Session 4.

From business to product strategy

Course: B to B Marketing
PGE-M5-MKT-215-E-L-MRS #3
2016/2017

Session 4 From business to product strategy

Objectives
be able to connect strategy: from business to product strategy
be able to explain components and variations in product offer

understand the relevance of innovation for the b2b marketer

PGE-M5-MKT-215-E-L-MRS #3
Louise Canning & Diego Rinallo

Marketer decisions informed by competitive advantage

Competitive advantage via

competencies
capabilities
assets

combination of technologies & operational skills

- provide access to variety of markets

- contribute to perceived customer benefits
- difficult for competitors to imitate

PGE-M5-MKT-215-E-L-MRS #3
Louise Canning & Diego Rinallo

Competitive advantage: competencies

substrates
coatings
adhesives

industry

security

displays

dental care

electronics

transport

PGE-M5-MKT-215-E-L-MRS #3
Louise Canning & Diego Rinallo

Marketer decisions informed by competitive advantage

High performance depends on

competencies
capabilities
assets

business processes that enable

- better coordination with functions

- superior connections with markets

- outperforming of competitors

PGE-M5-MKT-215-E-L-MRS #3
Louise Canning & Diego Rinallo

Capability: innovation

PGE-M5-MKT-215-E-L-MRS #3
Louise Canning & Diego Rinallo

Marketer decisions informed by competitive advantage

Advantage facilitated by

competencies
capabilities
assets

properties (normally intangible) that can be used

to advantage in market place
brand
resources

physical
financial
technological
human

network
position

PGE-M5-MKT-215-E-L-MRS #3
Louise Canning & Diego Rinallo

Marketer decisions framed by business strategy

Generic business strategy

emphasis on achieving lowest cost position in industry

cost leadership
differentiation

low-margin, standard products

achieve & maintain market share leadership

PGE-M5-MKT-215-E-L-MRS #3
Louise Canning & Diego Rinallo

Generic business strategy: cost leadership

PGE-M5-MKT-215-E-L-MRS #3
Louise Canning & Diego Rinallo

Marketer decisions framed by business strategy

Generic business strategy

cost leadership
differentiation

e.g.

customer intimacy
product leadership

emphasis on innovation, high margin speciality products

meet customer choice criteria such that build customer

preference vis-a-vis competitor

PGE-M5-MKT-215-E-L-MRS #3
Louise Canning & Diego Rinallo

Generic business strategy: product leadership

PGE-M5-MKT-215-E-L-MRS #3
Louise Canning & Diego Rinallo

From business to relationship strategies

BUSINESS STRATEGY

MACRO-LEVEL
SEGMENTS
MARKETING STRATEGY
macro target segments,
marketing offer

MICRO-LEVEL
relationships

RELATIONSHIP STRATEGY
key account objectives,
relationship strategy
adapted marketing offer
PGE-M5-MKT-215-E-L-MRS #3
Louise Canning & Diego Rinallo

Relationship spectrum in business markets

transactional
exchange

anonymous transactions/
automated purchasing
fast response;
match offer to supply needs;
standard offer

value-added
exchange

focus on client retention

detailed knowledge of needs

tailoring solutions;
customer incentives to
concentrate supply needs

collaborative
exchange

complete collaboration &

integration with customer

relationship building;
resource investment;

(Day 2000)
PGE-M5-MKT-215-E-L-MRS #3
Louise Canning & Diego Rinallo

Marketer decisions: product strategy

Product offer

elements
variations

core benefit/product:

fundamental functional performance

that addresses customers basic need

supplementary :

minimum features considered

essential by customer
further augmented features that
that add value/reduce costs.

PGE-M5-MKT-215-E-L-MRS #3
Louise Canning & Diego Rinallo

Marketer decisions: elements of product offer

Augmenting services, programmes & systems
Services
corrective or remedial:
fulfilment:

problem-solving, trouble-shooting, operations assistance

availability assurance, order quantity, logistics, delivery, installation, maintenance, training,
returns, warranty

Programmes
economic:

deals, terms, conditions, off-invoice, freight, co-op allowances, rebates/bonuses

relationship:

advice & consulting, specification, co-design, process engineering, process redesign, cost
reduction, responsiveness to info. requests, joint marketing research, co-promotions,
partnering & participation in other customer programmes

