Business Marketing Management: B2B - ««1 MICHAEL D. HUTT Arizona State University THOMAS W. SPEH Miami University THOMSON * S O U T H - W E S T E R N A u s t r a l i a • B r a z i l • C a n a d a • M e x i c o • S i n g a p o r e • S p a i n • U n i t e d K i n g d o m • U n i t e d S t a t e s
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Business MarketingManagement: B2B
- ««1
MICHAEL D. HUTTArizona State University
THOMAS W. SPEHMiami University
THOMSON*
S O U T H - W E S T E R N
A u s t r a l i a • B r a z i l • C a n a d a • M e x i c o • S i n g a p o r e • S p a i n • U n i t e d K i n g d o m • U n i t e d S t a t e s
Preface
PrtEiE
Chapter 1 A Business Marketing PerspectiveBusiness Marketing
Business Marketing Management
Business Market Customers
Business Markets versus Consumer-Goods Markets
B2B TOP PERFORMERS: Career Path for B2B CEOs:For Many, It Began in Marketing!
INSIDE BUSINESS MARKETING: Google: B2C or B2B?
Designing Customer Solutions
Marketing's Cross-Functional Relationships
Characteristics of Business Markets
Business and Consumer Marketing: A Contrast
Smucker: A Consumer and Business Marketer
Distinguishing Characteristics
A Relationship Emphasis
The Supply Chain
Supply Chain Management
Managing Relationships in the Supply Chain
INSIDE BUSINESS MARKETING: Career Profile: DeliveringService Solutions to IBM Customers
Commercial Enterprises as Consumers
Classifying Goods for the Business Market
Entering Goods
B2B TOP PERFORMERS: Jim Ryan, Group President,W.W. Grainger, Inc.
Foundation Goods
Facilitating Goods
Business Marketing Strategy
Illustration: Manufactured Materials and Parts
Illustration: Installations
Illustration: Supplies
A Look Ahead
Summary
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Contents
, ' Discussion Questions 27
Internet Exercises 29
Case: Wireless E-mail: A Challenger to BlackBerry? 30
Chapter 2 The Business Market: Perspectiveson the Organizational Buyer 31
Commercial Enterprises: Unique Characteristics 32
Distribution by Sjze 33
Geographical Concentration 33
Classifying Commercial Enterprises, 34
The Purchasing Organization 35
Goals of the Purchasing Function 36
INSIDE BUSINESS MARKETING: The Supply Chain for McNuggets 37
Strategic Procurement 37
INSIDE BUSINESS MARKETING: Harley-Davidson's World-Class
Purchasing Organization ' 41
E-Procurement 42
Everyone Is Getting Wired 42
Enhancing the Buyer's Capabilities 42
Delivering Measurable Results 43
Buying Direct and Indirect Goods 43
Reverse Auctions 45
ETHICAL BUSINESS MARKETING: Gift Giving: "Buy Me
These Boots and You'll Get My Business" 46
How Organizational Buyers Evaluate Potential Suppliers 46
Governments: Unique Characteristics 46
E-Government 47
Influences on Government Buying 47
Understanding Government Contracts 47
Telling Vendors How to Sell: Useful Publications 48
Purchasing Organizations and Procedures: Government 48
Federal Buying 50
A Different Strategy Required 51
The Institutional Market: Unique Characteristics 52
Institutional Buyers: Purchasing Procedures 52
Dealing with Diversity: A Market-Centered Organization 55
Summary 55
Contents
Discussion Questions 56
Internet Exercises 57
Case: Managing Supplier Relationships: Does DetroitNeed a New Driver? 58
MANAGING RELATIONSHIPS IN BUSINESS MARKETII
Chapter 3 Organizational Buying Behavior 61The Organizational Buying Process 63
The Search Process 64
New Task 65
Straight Rebuy 66
Modified Rebuy 67
Forces Shaping Organizational Buying Behavior 69
Environmental Forces 69INSIDE BUSINESS MARKETING: Pressuring Suppliers to Outsource 71
Organizational Forces 71
Strategic Priorities in Purchasing 72
Organizational Positioning of Purchasing 73
INSIDE BUSINESS MARKETING: Go Digital to Target Buying Influential 75
Group Forces 75
INSIDE BUSINESS MARKETING: Innovate and Win with BMW 78
Individual Forces 80B2B TOP PERFORMERS: Delivering Customer Solutions 82
The Organizational Buying Process: Major Elements 83
Summary 85
Discussion Questions 85
Internet Exercise 86
Case: Dell, Inc. 88
Chapter 4 Customer Relationship ManagementStrategies for Business Markets 89
Relationship Marketing 90
Types of Relationships 91
Value-Adding Exchanges 92
Nature of Relationships 92
Strategic Choices 92
xviii Contents
B2B TOP PERFORMERS: Understanding the Customer'sBusiness—the Key to Success 93
Managing Buyer-Seller Relationships 93
Transactional Exchange 94
Collaborative Exchange 94
Switching Costs 94
Strategy Guidelines ~" 95
Measuring Customer Profitability 96
Activity-Based Costing 96
Unlocking Customer Profitability 96
The Profitable Few 97
Managing High- and Low-Cost-to-Serve Customers 98
Managing Unprofitable Customers 100
Firing Customers 100
Customer Relationship Management 101
Acquiring the Right Customers 101
INSIDE BUSINESS MARKETING: Diversify a Customer Portfolio Too! ' 103
Crafting the Right Value Proposition 104
Instituting the Best Processes 106
Motivating Employees 107
Learning to Retain Customers 107
Gaining a Customer Relationship Advantage 108
INSIDE BUSINESS MARKETING: Do Interpersonal Relationships
Matter to Corporate Buyers? 109
Customer-Relating Capability 109
Gaining a Position of Advantage 111
Achieving Performance Rewards 111
Summary 112
Discussion Questions 112
Internet Exercise 113
Case: Siebel Systems 114
Chapter 5 Segmenting the Business Market 117Business Market Segmentation Requirements and Benefits 118
Requirements 119
Contents
Evaluating the Competitive Environment 119
Evaluating the Technological Environment 120
INSIDE BUSINESS MARKETING: How to See What's Next 121
Benefits 122
Bases for Segmenting Business Markets 122
Macrolevel Bases 123
Illustration: Macrosegmentation 125
Microlevel Bases 126
B2B TOP PERFORMERS: Steering Customers to the Right Channel 128
Illustration: Microsegmentation 132
A Model for Segmenting the Organizational Market 132
Choosing Market Segments 132
Isolating Market Segment Profitability 134
Implementing a Segmentation Strategy 135
Summary 135
Discussion Questions 136
Internet Exercises 137
Case: Small Businesses Represent Huge Opportunity 138