Business-to-Business Marketing

Transcription

1 Business-to-Business Marketing Sales and marketing communications in B2B Antti Sihvonen

2 What did we go through last time and where are we moving onto now Last lecture: Customer value Product development This lecture: B2B sales Marketing communications in B2B markets Why: A marketer should not only be able to create value but also able to communicate that value

3 Marketing communications and branding in B2B markets

4 How to attract customers in B2B markets (basic tools) Tradeshows and fairs Direct marketing Advertising Personal selling Cost per contact is low, hitrate is low but generation of leads is high Cost per contact is high, hitrate is high and often necessary to close a deal

5 Budgets for marketing communications! Approximately what percentage of your brands, business units or company's annual revenue did you spend on marketing in the last fiscal year? (n=56 marketing managers)" 70%" 65%" 60%" Average percent of revenue " spent on marketing is 4 %" 50%" 40%" 30%" 20%" 12%" 14%" 10%" 8%" 0%" 1%-2%" 3%-5%" 6%-10%" Percentages do not add up to100% because of rounding" 11%->" (Forrester Research Inc., 2014)

6 B2B marketing channels Manufacturer" Direct channels" Direct sales" Online" marketing" Indirect channels" Industrial " distributors" Tele-" marketing" Manufacturers " representatives" Customer segments" (Hutt & Speh, 2010)

7 When it is best to use direct channels? Manufacturer" Direct channels" Direct sales" Online" marketing" Tele-" marketing" 1) The customers are large and well defined 2) The customers insist on direct sales 3) Sales involve extensive negations with upper management 4) Selling has to be controlled to ensure that the total product package is properly implemented Customer segments" (Hutt & Speh, 2010)

8 When it is best to use indirect channels? Manufacturer" 1) Markets are widely dispersed 2) Low transaction amounts prevail 3) Buyers purchase a number of items, often different brands, in one transaction Indirect channels" Industrial " distributors" Manufacturers " representatives" Customer segments" (Hutt & Speh, 2010)

9 Budgets for marketing communications are fragmented across the channels In-person trade shows & fairs, 20%" Other, 21%" Digital events, " telemarketing," sponsorships, " data analytics," Corporate social " responsibility etc." PR, 5%" Digital advertising/ marketing, 13%" Traditional advertising, 6%" Direct marketing, 6%" Content marketing, 12%" Agency fees, 7%" Website, 8%" Percentages do not add up to100% because of rounding" (Forrester Research Inc., 2014)

10 B2B advertising programs are very similar to consumer product advertising Set objectives and define target markets Determine the advertising budget Develop the message Select the media Evaluate advertising effectiveness

11 Complexity of B2B marketing communications: Case Wärtsilä Smart Power Generation

12 However, the role of brand might be different B2B BRAND B2C BRAND Buyers and salesperson are " in interaction" Customer and brand are in interaction Buyers are often" reached effectively through" specialized media " Buyers are reached through integrated multi-channel marketing Marketing is mainly about educating" Marketing is mainly about convincing Brand is about first impression, " it does not sell!" Brand can be the reason to buy!

13 B2B and B2C brands..? B2B BRAND B2C BRAND What is the difference between these two brands, one being a B2B brand and the other B2C?

14 Leveraging B2B brand in B2C markets Case Genelec Specialized in professional monitor speakers Used in studios, installations, monitoring rooms Nowadays also sold to consumers Headquarter located in Iisalmi, Finland Basis of competitive advantage: Adamant quality High focus on innovations Corporate culture as the overarching backdrop Leverages B2B knowledge in B2C markets

15 Sales and sales management in B2B markets

16 General outlook of sales the most respected professions in Finland 2010 A study made by Suomen Kuvalehti A total of 380 professions were ranked Excruciating figures for all the sales professions: Number 380 door-to-door salesman Number 379 phone salesman Number 375 product demonstrator Number 371 car salesman Number 360 sales representative Even repo man was ranked as 358 Sales is definitely not a respected profession in Finland

17 Why personal selling is so important in B2B markets characteristics of B2B markets (1/2) 1. Derived demand 2. Fluctuating demand 3. Stimulating demand 4. Fewer, larger buyers 5. Professional purchasing 6. Multiple buying influences 7. Multiple sales calls 8. Direct purchasing 9. Close supplier-customer-relationships

18 Why personal selling is so important in B2B markets characteristics of B2B markets (2/2) 1. Derived demand 2. Fluctuating demand Complexity and riskiness 3. Stimulating demand 4. Fewer, larger buyers 5. Professional purchasing 6. Multiple buying influences 7. Multiple sales calls 8. Direct purchasing 9. Close supplier-customer-relationships Nature of the exchange i.e. need of negotiations and forging a deal High importance of a single deal/relationship

