INSEAD Library

Includes bibliographical references and index

Digitized

Business Market Management Understanding, Creating, and Delivering Value Contents Preface xiii Acknowledgments xv About the Authors xix SECTION I: INTRODUCTION AND OVERVIEW 1 CHAPTER 1 Business Market Management: Guiding Principles 3 Overview 3 Value as the Cornerstone of Business Market Management 4 What Is Value in Business Markets? 6 Assessing Value in Practice 7 Managing Business Market Processes 9 Shareholder Value, Business Processes, and Marketing 10 Core business processes 10 / Contributions of marketing 11 Business Market Management and Business Marketing 12 Business market processes 12 / Business marketing 13 Doing Business Across Borders 15 Language and Culture 17 Cross-Border Negotiation and Dispute Resolution 18 Cross-border negotiations 19 / Cross-border dispute resolution 20 Currency Exchange and Payment Risk 20 Working Relationships and Business Networks 21 Work Teams 22 Working Relationships 24 Collaborative relationship agreements 25 / Collaborative relationship development 26 Business Networks 27 Business network characteristics 28 / Analyzing business networks 30 Summary 33 SECTION II: UNDERSTANDING VALUE 39 CHAPTER 2 Market Sensing: Generating and Using Knowledge About the Market 41 Overview 41 Defining the Market 45 Market Segmentation 45 Conventional bases of segmentation 46 / Progressive bases of segmentation 47 Determining Market Segments of Interest 49 Market segment size and growth 51 / Sales and profit potential 52 Monitoring Competition 55 A Framework for Competitor Analysis 56 Future goals 56 / Assumptions 56 / Current strategy 56 / Capabilities 57 Improving Monitoring Performance 57 Competitor intelligence systems 57 / Seek disconfirming as well as confirming evidence 60 Assessing Customer Value 60 Value Assessment Methods 61 Internal engineering assessment 61 / Field value-in-use assessment 61 / Indirect survey questions 62 / Focus group value assessment 62 / Direct survey questions 63 / Conjoint analysis 63 / Benchmarks 63 / Compositional approach 64 / Importance ratings 64 Customer Value Management 66 Translating business issues into projects 68 / Customer value workshop 69 / Customer value research 71 / Constructing a business case for change 74 / Value realization 74 Gaining Customer Feedback 78 Customer Satisfaction Measurement 81 American Customer Satisfaction Index (ACSI) 81 / What customer satisfaction results mean 82 Customer Value Analysis 84 Summary 85 CHAPTER 3 Understanding Firms as Customers 90 Overview 90 Understanding Purchasing Orientation 91 The Buying Orientation 93 Obtaining the best deal 93 / Maximizing power over suppliers 94 / Avoiding risk 95 / Developments in buying 95 The Procurement Orientation 96 Improving quality 97 / Reducing total cost of ownership 98 / Cooperating with suppliers 100 The Supply Management Orientation 101 Focus on end-users 102 / Craft a sourcing strategy 102 / Build a supply network 104 / Sustain highly collaborative relationships with select suppliers 107 / Apply purchasing portfolio management 107 Putting Knowledge of Purchasing Orientation to Use 110 Understanding How Purchasing Works with Other Functions and Firms 111 Value Management as a Cooperative Framework 111 Adding Value to the Purchasing Process Through Buying Teams 114 Team member roles 114 / Buying situations 115 / Buying team tasks 116 Working with Suppliers and Across Functions 116 Developing supply resources 116 / Improving existing offerings 116 / Contributing to new offering realization 117 Understanding the Purchase Decision Process 119 Understanding Customer Requirements and Preferences 119 Triangulate on customer requirements 120 / Map customer activity and value cycles 120 Learning the Customer's Purchase Process 122 Evaluating Supplier Performance 124 Reviewing price, quality, and availability 124 / Scrutinizing total costs 126 / Tracking supplier value 126 Summary 127 CHAPTER 4 Crafting Market Strategy 131 Overview 131 Business Strategy as the Context for Market Strategy 133 A Resource-Based View of the Firm 134 Core competencies 135 / Capabilities 135 / Brands as resources 136 / Reliance on outside partners for resources 137 Fundamental Value-Based Strategies 140 Product leadership 140 / Customer intimacy 140 / Operational excellence 142 Strategy Making 143 Who makes strategy? 143 / Defining purpose 144 / Strategy as orderly advances punctuated by radical change 145 Planning Market Strategy in Business Markets 146 What Do We Know? 147 Review recent performance 147 / Gather essential market information 148 / Construct scenarios 151 What Do We Want to Accomplish? 