LEARNING DIARY

BUSINESS TO BUSINESS MARKETING

KEY CONCEPTS
Business-to-Business (B2B) is defined as commerce transactions between
businesses. The overall volume of B2B transactions can be much higher than B2C
owing to the fact that any supply chain will have many B2B transactions.
Comparison with B2C

In B2B, usually committees of people in an organization form a customer.

Many people are involved in the decision making process. Technical details
may be discussed at length. This leads to a longer lead time in B2B
transactions compared to B2C.
B2C Consumer goods cost little compared to B2B goods, however the selling
cost is higher in comparison. Multiple prototypes, samples, mock-ups et al
may have to be made and the buyer may have to be contacted several times
before it results in a buying decision.
A B2B product in many cases is bought by a committee of buyers. Buyers are
usually well versed with costing levels and specifications.

Product

An item that satisfies a consumer demand.

It can be a tangible good or an intangible service.
All products are subjected to a product life-cycle.
It is one of the basic elements of the marketing mix.

Price

It is one of the basic elements of the marketing mix.

Defined as the monetary compensation for a product or service offered by a
company.
Pricing is based on any or all of the following factors taken into consideration;
Manufacturing cost
Competition
Brand value
Product quality

Promotion

It refers to raising customer awareness of a product/service/brand, generate

sales and create brand loyalty.
It is one of the basic elements of the marketing mix.
Fundamentally it;
Provides information to customers
Increases demand
Differentiates the marketed product
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Distribution

One of the elements of the Marketing Mix. It is the process of making a

product or service available for use or consumption by a consumer or
business user.
It can be accomplished directly, or by intermediaries.
Distribution takes place by means of channels. Channels are sets of
interdependent entities involved in making the product available for
consumption to the end-user.
In practice, organizations may use a mix of different channels to effect
distribution.

Penetration Pricing

A phenomenon where the price of a product is initially set low to enable a

wide reach into the market by word of mouth. It can result in fast diffusion
and adoption.
Strategy works on the premise that customers will switch to the marketed
brand because of the low price.
Commonly associated with enlarging an already existing market share or with
exploiting economies of scale and experience.
It can discourage the entry of competitors. Low prices form a barrier to
market entry.
The main disadvantage of penetration pricing is that it can establish long
term price expectations for the product, and image preconceptions for the
brand and company may be formed. This may prove to be difficult to
eventually raise prices.
Penetration pricing may be used where;
Product demand is highly price elastic
Substantial economies of scale are available
Mass market demand is available
The introduced product will be facing stiff competition

Segmentation

Involves dividing a broad target customer segment into subsets of having

common needs and priorities, and then designing and implementing
strategies to target them.
Used to identify target customers, provide supporting data for positioning,
and hence meet marketing plan objective.
Segmentation may be based on any or all of the following;
Geographical
Demographical
Behavioral
Lifestyle
Cultural

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Ideal Market Segment
It must be large enough to earn profit & must be stable enough that it does
not vanish after some time.
It should be possible to reach potential customers via the organization's
promotion and distribution channel.
It should be internally homogeneous (potential customers in the same
segment prefer the same product qualities) & externally heterogeneous
(potential customers from different segments have different quality
preferences).
It responds consistently to a given market stimulus & can be reached by
market intervention in a cost-effective manner.
Price Skimming

A pricing strategy wherein the marketer sets a relatively high price for a
product/service then lowers the price over time.
Allows a firm to recover sunk costs quickly before competition steps in and
lowers the market price.
Product pricing strategy by which the firm charges the highest initial price
that customers are willing to pay. As demand of the first customers is
satisfied, the firm lowers the price to attract other, more price-sensitive
segment.
Occurs in technological markets as firms set high prices during the first stage
of the product life cycle.
Product Life Cycle (from a marketing standpoint)

It is a succession of strategies used by businesses as a product goes through

its life-cycle. The conditions in which a product is sold changes over time and
must be managed as it moves though its succession of stages.
The product revenue and profits can be plotted as a function of the life-cycle
stages.
The different stages are;
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Introduction: The firm seeks to build product awareness and develop

a market for the product. Product branding and quality levels are
established and intellectual property protection such as patents and
trademarks are established. Pricing may be low penetration pricing to
build market share rapidly, or high skim pricing to recover
development costs. Distribution is selective until consumers show
acceptance of the product. Promotion is aimed at innovators and early
adopters.
Growth: The firm seeks to build brand preference and increase market
share. Product quality is maintained and additional features and
support services may be added. Pricing is maintained as the firm
enjoys increasing demand with little competition. Distribution channels
are added as demand increases and customers adopt the product.
Promotion is aimed at a broader audience.
Maturity: At maturity the strong growth in sales diminishes.
Competition may appear with similar products. The primary objective
at this point is to defend the market share whilst maximizing profit.
Product features may be enhanced to differentiate the product from
that of competitors. Pricing may be lowered to deter competition.
Distribution is intensive and incentivized. Promotion emphasizes
product differentiation.
Decline: As sales decline, the firm may choose to maintain the
product; harvest the product, reduce costs and continue to offer it to
loyal customers; discontinue the product.

