Unit 1: Introduction to Business

Markets
UNIT 1
Dr. Ved Srivastava
Definition of a business market
• Business market is a concept where businesses buy products
from other sellers as raw material which are used for
manufacturing other products which could be again resold to
buyers in requirement of those final finished products.
• Example: suppose an industrial adhesive manufacturer sells
adhesives to a shoe company which uses it to manufacture
shoes which could be sold to the final consumers who are in
need of shoes. So, the adhesive manufacturer is selling its
product in industrial market.
Nature and Characteristics of Business
Markets
• The buyers are few and they buy in bulk. So a B2B marketer for a tyre company
would eye the few automobile companies concentrated in some regions for their
sales.
• Business buyers are concentrated in specific geographies unlike the consumer
markets which are spread throughout the length and breadth of the country.
• Example: Automobile industry is concentrated in areas like Chennai, Pune, Nasik,
Gurgaon, etc and all sellers who are selling automobile related components need
to visit these geographies. The hosiery industry is situated in Coimbatore in
Tamil Nadu, diamond cutting and polishing industry in Surat in Gujrat,
pharmaceutical and chemical companies in Ahmedabad, Gujrat, software
companies in Bengaluru, Gurgaon, Hyderabad, Noida, etc., jute industries
around Kolkata, etc.
• Business buying is tied with the demands of the ultimate demand of the
consumers for the final product, known as the derived demand. As long there is
a demand for the final product will the business market for the raw materials
exist. This warrants the B2B marketers to be very alert and cautious as many
times they loose touch with the ultimate buyers and buying trends which might be
inimical to their business interests. When we are discussing the concept of
Marketing Myopia for B2C marketers it also has implications for the
corresponding B2B marketers related to it.
• Purchasing for industrial or business buying is more complex
due to the product specifications, price, quantity, service
requirements, length of the contract, and delivery
schedules.
• Due to close supplier-buyer relationship, more
customization of products is expected.
• The industrial purchase is done by a team known as buying
center comprising of many individuals and departments.
Industrial buying process is a multi stage affair which takes a
lot of time to materialize.
• Functionality is given higher weightage over aesthetics.
• There is nothing like impulsive buying in industrial buying.
 Size and Scope of business markets
• Digitization, connectivity, and virtualization are bringing revolutionary
new opportunities to companies engaged in business-to-business (B2B)
sales—and taking them beyond all the traditional limits. Flexible payment
options are favouring business owners.
• This year's global B2B Pulse survey of more than 3,800 decision makers
across 13 countries finds they're increasingly getting this ability, and B2B
companies that provide the best omnichannel experience are
improving their market share by at least 10 percent annually.
• The report estimated the country's B2B market size to be $20 billion for
2022 in terms of GMV (Gross Merchandise Value, or the total sales
made by an ecommerce marketplace over a specific period of time). The
GMV growth rate is estimated to be 44% from CY 2022 to CY 2027, as
per the report.
• According to a new report published by Allied Market Research, titled,
"FMCG B2B e-Commerce Market" The FMCG B2B e-commerce market
was valued at $520.80 billion in 2021, and is estimated to reach $1220.5
billion by 2031, growing at a CAGR of 9% from 2022 to 2031.
• The global B2B e-commerce market size was valued at USD 7,907.07
billion in 2022 and is projected to grow at a Compound Annual Growth
Rate (CAGR) of 20.2% from 2023 to 2030.
 Importance of Business Markets
• Importance for raw material producers like Agriculture, etc.
• Importance for companies producing plant and machinery.
• Importance for overall economy.
• Job engine for the economy.
• Quality standards and efficient systems of B2B have a
cascading effect on the consumer markets.
• Right place for the sustainability practices to enter the business.
 Difference between Consumer Markets and
Business Markets
Different buying requirements
• Many consumer goods are bought on the whims and fancies of the buyer
wherein perception, emotions, fashion, peer influence also play a major
role.
• Contrarily, in business buying the purchase teams are very much clear on
their requirements and how they have to go about it. Product performance,
quality, etc. parameters are paramount. So there is very less scope of
perceptions, emotions, etc. So, lesser cognitive dissonance.
Smaller & Highly Specialized Markets
• Business marketers usually target a few hundred prospects whereas the
consumer marketers target millions of prospects.
• Due to the smaller size it’s possible for the B2B marketers to thoroughly
research and approach each prospect with a customized offering
which is usually missing in consumer market.
• Nevertheless, new technologies, have brought a paradigm shift even
for B2C markets.
Concentrated selling leads to higher value
• As the focus is on fewer, intimate, long term relationships the value return is
more in B2B sales.
• Life time value calculation becomes more pertinent and relevant here. This
facilitates more realistic investment per account leading to better ROI.
The Personal Touch
• Consumer marketing offers at best a very remote relationship between buyer and
seller. So one to one relationship is not possible, even considering the digital
interventions, in the consumer marketing. However, one to one marketing is
very much possible in B2B selling which provides all its benefits to the latter.
Going beyond the Product
• The physical product is of greatest importance in consumer markets.
• In B2B markets, the purchase extends beyond the product and includes
handling of orders, delivery time, assured supply, services, credit, etc.
These aspects become as important as the product itself and can be crucial for
make or break in terms of getting an order.
Complex Products with complex constituents
• Now days, many final products are complex systems which warrant
equally complex components which need to be customised to cater
to the specialized applications. Moreover, the concepts of core
competency and outsourcing further deepened this
requirement.
• So in B2B marketing not only the components being sold by
individual companies ought to be performing but also they need to
synchronize well with other components in the system requiring
a very high level of collaboration and knowhow on the part of
industrial marketers.
Extreme Customer-Centric
• Although, B2C marketing also entails customer orientation it is not
taken to the extreme levels which one finds in B2B. As the
customer numbers are few there is no excuse for any lapse on
this front and nothing less than hundred percent deliverability on the
customer needs is warranted for.
Multi decision makers
• B2B marketing becomes tough and very thorough affair considering
the fact that the stakeholders are many and have a say in the final
purchase of the product.
• Each stakeholder has their own specific objectives based on their
specific KRAs influencing the final decision which ought to be taken
into consideration by the B2B marketers.
• The Production and Quality functionaries in the team are more
concerned about the quality parameters, and delivery timelines as
compared to the purchase people who are concerned more about
the prices offered. Marketing team on the other hand would love to
have only the amount of quality and pricing that goes with the
ultimate interests of the final consumer.
Customers’ Product Knowledge
• In B2C the consumer does not carry the product knowledge or it’s
application to that level. Comparatively, in B2B the customer is highly
experienced and aware of each and every and minutest of details of the
product and it’s application.
• Most of the time it exceeds even the knowledge of the B2B marketer
who is pitching the product. Moreover, their extra knowledge on the
channels available, competitive offers, substitutes, compliances, etc.
make things harder for the seller.
Longer and Formal Buying Process
• B2B entails formal policies, procedures, and there are various levels
through which the process needs to pass. So there is a highly structured
mechanism for this exercise entailing many steps before the deal is
actually struck. This causes a lot of delay which again is on purpose as the
time lag actually helps the stakeholders in deliberating the pros and
cons involved in the multiple offers at hand.
Multiple Sales call
• Because of the presence of the buying center, it takes multiple
sales call to wrap up a sales deal in the B2B arena. In some bigger
projects it might take even months and years to complete the sales
cycle which could be unsettling for the B2C marketers.
Inelastic demand
• Demand for business goods does not get affected that fast by price
changes as compared to the consumer goods. For e.g. a shoe
manufacturer is not going to buy less or more of leather if the
latter prices fluctuate as far as the demand for shoes is intact.
Moreover, in the shorter run the production methods also could
not be changed that quickly.
Acceleration Effect
• A demand in consumer good by few percentage points can increase
the related business demand by many percentage points and vica
versa.
Types of Business Goods
Capital Goods
• Capital goods are directly utilized for production. They are further classified into installations and
accessories.
• Installations consist of building, plant, and machinery and are bought directly from the producer.
• Accessories consist of workmen tools and office equipments like photocopiers, fax machines, etc.
These are usually procured through intermediaries considering the volumes required.
Raw Materials
• These are goods which are utilized in further manufacturing of products and loose their original
forms in the process. Examples are forest products, minerals, agricultural products, etc.
Components
• They are combined together to form a final product which is a systematic whole formed out of the
several components forming unique parts with their own significance in the whole. Examples could
be the processor, RAM, hard disc, etc. which are parts of a computing system.
The Business Buyer
Unit – 2
Dr. Ved Srivastava
 Factors Affecting Business Buying
Decisions
Environmental Factors
Governmental Regulations
• Related to taxes
• Related to supply of commodities especially essential
commodities affecting the common people.
• Recently government put certain restrictions on the supply of
some essential chemicals which affected the pharma
companies.
• Government norms on pollutants affected the business of
industries like automobiles, industries creating air and water
pollution, etc.
Economic Factors
• Shifts in demand patterns, interest rates, inflationary trends,
investment sentiments, etc. are very important factors.
Industrial and Competitive changes
• Introduction of new products with different features and
functionalities bring change across the industry with industry
players adapting to it.
• With the coming of BT cotton a lot of changes were seen in the
water, fertilizers, pesticides, usage which had far reaching
implications for all the stakeholders.
Cultural Factors
• Change in the fashion affects the garment and many other
industries.
• Increasing health concerns amongst people has made
transforming changes across the industries. Even companies
considered the source of junk foods have begun coming up
with healthy alternatives.
• The sudden spurt in the digitalization of business in recent
times is very much attributed to the cultural changes
happening in the society.
• Culture issues are all the more pertinent in the context of
Globalization with the advent of the MNCs wherein they
need to adapt to local culture.
Organizational Factors
• The work culture of the organization is very important and its
understanding is imperative for all stakeholders.
• Especially the Core values for any organization are sacrosanct and
you get to see its effect in all the activities of that organization.
• The structure and formal/informal norms of communication are
also noteworthy.
• Generally the pvt. Organizations stress more on quality supplies
whereas govt. organizations go by bidding process in which cost
component is primary. So knowing these is important for marketer.
• Also, the stress on individualism vs. team work, efficiency, etc.
change in different organizations.
Individual factors
• Marketers should be careful about the attributes of buying
centre viz. personal goals, professional experience, life-
style, attitudes and opinions, personality traits, etc
• Even though B2B is lot more rational devoid of emotionality as
compared to B2C setting, traces could be seen present
because of the emotions and beliefs of the individuals
comprising of the buying center.
• Individuals might differ based on their departments,
experience, educational backgrounds, age, etc.
 Purchasing Orientation
• A company’s purchasing orientation is dictated by the concern to
get maximum overall company performance from the concerned
purchase.
• Suppliers are selected on their ability to meet quality and
availability requirements and offering best prices.
• Apart getting from the above mentioned best deal the other
important concern is maximizing power over suppliers.
• The purchase team decides on the best final price which would be
acceptable to the final customer and then works backward in
demanding the best price from the suppliers.
• Earlier strategy was having many suppliers and playing one
against other.
• Web based searches facilitated finding many suppliers as per
need.
• Generally the cost of purchases account for 70% of the net
sales.
• So a saving of say Rs. 10 on purchases has same effect on
profit as Rs. 60 increase in sales revenue.
• Because of the above facts of correlation between
purchasing function and firm’s financial position companies
have been concentrating on “buying better”.
• So, this has led to the purchasing orientation and it shapes
the way purchasing managers treat their own internal
departments and the suppliers.
Total Cost of Ownership
• Apart from getting the best price another important
consideration is the calculation of total costs incurred in
acquisition, possession, use, and disposal of a product.
• The TCO varies from product to product based on volumes,
category, value of product purchases.
• This is especially important for goods which are for long term
use and have repeated ongoing buying activities associated
with them.
• Reducing TCO entails willingness and capacity to share
information and align activities between the buyers and
suppliers.
• The investment and coordination required for the same is
substantial and considering the stakes involved it asks for a
win win strategy wherein all stakeholders are comfortable
making the efforts.
• Taken to the next level this involves not just the direct buyer
and seller but all the intermediaries which form a part of the
value chain.
• This takes us to the supply chain orientation which maximizes
value across the chain in which companies like Toyota have
been pioneers.
Supply chain orientation
• Supply chain orientation leads to another important of aspect of
ascertaining the core competencies throughout the value
chain deciding what to make and what to buy.
• It further gives rise to the aspect of outsourcing of activities not
adding value to the supply chain.
• This also entails having lesser number of direct but strategic
suppliers and many indirect and 2nd, 3rd level of suppliers.
• The few direct suppliers are much more involved in product
expertise, system selling, buyer’s long term strategic
goals.
• Applications like the Extranet, JIT, SCM, etc. have taken this to
the next level.
 Types of Buyers
Producers
• These are companies which transform the raw materials they procure
into a further finished product.
• Most of the companies we are aware of like HUL, P&G, ITC, LG, etc fall
into this type.
Resellers
• They purchase the goods and services produced by other companies and
resell them without materially changing them.
• They could be wholesalers, retailers, etc.
• Companies like Walmart, Sears, etc. fall into this type.
• In recent times, e-retailers like Amazon are also the new joiners to this
category.
Government
• Government buys goods in huge quantities considering the
kind of work it has to do.
• There are so many ministries, departments, and other
governmental establishments who have huge requirements for
all types of products which has to be fulfilled through sourcing
from companies.
• In order to have a fair and transparent buying system, govt.
has a tender system for most of the higher ticket items.
• Usually govt. goes with the lowest price quoted by the
company participating in the tender process.
Institutions
• Apart from the above mentioned three types there are other
institutions which also buy a very large amount of goods from
the supplying companies.
• Various educational and research institutions, NGOs, pvt.
offices, etc. required to purchase a lot of supplies required in
their day to day work.
 Business Buying Process
Problem Recognition
• This is when company identifies a need for purchase through some
of its departments. It might include replenishment of stocks,
replacement of existing items, or even buying new products.
New products requirement recognition could be from sources:
Internal
• When the employees and workers stumble across some lacunae in
any of the company processes.
External
• When company gets to know from customer feedback, participation
in some trade show, competitors new launches and schemes,
etc.
Specification finalization and Supplier Search
• The buying center finalizes the specification based on the
quantity required, and technical requirements for optimum
performance.
• Then begins the search for the right supplier. Now days,
online search has become very important in this process
making it very convenient.
Price quotations or Detailed Proposals
• Once the suppliers have been identified, the buyer asks for
price quotation in case the specifications are clear. In case
the product is complex and the specifications need
deliberation then the buyer might ask for detailed proposals.
Proposal Evaluation
• Now, the buyer evaluates the proposals based on the price,
performance, credit, delivery, service, and other important
aspects.
• The financial strength, reputation, and reliability of the
supplier is also duly considered.
Order and Performance evaluation
• After everything has been finalized, the order is finally placed
with some negotiation on the price, discounts, credit,
delivery, etc.
• Performance evaluation post supply is very important which
helps buyer decide if the supplier needs to be continued in
 Buying Situations
Straight Rebuy
• This entails buying or replenishing regular, standard items of use
without any modification and also from a familiar supplier like
office stationery, etc.
• These being routine purchases not much deliberation is required
making them low involvement purchases.
Modified Rebuy
• This entails either changing some product specifications, or
sourcing from new supplier necessitating fresh negotiation on
contracts.
• This becomes a high involvement purchase as compared to
straight rebuy.
New Task Buy
• This is the most complex of the buying situations considered
so far. Herein, we are discussing situation where the buyer is
sourcing a product for the first time.
• There is no precedent for the product specification, order,
etc. and so the buyer has to develop all these from the scratch
entailing a considerable research on specifications and
vendor availability and suitability.
Systems Purchase
• This entails buying a complete solution from a supplier
rather than sourcing different components from different
suppliers.
 Buying Decision Making Unit
Initiator
• They are the people who first identify a need for some purchase.
• They could be machine operators who sound the need for buying
some equipment or tool or it could be administration
department asking for purchase of better security cameras in the
premise.
Influencers
• They help enumerate various specifications and inputs for
evaluation process. They might sometimes not be directly
involved in buying but their suggestions carry a lot of weight in
actual purchase.
• They could be business or technical influencers with former
concentrating on the impact on revenue and latter over the impact on
operational aspects.
Gatekeepers
• They are people who might be instrumental in providing or
retracting access to the real decision makers.
• Marketers need to negotiate their way through these gatekeepers.
Example, secretary to the CEO of a company might be
instrumental in providing or denying appointments thus facilitating or
preventing sales.
Buyers
• They are responsible for selecting vendors and negotiate on the
terms and conditions of the contract. They help others to be a part of
specification finalizing process and also take care of issuing
purchase orders, tracking deliveries, and following up.
Deciders
• As far as routine and regular purchase are concerned, the
buyers are competent to decide on the transactions. But for
major and big ticket sales it is the higher authorities who
are the deciders.
Users
• They would be using the purchased product finally and so
have a say in the specification finalization and suggest
inputs to the buyers.
• They may or might not be the initiators depending on case to
case.
 Business Buying Influencers
• In today’s decentralized systems the influences for B2B buying are
scattered across divisions, departments, and even geographies.
• Based on a LinkedIn survey the top three departments influencing
the buying center decisions were Information Technology,
Finance, and Business Development respectively.
• The millennials are figuring prominently as influencers in their
company’s decision making.
• Forrester reports that around 73% of millennials are involved in
the B2B buying center decisions. One third of them report that
they are the most important influencer in their respective
company’s buying decisions.
• The external influences are also important and the B2B buyers
consult them while making decisions. They could comprise of
Analysts, Industry experts, Thought leaders, Media
commentators, Partners, Consultants, Customers.
Following findings from Demand Gen Report’s 2018 B2B
Buyers Survey are really revealing in this context:

