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4MD3 Business to Business Marketing

4MD3 Business to Business Marketing. Steve Howse February 2, 2009. PREVIEW OF THEORIES. the buy-grid model switch “triggers” how customers evaluate bids theories of business buyer motivation the buying team (AKA buying centre). Segmentation Targeting Positioning The 4 Ps.

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4MD3 Business to Business Marketing

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  1. 4MD3 Business to Business Marketing Steve Howse February 2, 2009

  2. PREVIEW OF THEORIES • the buy-grid model • switch “triggers” • how customers evaluate bids • theories of business buyer motivation • the buying team (AKA buying centre)

  3. SegmentationTargetingPositioningThe 4 Ps

  4. DEFINITION OF A BUSINESS SEGMENT • Organizations… • with similar needs, expectations and preferences (NEPs)… • i.e. seeking similar benefits… • i.e. that respond similarly to a given 4P mix  

  5. MORE ON SEGMENTATION • first marketing reference in 1956 • segments are identified, not created • the size of segments

  6. WHY SEGMENT MARKETS? • purpose of segmentation is creation of a unique 4P mix for each segment • benefits of segmentation are… • a competitive advantage   • higher margins  • but there’s a problem…

  7. THE GULF BETWEEN SEGMENTATION THEORY AND PRACTICE • “the task is simply avoided because managers do not understand how to approach segmentation” • “managers find the practice of segmentation difficult and confusing”

  8. YOUR SEGMENT CHOICE DETERMINES YOUR… • customers • competitors • external environments • positioning • 4Ps • firm's skills and resources • firm's growth rate   i.e. just about everything, so choose wisely!!

  9. THE MARKETING PROCESS (STP + P)   • S: choose your segmentation variable(s) • T1: gather data on the resulting "candidate segments"  • T2: select your target markets (TMs)   • Po: choose a unique product position for each TM • Pr: create a unique 4P mix for each TM/position

  10. THE BEST VARIABLESTO CHOOSE IN THEORY • the NEPs themselves • that’s called "benefit segmentation“ • or "customer-back segmentation" • but it's often too difficult in practice

  11. SO IN PRACTICE… • "predictor variables“ often used instead • customer attributes • customer behaviours  • i.e. CABs • usually in combination • discrimination is the test of their validity

  12. MACROSEGMENTATION VARIABLES Observed outside the customer organization •  geographic location • customer size • customer existing or new? (cont’d) • commercial enterprise, government or NPI? • customer’s NAICS classification • econometric foot-printing • business clustering

  13. MICROSEGMENTATION VARIABLES Inside the Customer organization • price sensitivity   • business culture • purchase orientation • purchasing centralized or decentralized? • criticality of on-time delivery   (cont’d)

  14. MICROSEGMENTATION VARIABLES (CONT’D) • criticality of product use • intensity of product use   • level of loyalty of existing customers • customer’s innovativeness • degree of product value-added

  15. COMBINATION METHODS • two-stage segmentation • nested approach

  16. USING A CUSTOMER DATABASE CRM • definition: the business marketer's repository for all relevant customer information • great for segmentation  • and for account management • and for targeting promotion • what your database should contain

  17. TARGETING CRITERIA – A WISH LIST • high unit volume • high volume growth • high unit price • low segment-specific costs • low segment risk • easy accessibility • good fit with your firm’s objectives, resources and values • high awareness of your firm and products

  18. SEGMENT-SPECIFIC COSTS • product • promotion • distribution • pricing • research, analysis and planning

  19. CHOOSING THE NUMBER OF SEGMENTS TO SERVE • i.e. the number of target markets • the benefits of segmentation… • must exceed segment-specific costs • under-segmentation • over-segmentation

  20. POSITIONING • deciding the customer benefits you want your offering to be known for • becomes your promotional message • don’t use technical features

  21. BM/CM DIFFERENCES - MARKET RESEARCH • usually identified before contact • personal interviews done in R's office • harder to contact   • more wary when contacted • higher interviewer skills required • not as much formal research  needed • sample and population are smaller

  22. BM/CM DIFFERENCES - MARKET RESEARCH (CONT’D) • research is less formal and structured   • more effort for secondary research • primary research mostly surveys • surveys mostly ‘phone or face-to-face   • response rate higher for mail surveys • must research more customer layers  

  23. Steve’s Tips • You decide….

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