B2B Marketing Managing Services PGDM–B2B–RS–13

XIME / PGDM-B2B –RS–1302-March-2010

B2B Marketing

Managing Services

PGDM–B2B–RS–13

Amarnath Krishnaswamy


Plan for this Session

• Managing Innovation– Management of Innovation– Innovation & Technology– Innovation & the Development of New Products

• Quality Function Deployment

• Managing Business Services– Role & Importance– Buying Services– The Marketing Mix


Quality Function Deployment (QFD)

• QFD – for identifying:• The attributes the customer wants in the product • Establish link between these attributes and the

product design

• Process involves understanding, and then marrying:• The Voice of the Customer• The Voice of the Engineer


Voice of the Customer

• Identify customer needs

– The benefits the product should deliver

– Necessary to identify, and focus, on the main ones

– Relatively easy to do if the market is homogenous

– Weight each attribute: enables QFD to balance it with cost


Voice of the Engineer

• Translate customer needs into product design

• Put onto a matrix against what the customer wants, and compared with competition


QFD Matrix

WeightProd. Attr.

1

Prod. Attr.

2

Rating

1 2 3 4 5

Cust. Attr. 1

Cust. Attr. 2

Cust. Attr. 3

Cust. Attr. 4

Cust. Attr. 5


New Product Success / Failure - Factors

Success• Product Uniqueness / Superiority• Market Knowledge• Marketing Proficiency• Technical & Production Proficiency

Failure• Price, with no economic benefit• Obsolete in terms of what’s available• Customers satisfied with existing product


Can’t forget the law!

Wood’s First Law Of Procrastination

NOW is the time to do things later!

Wood’s Second Law Of Procrastination

Procrastinate today! (Tomorrow may be too late.)

Wood’s Third Law Of ProcrastinationNever put off till tomorrow what you can do the day after tomorrow!


Managing Business Services

Look at the following products:

1. Water purifier

2. UPS

3. Computer network in an organization

What is common to all of them?


Business Services – Role & Importance

• In India, “Services” sector has grown – 1990-91 44% of GDP– 2000-01 53% of GDP– 2007-08 63% of GDP

• 2006-07 11% growth in “Services” vs. 9% in GDP

• Employment – “Services” 34%, second only to “Agriculture”

(52%)

• Growth in other sectors (Manufacturing, Agriculture, etc) will spur growth in “Services”

• New “Services”


Services – Broad Categories

• Products supported by Services– Repairs & Maintenance– Training on use of Equipment / Services– Distribution & Delivery

• Pure Services– Consulting– Banking– Training– Recruitment


Defining Services - Services vs. Products

Services Products

Intangible Tangible1.

2. “Consumed” when produced

Lag between “Production” & “Consumption

Can be storedCan’t be stored3.

4. StandardizedHighly variable

5. Buyers are not owners

Buyers are owners


Buying Services

• Services are mostly – Intangible– Non-standard

Hence more difficult to evaluate.• Important for the service provider to look at:

1. Attributes that are important to the buying segment

2. Variance of these attributes amongst buyers in the segment

3. How all service providers rate on these attributes


Services - Attributes

• Types of attributes vary from objective to highly subjective

• Attributes can broadly be classified as:– People related– Equipment related

• Examples of industries and the attributes they look for are:


Services – Importance of Attributes

Extent To Which Equipment (Facility)-Related Attributes Form Part Of The Service Package

Extent To Which People-Related Attributes Form Part Of The Service Package

High Medium Low

HighRented storage, Conferences in hotels

Airline, Car rentals

Data mining & analysis services

MediumSeminars Maintenance

contracts, AV rentals

Freight movement, waste disposal

LowBanking, Consulting, Advertising

Equipment repairs,

Newspaper clipping


Services – Selection

• Prime factor, besides “Cost”, is “Perceived Quality”

• Selection can be looked at on:

– Determinant Attributes

Differences between suppliers apparent enough for customer to decide

– Minimizing Risk

Differences in attributes enough, so customer minimizes risk (Market reputation etc)


Services – Quality

• “Quality” has 3 components:

– Corporate Image• Most vague!

– Technical Quality (What the customer gets)• Can be measured• Rational

– Functional Quality (How the customer is served)• Difficult to measure objectively (compared to

“Technical”)

• Weights decided by the customer


Services – Marketing Mix

Involves

1. Identifying Market Segments • Service segments are usually narrower• Focus on what buyers expect vs. what they need

2. Development of the Service Package• Defining customer benefits• Articulating the benefits• Service specifications• Defining employee roles

3. Pricing


Service Package

Translated into

Level 1 Buyer Benefit Benefits sought by Buyer

Level 2 Service Benefits offered by Seller

Level 3 Service Specs What the Seller will deliver

Delivery to Buyer Service + Processes + PeopleLevel 4

At time of “delivery”, make sure “physical evidence is available!


Pricing the Service Package

• Unique nature of “Services” creates opportunities and problems

• Pricing depends on many factors”– Demand:

• Difficult to forecast.

• What ‘capacity’ does one plan for?

• What does one do with “idle” capacity?

– Bundling• Pure

• Mixed

– New Business• Cross selling


Promoting Services

• Communicating through employees– Front line assets

• Word of mouth


Services - Distribution

• Direct

• Intermediaries

• Franchising


Services - Failure

• Reasons for failure arise from:

– Wrong segmentation

– Wrong choice of “Marketing Mix”

• Defining buyer benefits and matching it with the “service”


A bonus?

Table A Resolution

1. Place it for discussion … &

2. Remove it from discussion!

Bag Of Snakes

A business situation with many unexpected problems


Moving Forward

Next Session: PGDM-RS-14

Date: Thursday, Mar 04, 2010

Subject: Managing Channels

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B2B Marketing Managing Services PGDM–B2B–RS–13

Documents

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