Sustaining Customer Relationships Rev 1

Sustaining Customer Sustaining Customer RelationshipsRelationships

Duane HamptonDuane Hampton

EducationEducation BSME, Cleveland State UniversityBSME, Cleveland State University MBA, Baldwin Wallace CollegeMBA, Baldwin Wallace College Course Work, Case Western Reserve, Course Work, Case Western Reserve,

MIT and University of MichiganMIT and University of Michigan

Duane HamptonDuane Hampton

ProfessionalProfessional Director of Business Development and Director of Business Development and

Marketing, TDWMarketing, TDW Director of Product and Market Director of Product and Market

Development, SwagelokDevelopment, Swagelok Director of Sales and Marketing, Applied Director of Sales and Marketing, Applied

Industrial TechnologiesIndustrial Technologies Various other marketing and sales roles Various other marketing and sales roles

through-out my careerthrough-out my career

Quiz QuestionsQuiz Questions1.1. List the five environmental forces?List the five environmental forces?

Regulatory, economic, technology, competitive, socialRegulatory, economic, technology, competitive, social

2.2. What is the first stage in the consumer What is the first stage in the consumer purchase decision process?purchase decision process?

Problem RecognitionProblem Recognition3.3. What is the term for post purchase anxiety?What is the term for post purchase anxiety?

Cognitive DissonanceCognitive Dissonance4.4. What are the three main types of organizational What are the three main types of organizational

buyers?buyers? Industrial, Reseller and GovernmentIndustrial, Reseller and Government

What is Marketing long term What is Marketing long term objectives?objectives?

FIGURE 2-5FIGURE 2-5 The strategic marketing The strategic marketing processprocess

FIGURE 1-3FIGURE 1-3 An organization’s marketing An organization’s marketing department relates to many people, groups, department relates to many people, groups, and forcesand forces

WHAT IS MARKETING?

Slide 1-10

Requirements for Marketing to OccurRequirements for Marketing to Occur

Two or More Parties with Unsatisfied Needs

Desire and Ability to Satisfy These Needs

A Way for the Parties to Communicate

Something to Exchange

FIGURE 1-4FIGURE 1-4 Marketing’s first task: Marketing’s first task: discovering consumer needsdiscovering consumer needs

FIGURE 1-5FIGURE 1-5 Marketing’s second task: Marketing’s second task: satisfying consumer needssatisfying consumer needs

Slide 1-22

FIGURE 1-AFIGURE 1-A Summary of factors that affect Summary of factors that affect an organization’s marketing programan organization’s marketing program

Environmental ScanEnvironmental Scan

Environmental Scan ExampleEnvironmental Scan Example EconomicEconomic

Many new pipeline projects for both oil and gas. Impacts all regions of the world. Many new pipeline projects for both oil and gas. Impacts all regions of the world. SocialSocial

Older workers are retiring and being replaced by younger un-experienced workers. Older workers are retiring and being replaced by younger un-experienced workers. TechnologyTechnology

LNG pipelines LNG pipelines Robotic pipeline inspection tool Robotic pipeline inspection tool Feeler snake pig – used for internal corrosion offshore Feeler snake pig – used for internal corrosion offshore Pipeline pressure up to 1935 psi ( 80% of SMYS), typically only 72% of SMYS Pipeline pressure up to 1935 psi ( 80% of SMYS), typically only 72% of SMYS Pipeline integrity monitoring by wireless technology ( March 2008) Pipeline integrity monitoring by wireless technology ( March 2008) UT external girth weld inspection UT external girth weld inspection Fiber optic sensing for oil and gas Fiber optic sensing for oil and gas

RegulatoryRegulatory Legislation on cathodic protection practices ( Federal/ State and Local) Legislation on cathodic protection practices ( Federal/ State and Local)

PoliticalPolitical Mexicans oppose private investment in PEMEX to explore GOM Mexicans oppose private investment in PEMEX to explore GOM Oil Sands could be declared conventional thereby circumventing US energy rules Oil Sands could be declared conventional thereby circumventing US energy rules Seven year re-inspection rule mandate on pipelines in HCA for corrosion is under Seven year re-inspection rule mandate on pipelines in HCA for corrosion is under

attack by operators, DOT is considering special permits that would make re-inspections attack by operators, DOT is considering special permits that would make re-inspections either 10, 15  or 20 years. either 10, 15  or 20 years.

