Quiz 7: Customer-Driven Marketing Strategy: Creating Value for Target Customers

Which is the largest segment of the business market? What role does the Internet play in the B2B market? What role do resellers play in the B2B market?

W. Grainger has such a good handle on who its 2 million business customers are that it recently redesigned its website to cater to two specific types: buyers in the field, using any of Grainger's 900,000 maintenance and repair products, and purchasing agents, placing orders for Grainger products from corporate headquarters. Customers who need a product right now in the field can enter their ZIP code to find out whether one of Grainger's 400 U.S. branches is nearby and has the required item. (The company has 600 branches worldwide.) If so, they can pick it up, often the same day. Purchasing agents take a longer view of their inventory, and they like Grainger's ability to recognize them online, tell them what they've ordered in the past, and help them check the status of their current orders. Both types of customers benefit from Grainger's mobile apps. Field workers can request purchasing approval for needed items, while purchasing agents can approve the requests even if they're away from their desks, and without logging on to Grainger's website. Anyone ordering from the website can also use the handy click to chat or click to call buttons to directly connect with a Grainger customer service rep for help. In fact, the website alerts Grainger's staff when a customer is having a problem with an order, so a customer service employee can step in with a chat or call invitation to offer immediate help. Grainger's successful development of its e-commerce division has enabled it to grow its online business more than twice as fast as its base operations, increasing it 17 percent in one recent year to reach more than $2 billion in annual revenues. According to the company's vice president of e-commerce, customers love to tell stories about how the company got them out of a bind with its huge inventory, convenient ordering process, and speedy response. Many of Grainger's customers are in government offices or schools; in heavy or light manufacturing operations; or in retail, wholesale, fleet maintenance, or asset management. "We're doing our thinking around customer experience," the company's vice president of e-commerce says. "We're doing all we can to help our customers make the right decisions." QUESTIONS FOR CRITICAL THINKING 1. Why is it important for W.W. Grainger to understand exactly who its B2B customers are? 2. In what other ways can Grainger provide a good customer experience via its website and mobile apps?

Imagine you are a wholesaler for poultry products such as chicken and eggs, which are produced by a cooperative of small farmers. Describe what steps you would take to build relationships with both the producers-farmers-and retailers such as supermarkets.

Suppose you work for a well-known local restaurant, and a friend of yours is an account representative for a supplier of restaurant equipment. You know the restaurant owner is considering upgrading some of the kitchen equipment. Although you have no purchasing authority, your friend has asked you to arrange a meeting with the restaurant owner. You have heard unflattering rumors about this supplier's customer service. Would you arrange the meeting between your friend and your boss?

Marketing to airlines. Boeing and Airbus are major manufacturers of commercial aircraft. Visit the websites of both firms. After you review the websites, prepare a report that compares and contrasts the marketing strategies employed by both firms. www.boeing.com/commercial www.airbus.com

As a team or individually, choose a commercial product-such as computer chips, flour, paint, or equipment-and research and analyze its foreign-market potential. Report your findings to the class.

How many firms throw open their doors to the business community, essentially offering access to trade secrets so other companies can learn and grow? Zappos does this-in fact, the online shoe retailer has created an entire division devoted to the effort, called Zappos Insights. Based on the company's core value of open and honest communication, Zappos conducts business-to-business marketing in an unusual way: giving away information for free. Zappos, an Amazon company, is well known among other businesses for two things it does extremely well: providing top-notch customer service and building a culture that spreads happiness. Zappos' focus on customer service was born of necessity. When it started in the late 1990s, the company didn't have any money to market the novel idea of online shoe selling. So its founders sank everything they had into customer service, including the idea of free shipping both ways. As the company built its business and its reputation, it also created a culture in which people liked to work. "It's an environment where people are in service to each other," explains Robert Richman, product manager for Zappos Insights. Zappos' expertise in customer service has become a product itself, as Zappos Insights offers training to other firms in how to do what it does so well. Access to the Zappos culture starts for free, with a tour of the company and information available to everyone online. From there, businesses can join Zappos Insights and pay for various levels of training, such as a two-day onsite boot camp at Zappos or a customized program conducted at an individual company's location. Membership benefits include training modules on leadership development, techniques for keeping team members engaged and empowered, and strategies for delivering Zappos' signature "WOW" service to customers. At a one-day seminar, a business owner or executive learns applications for tenets such as "culture drives success," "getting the culture right," "getting the right people on board," "creating a fun physical environment creates energy," and "communication is everything, and everything is communication." These aren't just taglines. They are organizational values that Zappos has proved to be successful. Zappos segments its B2B customers by sifting through the data it has collected on companies that request the free portion of its program and determining what kind of business they do (customer type) as well as how they might use Zappos training to further their business (end-use application). In essence, explains Richman, it's about "offering a lot of free value and then seeing who wants to go deeper." In fact, Zappos Insights doesn't advertise or send direct email; for the most part, companies come to them. They may be as varied as Google, Eli Lilly, and Intuit-but they all want one thing: a culture driven by customer service. Why isn't Zappos worried about sharing its methods? "Culture can't be duplicated because it's based on people," says Richman. "So because of that, it's completely different when transferred from company to company." The decision for an organization to pay for an in-depth membership to Zappos Insights requires consideration of certain factors, such as price (there are several levels) and availability (businesses can attend workshops and seminars at Zappos, or have Zappos come to them). The buying situation itself varies as well. As a client enters into a new relationship with Zappos Insights, it's a newtask purchase. Managers are involved not only in the purchase but probably in the experience itself. If a company continues its membership, adding services, upgrading, or renewing, it becomes a modified rebuy. Reciprocity also occurs, as some of Zappos' vendors are enrolled in the Zappos Insights program. When you think about strategies for businesses marketing to each other, you might not necessarily consider the strategy of delivering happiness. But Zappos Insights places the concept of happiness in the business environment at the top of its list. The training programs offered by Zappos Insights "play into the larger vision of delivering happiness, because we are essentially training the people who are responsible for hundreds of thousands of other people," says Richman. "We've seen the trickle effect." As Zappos trains companies to build places where employees like to work, all those employees deliver better experiences to their customers. "It's a rising tide that raises all boats," Richman muses. "If we create stronger cultures, everybody in business will have better relationships." Questions For Critical Thinking 1. Describe the buyer-seller relationship between Zappos Insights and its business clients. 2. How would you classify the business market demand for Zappos Insights training? Explain your answer.

