Quiz 6: Business-To-Business B2b Marketing

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?

Peerless Pump Puts Customers First Pumps are the world's second most commonly used machines. They supply almost a quarter of global demand for electric motor energy. Peerless Pump Co. of Indianapolis has been providing reliable pumps for high-value applications in the industrial, municipal, agriculture, and fire protection segments since 1923. By focusing on safety, quality, schedule, and cost-in that order-the firm has enjoyed steady growth and even increased its revenue expectations for the future. "Continued enthusiasm and management commitment make our future growth ambitions very attainable," says Fred Bock, Peerless vice president of marketing and business planning. A company initiative called "One Peerless" focused the attention of the company's 430 employees, who work in many different global locations, on improving teamwork, communication, leadership, and continuous improvement (growth). "It is very easy to focus on needs, One Peerless takes a proactive approach to focusing on what our customers-both internal and external-truly want," Bock says. "One Peerless is a well-rounded operations, sales, and marketing plan that involves everyone associated with our company, from suppliers to employees to distributors to end users." The company, with $120 million in annual sales, was acquired in 2007 from a private equity firm by Danish pump giant Grundfos, which has been expanding rapidly in eastern Europe and Asia, as well as a significant commitment to North America, where they see "significant growth potential." "The synergies and similarities in corporate culture are significant and will allow for the acceleration of the growth that Peerless Grundfos have enjoyed over the past five years," added Bock, who also holds the position of North American Marketing Director for Grundfos. Originally founded in California to supply agricultural irrigation pumps for orange growers, the company now counts water treatment facilities, stadiums, airports, and many of the world's tallest skyscrapers among its many clients. With energy costs increasing, such customers continue to increase their focus on saving money on operations wherever possible. Peerless assists its partners by applying a "life cycle cost" approach to its design and sales strategies by examining costs-in both time and resources-of repair rather versus replacement of less efficient equipment. Looking at the costs associated with installation, maintenance, and especially energy consumption over the long term-some pumps are in service for more than 50 years-allows Peerless to compare all possible solutions, from which the customer can evaluate the best solution. The company identifies the particular pump features and specifications in each option that will best improve reliability and minimize energy consumption, even in pump systems that move large volumes of water 24 hours a day. Market growth for new equipment far exceeds repairs as a source of revenue; however, in order to minimize downtime from potential breakdowns and help customers make the right repair/replace decision, Peerless advocates and offers ongoing training of its engineers and customers in preventive maintenance and repair as well as recommending spare parts inventories. This strategic approach makes the continuous and open line of communication between the company and end user a necessity. Do you think Peerless focuses on safety, quality, schedule, and cost in the right order to meet its customers' and distributors' needs? Why or why not? How do you think a B2B company can most accurately determine what its business customers need and want?

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

Peerless Pump Puts Customers First Pumps are the world's second most commonly used machines. They supply almost a quarter of global demand for electric motor energy. Peerless Pump Co. of Indianapolis has been providing reliable pumps for high-value applications in the industrial, municipal, agriculture, and fire protection segments since 1923. By focusing on safety, quality, schedule, and cost-in that order-the firm has enjoyed steady growth and even increased its revenue expectations for the future. "Continued enthusiasm and management commitment make our future growth ambitions very attainable," says Fred Bock, Peerless vice president of marketing and business planning. A company initiative called "One Peerless" focused the attention of the company's 430 employees, who work in many different global locations, on improving teamwork, communication, leadership, and continuous improvement (growth). "It is very easy to focus on needs, One Peerless takes a proactive approach to focusing on what our customers-both internal and external-truly want," Bock says. "One Peerless is a well-rounded operations, sales, and marketing plan that involves everyone associated with our company, from suppliers to employees to distributors to end users." The company, with $120 million in annual sales, was acquired in 2007 from a private equity firm by Danish pump giant Grundfos, which has been expanding rapidly in eastern Europe and Asia, as well as a significant commitment to North America, where they see "significant growth potential." "The synergies and similarities in corporate culture are significant and will allow for the acceleration of the growth that Peerless Grundfos have enjoyed over the past five years," added Bock, who also holds the position of North American Marketing Director for Grundfos. Originally founded in California to supply agricultural irrigation pumps for orange growers, the company now counts water treatment facilities, stadiums, airports, and many of the world's tallest skyscrapers among its many clients. With energy costs increasing, such customers continue to increase their focus on saving money on operations wherever possible. Peerless assists its partners by applying a "life cycle cost" approach to its design and sales strategies by examining costs-in both time and resources-of repair rather versus replacement of less efficient equipment. Looking at the costs associated with installation, maintenance, and especially energy consumption over the long term-some pumps are in service for more than 50 years-allows Peerless to compare all possible solutions, from which the customer can evaluate the best solution. The company identifies the particular pump features and specifications in each option that will best improve reliability and minimize energy consumption, even in pump systems that move large volumes of water 24 hours a day. Market growth for new equipment far exceeds repairs as a source of revenue; however, in order to minimize downtime from potential breakdowns and help customers make the right repair/replace decision, Peerless advocates and offers ongoing training of its engineers and customers in preventive maintenance and repair as well as recommending spare parts inventories. This strategic approach makes the continuous and open line of communication between the company and end user a necessity. What benefits does Peerless gain from helping its customers evaluate system repair as a potential alternative to costly replacement of a pump system? What strategies and business tools do you think the company must have in place to fulfill this customer need? Why is it important for Peerless to address it, if it is not as profitable for the firm as selling a new system?

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?