All of my sources come from the past few months of Pipeline & Gas JournalAll of my sources come from the past few months of Pipeline & Gas Journal

Product DevelopmentProduct Development

Product Development Product Development IntroductionIntroduction

•Increase sales/profitability•Optimize R & D Efforts•Develop cost advantage•Maintain market leadership•Create an innovative image

•Maturing product life cycle•Emerging new regulations•Rapidly changing technology•Increasing local and global competition

Key Motivating Forces Driving new Products / Service Development

Internal Forces

External Forces

Overlap

Source: Kellogg on Marketing

Product Development Product Development IntroductionIntroduction

Source: Kellogg on Marketing

Types of Products

New to the world products

Additions toProduct line

Revisions to Existing products

Cost reductionsRepositioning

New lines

New

to t

he C

om

pany

New to the MarketLow

Low

High

High

Product Development KeysProduct Development Keys

Understand customer needs and what Understand customer needs and what customer value.customer value.

Focusing on customer total experience Focusing on customer total experience with the product .with the product .

Simplifying customer purchasing process Simplifying customer purchasing process by reducing their cost and efforts.by reducing their cost and efforts.

Establishing barriers to competitive Establishing barriers to competitive entry.entry.

Estimating Market PotentialEstimating Market Potential

Estimating market potential Estimating market potential and demandand demand

Estimated Estimated Sales by Sales by CompetitorCompetitor

Sales Sales 1999 1999 (M)(M)

Market Market ShareShare

Sales Sales 1998 1998 (M)(M)

Market Market ShareShare

Competitor Competitor AA

$6,500$6,500 27%27% $7,500$7,500 28%28%

Competitor Competitor BB

3,0003,000 13%13% 4,0004,000 15%15%

Competitor Competitor CC

7,5007,500 31%31% 8,0008,000 30%30%

Market Market AvailablAvailablee

7,0007,000 29%29% 7,0007,000 27%27%

Total Total Market Market SalesSales

24,00024,000 100%100% 26,50026,500 100%100%

Estimating Market SizeEstimating Market Size

What issues surround collection of What issues surround collection of competitor market data?competitor market data?

What methods can be used to What methods can be used to quantify market size?quantify market size?

What markets are less likely to have What markets are less likely to have competitor data?competitor data?

Estimating market potential and Estimating market potential and demanddemand

Estimated Estimated Sales by Sales by CompetitorCompetitor

Sales Sales 1999 1999 (M)(M)

Market Market ShareShare

Sales Sales 1998 1998 (M)(M)

Market Market ShareShare

Competitor Competitor AA

$6,500$6,500 12.6%12.6% $7,500$7,500 13.8%13.8%

Competitor Competitor BB

3,0003,000 5.8%5.8% 4,0004,000 7.4%7.4%

Competitor Competitor CC

7,5007,500 14.5%14.5% 8,0008,000 14.8%14.8%

Alternative Alternative competitor competitor AA

5,0005,000 9.7%9.7% 4,5004,500 8.3%8.3%

Alternative Alternative competitor competitor BB

4,5004,500 8.7%8.7% 5,0005,000 9.3%9.3%

Market Market AvailableAvailable

25,00025,000 48.5%48.5% 25,00025,000 46.3%46.3%

Total Total MarketMarket

51,50051,500 100%100% 54,00054,000 100%100%

Estimating Market Potential Estimating Market Potential and Demandand Demand

Estimating Market Potential Estimating Market Potential and Demandand Demand

Marketing Four P’sMarketing Four P’s

Marketing Mix (Four P’s)Marketing Mix (Four P’s)

Product DecisionsProduct Decisions

Brand nameBrand name FunctionalityFunctionality StylingStyling QualityQuality SafetySafety PackagingPackaging Repairs and SupportRepairs and Support WarrantyWarranty Accessories and ServicesAccessories and Services

Price DecisionsPrice Decisions

Pricing StrategyPricing Strategy Suggested retail priceSuggested retail price Volume discounts and wholesale pricingVolume discounts and wholesale pricing Cash and early payment discountsCash and early payment discounts Seasonal pricingSeasonal pricing BundlingBundling Price flexibilityPrice flexibility Price DiscriminationPrice Discrimination

