B2B Marketing Managing Services PGDM–B2B–RS–13

1. B2B MarketingManaging ServicesPGDM–B2B–RS–13 Amarnath Krishnaswamy

2. Plan for this Session Managing Innovation Management of Innovation Innovation & Technology Innovation & the Development of New Products Quality Function Deployment Managing Business Services Role & Importance Buying Services The Marketing Mix

3. Quality Function Deployment (QFD) • QFD – for identifying: • The attributes the customer wants in the product • Establish link between these attributes and the product design • Process involves understanding, and then marrying: • The Voice of the Customer • The Voice of the Engineer

4. Voice of the Customer • Identify customer needs • The benefits the product should deliver • Necessary to identify, and focus, on the main ones • Relatively easy to do if the market is homogenous • Weight each attribute: enables QFD to balance it with cost

5. Voice of the Engineer • Translate customer needs into product design • Put onto a matrix against what the customer wants, and compared with competition

6. QFD Matrix

7. New Product Success / Failure - Factors Success • Product Uniqueness / Superiority • Market Knowledge • Marketing Proficiency • Technical & Production Proficiency Failure • Price, with no economic benefit • Obsolete in terms of what’s available • Customers satisfied with existing product

8. Can’t forget the law! Wood’s First Law Of Procrastination NOW is the time to do things later! Wood’s Second Law Of Procrastination Procrastinate today! (Tomorrow may be too late.) Wood’s Third Law Of Procrastination Never put off till tomorrow what you can do the day after tomorrow!

9. Look at the following products: 1. Water purifier 2. UPS 3. Computer network in an organization What is common to all of them? Managing Business Services

10. Business Services – Role & Importance • In India, “Services” sector has grown • 1990-91 44% of GDP • 2000-01 53% of GDP • 2007-08 63% of GDP • 2006-07 11% growth in “Services” vs. 9% in GDP • Employment • “Services” 34%, second only to “Agriculture” (52%) • Growth in other sectors (Manufacturing, Agriculture, etc) will spur growth in “Services” • New “Services”

11. Services – Broad Categories • Products supported by Services • Repairs & Maintenance • Training on use of Equipment / Services • Distribution & Delivery • Pure Services • Consulting • Banking • Training • Recruitment

12. Defining Services - Services vs. Products Services Products 1. Intangible Tangible Lag between “Production” & “Consumption 2. “Consumed” when produced 3. Can’t be stored Can be stored Highly variable Standardized 4. 5. Buyers are not owners Buyers are owners

13. Buying Services • Services are mostly • Intangible • Non-standard Hence more difficult to evaluate. • Important for the service provider to look at: • Attributes that are important to the buying segment • Variance of these attributes amongst buyers in the segment • How all service providers rate on these attributes

14. Services - Attributes • Types of attributes vary from objective to highly subjective • Attributes can broadly be classified as: • People related • Equipment related • Examples of industries and the attributes they look for are:

15. Services – Importance of Attributes

16. Services – Selection • Prime factor, besides “Cost”, is “Perceived Quality” • Selection can be looked at on: • Determinant Attributes Differences between suppliers apparent enough for customer to decide • Minimizing Risk Differences in attributes enough, so customer minimizes risk (Market reputation etc)

17. Services – Quality • “Quality” has 3 components: • Corporate Image • Most vague! • Technical Quality (What the customer gets) • Can be measured • Rational • Functional Quality (How the customer is served) • Difficult to measure objectively (compared to “Technical”) • Weights decided by the customer

18. Services – Marketing Mix Involves • Identifying Market Segments • Service segments are usually narrower • Focus on what buyers expect vs. what they need • Development of the Service Package • Defining customer benefits • Articulating the benefits • Service specifications • Defining employee roles • Pricing

19. Level 1 Buyer Benefit Benefits sought by Buyer Level 2 Service Benefits offered by Seller Level 3 Service Specs What the Seller will deliver Translated into Level 4 Delivery to Buyer Service + Processes + People Service Package At time of “delivery”, make sure “physical evidence is available!

20. Pricing the Service Package • Unique nature of “Services” creates opportunities and problems • Pricing depends on many factors” • Demand: • Difficult to forecast. • What ‘capacity’ does one plan for? • What does one do with “idle” capacity? • Bundling • Pure • Mixed • New Business • Cross selling

21. Promoting Services • Communicating through employees • Front line assets • Word of mouth

22. Services - Distribution • Direct • Intermediaries • Franchising

23. Services - Failure • Reasons for failure arise from: • Wrong segmentation • Wrong choice of “Marketing Mix” • Defining buyer benefits and matching it with the “service”

24. A bonus? Table A Resolution 1. Place it for discussion … & 2. Remove it from discussion! Bag Of Snakes A business situation with many unexpected problems

25. Moving Forward Next Session: PGDM-RS-14 Date: Thursday, Mar 04, 2010 Subject: Managing Channels -

26. Thank you !