• 65% influences happen from peer recommendations and review

sites
• 54% influences happen through social media in searching the
vendors and solutions
• 36% influences happen through the thought leaders
Research in Business
Markets
Unit – 3
Dr. Ved Srivastava
Difference between Consumer Research and
Business Research Fundamentals
• Generally research worthy companies with proper required
research details are few in number and so are the executives
available whose response is solicited.
• The respondents in B2B could be entrepreneurs of some startup or
senior executives of a company. Considering that these are ultra
busy people the researcher has to be very well prepared when
approaching them.
• In order that one could glean information from these busy and highly
skilled executives one himself need to have some expertise to
elicit proper response from the executives.
 Sample
• Sample lists are finite in B2B considering the few
respondents available. In B2B since the respondents could be
a huge number the sample lists are large.
• Because of the above mentioned constraint sample sizes are
smaller for B2B research because of the fact that limited
samples are available.
• Hence, generalization of any sample to the population
becomes difficult considering the sample size is too less to
back it.
• This makes it important for the researcher to be aware of the
research tools available for resolving aforementioned
problems.
 Response Rate
• As was discussed earlier,B2B markets are geographically
concentrated in various pockets of the country.
• Hence, the company executives are hard to access for
researchers as the latter needs to visit the geographically scattered
market in order to interview them or use similar such avenues.
• Tele-interviews came as a savior for researchers facilitating the
interviews with the geographically dispersed executives.
• Moreover, formation of focus groups for these executives is also
tedious considering the place and time constraints.
• Online transformation has helped the researchers immensely in
handling these issues. Online contacting with the executives as also
formation of online focus groups is very much possible with nearly
the same results thus increasing the response rate as also the
quality of it.
• In B2C primary research, tools like google forms facilitate the
filling of questionnaires for quantitative analysis of it later on.
Diverse Research Methodology
• B2C research projects generally utilize a specific research methodology
viz. quantitative or qualitative, online vs. offline, etc.
• However, B2B research projects generally have diverse and wide
reaching objectives making it pertinent for research agencies to use a
wider variety of methodology and techniques.
• For example it may start with detailed qualitative interviews to develop a
basic understanding of topics with lesser prior information and then build
up on quantitative surveys using scales to facilitate quantitative analysis
on statistical tools later on.
• Hence, B2B research agencies have to be competent in various
research methodologies and tools in order to succeed in researches
with unique research problems coming from the industries.
• B2B research agencies are therefore termed as “method neutral”.
 Standard Industrial Classifications
• The National Industrial Classification of 2008 aims to establish a framework for the
uniform collection, analysis, and dissemination of industry-specific economic data
in India.
• It is commonly used in enterprise surveys, population census, national income
estimation, labour statistics, and more. Organizations tasked with collecting statistical
data in the early years employed a range of industrial classifications.
• As a result, an urgent need arose to have a uniform industrial categorization in India
that could be used by many organizations. In the early 1960s, the Central Statistical
Organization (CSO) took on the mission of developing a national industrial
classification.
• The CSO developed a draft National Industrial Classification called Standard
Industrial Classification (SIC) in response to the needs, which was finalized and
released in 1962.
• The NIC code is a classification scheme or a form of business code that is supplied
by the government. Further, this code helps to track the business activities of micro,
small, and medium-sized businesses.
• Moreover, the NIC code is issued in order to meticulously and exactly trace the
commercial activities of firms. In the Indian market, the complete form of the NIC code
indicates its behaviour and preferences.
• In addition, NIC is widely utilized by government agencies, industry organizations,
and scholars for many administrative, analytical, and research objectives, in
addition to being the standard industrial classification that underlies Indian Industrial
Statistics.
• Simply put, this code was created to examine and measure the relationship between each
economic operation and national wealth.
 Role of Research Agencies
Confidentiality
• Many times respondents do not open up giving honest feedback
when the in house research team is undertaking the research.
When it is being done by a neutral, third party research agency it
could be expected to have more candid and honest feedback.
Seriousness
• When research is done in house it does not get the kind of
seriousness it requires. Senior executives feel they have had
been hearing to the viewpoints of their research team and
nothing new might be on cards.
• Contrastingly, when the research report is prepared and submitted
by research agency it brings forth fresh insights and
perspectives which is unheard of by the senior executives
drawing more and more attention eventually.
Time saving
• Considering that research work is the core competency for
research agencies they can wrap up the same work in half
the time which in house research team is going to take.
• Moreover, handing over research job to a research agency also
allows the internal teams to utilize the time in more
productive pursuits pertinent to their own areas of expertise.
• This is similar to what goes between internal and external
auditing teams. Both do the audit work for the betterment of the
company but they have different perspectives and their
complementary assignments help save considerable time.
Know how
• The field of research is constantly getting updated and thanks
to technology it is getting more and more complex and
advanced.
• The research agencies apart from having the requisite talent
also have access to the best state of the art technological
tools and softwares to derive the best results out of the
research work being done.
• Also, since the company does in house research only
intermittently it is not advisable to invest huge amount of
money and resources to it. For research agencies it is a
different ballgame as they are constantly engaged in multiple
researches for several companies justifying any investment they
 Secondary Research: Importance and
Usefulness
• Secondary Research is collating the existing data from journals,
books, and public sources like the government libraries and
archives. Also, they are also available in many online databases
maintained by some leading publishing houses.
• The researchers glean a range of different data samples from these
secondary data sources and tries collating them logically to derive
certain valuable conclusions from them.
• The idea is to examine and evaluate the patterns inherent in these past
data and utilize it for the present research context.
• So, secondary data researchers rely on the data which was previously
collected through some primary research and are available for
identification and evaluation of existing gaps at present.
 Advantages of Secondary Data
Accessibility
• Secondary data is more accessible as compared to primary data.
Especially after the advent of online resources it became very
easy to researchers to collect data from various online databases
available which provide a plethora of diverse information to be
gleaned through data pulling softwares.
• Comparatively, primary data collection becomes a very tedious
job as researcher has to approach a huge number of people for
getting information. Even though online mechanisms have made
this easier but still secondary data collection is more accessible.
• This advantage becomes perceptible when the secondary data size
is huge.
Early Leads
• In the secondary data based studies the researcher gets to
identify research gaps in the early phase of the study itself
getting an actual feel of the available information before
embarking on more detailed and elaborate research.
• Comparatively in primary data study, although the researcher
conjectures some hypothesis or premise based on the literature
review and theoretical model he develops, more clarity comes
only after the data comes in. This is a definite advantage of
secondary data based research.
Avoids duplication
• Many times due to the availability of the secondary data the
researcher is prevented from undertaking a similar research
realizing that a research work has already been done and
information on that is already available. This helps him to
avoid any duplication which would be a waste of time and
energy.
Convenience from Public Domain data
• Another convenience in secondary research is that the data is
already in the public domain and no special permission for
usage is not required.
• Moreover, if secondary data is used judiciously there are lesser
concerns of ethical violations in the conduct of secondary
research.
Work and Cost Efficiency
• As the data has already been collected previously the researcher
does not need to invest his time, energy, and money at the data
collection stage of his own study.
• While secondary data also at times need to be purchased it is still
cheap as compared to the costs involved in creating a new dataset
from scratch.
• The secondary data is already cleaned and usable which saves a
lot of time. In comparison primary data collection entails a lot of
initial data cleaning to make it usable which takes a lot of time.
• Especially many government collected longitudinal data are
huge and exhaustive which have taken years to compile. It
would be impossible for a researcher to compile it on his own.
 Disadvantages of Secondary Data
• Many times it happens that the research question which the
researcher has in mind might not be answered through the
kind of secondary data at hand.
• As data was originally collected for various other reasons
the exact data presently required might be missing.
• There is no control of the researcher over the secondary data
which makes him less confident of the data.
 Research in the Digital Era
• Literature Review has become very easy due to availability of past
research papers on the click of a mouse even though at times it is
paid. Earlier getting that from libraries by painstakingly going
through the databases was a tedious task.
• The research results are quickly published online which provides
quick access to the other researchers adding value to the
quality of the upcoming researches.
• In the initial days of digitalisation and its use in research a lot of
substandard research was produced in huge numbers and it
was a herculean task for the genuine researchers to winnow the
relevant material from the huge pile of trash.
• Digitalisation gave way to certain ethical issues also like
plagiarism etc. however technology was again utilized for putting
things right and we had the advent of plagiarism check softwares
to prevent use of forgeries and false identities.
• Many researchers are taking the research softwares as ends
rather then means and using them without basic understanding
of the statistical and research fundamentals.
• Such ignorant use of software can provide some results no doubt
but it can lead to errors which are very hard to ascertain and
rectify.
• Due to the above problem the quality of research in totality has
gone down.
• Easier access to information and more powerful analytical tools
have made the research work easier and somewhat aided the
creativity of the researcher. But that’s the end to it.
• The finding of a research gap and the uniqueness of the concept
and original contribution is something which no software can
bring about. It is ultimately based on the ingenuity of the
researcher.
Research Collaboration in Digital Age
• Collaboration between researchers of different institutes of different
countries is becoming possible due to online conferencing and mailing
mechanisms. This has increased the overall value of the research
projects.
• Multilingual information retrieval has brought down the barriers of
communication in research collaboration. Screen sharing programs have
also facilitated research collaboration in many domains.
• Due to the emerging techniques for integrating discipline-specific
modules into an overall simulation program there is a growing trend of
multi disciplinary projects which is bound to increase with technological
advances.
• In future, virtual reality will help collaboration to occur in simulated
environments where telepresence would aid the avatars of the
collaborators to interact in the virtual world.
• However, technology only helps facilitate this network, in order to forge
networking and collaboration the real meeting of minds and presence of
workable ideas and projects needs to be present.
Remote access
• Many research projects are becoming more and more feasible
due to remote access of instruments and devices to the
researchers. Projects undertaken in tough weather conditions
like Antarctica or Sahara desert are case in point. Also many
space projects and the like are also examples.
Business Market Segmentation
Unit – 4
Dr. Ved Srivastava
 Bases of Segmentation
Macro Segmentation
• Industry
• Organizational Size
• Location
Micro Segmentation
• Business model
• Buying situation
• Decision making unit
• Purchasing structure
• Organizational innovativeness
 Firmographics
Industry
• A lot of buying is industry specific also. The needs of the
industries are different which account for differences in the
actual buying of companies.
• For example if a computer manufacturer is selling to
companies in different industries it would have to customize
offerings based on the industry specific requirements.
• That is why it is pertinent for the different account
managers of that computer manufacturer to be abreast
with the industry specific requirements of the
dedicated account he is handling.
Revenues
• When deciding on the communication campaign for the
targeted segment one needs to be clear on whom to target.
A seller would definitely need to target only those
audience who could actually afford their
product/service proposition. So you are targeting those
with higher revenues.
• Similarly, while coming up with some cost efficient
product/service a supplier might be targeting small
companies with lower revenues who might actually care
these minor advantages as compared to the behemoths who
are not much bothered about small profits.
Location
• Regional differences ought to be considered before making
proposition to the buying companies.
• The regional cultural differences bring about considerable
changes in how things are dealt with inside the companies.
• Talking from Indian perspective things might be different
when making overtures to say a company located in Kolkata
from the one located in Mumbai.
• Internationally this is all the more augmented as a Japanese
purchase manager might be more team oriented and
lesser individualistic in decision making than compared to
an American purchase manager.
Company Size
• Large companies have more formal buying
process and buy in bulks.
• They have specialized departments like Purchase
and Quality Control who change the buying ballgame.
• Bigger companies look forward to better discounts
and additional services.
• So, when dealing with larger companies the list price
on offer should have some margin for later
negotiations.
• The smartest and best negotiators should be kept for dealing with
bigger clients.
• Some select few big tickets should be created as separate accounts
which should be specifically delegated to an individual accountable to
serving the various needs of that particular account.
• A unique marketing mix could be customized for each one of these big
accounts.
• Smaller companies do not press for deeper discounts or extensive
services so they are more profitable to serve even if the overall
business value could be low in absolute terms
• So, segmentation based on size need to keep this in mind that either one
can go for large volume but costly transactions like for bigger
accounts or one can opt for low volume but lesser cost intensive
propositions.
Sales Cycle Stage
• Sellers should be very much clear as to the stage in
which his prospective buyer is in.
• For buyers who are not aware about your offering you
need to concentrate more on awareness building
exercises.
• Buyers who are aware and interested should be coaxed
for commitments by the sales team.
• So segmenting the buyers on the basis of the stage of
purchase they are in would be highly efficient for sellers
avoiding any wasteful overtures.
Status
• It is highly worthwhile to segment organizations based
on the fact whether they are:
• Proprietorship
• Partnership
• Pvt. Ltd. Companies
• Public Ltd. Companies
• Corporations
Performance
• Organizations could be segmented on the basis of their
performance over a period of time. The key
performance metrics could be many. Some of the
prominent ones could be:
• Duration of existence
• Growth rates
• Profit & Losses over a period
 Operating Variables
Technologies Used
User Status
• Non user
• Light user
• Moderate user
• Heavy user
Customer requirements
• Few services
• Comprehensive service requirements
 Purchasing Approaches
Centralized/Decentralized Purchase
• Buyers having a centralized purchasing system give
more prominence to the purchasing experts who are
specialists in buying with better understanding of
costing related factors as also the strengths and
weakness of the suppliers.
• In decentralized systems the technical teams and the
users have more say in the buying and their concerns
ought to be considered by the suppliers.
Power Structure
• Production/Finance/Marketing dominated
Type of relationship
• Long association/New relationship
Purchasing policies
• Bidding/Service Contracts
Purchasing criteria
• Quality/Price
 Situation Factors
Buying Situation
• The importance of the constituents of the Decision making unit or the
Buying center differs based on the buying situation.
• So, straight rebuy, modified rebuy, new task buy, system buying, etc.
would all call for differences in the DMU.
• In case of straight rebuy the purchaser could also be the decider
but for cases of modified rebuy or new task buy it is the higher
authorities in the company who would take the ultimate decision.
• Moreover, in the latter two cases as specifications need to be thoroughly
deliberated upon again, the influencers would have a important role
which the selling company should be mindful of.
• Similarly the size of the DMU would also depend on the buying
situation and in turn would make the whole process simple or
tedious.
Requirements from Selling Team
• New task buy wherein the buyer might be buying supplies for the first
time entails a lot of communication efforts and patience on the
account of the seller as the buyer might not have any experience of
that kind of purchase.
• For a modified rebuy the buyer might expect the seller to be
flexible so as to amicably reformulate the specifications and other
terms and conditions.
• For straight rebuys as companies usually want to stick with the
incumbent suppliers it will required very dynamic sales team to
persuade the buyer for getting that order.
Level of Urgency
Specific Product/Service Applications
Size of order
 Personal Characteristics
Buyer Seller similarity
• Similarity in strategy/values/work culture
Business Attitude
Loyalty
• Long term strategic alliances or short term exigencies
Business Model
• How a company would buy depends on the business
model it has in catering to its own customers.
• A company could be playing on margins like Tommy
Hilfiger or on volumes like Pantaloons. Both would buy
differently because of their different requirements.
• Tommy Hilfiger will not mind a price hike in supplies so
long that they maintain the quality as its targeted
segment of customers are not at all price sensitive.
However, Pantaloons would definitely be affected by
price increase by a supplier.
Organizational Innovativeness
• Buyers who are ready to take risks in order to try
new product solutions have a very different perspective
towards buying as compared to risk averse
companies who want to tread on the tried and tested
paths.
• Especially when eyeing buying situations of modified
rebuy or new task rebuy the supplier can hope of
getting positive response from companies who are
innovative and look forward to try new suppliers.
Requisites for a successful segmentation
• Measurable and identifiable
• Internal consistency of segments
• Diversity amongst the segments
• Accessible and actionable segments
• Profitable segments
 Challenges in B2B Segmentation
More complex decision making unit
Questions to be pondered upon
• Is segmentation company wise or DMU wise?
• Has one most influential decision maker to be
identified per company wise and segmentation done
on the basis of key decision makers?
• So question is that who is the target audience
actually?
Complex products
• Due to the highly complex and customized products it is difficult
to segment business buyers as each buyer becomes a
segment in itself.
• B2B segmentation could at best be done for smaller
companies with lesser complex products requiring lesser
customization.
Personalization costs
• All B2B buyers want more and more personalized
relationship but the seller needs to do a cost benefit
analysis as to how much of personalization and investment of
time energy and resources is feasible.
Scope of complacency
• As the B2B segment is for the long haul it might at
times make B2B marketer complacent and
ignorant of the evolving industry scenario and
requirements of the buyer. This could be fatal for the
healthy relationship
 Importance of B2B segmentation
• Understanding of unique needs and preferences of
buyers
• Strategic resource allocation leading to higher ROI
• Customer satisfaction leads to retention and repeat
business converting relationship into strategic alliance.
• Product and services more apt to actual requirements
• Increased market share, customer loyalty, and business
growth
Targeting and Positioning of Business
Markets
Unit – 5
Dr. Ved Srivastava
 Target Segment Selection
Information Search
• A thorough research needs to be accomplished on the
B2B market one is involved in.
• The information needs to be collected on the industry,
location, company size, sales cycle stage, status,
performance, operating variables, purchasing
approaches, buying situation, etc.
• One needs to have a thorough knowledge of the
characteristics, dynamics, and trends on the
above.
 Matching the specifics
• After having the general information about the various
firmographics the next step is to match those with
one’s own profile.
• So, there should be a congruence or sync on the
firmographics between our and the targeted
segments.
• The congruence or sync should be based on common
vision or mission, objectives, strategic
similarities, pain points, etc.
• The more apt this matching exercise is better is the
chance of selecting optimum segments.
 Market Attractiveness
• Market has to be analyzed on the parameters of market size, growth
potential, competitor mapping, profitability, etc.
• The segments providing maximum opportunities on the above
parameters ought to be selected.
Hierarchy of Importance
• Next comes the step of deciding as to which segments would add
most of the value to your specific business based on your
capabilities and products/services.
• Based on this evaluation the segments need to be prioritized to
help allocate optimum resources to each.
 Segment validation
• Additional data needs to be collected based on the
customer and experts’ feedback.
• The accessibility, measurability, uniqueness,
profitability of the segments needs to be proven
before company embarks on the specific segments
targeting.
Segment customization
• Each of the segments targeted ought to be aimed with a
tailor made and customized strategy.
• Each segment has its own needs and pain points
which must be kept in mind while deciding on the particular
strategy.
Monitoring and Control
• Continuous evaluation of the revenue growth,
customer acquisition, customer satisfaction, market
share, etc. ought to be evaluated for each targeted
segment in order to take corrective actions when and
where required.
 Targeting Strategies
Strategic alliance based targeting
• The business partners in the supply chain who provide
complementary strength giving a competitive edge ought to
be targeted.
• The concept is not to sell to everyone but only to those who
would not be just buyers but strategic partners in the long run.
• This will lead to a virtuous cycle as all the like minded
businesses will keep on converging and forming valuable long
term strategic partnership.
Technology based targeting
• Companies which are using the similar technology or are planning
for it in future would be a good fit considering that technology
compatibility is a foremost parameter for business association.
• Technologies being used regularly on an operational level are also an
important criteria for targeting companies who have same operational
base.
• For example, if a supplier is using particular ERP modules or JIT or
SCM in its operation naturally it will look forward to compatibility
on the part of its prospective buyers.
Decision Making units DMU based targeting
• For some businesses the DMU centric and User-Influencer-Decider
triad becomes important aspects for targeting related decisions.
• Suppose a supplier is manufacturing ITES or Project
management based products and services, it is naturally going to
target the IT and project managers of organizations apart from
the senior functionaries.
• So, all the moves and tactics of the company would be in concurrence
of closely following and monitoring the activities of these
people.
Location based targeting
• If based on the strategic, technological, and other
aspects a supplier finds that relevant buyers are
located in some particular geographies then former
is going to target that geography specifically.
• This could be extended to international markets as
well wherein sellers might hover around a country
where they find suitable segment of buyers.
 Positioning Process and Options
• Positioning = differentiation + communication
• It is creating a distinct and favorable perception of
your brand in the minds of the target segment.
• The perception in the case of B2B is much more than
an emotional appeal considering that it has to go
through the buying center or DMU ultimately.
• It is about your USP which differentiates you from
your competitors and the ultimate value you would
provide to your customers.
 The Process
Identify the target segment
• Identify those industries and companies who would find your USP
worthwhile based on their own requirements.
• Your USP should bring tangible benefits to the targeted customers.
• The relevant people inside those industries, organizations
should also be identified. How they take your communication is of
huge importance.
• The effectiveness of the positioning and associated messages
would depend on the correct identification of the target segment.
Understanding positioning of buyers
• A B2B supplier needs to be aware of the unique
offerings of its buyers. How different they are from
their own competitors and how they are communicating
it to their own customers.
• Understanding of the above is very essential for a
B2B supplier to correctly work on its own
uniqueness and communication.
• Nothing could be more important in crafting the right
positioning and it acts as a foundation for the more
detailed positioning process.
Deciding on the value proposition
• An important aspect of the positioning process is to be
very clear and honest about the unique value your
product or service is providing.
• The value could be on the basis of quality, cost
effectiveness, innovativeness, reliability,
customer service, etc.
• Those values which differentiate you from your
competitors and which your buyers consider worthwhile
vis a vis their own value propositions is what one should
concentrate on.
Positioning statement
• Positioning statements articulate concisely and precisely the
value proposition a company is offering.
• Positioning statements either directly or indirectly convey
the targeted segment, problem being solved, and
uniqueness in doing so.
• They form the common denominator for all the marketing
messages and communications formulated by the marketing
team which underscores their importance and relevance.
Congruence of the positioning and Marketing
Mix