Distribution DecisionsDistribution Decisions

Distribution channelsDistribution channels Market coverageMarket coverage Specific Channel membersSpecific Channel members Inventory ManagementInventory Management WarehousingWarehousing Order ProcessingOrder Processing

Promotion DecisionsPromotion Decisions

Promotional StrategyPromotional Strategy AdvertisingAdvertising Personal Selling and sales forcePersonal Selling and sales force Sales PromotionsSales Promotions Marketing Communications budgetMarketing Communications budget

Slide 2-40

FIGURE 2-7FIGURE 2-7 Elements of the marketing mix Elements of the marketing mix that comprise a cohesive marketing programthat comprise a cohesive marketing program

The situation or scenario provides the context in which to identify the issue or opportunity

1. Describe the situation 2. Frame the right problem 3. Describe end state and goals

4. Identify alternatives

7. Make the decision 8. Develop and implement the solution 9. Evaluate results

5. Evaluate alternatives 6. Identify and assess risks

Collect relevant facts and information

Engage people throughout the process

Slide 1-75

The The marketing mixmarketing mix consists of consists ofthe marketing manager’s controllable the marketing manager’s controllable factors—product, price, promotion, and factors—product, price, promotion, and place (the 4Ps)—that can be used to solve place (the 4Ps)—that can be used to solve a marketing problem.a marketing problem.

The The marketing mixmarketing mix consists of consists ofthe marketing manager’s controllable the marketing manager’s controllable factors—product, price, promotion, and factors—product, price, promotion, and place (the 4Ps)—that can be used to solve place (the 4Ps)—that can be used to solve a marketing problem.a marketing problem.

Marketing MixMarketing Mix

Environmental factors Environmental factors are the are the uncontrollable factors involving social, uncontrollable factors involving social, economic, technological, competitive, economic, technological, competitive, and regulatory forces.and regulatory forces.

Environmental factors Environmental factors are the are the uncontrollable factors involving social, uncontrollable factors involving social, economic, technological, competitive, economic, technological, competitive, and regulatory forces.and regulatory forces.

Environmental FactorsEnvironmental Factors

Learning Team FormationLearning Team Formation

10 Minutes10 Minutes

Step 1. Describe the Situation“What is the situation? What conflicts exist?”

• Scanning the environment identifies the challenges including opportunities and issues

• Avoid “Ready, Fire, Aim” model; take time to understand the situation

• Collect the data and information needed for understanding

• Tools– Ask the “What?” question

– Create a Mind Map

– Draw a picture

Issues and OpportunitiesIssues and Opportunities Pharmaceutical companies (customers) Pharmaceutical companies (customers)

are raising the bar with their expectations are raising the bar with their expectations of CRM solutions.of CRM solutions.

More competitors may enter the More competitors may enter the marketplace to meet changing customer marketplace to meet changing customer needs that go beyond technology to needs that go beyond technology to integration of customer data and touch integration of customer data and touch points.points.

Developing a new analytical capability and Developing a new analytical capability and a toolkit to facilitate integration of a toolkit to facilitate integration of customer data could create opportunities customer data could create opportunities with other customer groupswith other customer groups

Competitive LandscapeCompetitive Landscape

Competitive ForcesCompetitive Forces

Competitive Continuum

Pure Competition•Every company has a similarproducts.•Place (Distribution)

Monopolistic•Compete with Productson a substitute basis.•Promotion (Coupons)

Oligopoly•Few companiescontrol majorityof Industry Sales.•Price(Few discounts)

Pure Monopoly•Only one firmsales the product.•Promotion(Brand building)

Components of CompetitionComponents of Competition

Barriers to entryBarriers to entry Marketing response: Product Marketing response: Product

Development, Lower priceDevelopment, Lower price Power of Buyers and SuppliersPower of Buyers and Suppliers

Marketing response: Product Marketing response: Product Development and PromotionDevelopment and Promotion

Existing Competitors and SubstitutesExisting Competitors and Substitutes Marketing response: Promotion and Marketing response: Promotion and

priceprice

Regulatory ForcesRegulatory Forces

REGULATORY FORCES

Advertising- and Promotion-Related Advertising- and Promotion-Related LegislationLegislation

• Cease and Desist Order

• Corrective Advertising

FTC Act of 1914

Do Not Call Registry

CAN-SPAM Act (2004)

Kleenex, Band-Aid, and Q-TipsIn danger of becoming generic trademarks?

