Global Marketing Management Global Product Decisions B2B

1. Global Marketing ManagementGlobal Product DecisionsB2B MKTG 3231-001 Fall 2013 Mrs. Tamara L. Cohen Class # 20

2. Global Product DecisionsB2B Reading for this class: Course Pack #8

3. B2B is ‘big time’ The US government is the biggest single purchaser of products & services in the country, spending > $300 billion annually. B2B accounts for > half business activity in developed countries¹ More marketing majors begin their careers in B2B than in consumer marketing.

4. KEY TERMS B 2 B : Business Business • Industrial products • Derived demand • ISO 9000 certification • Relationship marketing • Content marketing

5. KEY CONCEPTS B 2 B : Business Business • Effect of technology on demand • Trade shows & relationship marketing

6. B2B interactions

7. DEMAND is different in Global B2B Markets • Demand in industrial markets is more volatile. • Stages of industrial & economic development affect demand for industrial products. • Level of technology of products & services make sales more appropriate in some countries than others.

8. 1. VOLATILITY of Industrial Demand • Cyclical swings in demand increased • professional buyers tend to act ‘in concert’ • derived demand accelerates changes in markets • Minor changes in consumer demand mean major changes in related industrial demand e.g. Boeing • worldwide demand for travel services related to demand for new airplanes • commercial aircraft industry one of most volatile

9. 2.Degree of INDUSTRIALIZATION 5-stage model of economic development: • Traditional society- most important B2B demand associated with extraction of natural resources; e.g. many countries in Africa & Middle East • Preconditions for takeoff- manufacturing is starting. Primary needs typically related to infrastructure development, like construction, telecommunications, power generation equipment; e.g. Vietnam • Takeoff- manufacturing of consumer goods has begun. B2B needs focus on equipment & supplies to support manufacturing; e.g. Russian & Eastern European countries • Drive to maturity- industrialized economies. Focus on low-cost manufacturing of various consumer goods & some industrial goods; need all categories of B2B goods & services; e.g. Korea; Czech Republic • Age of mass consumption- mostly service economies. High-tech products & services sought mostly from other stage 5 suppliers + consumer products from stage 3 & 4 countries; e.g. Germany; Japan

10. Traditional society • Preconditions for takeoff • Takeoff • Drive to maturity • Age of mass consumption

11. 3.TECHNOLOGY & Market Demand • Trends spurring demand for technologically advanced products • expanding economic & industrial growth in Asia • disintegration of Soviet empire • privatization of government-owned industries worldwide • Companies with competitive edge will be those whose products are: • technologically advanced • highest quality • accompanied by world-class service

12. B2B Promotional Activity • Internet/Electronic Media • Trade Shows/Events • Print Advertising • Promotion/Market Support • Publicity/Public Relations • Dealer/Distributor Materials • Market Research • Telemarketing • Directories Interactive marketing is the future for B2B marketing

13. Social Media is up-and-coming

14. Content Marketing “Content marketing (custom media) is the creation and distribution of educational and/or compelling content in multiple formats to attract and/or retain customers.” e.g. white papers case studies videos articles

15. Trade Shows:Crucial Part of B2B Marketing • Trade shows • manufacturer can exhibit & demonstrate products to potential users • manufacturers can view competitors’ products • opportunity to create sales & establish relationships with agents, distributors, franchisees & suppliers • Online trade shows • useful in difficult economic / political circumstances • poor substitute for live trade shows • Secondary marketing methods - print advertising, catalogs, web sites, direct mail • Total annual media budget on trade events: Europeans 22% Americans 5%

16. Trade shows

19. Relationship Marketing in B2B Contexts • Not a matter of selling right product 1st time • instead sell continuously changed product to keep it right over time • Objective of relationship marketing • make relationship an important attribute of transaction + differentiate from competitors • Use Internet to facilitate relationship building and maintenance

20. Quality is Defined by the Buyer • lack of universal standards • country-specific standards • metric system • ISO 9000 Certification = International Standard of Quality ISO 9001 certification of a fish wholesaler in Tsukiji

21. Global Project Team • Customer – initiate inquiry • Sales engineer – initial customer contact • Application engineer – find best product match • Engineering & control systems – design • Project manager – manage project & liaise • Manufacturing technicians – produce, assemble, test • Customer services – installation & start-up • Suppliers – provide materials & components • Service engineer – after-sales service & maintenance

22. B2B SERVICES

23. Support Services • Deliveries • Warranty • Spare parts • Repair and maintenance • Installation • Instructions • Other related services

24. Marketing Consumer Services Globally • Consumer services characteristics • intangibility • inseparability • heterogeneity • perishability • Service can be marketed • as industrial (B B) • as consumer service (B C)

25. Business Services • For many industrial products, revenues from associates services > revenues from products • cell phones • printers • Leasing capital equipment • Services not associated with products • Boeing at-sea-satellite-launch services • Ukrainian cargo company rents space on giant jets • professional services (advertising, banking, healthcare, etc.)

26. After-Sale Services • Installation • Training • Spare and replacement parts • delivery time • cost of parts • Service personnel • Almost always more profitable than actual sale of machinery / product • Crucial in building strong customer loyalty

27. Services Opportunities in Global Markets • Tourism – int’l tourism largest US services export • Transportation • Financial services • Education – 2007: >600,000 foreign students, tuition $11 billion • Communications – phone services • Entertainment – sporting events sold all over the world • Information – Internet, etc. • Health care – foreigners come here; US facilities abroad too

28. Next class: Global Product Decisions B2C Preparation: Read Course Pack #9