• The product, price, place, and promotion strategy

should be in sync with the positioning strategy.
• Example: Positioning statement of Intel – “Creating
technology that improves the life of every person”
entails that all the elements of marketing mix will be
commensurate with this statement.
• And it is not only the formal communication but all the brand
touchpoints that should convey the same message as the
positioning statement.
Constant evaluation of target segments
• Selection of the target segments is not a one time
affair.
• One needs to evaluate the key parameters like
revenue growth, customer acquisition, customer
satisfaction, market growth, profitability,
strategic alliances, etc. on a continuous basis.
• Based on the evaluation one needs to modify the
positioning strategies.
 Perceptual Maps for Positioning
• Perceptual map is a pictorial representation of
customers’ impression of your products on
certain dimensions.
• It is the process of pictorial organization and
comparison of perceptions of customers vis a vis
your competitors.
• Perceptual map is different from positioning map as
the latter is concerned about objective analytical and
rational facts whereas perceptual map is more
concerned about customers’ perceptions instead of
actual reality and the two could be at times be
• Perceptual maps help monitor the customers’
perceptions about your product/services.
• As it includes customers’ perceptions about your
competitors it also provides a fair idea of the gaps
which might be available in the market for you to
capitalize.
• It is a nice yardstick to base your marketing and
positioning campaigns and strategies on.
Creation process for perceptual map
Determining the Objectives
• Though it is clear that main objective behind creation of
perceptual map is to know about customers’ perceptions the
context in which this is being done is also important.
• So, the marketer might be trying to improve on an existing
product, or identify market for new product, or some
changes in communication program, or a completely new
marketing strategy.
• The context would help the researchers to finalize on the
dimensions for perceptual map as also the actual probing to
be involved during research.
Finalization of Dimensions/Attributes
• Based on the objectives and context of the research,
dimensions or attributes could be chalked out for the
perceptual map.
• Dimension/attributes could be many but the most
common ones are price, quality, convenience,
service, etc.
• Proper selection of attributes help the research move
in the right direction and collection of relevant
data and information which is really required from
the marketers’ task at hand.
Conduction of Market Research
• Data could be collected through surveys, interviews,
focus groups, customer feedback, third party
market data, etc.
• If questionnaires are being used then it ought to be
ensured that relevant questions which glean facts
about customers’ perceptions on those dimensions
are incorporated.
• There should be provision for negatively worded
questions and other bias removal statistical tools to
ensure genuineness and integrity of the data.
Mapping of the results
• The data and information collected ought to be finally
incorporated in the perceptual map.
• One should be fairly careful while transferring and plotting
of the data collected to the perceptual map as any mistake
could spoil the sanctity of the exercise.
• Proper interpretation is a prerequisite which involves a lot of
expertise and skill.
• Findings, Conclusions, and Implications ought to be
analyzed from the whole exercise to be presented to the higher
functionaries in charge of strategic decision making.
Example: Two dimensional perceptual
map
Multidimensional perceptual map
Spidergram perceptual map
 Positioning Errors
Incorrect comprehension of target segment

• Differentiation is important only to the extent that is

required or expected by the targeted customer
segment.
• If there is a genuine differentiation from competing
products/services and you are able to communicate it
also but there was actually no need for it then the
whole purpose is defeated.
• So USP or the differentiation should be based on the
customer expectations and value being imparted.
Genuineness of the differentiation
• The USP portrayed should be genuine and so should it
appear to the targeted customer.
• If the differentiation is not genuine then also it will not stand
the test of time and even if it is genuine but customers do
not perceive it to be so then also purpose is not solved.
• The whole process of positioning is based on the differentiation
communicated making it very important aspect.
• The competitor mapping is also very important when deciding
on the differentiation planned and should take care of
competitors’ positioning and marketing strategies as
well.
Non Integrated Marketing Communication
• All the touch points should convey the same
message to make the effect consistent.
• Advertising, sales promotion, website
information, customer interactions, etc. should
send the same differentiation message to the targeted
segment.
• Non compliance on the above will lead to confusion
in positioning.
Research shortcomings
• Whatever is being comprehended or portrayed should be based
on hard facts.
• Tools like perceptual mapping based on such researchers are
important source of keeping the positioning exercise on
track.
Over promising
• Though the whole exercise is based on customer perceptions,
the marketer needs to be very careful to commit and
portray only that which is fairly genuine and ethical.
• Underperformance could be lethal and any manipulation
of perceptions is not going to be sustainable in long run.
Managing Product Offerings
Unit – 6
Dr. Ved Srivastava
 B2B Product Elements
Seamless connectivity
• With the existence of various softwares and technological platforms
it is pertinent that the B2B products should allow for a seamless
integration between all components and systems for optimum
work flows.
• Unless this seamless connectivity is ensured there would be bottlenecks
and constraints which would make the system inefficient and ineffective.
• This connectivity ought to be reflected across the demand
management chain and cover activities from upstream to the
downstream processes.
Customization
• Based on their unique processes and systems B2B
buyers have specific requirements.
• B2B products are therefore quite flexible and
adaptable which easily configure into the system
of the buyer.
• So it is not only the specific feature or its quality that is
of concern to B2B buyers but the configurable and
integration friendly aspect of the product offerings.
Scalability
• We know that the B2B products cater to the unique requirements
of every buyer.
• Then how can a product offering cater to the expanding
customer base and changing requirements? Appears to be a
paradox!!
• Despite the uniqueness of the B2B products they are also
capable of catering to the different requirements of
different and expanding customer base and therefore
scalable.
• Their scalability allows prompt modifications without much
disruption into the systems and processes.
Functional Value
• As DMU or Buying centers evaluate product offerings in a
more pragmatic and rational manner rather than
emotionalism, the B2B products usually incorporate
more of functional utility than other aspects.
• Being more functional the B2B products help buyers to
address their specific objectives and provide practical
solutions to their problems.
• B2B products are more oriented towards enhancing the
efficiency, productivity, and effectiveness of the
industrial buyers.
Robustness
• As B2B products or components are critical for the operations of
businesses they need to be robust and durable to avoid
disruptions in the processes.
• In order for this to happen they have to pass through rigorous quality
checks and assessments to prevent any down time and
associated losses.
Customer support
• B2B products due to their unique nature come with dedicated
technical assistance, training, and maintenance.
• They also provide the facility of customer support wherein dedicated
teams are assigned the job of resolving any product related issues
24X7 to avoid any bottleneck in the business operations.
 Concept of the Total Product
• The concept of total product stresses on the fact that there are different layers of
products which together combine to form the total or whole product.
• The layers of the total product could be Core product, Actual product, and
Augmented product.
Core Product
• Core product is the primary solution or value that a product is providing.
• In B2B context it is the solution which the buyer might find worthwhile to
address it’s own business requirements. It might bring overall value to the
buyer’s process or final results.
• In case of logistics domain the core product will be reliable and timely
transportation of goods.
• In manufacturing sector the core product would be quality machine aiding
efficient and more productive processes.
• The core product in financial services would be secure and efficient financial
transactions.
Actual Product
• The actual product denotes the tangible features and characteristics of the
product.
• The functionalities based on the specifications and performance related
capabilities are also inherent in the actual product.
• Actual product denotes the true picture on the level of scalability,
customization, compatibility with existing systems based on the industrial
standards.
• In case of logistics the fleet of vehicles, warehousing mechanisms, supply
chain monitoring systems for extra visibility and status of consignments.
comprise of the actual product.
• In manufacturing sector, the durability and automation aspects,
sustainability related features, etc. form the actual product.
• In financial services, actual product could comprise of fraud detection
systems, payment gateway integration, real time monitoring of digital
transactions, etc.
Augmented Product
• An augmented product adds on the core and actual product
enhancing the overall customer experience.
• For logistics domain the augmented product could comprise of
optimization of route plan, exclusive warehousing and inventory
solutions, custom clearance service, dedicated account
managers, etc.
• For manufacturing sector, installation and configuration services,
long period maintenance, all time technical support, assured
spares availability, complete user training, etc.
• For financial services, the augmented product could be full time
customer service, high end analytics support for better financial
decisions, etc.
 Product Life Cycle
Introduction
• In this stage the product is launched and people are made aware of it.
• The thrust is on communication campaigns to inform the prospects on the
features, benefits, of the product.
Growth
• The acceptability of the product increases leading to rising demand.
• The distribution strategies take prominence in this stage.
• Competitors start arriving on the scene which gives rise to price
competition leading to rising prominence of pricing strategies.
• Differentiation as a counter to competition and loyalty building
measures become paramount.
Maturity
• Markets start reaching the saturation levels.
• Sales growth slows down and there is intense
competition between existing companies leading to
price wars. Aviation and Telecom sectors have been
passing through this in the recent past.
• Companies try retaining their existing customers
through various promotional schemes, and
enhancements.
• Upselling and cross selling also becomes much in vogue.
Decline
• This might happen due to changes in the business
requirements, cropping up of better alternatives,
technological advancements, etc.
• Profitability takes a hit as sales growth and market
share plummet.
• Companies have the option of closing the product line or
coming up with product extensions or replacements
in order to increase sales.
• Blue Ocean strategy has been recognized as the panache
for the challenges thrown about in this stage.
Portfolio Analysis
BCG Model
Stars
• Products which have large market share in a fast
growing product category.
• They have re-invested all their profits to
maintain their lead in the fast growing category.
• The intention is to continue capturing market share
so that it would be cash rich when the category
matures later on.
Cash Cows
• These products have a large market
share in a mature or slow growing
category.
• As the category has matured there are
lesser avenues of re-investment and
the profits remain making it cash rich.
• The surplus cash could be utilized for
other products of the company.
Question Marks
•These products have low market share but their product
categories might be offering a very high growth scenario.
•They require large amount of investments to gain more market
share.
•If invested with funds in a wise and strategic manner these could
become stars and highly profitable.
•Many products start in their respective product categories as
question marks. How wisely they are taken forward decides what
they would become eventually.
Dogs
• These products have low market share in a
low growth product category.
• They are neither generating profits nor
there is any possibility of it considering that
the category is waning.
• They take the valuable time and energy of
the managers which is a major concern for the
company.
• Unless there is any other strategic reason these
 New Product Development
Idea Generation
• The first step is the generation of an idea about new product
• The idea generation could happen through brainstorming
sessions, customer feedback, competitor mapping,
feedback of sales team, market research, etc.
• The concept is to comprehend the unmet needs of the
market and consequent opportunities it presents.
• The idea generation could be reactive or pro reactive.
• Example of Pro reactive idea generation- Sony Walkman
Evaluation of the Idea
• Evaluation is done on the front of feasibility and
strategic fitness.
• The parameters assessed are market potential,
resource requirement, profitability, company
capability, etc.
• Ideas that lack financial viability or are not in sync with
company strategy are to be dropped at this stage
itself.
Concretization of the Idea
• The ideas that show promise are further developed
and refined into concrete concepts.
• These concepts could be about the product idea,
target market, outlining of customers’ needs, etc.
• These concepts are very important from the long
term success point of view.
Actual product development
• After the product potential and feasibility are
established the actual development of the product
gets underway.
• Initially a prototype of the product is made to
ensure it passes on the specifications and
performance fronts.
• These stage sees a lot of collaboration between
R&D, Manufacturing, Quality, Engineering, and
other related domains.
Testing
• The prototype made goes through very rigorous and
stringent testing and checks.
• Apart from functionality, quality, performance, etc.
the regulatory compliances are also adhered to.
• The product should match industry standards,
customer requirements, and legal/regulatory
guidelines.
Launch of the product
• Finally the product is launched with proper
positioning, distribution and communications
strategies, etc.
• Now commercialization of the product offering is
the ultimate objective to earn profits.
Evaluation
• It is essential to assess the product acceptance,
performance, and customer satisfaction.
• Feedback from the sales team regarding
customers’ level of acceptance ensures any further
improvements and additions to the product for
better acceptability.
• It is an ongoing process for continued adaptation.
 Concept of Product Quality
What do we understand by quality?