Dell ComputerDell Computer Web site aids restitution to Dell customersWeb site aids restitution to Dell customers APAP Posted: 2008-05-28 13:35:39Posted: 2008-05-28 13:35:39 ALBANY, N.Y. (AP) - A Web site is now available for consumers seeking restitution from ALBANY, N.Y. (AP) - A Web site is now available for consumers seeking restitution from

Dell Inc. after a New York judge found the computer retailer engaged in false and Dell Inc. after a New York judge found the computer retailer engaged in false and deceptive advertising of its promotional credit financing and warranties.deceptive advertising of its promotional credit financing and warranties.

The judge is ordering the computer retailer to more clearly disclose that most customers The judge is ordering the computer retailer to more clearly disclose that most customers don't qualify for free financing or "next day" repair service.don't qualify for free financing or "next day" repair service.

Customers may apply for restitution through a Web site announced by New York Customers may apply for restitution through a Web site announced by New York Attorney General Andrew Cuomo, who pressed the case. The site is at Attorney General Andrew Cuomo, who pressed the case. The site is at www.nyagdell.com.www.nyagdell.com.

Cuomo is collecting complaints to help the court determine how much restitution Dell Cuomo is collecting complaints to help the court determine how much restitution Dell and Dell Financial Services owe customers.and Dell Financial Services owe customers.

He says the court will determine restitution later this year.He says the court will determine restitution later this year.

Copyright 2008 The Associated Press. The information contained in the AP news report Copyright 2008 The Associated Press. The information contained in the AP news report may not be published, broadcast, rewritten or otherwise distributed without the prior may not be published, broadcast, rewritten or otherwise distributed without the prior written authority of The Associated Press. Active hyperlinks have been inserted by AOL. written authority of The Associated Press. Active hyperlinks have been inserted by AOL.

05/28/08 13:33 EDT05/28/08 13:33 EDT

Consumer BehaviorConsumer Behavior

Purchase Decision ProcessPurchase Decision Process

Marketing ModelMarketing Model

Alignment of Consumer Alignment of Consumer Behavior and Marketing FunnelBehavior and Marketing Funnel

Problem RecognitionProblem Recognition

Information GatheringInformation Gathering

Alternative EvaluationAlternative Evaluation

Purchase DecisionPurchase Decision

Post Purchase Post Purchase BehaviorBehavior

Awareness (promotion)Awareness (promotion)

Interest (promotion)Interest (promotion)

Desire (promotion, Desire (promotion, price)price)

Action (price)Action (price)

PromotionPromotion

Consumer Purchase DecisionWhy is post purchase behavior important?

Step 2. Frame the “Right” ProblemWhat is the problem? Is there a problem? Is it worth solving?

• Begin with the mindset: “All problems can be viewed as opportunities.”

• Define the “right” problem; identify if there really is a problem

• Develop a “good” problem statement – leads to possibilities, not a single answer– It is a problem statement, not a solution statement– Get others to challenge it– Be open to refinement or transformation of the

statement• Tools

– Ask the “Why?” question– Challenge the Statement (including turning around assumptions)– Develop the Hierarchy of Needs

Possible Opportunity Possible Opportunity StatementsStatements

Grow Tera Tech by enhancing existing Grow Tera Tech by enhancing existing product lines.product lines.

Grow Tera Tech by developing new Grow Tera Tech by developing new lines of business based on core lines of business based on core competencies.competencies.

Seize new product development Seize new product development opportunities that anticipate the needs opportunities that anticipate the needs of current and future customers.of current and future customers.

Maslow's hierarchy of needs.

Classroom DiscussionClassroom Discussion

Considering the hierarchy of needs diagram, Considering the hierarchy of needs diagram, what products might be developed for what products might be developed for customers in each phase of the hierarchy?customers in each phase of the hierarchy?

