Solution Manual For Business Marketing Management B2B, 13th Edition Michael D. Hutt Thomas W. Speh D

Solution Manual For Business Marketing Management B2B, 13th Edition Michael D. Hutt Thomas W. Speh Douglas Hoffman Chapter1. A Business Marketing Perspective A. Chapter Overview Chapter One introduces the student to the unique facets of the business-to-business market. The chapter is pivotal to developing an effective understanding of business marketing management, as the essence of the business market and its unique aspects are often the basis for the development of marketing strategies.

The first section of the chapter highlights the important dimensions of B2B customers.

These key groups include commercial enterprises, governments, and Institutions. The next section highlights the essential differences between these consumer markets and the B2B market, and provides an insight into the nature of business product demand. Business products are distinguished by the intended use of the product and the intended consumers. The importance of market-sensing and customer-linking capabilities is discussed. Business marketers must develop strong cross-functional relationships within the firm. The essentials of derived demand are explored, highlighting how derived demand influences the demand elasticity for business products. The need for a global market perspective is also discussed. The J.M. Smucker Company is used as an illustrative example of the differences between business and consumer markets, emphasizing the importance of relationships.

Section Four of the chapter examines the increasing importance of the supply chain in business marketing. The Internet is allowing business marketers to increase the efficiency of the ordering process and creating virtual markets where products, such as computers, are built to order for customers. Different types of commercial enterprises are also discussed.

Section Five of the chapter discusses the classification of goods in the business market.

The underlying criteria for classification is how the product enters the production process and the way it is treated in an accounting sense. Entering goods, foundation goods, and facilitating goods make up the three major categories. A final section provides three illustrations of the classification scheme for the purpose of delineating how marketing strategies are adjusted on the basis of the business product's classification.

The chapter concludes by introducing a framework that guides the business marketing topics that will be covered in the text.

B. Answers to Chapter Discussion Questions 1.

First, it is important for Home Depot and Lowe‘s to have a market orientation to its customers, whether they are consumers or business customers. From a strategy perspective, the two capabilities that Home Depot and Lowe‘s should use to

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demonstrate a market orientation are market-sensing and customer linking capabilities.

2.

Many business marketers spend considerable sums for advertising to final consumers because of the nature of derived demand for many business products.

In the case of DuPont, advertising to final consumers should help to expand the demand for clothing made with DuPont's fabric and thus expand the total demand for DuPont's products.

3.

B2C Marketing

4.

B2B Marketing

Customers

Numerous, widely dispersed Few, concentrated geographically geographically

Buying Behavior

Individual decisions

Group decisions Many buying influences

Buyer/Seller

Very little close contact

Very close working relationships Interact in product design and problem solving

Product

Standardized

Complex; technical; detailed specifications Accompanying bundle of services important

Price

Fixed

Negotiated, bidding process List price for standardized items

Promotion

Heavily oriented to mass advertising

Primary role given to personal selling

Channels

Indirect, many intermediaries Direct, fewer at each level intermediaries at each level

A manufacturer of drill presses would view G.E. as a "user" because G.E. purchases the drill press to be used in the process of producing their final

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products, such as appliances or jet engines. A manufacturer of steel coil, on the other hand, views G.E. as an OEM because the coil will become an actual part of a toaster or some other appliance. Thus, the distinction is whether G.E. used the product to produce their final products or whether it becomes part of, or is incorporated into, the final product.

5.

It depends on whether the firm is selling the customer parts of manufactured materials and parts.

For custom-made parts, personal selling and customer relationship management activities assume an important role in marketing strategy. The value proposition centers on providing a product that advances Toyota‘s competitive position. The business marketer must also demonstrate strong supply chain capabilities. Standardized parts are typically purchased in larger quantities on a contractual basis, and the marketing strategy centers on providing a competitive price, reliable delivery, and supporting services. Frequently, industrial distributors are used to providing responsive delivery service to smaller accounts. For manufactured materials and parts, the marketer‘s challenge is to locate and accurately define the unique needs of Toyota for the items, and then uncover key buying influentials, and create solutions to serve Toyota‘s needs profitably.

6.

A customer value proposition captures the set of benefits that a supplier offers to advance the performance of the customer organization. Here the suppliers concentrate efforts on the attributes that matter most and develop opportunities that provide superior value to customers which may include social, technical, economic, or service benefits. Points of parity are elements in the value proposition that perform similarly to competitors‘ alternatives. Points of difference are the value elements that provide a contrast between the supplier‘s offerings to those of their competitors.

7.

The consumer classification scheme would not apply very well in the business setting. Business buyers typically don't "shop" for products and the business product classification scheme should reflect the purchase factors that would affect the formulation of the business marketer's strategy. In this sense, how the product is used and how it is treated from an accounting standpoint are important.

8.

Due to the fact that companies competing on the basis of time have the ability to conceive, develop, and introduce new products and services much faster than their competitors, without sacrificing quality, it is obvious how this ability is a new source of competitive advantage. As for whether or not it is the most powerful new source of competitive advantage, that depends upon whether or not the company competes on the basis of time (e.g., automobile manufacturer).

9.

A possible argument in favor of the statement: Because there are a fewer number of producers of major equipment (foundation goods), demand is not as responsive to shifts in price. In contrast, there are numerous producers of general materials and supplies, so it is easier for a customer to switch suppliers. In addition, due to the large capital expenditures that usually accompany the purchase of foundation

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goods, a small increase in price is less likely to create a reaction in a customer than would an increase in price for a low-cost item, such as a component part.

10.

Companies typically outsource activities and functions because they are not part of the firm‘s core competence. By shifting the production of non-core activities to third-parties, a manufacturer can devote more time and resources to their core competencies. As a result, productivity is enhanced and costs should be lowered.

In outsourcing, the customer would evaluate the supplier‘s technical capabilities, management strengths, cost structure, service capabilities, performance with other customers, and corporate culture.

C. Answers to Internet Exercises 1.

1) Automatic Data Processing, Inc. (ADP) offers a broad spectrum of business services, including human resource management systems, benefit and payroll processing, industry-specific computing and consulting services, Internet-based employee screening, and other services. The firm helps over 450,000 employers worldwide to staff, manage, pay, and retain their employees.

2) ADP serves businesses of all sizes from small companies to large multinational enterprises. The firm also gives special attention to the financial services industry, the auto industry including its dealer network, and the property and casualty insurance industry.

2.

According to the web site, BASF‘s product portfolio includes chemicals, plastics, performance products, agricultural products, and fine chemicals from crude oil to natural gas. Within each of these product categories, BASF serves many markets.

These markets can be samples at the web site.

Chapter 2. Organizational Buying Behavior A. Chapter Overview Chapter Two introduces the student to the salient dimensions of how organizations buy.

Understanding the organizational buying process is a key prerequisite for the development of business marketing strategy. Thus, the concepts developed in Chapter Two will form the base of knowledge from which the remaining chapters in the text will flow.

The first section of the chapter examines an eight-stage model of the organizational buying process. The buying process begins with problem recognition and concludes with performance feedback and evaluation. The eight stages may be contracted depending upon the nature of the purchasing situation. The next focus of the first section is a discussion of the types of buying situations which occur in organizational buying. These include "new task," "straight © 2017 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

rebuy," and "modified rebuy." Particular emphasis is given to the differing roles assigned to the supplier's marketing efforts in each stage.

Although the ultimate decision on the purchase of a product will be made by an individual, a multitude of environmental, organizational and group forces will dramatically affect the final product decision. Thus, the focus in Section Two of the chapter is to provide an analysis of the environmental influences that shape and determine the ultimate purchase decision. Economic and technological forces are examined. The section indicates that the influence of the environment is to set constraints on the purchase decision of some products while, at the same time, to provide opportunities for others. Organizational forces are discussed next, highlighting the impact that purchasing function has on the ultimate purchase decision.

The influence of the manner in which organizations function can be pervasive in terms of the buying process. The strategic role of purchasing and the positioning of purchasing in the organization is explored. Next, the implications of the total cost of ownership approach to buying is explained , and the importance of developing value-based sales tools is emphasized.

E-procurement and reverse auctions are explained and how B2B marketers can develop a strategic approach for dealing with to these two buying strategies.

The next segment of Section Two deals with the group influences associated with organizational buying. In particular, the concept of the buying center is treated at length.

Factors affecting the composition of the buying center are analyzed and the need for marketers to evaluate buying center membership as well as communication flows is highlighted.

The individual decision maker and the factors affecting a decision are key elements in purchasing decisions. Individual aspects include evaluative criteria, selective processes, and perceived risk. Each of these is explored from the standpoint of how it affects the purchasing decision. The section concludes with an examination of how buyers cope with purchasing risk.

The final section of the chapter provides a discussion of risk reduction strategies used by buyers to mitigate the situations in which they uncertainty about the purchasing situation.

B. Answers to Chapter Discussion Questions 1.

As an ―in‖ supplier, Jill must maintain a strong relationship with the customer.

She needs to make sure she is meeting the expectations of his customer and identify any potential changes affecting her customer. As an ―out‖ supplier visiting a firm that is currently unhappy with a supplier, Jill needs to gather information to identify the buying needs of the firm and their customer service expectations. Once established, she needs to demonstrate the capabilities of her firm to provide high quality products with better customer service, particularly their delivery service.

2.

A variety of economic influences may have played a role in the purchase of the equipment. Low interest rates, favorable forecasts of general economic growth, and the competitive state of the industry suggest that the new equipment be

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considered. Rapidly changing technology might argue that Harley-Davidson needs to update the level and sophistication of their current manufacturing equipment. The buying center would most likely include representatives from manufacturing, engineering, purchasing, finance, and quality control.

3.

The firm must emphasize the higher quality of its equipment as compared to other suppliers and demonstrate how over time the cost savings from the increased packaging efficiency will outweigh the higher purchase price for the equipment. In addition, the firm should point out to the purchasing agents at the food processing firms that the overall value of their products will be increased, which will be viewed as a direct benefit by its customers.

4.

The total cost of ownership approach means that purchasing agents need to consider other factors besides the purchase price. It includes the consideration of supply chain factors, costs of acquiring products, and the value of the product to a firm and its customers. Total cost of ownership considers a range of cost-value relationships associated with prices.

For consumers buying a new automobile, the total cost of ownership means considering more than just the purchase price of the car. For example, a consumer may pay more for a premium automobile but pay less on maintenance and service over the life of the car or enjoy a higher resale value than a less expensive car.

5.

The marketing task appropriate for the straight rebuy situation depends on whether the marketer is an ―in‖ supplier (on the list) or an ―out‖ supplier (not among the chosen few). An ―in‖ supplier must reinforce the buyer–seller relationship, meet the buying organization‘s expectations, and be alert and responsive to the changing needs of the organization.