---------Key Account Management

Key Account Management is applicable to high growth potential clients that are
conducive to the growth of the supplier company. Key Account Managers are
allotted to accounts that have client that may not only have the potential to grow,
but also should have the drive to do so.

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Case A-One Starch Products Limited
Knowledge
Objectives of A-One Starch Products Limited
Increase the ROE for improving shareholders value

Increase sales or reduce cost to improve contribution margin

Attitude
Improve the Quality of A One Glucose
Market Segmentation into Organized & Unorganized Sectors, Confectionaries
& Pharmaceutical Products
Skills
To ensure superior Quality of service ensure delivery through MS Drums
rather than HDPE Drums and link the performance of Purchase department
with appraisal system to ensure the quality of drums is maintained
Since Pharmaceutical Companies are facing problems in quality of glucose,
identify the reasons for which the product has turned hazy and provide a
permanent solution to ensure the same is not repeated and resume supply of
glucose to Multinational Pharmaceutical companies
Learning from the case
Focus on what customer requires
Identify the goal
Identify the process of achieving the goal
Identify the bottle necks from customers point of view
Increase sales and improve ROCE
Create and enhance market demand by providing better solution than
customer may anticipate through R&D
Identify what is pinching the customer and try to remove it

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Case: ABB Caterpillar (A): Key Account Management
Knowledge
Objectives
Get Support from ABB Management
Reinstate faith in Caterpillar
Attitude
Application of available knowledge
ABB dictated Caterpillar for Quality, price of the product, schedule of delivery of
turbochargers and this has created a disharmony amongst ABB and Caterpillar.
Caterpillar had alternate suppliers and this has resulted in loss of $40 million sales.
Steering committee (Top Management) has been constituted which shall
monitor the working groups and provide the direction for achieving the
planned/ projected progress
Working Committee: Actual project execution team who provide feedback
to steering committee
Skills
How to apply the knowledge
The most difficult marketing challenge we are facing is about understanding the
market.
Identify possible options Selection
Identify competitors and other potential new entrants - Evaluation
Design , reputation, service, reliability Product Formulation
Economy & Pricing

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Case: Tetra Pack- A
Pontero is a branded milk supplier who has positioned his product based on natural
content of milk with no added contents but has recently experienced loss in sales of
2.5% (56 Millions).
The reason of drop in sales is attributable to the below mentioned points
Competitors have launched new enriched milk with added minerals and
vitamins which has affected Ponteros sales.
Ponteros products are being used as a Loss leader (which is a pricing
strategy where a product is sold at a price below its market cost to stimulate
other sales of more profitable goods or services).
Due to entry of new product in the market, Children are now being fed with
enriched milk, Middle aged group is being drawn towards soft drinks & old
aged group is reluctant to consume milk due to which Ponteros sales has
gone down.
To identify the root cause we need to analyze the situation in the following manner;
Situation to be diagnosed: Loss of sales
1. What accounts for it?
Industry effect?
Product category effect?
Communication?
Looked Distribution?
Price?
Customers?
Why what is happening to customers?
2. What will happen if we do not do anything?
3. Is the outcome acceptable? Set objectives.
4. Segment the market on the basis of values and targets. Prioritize segments.
5. Decide value positioning
6. Design offer
7. Design delivery
8. Design Communication
9. Check whether the objectives are likely to be met
Key Accounts Manager
An account manager (Sales) is a person who works for a company and is
responsible for the management of sales, and relationships with particular
customers. Key accounts provide the most business because they contain a small
number of clients which contribute a large portion of the company's sales.
The purpose of an account manager: To maintain the company's existing
relationships with a client or group of clients, so that they will continue using the
company for business
Its Main Objectives are,
Identify growth potential prospects
Aligning of strategies and meeting of minds
Commitment

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How to build relationship with customer?
First need an entry into the business with the customer
Initiator : who aid in initiating the business/ service
Gatekeeper : Entry barrier to the business/ service
Purchaser
End User

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Case: Turner Construction Company
Identify and locate the prospects
Meet the decision makers
Send proposal and reference
30-45 min presentation to board or development committee
Pricing (Lump Sum vs. Negotiated)
Key Decisions in Marketing plan:
Positioning of product / service (w.r.t. Specialization, segment, standards)
Pricing (Based on product positioning)
Communication about the specialization
Budgeting (Current position w.r.t Goal)
Learning
SWOT analysis should be done at Company/segment level
Porters 5 Force Analysis should be done at Industry level
BCG Matrix should be used for product and Marker Analysis

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