As the baby boomer generation reaches As the baby boomer generation reaches retirement age, what products might retirement age, what products might become more important?become more important?

What new products might be developed to What new products might be developed to suit this group?suit this group?

What key trends in law, politics and What key trends in law, politics and technology will have significant impact on technology will have significant impact on product development in the next few years?product development in the next few years?

Classroom DiscussionClassroom Discussion

X’ers are the most conservative cohort in today’s X’ers are the most conservative cohort in today’s workforceworkforce – and you’re surrounded by “shake ‘em up” types – and you’re surrounded by “shake ‘em up” types on both sides. In your personal lives, X’ers are not particularly on both sides. In your personal lives, X’ers are not particularly keen on rules, but you had to follow them in the workplace – keen on rules, but you had to follow them in the workplace – and you resent it when others now don’t. It seems unfair to and you resent it when others now don’t. It seems unfair to be rewriting corporate etiquette when you’ve had to toe the be rewriting corporate etiquette when you’ve had to toe the line for so long.line for so long.

Many X’ers’ are guarding a closely held secret:Many X’ers’ are guarding a closely held secret: you’re you’re not all as comfortable with the technology that is changing not all as comfortable with the technology that is changing the way things are done as everyone seems to think you are. the way things are done as everyone seems to think you are. While it’s perfectly acceptable for Boomers to feign ignorance While it’s perfectly acceptable for Boomers to feign ignorance and ask for help, it’s embarrassing for X’ers to do so.and ask for help, it’s embarrassing for X’ers to do so.

Your own parenting pressures are at a peakYour own parenting pressures are at a peak. You’re . You’re deeply committed to spending more time with your kids than deeply committed to spending more time with your kids than your parents did or were able to spend with you, but juggling your parents did or were able to spend with you, but juggling is getting more and more difficult.is getting more and more difficult.

Fresh Step Crystals Cat Litter Why use the Good Housekeeping Seal?

Slide 5-40

Pierce Brosnan and Anna Kournikova Why use celebrity spokespersons?

Word of mouth influenceWord of mouth influence

Slide 5-46

Haggar Clothing What role do women play in this purchase?

Bonne Bell Cosmetics Why target the African American women market?

Organizational MarketsOrganizational Markets

What type of Product would What type of Product would you sell?you sell?

What does this portend?What does this portend?Whirlpool Corporation Reports First-Quarter ResultsWhirlpool Corporation Reports First-Quarter ResultsPR NEWSWIREPR NEWSWIREPosted: 2008-04-24 06:04:57Posted: 2008-04-24 06:04:57BENTON HARBOR, Mich., April 24 /PRNewswire-FirstCall/ -- Whirlpool Corporation (NYSE: BENTON HARBOR, Mich., April 24 /PRNewswire-FirstCall/ -- Whirlpool Corporation (NYSE:

WHR) announced today that first-quarter earnings from continuing operations of $94 WHR) announced today that first-quarter earnings from continuing operations of $94 million decreased 24 percent to $1.22 per diluted share compared to $124 million, or million decreased 24 percent to $1.22 per diluted share compared to $124 million, or $1.55 per diluted share reported during the previous year's quarter. Revenue of $4.6 $1.55 per diluted share reported during the previous year's quarter. Revenue of $4.6 billion for the quarter increased 5 percent from the $4.4 billion reported in the first billion for the quarter increased 5 percent from the $4.4 billion reported in the first quarter of 2007.quarter of 2007.

(Logo: (Logo: http://www.newscom.com/cgi-bin/prnh/20040202/DETU004LOGOhttp://www.newscom.com/cgi-bin/prnh/20040202/DETU004LOGO ) )

"Our first-quarter results reflect a very challenging global economic environment," said "Our first-quarter results reflect a very challenging global economic environment," said Jeff M. Fettig, chairman and chief executive officer of Whirlpool Corporation. "We had Jeff M. Fettig, chairman and chief executive officer of Whirlpool Corporation. "We had strong performance in our international operations, which was offset by declines in our strong performance in our international operations, which was offset by declines in our North American business. The combination of unprecedented material cost increases North American business. The combination of unprecedented material cost increases and seven consecutive quarters of lower U.S. demand have resulted in one of the most and seven consecutive quarters of lower U.S. demand have resulted in one of the most challenging operating environments we have seen in three decades. While near-term challenging operating environments we have seen in three decades. While near-term economic conditions remain turbulent, Whirlpool Corporation's innovative products and economic conditions remain turbulent, Whirlpool Corporation's innovative products and consumer preferred brands are well positioned to capitalize on global growth consumer preferred brands are well positioned to capitalize on global growth opportunities. In addition, we have taken strong actions to address significant material opportunities. In addition, we have taken strong actions to address significant material and oil cost inflation that has negatively impacted our margins."and oil cost inflation that has negatively impacted our margins."