The ―out‖ supplier faces a number of obstacles and must convince the organization that it can derive significant benefits from breaking the routine. This can be difficult because organizational buyers perceive risk in shifting from the known to the unknown. The organizational spotlight shines directly on them if an untested supplier falters. Buyers may view testing, evaluations, and approvals as costly, time consuming, and unnecessary.

The marketing effort of the ―out‖ supplier rests on an understanding of the basic buying needs of the organization: Information gathering is essential. The marketer must convince organizational buyers that their purchasing requirements have changed or that the requirements should be interpreted differently. The objective is to persuade decision-makers to reexamine alternative solutions and revise the preferred list to include the new supplier.

6.

The supplier can secure a rough estimate of the buying center composition by carefully examining all of the functional areas in the toy company that will be

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affected by the purchase of the electrical parts. In this way, the supplier can begin to identify individuals in those functional areas who will most likely be involved in the purchase decision. The composition of the buying center can be influenced by focusing promotion on those individuals who will be involved with the product in some way. The promotion would center on the relevant benefits, thus stimulating the user to become involved in the purchase decision.

7.

Membership in the buying center changes as information requirements change over the purchase process. Multiple buying influences and group forces are critical in organizational buying decisions. The organizational buying process typically involves a complex set of smaller decisions made or influenced by several individuals.

The group members‘ degree of involvement varies from routine rebuys, in which the purchasing agent simply takes into account the preferences of others, to complex new task buying situations, in which a group plays an active role. A salesperson must define the buying situation and the information requirements from the organization‘s perspective i in order to anticipate the size and composition of the buying center. Again, the composition of the buying center evolves during the purchasing process, differs from firm to firm, and varies from one purchasing situation to another.

8.

The ads were not reacted to in the same manner because each individual responds to stimuli on the basis of background experience, and education. Thus, individuals selectively perceive, pay attention to, and retain information stimuli.

In this case, the material in the ad was relevant to Carol‘s job function-purchasing--and probably not relevant to Thornton‘s production job.

9.

Purchasing managers could use technical, costs, quality, and service factors when evaluating brands. For notebook computers, purchasing managers may also look to product factors such as the flexibility and adaptability of each brand to meet the different computing needs of employees and to upgrade the computers in the future.

10.

More time and effort is spent on the purchase process for risky purchases. The buying center will grow larger and involve higher level members of the organization. More information will be collected on suppliers from a wide variety of sources and more time will be spent examining the information. Personal sources of information will be used more frequently and likelihood of choosing a supplier with a proven track record and history increases.

C. Answers to Chapter Internet Exercise 1. GE Healthcare a. GE Healthcare offers a variety of products for analysis of all types of diagnostic tests for many, many health issues. b. The site is excellent because it helps a wide array of buyer types – medical specialists of almost every type to get answers to critical questions. It also provides in-depth © 2017 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

educational opportunities for medical professionals to better understand the applications of the wide array of products on the site. In addition, the provide support to different medical customers in the form of assistance in treating their patients and customers.

2. Ariba, Inc. a. The Ariba Spend Analysis product takes data from a customer‘s files and classifies it for analysis, and enriches it with market and business intelligence. It also provides access to supplier pricing, savings, and performance benchmarks to augment your data for comprehensive analysis. b. Del Monte Foods used Ariba‘s analysis technology that allowed it to enrich and classify 98 percent of spending, which provided timely access to category cost data which allowed Del Monte to easily aggregate and classify indirect spend across all their systems.

In addition the analysis provided support for Del Monte‘s supplier negotiations with UNSPSC and SIC code classifications and parentage information.

Chapter 3. Customer Relationship Management Strategies for Business Markets A. Chapter Overview Chapter three introduces students to the critical importance of developing customer relationship management strategies in the business market. The ability to create and sustain successful working relationships with customers and alliance partners provides a significant competitive advantage to business marketers.

Section One focuses on the importance of relationship marketing to business marketers.

A relationship continuum is introduced that identifies different types of relationships that can exist between buyers and sellers. The importance of trust and relationship commitment to strong relationships is reviewed and strategies appropriate for each type of relationship are identified Section Two discusses the management of buyer-seller relationships. Strategies that are appropriate for transactional and collaborative exchanges are discussed. Managers are encouraged to manage each relationship individually and develop strategies for each customer based on the relationship type.

The third section examines the importance of measuring customer profitability and understanding the drivers of profitability. A comparison of high-cost-to-serve and low-cost-toserve customers is provided, along with strategy implications of customer profitability.

Section Four reviews the cross-functional process of customer relationship management (CRM). The importance of developing responsive and profitable customer strategies before developing CRM programs is discussed. Developing profitable customer strategies depend on acquiring the right customers, creating the right value proposition, instituting the best processes, motivating employees, and learning to retain customers.

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The final section of the chapter focuses on relationship marketing success, and the key drivers of that process. This section discusses relationship marketing programs and the financial impact of RM programs.

B. Answers to Chapter Discussion Questions 1.

It is important that business marketers trace costs to individual customers so that they can determine which customers are profitable and those that are not. If an unprofitable customer can not be converted to a profitable one, they should be fired because research has shown that the least profitable 10% can account for a negative 50 to 200 percent of a firm‘s profits. There are several characteristics of high-cost-to-serve customers that can be used to screen new clients. These criteria include whether they order custom-made products, order in small quantities, require significant pre-sale support, and make frequent changes in delivery requirements.

2.

Menu-based pricing can be used when flaring out when unbundling, typically for those customers that desire a greater transaction emphasis. Menu-based pricing unbundles services which reveals the core product offering. For those customers that demand extensive service and support, menu-based pricing provides an incremental basis for increasing price for the additional services requested by the customer.

3.

Large firms are seldom in the middle – they are often the most or least profitable customer in a portfolio. The characteristics of high-cost-to-serve and low-cost-toserve customers can be used to determine which large firms will be most profitable and those that will not.

4.

The availability of alternatives, dynamism of the supply market, importance and complexity of the purchase, amount of information exchange, and number of operational linkages could be used to place suppliers in transactional or collaborative relationships. To develop more collaborative relationships, business marketers must be trustworthy and demonstrate a long-term commitment to the relationship. They also need to learn about customer needs and develop tailored strategies to satisfy those needs.

5.

An intriguing study examined this important question: What avenues of differentiation can suppliers of routinely purchased products use to create value in business-to-business relationships, thereby winning key supplier status?15 The results suggest that relationship benefits display a much stronger potential for differentiation in key supplier relationships than cost considerations.

Importantly, service support and personal interaction were identified as the core differentiators, followed by a supplier‘s know-how and its ability to improve a customer‘s time to market. Product quality and delivery performance, along with cost savings associated with the acquisition process and from operations, display a moderate © 2017 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

potential to help a firm gain key supplier status.

Finally, price displayed the weakest potential for differentiation. The researchers conclude: ―Whereas cost factors serve as key criteria to get a supplier on the short list of those vendors considered for a relationship, relationship benefits dominate when deciding which supplier‖ should be awarded key supplier status 6.

It costs less to maintain an on-going relationship with a customer because of the significant commitment of resources required to establish relationships with new customers. If the relationship is properly managed, a seller has already evaluated the factors that are important to the customer, developed a value proposition that fits the customer‘s needs, and identified the type of relationship that is mutually beneficial to both parties. While there are switching costs for buyers, there are also switching costs for sellers if they move from customer to customer because of the time and resources it takes to establish an appropriate relationship with a customer.

7.

A major cost of switching the investments made by Southwest in equipment and systems to operate, maintain and repair Boeing aircraft. These include assets (special tools, computers, etc.) People who are experts in Boeing products and procedures for dealing with Boeing airplanes. Airbus could reduce these costs by providing inexpensive equipment to handle their planes, free training of personnel or by agreeing to buy all unusable Boeing equipment. In a sense, they want to make the switch to Airbus seem less and virtually cost free. Boeing might focus attention on the risk Southwest faces with a new product and supplier and perhaps suggest possible difficulties in maintaining the Airbus airplanes. In addition, Boeing could promote Boeing - specific learning within the buying center at Southwest to strengthen their existing relationship.

8.

To develop customer-specific product offerings, the business marketer should next examine the nature of buyer–seller relationships in the industry. The strategies competing firms in an industry pursue fall into a range referred to as the industry bandwidth of working relationships.39 Business marketers either attempt to span the bandwidth with a portfolio of relationship- marketing strategies or concentrate on a single strategy, thereby having a narrower range of relationships than the industry bandwidth.

9.

Relationship breadth represents the number of interpersonal ties that a firm has with an exchange partner while relationship composition is described by the decision-making capability of relational contacts at the customer firm.

10.

In terms of salesperson relationship-building efforts, customers would most likely to be more responsive in conditions of long-term horizons for the relationship, when information sharing benefits both parties and during larger volume purchases often across multiple business units of the seller.

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C. Answers to Chapter Internet Exercise The Oracle web site has a link on its home page to customer success stories. Students should have no problem finding a government customer success story to review and share in class. a) PeopleSoft, Inc. designs, develops, markets, and supports a family of enterprise software products for use throughout large and medium-sized organizations. The company provides application software for customer relationship management, human resource management, financial management, and supply chain management. b) PeopleSoft serves all sectors of the business market with customers like Wells Fargo, the state of Texas, and Sprint, as well as a range of small to medium-sized businesses.

D. Answers to Chapter 4 Case Questions 1.

IBM should attempt to identify value drivers in each of its collaborative relationships.

For Group A customers, IBM should focus on the core offering and serve these profitable customers at the highest levels. For Group B, these price sensitive customers that demand top value are likely to be less-profitable and relationships might not be as valuable over time. Finally for Group C customers, IBM will likely focus on creating flexible service offerings so that these customers can select the level of service for which they are comfortable paying.

2.

Cost differences should be reflected across consumers through the utilization of a CRM system which gives a marketing manager a clear view/record of all of the ways a customer has interacted with the firm (e.g., through a call center, business partner, salesperson, and/or Web site). Likewise, the system can be used to identify, acquire, and retain the most valuable customers and provide a framework for monitoring the level of satisfaction of these customers.

3.

Switching costs can be identified to help increase commitment from its customers. IBM should focus on investments and risk of exposure. They can do so by understanding the process in which buyers invest in their relationships with suppliers. Risk of exposure means that customers perceive more risk when buying from less established providers.

IBM and its strong brand equity should focus on capitalizing on its steady service and longtime quality reputation.

Chapter 4. Segmenting the Business Market and Estimating Segment Demand A. Chapter Overview A first step in designing effective market strategies in the business sector is to recognize that the market may be composed of many different segments, each with different needs and requirements. The focus of Chapter Four is to develop an understanding of an approach that will

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aid management in selecting and evaluating segments of the business market as well as employing market research techniques to analyze business demand.