Reliability
• The product should meet functional requirements,
specifications, and industrial standards
consistently over time.
• Reliability is essential for consistency in results and
avoidance of any down time or operational
disruption.
• Important parameter in the selection of a
supplier.
Durability
• B2B customers expect the products to be durable and
capable of delivering in the tough and demanding
conditions especially of the manufacturing,
construction, etc. where conditions could be very
harsh and usage could be heavy.
• It is expected that products should not need
frequent repairs or replacements.
Flexibility
• B2B buyers have particular requirements and expect
the products to be customized.
• Product quality also entails that configuration is
flexible, features are optional, and design is
modular for more customization.
• Full or partial customization without any
compromise on reliability and durability are the
hallmarks for good quality product.
Customer Support
• The B2B products being quite complex which are
incorporated in even more complex final products with
configuration issues, the requirement of technical
support is constantly present.
• How fast the intermittent problems are being addressed
becomes a key component in determining the product
quality which goes beyond just the physical product.
• Competent after sales services, warranty coverage, and
maintenance are the hallmarks for a positive perception of
good product quality.
 Product Lines
• Product line is a category of products which are related but might have
shades of differences based on the number of variations existing.
Catalog Product
• It is a standard product which is pre designed. The name derives
from the word catalog and the product could be found in the
catalog of the company.
• Product is ready made and generic which could be bought without
any customization.
• They have pre-defined specifications and features and meet the
need of a broader market.
• Customers can choose from the available products whichever
comes closest to their own requirements.
Custom Built Product
• These are customized products which are created to
fulfill the specific requirements of a customer.
• They are built on order and indicate collaboration
between the seller and buyer regarding the
specifications, features, and functionality.
• Products which are more complex and require
higher degree of engineering and technical
expertise due to specific needs are produced in this
manner.
Custom Designed Product
• As the name suggests these are highly customized products which are
entirely created as per the specifications of the customer based on
his needs.
• Hence, they entail very high level of designing and engineering
acumen as they have been tailer made to unique requirements of the
customer.
• The collaboration required between buyer are seller is more intense
covering a longer period of time through designing and manufacturing.
• Consequently, the cost of the product is also more considering the
time, energy, and skills that go into it.
 Industrial Services
Troubleshooting services
• The components supplied to the buyers require periodic maintenance
to ensure equipments are in order.
• This is required to avoid downtime and enhance efficiency and
productivity of the manufacturing processes.
Configurational services
• Equipments bought need to be set up and configured with other
components to form a unified system. Although these services are
usually free but the quality of these services could vary and an
indicator of vendor quality.
Calibration services
• B2B products like instruments and related machines require
proper calibration to ensure proper measurement.
• Sellers sometimes provide these services to ensure that the
machines and equipments meet the industrial standards.
Advisory services
• Considering the complexity of components and their
configuration the sellers have to provide advisory services
to the buyers for optimization of processes.
Updation training
• With quick technological changes the buyers need to be updated
on the new technologies.
• The sellers regularly run training programs for the very purpose.
• This helps optimizing processes and increasing efficiency.
Sustainability services
The sellers assist the buyers in the sustainable disposal of waste as
also in incorporating the environmental regulations and practices in
their processes.
 B2B Product Innovation
Customer pain points
• Any product innovation should be an answer to the pain points
of the customers in order to sustain.
• Customers’ problems could be gauged through market research,
feedback of sales team, customer feedback, etc.
Collaborative Co-creation
• When the buyer and seller collaborate on product innovation
from the very start there are better chances of customer
satisfaction and savings in time, energy, and cost.
Trend awareness
• For any product innovation to be successful the latest social, cultural,
economical, and technological trends need to be understood in order
to come up with products which are more in sync of changing needs
of the customers
Functional integration
• Product innovation would be better if insights across departments
and specializations are dovetailed.
• Each department has its own expertise and skills which if combined
judiciously could lead to better product development.
Risk Assessment
• Any innovative product carries risk which should be properly
evaluated so that it could be managed effectively.
• Contingency planning should also be involved whenever novel
product is being introduced.
Constant Updation
• Any innovative product would not be completely successful at
one go and will required constant Updation based on the
continuous feedback from the stakeholders involved.
Examples of B2B Product Innovation
IBM’s Watson
• This AI platform entails natural language processing,
advance analytics, artificial intelligence and machine
learning to help customers derive meaning from the
plethora of data at their disposal.
• Automation of complex processes and helping take
complex decisions based on the cognitive computing
capabilities is the unique advantage of this product.
Digital Wind Farm of GE
• It entails machine learning, advanced analytics and
sensors to optimize the performance of the wind
turbines.
• Using real time data and predictive analytics it helps the
operators to increase the energy production and reduce
downtime which increase the efficiency and brings
down costs.
Business Product Pricing
Unit – 7
Dr. Ved Srivastava
 Pricing Consideration
Pricing Objectives
Customer Lifetime Value
• When the objective is to get repeat business and company is
aiming for customer retention and loyalty with an eye on customer
lifetime value.
• Under this objective Preferential pricing could be offered to loyal
customers.
• Many preferential services could also be provided which makes the
customer feels privileged.
Consistency in Pricing
• This is when customers want stability in pricing for
convenience in planning their own budgets.
• This becomes pertinent also in situations where there are long
term contracts and frequent fluctuations in prices might
destabilize the buyers’ budget.
• Consistency in pricing builds up on trust and could be an
important aspect in long term relationship.
Accommodating diversity
• Considering the diverse needs of the B2B customers there
should be ample scope of different levels of pricing to
accommodate different needs.
• If somebody cannot be covered under generic price levels
then they could be offered customized pricing offers based
on the products and services provided.
Differentiation
• Another objective could be to convey a value proposition and
differentiation which is useful from the positioning point of view.
• A company can go for premium pricing if it wants to promote a
high quality perception amongst the customers.
• The pricing could be lower in order to establish the company
as a cost leader.
Profit Increase
• Sometimes the objective is to increase the profits given the
demand and supply condition prevalent in the market.
• Under such conditions pricing when increased judiciously
keeping in mind the cost of production, distribution, etc. leads to
increase in overall profits.
Market Penetration
• If the objective is to overlook short term profits for greater
market share then the pricing could be made more
competitive to lure away customers from the competitors.
• Later on after the market has been captured the prices could
be moderated as per the requirement.
More Revenues
• The prices could be increased if the revenues are to be
increased keeping other things constant.
• However, it needs to be considered if increased pricing
could lead to a market backlash which could be detrimental
ultimately.
 Demand Determinants
Cost/Benefit of Technology
• New technologies bring new products and services and
consequent demand for them.
• Most of the times they entail cost and sometimes warrant
increase in prices.
• However, a proper cost benefit analysis needs to be done to
understand whether the benefits exceed the cost and
customers would condone any increase in prices.
Competitor Mapping
• Any business is affected by the number of competitors, their
value proposition, pricing, positioning, etc.
• All the above aspects have a bearing on the demand generation
and customer acquisition.
• Any company should keep these into mind while formulating
their own pricing strategies in order to retain customers and
maintain their viability and profitability.
Brand Loyalty
• The customers who are brand loyal do not get demotivated
on price increase if they feel they are getting the value
commensurate with the increased prices.
• So, in case if company has more brand loyal customers it
can safely increase prices keeping an eye on the
commensurate value.
• However, if loyalty could be an issue then pricing should be
increased very cautiously and considering all pros and cons.
Quality Vs. Price
• Some companies target high net worth clients and charge
higher margins on the sales. These customers are more
concerned about quality and related parameters than price.
• Other companies deal in volumes and have lower margins.
Their customers get easily demotivated on any price
increase.
• Hence, companies need to adopt pricing strategies keeping
in mind the attitude of their buyers.
External Environment
• The external environment like industry trends, economic
scenario, competitors’ strategies, etc. influence the pricing
strategies of a company.
• When the market is going through recession or slow down
leading to job losses and low demand the pricing ought to
be done keeping these things in mind.
 Cost Determinants
Fixed Cost
• These are costs which are to be factored in even if there is no
production.
• They include rent, salaries, insurance, etc.
• So the pricing should include these irrespective of the revenues.
Variable Cost
• These are dependent on the number of units produced.
• They include wages, raw materials, packaging expenses, etc.
• When the production is low and units produced are less the fixed costs
cannot be spread in an optimum manner and creates problem in unit
pricing.
Direct Costs
• These are the costs entailed in direct manufacturing of a
particular product or service.
• They include costs of raw materials, labor, and other costs
related with manufacturing and distributing the product or
service.
• Usually they have to be factored in pricing strategies and
cannot be dispensed with as they are bare minimum costs
associate with the product or service.
Indirect Costs
• These are costs not related directly to the production and
distribution of particular product or service.
• These are also called overhead costs and include marketing
costs, utilities, administrative costs, rent, etc.
• These costs need to be spread out to all the products and
services and allocated to all the units so that pricing could
factor in the same.
Economy of Scale
• As volume of production increases the cost per unit
production decreases.
• So, higher production could lead to more competitive
pricing and better sales opportunities.
 Competitive Determinants
Competitors’ Market Share
• Pricing strategy has also to take into account the market share
captured by the competitors.
• If your competitors have very large market share then you
ought to be more competitive when deciding on your
pricing.
• So, based on your market share objectives and long term
competitive strategies you will have to work out on your
pricing strategy.
Aggressive Competitive Position
• Sometimes, strong competitors can engage in cut throat price
competition which disrupt the market conditions especially for
smaller companies.
• A company ought to consider its own market strength vis a vis the
competitors and be very cautious in engaging itself in outright
price wars.
• Sometimes, such moves are started by competitors and a
company ought to be prepared to defend it’s turf through apt
pricing mechanism in place.
Price-Quality Perception
• A company must be very clear about customers’ perception
on the price vs. value(cost/benefit) dyad of its product
offering vis a vis it’s competitors.
• This could be verified through market research and effective
customer feedback mechanism.
• Pricing strategy should be such as to take care of any
customer concern regarding price-value gap.
 New Product Pricing Strategies
Price Skimming
• Price skimming comes from the terminology of skimming of
butter through layers.
• A new product passes through huge initial costs incurred in
R&D, communication campaigns, distribution
arrangements, etc.
• In order to cover those costs and target the high net worth
customers who might be inclined to buy new innovative
products at higher price, company launches the product at
higher prices.
• Later on, as the novelty factor goes down the company
targets the lower segments who are offered the same
product at lower price.
Market Penetration Pricing
• Sometimes as a new product is launched, company might be
more concerned about quickly acquiring the market share
rather than increasing the profits.
• Under this scenario, company launches the product at least
possible price which makes it more competitive and
increases the customer size.
• The company intends to raise the price later on when sizeable
amount of customers have been tapped.
 Response to Price Attacks by Competition
Maintaining Price
Pros
• Profitability is maintained
• Not much market share is lost if customers perceive getting value
• Even if the SHIFTERS move on the other side they could be reclaimed later on
better value proposition.
Cons
• The competitors might get more confident
• Your sales team can get demotivated due to some loss in market share
• Market share is lost more than what was presumed which leads to panic
Maintaining Price and Adding Value
• Company can increase it’s value proposition and maintain the
price even if competitors are going for price cuts
• In B2B setting, the value proposition could be increased on
delivery timelines, credit, installation and service, etc.
Reducing Price
• If the market is price sensitive and products are undifferentiated
then company would have to reduce price following the
competitors.
• If the market is such that due to lack of brand loyalty it would be
difficult to regain the lost market.
• This action would cut down on profits in the short run and the
company should be prepared for it.
Increasing the Price and enhancing quality
• In a counter attack on competitors, a company can increase
the price and enhance the quality or the total value proposition.
• Through this move the company can put across the
perception that it is a different offer altogether and price
rise is justified accordingly.
• This is considered a classic competitive move to befuddle
your competitors.
Launching a low priced variant or new brand
• If matching the price cut is not viable the company can also
consider adding a lower priced variant to the product line.
• Another way out could be to launch a low priced brand to
compete with the lower priced competitive products.
• HUL launched lower priced Wheel to take on Nirma which was
catering to a lower level segment which HUL was not.
 Competitive Bidding
• It is a form of solicitation by private or government buyers
for procurement of goods and services
• This solicitation usually is as a Request for Proposal (RFP).
• RFP has details of the products required in which the sellers
are required to show interest through a competitive bidding
process.
• The interested sellers submit their bids in the stipulated
period of time.
• After the stipulated period the bids are opened and usually the
lowest bidder or one with best terms is selected to supply.
Buyer’s Perspective
• The intention behind competitive bidding is to find out the
most qualified vendor for the required goods and services.
• RFPs should be detailed and published so that it reaches out
to the most qualified vendors.
• Usually the vendors are expected to provide the cost of
delivery, timelines, and their past credentials.
• Based on the information obtained the bids are evaluated.
• Sometimes face to face interviews are also conducted to
generate more information on the proposal.
• Finally the winner vendor is invited to work on the project.
• Ideally all the competing vendors who failed to get the work
should also be intimated about the results.
• Sometimes, buyers do not publish RFPs and invite some
vendors with whom they have worked before and who are
trusted.
• Inviting bids through the list of approved vendors without
RFPs saves a lot of time.
Vendors’ Perspective
• Vendors need to figure in the list of the qualified vendors to figure in
the tendering process and get the RFPs.
• Qualified vendors have to send the proposal in response to the RFPs.
• They need to ensure that the proposal is based on the requirements of
the RFPs and should promptly seek clarifications on it if required.
• The costing on the part of the vendors is most important and they should
be highly competitive in quotation of rates to get the order.
• Sometimes the order might be given to even that vendor who has not
quoted the lowest price if other terms of proposals like delivery
timeline, credit, etc. are better.
• Vendor can even deny participating in the tender process if they feel
they are inexperienced or would not be able to meet the conditions or
quote low bids as per buyer’s expectation.
 Open and Closed Bidding
Open Bidding
• In open bidding any potential vendor is allowed to look at the RFP
issued by the buyer and submit the bid.
• This system usually exists in the government organizations where it is
ensured that the bidding mechanisms are unbiased with no chances
of nepotism.
• Request for Information (RFI) is a variant of RFP which is issued in
earlier stages of purchase process wherein the buyer themselves want
more information as to the products and services on offer in the category.
• RFI usually involves shorter responses and are issued by even private
institutions apart from the government ones.
Closed Bidding
• Closed bidding is usually meant for select few vendors who are
the only ones to be invited.
• Any bid from uninvited vendor is not solicited.
• Usually private institutions are involved into closed bidding who
have already selected a list of vendors who they consider
competent and effective for the supplies.
• Private institutions do not have to go that extra mile in order to
make their process transparent which a government institution has
to do.
 Bidding Strategies
Sniping
• In this strategy a vendor waits till the last moment and bids
higher just before the end of the process.
• This strategy catches the other vendors unprepared for such
a move to the advantage of the sniper.
• However, the sudden spurt in bid price required caution as
any over bidding just for getting the order could be detrimental.
Pattern based bidding
• Careful and observant vendors might spot a particular trend
in which the bidding process might be moving.
• The attitudinal and behavioral traits of the competing bidders
becomes an indicator for placing the winner bid.
• One should be careful to shun any subjectivity in recognizing
such patterns or it could go astray.
Cost Benefit based bidding
• A proper cost benefit analysis should be done to avoid any
miscalculation of cost/benefit.
• In the zeal to bag the order over commitment should be avoided
which would ultimately lead to losses and failed commitments.
Dynamic Bidding
• In this bidding strategy the participants keep on adjusting their bids
based on the real time information.
• This helps in making an informed decision.
Straight bidding
• This strategy involves placing a predetermined value of bid
irrespective of what the competitors are bidding.
Incremental bidding
• In this the participants keep on increasing the bid amount as
compared to the current highest bid.
• This helps the participants to stay in the competition and
avoid huge risks.
Channel Design
Unit – 8
Dr. Ved Srivastava
 Channel Design Process
Customer Requirements
• Channel ought to be designed keeping in mind the needs and
expectations of the customer.
• For high potential customers the accessories and spares have
to be available continuously.
• The bigger customers also expect effective and professional
service backup 24X7.
• However, marketer should also consider the costs involved in
designing more elaborate and effective channel and proceed after a
proper cost benefit analysis.
 Channel Objectives
• Asset utilization and profit objectives should be balanced.
• Channel should try for optimum services output at least
possible cost in order to further customer satisfaction along
with profitability.
• Channel objectives also change with differences in the
characteristics of the product.
• For highly complex and technical products personal sales
force is utilized whereas for standard simple products the
distributors could be operationalized.
 Channel Constraints
Company related
• If the company is financially constrained then it would not be able
to provide the desired service output leading to dissatisfied
customers.
• It might happen that a product which requires personal selling
would have to be left to the distributors or franchisors.
Competitive constraints
• Sometimes competitors force a company to design channel
keeping in mind the industrial norms.
• So even if the product is simple, standard and does not required
personal selling still company will have to adopt personal selling
due to the industrial norms and consequent customers’
expectations.
External Environment
• Many times external factors like the economic conditions or
governmental regulations play an important role in the channel design
decisions.
• During slowdown or recession company may do cost cutting and
design a very simplistic channel even though there might be
requirement for a heavier one.
Product characteristics
• For simple products franchises or other intermediaries might do but
for complex and technical products direct marketing or personal
selling will be better.
Customer characteristic
• For lower potential customers or who are distantly situated company
depends on intermediaries but for nearby and high potential
customers company caters on its own.
 Channel Alternatives
Types of Business Intermediaries
• These are decided on the basis of the product, tasks to be
performed, market conditions, etc.
• Manufacturer’s Representative or Agents
• Industrial Distributors
• Brokers
• Commission Merchants
• Value added Resellers
 Number of Intermediaries
Intensive Distribution
• Standard products like some raw materials that are
purchased more frequently and are lower priced are sold
through multiple outlets to be available on demand that
would be huge.
Selective Distribution
• In this the industrial marketer selects few intermediaries to
distribute the products to the targeted buyers.
• This gives them better control, brings down the cost, forges
close relationship with the few intermediaries, and more
selling efforts could be expected from the intermediaries.
Exclusive Distribution
• An intermediary exclusively deals and distributes the
product of a single manufacturer without entertaining any
competitor.
• Very aggressive selling effort could be expected from this
intermediary as he is also focused around the single product.
• The industrial marketer keeps a close control over the
pricing, communication, credit, and other aspects of the
intermediary.
Number of Channels
• As the industrial marketer might serve various segment of
customers they can have more than one channel to distribute
their products.
• Multi-channel approach reduces cost and also increases the
efficiency.
• However, omni channel strategy could lead to conflicts and
should be avoided through proper control mechanisms.
Mutual Understanding
Responsibilities
• There should be clarity in the roles of both marketer and the
intermediary
• Both of them should honor their commitments regarding the tasks
and responsibilities mutually accepted.
Terms and Conditions
• The discounts offered to the distributors, commissions offered
to the agents and brokers, warranty and part replacement, etc.
should be clearly mentioned to avoid any future conflict.
Territorial rights
• The territory allocation to the distributors should also be clear to
avoid confusion and conflicts.
 Assessing Channel Alternatives
Economic Evaluation
• Different channels bring different levels of sales but also entail
different costs.
• For example the comparison between direct selling through
company sales force and through the intermediaries is commonly
assessed by companies.
Benefits of selling through company sales force
• They are more trained and competent in sales generation thus
chances of more sales.
• They are better aware on the products and services offered.
• Their loyalty is permanent with the company and they are
actively involved in helping build the brand.
• Being company insiders they are held in high esteem by the
buyers as compared to intermediaries.
• As their career depends on the sales generated by them and
have specific targets chances of their deliverability is higher.
• Most of the buyers are more keen to deal with company
insiders rather than intermediaries.
Disadvantages of selling through company sales force
• Salaries are a fixed component which have to be expended
even if there is no commensurate sales to back up.
• Company sales staff have a permanent job and sometimes
they become casual because of that.
Advantages of selling through intermediaries
• Sales agents and other channel members work on
commissions therefore they put in more efforts as the
volume of sales is directly linked with their commissions.
• There is no expense involved permanently like salaries and perks
and company doesn't spend anything if no sales is there.
• They have extensive contacts as they are dealing with many
companies which leads to better market connect and hence more
sales.
Disadvantage of selling through intermediaries
• Their loyalty is not fixed and they might sell for other companies
at your expense.
• They do not care about your long term brand building and
sometimes commit irresponsible acts which lead to brand
dilution and dissatisfied customers.
Control
• Various channels provide you with varying level of control which in
turn effects the overall business.
• Company sales team provides maximum control as these people
are on the payroll of the company and bound to follow the
company instructions.
• Intermediaries are not in direct control of the company and not
bound to follow every instruction.
• Selling agents or distributors might do what is best suited for
their own business interests which at times might be contrary to
the actual interests of the manufacturer.
Adaptability
• The channel should be flexible and adaptable to the changing
requirements of the dynamic external environment.
• Based on the changes in the needs of the customers the channels should
also recalibrate.
• Company sales team could be adapted more quickly than intermediaries
as these players are external to the company with their own future
business vision behind their structure and processes.
• In case the intermediaries and the business partners have to kept flexible
and adaptable then strategic alliances could be forged with long term
mutual commitments so that individual interests could be safeguarded in
the long run.
 Channel Selection
• Target customers
• The first and foremost determinant of the channel selection is as to
who is the targeted customer and what are their requirements and
preferences.
• Understanding the industries involved, company sizes, and their
locations is a prerequisite for this.
• Competitor Mapping
• To start with it is wise to research as to how the players prior to you
have been delivering to their customers through which channels.
Things that worked out for them could similarly work out for you with
some modifications.
• Evaluation of the available options
• Content Marketing
• Blogs, eBooks, videos, whitepapers, etc. are valuable content which could be utilized for
attracting the prospects.
• Email Marketing
• Sending emails to the prospects with details of new product launches, promotional limited
period offers, etc. is also a good option.
• Permission marketing is an important concept associated with this and ought to be kept in
mind by the marketers.
• Social Media
• Customer companies could also be reached out on social media through twitter,