152 Targeting 153 / Setting goals and objectives 154 / Positioning in business markets 155 / Building brands in business markets 159 How Will We Do It? 160 Develop an action plan 162 / Marketing and sales programs 163 / Take stock of implementation skills 163 / Learning and adapting 165 Summary 168 . SECTION III: CREATING VALUE 173 CHAPTER 5 Managing Market Offerings 175 Overview 175 Some Conventional Thinking About Market Offerings 178 The Tunnel Vision of Commodity Markets 178 Understanding the true extent of commoditization 179 / Rebuilding differentiation 180 Services as Core Products in Market Offerings 182 Constructing Flexible Market Offerings 183 The Concept of Flexible Market Offerings 183 Articulate the Present Market Offering for Each Market Segment 185 The true breadth of the market offering 187 / The arbitrary nature of charges 187 / Lack of variation across segments 187 Assess Customer Value and Supplier Cost 187 Measuring customer value 187 / Coming to grips with service costs 188 / The payoff from value and cost assessments 189 Formulate Flexible Market Offerings by Market Segment 190 Reevaluating existing standard services 190 / Reexamining optional services 193 / Building flexibility with new services 193 / Pricing implications 195 Prepare to Implement Flexible Market Offerings 196 Option menu versus tailored-value package 196 / Branding market offerings 198 / Anticipating implementation problems with customers 199 / Breaking away from the pack 202 Value-Based Pricing 203 Traditional Pricing Approaches 204 Cost-plus pricing 204 / Competition-based pricing 204 An Approach to Value-Based Pricing 205 Managing Market Offerings Across Borders 211 Adapting Market Offerings Across Borders 211 International market development 211 / Providing transnational market offerings 212 / Global branding 213 Pricing Across Borders 214 Pricing in local markets 214 / Harmonizing pricing across borders 215 Summary 217 CHAPTER 6 New Offering Realization 222 Overview 222 Realization Strategy 223 Development Goals and Objectives 224 Overall development goals 225 / Project objectives 227 The Aggregate Project Plan 228 Mapping the kinds of development projects 228 / Making capacity decisions 233 / Gaining critical skills and capabilities 235 Concurrent Engineering in Realization Strategy 235 Point-based versus set-based approaches to concurrent engineering 236 / Set-based concurrent engineering and flexible market offerings 236 Outside Development Relationships and Networks in Realization Strategy 238 Alternative development structures 238 / Aims of development relationships and networks 240 / Decision considerations 242 Realization Process Models 243 A Variety of Realization Process Models 243 SMALLFRY Industrial Design 243 / AKZO NOBEL Coatings 245 / Kleinwort Benson Investment Management 247 / ABB Asea Brown Boveri large-system projects 249 / ABN-AMRO Bank Global Transaction Services 250 A General Realization Process Model 252 Augmenting services in realization process models 255 / "Next-generation" realization process models 255 Market-Oriented Realization 256 Market-Oriented Research 256 Creating focused research centers 257 / Connecting research with the market 258 Market-Oriented Development 259 Positioning statements as a market-focusing mechanism 259 / Researching market requirements and translating them into design specifications 260 / Guiding realization efforts with customer value assessment 262 / Tailoring mar ket introductions of new offerings 264 Summary 266 CHAPTER 7 Business Channel Management 271 Overview 271 Designing Superior Value-Adding Marketing Channels 273 Assess the Value of Potential Augmenting Service Offering Elements to Customers 273 Envision a Value Proposition for Each Targeted Market Segment 274 Reformulate the Augmenting Service Offering for Each Targeted Market Segment 274 Configure the Channel Network 275 Think in terms of business processes and functions 275 / Consider streams of competition and plan lean enterprises 275 / Adopt a channel network strategy 277 / Build a channel network model 277 Finalize Marketing and Distribution Arrangements 281 Balance exposure and coverage in marketing channels 281 / Devise profit models 282 / Carefully select channel partners 283 / Consider e-business and wireless technologies 284 / Build international marketing channels 285 / If possible, place side bets 291 Creating Value Through Direct Channels 292 Creating a Sales Force of Value Merchants 293 Internally promote a value-based marketing philosophy 294 / Train value merchants 294 / Compensate value merchants based on profitability of accounts 295 Deploying Value Merchants 295 Establish necessary sales units 295 / Determine the number of value merchants needed 297 / Designate areas of responsibility 297 / Assign value merchants to areas of responsibility 298 Designing a Logistics System That Creates Value 298 Segment the market into logistically distinct businesses 299 / Establish differential service standards for each market segment 299 / Tailor unique logistics systems to deliver differential services 299 / Exploit economies of scale among the different logistics systems 299 Strengthening Reseller Performance 300 Build Marketplace Equity 300 Decompose marketplace equity 300 / Cultivate brand and reseller equity 302 Determine Reseller Performance Expectations 302 Assess the Reseller Value of Channel Offering Elements 303 