The first section of the chapter reviews the benefits of and requirements for successful business market segmentation. First, the criteria for evaluating effective market segments are presented. In this discussion, the impact of the competitive and technological environments is explored in terms of their impact on the appropriateness of a particular segmentation approach.

The benefits of segmentation are numerous, and these benefits are discussed in detail. The important benefits include market orientation, provision of strategic guidelines, and aid in allocating marketing resources.

Section Two of the chapter discusses the bases upon which the business market can be segmented. Macrolevel bases for segmentation, which center on characteristics of the buying organization, are treated first. Next, the microlevel bases for segmentation are examined, which include the characteristics of the decision-making unit. These two discussions highlight the value of key buyer behavior concepts and secondary information sources for making segmentation decisions. Illustrations are shown which provide examples of each approach.

The third section of Chapter Four provides a discussion of the segmentation process.

Market segments are identified by evaluating the information supplied by macro segmentation bases. If the information is not adequate for developing unique market strategies, further segmentation utilizing the micro bases is required. Choosing proper market segments and isolating market segment profitability is critical.

Section Four focuses on strategic implementation of the segmentation process. Once segments have been identified, evaluation of them is focused on company, competitor, and market factors. Proper implementation is required.

Estimating segment demand comprises the fifth section. Here, the critical role of demand estimation is discussed. Accurate sales forecasts are vital for optimal strategic business decisions. Planning and control in the application of marketing strategy is impacted by precise analysis.

The final section of the chapter details methods of forecasting demand by briefly emphasizing the importance of forecasts in the decision-making process of the business marketer. This section reviews qualitative and quantitative forecasting methods. Executive judgment, sales force composite, and Delphi techniques are covered in the qualitative section.

Time series and causal analysis are covered in the quantitative section. The section and chapter end with a discussion about the importance of developing and using a composite of all forecasts to increase accuracy and to use as a standard for future individual forecasts.

B. Answers to Chapter Discussion Questions 1.

Size of company would be important because of the complexity of systems required by huge multibillion dollar firms. Whether or not the firm had previously outsourced payroll and taxes would also dictate their buying behavior.

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The new task, modified and straight rebuy would all be handled quite differently.

New task buyers would have to be educated about payroll outsourcing and assured of its security and confidentiality. On a microsegmentation basis, purchase importance would be a key variable. Firms with significant payroll (e.g. large labor forces) would have more concerns and be more thorough in their search than firms with smaller payrolls (e.g. investment bankers vs. Construction companies). The personal characteristics of the buying center members would also play a role in this decision: A firm considering the outsourcing of payroll and taxes will be most concerned with the supplier‘s integrity and reputation, the security of the information, the technical characteristics of the operation to be able to pay in a timely fashion and satisfy government tax requirements and the cost of the service.

2.

Fed Ex should start by using macrosegmentation variables such as NAIC code or size to identify potential firms or industries. Fed Ex must then determine if they segmenting by only using macro variable is acceptable. If not, they can use key decision-making unit variables to identify microsegments. They should then select target segments by examining the costs and benefits of serving these potential microsegments.

3.

Institutions experience different buying situations, stages in the purchase decision process, structure of procurement, key decision criteria, purchase strategies, and personal characteristics, as do their commercial counterparts. Each of these factors creates differences in the response to marketing stimuli and, therefore, Sara Lee may find them to be appropriate segmentation bases. For example, large school districts may purchase bakery items through a professional buyer, while smaller districts permit the cook to make these purchase decisions. A different marketing approach will be required in each situation.

4.

If the segments which result from macro segmentation exhibit distinct responses to marketing stimuli, then the segmentation process is complete at this stage. However, segmentation may not go beyond this stage if the costs outweigh the benefits of more refined micro segmentation.

5.

The sales force composite is simply the summation of product sales as estimated by each salesperson. The Delphi method, on the other hand, is more complex and involves sales estimates provided by a panel of experts or top management. The estimates by the panel are revised several times on the basis of information provided to each panel member on the estimates of the other panel members.

Eventually, a consensus of opinion is reached, providing an estimate of future sales.

6.

The limitations of the qualitative approaches include: a. A lack of systematic evaluation of cause and effect relationships.

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b. Difficulty in determining the accuracy of the approach. c. Estimates are based on opinion and judgment, which may be biased.

7.

Such features of the business market as close buyer-seller relationships, welldefined markets, the importance of high unit-value sales, and sales force knowledge of customer requirements would argue for the qualitative forecasting approaches. The benefits gained by combining qualitative and quantitative approaches are centered on the fact that each approach addresses the weaknesses of the other approach. Thus, using the two approaches in combination would provide a system of checks and balances in the forecasting process.

8.

Salesforce Einstein draws on data gathered on every user (e.g., customer or salesperson) to provide predictive analytics, natural language processing (NLP) capabilities, and machine learning to Salesforce customers. For example, with language processing, Salesforce Einstein can determine the sentiment of customers who contact a firm by analyzing emails, forms, notes, or service inquiries. By scanning the text, NLP can find patterns to quickly determine customer sentiment (positive or negative), thereby allowing a salesperson to plan for an impending customer visit.

C. Answers to Internet Exercise a.) DocuSign Inc is a software suite that allows an agreement to be signed electronically on a variety of devices. b.) For the banking industry, DocuSign provides solutions that enhance the customer experience of a bank‘s customers. For example, the DocuSign Internet Document Delivery product allows customers of a bank to view, download, and print their material on demand.

Chapter 5. Business Marketing Planning: Strategic Perspectives A. Chapter Overview Strategic marketing planning is the process of making decisions on how the firm will act; that is, evaluating marketing opportunities and determining the proper allocation of resources to realize these opportunities. Chapter Six provides a general framework for the business marketing planning process in the business marketing environment.

The first section of the chapter reviews the role of marketing strategy for the organization. It identifies the three major levels of strategy in organizations – corporate, business-level, and functional. The role of the marketing function as the driving force behind three critical customer connections is explained. The first section concludes with a discussion of © 2017 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

the importance of interplay among all three strategy levels during strategy development within business marketing organizations.

The second section of the chapter introduces the major components of the business model. Each component is defined, keys to successful development are identified, and linkages to customer benefits explored.

The last section describes the formulation of the strategic plan. Here two tools are introduced, the Balanced Scorecard and the Strategy Map. Each of the four components of the Balanced Scorecard is reviewed and the use of the scorecard to connect performance measures to planned vision and strategy is discussed. At the end of this section, the Strategy Map is introduced as a tool that utilizes the balanced scorecard components and allows managers to develop a visual representation of the cause-and-effect relationships that affect strategic direction.

B. Answers to Chapter Discussion Questions 1.

Often, conflicting positions are embraced by separate divisions because of the inherent nature of the company itself. One of the most significant problems is that the company stresses success of the firm as a whole, but then rewards departments for individual performance. Also, the standards on which managers are rewarded often conflict. For example, marketing managers are evaluated (rewarded) on the basis of sales and market shares, production managers are evaluated on manufacturing efficiency and cost effectiveness. So while marketing managers are running promotions to increase sales, production managers are being hurt because the high demand (sales spikes) is lowering efficiency of the system. The best way for decisions to be made is for all sides to get together and make compromises about how business will proceed in the future.

2.

At the corporate level marketers assess market attractiveness, promote a customer orientation, and formulate a firm‘s overall value proposition. At the business level, the focus is on how a firm competes in a given industry and the development of a competitive positioning strategy. Functional strategy focuses on how resources should be allocated most effectively and efficiently in support of the business level strategies.

3.

R&D is focused primarily on new product development from the technical standpoint and it keeps abreast of competitive technology. Manufacturing is responsible for planning the capacity and quantity to produce and the speed with which charges can be made to the production process logistics assess timely delivery of product and information. Conflict emerges if the goals, rewards and incentives of each function are not integrated and synchronized. When these factors are not integrated each function will behave in ways that will satisfy these goals and these behaviors may be at odds with the goals actions of other functions.

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4.

The four major components of the business model are core strategies, strategic resources, customer interface, and value network. Core strategies are linked to benefits because they provide the basis for differentiation from competitors.

Strategic resources are linked to core strategies and are the skills and resources used to deliver the core strategies for the firm. The customer interface provides benefits to customers by providing superior service when directly interacting with customers. Finally, the firms and partners that comprise the value network increase the benefits to customers because of the close working relationships that are developed.

5.

Students should be urged to consider many of the factors discussed regarding "sources of competitive advantage," e.g., skills and resources, cost and value superiority, and differentiation in assessing the firm they have selected for analysis.

6.

This will vary based on students stance. However, there are many examples that can provide evidence where companies have tried to be so inclusive in their campaigns that they run the risk of alienating some of their customers (ie. Chickfil-la, Niki, Bud-Light).

7.

A position of advantage in high tech market may erode quickly as technology changes if the firm does not take steps to maintain their superior position. But just because the pace of technology change is rapid does not necessarily mean that competitive positions will evaporate. It all depends on the company's strategic posture and their focus on creating value superiority and favorable cost positions.

Apple had a strong market position in a fast-changing high tech environment because they beat competitors to the market place with new technology. But then in the late 90‘s and the first part of this decade, that position has eroded somewhat as the company failed to meet the challenges of new and powerful competitors.

Then, Apple regained their superior technology position the past 5 years through the various versions of their iPod products. Apple will need to stay ahead of its competitors as portable media technologies evolve the next 10 years.

8.

If the new market segment required the business marketer to employ a different customer strategy to satisfy the segment, the business marketer would have to change the focus of its internal business processes to realign the processes to the new customer strategy being used.

9.

Learning and growth objectives align a firm‘s intangible assets to its strategic goals. The three primary drivers of learning and growth are human, information, and organization capital. For a firm pursuing a low total cost strategy, training of employees in total quality management, six sigma, or lean logistics and manufacturing would enable them to improve the efficiency of their operations.

For a firm interested in developing customer solutions, they may train their

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employees or align intangible assets to support customer relationship management or relationships marketing.

10.

Fed Ex is likely to be more concerned with improving the efficiency of their delivery processes to keep costs down while delivering packages and documents the next day. Therefore, Fed Ex would be focused on developing the human talent with the skills to handle these everyday tasks and to continue investing in the information technology needed to track shipments and provide strong customer service. As a technology firm, Google is also interested in learning and growth but their focus would most likely be on developing talented researchers that will develop the latest web-based technologies and innovations that will allow Google to maintain its leadership position.

C. Answers to Chapter Internet Exercise 1.

2.

Tools and solutions from ServiceNow focus on software and platform services to increase customer management, increase customer engagement, increase customer satisfaction, response times, marketing relationships, service/marketing funnels, and social media marketing. a.) The web site‘s home page prompts visitors to select a country of choice, which demonstrates the major markets 3M serves around the world. The firm serves many industries ranging from transportation and manufacturing firms to products for the home and office. b.) A number of health care products are featured on the site.

