strategic business marketing reflection
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Lecture4_s18postgradstudent1slide.pdf
Session 4: Market Sensing
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• Purchasing Orienta1on and Nego1a1on • Chapter 3
3 • B2B Rela1onships and Networks • Handout
4 • Market Sensing / Price value • Chapter 2
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• B2B Strategy and Planning • Chapter 4
6 • Managing B2B Products and Services • Chapter 5, 6
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• Integrated B2B Marke1ng Communica1ons and Consulta1ve Selling • Handout
8 • Business Channel Management • Chapter 7
9 • Gaining and Managing Customers • Chapter 8, 10
10 • The Digital Evolu1on in B2B • Handout
11 • Exam Briefing and Poster presenta1on
Understanding Value
Crea0ng Value
Delivering Value
B2B Marke1ng Framework
1. Regard Value as Cornerstone. 2. Focus on Rela0onship Interac0on and
Networks. 3. Focus on Business Market Processes. 4. Stress doing Business Across Borders.
Guiding Principles
Session Topics
By the end of this session you will understand:
• The importance of Market Sensing: – Understand market segmentation – Monitoring competition – Defining the market – Assessing Customer value and Feedback
Market Driven Firms
Ø Ability to sense events and trends of ahead of
competition
Ø Anticipate more accurately responses to
actions designed to retain or attract customers
Ø Act on information in a timely, coherent manner
What is Market Sensing?
Generating knowledge about the market
that individuals in business use to inform
and guide their decision making
Knowledge Management
Knowledge Management: processes and supporting systems firms use to gather know-how, best prac/ces, and learning that potentially has value elsewhere in the firm, convert them into a form that can be readily found and understood, and then made accessible for reuse more broadly within the firm
Learning Organisa1ons
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IBM Design thinking
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In the age of information and knowledge workers, there is one – and only one – source
of competitive advantage.
It is the ability of an organization’s human assets to out-think, out-learn, and out- create the competition of the future.
Michael Porter
Competitive Advantage
Defining the Market § Market segmentation § Determining segments of
Interest
Monitoring Competition § Competitor analysis § Improving monitoring
performance
Assessing Customer Value § Value assessment methods § Customer value management
Gaining Customer Feedback § Customer satisfaction
measurement § Net promoter score
Market Sensing § Formulate and test
market views § Inform and guide
decision making
What is Market Sensing ?
I. Defining the Market
Defining the Market
Market Segmenta1on:
Par11oning a market into groupings of firms that have similar
requirements and preferences for market offerings within
each grouping and rela1vely different requirements and
preferences between groupings
Introduc1on to B2B Segmenta1on
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Criteria for Judging Validity of Segmentation
Measurable? Can the size, growth, and market potential of a segment be measured?
Profitable? How profitable is the marketing effort likely to be? What is the payoff from each segment?
Accessible? Can segments be identified and reach successfully?
Actionable? Can effective marketing and sales programs be formulated for attracting and serving the segment?
Selected Macro level Bases of Segmentation
Micro-Level Bases
• Once macro-segments are iden1fied, the next step is to divide each macro-segment into smaller meaningful micro-segments.
• O^en, several micro-segments are buried within macro-segments.
• To isolate them, marketers need to move to primary sources of informa1on from:
– Salespeople – Present Customers
Selected Micro-Level Bases of Segmentation
Copyright © 2007 by South-Western, a division of Thomson Learning, Inc. All rights reserved. Developed by Cool Pictures and MultiMedia Presentations
Determining the Market Segments of Interest
Gaining understanding occurs in: 1. Obtaining estimates of each defined
market segment’s size and growth
2. Assessing its sales and profit potential
“I will know when our businesses are doing a good job when they can articulate who we should not sell to.” --Chuck Lillis
(former CEO of US WEST Media Group)
Market Segment Size and Growth
Ø Market Poten1al: iden1fies the maximum units of a defined product or service capable of being purchased
within a geographic area during a designated 1me
period
Ø Total Market Demand: a predic1on of the actual number of units that will be purchased
Typically, qualita1ve es1mates are merged with quan1ta1ve ones.
Summary of Qualitative Forecasting Techniques
Copyright © 2007 by South-Western, a division of Thomson Learning, Inc. All rights reserved.
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Four Steps to Forecast Market Demand
• Define the market • Divide total industry demand into its main components
• Forecast the drivers of demand in each segment and project how they are likely to change
• Conduct sensi1vity analyses to understand the most cri1cal assump1ons and to gauge risks to the baseline forecast
Source: Barne`, “Four Steps to Forecast Total Market Demand,” p. 28)
II. Monitoring Competition
Monitoring Competition
Knowledge about competitors used in: – Crafting their own market strategy – Anticipating competitor’s reactions to their
strategy
– Deciding what reactions to make in response to competitor's action in the market
Monitoring Competition
• R&D monitor advances
in technology outside the
industry
• Monitor mergers and acquisition activities
Framework for Competitor Analysis Future Goals Assumptions
• Understand competitor’s financial and market performance goals
• Know management compensation plans
• Be aware of competitor’s corporate training programs
• Understand the assumptions competitor makes about itself
• Recognize blind spots identified by competitors as areas to exploit
Current Strategy Capabilities
• Know competitor’s current market strategy
• Discern competitor's selected target markets
• Understand competitor’s positioning of market offerings
• Be aware of their marketing mix selected in support of strategy
• investigate and understand competitor's capability to conceive and design, produce, market, finance, and manage
• Estimate how quickly competitor can adapt to change
• Gauge competitor’s strength of will to compete
The Explainer – Disrup1ve Compe1tors
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III. Assessing Customer Value
“Everything is worth what its purchaser will pay for it.”