19 Why personal selling is so important in B2B markets taking into account the buying centre Different members of the buying center buy different things Price Payment terms Financing Of high importance to finance and accounting people Recognizing different buying roles is of utmost importance in B2B selling Product attributes Ease of use The actual users of the product or service A solution to a problem This is what the top management buys Enables tailored messages to different members of the center

20 Why personal selling is so important in B2B markets buying process and the role of the seller 1. Problem recognition Proactiveness in searching new customers 2. General need description 3. Product specification Influence the need description and the product specifications to comply with your offering 4. Supplier search Active presence and proactive orientation 5. Proposal solicitation 6. Supplier selection 7. Order-routine specification 8. Performance review Partcipating in bidding, deciding on which bids one wants to participate in, and finally closing the deal Deliver what was agreed upon, avoid the tail-light guarantee (=perävalotakuu), build customer relationships

21 Not all sales is the same different approaches to sales Business win the deal Directive sales Expert sales Low value added to the customer High value added to the customer Sales by being a buddy Consultative sales Customer relationship deepen the relationship

22 Not all sales is the same customer expectations vs. what vendors think customers expect Subject matter and solution expertise, and understanding customer s business and industry are essential for selling (Kreindler & Rajguru, 2009)

23 Not all sales is the same what can be sold and what s the logic? Product Project Solution Service

24 Not all sales is the same 3-4 Basic business models and their relation to sales Product business (I d like one in exchange for ) Quality and completeness of productization, Understanding buyer behaviors, Capacity of sales and distribution, Active, aggressive and driven sales people, Partnering and alliances to satisfy customer needs Project business (Cash flow only when agreed) Relationship management and marketing skills, Selecting the right customers, Setting limits to what is done, Understanding customer value creation processes, Reliability of sales and distribution Service business (Cash flow unless otherwise agreed) Quality, process engineering and process management, Modularization, Customer intimacy, Installed customer base Solution business (don t concentrate on the offering)

25 Sales management key account management Key account management A strategy used to serve high potential customers with complex needs by providing them with special treatment in the areas of marketing, administration, and service Most profitable customers may not be key accounts (although high sales potential is a antecedent) Alignment and potential are also very important

26 Sales management key account management vs. transactional selling Transaction selling Key account management Overall objective Sales Preferred supplier status Sales skills Asking questions, handling objections, closing Buildign trust, providing excellent service, negotiation Nature of relationship Short, intermittent Long, more intense interaction Salesperson goal Closed sales Relationship management Nature of salesforce One or two salespeople per customer Many salespeople, often involving multifunctional teams

27 Sales management key account management and its risks Supplier runs on risk increased dependence of relatively few customers (take Nokia and Elcoteq for example) Risk of pressure on profit margins if a customer chooses to abuse its key account status Ever increasing demands for better service from customers when they know they are key accounts Focus on key accounts may lead to neglect of smaller customers which might still have large potential

28 Sales management Organizing the salesforce Geographic structure Each salesman is assigned to a territory Product specialization structure Each salesman is responsible for selling certain products Strenghts: Strenghts: Simplicity Relatively low cost Good product knowledge Specialization of selling skills Weaknesses: Weaknesses: Difficulty of selling wide product range Lower understanding of the complexities of buying behavior Relatively high cost Potential of route duplication Multiple simultaneous contacts to same customer Industry specific structure Each salesman operates in a specified industry Account-size structure Each salesman is responsible for certain sized accounts Strenghts: High industry specific knowledge Good for monitoring changes and trends Strenghts: Enables key account managment Motivates salespeople through a career options Enables the development of specialized sales skills Weaknesses: High costs Weaknesses: Expensive and very expensive when servicing key accounts

29 Sales management compensating the salesforce Fixed salary Used in highly complex sales situations where closing takes a lot of time Enables better customer servicing as salespeople are not that closing oriented Commission only High incentive to sell good for high volume bulk sales Salary plus commission Attemps to combine benefits from both of the previous methods The most widely used compensation model

30 Sales management sales and marketing integration Not an easy task by any means Differences largely stem from the different mind-sets Some of these differences include: Customer versus product responsiblity Personal relationship versus analysis Continuous daily activities versus sporadic projects Field versus office Result versus process Short-term versus long-term orientation

31 Sales management sales and marketing integration

32 For the sparring session Bring with you what you have done this far and the material you have used The session and current state of your project will not be graded but the idea is to give feedback and discuss your case solutions You can also use the session to work on the project Things we can discuss include (but are not limited to): Segmentation and segmentation process Segment selection Execution of the marketing campaign The poster session

33 3 things to remember after this class 1. What kind of B2B marketing channels there are and when should they be used 2. Role of brands in B2B vs. B2C markets 3. Why personal selling is so important in B2B context

34 Thank you Any questions?