Chapter 6. ESG and Business Marketing Strategies for Global Markets A. Chapter Overview Chapter Six develops an understanding of the elements required to create effective business marketing strategies for global markets. The chapter examines the forces which drive the move to globalization, how international efforts may be initiated, key strategic marketing issues, and the need to form strategic alliances.

The first section reviews that for B2B companies to compete successfully in this challenging business environment requires them to meet the needs of both low-growth and highgrowth markets while differentiating their offerings from foreign and local competitors. The BCG Global Advantage Diamond is introduced to portray the key elements that must be developed and integrated to secure a strong position in global markets.

The second section discusses that to achieve global leadership, integrated strategies should incorporate the following elements: market access; resource access; local adaptation; and network coordination. © 2017 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

The next section reviews the variety of options available to firms to begin marketing in foreign markets, including exporting, contracting, strategic global alliances, and joint ventures.

This section also includes an evaluation and comparison of multidomestic and global strategies and the conditions that affect strategy choices.

The fourth section reviews a general framework for global strategies. From the need for a competitive position to the coordination and integration of dispersed activities, managerial advice is provided to increase the effectiveness of global strategy implementation efforts.

B. Answers to Chapter Discussion Questions 1. Carbon neutrality essentially means organizations are achieving a balance between greenhouse gas emissions produced and greenhouse gas emissions taken out of the atmosphere. Organizations that establish themselves as a carbon neutral organization help reduce expenses related to energy, resources, and waste and can appeal to customers and employees that share and expect these organizations to do their part.

2. ESG credentials help propel profitability and growth for a business marketing firm by becoming a sustainable organization with economic, environmental, and societal considerations when making business decisions. A strong ESG proposition correlates with higher equity returns.

3. This move would enable a manufacture to be very close to many of their large customers who have moved operations and production to a different area of the world. Thus they can respond more rapidly to customer requirements in that area of the world.

4. Companies can gain advantages by sharing successes around the world—taking innovations developed in RDEs back to developed markets. Thus, it is not true that products developed for special needs cannot be marketed in other countries.

5. Products and services that are poor candidates for outsourcing include those that are technically complex or protected by patents. In addition, products with complex logistics requirements or those where customers are extremely sensitive to production and sourcing locations do not make good candidates for outsourcing.

6. Products and services that are developed for a specific need in developing countries would never be created and marketed to compete in those markets but rather to meet a customer need. For example, maternal and infant care represents a large potential market in India with its infant mortality rate of 55 children for every 1,000 born. GE‘s baby warmer, developed and built in India, is aimed at this market.36 Eighty percent of Indian hospitals use baby warmers, which provide direct heat in open cradles. The appeal of GE‘s offering is its low price ($3,000), simple design, and user-friendly display board.

Ravi Kaushik, GE Marketing Director for Maternal Care, observes: ―We‘re targeting the bottom of the pyramid . . . I have the technology, and I need to get it to the lowest © 2017 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

market.‖37 The product is now sold in 62 countries, including Brazil, Russia, Egypt, and Italy.

7. A firm will generally follow a global strategy if its competitive advantage stems from upstream and support activities. This means it can perform the R&D, procurement, and operations activities centrally and develop a common marketing strategy to be used across many different countries. A multidomestic strategy, on the other hand, means the firm will develop unique strategies for each country. The rationale for this approach is the fact that downstream activities--those tied closely to the buyer's location (service)-are the source of competitive advantage.

8. Downstream activities create country-specific competitive advantages because they are focused on activities that are performed locally, like local repair and maintenance services. In this case, a firm's brand name, reputation, and service network grow out of the firm's activities in a particular country.

9. Hewlett-Packard may assign this responsibility in a subsidiary because it wants to pursue a multidomestic strategy where it allows each business unit, or subsidiary to act independently from the company‘s U.S. headquarters. The company may also believe it can create a value chain in the subsidiary country that will provide a competitive advantage, which means dispersing the responsibilities of each activity to the subsidiaries. For example, the firm may be able to capitalize on locational advantages by assigning product line responsibility to the subsidiary.

10. A global competitor can implement a consistent strategy by establishing a clear strategy, developing consistent accounting and information systems, encouraging strong relationships among subsidiary managers, and designing incentive systems that reward overall contribution to the enterprise as a whole.

C. Answers to Internet Exercise GE is broken up into 6 primary business units – Commercial Finance, Consumer Finance, Healthcare, Industrial Products, Infrastructure, and NBC Universal. There are many products within these groups that students will identify as important needs and priorities in China.

Chapter 7. Managing Products for Business Markets A. Chapter Overview

© 2017 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Managing products stands at the heart of business market strategy, as the firm's identify is established through its products and services. Chapter Seven is geared to providing a managerial framework of the product management process, focusing on the existing product line.

The first section in Chapter Seven discusses how strong B2B brands are built. A detailed explanation of building customer-based brand equity is provided. Here, a strong brand is developed through extended brand awareness, strong and favorable brand associations, positive and accessible reactions leading to intense, active loyalty as the strong brand resonates with consumers. Guidelines for building a strong brand strategy are explained.

The next section of the chapter focuses on guidelines for creating a successful brand strategy. Key considerations include making sure all employees understand the meaning and vision of the brand, developing a brand strategy, and commanding a price premium for the brand.

IBM is provided as a good example of a strong brand strategy.

Section Three centers on product quality and customer value. An explanation of quality and the importance of value to the firm is discussed and the importance of product support strategies reviewed. The meaning of value is defined as a consequence of benefits and sacrifices.

The implications of the customer view of value are discussed. In addition this section addresses the way in which sustainability strategies are transforming the competitive landscape in B2B marketing. The key conclusion in this section is that companies need to change the way they think about products, processes, and business models as they adopt sustainability as an important company priority.

Section Four covers product policy. Here, types of product lines are defined and the key decision areas are specified. The importance of accurately defining the product market is reviewed.

Section Five examines the vital importance of strategic marketing plan for industrial products. Guidelines for product positioning process are reviewed. The fifth section of the chapter delineates the importance of strong branding and reviews a pyramid strategy for developing strong brands for high-tech products.

The final section of the chapter discusses the use of the technology adoption life cycle to manage high technology products. A discussion of strategies that are appropriate for each stage of the life cycle is included.

B. Answers to Chapter Discussion Questions 1. A brand is more than a name because a brand also includes the logo, trademark, and slogan associated with developing a strong brand that is viewed favorably by customers.

Branding is a strategy problem because brands can be a key component of delivering value to customers and establishing a differential advantage with competitors.

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2. Irrespective of the two brands selected, students should compare the brand equity, personality, and attitude of the two brands. In addition, for high technology firms, students can use the levels of the brand pyramid to compare the two brands.

3. The first step a strategist can take is to make sure that every part of the organization is focused on developing strong brand awareness. Apple does this by prominently displaying its distinguishable and recognizable logo on the backs of its laptops and iPhones. It then uses its advertisements to create strong, favorable and unique brand associations that promotes Apple in a positive light as a cool product that one needs to have. Customer judgments and feelings then elicit positive feelings which in turn lead to Apple‘s products resonating with its customer base.

4.

Brand-positioning strategy should include points of difference and points of parity to determine what needs the product is meeting for its customers. Brand performance can determine functional needs like price and quality, while brand imagery can determine the customers psychological or social needs for the product. See Figure 7-1 .

5.

Technology has the ability to render today‘s product solutions obsolete in a moment‘s notice when Companies are beginning to recognize the importance of understanding brand equity. Brand equity evaluators, such as at Interbrand (www.interbrand.com), are taking a prominent role in assessing this intangible value that a brand name possesses. At the end of the day, brand equity can be the strongest asset a company possesses.

6.

To the customer, value is the key measure of a product, and value is the criteria by which a particular product is selected over competing offerings. Value relates to the customer's perception of the product's price and performance relative to other offerings. Product quality improvements contribute to profitability by providing the basis for customer acceptance of higher prices and by increasing customer-perceived value. When value is reorganized, the result is generally higher market share and lower costs. Companies should emphasize features that communicate the reason why a consumer should feel that the product contains all of the important attributes (points of parity) and then also differentiate it from other products and offer value to the customer.

7.

The product strategist would want to focus the strategies - low commitment, maintenance, growth, or niche - on those pursued by top rivals. Then, the firm's position relative to leading competitors should be evaluated in each market segment in terms of market share, quality, cost, and technology.

8.

The specific features of the competitive environment that business should use when marketing strategies are evaluated areas such as potential product/market fits, new market opportunities, number of competitors as well as determining products strengths and weaknesses.

9. Smart, connected products significantly affect competition in many industry sectors as they allow for the monitoring, control, optimization, and autonomy to help streamline and automate many of the organizations' operational activities. Additionally, Software embedded in the © 2017 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

smart, connected product or in the product cloud enables control of an array of product functions and the personalization of the user experience. These products can be controlled through remote commands or algorithms that are incorporated into the device or reside in the product cloud. ―Algorithms are rules that direct the product to respond to specific changes in its condition or environment (for example, ‗if pressure gets too high, shut off the valve‘)45 For example, customers can control their Philips Lighting hue light bulbs via smartphone, turning them on or off or programming them to blink red if an intruder is detected.

10. After a ―tornado‖, firms should concentrate on increasing the production needed to meet the increased demand. Firms should work on improving the efficiency and effectiveness of production and logistics processes, add new distribution channels, and drive down prices.

C. Answers to Internet Exercise 1.

―United Technologies Corporation (UTC) is a diversified company whose products include Carrier heating and air conditioning, Hamilton Sundstrand aerospace systems and industrial products, Otis elevators and escalators, Pratt & Whitney aircraft engines, Sikorsky helicopters, UTC Fire & Security systems and UTC Power fuel cells.‖ (accessed from www.utc.com on June 10, 2006.)

Chapter 8. Managing Innovation and New Industrial Product Development A. Chapter Overview The chapter begins with a discussion of the role of innovation in the success of an industrial firm. The first section examines patterns of strategic behavior--induced and autonomous--related to new product development. The role of the product champion is examined and three markets critical to fostering innovation in an organization are discussed.

Section Two examines the importance of managing technology. The four types of development projects that comprise technology portfolios are reviewed and the characteristics of companies that successfully develop innovations are discussed. In addition, a disruption innovation model is introduced and approaches to creating new-growth business are discussed.

Management of the new product development process is the basis for Section Three. The section begins with a review of the factors that drive a firm‘s new product performance. A review of the internal and external sources of new product development innovations ends the section.

The concluding section of the chapter deals with an analysis of the determinants of new product performance and timeliness. The importance of matching strategies to the product development project in rapidly changing markets is also discussed.

B. Answers to Chapter Discussion Questions © 2017 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

1.

It suggests that top management must develop innovative ways to foster entrepreneurial initiatives that are outside the boundaries of traditional organizational relationships and communication flows.

