Kapitel 4: Product business Flashcards
What is the characteristic of a performance which is marketed in the product business?
- developed for a group of buyers and not specific or unique to a single customer
- Purchase without composite effect (buyer is able tod ecide between performances of different competitors independent of former decisions)
- Annonymous market
- Single transaction
B2B Marketing approach for Product business?
Quite similar to consumer markets:
the classical marketing approach (Stimulus-Organism-Response-Paradigma) can also be applied to the industrial product business
What is required in the product business in B2B makreting?
Product business requires an efficient and effective pre-sales information policy:
the buyer needs information (communication policy) about:
1. quality of the offer (Product policy)
2. prices to pay for the performance (pricing policy)
3. where the offer is available and in whcih quantities (Sales policy)
What is the product life clye in quality leaders
- In the beginning of the product life cyle the advantage of quality is perceived
- Overtime, the advantage of quality is not perceived and competitor are offering similar quality
What are the two types of product markets and their characteristics in B2B?
Speciality market:
- High degree of innovation
- Low degree of standardization
- Low price competition –>Large price-cost margin
Commodity market:
- MInor degree of innovation
- High degree of standardization
- Higher price competition
- Product-related services
Why is price and cost management important in commodity markets?
Products in commodity markets are very similar
–>Dominance of pricing policy (price is the selling point)
–>Marketing emphasis:
internall cost management and external price enforcement
What is the goal by cost management in commodity markets and how is it done?
Goal: to identify price advantages, cost management team may relate to:
- relative cost position (statistical analysis, e.g. cost benchmarking)
- Cost development (dynamical analysis, e.g. experience curve)
What is price enforcement management iin commondity markets?
Price determination depends on the cost analysis, therefore depends on the cost postion compared to competitors
What are the two possible position in price enforcement management in commodity markets? (What are the strategies?)
1.Cost leader supperior cost position, no risk of loss in price wars
- Objective: highligh, exploit and extend the existing cost advantage
Strategies:
- Unboundling of product offers
- Skimming pricing
- Target pricing
- Long-term contracts
2.Cost follower: No superior cost position, threatening price wars
Strategies:
- Overall value-added pricing to compensate existing cost disadvantage
- Complex pricing to conceal exisitng cost disadvantages/product bundling
What is performance contracting and why should supplier do it?
Supplier can avoid price competition through product (i.e. performance) differentiation
–>by not only offering services that accompany the products, but enter into performance contracting, they develop from a “service providing producer” to a “producing service provider”.
Basic forms of performance contracting:
- performance guarantee: supplier takes on the risk for functionality of the product
- Guranteed performance outcome: Supplier operates the product
What is the stage model of performance contracting?
Stage 1: Machines with services
Stage 2: 1 + Training + startup
Stage 3: 2 +Spares + repair
Stage 4: 3 +Funding +Leasing
Stage 5: 4 +Services for the purpose of the Contracting-type I added
Stage 6: Final stage: Contracting according to Contracting types II
–>Performance contracting takes place step by step to get from product-accompanying services to a performance contracting offer
More explanation of Stage 5 and Stage 6 of the performance contracting?
Stage 5: Contracting type I added –> full service providing producer –>gurantee performance (taking risk of breaking down
- d
Stage 6: Contracting type II: producing service prodiver –>gurantee performance outcome –>operate service for the customer (customer doesn´t use the product)
–>e.g. BASF: paint for automotive–>BASF employees are at the production facilitiees and apply the paint to the cars
What are the two basic form of performance contracting?
Basic forms of performance contracting:
- performance guarantee: supplier takes on the risk for functionality of the product
- Guranteed performance outcome: Supplier operates the product