--Publilius Syrus, first century, B.C.
Value Assessment Methods
Value Assessment: work process of
obtaining an es1mate of the worth in
monetary terms of some present or
proposed market offerings or elements of it
Value Assessment Methods
Internal Engineering Assessment
Focus Group Value Assessment Benchmarks
Field Value-in Use Assessment
Direct Survey Questions
Compositional Approach
Indirect Survey Questions Conjoint Analysis Importance Rating
Customer Value Management
Goals: 1. Deliver superior value to targeted market
segments and customer firms
2. Get an equitable return on the value delivered
To gain an equitable return on value, suppliers must be able to persuasively demonstrate and document superior value relative to next-best alternative
Customer Value Workshop
1. List all the elements for the marketing offering under consideration
2. Write a list of value elements, in a quick fashion, drawing on collective experience.
3. What are the next best alternative offerings in the minds of the customer for all segments to be investigated.
4. Apply the value equation
Xerox 914
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Customer Value Workshop
(Value f – Price
f ) > (Value
a – Price
a )
(Value
f – Value
a ) > (Price
f – Price
a )
!Value
f, a > (Price
f – Price
a )
Paper Jam Cost Savings B, A = [(paper jambs per day x minutes to fix jam) A - (paper jams per day x minutes to fix jam)B ] / 60 minutes per hour x operator wages per hour x annual work days
Paper Jam Cost Savings B, A =[(3 x 10)A – (1 x10)B ] /60 x $31.82 x 240 = $2,545.60
Improving Produc1vity
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Customer Value Workshop
(Value f – Price
f ) > (Value
a – Price
a )
(Value
f – Value
a ) > (Price
f – Price
a )
!Value
f, a > (Price
f – Price
a )
Auto Repair Cost Savings B, A = [(discs used per day x minutes to change disc on sander) A - (discs used per day x minutes to fix disc on sander)B ] / 60 minutes per hour x operator wages per hour x annual work days
Auto Repair Cost Saving B, A = [(50 x 5)A – (30 x5)B ] / 60 x $35 x 240 = $14,000
Costs Benefits
Func1onal gains from product
Reliability of service
Convenient pay back period
Recogni1on gained by buying manager
Purchase price
‘Hidden’ and internal costs
Poten1al risks
Value as benefits vs. costs: some examples
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Purchase price
Transac1on cost
Maintenance cost
Inventory cost
Opera1ng cost
Training cost
Technical support cost
Disposal cost
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Source: Adapted with permission from Christopher (1997, p49)
Total Cost of Ownership
Offerings Pricing/costs
Compe11ve structure
Costs Corporate objec1ves Marke1ng plans Product range
Value percep1ons Percep1ons of product/firm
Ability to pay
Costs Capabili1es
Locus of power
Economy Regula1ons Currency
Compe&tors Customers
Channels Context/
Environment
Price Sejng
Factors affecting company price setting
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Pocket Price
B2C Vs B2B Pricing
IV. Gaining Customer Feedback
Gaining Customer Feedback
Role of Customer Feedback:
– Educates supplier where its offerings provided functionality and performance
customer expected and where it fell short
– Can remedy problems and retain a customer’s business
– Provides early warning of changing customer requirements and preferences
Ask Nicely – Customer Surveys
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Gaining Customer Feedback
Feedback from three distinct customers:
– New Customers
– Established Customers
– Customers that recently stopped doing
business
Customer Satisfaction Index (ACSI)
• Overall Customer Satisfaction: represents a cumulative evaluation of a firm’s market offering,
rather than a person’s evaluation of a specific
transaction
– Overall Satisfaction Measure
– Measure to the extent that offering’s performance falls short or exceeds
– Offering’s performance relative to customer’s ideal product or service
Perceived Quality
Customer Expectations
Perceived Value
Overall Customer Satisfaction (ACSI)
Customer Complaints
Customer Loyalty
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+
+
+
+
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The Customer Satisfaction Index
Perceived Value
Perceived Quality
Customer Expectations
Overall Customer Satisfaction (ACSI)
Customer Complaints
Customer Loyalty
+
+
+
+
+
+ +
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Survey Customer Sa1sfac1on Template
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Summary
• Market sensing- is the process of generating knowledge about the market place that individuals in the firm use to inform decision makers.
• Defining the market- pinpointing groups of firms that are of greater interest to a supplier firm.
Summary
• Market segmentation- partitioning a market to identify opportunities.
• Value assessment- is obtaining an estimate of the worth in monetary terms of some present or proposed market offering, or elements of it.