facebook, LinkedIn, etc. whereby content could be shared and relationships can be build.
• Trade Shows/Industry events
• These are a nice way to showcase your products and share
information about your company, products, and services.
• As these are not very frequent affairs they will have to be
complemented with some other discussed options as well.
• Company sales team
• These are one of the most significant options available especially for
B2B setting where the products are complex and much
customization needs to be done.
• Strategic alliances
• Those business partners who complement your offerings and have a
similar vision and strategy could be suitable as channels for adding overall
value.
• Online display ads
• Online ads displayed on the search engine result pages, or elsewhere on
world wide web are also a nice way to reach out to the targeted audience
with high success rate considering the enormous increase in online traffic.
• Inbound marketing
• Utilizing the web sites and web pages through some great content which
pull in prospects to the website through the search engines is also a
worthwhile option.
• Cost considerations
• Some of the channel options might be very good but can entail more
cost. So companies ought to consider their marketing budgets when
evaluating and selecting the channel.
• Constant monitoring
• Channel selection is not a one time activity but a constant endeavor.
• One needs to go for the most appealing alternatives and then keep
on monitoring the results with keen attention to the cost benefit
analysis and on the parameters of lead generation, conversion,
loyalty, return on investment, etc.
• Adaptation and modification
• Based on the results of the initial channel activities the channel
set up should be adapted and modified for optimum
performance.
• Omni channel strategy
• Rather than banking on just one or two channel options one
should try for multiple channels and they should be dovetailed
nicely for well coordinated and optimum performance.
Business Market Channel Management
Unit – 9
Dr. Ved Srivastava
 Channel Tasks
Channel Selection
• Considering the importance of channels in today’s
business it becomes a very important task to identify
and select channel partners who might be interested
and suitable for the kind of business model the
manufacturer might be having.
• Most importantly the wavelength or business vision
of all of them should meet as far as possible for a
better coordinated team work.
Terms and conditions
• Hectic negotiations usually entail any finalization of
terms and conditions between manufacturers and channel
partners.
• However, it must be kept in mind that any terms and
conditions should be a win-win situation and not a win-
lose in order for the association to sustain in the long run.
Order Processing
• The way orders are placed, tracked, completed, are to
be standardized with a proper mechanism in place to
ensure efficiency and effectiveness.
Channel Relationship
• Long term relationship with the channel partners is a
must for getting the competitive edge.
• Leaders in the industry are those who apart from
having better goods and services also have the best
channel partners available.
• Strategic alliance is the buzzword today and the
cornerstone for winning the competitive race in
any industry or sector.
Buttressing Channel
• It is a constant endeavor to support the channel partners to make them
more effective in their job.
• Channel partners need to be trained about the products and services on
offer so that they are well prepared to showcase it to the end customers.
• Channel partners need to be supported with inputs like updates on the
products and services relevant to their work.
• They need to be financially supported at times by giving credit on
investments done by channel partners in concurrence to some
strategic project of mutual interest.
Co-Branding Activities
• Many times the promotional campaigns are run
jointly by the manufacturer and channel partners in
which the former has a major role to play.
• The above activities could take the form of joint
advertising, discount schemes, demos, etc.
• It is manufacturer’s responsibility to ensure
congruence between all the channel partners in
whatever capacity they might be engaged.
Selling skills
• Usually the channels are not that good in their selling skills as
compared to the company people who generally hail from top
management institutes and abreast of latest selling practices.
• The manufacturers often realize that they can increase the overall
revenues by doing little bit of investment by way of organizing
training programs on general selling skills for the channel
partners.
• The expertise power which manufacturers have over channel
stems from this context only.
Monitoring Channel Performance
• As discussed earlier, now days competition is between business channels
rather than manufacturers. Therefore it is highly imperative to be aware as
to how the channels are performing.
• Usually the onus of such analysis and assessment lies with the
manufacturers who are the most important stakeholders in the whole
gamut of affairs.
• Such assessments should have proper mechanisms to alert the
associating parties as soon as any dip in performance is witnessed
and ought to be taken up at the highest level in the form of periodic
reports.
Future Demand
• It is very obvious that manufacturer and the channel partners will be there in the
game till there is demand for the products and services they are dealing with.
• The day the demand for those products and services dips or ends would
be red flag as far as continuation of these entities are concerned unless they
have secondary associations with other channels in the fray.
• So, it is in everybody’s interest to keep on assessing the probability of future
demand by the targeted segment. Though all channel partners could
contribute on the basis of the feedback they get from customers,
manufacturers again have important role in this as well.
Supply Chain Management
• Modern systems in SCM try to forge a seamless demand
management chain from the upstream to the downstream
with all the channel partners playing a crucial role in its success.
• The various tiers of vendors in the upstream and the distributors,
retailers in the downstream ensure that the demand is met as per
the requirements of the customers.
• Manufacturers paly a crucial role in this and make modern
technologies like SCM modules in ensuring that products are
being sourced, produced, distributed, and recycled properly.
Technical Support
• Although it is the prime responsibility of the manufacturer
to provide technical support to the clients in which account
management and issue resolution figure prominently, the
channel partners also sometimes are responsible for
some of these depending upon the situation.
• In B2B setting these services become as important as
the actual products themselves and ought to taken with
full seriousness.
Legal Compliance
• With the availability of dedicated legal teams the
big manufacturers have this onus to be always vigilant
regarding the fulfillment of legal and contractual
obligations by them and their channel partners to
avoid any issue.
 Factors Affecting Channel Decision
Product Type
Perishability
• In case the goods are perishable then shorter channels would be a better
choice rather than longer channels.
Unit value
• If the unit value of a product is low then longer channels could be utilized.
Complexity
If the product is complex then usually direct selling by company sales team
is more preferable to the buyers rather than dealing with distributors and retailers.
Simple products are easily sold by resellers or through e-commerce sites.
Company Characteristics
• Financial strength
• Shorter channels require greater funds as compared to the longer
channels so companies with greater funds at their disposal can go for
shorter channels.
Infrastructure and Technology
• Every company cannot go for technology based channels if they are not
technologically sound. If a company is technologically sound it can go
for e-commerce platforms or other such modern provisions.
• Capability of the team is also pertinent here.
Degree of control
• Shorter channels offer greater control over the intermediaries as
compared to the longer ones. So companies wishing to exert greater
control over the intermediaries ought to have a shorter channel.
Competition
• It is an old strategy to follow the industry norms and the ways of
the competitors. This often leads to identification of gaps and
opportunities in the market which could be uncashed judiciously.
• In case most of the competitors have been successful with a
strategy of retail stores then the company might also go for it to
be on the safer side.
• However, if the company comes up with an innovative model
and has reasons to back it then it can go against the tide and
come up with new channel choice.
Regulatory Framework
• The governmental regulations in the legal or environmental
context also becomes an important aspect in channel decision.
• If in case there are lot of regulations and legal formalities at every
step of distribution then company would prefer going for shorter
channel.
Market Factors
• Market size, Geographical concentration of the buyers, Quantity
demanded, etc. are also crucial in this decision. For example if the buyers
are dispersed and located in a larger area then longer channels
ought to be preferred.
• Similarly international distribution may require partnerships with
global distributors or coming of local sales offices.
• In markets where sales cycle is longer personal selling is more
preferred.
Buyers’ Preference
• Buyers’ preference is obviously an important determinant. Some
buyers might prefer dealing with direct company sales team
while others might be more comfortable dealing with the distributors
and retailers.
Cost & Profitability
• Some channels, like direct personal selling team, may entail
higher initial costs but may be more profitable in the long run.
• Contrarily, going for intermediary based channels might be cost
efficient initially but then it might not offer that much of
profits in longer run. So this tradeoff needs to be considered while
deciding on channel.
 Channel Participants
Industrial Distributors
• These are the intermediaries between
manufacturers and their industrial buyers.
• They act as a one stop buying space for the industrial
buyers.
• They should not be confused with the retailers in
the B2C space as the former have quite different
functions and characteristics.
• They play a very crucial role in the industrial
distribution process.
Mindboggling Inventory
• Considering that any delay in the product supply
may lead to disruption and down time of the industrial
buyers, the Industrial distributors have to be
constantly on their toes to deliver.
Exquisite Delivery
• Industrial distributors ably handle the order
processing, warehousing, logistics, etc. to ensure
most optimum efficiency in the processes.
Technical acumen
• Many industrial distributors have capable teams adept in
handling the technical aspects of the products.
• They can advise the clients on their buying decisions as also
provide technical support post sales.
Economy of Scale
• Usually the industrial distributors buy products in bulk from
the manufacturers at better prices and pass on cost savings
to their customers.
Diverse product range
• As the industrial distributors buy products from various
manufacturers they are in a position to provide diverse
portfolio of products to their customers.
Online sales
• Some of the technologically sound industrial
distributors have also gone online providing their
customers the facility to do digital transactions making the
process more convenient and efficient for them.
Additional benefits
• Some of the Industrial distributors are also in the
position to cater additional benefits like credit
facilities, customization, configuration, training
to the customers, etc.
• Because of these additional benefits these industrial
distributors are much sought after by the industrial
buyers.
 Classification of Industrial
Distribution Mechanism
Distributors
Direct Distribution
• The distributor acts as an authorized agent of the manufacturer which
adds a lot of sanctity and weight to his dealings with the end customers.
• It adds on to the distributor’s reputation and instills confidence in
the buyers as to the distributors credentials.
Bulk Distribution
• Here the distributor is concerned only in buying in bulk from the
manufacturer so that he gets better price which could be passed on
to the buyer at a good mark up.
Value Distribution
• Distributors provide additional benefits like credit facilities,
customization, configuration, training to the customers.
Mode of transactions
Physical stores
• This appeals to the more traditional buyers who like to
visit the distributor’s store and buy only after physical
inspection and verification.
Online sales
• This appeals to the more modern and tech savvy buyers
who want to go for convenience and efficient buying.
Affiliation
Company based distributorship
• Sometimes the manufacturers have their subsidiaries
who are also engaged in distribution activities.
Self owned distributorship
• These are independent distributorship who are not
affiliated with any manufacturer.
Location
Local Distributors
• They are located in a specific location and cater to the
needs of nearby industrial buyers.
National Distributors
• They cover multiple states or regions in a country
International Distributors
• They cater to several nationalities and are proficient in
international trade and commerce. Usually these are
very big and affluent players.
Buyer’s Nature of Business
OEM Distributors
• These distributors serve the original equipment manufacturers.
• These manufacturers might be in need of raw materials,
components, and machines for their own manufacturing
processes.
MRO Distributors
• These distributors serve the businesses engaged in
maintenance, repair, and operations of the manufacturing houses.
• These businesses might be involved in supplying replacement
parts, spares, and accessories to the manufacturers ensuring
that the industries are up and running.
Product Category
General Distributors
• These distributors cater to diverse product categories and their
services are availed by various industries.
Specialized Distributors
• These distributors deal in specific product categories but provide
all the variants in that particular category.
• Also, they carry considerable expertise in that product category
and are in a position to even guide the associated manufacturers.
 Manufacturer’s Representative
• Manufacturer’s representatives are sales agents that work on the
basis of commissions not being on the payroll of the manufacturer.
They are an immense support to the manufacturers in their selling
activities. Some of their important features are:
• Independent entities
• These reps are not on company payrolls and are not the employees
of the company.
• They usually work on commissions and do not get any fixed salary
for their work. The more sales they do more commissions they can
look forward to.
• Expertise in their sectors
• As these reps have been consistently working independently in some sector or
industry they know it inside out.
• They have in depth knowledge of the specification and features of the products they
are dealing in.
• Because of their expertise they are much sought after by the distributors or
industrial buyers which adds on to their networks aiding them further in making
better sales.
• Regional focus
• Usually the manufacturers assign specific locations to these reps in which they are
expected to liaison with all the available prospects which might help augmenting the
sales.
• Huge networking
• Since these reps are constantly in touch with their customers for a very long
period of time they tend to develop very intimate and close relationships with
them in the long run.
• Many times businesses are being done on the basis of this trust and closeness
that these reps share with their customers.
• Feedback mechanism
• Based on their consistent presence in the market these reps have a real pulse of
the customers and can muster very valuable insights and feedback from them.
• These feedback and insights are utilized by the manufacturers in coming up with
the required modifications and changes in the products and services.
• Operational involvement
• These reps are frequently used by the manufacturers for
order processing, contract negotiation, etc. on their
behalf.
 Sources of Conflicts
• Shoddy Inventory management
• When manufacturer is unable to manage the inventory properly as
per the demands then there is usually a situation of understocking
or overstocking at various stock points.
• Both the situations show shoddy channel management on the part
of the manufacturer.
• In such a scenario of confusion and uncertainty all the channel
partners will scramble for the limited resources or they would dump
their inventories to avoid losses. In both scenarios there would be
conflict and unrest.
• Lopsided channel performance
• It might happen that some particular channel member
might underperform consistently raising concerns of
other channel partners.
• The channel partners might complain of overall brand
dilution and disrepute because of that underperforming
channel partner.
• Or they might even feel overburdened as some channel
partners are not doing their part well.
• Addition of channel partners
• Sometimes the perspective of the existing channel partners might be different from the
manufacturer as far as addition of some channel partner is concerned.
• Channel partners might feel that it could lead to increased competition or reduced
profitability.
• Conflicting objectives
• There could be variance in the objectives of channel partners leading to conflict.
• Whereas the manufacturer might like to go for competitive pricing for quick capture of
market share thereby foregoing short term profits, the distributor might opt for drawing
maximum short term profits by increasing the current pricing.
• Moreover, for some newly launched product the manufacturer might want more technical
support and allied services for better customer satisfaction even at the cost of profits, the
distributors might be averse to any raising of costs like this.
• Improper Conflict resolution mechanism
• Each channel partner might have their own viewpoints over solving of any
channel conflict that erupts.
• This difference in desirability of the manner of conflict management might
be another bone of contention between channel partners.
Pricing mechanism
• Differences in pricing between manufacturer and distributors or the
distributors amongst themselves are serious causes for channel conflicts.
• There should be definite laid down rules as to where the manufacturer would
supply directly and where the distributors would supply. The manufacturer
price would always be low due to low operational costs and distributor
should not be left uncompetitive on this ground or they would just not
associate.
• As far as different distributors are concerned they can definitely compete
against themselves but nobody should work for intentionally harming the
interests of the others with ulterior motives and the manufacturer being the
hub of all should be watchful over these matters.
Territorial Disputes
• If there are too many channel partners vying for space in the same territory
they might feel the pressure as gain for one would inordinately be loss for
others in that small territory.
• Manufacturer should proactively work on demarcating proper territories for
different channel partners to avoid any such conflict.
Communication Gap
• Many times issues are not that serious but appear so because of
communication gaps and mistrust amongst the channel partners.
• It is in everyone’s interest to ensure proper communication mechanisms
throughout the supply chain.
Exclusivity
• Some times manufacturers provide exclusive products or special incentives to
specific channel partners which might not go well with others and could create
tensions.
 Conflict Management
• Proper Segmentation
• If proper segmentation has been done at the very outset so that each
channel partner can focus on serving different customer base as far as
possible then it would lead to lesser direct competition and conflicts.
• Joint Marketing
• Channel partners should look at each other as genuine partners rather
than competitors.
• Joint marketing activities on communication and distribution front
would go a long way in forging better relationship amongst the channel
partners where they will feel like a team rather than adversaries.
• Communication
• Very often communication gaps lead to more serious issues that they really are.
• Proper flow of information through regular meetings, conferences, seminars, etc.
should be ensured.
• All channel partners should be on the same page with all the requisite
information.
• Technology
• Technology could be a huge aid in proper collaboration and information sharing.
• Real time data on inventory levels, sales, and other customer related details could
be very efficiently disseminated through latest technological tools.
• Regulatory framework
• There should be clear roles, responsibilities, and expectations for the channel
partners.
• Important aspects like pricing, inventory, territory, performance, etc. should be
in black and white to avoid later misgivings.
• More involvement of channel partners
• Rather than a top down approach where all the directions flow from the
manufacturer it should be a joint approach and channel partners should also
be consulted for setting channel goals and objectives.
• Due to the sense of involvement the channel partners would more likely follow
the guidelines due to presence of a shared channel vision.
• Unbiased conflict resolution
• Any conflict resolution should be done by unbiased mechanism wherein
either external arbitrators or internal teams formed with consensus should be
utilized.
• Channel partners are to be more satisfied by any conflict resolution which
appears to be done in an impartial and unbiased manner.
• Constant monitoring and evaluation
• Channel performance should be constantly monitored and results shared with
all the channel partners.
• Underperforming partners should be trained and counselled for improvement.
Marketing Communication in
Business Markets
Unit – 10
Dr. Ved Srivastava
 Difference between B2B and B2C Marketing
Communication
Communication Content
• In B2B the communication is more about providing informative
content to the buyer.
• The buying center or the Decision making unit individuals require
more information on the features and benefits of the products so
that they can select the one offering more valuable solution to
their problems.
• The information provided is more technical and provides clear
input on how the product offering could be more efficient in terms of
money, time, and other resources.
• B2C communication caters more to emotional appeals by way
of the content inherent in the communication.
• Communication tries to connect with the customer on a more
personal note keeping in mind their aspirations and desires
as also their pain points.
• Dramatization using more creative and impressionable
elements is usually made use of to create the desired effect.
Communication Media
• B2C makes use of mass media like television, radio, display
boards, print media, online media, etc. in order to reach out to
maximum number of prospects.
• B2B uses more professional communication channels like
industrial publications, email marketing, sites like LinkedIn,
Industry conferences, Trade shows, etc.
• B2B makes much use of personal selling teams to communicate
with the buyers on various issues considering the complexity
involved.
• B2C communication are very relatable and simple which any
layman also would easily comprehend. Comparatively the B2B
communication use a lot of technical, industrial jargon which
only the people of specific domain would be in a position to
comprehend.
• The B2C consumer wants attractive deals and offers which
should come his way in a very fun filled and entertaining
manner.
• Comparatively the B2B customer will have nothing of it and is
concerned only that the problems being faced by the
organization should be alleviated through proper product
solutions.
• B2C customers expect entertaining, useful, and sharable
communication content which should be brief, crisp, to the point
and benefit driven. The stress is on the emotional connect.
• In B2B customers are used to detailed description of products
and services with technical specifications. But it should be kept
in mind that the details like specifications and features should
relate to the actual expected benefits for it to be decision friendly.
• As B2B is based on long term relationship the communication
should be relevant and regular for a longer period of time. This
continuity in information is very important part of B2B
communication.
• B2B communication must be really appealing as it has to be
approved by several individuals. It is essential that it is logical,
based on commercial benefits, with ample supportive data.
• B2C buying is many times about making a statement so social
influence is an important component of the messaging in B2C.
However, as B2B buying is more about problem redressal so
benefit linkage is more important.
• B2C buying is more about quick decisions for some immediate
needs. So the communication is more about instant gratification,
convenience and ease of use. B2B buying has longer buying
cycles and requires more sustained communication efforts.
• Focus of B2C communicators is on generating more brand
awareness whereas the B2B communicators stress more on
customer satisfaction and retention as client size is bigger and
an individual customer means a considerate revenue stream.
Losing a customer is more detrimental in B2B as compared to
B2C and hence the changed focus of communication.
 Role of Advertising in Business Markets
Introduction of product offerings
• When a new B2B product or service is introduced in the B2B
market it’s advertisement creates initial awareness and interest
amongst the buyers.
• Effective advertising can drive early adoption and generate more
and more product sales.
Innovative products
• When the products are innovative using new technologies and
are claiming to solve the buyers’ problems in novel ways they
need to be methodically advertised and communicated for the
buyers to get conditioned and educated.
Reaching out to the Buying Center
• As there are many individuals who are a part of the Buying
center it becomes convenient to reach out to all of them
individually through intelligently crafted advertisements in
addition to the personal selling teams.
• The buying center becomes more receptive to the personal
selling team members if they had viewed the relevant ads
earlier and have prior information on the products and services
being offered.
Sustainability in communication
• Consistent and regular advertisements help register the product
and service in the minds of the DMU members.
• They are apt examples of the saying “ out of sight is out of mind”.
• They ably complement the efforts of the personal selling team in
the long run.
• So they are a nice way to build on the relationships.
Brand Equity
• Advertisements, although more effective in case of B2C setting, are
nice way to build a great brand identity and image leading to
enhanced trust and credibility even for B2B.
• A well known brand has better chances of getting adopted and
trusted which will lead to more respect and competitive advantage.
Lead generation
• When the B2B buyers are already aware of the products and
services of a company and become interested then they could be
easily approached for advanced talks and meetings.
• Most of the B2B marketers depend on these advertisements to
create an interested set of prospects which otherwise would
have been unapproachable.
Advancing one’s USP
• Advertisements are a nice way to intelligently put across one’s
USP to the various prospective buyers.
• If there is genuineness in this it could be real shot in the arm and
work wonders as far as approaching and closing the deal is
concerned. So, it is a great way to expedite the sales process.
Limitations of Advertising in Business Markets
Unsuitable for conveying complexities
• Since business market related products have detailed
specifications it is not possible to convey all the fine points
in the short duration of a broadcast media or insufficient
space of print media.
• This becomes all the more acute in case of products which are
all the more complex and highly technical.
Skepticism amongst the rational ways of DMU
• Advertisement generally are known to dramatize the content a
bit to put forth a heightened effect.
• In B2C the viewers take these dramatization in their stride
and are too happy to endorse and accept it and even buy it
later on.
• However, in B2B where rationality and credibility takes
precedence, the Buying center or the DMU individuals might be
skeptical towards any such exaggeration and might
consider it as biased and irrational with distortion of truth.
• This might not be good for final purchase point of view as the
claims made by the advertisement might be cast in a
shadow of doubt.
Generic advertising unsuitable for B2B

