Notes b2b 139-150 & 215-231

Isolating Market Segment Profitability.
process of evaluation that makes explicit the near-term potential and the longer-term resource commitments
necessary to effectively serve customers in a segment. In particular, special attention is given to the individual drivers
of customer profitability, namely the cost-to-serve a particular group of customers and the revenues that result.
Implementing a Segmentation Strategy
How should the sales force be organized?
What special technical or customer service requirements will organizations in the new segment have?
Who will provide these services?
Which media outlets can be used to target advertising at the new segment?
Has a comprehensive online strategy been developed to provide continuous service support to customers in this
segment?
What adaptations will be needed to serve selected international market segments?
The Role of the Demand Estimation
Three broad groups of stakeholders require demand forecasts:
engineering design and implementation teams;
marketing and commercial development teams; and
external entities, such as potential investors, government regulators, equipment and application suppliers, and
distribution partners.
Where should sales outlets be located?
How many are required to cover the target market?
What sales levels should be expected from each outlet?
What performance targets should be established for each?
based on both expected demand and the level of competition.
Actual sales in each segment can also be compared with forecasted sales, considering the level of competition, to
evaluate the effectiveness of the marketing program
Methods of Forecasting Demand
Qualitative Techniques
Qualitative techniques, which are also referred to as management judgment or subjective techniques rely on
informed judgment and rating schemes. The effectiveness of qualitative approaches depends on the close
relationships between customers and suppliers that are typical in the industrial market. Used when historical data
are scarce or nonexistent.
Executive Judgment: Sales Force Composite:

Quantitative Techniques
Quantitative demand forecasting, also referred to as systematic or objective forecasting, offers two primary
methodologies: (1) time series and (2) regression or causal.
Time series techniques use historical data ordered chronologically to project the trend and growth rate of sales.
Regression or causal analysis, on the other hand, uses an opposite approach, identifying factors that have affected
past sales and implementing them in a mathematical model.40 Demand is expressed mathematically as a function of
the items.
Brand attitude is defi ned as the percentage of organizational buyers who have a positive image of a company minus
those with a negative opinion.
Product Quality and Customer Value: ISO-9000 standards
Meaning of Quality
Stage one centred on conformance to standards or success in meeting specifications
Stage two emphasized that quality was more than a technical specialty and that pursuing it should drive the core
processes of the entire business. customer satisfaction.
Stage three, then, examines a firm’s quality performance relative to competitors and examines customer perceptions
of the value of competing products. The focus here is on market-perceived quality.
Customer value, then, represents a “business customer’s overall assessment of a relationship with a supplier based
on perceptions of benefits received and sacrifices made.
Industrial product lines can be categorized into four types:
1. Proprietary or catalog products. in anticipation of orders
2. Custom-built products.
3. Custom-designed products.
4. Industrial services
A product market establishes the distinct arena in which the business marketer competes. Four dimensions of a
market definition are strategically relevant:
1. Customer function dimension. This involves the benefits that are provided to satisfy the needs of organizational
buyers (for example, mobile messaging).
2. Technological dimension. There are alternative ways a particular function can be performed (for example, cell
phone, pager, notebook computer).
3. Customer segment dimension. Customer groups have distinct needs that must be served (for example, sales
representatives, physicians, international travellers).
4. Value-added system dimension. Competitors serving the market can operate along a sequence of stages.34 The
value-added system for wireless communication includes equipment providers, such as Nokia and Motorola, and
service providers, like Verizon and AT&T. Analysis of the value-added system may indicate potential opportunities or
threats from changes in the system
Product positioning represents the place that a product occupies in a particular market; it is found by measuring
organizational buyers’ perceptions and preferences for a product in relation to its competitors. (for example, quality,
service), the product strategist should examine the attributes that assume a central role in buying decisions.
Moore defines discontinuous innovations as “new products or services that require the end-user and the
marketplace to dramatically change their past behaviour, with the promise of gaining equally dramatic new benefits
The Bowling Alley In technology markets, each market segment is like a bowling pin, and the momentum from
hitting one segment successfully carries over into surrounding segments. The bowling alley represents a stage in the
adoption life cycle where a product gains acceptance from mainstream market segments but has yet to be adopted
widely
The Tornado Although economic buyers who seek solutions are the key to success in the bowling alley, technical or
infrastructure buyers in organizations can spawn a tornado.
Main Street This stage of the technology adoption life cycle represents a period of aftermarket development.

Notes b2b 139-150 & 215-231

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Notes b2b 139-150 & 215-231

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Isolating Market Segment Profitability.

Implementing a Segmentation Strategy

How should the sales force be organized?

Who will provide these services?

What adaptations will be needed to serve selected international market segments?

The Role of the Demand Estimation

Three broad groups of stakeholders require demand forecasts:

engineering design and implementation teams;

marketing and commercial development teams; and

Where should sales outlets be located?

How many are required to cover the target market?

What sales levels should be expected from each outlet?

What performance targets should be established for each?

based on both expected demand and the level of competition.

Methods of Forecasting Demand

Executive Judgment: Sales Force Composite:

Product Quality and Customer Value: ISO-9000 standards

Stage one centred on conformance to standards or success in meeting specifications

Industrial product lines can be categorized into four types:

1. Proprietary or catalog products. in anticipation of orders

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