Net earnings for the quarter reflected challenging macroeconomic conditions in the Net earnings for the quarter reflected challenging macroeconomic conditions in the company's U.S. business, as industry unit demand declined approximately 9 percent company's U.S. business, as industry unit demand declined approximately 9 percent compared to the prior year. Operating profit totaled $159 million compared with $226 compared to the prior year. Operating profit totaled $159 million compared with $226 million in the prior year. First-quarter operating results were unfavorably impacted by million in the prior year. First-quarter operating results were unfavorably impacted by significantly higher material and oil-related costs and lower U.S. industry unit volume. significantly higher material and oil-related costs and lower U.S. industry unit volume. Results were partially offset by productivity initiatives and improved results within the Results were partially offset by productivity initiatives and improved results within the company's international operations. Whirlpool Corporation's operating profit improved company's international operations. Whirlpool Corporation's operating profit improved in all three major regions outside of North America.in all three major regions outside of North America.

PagePage 22 FIRST-QUARTER REGIONAL REVIEWFIRST-QUARTER REGIONAL REVIEW

Whirlpool North America first-quarter sales of $2.6 billion declined 3 percent Whirlpool North America first-quarter sales of $2.6 billion declined 3 percent from the prior year. U.S. industry unit shipments of major appliances (T7)* from the prior year. U.S. industry unit shipments of major appliances (T7)* declined approximately 9 percent.declined approximately 9 percent.

Operating profit of $44 million decreased from $159 million reported in the Operating profit of $44 million decreased from $159 million reported in the previous year. Significantly higher material and oil-related costs, lower industry previous year. Significantly higher material and oil-related costs, lower industry demand and increased selling, general and administrative expense due to new demand and increased selling, general and administrative expense due to new product launches and consumer advertising spending were the primary factors product launches and consumer advertising spending were the primary factors affecting the company's first-quarter operating profit.affecting the company's first-quarter operating profit.

Based on current economic conditions, the company now expects full-year Based on current economic conditions, the company now expects full-year 2008 U.S. industry unit shipments to decline approximately 5 percent to 6 2008 U.S. industry unit shipments to decline approximately 5 percent to 6 percent from 2007 levels, versus the 3 percent to 5 percent decline previously percent from 2007 levels, versus the 3 percent to 5 percent decline previously expected.expected.

Whirlpool Europe reported first-quarter sales of $940 million, a 13 percent Whirlpool Europe reported first-quarter sales of $940 million, a 13 percent increase from the prior year. Excluding the effects of currency, sales decreased increase from the prior year. Excluding the effects of currency, sales decreased 2 percent in the quarter. Overall industry demand during the quarter declined 2 percent in the quarter. Overall industry demand during the quarter declined approximately 2 to 3 percent from the prior year. The region's favorable approximately 2 to 3 percent from the prior year. The region's favorable performance relative to the industry was driven by sales of the market-leading performance relative to the industry was driven by sales of the market-leading Whirlpool brand and continued strength of the region's innovative product Whirlpool brand and continued strength of the region's innovative product offerings.offerings.

Operating profit increased 17 percent to $45 million, as the region benefited Operating profit increased 17 percent to $45 million, as the region benefited from increased productivity compared with the prior year. Partially offsetting from increased productivity compared with the prior year. Partially offsetting these gains were higher material costs.these gains were higher material costs.

How can NAICS help?How can NAICS help?