2.

Induced strategic behavior is consistent with the firm's traditional concept of strategy and unfolds in traditional patterns and normal reporting relationships.

Autonomous strategic behavior is true entrepreneurial activity which takes place outside traditional channels and networks.

3.

Companies need to include all levels of employees in the strategic process and encourage them to actively participate in the development of new innovations and technologies. They should allocate a separate pool of resources for innovative, risky projects and unleash their employees, making it easier for them to move between projects and departments.

4.

Low-end market disruptive strategies require enough customers willing to purchase an ―acceptable‖ product if they can get it at a low enough price and the business marketer must be able to set up a business model that leads to profits even with the low prices charged to customers. New-market disruptive strategies require either a large population that previously did not have access to or the ability to purchase the product or service or a current customer group that uses extremely inconvenient methods of using or purchasing the product.

5.

The two tests are whether there are enough customers willing to accept just good enough in exchange for the lower price and whether the firm can build a cost structure that allows them to still make profits at a lower pricing point.

6.

The critical factors that drive the successful new product development process for firms in fast-changing high-tech industries are limited structure, real time communication and improvisation, experimentation, and time pacing.

7.

It is impossible to perfectly predict the acceptance of future innovations so the use of several low-cost probes is a wise decision. By testing experimental products or teaming up on joint projects with industry leaders, firms gain knowledge and experience that can be used when a particular innovation becomes successful.

8.

Lead user analysis refers to understanding how to build the foundation, identify trends and lead users, develop and assess preliminary product ideas and develop breakthroughs. For Marriott to target the executive traveler they need to identify the types of innovations desired by this group. Here they could focus on testing concepts in their hotel chains that solve the needs of this segment.

9.

Product advantage refers to customer perceptions of product superiority with respect to quality, cost-performance ratio, or function relative to competitors.

© 2017 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

10.

The answer depends on the type of new product. Reformulated products have been shown to be successful when launched as early as possible. On the other hand, success levels were highest for original products where launch was delayed somewhat.

C. Answers to Internet Exercise 1.

Major product lines for Corning include: advanced optics, environmental technologies, optical communications, and pharmaceutical technology, which is a far cry from dishes and glassware.

D. Answers to Chapter 8 Case Question 1. A disruptive innovation represents a product or service that is not as good as currently available alternatives. But disruptive technologies offer other benefits—typically, they are simpler, more convenient, and less expensive products that appeal to new or less-demanding customers. This the imaging device produced by GE is smaller, easier to use, and it can be used my a new set of customers – primary care doctors, critical care workers and cardiologists who previously did not have a device this small or easy to use. This should not cannibalize the higher-priced imaging devices as they are used by different types of users for different reasons.

2. Strategy-wise, GE needs to identify physicians – primary care doctors, critical care workers and cardiologists and focus an extensive awareness campaign on them through a variety of media, including print, web-based and direct contact. The key is to create the awareness of the new item, it‘s relatively low cost and effectiveness in helping these health care workers do their job- ease of diagnosis. They need to target conferences and seminars attended by the target health care providers and set up displays and booths to demonstrate their product. Testimonials by new users in the different health care professions (e.g., cardiology) will be useful in spreading the awareness of the capability of the new product in diagnostics.

Chapter 9. Managing Services for Business Markets A. Chapter Overview This chapter explains the unique aspects of business services and explores the special role they play in the business market environment. Section one begins the chapter with the introduction of a solution-centered perspective that takes into account the increased importance of services in business marketing and the economy. The solution-centered perspective starts by examining the customer‘s problem and developing solutions for their problem instead of starting with the product and then thinking about customers. A comparison of the product and solutions perspectives is provided.

The second section of the chapter focuses on how to deliver more effective service solutions at profitable prices. The key is adopting a stronger relationship focus. Business marketers must adopt a relational process approach to developing a customer solution. Success here will hinge on developing appropriate mechanisms for coordinating the activities of different © 2017 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

organizational units. Customers also play a part in this process as they must be willing to adapt to the suppliers needs or contingencies as they unfold. Not all customers are viable for the solutions approach, so customers must be selected wisely.

Special challenges of service marketing and the components of service quality are the focus of Section Three of the chapter. How services are different than products and the impact on marketing is first explored, then the chapter highlights that buyers experience difficulty in evaluating quality and their evaluation is often based on perception as opposed to reality. The five determinants of service quality - reliability, responsiveness, assurance, empathy, and tangibles - are discussed. Several factors related to better customer satisfaction and loyalty are reviewed. Brief discussions of service recovery, defections, and return on quality close out the section.

Section Four is devoted to describing the service package, including the customer benefit concept, service concept, service offer, and the service delivery system. Along with the service package, physical evidence plays an important role in influencing the customer's perception of the service. Hybrid offerings are discussed at length, including the evaluation of unique resources that manufacturing firms can leverage, the capabilities necessary for launching hybrid offerings, and finally, a system for classifying services for hybrid offerings is presented.

B. Answers to Chapter Discussion Questions 1.

A solution-centered perspective differs from the traditional product centric and transactional model of business because it starts by analyzing a customer‘s problem and then determines which products and services can be used to solve the problem. Home Depot or Lowe‘s could use solutions marketing by learning about their customers first and then selling them the products and services they need, even if that means ordering products not currently in the store and by not pushing pre-selected products or brands in the store to push on the customers.

These firms can also reinforce the long-term relationship nature of the solutions approach by collecting customer information and tracking it over time to ensure that customer needs are met.

2.

One important service would be training employees to properly use the equipment and utilize the special features. It would also be important to offer timely, effective service recovery programs when the machine breaks. Buyers can collect information from current users to help evaluate the value and quality of service offerings.

3.

Research reveals that solution effectiveness hinges on particular customer behaviors as well. First, a supplier can do a more effective job if the customer is willing to adapt to the supplier‘s needs or to unforeseen contingencies as they arise. Customer adaptiveness refers to the degree to which a customer is willing to adjust its routines and processes to accommodate a supplier‘s products.

Therefore, solution effectiveness is enhanced if the customer provides information

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and guidelines concerning the priorities and sensitivities of various stakeholders in the customer firm. Without getting the help and suggestions from the customer, the supplier simply cannot create an effective and creative service solution to help a buyer.

4.

Customer satisfaction is closely linked to customer loyalty, and, in turn, to longterm profitability. In one study, it was found that very satisfied customers were far more loyal than satisfied customers. They were several times more likely to repurchase company products than satisfied customers. Some customers may become so satisfied that they convert others to a firm‘s product or service.

5.

A recovery process works to turn poor service performance into a positive experience for the customer. For example, a business person whose flight is delayed might be given a free ticket for a future flight and a complementary meal.

In this way, the traveler‘s faith in the airline is restored, if not deepened.

6.

First, the company must carefully delineate the core benefit they will provide. In the case of offering consulting advice on e-commerce and web site strategies, the major benefit offered is the technical expertise that the customer does not have. It allows the customer to have a presence on the web by utilizing the services of a company with extensive experience. Next, the service concept should be defined, and this includes the general benefits to be provided: attractive web page, revenue growth, low-cost, maintenance of web page etc. The service offer follows from the service concept and it spells out the actual services to be provided: server maintenance, webmaster etc. The final element is the delivery system - how the service is provided: people (programmers, technicians, webmasters), equipment (hardware, software), and procedures (schedules, interface with ordering and other logistics processes).

7.

Physical evidence plays an important role in creating the atmosphere and environment in which a service is bought or performed, and it influences the customer's perception of the service. It is the tangible aspect of the service package.

8.

One approach is to offer off-peak rates to business people for meetings, conferences or overnight stays. Another approach would be to bundle a variety of hotel and travel services together and offer an attractive price for the bundle of services.

9.

HP could drew on its deep knowledge of consumer usage of its machines across its installed base and developed services for improving how the copiers are used and ways to improve the productivity of the copying process. If HP were to provide maintenance and repair services to its installed base, product usage data can be systematically gathered and used to tailor service offerings that advance customers‘ goals.

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10.

Product life cycle services are services that facilitate the customer‘s access to a manufacturer‘s product and ensure its desired functioning during all stages of its useful life from delivery, installation and maintenance to recycling or disposal.

An example would be timely maintenance and repair services for an aircraft engine. Although they are expected by business customers, they can assume a valuable role in building the firm‘s reputation as a trusted service provider in the market. Process delegation services are those services where a manufacturer performs specific processes on behalf of the customer, for example, as the text points out, DuPont not only supplies the paint but also manages Ford Paint shops.

PDS usually involve an integrated mix of product and service elements, a highly customized offering tailored to specific customer requirements, and often, a complex gain-sharing agreement.

C. Answers to Internet Exercise 1.

IBM Watson Assistant Solutions using AI has the ability to use a virtual agent that are customizable to your organization to address customer inquiries. With the new AI capabilities it is becoming harder to determine AI from an actual person.

D. Answers to Chapter 9 Case Questions 1.

2.

The core service concept in this business is providing relief from tasks (payroll processing) that is not a core function of the business for a Paychex customer; and the service is provided in a secure and reliable manner. The benefits to the customer are numerous: relief from non-essential tasks, ability to focus on core offerings to their customers, reliability with payroll processing, elimination of the need to hire and train people in the area of payroll processing.

The challenges in marketing Paychex‘s services are focused on the intangibility of the service, concerns of the potential customer for integrity of their payroll information, the lack of control over the process, and the fact that the individuals who perform the service for Paychex will ultimately determine the effectiveness of the company‘s relationship with its customers. Paychex also invest in the ―capacity‖ to service all their customers at peak times.

Chapter 10. Managing Business Marketing Channels: The Omnichannel Imperative A. Chapter Overview The most elaborate and well-designed product, promotion, and pricing strategy may fail miserably if the business marketer is not able to develop effective marketing channels In this sense, design and management of the channel must reflect the broad marketing goals established for the entire marketing strategy and be integrated with all strategic elements. The goal of Chapter Ten is to provide a firm grasp of the essentials of designing and administering the marketing channel. © 2017 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

The first section of the chapter focuses on the basic nature of the business marketing channel. In particular, the channel tasks are specified and the nature of direct and indirect distribution is then explored. Finally, the need to employ a variety of channels, including echannels, is delineated and related to the nature of the market situation.

Distributors and manufacturers' reps are the key channel participants in the market, and Section Two is oriented to providing an understanding of their operations. First, the "typical" distributor is described and then types of distributors are discussed. Rep operations are discussed and conditions that make it appropriate to use them are reviewed.

The third section of the chapter is focused on the broad dimensions of the channel design process. Channel objectives, constraints, and pervasive channel tasks are reviewed first. Next, the four issues that comprise specification of channel alternative are discussed. The final part of the section treats the channel selection process and presents an approach for carefully evaluating channel alternatives.

