(Book) Summary B2B (EBM808B05) - All mandatory chapters (B2B Customer Value Marketing - the essentials)
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Course
B2B Marketing (EBM808B05)
Institution
Rijksuniversiteit Groningen (RuG)
This extensive summary contains all mandatory chapters of the book "B2B Customer Value Marketing -the essentials", (by Dr Jean-Pierre Thomassen). Only chapter 12 will not be discussed, due to the fact that this will not be exam material. The other 14 (!) chapters are discussed in detail. The docume...
Chapter 1. B2B Markets and Customer Relationships
Chapter 2. Customer Value Marketing (CVM)
Chapter 3. Value of the Customer (VOC)
Chapter 4. Value for the Customer (VFC)
Chapter 5. Combining Value of and for the Customer
Chapter 6. Offering Superior Value Propositions
Chapter 7. From Products to Total Solutions
Chapter 8. Differentiating in Customer Service and Customer Relationship Management
Chapter 9. Value Enhancement through Sustainability
Chapter 10. Total Cost of Ownership and Customer Value-Based Pricing
Chapter 11. Improving Trustworthiness Through Risk Reduction
Chapter 13. Return on Value: The Business Case of CVM
Chapter 14. Customer Perceived Value, Satisfaction, Delight, and Trust
Chapter 15. Commitment and Loyalty: The Ultimate VOC Antecedents
, 1
Chapter 1. B2B Markets and Customer Relationships
Successful companies understand that customers evaluate value by comparing the benefits of a
company’s proposition against the sacrifices they must make
Benefits can be tangible goods or intangible services, the customer service, the relationship
management, but also total solutions that make both customers and suppliers more successful.
The sacrifices are viewed in terms of the money customers must invest and the risk they need
to do business with the supplier.
B2B organizations are operating in three different B2B sectors:
● The primary sector: this involves extracting, mining, and harvesting natural products
from our earth. Think about mining corporations, fishermen, and farmers.
● The secondary sector: this involves processing, manufacturing, and constructing
products using the goods or materials that the primary sector delivers. The best
examples here are manufacturing companies.
● The tertiary sector: this involves the services sector, such as accountancies and
advertising agencies.
Five product-groups that B2B customers buy:
1. Resell as is: these are products that are bought for trade, unmodified as they are, by
wholesalers and retailers.
2. Integrate as components: they become part of the final product but need no further
processing before that stage. These parts are integrated unmodified into products by
original equipment manufacturers (OEM). Think about components for machines,
telephones, or cars.
3. Modify and resell: products become part of the B2B customer’s final product. They
have previously undergone some processing but need further processing by the B2B
customer before they enter the final product.
4. Capital items: these are used for production within the B2B customers’ organization. As
such, this customer is the end-user. Each company buys furniture, computers, and other
products for internal use. A company also uses services like those of an accountant, a
waste disposer, a supplier of energy or a telecom operator. These goods and services
help the company operate and conduct its main activities. Capital items can be divided
into two types. Major capital items have a lifespan of more than one year, they do not
become part of the company's final product, and cost more than $10,000 per unit (e.g.,
business cars). Minor capital items have a lifespan of more than one year, do not
become part of the company's final product, and cost between $1,000 and $10,000 per
unit (e.g., computers).
5. Internal consumption: these products do not become part of the final product and are
no capital items. They rather are used for operating the company, maintenance, or
repairs. Think about buying wine and beer for the Friday meetings or toilet paper for the
toilets.
, 2
Storbacka et al. differentiate B2B companies in the secondary sectors in two generic business
logics: I2P and IB.
● Input-to-process (I2P): these are companies like metal, pulp, and paper suppliers
providing goods that are utilized as inputs in the B2B customers' process (modify and
resell). The goods are transformed during the customer's process and eventually cease
to exist as a separate entity. These are 1, 2 and 3 of the previous list.
● Installed-base (IB): these companies, such as machinery and equipment industries,
provide investment goods to B2B customers, thus helping to create an installed base of
machines and equipment at the customers’ plants. There are two different types of IB
businesses:
○ The Capex business: capital items, as when customers invest in new plants,
heavy machinery, or information technology systems. This is number 4 of the
previous list.
○ The Opex business: operational expenditure for internal consumption, such as
services, maintenance and repair related to the capex investments done. This is
number 5 of the previous list.
Value chains as: combinations of companies that produce, distribute, and eventually deliver
products to the end user
Each company as a member of the value chain adds value to the end-product.
Three views of strategic network competition leading to completely different value chains
● Traditional view of competition: competition is horizontal and company-to-company at
each level. Suppliers in the same business compete to get and retain the best
customers. Figure 1.2. is an example of such a market situation.
● Hierarchical competition: vertical integration by buying companies and integrating
them into the company leads to competition between integrated companies
(‘hierarchies’).
, 3
● Strategic network competition: combining the advantages of the other two views leads
to this third one. In this case various companies are not owned but work together as
network partners. “A network is a group of independently owned and managed
companies that agree to be partners rather than adversaries”
Three types of B2B relationships:
● B2B: this is when the business customer is the end-user in the case of buying capital
items or products for internal consumption.
● B2B2B: this is when a supplier sells to a business customer that again sells to a
customer that is a business customer. For example, a producer of motors delivers to a
car manufacturer that delivers to car dealers.
○ In Figure 1.2. It is the ‘raw material producer’, the ‘distributor’ and the
‘manufacturer’ that have such B2B2B relationships.
● B2B2C: this is when a supplier sells to a business customer that directly sells to
consumers. For example, a producer of games delivers to game stores that sell the
games to consumers.
○ In Figure 1.2., it is the ‘other producers (OEM)’ and ‘wholesale/distributor’ that
have such a B2B2C relationship.
Companies must not focus only on the direct customers but also on the customers’ customers
(indirect customers).
, 4
For suppliers, to gain a competitive advantage, it can be important to bypass their direct
customers and conduct research among their customers’ customers three different approaches
for this:
1. Direct customer downstream support: this is based on the push marketing principle. A
B2B supplier supports its direct customers to improve their power and increase customer
intelligence downstream in the value chain.
2. Cooperative indirect customer marketing: this consists of joint activities of the
supplier and direct customer. The supplier ‘steps out of the background’ and acts
together with the direct customer towards indirect customers.
3. Independent indirect customer marketing: the supplier uses a pull approach and
directly contacts the indirect customers. In this way he passes the direct customer.
Customer-Supplier Relationships
Companies enter relationships with other companies “when such a relationship contributes to
the competitiveness of the organization
To achieve competitive advantage and, thereby, superior financial performance, companies
should identify, develop, and nurture an efficiency-enhancing, effectiveness-enhancing portfolio
of relationships
B2B relationships can be equity-based or non-equity based
● Equity-based relationships are in the form of joint ventures or partial acquisitions where
one partner has a financial stake in the other.
● Non-equity based relationships are based on licensing or another contractual
relationship
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