BusinesstoBusiness Marketing Chapter 4 BusinesstoBusiness Marketing Strategy Learning

Business-to-Business Marketing Chapter 4 Business-to-Business Marketing Strategy

Learning outcomes • Know what shareholder value, customer value, supplier value and relationship value are, and what role they play in the formulation of business marketing strategy; • Understand how business marketing strategy is closely linked to an understanding of organizational buying behaviour; • Be able to explain the similarities and differences between the formal, planned approach to strategy and the resource-based view of strategy.

Learning outcomes • Understand the role played by the relationships and networks of which the firm is a part in the formulation of business marketing strategy; • Appreciate the impact of new information and communications technologies on strategy; • Be able to apply several different ethical frameworks to the analysis of decisions in business marketing; • Understand the significance of international climate change agreements for business-tobusiness strategic decision-making.

Strategy • Strategy concerns decisions that have a major effect on the performance of the firm. • It can be sub-divided into corporate strategy (concerning the overall design of a corporation comprising multiple business units) and business unit strategy (concerning the competitive strategies of individual businesses). • Marketing strategies are devised and implemented at the business unit level.

Strategy • The overall aim of business strategy in profitseeking firms is to increase long-term shareholder value. • The key contribution that marketing strategy in business-to-business firms should make is to understand, analyze and deliver customer value. • Customer value is defined as the trade-off between what a customer has to give up and what the customer receives in a business transaction or relationship.

Value concepts • • Customer value Brand value Shareholder value Supplier value Relationship value Customer life-cycle value Product value

Definitional problems • Zeithaml (1988): give-get – ‘Perceived value is the customer’s overall assessment of the utility of a product based on perceptions of what is received and what is given … value represents a tradeoff of the salient give and get components. ’ • Technical issue of functional form • V = B – S (e. g. Blois 2003) • V = B/S (e. g. Christopher 1996)

Relationship value • Holistic relationship assessment: – e. g. Hogan (2001) ‘the future benefits to be derived over the life of the relationship’, defined operationally as a NPV concept, i. e. give-get definition – conceptually very close (identical) to broad give-get definitions of customer value • Incremental assessment of the relational value of an exchange episode (e. g. Ravald and Grönroos 1996)

Caterpillar Vision: Be a global leader in customer value • Caterpillar will be the leader in providing the best value in machines, engines and support services for customers dedicated to building the world's infrastructure and developing and transporting its resources. We provide the best value to customers. • Caterpillar people will increase shareholder value by aggressively pursuing growth and profit opportunities that leverage our engineering, manufacturing, distribution, information management and financial services expertise. We grow profitably. • Caterpillar will provide its worldwide workforce with an environment that stimulates diversity, innovation, teamwork, continuous learning and improvement and rewards individual performance. We develop and reward people. • Caterpillar is dedicated to improving the quality of life while sustaining the quality of our earth. We encourage social responsibility. (Source: www. cat. com)

Professional ethics American Marketing Association Code of Ethics Responsibilities of the Marketers must accept responsibility for the consequences of their activities and make every effort to ensure that their decisions, recommendations and actions function to identify, serve and satisfy all relevant publics: customers, organizations and society. Marketers' Professional Conduct must be guided by: 1. The basic rule of professional ethics: not knowingly to do harm; 2. The adherence to all applicable laws and regulations; 3. The accurate representation of their education, training and experience; and 4. The active support, practice and promotion of this Code of Ethics. (Source: www. marketingpower. com)

Approaches to strategy The rational planning approach proposes that good strategy results from a systematic, planned approach to strategy development. The resource-based approach focuses on key internal resources of the firm as the source of enduring competitive advantage. The relationships and networks view of strategy contends that network positional resources are the key to success in business markets.

Ethical approaches Managerial egoism Ø what is best for the company? Utilitarianism Ø evaluating the costs and benefits to all stakeholders Deontological approach Ø abiding by codes of conduct Virtue ethics Ø learning and applying sound judgement based on integrity

Texas Instruments We are Honest By: • Representing ourselves and our intentions truthfully • Offering full disclosure and withdrawing ourselves from discussions and decisions when our business judgment appears to be in conflict with a personal interest. • Respecting the rights and property of others, including their intellectual property. • Accepting confidential or trade secret information only after we clearly understand our obligations as defined in a non-disclosure agreement. • Competing fairly without collusion or collaboration with competitors to divide markets, set prices, restrict production, allocate customers or otherwise restrain competition. • Assuring that no payments or favors are offered to influence others to do something wrong. • Keeping records that are accurate and include all payments and receipts. (Source: www. ti. com)

External Communication Extraorientated organizational Transaction orientated Internal Intraorganizational Tools that enhance communication between firms e. g. Extranet Tools that enhance communication within firms e. g. Intranet Extraorganizational Intraorganizational Tools that facilitate exchange between firms within firms e. g. Internet Online Table 4. 1 A classification of business-to-business e-commerce tools EDI transactions (Source: adapted from Osmonbekov et al. , 2002) database

Questions for discussion • • How can customer value be defined? What are the key differences between the resourcebased view of business marketing strategy, and the conventional strategic market planning approach? Is the Internet completely revolutionizing business-tobusiness marketing and purchasing? What kind of ethical issues might a business-tobusiness marketer or salesperson have to take into account when engaged in (a) a major account sales negotiation, (b) a substantial international market research project, and (c) bidding for a government contract in a foreign country?