• Usually, B2B buyers have unique problems which ought to be

met by customized solutions.
• Since advertisements carry generic display of general
features and specifications it cannot put across the specific
ways in which the B2B seller can help the buyer in his
problems.
• Thus advertisements are a very incomplete way of
communicating with the prospects and therefore not very
popular in B2B space.
Impersonalization
• Advertisements generally are not that personalized which B2B
buyers expect from their suppliers.
• B2B buyers desire that the vendors should make frequent
visits to their premise going through the problems and
issues again and again so that no dimension or aspect of
the problem is left.
• This is the reason that the vendors also go for frequent regular
visits by their personal sales team rather than opting for
advertisements as means of communication.
Attribution of Conversions difficult
• In B2C it is comparatively easier to decipher the effect of
advertisements on sales.
• The direct sales or website traffic can be easily tracked in
B2C and cause and effect established.
• However, in B2B where there are multiple touch points and
several interactions apart from regular advertisements that
a specific cause and effect just for the advertisements is
very difficult to establish.
• Without any exact metric the advertisement performance
cannot be easily established putting the efficacy of the whole
exercise in doubt.
Advertising Deluge
The senior members of the buying center or the DMU might be
too occupied and busy to view the advertisements.
As these are the people who carry weight as far as buying
process is concerned, there not viewing the advertisements
might not serve the purpose for which the ad was made in the
first place.
This is another reason many B2B vendors do not find it
worthwhile to spend so much of money on an exercise which is
not serving much purpose.
Industry specific constraints
• Some industries like healthcare, finance, etc. have certain
regulations regarding the production of advertisement.
• These restrictions are additional impediments to
advertisements in the B2B arena discouraging its use further.
Expensive
• Advertising in industrial publications, participating in trade
shows, going for online advertisement campaigns, etc. could
be an expensive proposition.
• Smaller companies with shoe string budgets, especially the
startups with limited fundings available are too loathe to go for
such expensive advertisements as a means of communication.
• This becomes all the more pronounced when the smaller
companies are aware of their limitations and realize that they
would not be able to compete on this communication front
with the more established competitors with larger budgets.
Accessibility
• B2B vendors need to reach out to the few individuals who
are a part of the buying center or the DMU.
• It is really difficult in any case to identify and then reach out
to these individuals.
• Traditional advertising might miss out on these few
individuals and could be wastage of valuable and scare
resources.
Lacks consistency
• B2B sales cycle are usually longer and complex than the
B2C.
• Few number of advertisements with questionable
accessibility might not be depended to convince the buyers
especially for high involvement and high value products
and services.
• It is the constant and repeated personal meetings which is
considered to be more effective than the advertisements under
these circumstances.
 Developing an Advertising Program
Advertising objectives

• To start with it is highly imperative to be very clear about the

objectives which are to be met by any advertisement
campaign.
• The common advertisement objectives for B2B could be
increase of brand awareness especially when a new product
or service is introduced, generation of leads through inbound
marketing, increase in the website traffic, etc.
Customer Buying Behavior
• One should be acutely aware of the needs, pain points,
attitudes, etc. of the customer viz. their buying behavior.
• Also, the individuals carrying weight in the buying centers or
the DMUs should be identified. The decision makers,
influences, users, buyers, etc. should be known.
• All this research will go a long way in making the
advertisements relevant and effective.
Channel Selection
• There could be many channel options through which
advertisements could be done like Trade shows, Industrial
publications, emails, webinars, online platforms like
industry specific websites, social media sites like LinkedIn,
etc.
• The thing to be kept in mind is that the channel should sync
with the objective behind the advertisement.
• So for online leads the choice would be different from brand
awareness and so on and so forth.
Specificity of Messages
• Though it is true that advertisements tend to be very generic
and the individual issues cannot be dealt with properly
through few ads.
• However, if intelligently done the words can weave magic and
even through the generic standard advertisements a lot can
be conveyed which many could find worthwhile for their
specific individual needs.
• This increases the importance of good advertising teams
and agencies especially those who have fair idea of what
transpires in a B2B setting.
Relevant Budgeting
• Keeping in mind the objective and the channels that have
been selected proper budget should be allocated to each one
of them based on their reach and effectiveness.
• Considering that the B2B sales cycle is longer the
advertisements need to be run consistently over longer
periods of time and therefore budgeting would also go up
accordingly.
Monitoring and evaluation of Advertisements

