach
Companies in a business context have a customer base. Starting from the pareto priciple, 80% of the sales are made with only 20% of the Customers, The rest 20% is sread in the other 80% of customers.
This facts makes necessary two approaches the Interaction and Market mix approach.
Tha market mix approach is intended to attend those customers who are involved in transactional relationships. they only buy generic products in few amounts.
On the other hand the interaction approach is intended for those customes that represent the majority of the selling share and the supplier has a close collaboration and need to be treated individually
.
- THE PARTICIPANTS IN THE RELATIONSHIP
SELLER Organization *Technology * Structure Strategy
INDIVIDUAL
- Aims
- Experience
BUYER
- Organization
- Individual
- INTERACTIONS
ENVIRONMENT
- Market Structure
- Dynamism
- Internationalization
- Position in the manufacturing channel
- Social System
ATHMOSPHERE
- Power/Dependece
- Cooperation
- Claseness
- expectation
SHORT TERM
- Product/Service
- Information
- Financial
- Social
LONG TERM
- Institunalization
- Adaptation
b) Need uncertainty vs. market uncertainty
Ask Frida
c) Target costing
2.
Some more concepts
Target pricing: What is a customer willing to pay?
Estimate portion of the price for different components. (see B3, p. 100)
Target costing: From total costs, the firm estimates the total cost for different systems, sub-systems.
Then, a supplier is requested to come up with a product offering corresponding this total cost. (see B3, p. 107).
Price sensitivity/elasticity – depend on how value is perceived
Competitive bidding: Sometimes regulated by law.
TWO DIFFERENT STARTEGIES
- From the perspective of the users’ perceived value
Focus on how the value of the offering is perceived by the customer
Value based or market based pricing
Traditional pricing approaches
From the perspective of the own costs
Focus on the production costs plus a margin - Cost based or COST+ pricing
In relation to the competitor prices
Focus on the production costs plus a margin
Competition-based pricing - PRICING OF NEW PRODUCTS
SKIMMING PRICING STRATEGY
High introduction price to use that the price
sensitivity of buyers vary.
Requires safety arrangements – patents or that the firm is technologically ahead of competitors.
The price is later reduced to attract new buyers.
2, PENETRATION PRICING STARTEGY
Low introduction price to take a large
marketshare early and to scare competitors to follow.
