Summary
Summary B2B Marketing articles
- Course
- Institution
An extensive summary of the articles for the course B2B Marketing (MSc Marketing) at the University of Groningen.
[Show more]
Seller
Follow
marketingstudent94
Reviews received
Content preview
Week 1:1.1 Anderson, James C.,and James A. Narus (1998), “Business Marketing: Understanding
what Customers Value”.
To persuade customers to focus on total costs rather than simply on acquisition price, a
supplier must have an accurate understanding of what its customers value, and would value.
Many customers understand their own requirements but do not necessarily know what
fulfilling those requirements is worth to them. To suppliers, this lack of understanding is an
opportunity to demonstrate persuasively the value of what they provide and to help customers
make smarter purchasing decisions.
Some suppliers have developed customer value models, which are data-driven representations
of the worth in monetary terms, of what the supplier is doing or could do for its customers.
It’s based on assessments of the costs and benefits of a given market offering in a particular
customer application. Depending on the circumstances, these can be built for individual
customers or for a market segment.
A common definition of value
Value in business markets is the worth in monetary terms of the technical, economic, service,
and social benefits a customer company receives in exchange for the price it pays for a market
offering. We will elaborate on some aspects of this definition:
1. We express value in monetary terms, like dollars per unit, guilders per liter, or kroner
per hour.
2. By benefits, we mean net benefits, in which any costs a customer incurs in obtaining
the desired benefits, except for purchase price, are included.
3. Value is what a customer gets in exchange for the price it pays. We see a market
offering as having two elemental characteristics: its value and its price. Thus: lowering
the price of an market offering does not change the value. Rather, it changes the
customer’s incentive to purchase it.
4. Considerations of value take place within some context. Even when no comparable
market offerings exist, there is always a competitive alternative. In business markets,
one of that can be making the product itself instead of purchase it.
We can capture the essence of this definition of value in the following equation:
Value’s en Price’s are the value and price of the suppliers market offering, and Value’a and
Price’a are the value and price of the next best alternative.
1
,Building Customer Value Models
Field value assessments are also known as ‘value-in-use’ or costs-in-use studies, and these are
the most commonly used – and we believe the most accurate – methods for building customer
value models. Field value assessments call for suppliers to gather data about their customers
firsthand whenever possible. In cases where field value assessments are not feasible, it is
possible to gain a worthwhile understanding of value through such methods as direct and
indirect survey questions, conjoint analysis, and focus groups, all of which rely primarily on
customers’ perceptions of the functionality, performance, and worth of a supplier’s offering.
Now we describe a process for building a value model using field value assessments
- Get started: The first step is putting together a value research team, which include
people with product, field engineering, and marketing experience, and two/three
forward thinking sales people. Selecting the right market segment to target is the next
step. Before approaching a customer, the team should think through what it will need
from the customer and what the customer will gain, and be prepared to offer an
incentive.
- Generate a comprehensive list of value elements: Value elements are anything that
affect the costs and benefits of the offering in the customer’s business (technical,
economic, service, and social, vary in tangibility). As it is generating the list, the team
should consider the entire life cycle of the offering in question, from how the customer
acquires and uses it to how the customer disposes of it when it is nog longer needed. It
is very important to be as inclusive as possible, otherwise the project’s credibility
decreases. Often, the value research team will have to make trade-offs between relying
on a customer’s perception of what all the relevant elements are and actually
observing firsthand the ways in which the supplier’s offering affects the customer.
- Gather data: With a comprehensive list of value elements in hand, the next step is
obtaining initial estimates for each element and finding out what each one is worth in
monetary terms. Frequently, the customer doesn’t know that it has the data or
information the supplier is looking for.
o Sometimes, the only way to find the data is for team members to ask around
until they come across the individual who knows where the information is.
o Focus groups made up of representatives from each functional area in a
company can also be an effective mechanism for uncovering data.
o Value research teams also needs to be creative in finding other sources of
information.
o The ease with which the team can establish monetary estimates for its value
elements will vary (for example social elements).
o Assumptions must be made in order to complete an analysis. It is crucial for
the supplier to be explicit about any assumptions it makes.
ZOZ
2
, - Validate the model and understand variance in the estimates: Conducting further
assessments enables the supplier to refine its value estimates and to understand better
how the value of its market offering varies across customers’ applications, capabilities
and usage. It will also develop a greater understanding of where it needs to use
firsthand data and where it can rely on customers’ perceptions.
o In soliciting perceptions, the supplier should remember that people are
generally better at making comparative judgements than absolute judgements.
o Suppliers can create a database with descriptors (characteristics of individual
customers) which influence the value of an offer for them.
