12e

Introduction to Course

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 Introduction to Me
 Education: Bcomm (McGill), MBA (SFU), PhD (Paris)
 Work: Healthcare Marketing & Sales
 Teaching:
 7 Years UBC
 Been teaching at SFU since 2007 (on and off)
 2 years Dubai
 5 MBA lectures in Paris
 Family

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 Course Expectations
 Attendance is mandatory
 I will take it weekly
 If you will miss for some reason, pls email me
 Participation
 Attendance
 Contribution to class discussion
 Reading chapters weekly and articles (to buy)
 Preparing for weekly quizzes
 6 questions per quiz (from book and articles)
 5 quizzes
 Group quizzes
 Working in group cohesively and fairly

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 Course Outline
 Participation: 10%
 Attendance and contribution
 Weekly Quizzes: 15% (5 quizzes @ 2% each and 5
group Quizzes at 1% each)
 Midterm: 30%
 Final Value Creation project: 35% (10 oral 25 written)
 Lessons Learned Report (10%)

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 Groups

 For the project you have been assigned a group.

 By week 2, I need an idea of which company you
might work on
 Worth 35%
 20 minute presentation
 Presentations will be on the last day

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 Market Value Creation
 Marketing Value Creation (Group)
 Purpose – to develop skills in value creation; to provide practice in developing business models; to
develop a deeper understanding of targeting and the marketing mix as primary tools in marketing
strategy; and, to develop team norms and processes.
 A “Re-invention” here is the design of an innovative approach to one element of the marketing
mix or to the target. Each group will select a particular local real-world B2B business, decide what
the current marketing strategy (STP) and Mix is for that business, and then radically change one of
those elements with the goal of creating new value.
 Have fun with this and get as creative as you can. It could mean a radically new approach to place
(for example, a construction tool company whose reps visit worksites to sell and service power
tools), or a different product (for example, a printing company that deals in only recycled paper
and eco-friendly). Perhaps your product could be a great solution to a previously unexplored
segment.
 Then, a detailed explanation, justification and implementation plan must be put together,
including costs and estimated impact of the invention for the business. Here are some specifics
you might want to include:
 Company background (name, what they sell and to whom, etc.)
 The opportunity you’ve identified and which element of the marketing mix it concerns
 Your concept for change, why it’s innovative, and why it represents a better way of creating value
 Justification and rationale (how exactly it would work and be implemented)

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 Market Value Creation
 Potential downsides/drawbacks/risks and how they can be mitigated
 Supporting information (estimated timetable, costs, diagrams, etc.)
 The last 3 of the above points will likely be informed heavily by the
situational analysis.
 Notes: Know that the remaining elements may also change as a result of
your decision. This change should be discussed only as a consequence of
your primary factor change. i.e. I’m not looking for a wholesale invention
of a new product but an augmentation of existing company model – what
opportunities exist to create value with minimal change in resources?
 Each group will be graded on two criteria: 50% on how truly innovative or
out of the box the idea is (the more creative the better), and 50% how
realistic it is in terms of your approach to overcoming resistance and
implementing it. Detail here is critical. Submission details like media
choice, format, style, length, etc. are up to you. So, saying that you are
going to build a website for a small company is not overly radical, though
you may make-up points in implementation.

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 Value Creation Project
 Ideally, this subject of your creativity is a local B2B business. Keep
the project and scope small and manageable. Solving problems for
Target of Blackberry are likely beyond the scope of your knowledge
at this point. Projects that involve national or international
companies will be graded with prejudice (I’ll mark them harder).
 You will spend about 25 minutes presenting your re-invention to
the group followed by a 5 to 10 minutes of Q&A and discussion
from the class. You can present in any way you like. The
presentation will be very informal and not for grades, just for a fun
way to review your project, and generate understanding and
thought through storytelling.
 Primary research is less of an issue though you should provide the
basics as applicable for the class to understand the current and
proposed model.
 Submission details like media choice, format, style, length, etc. are
in the project guideline.
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 12e

Chapter 1
A Business Marketing
Perspective

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Think about all the business marketing that
was involved in putting together these
consumer products/services
 Chapter Outline
 The dynamic nature of the business marketing
environment and the basic similarities and
differences between consumer-goods and business
marketing
 The types of customers in this important market
 The underlying factors that influence the demand
for industrial goods
 The nature of buyer-seller relationships in a
product’s supply chain
 A method for classifying products and services for
the business market
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 Business Markets
 Markets for products and services bought by
businesses, government bodies, and institutions for:
 Incorporation (tires)
 Consumption (work laptops)
 Use (tools used to manufacture products)
 Resale (wholesalers buying and reselling)

 Give me some examples of each

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 Business Marketing
 Business marketers serve the largest market of all
 Dollar volume of the business market greatly
exceeds the consumer market
 Single customer can account for an enormous level
of purchasing activity
 Known as industrial marketing