Channel administration is the center of attention in the fourth section. First, the selection of channel members is addressed. Next, the motivation of channel members is analyzed. The final aspect of this section focuses on channel conflict and the need to build strong relationships to manage channel conflict.

B. Answers to Chapter Discussion Questions 1.

The tasks performed in a typical sales cycle are lead generation, lead qualification, bid and proposal, negotiation and sales closure, fulfillment, and customer care and support. Many firms are using integrated multichannel models to serve customers. Therefore, it is quite common for one channel to perform certain tasks, such as lead generation and lead qualification, and then pass on qualified leads to another channel that serves the same customer. One key is to have the technologies and software available to the channels to support this integrated effort and exchange of information.

2.

Answers may vary. Small and medium-sized businesses with one channel strategy vs large corporate customers with another channel path. A channel management strategy begins with an understanding of the intermediaries that may be used. Primary attention is given to two: (1) industrial distributors and (2) manufacturers‘ representatives. They handle a sizable share of business-tobusiness sales made through intermediaries. From here you will need to move to channel design: Define customer segments, Identifying customers channel needs by segment, assess the firms channel capabilities, benchmark to competitors, create channel solutions for customers needs, and evaluate and select channel options.

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3.

Yes, there are already platforms selling for the B2B sales similar to B2C. With B2B marketplaces is an e-commerce platform that allows third parties to sell directly to customers such as Amazon Business and Alibaba.

4.

Direct channels are associated with large manufacturers, large orders, high levels of buyer analysis prior to purchase, greater technical complexity of the product, later stages of the life cycle, nonstandardized products, and infrequency of purchase. Indirect distribution is more common when the opposite of these conditions prevail.

5.

Distributors perform the full range of marketing tasks -- from contacting customers to provide credit. Reps, on the other hand, perform more limited tasks-they neither take title nor possession, but perform the selling job for their clients.

6.

Reps will be most likely used when the product is not standard, the product tends to be technically complex, gross margin is not large, the market is comprised of relatively few customers that are concentrated, and customers order infrequently and allow long lead times.

7.

The number of channel levels is frequently dictated by the nature of the product (frequently purchased, small unit value item), where many channel levels are required to distribute the product efficiently; company financial resources may not permit the firm to use its own sales force.

8.

Entrance into a new market segment may initially require the firm to abandon a policy of direct distribution as the market potential in the new market may not economically support the costs associated with a direct sales force. As a result, the firm may use reps or other middlemen whose costs are variable and tied to the level of sales volume.

9.

They are in conflict because actions by either one affect the profits of the other party. Thus, a manufacturer's request of a distributor to hold more inventory will affect the distributor's costs and resultant profits. Conflict can be reduced by viewing the relationship as a partnership, providing assistance of all kinds to the distributor and using the manufacturer's sales force to train and help the distributor's sales force.

10.

Efficiency and effectiveness in the channel would not necessarily be improved by reducing the number of links in the channel. In fact, performance may be reduced by such actions. Business middlemen perform key marketing tasks which must be performed in bringing products to industrial customers, and these tasks must be performed regardless of who performs them. Typically, middlemen who are specialized in the performance of these channel tasks are generally able to perform them more efficiently than any other organization. Thus, each link in the channel has specific tasks to accomplish, and these tasks can be accomplished by the middlemen most efficiently and effectively.

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C. Answers to Internet Exercise The students should have no problem identifying many services provided by Sysco to its customer groups. For example, Sysco offers restaurant owners many services including credit card processing, Web-enabled training and support for managers and employees, merchandising/menu advice, branding programs, as well as recipes.

Chapter 11. Supply Chain Management A. Chapter Overview In today‘s competitive marketplace, as buyers demand higher quality products, lower costs, and better service, suppliers are turning to Supply Chain Management to achieve all three goals. Chapter Eleven is devoted entirely to Supply Chain Management and examines the role of supply chain management in business marketing, discusses the importance of integrating within and among firms, explains the critical importance of logistics processes, and reviews the importance of balancing logistics costs and service to achieving an optimum supply chain system.

The first section of the chapter defines supply chain management and reviews the critical importance of the partnership requirements of successful supply chains. Section Two provides a more thorough review of supply chain management. This section begins by explaining that an effective supply chain can be the source of competitive advantage. The goals of supply chain management are then presented and the benefits of supply chain management to the firm are reviewed. Section Three briefly reviews several suggestions for successfully implementing SCM systems.

Sections Four, Five and Six examine the crucial role of logistics in supply chain management. These sections begin by identifying the two primary product flows in logistics and the differences between logistics and supply chain management. Next, the importance of integrating the sales, marketing, and logistics departments is discussed and the importance of logistics in meeting the demands of just-in-time inventory systems is explained. This section concludes with a discussion of total-cost approach and the need to implement a trade-off approach when developing logistics strategies because of the interactive nature of all logistics decisions. Section Six reviews methods for calculating logistics costs.

The final two sections of Chapter Eleven examine business-to-business logistical service and logistical managements. The service section discusses the vital importance of logistics service to supplier evaluations. The last section reviews the impact that logistics facilities, transportation, and inventory management decisions can have on the firm. It ends with a review of the continued use and importance of third-party logistics firms.

B. Answers to Chapter Discussion Questions © 2017 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

1.

Supply chain management is the integration of business processes from end user through original suppliers that provides products, services, and information that add value for customers. There are firms that supply raw materials, process information, design software, and perform wholesaling functions. Functions performed in the supply chain include sourcing, procurement, product design, production scheduling, manufacturing, order processing, inventory management, materials handling, warehousing, and customer service.

2.

Effective SCM can lower costs and improve customer service for all firms in the supply chain, making better use of assets. By improving service and lowering costs simultaneously, SCM should also lead to increased revenues for firms.

Because of the complexity and scope of SCM, effective SCM systems should lead to long-term competitive advantage that is hard to imitate.

3.

Cooperation among supply chain participants is necessary because of the tremendous scope of SCM as a boundary-spanning and function-spanning endeavor. Cooperation is a central component to achieving the four goals of SCM.

4.

First, waste can be reduced by eliminating the duplication of efforts by firms in the supply chain. For example, instead of having each firm in the supply chain producing demand forecasts or maintaining inventories, assign important logistics responsibilities to those firms in the supply chain that are the most equipped to handle the tasks. Waste can also be reduced by harmonizing operations and systems among supply chain members so that the process for carrying out tasks is standardized. Finally, it is important for supply chain members to maintain and improve the quality of its products and operations.

5.

An important effect of the Internet is its impact on transactions. It allows marketers to make more information available to buyers at a lower cost. The information is exchanged in real time, can be updated regularly, and is available to customers continuously. The use of the Internet can also improve the new product development process, reduce channel inventories, support efforts at reaching new target markets, and improve relationships through customization of products and services for each customer.

6.

An organizational buyer needs to consider the totality of the supply chain when making decisions on sources of supply. Finding the cheapest supplier should not be the only criterion used because of the implications of the actions of one firm on the rest of the supply chain. For example, cost savings from finding a low cost supplier may be offset by the increased inventory costs resulting form the need to increase average inventories in a manufacturing facility because the supplier is inconsistent in their delivery of the products. A buyer must consider the total costs and service issues of major purchase decisions. Therefore, it is possible that paying the highest price may actually lead to the best overall cost or service results for the firm.

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7.

Increasing transportation costs usually implies that faster modes of transportation have been employed. If faster transportation modes are used, order-to-delivery times are reduced. Shorter order-to-delivery times mean that buyers can use lower inventory re-order points and less buffer inventory, significantly reducing inventory costs. Lower average inventories can also reduce handling costs. The reduced handling and inventory carrying costs could be greater than the increased transportation costs.

8.

Logistics managers should use the total-cost or trade-off approach because all logistics decisions affect other departments within a firm or firms in the supply chain. Reducing transportation costs may adversely affect inventory costs.

Reducing inventory levels to lower costs might lead to lower levels of customer service. These tradeoffs occur both within the firm and among supply chain partners. Firms must recognize the interactive nature of all logistics decisions and search for the optimal combination of cost and service levels based on customer needs and supply chain capabilities.

9.

Buyers want to minimize inventory levels but avoid the stockouts that will stop them from satisfying their customers at a different level of the supply chain.

Suppliers who provide inconsistent service delivery performance force buyers to carry higher levels of inventory so that customers can be fulfilled even when deliveries are late.

10.

For business marketers, there is increasing pressure to consistently deliver high quality products to customers at low costs with higher levels of customer service.

The increased adoption of sophisticated purchasing and inventory control systems by manufacturers means that business marketers must ensure that their ability to meet the increasing demands of manufacturers for faster, more frequent delivery of products to their facilities is improved. This often means a commitment to supply chain principles and the investment in technologies to support the increased service requirements.

C. Answer to Internet Exercise 1.

A visit to www.yrcw.com will show students that many on-line tools are available to YRC‘s customers, including transit times, online visibility of orders, rates and claims resolution. All of these services can significantly improve customer satisfaction, particularly to the extent that they can use the web site to self-manage their customer service needs quickly and effectively.

Chapter 12.

Pricing Strategy for Business Markets

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A. Chapter Overview The determination and administration of the price of business products is a complex and demanding process. The pricing process must be integrated with all other elements of marketing strategy and should reflect an understanding of the buyer's perception of the product's cost and benefits. The focus of Chapter Twelve is to provide a comprehensive framework for understanding the diverse factors that impinge on the determination of the price of industrial products.

The chapter begins with a discussion on the meaning of value in business markets. Value is defined as a combination of benefits and sacrifices, and types of benefits and sacrifices are identified.

The second section summarizes the key factors that need to be considered during the industrial pricing process. Pricing objectives need to be established at the outset of the pricing process. Next, the section examines the determinants of demand as they relate to price determination. Included in this treatment are the concepts of value, cost/benefit analysis, and search behavior/switching costs. The section closes with an examination of cost classifications and competitive factors.

Pricing strategies vary across the time frame associated with the product life cycle. The third section is focused on a discussion of skimming versus penetration pricing. In addition, price decisions associated with product line considerations are explored.

Responding to price attacks by competitors is the focus of Section Four. A systematic framework for evaluating whether to match competitive price reductions is introduced and discussed. The final section of the chapter explores the complexities of competitive bidding.

The differences between open and closed bidding are discussed and the strategies for bidding reviewed.

B. Answers to Chapter Discussion Questions 1.

There are two types of benefits – core and add-on. For Fed Ex, their core benefits are the ability to be included in business customers‘ consideration sets because of the basic levels of service they provide to those firms that ship packages and cargo with them. The ability to track shipments and packages and the commitment of Fed Ex to develop close working relationships with larger customers are also part of core benefits. Add-on benefits would include the commitment demonstrated by Fed Ex in their relationships with customers and the flexibility and commitment they make to help their customers achieve the best solutions. Fed Ex has logistics consulting services that can be used in tandem with their customers to develop the best solutions to customer needs – the expertise provided by this service is an additional benefit of their core benefits of shipping products for customers.

