B2B Mktg Session 4

Buyer-Seller
 Discussion Issues

Understand the roles and relationship of business buyer

and salesperson
Dimensions of buyer seller relationship
Types of buyer seller relationships
Effective relationship marketing (RM) strategies
Facets of RM, CRM, and CLV
Prevalent methods for influencing business customers
Aspects of special dealings between buyer and seller in
business marketing
 Dimensions of buyer seller relationship
Basic foundation block of buyer seller relationship stands on
interactions of sales representative of seller with rep of buyer
Two major buyers perceptions of salesperson : stereotypical and
reputation of salespersons company
Stereotypical : talkative, competitive, manipulative; response in terms of
the stereotype of the salesman
Company reputation : better the co., better the response

Behaviour of salesperson and buyer depend on:

o Organizational needs or objectives
o Personal needs
o Social needs
Shoafs study : indl buyer is conformist; as products.svcs get more
standardised, buyer decision acquires more subjectiveness
Usually, orgnl culture demands analysis of supplier proposals and
justification for selection
Effectiveness of a sales rep : ability to sense buyer reaction, understand
buying decision-makers issues, clarity of the superiors expectations
 Basis of Buyer-Seller Interactions

Dr Jagdish Sheth identified two major factors as the basis of the

relationship
Content of information
Style in which it is exchanged
For a successful relationship, content and style of interactions should
be compatible
Content : prod features, prices, services, etc
Styles : task-oriented, interaction oriented, self-oriented
For both, salesperson and the buyer, there is a need to satisfy orgnl as
well as personal needs
These needs become the starting point of their interaction; firms are
realising the advantages of relationship marketing
 Need for Relationship Focus in Bus Mktg

Buyer-seller reltnshp is stable and interdependent

Selling and mktg strategies directed towards indiv customer or small
group of customers; as against mass mkts in consumer mktg
B-s rltnshp important to both the dyad concept
Covers the long route : pre-sales activities like RFI, RFQ,
negotiations, to purchase order placement and order execution, and
further to post-sales svc if required, and repeat orders; many of these
are absent in consumer mktg
B-s : mutual interest in working together
 Types of Buyer Seller Relationships

Buyer and seller firms have types of business rltnshps, which occupy a
range or a spectrum
In practice, attitude and culture of orgn are reflected in attitude and
behaviour of individual buyers and sellers
Broadly three types (in a range) of exchanges or relationships between
buying and selling firms:

Transactional (distant) relationship.

Value added (continuing) relationship.

Partnering / Collaborative (close) relationship

 Transactional Exchange / Relationship

One-time transaction / exchange

Buyers prefer this when:
Many suppliers are available
Supply market is stable
Less complex purchase decisions
Sellers prefer this when buyers sales and profit potentials
are low
Focus is on lowest / competitive prices and timely
availability
Buyers are switchers; no loyalty to any suppliers
 Value-Added Exchange / Relationship

Sales and profit potential of buyers in the medium range

Thrust on understanding and meeting buyers needs better than
competitors
Buyers are split loyals i.e. have 2 or 3 suppliers
Sellers objective is to get maximum share
Example :
A two-wheeler mnftrr needed flexibility in delivery schedules, due to
wide variations in demand for different models
A precision tube mntrr and supplier to the above company had located a
warehouse in proximity with the buyer and also stocked adequate
inventory to meet the fluctuating requirements of superior quality tubes of
different sizes
 Collaborative / Partnering Exchanges or
Relationships
Between a customer firm and a supplier firm, involves a
process of building strong social, economic, service, and
technical ties over a time stretch
Platform : Commitment and trust
Objective: Long-term mutually beneficial relationship
Buying firms prefer it when
Few supply alternatives
High purchase complexity and uncertainty
Selling firms prefer it when
Buying firms sales and profit potentials are high
Process includes strong social, economic, service, technical ties;
and joint problem solving, multiple connections, integrating
operations.
Buyers are hard-core loyals to one supplier
 Developing Effective Relationship
Marketing Strategies
Seller firm needs to develop suitable marketing strategies;
actions found effective include:
Linking CRM system with customer database
Selecting customers
Developing objectives and strategies
Implementing relationship strategies
Evaluating relationship objectives and strategies
 Linking CRM System with Customer
Database

Determines the lifetime value of a customer firm : the potential

profitability factor

Build customer database using CRM software

Customer database includes following customer information

Basic : Name, mail-ID, mobile nos. etc.
Company info: Customer type, products purchased, etc.
Psychographic factors info: Values, lifestyle of members, etc.
Transaction history: Purchase transactions characteristics
Others: Satisfaction, loyalty, etc

Identifies customers, develops, and analyses customer and mktg

databases, builds customer relationships, influences customer
perceptions of the co. and its products, and maximizes the lifetime
value of each customer to the firm
 Selecting Customers