How is customer-based segmentation beneficial to B2B marketers? Describe segmentation by purchasing situation.

Describe an industry that might be segmented by geographic concentration. Then identify some of the types of firms that might be involved in that industry. Keep in mind that these companies might be involved in other industries as well.

Suppose you work for a well-known local restaurant, and a friend of yours is an account representative for a supplier of restaurant equipment. You know the restaurant owner is considering upgrading some of the kitchen equipment. Although you have no purchasing authority, your friend has asked you to arrange a meeting with the restaurant owner. You have heard unflattering rumors about this supplier's customer service. Would you mention the customer service rumors either to your friend or your boss?

Marketing to small businesses. According to some experts, there are important differences between marketing to large businesses and marketing to small businesses. Go to the websites listed here and review the material. Prepare a summary you can use in a class discussion on the topic. www.gianfagnamarketing.com/blog/2010/11/03/landingthe- big-one-10-tips-for-selling-to-large-companies www.marketingsherpa.com/marketing-to-smallbusinesses- category.html#

In pairs, select a business product in one of two categories- capital or expense-and determine how derived demand will affect the sales of the product. Create a chart showing your findings.

How do the sizes and numbers of buyers affect B2B marketers? Why are buyer-seller relationships so important in B2B marketing?

Imagine you are in charge of making the decision to lease or buy a fleet of trucks for the moving company for which you work. What factors would influence your decision and why?

Suppose you work for a well-known local restaurant, and a friend of yours is an account representative for a supplier of restaurant equipment. You know the restaurant owner is considering upgrading some of the kitchen equipment. Although you have no purchasing authority, your friend has asked you to arrange a meeting with the restaurant owner. You have heard unflattering rumors about this supplier's customer service. Would you try to influence the purchase decision in either direction?

Selling to the federal government. The General Services Administration (GSA) purchases billions of dollars' worth of goods and services for various federal agencies. Visit the GSA's website to learn more about selling to the federal government. What products does the GSA purchase? Who may sell products to the federal government? What are the requirements to become a federal government vendor? www.gsa.gov/portal/category/100000

Imagine you and your teammates are buyers for a firm such as Olive Garden, Dick's Sporting Goods, Marriott, or another company you like. Map out a logical buying process for a new-task purchase for your organization

Give an example of each type of demand.

Do you think online selling to the federal government benefits marketers? What might be some of the drawbacks to this type of selling?

Form a team to conduct a hypothetical team-selling effort for the packaging of products manufactured by a food company such as General Mills. Have each team member cover a certain concern such as package design, delivery, and payment schedules. Present your marketing effort to the class.

For what reasons might a firm choose an option other than making a good or service in-house? Why is outsourcing on the rise? How is offshoring different from outsourcing?

Conduct research into the U.S. government's purchasing process. Select a federal agency or department such as the Environmental Protection Agency, the National Aeronautics and Space Administration or the Department of Health and Human Services. What types of purchases does the agency make? What is the range of contract amounts? Who are the typical suppliers? What type of process is involved in buying?

What are some of the environmental factors that may influence buying decisions? Identify organizational factors that may influence buying decisions. Describe the role of the professional buyer.

Why are there more steps in the organizational buying process than in the consumer buying process? Explain why feedback between buyers and sellers is important to the marketing relationship.

Give an example of a straight rebuy and a modified rebuy. Why is new-task buying more complex than the first two buying situations?

What buying center participant is a marketer likely to encounter first? In the buying center, who has the formal authority to make a purchase?

Describe some of the factors that characterize U.S. government purchases. Why are institutional markets particularly challenging?