2.

Economic value represents the cost savings and/or revenue gains that customers

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realize by purchasing the firm‘s product instead of the next-best alternative. Cost drivers create value by providing economic savings while revenue drivers add incremental value by facilitating revenue or margin expansion. Consider for a moment the value that Sonoco, a packaging supplier, provided for Lance, the snack food maker. One improvement involved the use of flexographic painted packaging film on some of Lance‘s key brands.13 These efforts drastically reduced Lance‘s packaging costs (cost driver) and, by nhancing the appeal of the products, spawned a growth in sales (revenue driver).

3.

A separate demand curve for each market segment is required because each segment has unique needs and they base evaluations of the product on these factors that are of value to them. Thus, the demand curve for each segment may be quite different depending on their unique requirements.

4.

By pursuing this strategy, a company is stressing the benefits the product provides. Some of these benefits can be functional in nature, operational, financial, or personal benefits that an individual might obtain from using the product. This focus also forces a company to examine the product from the consumer's perspective and forces a comparison of the firm's product offering to that of the competition. By doing this, a company can see whether or not its product truly is a problem solver. This focus also forces a company to look for a differential advantage over the competition on dimensions other than just the product itself. Some of the dimensions may include reputation, technical expertise, or delivery reliability. By pursuing such activities, companies move away from the commodity mentality about their products.

5.

Commodity value is the value that a customer would give to product features that resemble those of the competition, analogous to points of parity described in Chapter One. Differentiation value is the value associated with unique product attributes that differ from the competitors‘ features. This is reflective of the points of differentiation also discussed in the first chapter.

6.

First, the cost of the component relative to the total cost of the finished product should be explored. If the component is a relatively small proportion of total final product cost, demand may be somewhat inelastic, resulting in relatively little stimulation of demand. Here, a price increase might be more effective in increasing total revenue. An analysis of substitutes for the component would also suggest whether the demand would be inelastic. Finally, evaluation of the demand for the final product would also indicate whether the price reduction would help to stimulate an increase in demand. Here, reducing the component's price may permit a reduction in the finished product's price, thus expanding demand for it.

7.

The pricing process is complicated because of the wide variety of factors that impinge on how the customer will respond to a price and how competitors will react. First, each market segment has different perceptions of the product, which

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will be reflected in their relative demand elasticities. Costs, the lower floor of business prices, tend to have complex impacts. Different types of costs must be considered (direct, indirect), and costs over the life span of the product must be evaluated. These include the total costs as perceived by the buyer in using the firm's product, as well as the experience effects associated with accumulated volume. Finally, competitive reactions, which depend on the structure of the industry, will determine how effective a particular price will be. To develop a price for a business product, all the factors must be considered. First, a survey or perhaps a test market could be used to analyze how buyers evaluated the benefitcost tradeoff associated with the product. The required cost analysis will be made from internal records. Here, the key is to properly classify cost as to variability and traceability to various segments. Finally, competitive reactions can be estimated by evaluating the business structure and analyzing the extent to which the product is differentiated from competitive offerings.

8.

The pricing advantage that arises from being first to market with a new product is the ability to follow a price skimming strategy. A skimming strategy allows a company to capture early profits through charging a premium price initially, then reducing the price later in order to reach segments that are more price sensitive. It also allows a company like Intel to recover high developmental costs more quickly.

9.

This statement is true. Because there could be negative long-term consequences from engaging in a price war, business marketers need to carefully assess the expected impact of a competitor‘s price reductions before following suit.

10.

After selecting an industry and listing the key competitors, students should identify the firm(s) that appears to be constantly driving the market to low price points. Once that firm is identified, students need to determine what differentiating factor is enabling that firm from driving price down. For software, most would agree that Microsoft has established a value position in several segments of the market, such as office products, operating systems, or web browsers. Microsoft often uses the power garnered from this advantage to disrupt the equilibrium of the market.

C. Answers to the Internet Exercise 1.

Products range from hospital beds and stretchers to furniture and other accessories for patient rooms. Services include equipment and biomedical services. Students should use the benefits and sacrifices of Hill-Rom‘s products when discussing the value the firm provides of hospitals and the ability to reduce total cost-in-use for its customers.

Chapter 13. Marketing Communications and the Customer Decision Journey A. Chapter Overview © 2017 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Advertising's role in business marketing is very much different than that in the consumer market sphere. Business advertising is not so much geared to creating a sale, but to providing the salesperson with the opportunity to close a sale. Chapter Thirteen investigates the role of advertising and sales promotion in marketing strategy and provides a framework for understanding the management of this important function.

In the first section, a discussion of social media focuses on the role of social media in the B2B sector.

Often onsidered by many to relate only to the consumer markets, B2B companies are using social media to monitor what prospects are saying about their company, capture interest from prospects looking for their products and solutions, and coordinate the marketing and sales follow-ups to their social media interactions.

The second section of the chapter discusses the role of advertising in B2B marketing efforts. Then a advertising decision model is discussed that can be used in the management of business-to-business advertising. The model includes analysis of objectives, budget determination, messages, media outlets, and evaluation of advertising effectiveness. This section concludes with an important review of direct marketing tools and the increasing use and value of interactive marketing.

The next section of the chapter is devoted to the final stage in the model – evaluation of advertising effectiveness. The section outlines the important considerations associated with measuring advertising effectiveness.

The final section of the chapter deals with managing trade show strategy. The primary focus of the section is on the benefits, advantages, and effectiveness of trade shows. The section also includes guidelines for effectively planning a trade show.

B. Answers to Chapter Discussion Questions 1.

Advertising facilitates the personal selling function by increasing the awareness of the firm's name and product, thus making it easier for the salesperson to make contact with potential buyers. In addition, advertisements can reach buying influential who are unknown and inaccessible to the salesperson.

2.

Social media facilitate targeted, personalized contact across the customer experience landscape. Rather than a tactical communication vehicle, social media can augment an offering to expand the value proposition, thereby changing what people buy and how they relate to a brand.

3.

For the media, questions would include: a.

What industries are potential users? b.

Which functional areas in the firm would be affected by the purchase? c.

What are the audiences of various potential media? d.

What are the costs associated with each media?

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e. f.

What mailing lists are available by industry and function?

What is the cost associated with securing the lists?

The answers to these questions will provide the data to match media to target groups of buying influential on a cost effective basis. For the message, questions would include: a.

What are the product benefits associated with the new product? b.

Which dimensions of these benefits are salient to each group of buying influentials? c.

What associated services are salient to each group? d.

What is the general background, experience, and education of each group?

Answers to these questions will result in the ability to tailor messages to the salient benefits perceived by each buying group and insure that attention and retention will be maximized.

4.

Effectiveness measures will focus on how well the firm achieved their objectives.

Thus, the first step will be to delineate the specific communication goals designed for the advertising. Next, operational measures of performance will have to be determined; e.g., recall will be measured by the percentage of respondents who are able to remember seeing the ad in a particular media on an unaided basis.

Then, procedures for sampling respondents will be set up and actual measurements made. Efficiency relates to how well the funds allocated to advertising were used in accomplishing objectives.

A number of measures would be required. First, media allocations can be evaluated on the "cost per 1000" basis. Next, the "cost per 1000 respondents that recalled the ad" could be measured, indicating the combination of the effectiveness of the message and the media. The key here is to evaluate the efficiency in achieving the various tasks to be undertaken by advertising. The ADVISOR studies may be useful here in comparing the firm's budget to industry norms.

5.

If the message sent to each purchase influencer were the same, it could easily fail to gain the attention of many of these individuals. Each individual may have a different set of goals and perceptions regarding the product and its salient dimensions. Thus, an ad geared to one group of buying influential may have little relevance for another group whose needs are very different.

6.

Substitutions of direct mail advertising for personal selling would not necessarily be a wise strategy. Direct mail advertising plays a rather specific role in the overall communication process, and it cannot substitute for the role played by the personal sales call. Thus, direct mail is focused on creating awareness, creating image, informing, and opening the door for the salesperson. Personal selling, on the other hand, concentrates on the face-to-face communication tasks necessary to

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affect the sale. Even though direct mail is cheaper on a cost per contact basis, it can never totally fulfill the role played by the sales call.

7.

The Internet provides an opportunity to have truly interactive communication with customers and potential customers. Advertising copy can be tested over the Internet and instant feedback can be received. Marketing research can also be conducted on-line and the firm can create e-mail mailing lists by asking visitors to their home page to sign up for company news updates. One of the biggest advantages of the Internet is its low cost per exposure and the ability to efficiently reach global customers. A firm could use e-mail as a cost-effective method of collecting information from customers on their desires and preferences and then tailoring specific strategies and programs for each customer.

8.

Business-to-business advertising focuses on the communication and purchase decision-making process, and specifically on the first stages of that process. The intent of advertising is to impact what "intervenes" between the stimulus (advertising) and the resulting behavior (purchase). In this regard, advertising is directed to affect awareness and knowledge, and the goal is to take the individual through the purchase decision process. The advertising efforts must be judged on the cost per level of achievement; that is, dollars spent to achieve a certain level of awareness, recognition, and so on. These performance measures can be used to compare advertising against other communication approaches, primarily personal selling, in terms of their associated cost per level of performance.

C. Answer to Internet Exercise 1.

The www.m3glass.com Web site provides a convenient interface for consumers to search for glass product needs. Answers will vary.

Chapter 14. B2B Sales Strategies for Digital-Frist Buyers A. Chapter Overview Today‘s B2B customers are very clear about what they expect from business marketers— they want the right mix of in-person sales interactions, remote contact via phone or video, and responsive e-commerce self-service across the purchasing journey. Based on these pronounced changes in business buying behavior, hybrid selling has upended the traditional field sales force structure. To form a responsive hybrid sales strategy, top-performing B2B companies prioritize four areas: (1) agility—go remote where possible but provide in-person sales as required; (2) insights—capture valuable customer information; (3) technology—enable sales reps with optimal equipment and technology; and (4) talent—cultivate and attract diverse talent.

When properly used, social media platforms provide sales professionals with the means for prospecting, lead qualification, and for managing customer relationships after the sale.

Second, the sales organization must be appropriately structured—by geography, product, market, © 2017 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

or some combination of all three. Regardless of the sales force organization, an increasing number of business-to-business firms are also establishing a key account sales force so that they can profitably serve large customers with complex purchasing requirements.

To manage the complex web of influences that intersect in buyer–seller relationships, an account manager must initiate, develop, and sustain a network of relationships, within both the firm and the customer organization. Compared with their colleagues, high-performing account managers excel at building relationships and develop a richer base of customer and competitor knowledge that they use to create superior solutions for the customer. Compared with their peers, high-performing account managers are better able to diagnose customer requirements, mobilize internal experts, and choreograph the activities that are required to outmaneuver rivals and create the desired customer solution.