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 Business Marketing (continued)
 Factors that distinguish business marketing from
consumer marketing
 Nature of the customer
 Utility of the product for the customer (adding value
to a product in a particular way…time
 Key to successful marketing strategy
 To identify unique dimensions of each major business
market and formulate programs that respond to
specific characteristics of each business market sector

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 Commercial Enterprises

Construction Service firms

Manufacturers
companies (hotels)

Selected Resellers
Transportation
professional (wholesalers
companies
groups (dentists) retailers)

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 Concentration of Customers
 Business marketers serve fewer but larger
customers than consumer-products marketers
 Customers can be manufacturers of products who in
turn target millions of potential buyers
 Geographical concentration indicates that a large
potential volume exists in a given area
 Large metropolitan areas are lucrative business
markets

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 Government Units
 Generate the greatest volume of purchases of any
customer category in the U.S.
 Gov’t units purchase from every category of goods
and services – office supplies, notebook computers,
food, health care, military equipment.

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 Government Purchasing Strategies
 Formal advertising - Government solicits bids from
appropriate suppliers
 Followed when the product is standardized and the
specifications are straightforward
 Ex: 20 pound bond paper
 Generally awarded to lowest bidder
 Negotiated contract - Employed when:
 Purchased goods and services cannot be differentiated on
the basis of price alone
 Ex: complex scientific equipment
 Few potential suppliers exist

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 Institutional Customers
 Schools and health care organizations make up a
sizable component of the institutional market
 Includes colleges, universities, art galleries, foundations,
libraries
 Many are administered by government units

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 Institutional Buying
 Institutions may employ a purchasing agent or a
purchasing department
 Group buying - Institutions may join cooperative
purchasing associations to secure purchasing
efficiencies
 Allows institutions to enjoy lower prices, improved
quality, reduced administrative costs, and greater
competition

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 Business Markets and Consumer-
Goods Markets
 Employ a market orientation
 Means understanding and satisfying customers
 Are market-driven

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 Aspects of Market-Driven Firms
 Set of values and beliefs that places customers’
interests first
 Ability to generate, disseminate, and productively
use superior information about customers and
competitors

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 Distinctive Capabilities

Market sensing capability

• Ability to continuously sense change and to

anticipate customer responses

Customer linking

• Capability to develop and manage close

customer relationships

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 Impact on Business Performance

 Marketing expenditures that were once considered

expenses are now considered investments now
 Marketers need to:
 Demonstrate return on investment from marketing
spending
 Deliver strong financial performance
 Be more accountable to shareholders

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 Customer Relationship Management
(CRM)
 Includes the skills required to identify, initiate,
develop, and maintain profitable customer
relationships
 Helps to meet performance standards

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 Customer Decision Journey
 Customers can determine how, when, and where
they want to acquire information
 Customers can access information from Websites,
YouTube, and peers in the business network

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 Customer Engagement
 Through:
 Close working partnership
 An intimate knowledge of the customer’s operations
 Unique value contribution to the customer’s business
 Market-driven firms place high priority on customer-
linking capabilities and closely align product
decisions with the customer’s operations

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 Aligning Strategy and Sales
 Firms must:
 Clearly communicate the strategy
 Match customer with optimal products and services
 Make the strategy relevant through value proposition

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 Roles of Marketing Managers
Instigator

•Capitalizes on the close connection to customers, thinks strategically,

and challenges the status quo

Innovator

•Takes an active role in shaping the company’s innovation agenda

Integrator

•Links multiple functions to unite organizational members on a clear

strategy path

Implementer

•Mobilizes diverse organizational members across the firm

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 Customer Value Proposition
 Customers compare value elements of a firm’s
offering with those offered by the next best
alternative

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 What is Value proposition
 A value proposition is a statement that paints a clear
picture of what your brand has to offer
 How your product or service solves/improves
problems
 What benefits customers can expect
 Why customers should buy from you over your
competitors
 It introduces you to prospective buyers and helps
you make a strong first impression.
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 Building Blocks of a Successful Value
Proposition

Points of parity

•Value elements with the same performance

characteristics as the next best alternative

Points of difference

•Value elements that render the supplier’s

offering either superior or inferior to the next
best alternative

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 Examples

Apple has great value propositions for every product, but

one that is particularly impressive is its statement for the
MacBook. In this witty example, Apple emphasizes how
lightweight its product is (its biggest differentiator), while
also speaking to how advanced its technology is

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 Vimeo

If you're familiar with it, you know Vimeo positions itself as a

higher-quality, more sophisticated YouTube, and their value
proposition makes this very clear. When you choose its platform
over YouTube, you're making a commitment to posting something
"worth watching," not just another cat video (no offense, cat
videos).
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 Tortuga Backpacks

While many people may associate backpacks with school kids,

Tortuga makes it clear in its value proposition that that is not its
market. Making "travel backpacks for International, Urban
Travel," the brand is going after hardcore travelers who are
annoyed at the thought of checking bags and inspired by that of
backpacking. Its imagery and messaging resonate perfectly with
this audience.