Systems
linking:

efficacy:

computer-to-computer ordering, shared material resource planning (MRP), information

exchange (cloud)
logistics management systems
Anderson and Narus 1991
PGE-M5-MKT-215-E-L-MRS #3
Louise Canning & Diego Rinallo

Marketer decisions: variations in product offer

Product offer

elements
variations

product offer might differ to reflect

- industry bandwidth
- segment
- relationship

PGE-M5-MKT-215-E-L-MRS #3
Louise Canning & Diego Rinallo

Variations in product offer: bandwidth

pure
transactional
exchange

pure
collaborative
exchange

corrugated box

fibre drum

programmable
controllers

Anderson and Narus 1991

PGE-M5-MKT-215-E-L-MRS #3
Louise Canning & Diego Rinallo

Variations in product offer: segment

Siemens electrical apparatus division: small manufacturer market segment

products

services

Standard

metal clad boxes

product availability
delivery
product warranties

Options

electromechanical or
electronic instrument
controls
enhancements
communications
peripherals

installation
maintenance
tests
inspections
drawings
retrofit designs
PGE-M5-MKT-215-E-L-MRS #3
Louise Canning & Diego Rinallo

Variations in product offer: customer relationship

PGE-M5-MKT-215-E-L-MRS #3
Louise Canning & Diego Rinallo

Variations in product offer: customer relationship

Baxter Healthcare: hospital customers

Market offering element

Services
product returns
technical assistance
single point of contact
future disease incidence forecast
Programmes
price deals
customer bonus
executive perspectives
purchasing report summary
consulting
Systems
asap order-entry system
technology assessment

transactional

strategic

standard
standard

standard
standard
standard
option

standard

standard
standard
standard
standard
option

standard

standard
standard

Anderson & Narus 1995

PGE-M5-MKT-215-E-L-MRS #3
Louise Canning & Diego Rinallo

Innovation and the B to B marketer

Innovation

forms
risk
enablers

incremental vs. radical

PGE-M5-MKT-215-E-L-MRS #3
Louise Canning & Diego Rinallo

Innovation: incremental vs. radical

Incremental innovation

Radical innovation

builds on existing knowledge & resources

requires new knowledge & resources

competence-enhancing

existing competences lose value

Relatively small changes in performance/utility

step changes in performance

lifeblood of new products

relatively rare

PGE-M5-MKT-215-E-L-MRS #3
Louise Canning & Diego Rinallo

http://crystals.swarovski.com/crystals/innovations/innovations.en.html

PGE-M5-MKT-215-E-L-MRS #3
Louise Canning & Diego Rinallo

Innovation and the B to B marketer

Innovation

forms
risk
enablers

PGE-M5-MKT-215-E-L-MRS #3
Louise Canning & Diego Rinallo

Innovation risk

PGE-M5-MKT-215-E-L-MRS #3
Louise Canning & Diego Rinallo

Innovation and the B to B marketer

Innovation

forms
risk
enablers

product champion
culture

lead customer

PGE-M5-MKT-215-E-L-MRS #3
Louise Canning & Diego Rinallo

Innovation enablers: product champion

PGE-M5-MKT-215-E-L-MRS #3
Louise Canning & Diego Rinallo

Innovation enablers: culture

PGE-M5-MKT-215-E-L-MRS #3
Louise Canning & Diego Rinallo

Innovation enablers: lead customers

PGE-M5-MKT-215-E-L-MRS #3
Louise Canning & Diego Rinallo

Innovation enablers: lead customers

In nutshell, what weve covered in this session

connected business to product strategy (via marketing & relationship!)
components and variations in product offer

relevance of innovation for the b2b marketer

Sources
Brennan, R Canning LE McDowell R 2014 ch. 4 & 10.
Anderson, J.C. Narus, J.A.(1991), Partnering as a focused marketing strategy, California Management Review, 33, Spring: 93-113
Day, GS 2000, Managing market relationships, Journal of the Academy of Marketing Science, 28, Winter: 25.
Porter, M.E. Heppelmann, (2015), How smart connected products are transforming companies, Harvard Business Review, October: 96-114
Pralahad, CK Hamel, G 1990 The core competencies of the corporation, Harvard Business Review, 68,3:79-91
Stalk, G Evans, P Schulman, LE 1992, Competing on capabilities: the new rules of corporate strategy, Harvard Business Review, Jan/Feb, pp: 57-69

PGE-M5-MKT-215-E-L-MRS #3
Louise Canning & Diego Rinallo