Construct a channel positioning matrix 303 Craft a Reseller Value Proposition and Channel Offering 306 Devise and pretest the channel offering 306 / Improve reseller target-marketing efforts via tailored channel offerings 307 Communicate the Reseller Value Proposition 308 Summary 311 SECTION IV: DELIVERING VALUE 315 CHAPTER 8 Gaining Customers 317 Overview 317 Prospecting for New Business Relationships 318 Generating Leads from Business Market Databases 320 Prompting and Gathering Inquiries via Integrated Marketing Communications 323 Use integrated marketing communications to reach the target market 324 / Encourage and process inquiries 326 / Foster strong brands 327 Qualifying Leads and Inquiries as Prospects 328 Getting the Sales Force to Follow Up with Prospects 329 Provide knowledge to create an informed sales force 329 / Motivate sales representatives to follow up 329 / Give sales representatives experience dealing with prospects 330 / Furnish abundant sales support 330 Assessing Mutual Fit 332 Scheduling the First Meeting 335 Getting started for simple sales 335 / Initiating dialogue for complex sales 336 Learning Each Other's Requirements and Preferences 336 Plan the call 337 / Open the call 337 / Investigate requirements and preferences 338 Gaining the Initial Order 341 Demonstrating and Documenting Value 342 Propose solutions 344 / Gain the order 346 Negotiating the First Sale 350 Pricing the initial offering 350 / Negotiation approaches 351 / Understanding BATNA 351 Initial Order Fulfillment 351 Coordinating Supplier Functions 352 Completing the Transaction 355 Manage revenue 355 / Follow up with prospects after the sale 356 Deciding Whether to Continue Doing Business Together 357 Summary 357 CHAPTER 9 Sustaining Reseller Partnerships 361 Overview 361 Fulfilling Commitments to Deliver Value 362 Fulfilling Supplier Commitments to Deliver Value 362 Provide responsive sales and marketing programs 363 / Back up resellers with pricing support 363 / Furnish operational and technical support 364 / Pass the critical incident test 365 Fulfilling Reseller Commitments to Deliver Value 365 Provide consistently superior service to customer firms 366 / Innovate in the local marketplace 366 / Enhance the supplier's brand equity 366 / Pass the critical incident test 368 Ensuring That Value Is Delivered 369 Conduct market research 369 / Getting an equitable return on delivered value 369 Synchronizing Joint Fulfillment Efforts 371 Strengthening Delivered Value 373 Adjusting Commitments 373 Reformulate channel partners' gives and gets 373 / Make responsive adjustments to the joint annual plan 375 Working Together More Effectively 377 Establish a reseller advisory council 377 / Train and coach partner firms 378 / Strengthen interfirm coordination 379 Working Together to Fulfill Changing Marketplace Requirements 381 Creating Adaptive Channels 381 Provide support in extraordinary situations 382 / Responsively broaden the market offering 383 / Share capabilities with other channel members 386 / Overcome implementation problems 388 Skillfully Handling Relationship Transfers 389 Delineate relationship transfer criteria 389 / Establish equitable compensation for relationship transfers 391 Summary 391 CHAPTER 10 Sustaining Customer Relationships 394 Overview 394 Fulfilling Mutually Agreed-Upon Customer Requirements 395 Thinking Strategically About Relationships 396 Consider industry bandwidths 396 / Partnering as a focused market strategy 397 Delivering Superior Value with Relationship-Specific Offerings 399 Construct relationship-specific market offerings 399 / Pricing relationship-specific offerings 400 / Organize to deliver relationship-specific offerings 401 / Sell relationship-specific offerings 401 / Solve common relationship-offering implementation problems 402 Pursuing Continuity and Growth 405 Working Together 405 Promote honest and open communication 405 / Build trust and commitment 406 / Implement coordination mechanisms 409 / Anticipate and resolve conflicts 410 / Customer retention planning 411 Selectively Growing the Relationship 413 Estimate and target share of customer's business 414 / Focused share building 415 / Pursue single-sourcing and multiple single-sourcing 416 / Expand the scope of working relationships 417 / Broaden working relationships 419 / Adopt new profit models 419 / Document the profitability of greater share 421 Ongoing Customer Relationship Management 423 Monitoring, Evaluating, and Reassigning Accounts 424 Estimate customer equity 424 / Implement activity-based costing 425 / Monitor transaction prices 426 / Evaluate relationship outcomes and reassign accounts 427 Emerging CRM Applications 429 Allocating resources for customer acquisition, retention, and growth 429 / Synchronizing marketing efforts 429 / Updating customer value 431 Sustaining Customers Through Connected Relationships 431 Managing within a business network context 432 / Adding value through business networks 434 / A final thought on sustaining relationships 435 Summary 435 Index 441