strategic business marketing reflection
zyyyy
Lecture6_s18postgrad1slide2.pdf
Session 6: Managing B2B Products and Services
2
• Purchasing Orienta1on and Nego1a1on • Chapter 3
3 • B2B Rela1onships and Networks • Handout
4 • Market Sensing / Price value • Chapter 2
5
• B2B Strategy and Planning • Chapter 4
6 • Managing B2B Products and Services • Chapter 5, 6
7
• 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: • Recognize the Importance of Product and
Services: – Smart Connected Products – Elements of a B2B service offering – Classification of services
• Understand criteria for product Adaptation – Translating product service offering – Value curve
• Service Dominant Logic • Exponential Organisations • Summary
Some Conventional Thinking About Market Offerings
• The tunnel vision of commodity markets. – If you think you are in a commodity market, you’re
thinking to narrowly about the market you’re in. – Levitt classic article– “Marketing Success through
Differentiation” begins by stating. There is no such thing as a commodity. All goods and services are differentiable.
4
Elements of a B2B offering
Products • The physical part of the offering. • What the customer can see and feel after the
purchase.
• May consist of one product, or many. • Products are often wrongly considered by many
customers and suppliers to be the most important element.
• A Product has no intrinsic value. It’s only value is as a problem solution.
– As part of an offering.
A Radical Shift
“Smart, connected products are forcing companies to redefine their industries and rethink nearly everything they do, beginning with their strategies” Source: Michael E. Porter and James E. Heppelmann, Harvard Business Review October 2015.
7
“The evolu1on of products into intelligent, connected devices – which are increasingly embedded in broader systems – is radically reshaping companies and compe11on”
Smart Connected Products
Smart Connected Products
New Structures
New Processes
New Rela1onships
What is a Smart Connected Product ?
Ports, antennae, protocols, networks that enable communication from the cloud
Physical Parts, Mechanical and electrical parts
Sensors, microprocessors, data storage, controls, software, embedded operating system
Core elements
Digital user interface
Smart components
Smart Connected Products
How Smart Connected Products are Transforming Industries
Creating New Value with Data
Nature of Services and the Service Experience
Services
1. The product element has little value without the associated services.
2. Many customers now purchase a service instead of purchasing a product.
3. Business services have increased in importance as companies depend more and more on “external” technologies, rather than retaining expensive skills in-house
Characteris1c Implica1ons for services marke1ng
Intangibility
Inseparability
Perishability
Heterogeneity
Services cannot be touched or owned prior to or during delivery: marketers need to provide tangible evidence or clues for customers
Services are produced and consumed simultaneously making it hard to separate provider/client: marketers need to prepare front line staff & educate customers
Services cannot be stored: marketers need to try to manage demand via promo1on and/or price, and manage supply e.g. via part-1me employees
Services involve the interac1on of many individuals in produc1on & consump1on: marketers need to ensure consistency via standardiza1on or skilled staff
Characteristics of business services
1. Possessing capability to manufacture or distribute goods
2. Offering services that complement product porcolio
3. Marke1ng different product/ service combina1ons
Stages of Servicisation
Caltex
Caltex – Oils Ain’t Oils
19
Delivery services
Installa1on
& maintenance
Afer-sales training
Warranty services
Market research services
Adver1sing agencies
Export advice
Consul1ng services
Accountancy services
Legal advice
Inventory management
Supply chain management
Data
aggrega1on
Financing for product purchases
Managing billing
processes
Credit evalua1on
Banking & insurance
Product- related
Professional Services
Informa1on Services
Financial Services
Marke1ng Services
Classifying services in B2B markets
China Blue Star Cleaning – Product related services
Buyer’s prior experience
Different levels of client
sophis1ca1on Understanding
customer’s needs
Non-standardised offerings
Interac1ve rela1onship management
Personal rela1onship
between client and professional
Informing client of progress
Outcomes of service delivery
Reputa1on & WOM referrals
Issues in the marketing of professional services
Logistics
• Aren’t just the ways in which the other elements of an offering are delivered to the customer
• Logistics can be the most vital element of an offering for competitive success, particularly when product and service elements are un- differentiated.
Advice
• Concerns all activities aimed at increasing customer understanding.
• The importance of advice will depend on the customer’s uncertainties.
• Advice is not the same as the “Hard Sell”. • Advice is a two way process in the
relationship.
Adaptation
• Occurs when a supplier makes a change to any element of its offering that it would normally do for other customers.