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 Differences in Consumer and Business
Marketing
 Nature of markets
 Market demand
 Buyer behavior
 Buyer-seller relationships
 Environmental influences
 Market strategy

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 Characteristics of Business Markets
 Derived demand
 Demand for industrial products is derived from the
ultimate demand for consumer products
 EG: Decline in mortgage rate can increase interest in new
home construction and then appliances (retailers increase
inventory)
 Fluctuating demand
 Business marketers carefully monitor fluctuating
trends and patterns in consumer markets
 Downturn in the economy can cause the opposite of
the above
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 Characteristics of Business Markets
(continued)

 Stimulating demand
 Business marketers must monitor final consumer markets
and develop a plan that reaches the ultimate consumer
directly
 Aluminium producers use TV ad mag ads to show convenience and
recycling opportunities that aluminium containers offer
 Consumer determines the demand by buying soft drinks in
aluminium cans versus plastic
 Price sensitivity
 Responsiveness of the quantity demanded to a change in
price
 Called demand elasticity
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 Global Market Perspective
 Marketers must look beyond the borders of the
United States
 Growing demand for industrial products in Germany,
Japan, Korea, Brazil, China, and India

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 Business and Consumer Marketing

 The Intended use determines whether or not a

product is a consumer product or a business
product
 Business marketing emphasizes personal selling
rather than advertising to reach potential buyers
 Business product includes an important service
component

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 ●Reaches consumers with products sold through retailers.
● New products are developed, tested, targeted, priced,
promoted for specific segments.
● Distribution – they employ food brokers who call on wholesalers
and retailers
●Promo includes media advertising, coupons, special offers,
incentives for retailers
●Pricing reflects demand, costs, competitive behavior
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 Relationship Marketing
 All marketing activities directed toward establishing,
developing, and maintaining successful exchanges
with customers
 Building one-to-one relationships with customers is
the core of business marketing

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 Supply Chain Management
 Technique of linking a manufacturer’s operation with
suppliers, key intermediaries, and customers to
enhance efficiencies and effectiveness
 Aims to improve the speed, precision, and efficiency
of manufacturing through strong supplier
relationships
 Achieved through information sharing, joint planning,
shared technology, and shared benefits

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 Managing Relationships in the Supply
Chain
 Long-term relationships are built on trust and
demonstrated performance
 Strategic partnerships require open lines of
communication between multiple layers of the
buying and selling organizations

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 Categories of Commercial
Customers
 Users
 Buy industrial products or services to produce other goods
or services that are, in turn, sold in the business or
consumer markets (items used to make the final product)
 Ex: When Ford buys machine tools, Ford is a user. These machine
tools don’t become part of the auto but help produce it.
 Original Equipment Manufacturers (OEMs)
 Purchase industrial goods to incorporate into other
products it sells in the business or ultimate consumer
market (used as part of the final product)
 Ex: Intel produces microprocessors that constitute heart of Dell’s
computer
 In purchasing the microprocessor, Dell is an OEM

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 Categories of Commercial Customers
(continued)

 Dealers and distributors

 Purchase industrial goods for resale to users and
OEMs
 Distributor accumulates, stores, and sells a large
assortment of goods to industrial users

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 Figure 1.3 - Categories of Industrial
Goods

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 Discussion Questions
 Home Depot is quite busy each morning because
local contractors, home remodelers, are buying
products they require for the day’s projects. Such
small business customers represent a huge market
opportunity for Home Depot or Lowe’s.

 Describe particular strategies these retailers could

follow to target and serve these customers.

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 Think about the 4 P’s

 If Home Depot and Lowe’s want to target and serve

their customers, they should have a market
orientation toward their customers, regardless of
whether they are end consumers or business
customers.

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 Discussion Question
 DuPont, one of the largest industrial producers of
chemicals and synthetic fibers, spends millions of
dollars annually on advertising its products to final
consumers.
 For ex: DuPont invested more than $1 million in a TV
advertising blitz that emphasized the comfort of jeans
made of DuPont’s stretch polyester-cotton blend.
 Du Pont does not produce jeans or market them to
final consumers, so why were large expenditures
made on consumer advertising?

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 Answer
 Many business marketers make large expenditures
on consumer advertising because of the nature of
derived demand for many business products.
 In the case of DuPont, advertising to final consumers
should help the company expand demand for its
stretch polyester–cotton fabric among denim
manufacturers and thus expand the total demand
for DuPont’s products.

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 Project Groups
 I have pre-assigned groups.
 Please check Canvas to find your group members
and exchange contact info today

© 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part, except for use
as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning
management system for classroom use.
 For Next Week
 Read Chapters assigned on schedule
 Send me name of company you want to work with

© 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part, except for use
as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning
management system for classroom use. 53