MEASURING DOMESTIC AND GLOBAL INDUSTRIAL, RESELLER,

AND GOVERNMENT MARKETS

Slide 6-9

North AmericanNorth AmericanIndustry Industry ClassificationClassificationSystem (NAICS)System (NAICS)

North American North American Product Product Classification Classification System (NAPCS)System (NAPCS)

Standard Record Types

Data ElementsMailingRecord

TelemarketingRecord

EnhancedTelemarketing

ProspectingRecord

StrategicMarketing

Business Name X X X X X

Mailing Address or Physical Address X X X X X

City, State, Zip + 4 X X X X X

Primary SIC Code X X X X X

Secondary SIC Code (if available) X X X X X

Primary NAICS Code X X X X X

DUNS # X X X X X

Executive Contact Info (Name & Title) X X X X X

Telephone Number   X X X X

Annual Sales "or" Number of Employees       X X

Total Employees       X X

Employees at the Site       X X

Annual Sales       X X

Manufacturing Indicator       X X

Subsidiary Indicator       X X

Ownership       X X

Year Started       X X

Corporate Linkage       X X

Ultimate Parent Name & DUNS #         X

Parent Name & DUNS #         X

Headquarter Name & DUNS #         X

Bank Name and Address         X

Owns/Rents Indicator         X

Employee Trends         X

Import/Export Indicator         X

Legal Status         X

Square Footage (where available)         X

Accounting Firm (where available)         X

Sales Trend         X

Organizational Buying Organizational Buying BehaviorBehavior

What is the difference between What is the difference between Organizational buying and Consumer Organizational buying and Consumer

buying?buying?

ORGANIZATIONAL BUYING vs. CONSUMER BUYING

Organizational consumers purchase for:

•further production, •usage in operating the organization, and/or •resale to other consumers

Final (or ultimate) Consumers purchase for:

•personal, •family, or •household use

Differences in Organizational Differences in Organizational transactionstransactions

Buying Specialists are often used.Buying Specialists are often used. Often use multiple buying Often use multiple buying

responsibility responsibility (buying center).(buying center).

Often use multiple suppliers.Often use multiple suppliers. More likely to require exact More likely to require exact

specifications.specifications. Often lease equipment and space.Often lease equipment and space.

Slide 6-17

Key organizational buying criteriaKey organizational buying criteria

Buying specialists are often used.Buying specialists are often used. Organizations often employ people who are Organizations often employ people who are professional professional purchasing agentspurchasing agents. Just as sales . Just as sales agents are professional specialists at finding agents are professional specialists at finding organizations that need the products that their organizations that need the products that their employer produces, purchasing agents are employer produces, purchasing agents are specialists are professional specialists at finding specialists are professional specialists at finding what their employer needs. Whatever stereotypes what their employer needs. Whatever stereotypes you might have from experiences with salespeople you might have from experiences with salespeople in consumer sales, any negative stereotypes of in consumer sales, any negative stereotypes of salesperson behavior probably would not be salesperson behavior probably would not be appropriate in dealing with professional buyers. appropriate in dealing with professional buyers.

Often use multiple buying responsibility.Often use multiple buying responsibility. A A household purchaser is often the sole decision household purchaser is often the sole decision maker. Making a sale to an organization, however, maker. Making a sale to an organization, however, often requires selling to several entities within the often requires selling to several entities within the buying centerbuying center. For example, you might be the . For example, you might be the user of a desktop computer at work, but the user of a desktop computer at work, but the decision as to what specifications were needed decision as to what specifications were needed might have been set by someone in the computer might have been set by someone in the computer department, the decision to buy might have been department, the decision to buy might have been made by your department manager, bids taken buy made by your department manager, bids taken buy taken by someone in the purchasing department, taken by someone in the purchasing department, and the final authorization made by the company and the final authorization made by the company president. president.

Often use multiple suppliers.Often use multiple suppliers. It is often It is often desireable to have a long term relationship with desireable to have a long term relationship with more than one supplier, even if a second supplier more than one supplier, even if a second supplier has higher prices for otherwise similar terms and has higher prices for otherwise similar terms and conditions. If problems in quality or delivery are conditions. If problems in quality or delivery are experienced with a supplier, production can still experienced with a supplier, production can still be maintained if the second supplier can be used be maintained if the second supplier can be used to replace the first. The ideals of a cozy, trusting to replace the first. The ideals of a cozy, trusting relationship that has been promised with relationship that has been promised with strategic alliancesstrategic alliances in the popular business in the popular business literature does not always work if it leaves one literature does not always work if it leaves one party vulnerable as a sole supplier or buyer. party vulnerable as a sole supplier or buyer.