Segment the total market distinct group of buying firms

Target segments with superior value offering ie where the companys (sellers)
offering has edge over competitor product
Where no edge, strategy is transactional rltnshps

Select customers with high profit potential from target segments for
collaborative relationship
Bus mrktr needs accurate knowledge of the customer needs, sales potential, and
costs of serving the customer

Electric motors manufacturer case

3 mkt segments
OEMs such as indl pump / air compressor mnftrrs needing elect motors for finished
product collaborative strategy
User industries like steel plants etc needing elect motors as replacement; not regular
demand transactional rltnshps
Small-scale industries : small volume outsourced to firms dealers
 Developing R M Objectives and Strategies

Bus. Mktg firm should study the nature of buyer-seller rltnshps in the
industry, and the strategies practised by competitors
Bus. Mktg firm should then satisfy the specific needs of the customer
by adapting product and systems
Relationship objectives: Based on
The customers purchase orientation e.g. supply chain mgt
The customers specific needs
Relationship strategies:
Collaborative
Value added
Transactional
 Implementing Relationship Strategies &
Evaluating

Requires proper orgn structure and effective use of salespersons

Done through sales and support people (tech staff, logistics etc)
Sales groups serve different customer segments: e.g. key accounts,
transactional accounts, dealers

Evaluating Objectives and Strategies

Both buyer and seller evaluate if stated objectives and strategies
achieved
Relationships continued, upgraded, or downgraded after
evaluation
Customers definition of value may change; thus continuous
evaluation is important
 Relationship Marketing (RM)

RM focuses on collaborative / partnering relationship

Aims of RM
Building mutually satisfying, long-term relationships between customers,
suppliers, intermediaries.
Gain and retain business
Develop strong customer bond / loyalty

Approaches / Strategies used in RM

Financial benefits
Social benefits
Structural or technical ties

RM is productive with customers who have long term focus with major
suppliers, support collaborative relationships, have high sales and profit
potential and expect suppliers to deliver superior value, eg tyres and
batteries suppliers to Tata Motors, Maruti, Ford, etc
 Customer Relationship Management
(CRM)
CRM defined (from many definitions):
Develop customer strategy, business processes, customer-centric culture,
supported by a software.

Main objective: Give shared customer data to all customer interacting

persons

CRM applications:
Sales force automation and management enable salespersons acquire
and retain customers, minimise time spent on admin work, get competitive
info, use sales process and sales forecasting methods
Customer service and support mainly after sales service activities
Integrating marketing functions such as lead generation and follow-up,
market segmentation and targeting, multi-channel operations, facilitate
individualised mktg

Customer Lifetime Value (CLV)

CLV is the long-term economic value of a customer
CLV = Lifetime profit less cost of acquiring a customer
 Benefits and Cost Analysis of CRM

Benefits
Unified customer database past, present, and potential customers
Retaining customers customers total business, suppliers mkt share,
cost of serving, customer complaints, defections, etc
Acquiring customers finding new customers and delivering value

Costs
CRM Software: Develop in-house, buy licensed, or outsource creation
Implementation People and time have to be devoted
Integration with existing systems sometimes difficult, but drivers are
business considerations
 Influencing Business Customers

Why should a customer firm buy our product ?

After getting feedback from target customers, the business mkt manager
develops a customer value proposition promising superior benefits that matter
most to prospective target customers
The marketer must provide proof or reason to believe the promises

Major Methods : Sales Presentation; Negotiation

Sales Presentation
Identify and respond to the customer needs
Have two sided discussion
Highlight superior value
Use technology for presentation
Negotiation
Many purposes of negotiation
Meet customer before formal negotiation to collect information and build
rapport
Adopt win-win style out of various styles
 How to defend when customer uses another
style?

During negotiation:
Be positive, kind, and calm

Get agreement to the problem

Explore areas of agreement

Make concessions in small amounts

Conclude by summing-up what is agreed

 Special Dealings between Buyer-Seller in
Business Marketing

Reciprocity

means reciprocal dealings between a buyer and a seller

buying from a customer, or selling to a supplier
it often becomes complex in practice
hence, purchase and sales managers dislike it and try to minimise

Dealing with Customers Customers

business marketers may need to deal with customers customers

sensitive issue
planning and coordination required with customer
Eg a/c engine mnftrr
 Customer Service
Definition

Additional facility or supplement to a core product or service,

given free of charge by a supplier to a customer, for competitive
edge, goodwill, etc

Examples

Delivery of a product or service, technical information, warranty

service, free training if required, etc

Quality of customer service depends on:

Timely delivery, prompt and accurate information, speedy

technical service.

High importance given by buyers and suppliers