• With web analytics and other such tools the online

performance of the advertisements could be ascertained with
great perfection.
• The web traffic, lead generation through filling of customer
forms, conversion rates, ROI, these become easy to calculate
and tabulate.
• These valuable inputs are a great help in evaluation of the
advertisement effectiveness.
Complementing Advertisement through Personal selling
• Advertisement campaign will work very well if complemented
through personal selling.
• Leads generated by way of advertising should be effectively
followed up by the personal selling team to increase sales.
 Measuring Advertising Effectiveness
Engagement Through Digital Advertisement
Measuring the advertisement effectiveness on the digital format entails
assessing the following:
• Click Through Rate
• Landing Page engagement
• Bounce Rate
• These metrics are an apt indicator of whether advertisements are
able to capture the attention of the prospects and what is the level of
engagement with them.
Content consumption
• The amount of content that is being consumed or shared with
one’s networks is another important metric to understand how
effective the advertisements are.
• If an ad is being shared number of times that means it is found
very relevant and interesting by the targeted audience. This
is what was required of the advertisement and it has actually
served its purpose.
• There is a very high probability that such popular and liked
ads would enable more conversions.
Brand Recall
• An important exercise which most of the brand managers are
consistently engaged in is assessing the brand recall.
• More the brand recall better is the effectiveness of the
advertisement campaign.
• It is imperative that your brand should at least be in the
consideration list of the prospective buyers to have any
chance of getting purchased.
Quality and Relevance of Leads
• The number and conversion rates of the leads are an ample
testimonial as to whether the advertisements are able to reach out
and convince the right segment of customers.
• The leads generated through different channels should be noted
down which will give an assessment of the importance of various
channels on this important parameter.
• The sales team are the best people to provide feedback on where
things are not working as far as the conversions on the basis of the
advertisements is concerned.
• On the basis of the feedback, changes in the advertisement
content or media should be brought about.
• The customers could also be interviewed or researched directly
to get feedback on the lapses in the advertisement creation and
implementation.
Conversion Cost
• The marketers should also be concerned about the conversion
costs for progressing on the various stages of the customer path.
• An important metric is the customer acquisition cost with respect
to the advertisement expenses incurred.
• The total advertisement cost could be divided by new
customers converted in order to get the customer acquisition cost.
• Apart from the customer acquisition, the advertisement costs could
also be compared to the total revenues generated which could be
attributed to the advertisement campaigns.
Potential business generated
• Apart from the actual sales and customer conversion, the potential
orders that could materialize later on could also be evaluated as a
measure for the effectiveness of the advertisement campaigns.
• Above is important considering the long sales cycle of B2B where
it takes much time for actual sales to happen. So advertisement’s
effect could be gauged from the potential sales which is still in the
sales pipeline.
Life time value generated
• Real advantage of the advertisement expenses could be ascertained
only when the customer life time value is calculated for every
customer acquired. It is only then that one would be able to
categorize advertisement as a long term investment rather than
only an expense.
Personal Selling
Unit – 11
Dr. Ved Srivastava
Role of Salesperson in Business Markets
Comprehending problems of business customers
• The first and foremost requirement from a salesperson is to
comprehend the pain points of the customers.
• B2B customers are business houses themselves who have
many operational issues which they expect the B2B marketers
to alleviate through apt product and service solutions.
• The salesperson becomes an interface between the business
customers and the product developers as they are the
people with maximum information on the customer
requirements.
Long term association and relationships
• It is the duty of the sales persons to forge a long term, warm,
and cordial relationships with their business customers.
• It is the sales persons who get the opportunity to visit the
prospective and existing customers repeatedly over a long
period of time.
• Much of the buying that happens could be attributed to these
relationships.
Sales consultancy
• The competent and knowledgeable sales persons are
considered as sales consultant by the business customers.
• Having worked in the particular industry or sector for many
years with in depth knowledge of the products and services,
these sales persons are highly esteemed in the industry due to
their expertise.
• Their advise and suggestions are much sought after by these
customers before coming to some decision.
Final word on Lead Management
• When through the communication campaigns and other recourses
or through inbound marketing, valuable leads are generated they
are an asset for the company.
• What has to be done with this veritable goldmine of information is
usually left at the discretion of the sales persons who with their
immense experience and exposure are the best bet for the
company to decide with leads are to be worked upon immediately
and which ones to be relegated for a later date.
• This becomes important as it will save a lot of time, money, and
other resources if done properly in the right manner.
Matching product features with customer needs
• B2B is based more on customized offerings as per the specific requirements of
the customer.
• Though many times the product is specifically designed for some customer
requirement, many times the generic product has to be adapted and suited to
the customer requirements.
• This matching up of product with customer needs requires a lot of knowledge,
expertise, and skill which an experienced and seasoned sales person can
only be expected to have.
• In their presentations and meetings with prospective customers the sales
persons try to put across their product offerings as perfect match to the
customer needs which help them bag orders.
Facilitator
• The customers cannot be expected to access so many
departments and functionalities for their requirements.
• The sales people are the one point stop for the customers as
far as any of their needs is concerned.
• Sales people are the interface between production,
marketing, technical and customer support teams and the
customers.
Helping negotiate deals
• It is the salespersons who negotiate on the prices and other
terms with the customers.
• They are the most competent people who can negotiate for
their company as also deal with any objections if raised.
• They try to come up with a win-win and not a win-lose
situation as they would definitely want a long term relationship
with the customer which would be based on customer life time
value considerations.
Beyond the sales
• Sales persons do not stop after just making a sales deal.
• They constantly keep in touch with the customer and provide
after sales service and other associate help and support to
the customer.
• They keep on trying to cross sell and up sell additional
products to further increase the revenues.
 The Selling Cycle
Lead Management
• Considering the limited resources at disposal, one has to be very
judicious in making overtures to the prospective customers.
• The sales persons prepare a list of prospective candidates who
could be expected to provide business to the company.
• Usually the marketing campaigns, referrals, networking, trade
events, etc. are the avenues utilized by the sales persons for
generating leads.
• This is the first stage of the selling cycle but most important one as
it sets the direction in which all the efforts would be made.
Lead Evaluation
• The leads are to be evaluated by the sales persons to ensure
they would be the most ideal ones to approach.
• The threshold decision is on the basis of the cost benefit
analysis. Those who could give a sizeable business with
lesser efforts are the ones to be selected.
• The factors usually assessed are the industry, size of the
business, financial standing, match of the product and
requirements, etc.
Need Assessment
• In this stage the sales persons try to find out the pain points of
the customers which will clarify their actual needs and the
solutions required.
• This step is very important as if there in not a match between
product on offer and the customer needs then it is not wise to
take things further.
• It might take more than one meeting to fully understand the
intricacies involved and the way ahead.
Presentation of proposal
• After comprehension of the customer needs the salesperson
is in the position to come up with a value proposition based
on customer requirements.
• Considering the specific requirements of the customer a lot of
customization is required which takes considerable skill and
acumen on the part of the salesperson.
Clarification of doubts
• This is an important stage wherein the prospect starts raising
objections and seeking clarifications.
• The sales person should take this doubts and objections in
the right manner as they are an ample proof that the
prospect at least is interested in the proposal and is thinking
on the outcomes.
• Good sales persons are very patient and effective listeners
who are able to provide all the information and clarifications
to the satisfaction of the prospect.
Closing the deal
• This is the stage wherein hectic negotiations go on between
the sales person and the prospect. Both are trying to gain
some points favorable to their respective employers.
• The deal should close on a win-win proposition so that both
parties should leave the table feeling good about it.
• Finally with mutual agreement the prices, terms and
conditions, and other issues are thrashed out amicably.
After sales follow-up
• Sales person should keep visiting and meeting the customer
even after the sales to ensure there is no cognitive dissonance in
the mind of the customer.
• Customer support services should be very active post sales.
• Customer feedback should not just be a formality but it should be
rigorously worked upon for future improvements.
• This will go a long way in having a long term relationship and repeat
purchase. Customer retention is more important than having a
fresh sale.
• Customer advocates are the best brand ambassadors for any
company.
 Organizing the Salesforce
• There could be various approaches to organize the sales force
as follows:
Product category
• The sales people are assigned certain product categories
and they have to target all relevant customers who required
anything from that product category.
• Working consistently on that product category the sales
people tend to become experts on them and are in a position
to suggest and support the customers on any issues related
to them.
Key account management
• Every sales person is allocated some important clients
whose requirements are to catered by the former.
• It becomes very convenient for both the customers and the
company as there is no communication gap and the
designated sales person is the one stop support for any issue
that might crop up for the customer.
• This also is good from the point of view of the long term
relationship between those customers and the company.
Customer Size
• The sales person can also be organized on the basis of the
customer sizes.
• The customers could be large, medium, or small with each
having it’s own importance.
• Based on certain strategic imperatives the company can assign
these various sized customers to different sales persons.
Geographical basis
• Sometimes the sales people are allocated customers based in
different geographies.
• All customers available in a particular territory are catered by a
particular sales person.
• It is all the more pertinent when different geographies have their
own typical issues and a different sales person cognizant of
regional issues is in charge.
• Considering the regional diversities prevalent in India this
becomes a very important basis for organizing sales team.
Office based and on field sales team
• Many times companies have office based sales team who are
assigned with making cold calls and coordinating the various
tasks from the office premise.
• The on field sales team is entrusted with actually meeting the
prospects and take the sales process further.
• Usually the field sales team comprises of more experienced
and seasoned sales persons who are in a position to chalk
out the nitty gritty of the sales together with the customers.
Sales support
• They help the core sales team in accomplishing their jobs
well.
• There could be sale support team handling the administrative
work, customer satisfaction and retention aspects, and
those who are working on the analytical aspects helping with
sales data management and optimizing sales performance.
Selecting and Managing Industrial Salesforce
Finalizing Job Description
• The specific sales role which are required keeping in mind the
requirements of the industrial customers has to be clearly
thought of.
• The roles could be account managers, sales coordinators,
business development managers, sales engineers, sales
development representatives, etc.
• The responsibilities and expectations of each of them should
be clearly defined from the very outset.
Finalizing Job Specification
• Each role comes with certain specific skill sets which are
essential if the responsibilities and expectations are to be met.
• The various skill sets could be communication skills,
liasioning skills, negotiation skills, technical skills, industry
and product knowledge, etc.
• Both the hard and the soft skills should be ascertained
clearly so that the right candidates are recruited.
Well designed recruitment process
• The recruitment process should be designed properly in order to hire
the most appropriate candidate for the job.
• Each step of the recruitment process should be intelligently
crafted as per the requirements.
• Sourcing could be done from industrial referrals, job
consultancies, etc.
• The interview and other assessment should be stringent to find
out the best candidates based on their experience, knowledge,
qualifications, and cultural fitment.
Thorough Induction and Training
• The induction and training program of the company should be
rigorous in order to provide the new recruits with all the
information on the industry trends, products, target
markets, etc.
• The training should not end with the induction program but
should be an ongoing and regular feature to update the
sales team on the changing trends.
Management by Objectives
• The objectives and goals of the sales team should be chalked
out in consultation with them.
• Every task and activity should be objective based with key
performance indicators laid down in black and white. Clarity
and transparency should be the hallmark.
• Periodic review meetings should be conducted with relevant
feedback mechanism so that everyone is aware of the
shortcomings in achievement of the key performance
indicators which could be rectified.
Technological support
• Within the budget of the company, proper technical tools
should be utilized as far as possible for more efficient and
optimized results.
• Tools like ERP, CRM, etc. will go a long way in better
management of sales activities and productive analysis of
sales related data.
• Sales automation is the norm currently and companies are
reaping rich dividend with their support.
Functional Integration with Customer Orientation
• Sales team are the best bet for the company if all the functions are to
be made more customer centric.
• It is the sales team which is in constant touch with the customers
and have a pulse of the requirements and needs of customers. So
they are in a better position to guide various functions in being more
customer centric.
• Objectives of all the functions need to be integrated and oriented
towards the needs of customers.
• For example the purchase team cannot just say that it has the
ultimate objective of bringing down purchase costs. Objective should
be to provide the quality which customer wants at the cost which
they can bear.
Competitive and Just remuneration
• The sales team should get the base salary and incentives which
are as per industry standards and commensurate with the
amount of effort put in by the sales force.
• Both financial and non-financial mechanisms should be adopted
to reward and motivate the sales people to put more efforts with
passion and zeal.
• Moreover, the compensation should be in concurrence with the
overall business goals.
• For example, incentives on new products could be more than
the flagship and popular company products, etc.
 Salesforce Deployment decisions
Team Size
• An important decision to make before deploying the sales force is
regarding the size of the team.
• The key factors determining this would be the sales objectives, the size of
the target market, the resources available with the company.
• It is a given fact that a large personal selling team would be more capable
of increasing sales but then company should be financially sound to have
a large team and there should be requisite number of target customers
who are to be approached.
• Also, team size required would be more if company wants to capture the
market share very quickly even though the operational costs are high
bringing down the profits initially.
• So, the team size should neither be too big or small but optimum and
based on the requirements of the company.
Flexibility
• The salesforce deployed should be flexible enough to be
changed as and when required.
• The external business environment is very dynamic and can
change surprisingly quickly.
• Additions and curtailments in the human resource inventory is
really one of the most challenging task that companies face.
However, the good companies are able to do so in a just,
ethical, and profitable manner.
On roll employees and agents
• A very crucial task during the deployment of the sales force is
finding the balance between on roll employees and the sales
brokers and agents.
• Both have their own pros and cons which ought to be carefully
assessed before coming to any decision on this.
 Sales Influencer
Personal Branding
• They are in a position to help and support B2B companies to
increase sales or increase their prospects using their clout with their
huge offline and online following.
• Knowledge about industry, segments, customers and their pain
points
• Latest trends in the industry
• Technological transformations and their effect on the industry
• The best practices being followed and benchmarking that could
happen.
Networking
• Their networking is immense for which they have worked
painstakingly in the following manner.
• Attending various trade fairs, expos, exhibitions, seminars, to
associate with fellow professional from the industry.
• Reciprocal and symbiotic activity wherein a lot of give and take
can happen.
• Associations lead to further expansion of networks.
Social media presence
• Now days social media is one of the most important way to
increase followers for which influences work hard.
• Sharing of content, engaging conversations, providing insights
which could be helpful to the followers leading to increase in
their numbers.
• Quality of content is very important. Should be professional but
done in a informal and entertaining manner.
Online presence
• Prominent influencers like Seth Godin, etc. have considerable
online presence which entails a lot of online work.
• Personal web site
• Regular blogs, podcasts, webinars
• Highlighting personal skills, experience, knowledge, past
projects, networking, etc.
• Development of case studies, personal tips, etc.
Performance evaluation
• Keep on evaluating and assessing the influence amongst the
followers and industry.
• Important metrics like website traffic, CTR, bounce rate, landing
forms status, etc. are a good indicator of the overall influence.
Sales Resource Opportunity Grid
Planning & Control Unit Vs. Sales Resource Strength
Sales Promotion
Unit – 12
Dr. Ved Srivastava
 Categories of Sales Promotion
Package deals
• Very often complementary products and services are sold together as
package deals which the customer might perceive as providing him with more
value.
• Though this is more often used in B2C, it does have a role to play in B2B setting as
well making it very popular with the customers.
Free samples
• They are also preferred by B2B customers as it gives them fair idea of the kind of
product quality offered.
• Considering the large quantities in which products are purchased by B2B buyers,
free samples are a nice way to mitigate risk and make an informed decision.
Word of mouth marketing
• A nice way to get recommended by existing satisfied customers is
to run word of mouth marketing which is sometimes also called referral
marketing.
• It is a very cheap and convenient method to work on lead generation
which could later lead to sales conversion and hence added business.
Business Collaboration
• Collaborating with other like minded players for joint promotions is also
a nice way to increase the reach and visibility of your product and
services.
Limited Offer
• The limited offers create a sense of urgency amongst the
customers to goad them to buy immediately.
• The limited offers could be of many kinds:
• Limited Time Offers which go like “Today only!”, “Valid
through”, “Ends tomorrow”, “Last day!”
• Limited Supply Offers which go like “While supplies last!”,
“Limited quantities”, “Get them before they're gone”
Trade Fairs
• Trade fairs are a very popular promotional mechanism
in B2B.
• It is a nice way to showcase one’s products and
meet the industry people, professionals,
prospects, competitors, etc.
• They also offer a very nice platform for quality lead
generation as the leads could be of very interested
and relevant prospects.
Discounts and Rebates
• Discounts are the deductions on the purchase price of
a product whereas rebates are the refund made on a
certain amount or quantity of purchase.
• Discounts and rebates could be offered for:
• Fostering repeat purchases
• Encouraging volume buying
• Buying within a time span
 Utility of Exhibitions
Valuable Insights
• Participating in these exhibitions help gain a lot of valuable insights from
industrial experts and prospective customers.
• These valuable insights go a long way in product modifications and market
development.
Collaboration Opportunities
• Exhibitions are a good opportunity to hob nob with other companies which
might lead to long term collaboration or partnerships with them.
• When like minded companies with similar vision come together they can come
up with new business models which they could not have achieved
independently.
Competitor Mapping
• Usually all the competitors could also be found participating in
prominent Trade fairs and expos.
• This is a nice opportunity to observe and analyze not only the
current product offerings but also the future product plans of
competitors.
• Although product innovation is a clandestine and confidential affair
for most of the companies but they use this opportunity to showcase
that publicly in order to appeal to their future customers. This
becomes a rare occasion for others to peep inside that.
Enhancement of Credentials
• There are a lot of things which companies can communicate
to the visitors to the exhibitions which build on their
reputation and credentials.
• This is a very nice way to position oneself as an eminent and
cutting edge company with immense value potential.
• It is the credential and reputation of companies which
establishes their brand image and pave the way for future
sales and brand association.
Ideal launchpad
• With adequate media and industry presence such
exhibitions are a grand way to announce new product
launches.
• Many companies wait for such exhibitions for such
announcements which adds to the overall effect.
• It is a reciprocal process as many visitors also come
with the intention of becoming a part of such
extravaganza.
On the spot selling
• Companies use these occasions for selling as well. The customers
who are decisive and early adopters can raise their queries,
objections, etc. and after getting satisfied might actually buy as
well in the exhibition itself.
• So, trade shows and exhibitions are a nice way to skirt the tedious
sales process and make quick conversions.
• However, it should be noted that in B2B immediate sales is very
unlikely considering the tedious and elaborate sales process. Still it
does gives a start and paves the way for future sales.
Better communication
• Advertisements and some other traditional means of
communication are not ideal for complex and technical
products.
• Usually there is a space constraint in print media and time
constraint in advertisements to communicate and express fully
whatever is required.
• Exhibitions and expos provide ample opportunity of product
showcasing and also for live demonstrations in which product
features could be brought out clearly and effectively.
Qualified leads
• Very nice opportunity to create leads which could be easily
converted later on into sales.
• Barring few casual visitors who are visiting for curiosity and
mirth, many serious visitors are also available who are very much
interested in the products because of the problems and
concerns they might be facing.
• The serious visitors could be treated as qualified leads as their
conversion rate is much more.
• So, this sort of traditional inbound marketing is much easier
than the cumbersome modern digital inbound marketing
wherein expensive and tricky content management has to be
engaged in before getting qualified leads for sales.
 Planning Exhibitions
Goals for Organizing
• Selling of Products
• Generation of lead
• Showcasing industry trends
• Facilitating network building
Constitution of Planning team
• A cross functional planning team should be
constituted for the purpose.
• People from different functions have varied expertise
that should be fully utilized in planning the diverse
activities associated with such exhibitions and expos.
• The marketing team should think of a theme that
resonates with the target audience and
participants.
Finances
• Proper budgeting is pertinent for any big event like this to avoid
any glitches later on.
• The various heads entailing the budget could be:
• Rent for the venue
• Expenses in setting up of the infrastructure
• Expenses in marketing of the event
• Administrative costs
• Logistics expenses
Venue selection
• Venues should be selected on the basis of:
• Number of visitors expected-necessitating the proper
infrastructure
• Number of outstation visitors- requiring the venue to
be strategically situated near airport or railway station
with proper availability of hotels.
• Facilities should be commensurate with visitors’
expectations
Orientation
• The orientation of the exhibition is very important and needs to be
done strategically.
• In which portion of the premise the stalls would be put up and where
the common areas will be situated is an important decision.
• Which stalls would come near the entrance and which ones in the
middle areas is again to be given due thought.
• Each and every inch allocated for some activity is done so with the
intention of serving the interests of most of the stakeholders in a
proper manner.
Marketing the Exhibition
• Both the exhibitors and the visitors ought to be persuaded to be
a part of the exhibition.
• Exhibitors could be persuaded by providing exclusive sponsorship
opportunities, early bird discounts, strategic location, package
deals, etc.
• Visitors could be persuaded by bringing out the numbers and
diversity of the exhibitors which could be valuable for the visitors.
• Both online and offline communication tools could be used for this
awareness.
Supplementing the main activities
• The showcase of the products and services are the main
attractions for such seminars but they could also be
supplemented nicely by other peripheral activities like
seminars, workshops, networking sessions, etc.
which sometimes are more attractive to the
professionals present.
Registration and Entry
• Registration could be done both offline and online.
• These are also important activities considering the revenues
they provide.
• The income from registrations and tickets are a huge support
to the fund raising for the event.
• More the registrations more do they increase the
importance of the event both for visitors and the exhibitors.
So they ought to be given the due importance that they deserve.
Infrastructural Provisions
• For any exhibition to be successful and satisfying to the
attendees it should have the requisite infrastructure.
• Proper restrooms, cafeterias, seating areas,
charging stations, Wi-Fi enabled arena, fire
security arrangements, etc. should be available.
Feedback & Evaluation
• Feedback of the visitors and associated stakeholders should be
judiciously recorded and evaluated.
• There should be a proper mechanism to share those feedback as
per requirements with the stakeholders.
• Visitors’ feedback on the displays is actually what the
exhibitors are there for and they would really appreciate this. The
ROI for the exhibitors should also be properly noted.
• For the organizers also the feedback is immensely valuable and would
help them to take care of any lacunae in the later such events.
Managing B2B Exhibition Kiosk/Stand
Kiosk orientation
• The layout of the kiosk should be strategically planned
so that the products being showcased get all the
visibility they require.
• The navigation of the visitors inside the kiosk should
be meticulously planned otherwise improper planning
could lead to bottlenecks hindering the movement
and thus discouraging more visits.
• There should be spaces wherein visitors can stand for
a while if they need to discuss things about the
products on display.
Visitors’ engagement
• The kiosk should have people who are both knowledgeable about the
products showcased and also are adept in engaging the visitors.
• Staff should be proactive, courteous who are experts in starting
conversations, handling queries, and taking care of the interests
and requirements of the visitors.
• Visitor engagement is essential if things are to be taken beyond
frivolous visits with no serious intent.
Element of attraction
• All the displays and signages should be such that they catch the
attention of the visitors and motivate them to visit the kiosk.
• The products, features, benefits, solutions should be highlighted
through attractive displays like digital screens, etc.
Technologically driven interactive experiences
• Now days technology has provided with wonderful opportunities to
increase visitors’ engagement through touchscreens and virtual
reality enhanced provisions.
• These wow experiences are a nice way to increase brand recall for
the visitors who tend to remember it and even mention it to their
friends and acquaintances initiating viral marketing for the
company.
Smart product showcasing
• As far as possible the visitors should be allowed to touch, feel, and
interact with the products showcased.
• Avoiding unnecessary clutter only those products should be
showcased which are relevant to the kind of visitors expected in
the exhibition.
Promotional schemes
• Limited time exclusive offers with special discounts should be offered
to the visitors in order to create the urgency and immediate sales.
• Takeaways should be thoughtfully designed which should be catchy but
not very expensive and given profusely which helps people
remember your brand even after many days.
Lead management
• A proper mechanism to capture the leads generated should be designed.
• Traditional methods of manually noting down the visitors’ details can be
supplemented by utilizing of modern aids like tablets, apps, etc.
Promotional material
• Ample amount of flyers, brochures, business cards,
and other promotional materials should be available in
the kiosk to be distributed to the visitors.
• These material should be distributed even outside
the kiosk throughout the exhibition venue. Many
visitors might find it relevant to them and attract them
to visit the kiosk itself.
Access
• The kiosk should be easily accessible to everyone even the
handicapped people.
• The environment of the kiosk should be comfortable and salubrious
to ensure more footfalls.
Forging associations
• Such exhibitions are nice opportunities for associating with industry
peers who could be explored for future partnerships.
• These connections go a long way in providing wonderful business
opportunities in future.
Evaluation and action
• Feedback from own staff as also the visitors should be
meticulously captured and analyzed to derive insights adding
value to the overall exercise.
• All the engagements, interactions, and leads should be
documented.
• Leads and contacts developed should be properly followed up
post event.
• E-mails, calls, personal meetings, etc. should be planned to
capitalize fully on the opportunities presented.
 Trade Shows- Utility & Strategy
• Branding
• Competitor Mapping
• Learning dissemination
• Direct customer company interface
• Market Intelligence
• Associations
• Lead Management
Relationship Marketing
Unit – 13
Dr. Ved Srivastava
Understanding Relationship Marketing
Prerequisite for Customer Retention, Brand
Advocacy
• In B2B arena, apart from apt and customized
solutions for the industry problems, business is
generated on personal relationship.
• The trust and faith created thereof is instrumental in
repeat purchases and leads to customer loyalty
and brand advocacy.
• For getting healthy profit margins in long run
despite competition, brand loyalty is instrumental
which to a large extent is crafted by long term intimate
relationship.
One to Many
• Good relationship does not remain limited to the immediate
contacts but it spreads to their contacts as well leading to
diffusion of networking opportunities.
• As the networks get multiplied multifold it enhances the
opportunities leading to business expansion.
Knowledge Proliferation
• Increase in networks also lead to more information of the
market and customers paving the way for betterment of products
and business solutions.
Strategic and Long term
• Relationship marketing focuses on long term
association which is not limited to short term
profits.
• It is based on shared long term vision with scope for
comprehensive collaboration.
• Both parties are committed to adapt and change with
each others requirements through proper
communication about future plans.
Increased viability in B2B
• B2B entails fewer customers allowing for more
customization and personalized care.
• Therefore relationship marketing takes a completely
different hue due to it’s unique characteristics
• There is no other way also as the customer also looks
forward to intimate and sustained relationship so
that the frequent problems could be sorted out through
constant touch points.
Removal of bottlenecks
• Constant meetings and associations on a regular
basis prevents any miscommunication which might
be detrimental to the mutual relationship.
• Close and intimate relationship aids in better
understanding of each other’s perspectives and
constraints leading to more liberal and
accommodating environment.
Mutual Good Faith
• Since the buyer is depending upon the seller for
its critical processes and operations, it places
implicit trust and faith in the latter.
• Any miss from the vendor could lead to down time
and immense loss of time and money.
• So trust is the foundation for any such relationship
and is too sacrosanct to be taken lightly.
Co-creation
• Due to the close relationship and communication both
the parties are in a position to collaborate on the
solutions for dealing with the problems cropping up
now and then.
• So, it is as if both problems and solutions are the
mutual responsibility for both the parties and they
are swimming and sinking together.
Key Account Management
• Taking the relationship further there are special
provisions crafted for its nourishment.
• Key account managers are entrusted with all the
problems cropping up with the account assigned to
them to ensure one stop solution to all the problems.
• Provisions like these are a nice way to substantiate
that the relationship is important and a top
priority.
Other provisions
• Other provisions like 24X7 technical support,
training, consultation, etc. are available for further
consolidation of the relationship.
Relationship Metrics
• The strength of the relationship could be gauged by
the metrics like customer satisfaction, customer
retention, revenue increase, conflict resolution
mechanisms, etc.
 Transactional Relationship
Customer Turnover
• Since in transactional relationship customer retention is not the
concern the customers might move on after a single purchase.
• The benefits related to repeat purchases are not accrued in this
case.
No Marketing research
• As long term relationship is not sought there is no proper
research over the needs and requirements of the
customers for which sustained solutions could be provided.
Not much scope of after sales opportunities
• Cross selling or upselling is not sought after due to termination of
relationship just after a single sale.
• It is a waste of opportunity as a lot of efforts go into one time
conversion which are not utilized fully if nullified after one instance.
Different performance metrics
• The metrics under this are sales conversion, number of
transactions, sales revenue etc. rather than brand loyalty,
brand advocates, repeat purchases, customer life time value,
etc.
More relevant to B2C
• Transactional relationship is better for B2C wherein there are very large
number of customers and personal or close relationship might not
be very feasible.
• However, due to the technological revolution, in B2C also the
relationship is moving away from pure transactional one.
Instant solution and immediate gratification
• Transactional relationship eyes for immediate problem for which a
solution could be offered for that specific transaction.
• Broader issues and related pain points are relegated to a back seat.
Price sensitive customers
• Since there is no brand loyalty the customers are also
looking for benefits like low price, more discounts,
rebates, etc.
Lack of communication
• There is a lack of consistent communication as there is
no sustained association or relationship.
 Collaborative and
Value adding Relationship