More likely to require exact More likely to require exact specifications.specifications. A household purchaser A household purchaser might select a particular model of might select a particular model of desktop computer for no other reason desktop computer for no other reason than it has a pleasing color. An than it has a pleasing color. An organizational purchaser is more likely organizational purchaser is more likely to set specifications regarding to set specifications regarding processor speed, memory, hard drive processor speed, memory, hard drive size, and such before taking bids on size, and such before taking bids on price. price.

Often lease equipment and space.Often lease equipment and space. As a As a household consumer, you would probably prefer household consumer, you would probably prefer to own your own car, furniture, and home. These to own your own car, furniture, and home. These are things that represent personal expression, are things that represent personal expression, status, and wealth. Your objectives as a business status, and wealth. Your objectives as a business manager, however, are very different. You might manager, however, are very different. You might prefer to lease public warehouse space to provide prefer to lease public warehouse space to provide the flexibility to change locations when the the flexibility to change locations when the market demands, to lease trucks so that you can market demands, to lease trucks so that you can leave the problems of maintenance and leave the problems of maintenance and disposition to someone else, etc. disposition to someone else, etc.

More frequently employ More frequently employ competitive biddingcompetitive bidding and and negotiationnegotiation.. Household consumers Household consumers (especially those of us in North America) are (especially those of us in North America) are more likely to accept as final a price that is more likely to accept as final a price that is placed on a product in a retail setting or to accept placed on a product in a retail setting or to accept a price that is given to us by a service provider. a price that is given to us by a service provider. As a business manager, your employer is more As a business manager, your employer is more likely to require that you accept, say, three bids likely to require that you accept, say, three bids for a service or to negotiate various terms and for a service or to negotiate various terms and conditions associated with product specifications, conditions associated with product specifications, delivery, and price. delivery, and price.

Slide 6-23

Buying CenterWho is in the buying center and

what roles do they play?

Buying CenterBuying Center

UsersUsers InfluencersInfluencers DecidersDeciders Buyers (Initiator)Buyers (Initiator) GatekeepersGatekeepers

Slide 6-24

Five roles in the buying centerFive roles in the buying center

What would be your marketing mix approach to the different roles within the buying center?

FIGURE 6-5FIGURE 6-5 Comparing the stages in Comparing the stages in consumer and organizational purchasesconsumer and organizational purchases

Step 3. Describe the “End-State GoalsWhat does the idea future end-state look like? What are the goals that define it?

• Effective problem solving, if it is to create value, includes a focus on the future

• Describe the ideal future, or end-state, that will be created if you have realized the opportunity or addressed the issue

• Develop a set of specific goals to measure the attainment of that future

• Consider the various stakeholders’ perspectives: Engage them in the process!

• Tools– Idea Cartoons– Stakeholder Analysis and Feedback

Goals might include:Goals might include:

Financial Goals: Meet or exceed financial Financial Goals: Meet or exceed financial targets in the plantargets in the plan

Be perceived as the industry leader.Be perceived as the industry leader. Meet unmet and unarticulated customer needsMeet unmet and unarticulated customer needs Alignment: Leaders and employees aligned Alignment: Leaders and employees aligned

around the new productaround the new product Customer Satisfaction: In Customer Customer Satisfaction: In Customer

Satisfaction Survey, the customers indicate Satisfaction Survey, the customers indicate that the product and company meet or exceed that the product and company meet or exceed their expectations.their expectations.

Concept Check

1. What one department is almost always represented by a personin the buying center?

Purchasing Department

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Concept Check

1. What is a make-buy decision?

A: A: An evaluation of whether components An evaluation of whether components and assemblies will be purchased from and assemblies will be purchased from outside suppliers or built by the company outside suppliers or built by the company itself.itself.

Slide 6-35

Concept Check

2. What is a bidder’s list?

A: A list of firms believed to be qualified A: A list of firms believed to be qualified to supply a given item.to supply a given item.

See you next weekSee you next week

Closing Questions, Comments, Concerns