- Create value-based sales tools: Suppliers can not only use value models to inform
and guide their own decision making but also to create persuasive sales tools.
o Value case histories: written accounts that document the cost savings or added
value that a customer receives from its use of a supplier’s market offering.
o Value assessment can also become a service that suppliers offer as part of a
consultative selling approach.
Putting an understanding of value to use
Suppliers can use their understanding of value to strengthen performance and create
competitive advantage in several ways.
- For example: (1) a supplier can use its knowledge to tailor supplementary services,
programs, and systems in its current market offerings and to guide the development of
new offerings. (2) It can also gain new customers by integrating everything it has
learned about value into its marketing efforts. (3) It can better sustain customer
relationships by documenting its delivery of superior value over time and by
discovering new ways to update and reinvigorate those relationships.
Managing Market Offerings: Suppliers can capitalize on the inevitable variation in
customers’ requirements within market segments and increase their profitability by providing
flexible market offerings: naked solutions with options. A company’s ability to manage
flexible market offerings successfully rests on its understanding of the value each component
of an offering creates as well as its associated cost. Understanding this two, enables suppliers
to identify and eliminate what we call value drains: services that cost the supplier more to
provide than they are worth to the customers receiving them and that have no strategic
significance. Suppliers can find value drains by chance, but they can also set out to detect
them by using field value assessment in conjunction with activity-based-costing analysis.
Identifying and eliminating value drains results in better allocation of resources and improved
profitability.
Guiding the development of new or improved products and services: Value models
provide information as: “if we do X, what is it worth to that customer?”. Knowing that an
improvement is important does not tell a supplier if the customer is willing to pay for it.
Gaining customers: Knowledge of how their market offerings specifically deliver value to
customers enables suppliers to craft persuasive value propositions. Zie kader
3
, Sustaining Customer Relationships: At the core of all successful working relationships are
two essential characteristics: trust and commitment. To demonstrate that, progressive
suppliers periodically provide evidence to customers of their accomplishments. Zie kader
Delivering Superior Value and Getting an Equitable Return
Understanding value in business markets and doing business based on value delivered gives
suppliers the means to get an equitable return for their efforts. The essence of customer value
management is to deliver superior value and get an equitable return for it, both of which
depend on value assessment.
1.2 Anderson, James C., Narus, James A., and Wouter van Rossum (2006). “Customer Value
Propositions in Business Markets”
Most Customer Value Propositions make claims of savings and benefits to customer without
backing them up, but customer managers don’t have the luxury of simply believing suppliers’
assertions. [example of a more expensive offer, but superior quality by knowing what
customer valued]
Some managers view the customer value proposition as a form of spin their marketing
departments develop for advertising and promotional copy. This shortsighted view neglects
the very real contribution of value proposition to superior business performance. Properly
constructed, they force companies to rigorously focus on what their offerings are really worth
to their customers. Once companies become disciplined about understanding customers, they
can make smarter choices about where to allocate scarce company resources in developing
new offerings.
Three Kinds of Value Propositions
All benefits: Most managers simply list all the benefits they believe that their offering might
deliver to target customers. The more the better. A major potential drawback is benefit
assertion: managers may claim advantages for features that actually provide no benefit to
target customers. Another pitfall of the ‘all benefits value proposition’ is that many of the
benefits may be POP with those of the next best alternative, diluting the effect of the few
POD’s (see exhibit on page 7).
Favorable Points of Difference: This type of value proposition explicitly recognizes that the
customer has an alternative. “Why should our firm purchase your offering instead of your
competitor’s?” is a more pertinent question than “Why should our firm purchase your
offering?”. You really have to understand the customer’s requirements and preferences, and
what it is worth to them. A lack of this can lead to the pitfall of value presumption: assuming
that favorable points of difference must be valuable for the customer.
Resonating focus: Although the favorable POD value proposition Is preferable to an all
benefits proposition for companies crafting a consumer value proposition, the resonating
focus value proposition should be the gold standard. This approach acknowledges that the
managers who make purchase decisions have major, ever-increasing levels of responsibility
and often are pressed for time. They want to do business with suppliers that fully grasps
critical issues in their business and deliver a customer value proposition that’s simple yet
powerfully captivating. Suppliers can make such a customer value proposition by making
their offerings superior on the few elements that matter most to target customers,
4
The benefits of buying summaries with Stuvia:
Guaranteed quality through customer reviews
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through credit card or Stuvia-credit for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying these notes from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller marketingstudent94. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for $6.46. You're not tied to anything after your purchase.
Can Stuvia be trusted?
4.6 stars on Google & Trustpilot (+1000 reviews)
56326 documents were sold in the last 30 days
Founded in 2010, the go-to place to buy study notes for 14 years now