Long term relationship

• Unlike transactional relationship the collaborative relationship
goes for a long haul.
• The stress is on sustained association which will bear fruit
in future on multiple occasions in multiple ways.
Mutual and shared benefits
• A lot of sharing of resources, expertise, and insights for
mutual benefit and value addition.
• A win-win scenario is looked forward to.
Transparent communication mechanism
• Communication between the two parties is transparent and
frequent.
• Extranet kind of facilities whereby all information with one is
shared with the other through required access.
• Just in Time kind of processes are to be find in such kind of
relationship.
• These mechanisms substantiate the amount of trust
prevalent which is the cornerstone for any relationship to deliver.
Advanced and high level co-creation
• In most of the solution designing there is a co-creation and
collaboration between the two parties.
• The products and services created are better suited to the customer
needs as they are based on sustained inputs from the latter.
• Also, many innovative products come up through such relationship as
the cycle of demand and supply is complete.
• This is an apt situation for a learning environment.
• A lot of strategies, plans, and policies of mutual interest are
created collectively.
Sustained Technical support
• Collaborative relationship stresses on sustained post sales
technical support to alleviate any problems which might
arise even much after the actual sales.
Supply chain optimization
• Due to collaboration and shared resources a lot of cost
reduction and efficiency is ensured.
• Due to continuous feedback and improvement things get
better with time.
 Successful CRM Strategies
Customer is the King
• Each and every activity should be performed keeping in mind it’s
repercussions as far as customer needs, preferences, and
likings are concerned.
• The yardstick for doing an activity should be if that adds any value
to the customer requirements.
Know Your customer
• In the past all the information regarding the customers were
meticulously recorded to be utilized as an when required. Example,
Singapore Airlines.
• Now days with the digitalization of business and coming of
sophisticated tools like data analytics all the information regarding
the customer could be gleaned and saved for better customization
and engagement.
Omni channel approach
• Customer relationship management should be done through all the
available channels like e-mail, social media, web site, phone
calls, customer care staff, etc.
• It is important that all the channels should be on the same page
and should present a unified and integrated communication.
• The transition should be seamless across all the channels to
provide more convenience to the customers. The yardstick is that
the customer should get the support and help where and when
they require.
Technological support
• The operational level tasks like sending reminder and welcome mails,
wishing people on special occasions, information about upcoming
schemes, any important updation, etc. should all be automatized
through technological aids.
• This frees the staff to engage in more serious and complex issues
which keep on cropping from time to time.
Functional integration
• All the functions like finance, HR, production, etc. should be integrated with
the CRM systems so that everyone is aware of the developments to
avoid any communication gap.
Understanding of Customer Path
• Proper understanding of the stages of customer path is
vital for improving on the customer relationship
management.
• Company needs to be very clear of the bottlenecks
throughout the stages of customer path in order to
better manage the customer relationship.
• The conversions from one stage to other require
specific information on the movement.
Relationship as desired by customers
• Many companies make the mistake of having customer relationship
provisions which are company oriented rather than customer oriented.
• Relationships as desired by the customers should be the
yardstick.
• It would also save a lot of money and time as no unwanted
mechanisms needed to be done.
• Customer feedback is an important source of understanding which
policies and mechanisms is desired by and would be acceptable to the
customers.
Specialists should be roped in
• It should be recognized that maintaining customer relationship is a
specialist job and hence ought to be entrusted to staff with
special training in it.
• These specialist should be well versed with all the technological
aids like the CRM modules to do the job with perfection.
• Not only technologically and functionally suitable these people
should have a customer friendly disposition with great
interpersonal skills.
Data analytics for digital platforms
• With most of the purchasing happening online the data
analytics is becoming a great tool to understand the
psyche of the customer, his surfing habits, interests,
aspirations, pain points, etc.
• CRM could benefit greatly by the tabulation and
analysis of such data which would go a long way in
maintaining great relationship with the customers.
Flexibility
• The CRM strategies should not be rigid and keep on changing as per
the changes in the requirements of the customers.
• The business and cultural changes bring about shifts in
customer expectations which must be closely monitored and
reciprocated.
• The generation Y or Z are completely different in their attitude and
expectations from the earlier generations and any company which
does not take this into account into its customer relationship
management would be doomed.
Digital monitoring
• A lot many grievances and issues are now discussed
by customers online especially through social
media.
• Through tools enabling social listening, customer
sentiments could be tracked and alleviated if
required.
• Apart from the technological aid some of the expert
staff could also be engaged in such monitoring
activities.
Data confidentiality
• The details of the customers which has been
meticulously collected for analyzing and to be used
for relationship management, should be kept
confidential.
• The sharing of the confidential customer details with
unscrupulous third parties for ulterior motives
casts a very bad impression on the customer and could
be detrimental for any long term and trust based
relationship.
Key Account Management
Unit – 14
Dr. Ved Srivastava
 Key Accounts vs. Regular Accounts
Profits
• Key accounts are more profitable to the company because of bigger
orders, repeat purchases, longer retention and loyalty, larger lifetime
customer value.
• They are perfect for the calculation of life time customer value which
justifies the extra investment which company does on the key accounts.
• Regular accounts individually provide lesser revenue and profits but then
their collective volume of transactions is huge which ought to be taken
into consideration.
Strategic Alliance
• Usually the relationship with the key accounts are more strategic.
• Many times they share goals and objectives partnering on key
projects and are committed to align their business with shared
business interests.
• Alliances and associations with regular accounts is varied. Overall it
is lesser as compared to the key accounts.
• More value
• Companies provide more value to their key accounts.
• Added value can take the form of exclusive product offerings, special
prices, better technical support, etc.
• Regular accounts get value in context of competitive prices, reliable
support, etc. However the value proposition to the regular account is
lesser than what the key accounts get.
More customization
• For key accounts the companies go an extra mile in their efforts to
provide solutions more customized to the exact requirements of the
key accounts.
• This requires extra cost which company is ready to bear considering
the special relationship with the key account.
• Regular accounts are generally provided with standard products
based on general market needs rather than very specific or tailer
made ones which are usually provided to the key accounts.
 Understanding Profitability though Whale Curve
Substantiation of Pareto Principle
• Pareto principle states that in most of the situations the 80-20 rule
stands.
• Utilizing the principle here we can say that 80% of the profits come
from the key accounts even though they are lesser in number.
• Comparatively only 20% of the profits come from the regular
accounts which although are more in numbers.
Whale Head
• This usually comprises of the key accounts which contribute
maximum to the profitability.
• They give frequent order, pay premium prices, and are brand loyal
thus long term even if the prices are increased.
• This is the reason why company invests hugely in providing them
with exclusive and tailored offerings, with more customization and
technical support.
The tail
• This comprises of the regular accounts which do not individually
contribute much to the overall profitability.
• They buy less frequently, ask for more discounts, are not brand loyal
and quickly leave on getting slightly better deal elsewhere.
• Only respite from them is that they are several in numbers so
contribute to the absolute revenues of the company.
Segmentation Decisions
• Based on the implications of the whale curve proper segmentation
strategies should be chalked out.
• The segment comprising of the key accounts should get differential
treatment as compared to the rest.
• The marketing mix for the Head of the whale should be different as
compared to the Tail of the whale
Cost Benefit perspective
• Considering the more brand loyalty and retention of the Head of the
whale customers, more engagement strategies could be crafted for
the key accounts.
• The platinum card holders, premium membership, etc. and the
associated benefits like separate check in lines, luxurious waiting
lounges, prompt upgradation of tickets, etc. which we witness in the
aviation industry is an example Head of the whale strategy.
Growing the Head of the Whale
• Efforts should be made to work on more companies who could figure
in the head of the whale curve.
• Also, more business growth with these key accounts should be
thought of.
• Cross selling, up selling, new solutions, new opportunities for
association and collaboration should be consistently incorporated for
the Head of the whale companies.
Monitoring and Evaluation
• Considering the dynamic business environment there are bound to
be changes in the constitution of the whale curve and companies
might shift on the curve.
• This factor should be continuously weighed in and adapted versions
of the whale curve should be prepared for strategic decision making.
The Whale Curve
 Identifying Key Accounts
Profitability
• Sometimes the order size for some buyers might be high but still the
profitability might be low as operational costs involved might be very
high.
• The potential of a buyer to provide high profits consistently over a long
period of time ensures high lifetime customer value which is an important
yardstick for determining the importance of an account.
Customer satisfaction levels
• The level of customer satisfaction ensures if the relationship with that
customer is strong and bound to stay. Customer retention and loyalty is
important parameter for ascertaining strength of relationship.
• Customer satisfaction levels could be ascertained through monitoring of
customer feedback and working on it.
Incisive Segmentation
• In search for the key accounts the segmentation exercise should be
done properly with proper emphasis on the industry, company size,
geography, past credential, financial stability, future potential, etc.
• These classifications are a nice way to zero down on the accounts
which could be beneficial to the company in the long run.
• For example, if an account is in a sunrise industry like, say, electric
vehicles, they could be highly lucrative partners in future.
Strategic Alliances
• Companies with whom one can forge a strategic alliance are better for
future partnerships.
• Mutual commitment of resources which makes two business houses a
close knit team with common objectives and interests makes for a
formidable combination which is synergetic and high on overall
performance.
Engagement and Involvement
• On the way to forge strategic alliances and associations it should also be
ascertained clearly if it is not a one way traffic.
• The other party also should reciprocate your sentiments towards them.
• A nice way to be sure of this is feedback from marketing team on the
response levels and involvement of other party on the various
engagement measures opted by the company.
Recognition of customers with special needs
• This also is a good ploy which is sometimes used by the marketers in their
endeavor to identify valuable accounts.
• Buyers who require more customization are the ones who usually are
mentally prepared to pay a premium price for the specialized offerings.
Competitor Mapping
• The customers who are attracting most of the competitors might be the
ones who are the most lucrative amongst the lot.
• This is same like targeting the keywords with most PPC in digital
marketing even though the rates are higher than the rest. The higher
price is an obvious indicator that it involves most viewers and hence is
costly.
 Managing Key Accounts
Comprehension of Pain Points of the customer
• If you want to go a way ahead of your competitors in winning over the customer
whom you are eyeing as a key account, try understand his problems in minutest
of details.
• Better the above understanding is better you would be able to customize and
tailor your product offerings as per the exact requirements of the customer.
Regular Engagement
• In order that the key accounts also reciprocate your gesture you need to
constantly engage with them through calls, visits, online messages, etc. This is
important for any healthy relationship as “out of sight is out of mind”.
Alignment with Customer’s planning
• The value proposition should be aligned with on the objectives,
strategies, expectations of the customer.
• The customer is not going to change his plans for you, your alignment
should follow his plans.
• Moreover, you should anticipate the coming changes in your customer’s
business and be prepared for it rather than to be taken by surprise on
sudden changes.
Evaluation of the returns
• It is also imperative to be very clear that based on the costs expended to
maintain relationship with the key account the revenues also accrued
proportionally.
• No opportunity for cross selling or up selling should be left out in order to
increase the benefits.
Proper conflict resolution mechanisms
• Even in very close and intimate relationships, conflicts are bound to
crop up at some time or the other.
• It is the promptness with which such issues are dealt with is
important.
• It is also advisable to have preventive rather than corrective
resolution mechanisms.
Imparting more value
• Move beyond just products and services by providing technical
support, configuration services, training, consulting, etc.
• All the insights, feedback, interactions with customer should be well
documented and passed on to the various functions to come up with
better value proposition adding more value.
• However, in the run for providing more value at every stage do not
over commit and manage any over expectations which could be
harmful for long term relationship.
 Key Account Management Strategies
Cross Functional Support
• It is always advisable to have people from different functions in the group that
caters to the key accounts.
• The requirements of the key account could be multifarious and it always pays to
have a group with comprehensive and diverse knowledge and skill sets.
Institutionalized feed back mechanism
• The feed back from the key accounts should be utilized in earnest and should not
be a perfunctory activity.
• This helps avoid any communication gap and keeps everyone on the same page.
Account prioritization
• There should always be some hierarchy of accounts based on revenue and
growth potential, strategic interests, etc.
• Treatment meted out to each should be in accordance to their hierarchy.
Account comprehension
• One should be fully aware of the problems, pain points, goals and
objectives of the accounts.
• The account strategies should be based on this critical information.
Monitoring and evaluation
• There should be proper quantifiable performance targets which could be
regularly monitored and evaluated to understand the success of the key
account management.
• The metrics used could be revenues, profitability, customer satisfaction and
retention, brand advocacy, customer lifetime value.
Proactive treatment
• The potential issues should be addressed even before the customer raises
them.
• Similarly risk management strategies should also be incorporated to nip the
issues in the bud and having contingency plans.
• This ensures customer satisfaction and provides strength to the
relationship.
Proficient KAM team
• It should be ensured that the key account management team should
be well trained with the requisite knowledge and skill sets to cater to
the requirements of the key accounts.
• Any money spent on the team should be considered as an investment
rather than an expense considering that life time customer value is
being expected from this relationship.
Agility of the KAM team
• The KAM team should be nimble enough to change strategy as per
the customer’s changed requirements.
Handling conflicts promptly
• There should be a proper mechanism to handle any conflict with key accounts as quickly
as possible.
• Adept handling of conflicts lead to better relationship.
Business expansion
• KAM team should always be on a look out to further enhance the relationship by
increasing business with the key accounts.
• This would ensure that the investments done are justified with proper returns.
Technological support
• The latest technological aids and modules should be actively utilized for taking this
relationship to the next level.
Marketing Control
Unit – 15
Dr. Ved Srivastava
 Marketing Audit
Why Audit?
• This is an important question which should be pondered upon before embarking
on any marketing audit.
• A related question in this context could be What would happen if an audit is not
done? What would be the contribution of such an audit?
• Whether audit is regarding overall marketing performance over a period of time
or is it for some particular marketing campaign?
Information collection
• Any audit is incomplete without proper information. Valuable information from
internal sales records, customer feedback, market research, competitor
mapping, industrial trends, etc. could be utilized for audit purposes.
• Though the information could be both quantitative and qualitative, the
quantitative data leaves more scope for analytical tools which could make the
work easier with more precision and control.
Evaluation of STP & Marketing Mix
• It could be analyzed if the marketing mix is in concurrence with the
targeted segment.
• Also the positioning should be relevant to the targeted segment.
Online Presence
• With growing importance of online selling no company can remain away
from it unless and until their target segment is absent online.
• The marketing mix of the company vis a vis the digital platforms should be
thoroughly evaluated.
• Various relevant metrics like the website traffic, conversion rates,
engagement levels, search engine optimization, etc. should be analyzed.
Omni channel consistency
• The marketing messages across the channels should be consistent to avoid
any confusion and miscommunication.
• Apart from internal consistency it should also be ensured via proper audit
that the marketing messages ought to be in sync with the brand value and
customers’ expectations and aspirations.
Audit parameters
• The parameters or standards for assessment of marketing performance
should be clearly demarcated at the very outset.
• The awareness costs, conversion costs, customer acquisition costs,
engagement costs, customer lifetime value, resource allocation, return on
investments, etc. could be the metrics to assess the marketing success.
Regulatory compliance
• There are various government regulations which marketers need to follow
in order not to get penalized and keep their brand value intact.
• These regulations could be in the field of advertising or other
communication campaigns, or regarding data collection of customers and
prospects keeping intact the confidentiality issues.
Follow up Actions
• Based on the audit proper follow up should be done and everything
documented and saved for records. Recommendations and suggestions
should be provided.
• The good things should be sought to be continued and the deviations
corrected promptly to avoid further losses.
Areas/Types of Marketing Audit
Marketing Environment Audit
• Natural environment
• Economic environment
• Political environment
• Social environment
• Consumers
• Competitors
• Suppliers
Marketing strategy audit
• Marketing objectives
• Segmentation
• Targeting
• Positioning
Marketing organization audit
• Workforce structure
• Territory allocated
• Remuneration and incentives
• Training & Development
• Motivation
Marketing Systems Audit
• Marketing information systems
• Lead generation
• Planning of marketing campaigns
• Monitoring and control mechanisms
Marketing Productivity Audit
• Profitability
• Customer acquisition cost
• Customer retention
• Lifetime customer value
Marketing function audit
• Auditing of the marketing mix in totality
 Sales Analysis - Methods
Sales Trend analysis
• Finding pattern from sales data over a period of time.
Microtrend
• How a product line fares over, say, a week.
Macro trend
• How a range of goods perform over a month or so.
• Nice way to ascertain the demand patterns of goods and level of
achievement of sales objectives.
Sales performance analysis
• Monitoring sales team performance based on expectations and actual
achievements
• Both at the individual and department level
• The metrics used could be revenues, profitability, etc.
Predictive sales analysis
• Based on the advanced forecasting softwares and past trends the future
opportunities and risks are anticipated.
• This helps the sales team to plan and prepare in advance for sales enhancement.
Sales Pipeline analysis
• Ascertaining the sales prospects at various stages of customer path.
• Helps in making an estimate of expected sales in a period of time.
• The bottlenecks and conversion related issues could be better
monitored and planned on its basis.
Product sales analysis
• The product mix is assessed and evaluated to plan the optimum
length, breadth, and depth of the products.
Sales effectiveness analysis
• The sales process is monitored for the sales team and suggestions
given on the basis of the reported issues.
• Valuable tool to increase the sales skills of the team members.
Diagnostic analysis
• To ascertain the real reasons for the sales fluctuations.
• For example a sales dip could be because of new competing product
rather than fault of the sales team.
• This would entail proper steps to rectify the issues.
 Marketing Cost Analysis
Campaign/Channel wise cost classification and ROI generated
• Channel wise classification of costs like that spent on online
advertising, content creation, email, event management, social
media, etc. helps clarify the exact costs expended across exact heads.
• Similarly, campaign wise cost classification also give clarity on how
different campaigns fared.
• The ROI calculation campaign/channel wise helps ascertain the value
generated in each head based on the costs incurred.
Budgetary control for cost optimization
• Based on the clarity on the costs attributed to channels and campaigns
separately one is in a position to compare the actual costs with the ones
expected.
• The resources can be reallocated from non performing channels to the
better performing ones.
Utilizing technology
• Now days there are sophisticated tools to track and monitor the cost
efficiencies of various channels and campaigns.
• Based on the real time monitoring, proper reports should be generated
and shared with the senior management to take requisite steps as
required.
Consistent monitoring and evaluation
• Industrial benchmarks and own past credential should be compared
with the present performance and corrective actions taken.
• This should be an ongoing exercise with proper mechanisms
institutionalized in the system.
 Emerging Trends in Business Marketing
Technology driven support
• Although the personal touch of the selling teams is still intact, considering
the increasing clout of the digital platforms, the virtual assistant and AI
powered bots are also available to solve the customer problems.
Increased mobility
• With growing trend towards mobile usage the B2B domain is also making a
lot more use of mobile devices for research and communication.
• The decision making units and buying centers are making more and more
use of mobile interfaces.
Confidentiality
• B2B companies are also emphasizing a lot on data privacy and
confidentiality issues.
• B2B marketers are cautious to maintain the compliances in data security.
Increasing clout of Sales Influencer
• In a parallel to the brand ambassadors of B2C, the sales influencer are
doing their bit for providing credibility and value to B2B products and
services.
Online presence
• B2B is also making profuse use of online advertising, content marketing,
etc. to gain traction from this format.
Use of social media
• B2B is also making full use of social media sites for thought leadership,
lead generation, and networking.
• LinkedIn has become a very popular destination for B2B professionals for
mutual informal communication.
E-commerce
• B2B is also moving towards e-commerce to provide more convenience and
value to its customers.
 Control in the era of Digital B2B Marketing
Balancing CRM tools and personal touch
• B2B is also trying to take full advantage of latest softwares providing
for advanced engagement techniques through the CRM modules.
• However, this might do away with the personal touch which B2B
buyers have been so fond of.
Complexity of content management
• Although B2B is also shifting to digital advertising with smart content
management, it needs to ensure that it does not overspends and
proper cost benefit analysis ought to be done.
Digitalization of segmentation techniques
• Now days many digital provisions are available to take care of the
segmentation activities.
• However, it should be ensured that the real life experience should
complement and check the digital aid in order to avoid any
excessively broad or narrow segmentation.
Pitfalls of automation
• AI powered automation aid can be quite handy at times but it is no
match to the time tested personalization and human touch. So, they
should be utilized in tandem.
Data deluge and confidentiality
• In today’s time of data deluge where data occupies important place
in all the activities and processes it could be really difficult to
maintain data confidentiality.
• However, there is no respite considering the stringent rules and
regulations across the globe.
• Proper encryption systems, access control, and proper audits are
some of the ways in which this could be accomplished.