Criteria for Adaptation
• It is not an adaptation if a supplier always modifies the product or other element.
• It is an adaptation if the supplier changes a standard element.
• Adaptations are an important way for a supplier to demonstrate commitment.
• Adaptations can lead to considerable costs and disruption to the company.
Constructing Flexible Market Offerings
The Concept of Flexible Market Offerings • Need to vary product and service offering to
meet the needs of each segment. • Build flexibility into their market offerings. • Naked solution – bare minimum of products
and services for all segments. • Options – are offered separately for each
segment.
Two Simplified Examples of B2B Flexible Market Offerings
Siemens Electrical Apparatus Divison Small Manufacturer Market Segment
Mitsubishi Electric Industrial Controls Inc Machining Center Segment
Standard
Options
Standard
Options
Product (s) Services
Product (s) Services
Metal clad boxes
Electronic instrument controls
Enhancements
Communications
peripherals
Product availability, delivery
Product reliability warranties
Installation
Maintenance contracts
Tests, inspections , retrofit designs
Computerised controls, CRT terminal, program panel, axle and drive motor, spindle drives and motos basic software..
High performance hardware
Interactive screens
Advanced drives and motors
Product availability , delivery, installation
Set-up
Training and field engineering
Customised software
2 year guarantee on parts labour and repair
Retrofitting cusomisewd PLC design.
Aviation – Rolls Royce
TotalCare® is a flexible approach to achieving an engine support service that has the correct fit and scope of services to meet the operator's specific needs. It provides a single source solution ensuring "peace of mind" for the lifetime of the engine, from the time the engine is delivered to the customer until the engine goes out of service. This is achieved through our sharing of knowledge, expertise and experience. Power by the hour - payment
Rolls Royce - Avia1on
30
The Value Curve - Advantages
• It allows product mangers to differentiate their products or services and manage their product portfolio.
• An example of a pharmaceutical value curve combines: – Y axis showing product or service complexity – X axis shows gross margin by product.
• Allows for more profitable portfolios.
The Pharmaceutical Industry Value Curve
Translating Customer Offerings
• Sales work to translate and adapt customer problems into an product – service offering.
• Customers and sales collaborate to adapt their standard offerings.
• Marke1ng need to control, manage and price product / service adapta1ons.
SERVQUAL Survey Items
Service Dominant Logic • Assuming that products are separate and dis1nct from services may be somewhat of a problema1c perspec1ve since a service component beyond the actual manufactured product is a key ingredient in the ability to airact and retain customers.
• Vargo and Lusch (2004) have introduced a valuable new perspec1ve for marke1ng which they call service dominant logic in which the firm would use the customer as a co producer of the service or good created.
Service Dominant Logic – Stephen Vargo
36
Categories of Service Outsourcing
Internal employee culture creation and enhancement
• Service firms are constantly faced with employee turnover, and a lot of the problems experienced have to do with the lack of care and nurturing of these important facilitators (Frei 2008).
• Setting up a supportive internal culture could keep employees happier and more productive.
• One of the most important ways in which a company can keep good employees and attract qualified candidates is to create an environment in which the employees are treated in the same way as they would treat customers.
The Aggregate Project Plan
Ø The aggregate project plan – is the mechanism “ to ensure that the collective set of projects will accomplish the development goals and objectives and build the organisational capabilities needed for ongoing development success.
Ø It allows management to think through in a systematic way how the firm can achieve realisation performance that is greater than simply the projects done.
Mapping the Kinds of Development Projects
• Derivative Projects – initiatives that realize small advances in current offerings
or production processes • Platform Projects
– are in the middle of the development spectrum & harder to define. They entail more product and/or process change.
• Breakthrough Projects – New processes and skills
Derivative Projects
42
Platform Projects
43
Breakthrough Technology
46
Definition
47
New Breed of Organisation - Exponential
48
49
50
51
Summary
Ø We must view not fall into a commodity trap with products.
Ø Elements of a product center on Product, Service and Logistics and moderated by advice and adaptation
Ø Radical shift to smart connected products Ø Service elements of market offering are
important. Ø Service options represent sales and profit
opportunities.
52
Summary
Ø Service dominant logic is seeing companies look beyond product to co-creating services options with their customers.
Ø Companies are mapping their development projects to allocate resources for derivative, platform and breakthrough projects.
Ø Exponential organizations are challenging fortune 500 companies and working with them to speed up new product development
53