A particularly challenging sales management task is deploying sales effort across products, customer types, and territories. A properly aligned sales territory balances the workload and potential for salespersons. Good territory alignment enhances customer coverage, boosts salesperson morale by fostering an equitable reward system, reduces travel costs, and advances sales performance. Hybrid selling capabilities provide sales managers with added flexibility in planning market coverage. High-performing companies are employing sophisticated sales analytic approaches to better understand the drivers of customer purchasing behavior and to uncover high-growth market segments. Such tools can help the sales manager pinpoint highpotential customer accounts, deploy the selling effort, coordinate activities across multiple sales channels, and build customer loyalty. Leading-edge firms, such as GE, are giving heightened attention to sales force deployment analysis and to the fundamentals of sales management.

B. Answers to Chapter Discussion Questions 1. In terms of the buying center, data relevant to the composition of the buying group would be important. Here, we would like to know which individuals are involved as well as their functions, experience, and backgrounds. In addition, how they view the purchasing task (e.g., new task) would be important, as would the organization of the purchasing function. In terms of purchase requirements, the salesperson would want to know potential product applications, unique product requirements, and the specific service needs--delivery, financing, and technical support. Knowledge of the existing "in" suppliers, their product offerings, and cost structures would be relevant to the competitive aspect.

2. In terms of salesperson relationship-building efforts, customers would most likely to be more responsive in conditions of long-term horizons for the relationship, when information sharing benefits both parties and during larger volume purchases often across multiple business units of the seller.

3. As a key account manager, she will be dealing with only a handful of customers and likely will be working with a team of people from other key functional areas because key managing key accounts is more complex due to the large volume of business and the © 2017 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

buyer‘s expectations of receiving value-added services. The selling objectives focus on becoming the preferred supplier, lowering costs, and enhancing the quality of the relationship.

4. Describe the selling situations that lend themselves to remote selling and those that require in-person sales engagement. Millennials prefer limited to no interaction with sales reps while older consumers may prefer in-person sales engagement.

5. Hybrid selling orchestrates the customer decision journey across multiple touch points, utilizing a combination of channels including in-person, remote, and digital self-service interactions to meet customer needs. Hybrid sales reps spend at least half of their time working remotely. To sense and respond to B2B customer needs, top-performing companies center on four priorities in forming a hybrid sales strategy: agility, customer insights, technology, and employee talent.

6. Salesperson job performance is largely a function of three factors – motivation, ability, and perceptions of how to perform roles. These factors can be influenced by personal, organizational, and environmental factors. Sales managers can improve the performance of average salespeople by increasing motivation, using training to increase ability and aptitude, and by making the role of the salesperson clear through clear communications from supervisors.

7. Market potential is valuable because it indicates how much business is available in a territory. Thus, budgets can be allocated on the basis of available business and salespersons can be evaluated in terms of sales results relative to potential. Concentration indicates the amount of business available in large accounts. Here, sales personnel can be directed to focus their efforts on the few large accounts and tap the majority of the potential. Dispersion refers to the geographic spread of accounts throughout the territory. If accounts are dispersed, quotas and expected performance must be adjusted downward to reflect the increased travel time.

8. One step can be to provide training and socialization that make role expectations clear to the sales force and reduces confusion about performance goals. Socialization can also reduce ambiguity about the nature of the job for new or current salespeople, which should lead to improved commitment and motivation.

9. Sales force job satisfaction can be enhanced by providing accurate expectations for performance, eliminating conflicting demands on the salesperson, and providing certainty to the salesperson regarding performance expectations and evaluation criteria. Generally, role ambiguity and role conflict are the biggest contributors to salesperson dissatisfaction with their jobs.

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10. If sales territories are not aligned properly, then some salespeople could be overloaded with low potential customers, and thus they do not have the opportunity to earn the commissions that would come from having more high potential customers in their territory

C. Answer to Internet Exercise 1.

Case studies profile a number of customers that have used Oracle‘s CRM products are readily available if the students follow the instructions provided in the chapter.

D. Answer to Chapter 14 Case Question 1.

When determining which accounts represent the best accounts or potential customers, there are many criteria YRC Worldwide should consider. They should assess the potential sales volume of prospects, determine the number of organizational members that will be involved in the purchasing process, and identify those prospects that appear willing to develop strategic relationships with YRC Worldwide.

Chapter 15. Marketing Performance Measurement A. Chapter Overview A marketing control system provides the means whereby the business marketer can evaluate past performance and utilize performance data in planning future programs. As such, the control system is a vital input to the development and planning of marketing strategy. To generate data that permits evaluation of past performance and provides insights for developing future strategies, careful attention must be paid to controlling business marketing strategies.

The first section of Chapter Fifteen briefly reviews the components of the Balanced Scorecard which was first introduced and discussed in more detail in Chapter Six. Next, the concept of a Strategy Map is introduced. Strategy Maps incorporate the components of the Balanced Scorecard into a visual representation of the cause-and-effect relationships among the components of a company‘s strategy. A process for developing strategy using the strategy maps in then reviewed.

Section Two briefly reviews the importance of effectively allocating resources to the appropriate strategic elements. Guidelines are introduced to aid the business marketer during the allocation process.

Section Three reviews the four primary levels of marketing control – strategic, annual plan, efficiency and effectiveness, and profitability. The fourth section of the chapter discusses the critical importance of implementation to the success of even the best strategic plans. This section discusses the strategy-implementation fit and the four implementation skills needed by marketing managers. It concludes with a discussion of the use of the marketing strategy center as business marketing implementation tool. © 2017 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

The last section of the chapter and book introduces a figure that illustrates the major topics covered in the text and how they are integrated with each other.

B. Answers to Chapter Discussion Questions 1.

A new internal business process may be necessary because each market segment responds to a different value proposition, and it is through the business processes that the value proposition is created. Operating, post-sale service and innovative processes may need to be changed to focus on the values sought by the new segment.

2.

The first thing the manager must do is undertake further analysis to be able to chart the correct course of action. The firm needs to determine whether the unprofitable customers can be made profitable by developing more efficient processes for producing and delivering products and services to them. If processes can‘t be changed, it may be necessary to raise prices for the products and services bought by these customers.

3.

The strategy map, which utilizes the balanced scorecard approach to performance measurement, involves identifying target market segments, isolating critical internal processes that the firm must develop to deliver value to customers in these segments, and selecting the organizational capabilities that will be required to achieve customer and financial objectives. The financial measures are linked to a sequence of actions to be taken with financial processes, customers, employees and systems to deliver the desired long-run economic performance.

4.

Performance is related to achieving the objectives specified in the plan and the efficiency with which the objectives were achieved. Thus, the information system would need to supply data relating to objectives--profits, market share, sales etc.-for each segment. Sales and profit performance relative to potential would need to be evaluated for each segment so that allocation decisions for the next planning period could be made. Thus, the information system would also supply data on potential by segment. Finally, to evaluate efficiency for each segment, data on marketing costs by segment would be required. The net result would be extensive analysis of segmental goal achievement relative to expenditure levels and market potential. Good or bad performance would be based on a comparison of actual results to planned results.

5.

The firm needs to be able to measure performance of the products in each NAICS segment. Thus, they will need to associate the costs and revenues for each product with each of the five NAICS groups. Advertising effectiveness by product can be evaluated, but advertising by NAICS segment cannot, since there is no way to effectively relate expenditure levels to each NAICS group (unless, of course, advertising to each group involves separate and totally distinct media).

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Selling effectiveness for each product should be monitored if it is possible to relate salesperson effort to each product and each NAICS segment.

6.

For advertising, if the level of sales-per-dollar expenditure is greater for one product than for others (all other things equal), budgets could be more profitably used by reallocating funds to the product with the highest sales-per-dollar of advertising expenditure. However, levels of potential should also be considered, and the appropriate measure might be percentage of potential achieved per dollar of advertising expenditure. For salespersons, sales performance relative to potential would suggest where funds should be allocated. It may be that the salesperson has exhausted the potential where another has hardly tapped the full potential. Thus, the shifting of funds to the products with the most untapped potential may yield good results.

7.

Expenditures need to be based on potential business available and the level of competitive action in the segments. Thus, market potential in each region must be evaluated. This gives the manager some idea of what there is to "shoot for." In the Midwest, the 20 percent increase in expenditure resulted in only a 6 percent increase in sales, suggesting that either competitive activity is especially great or that market potential is not significantly large. In addition, the results obtained may be a result of inadequate structuring of the marketing mix. Thus, what is required is a system that would indicate the relative efficiency and effectiveness of each marketing mix element. A careful evaluation of the responsiveness of customers to adjustments in price, channels, promotion, and product is required so that budgets can be allocated to that area of the marketing mix with the greatest elasticity of response. A final aspect of the approach would be to establish cost standards for each marketing mix element based on what it is the element is to achieve. In summary, analysis of competition and potential provides a base for establishing objectives. The objectives then serve as a standard for allocating total funds and allocating funds among the mix elements. The mix allocation decisions are also predicted on the response elasticity of customers within the regions.

8.

The control system provides information on how the firm performed in the past and, as a result, suggests where adjustments need to be made in the future. To accomplish these objectives, management needs to evaluate the overall direction of the firm (strategic control); how the firm performed last period relative to plan (annual plan control); how each element of the marketing mix performed (strategic element control); and where the firm is making or losing money in terms of important segments (profitability control).

9.

If the product is not delivered in a timely basis to customers, the product, despite its superior qualities, will have little value to the buyer. Thus, although the strategy is sound, a breakdown in logistics services totally wipes out all the good aspects of the firm's product design, communication, and pricing strategy.

Similarly, if the buyer has trouble learning how to use the product, and technical

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service personnel are ineffective in training users, the firm will be doomed to failure, despite having a good strategic plan.

10.

The implementation challenges for the industrial firm are focused on Interfunctional coordination to a greater degree than they are for consumer firms.

Thus, the industrial manager must concentrate on negotiating market-sensitive agreements and developing coordinated strategies with other members of the firm.

C. Answer to the Internet Question 1.

McKinsey Quarterly provides some valuable insights on strategic marketing issues so students should have no problem finding a recent article for classroom discussion.

D. Answer to Chapter 15 Case Question 1.

Danaher can and should apply a common set of metrics across their wide ranging businesses that center on the key outcomes expected by the company, regardless of which market segment they are focused on. Although the outcomes may be very different in each setting or market, the metrics used for evaluation will be the same. Thus a key metric might be net margin earned in the segment. So net margin is a common metric, but the expected level of achievement on the metric may be quite different when looking at different segments of the business. Thus, for dentists, the expected margin might be 12 percent where as it may be 18% for the health science market due to a host of factors relevant to that sector.

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