TM
Business-to-Business
Marketing Trends and
Best Practice…
Insights from the ISBM
Business Marketing Trends Study
Research by Ralph Oliva
Executive Director, ISBM
Wes Johnston, Executive Director, CBIM
J. Mack Robinson College of Business
Georgia State University
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(C) 2011, ISBM - Penn State
3/21/2016
Trend Study Origins – Request from
Hewlett Packard:
As part of planning for marketing strategy
and professional development at HP…
“Top of Mind” inputs from key marketing
leaders on the…
Critical challenges and Key Capabilities
marketers must address, along with some
Benchmark Examples
over the next 2 - 3 years…
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“Trends Study” Approach:
 eMail/Web survey with follow up:
 Original study 4Q03
 Current (9th) Track: 2011
 “Marketing Leaders” - ISBM “Virtual Faculty”
 Leading Members/Practitioners
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2009: The Crunch…
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ISBM/CBIM Trends Study – 2009:
Key B-to-B Challenges/Capabilities
1. Marketing as an Investment/ROI
2. Marketing the Marketing Process
3. Profitably Harnessing B-to-B eBusiness
4. Managing Value Chains
5. Managing Value Pricing
6. Successful, Significant New Products
7. Global vs. US/International Marketing
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2010: Turbulence…
?
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ISBM/CBIM Trends Study – 2010: Key
B-to-B Challenges/Capabilities
1. Achieve profitable growth
2. Marketing ROI: better organize/market marketing
3. Get the basics right: S, T, P
4. Refine Marketing budget process and metrics
5. Build/market/harvest higher-value solutions
6. Better manage changing channel relationships
7. Deploy the power of B-to-B brands
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1. Achieve Profitable Growth
Perspective on the Market
“Waiting is not a strategy.”
The Customers’
Total Economic
My
Equation
“Big Box”
“Smart managers are learning how to
grow their business – even when
markets’ aren’t – through demand
innovation and the creation of
fundamental new value . . .”
Product
“Little Box”
“Marketing needs to think Big. How to
transform the business? Alternative
Business Models? What new
businesses to be in?”
TM
“Creating value through marketing
‘connections’”
(C) 2007, ISBM - Penn State
Sales ROI
Analyze Customer profitability
20% = 225%
70% = 0%
10% = (125%)
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(C) 2007, ISBM - Penn State
2. Better Organize/Market the
Sales/Marketing Function

Changing the perception of
“marketing” from cost to
investment.

Understand “operations” so
that marketing can get closer to
the rest of the organization.

Become mainstream – not a
function in the company that is
doing marketing, but an
essential ingredient in every
deal.

Own the customer relationship
and translate it to the rest of the
company.

Understand the customer
demand matrix of benefits and
buyers.
Gap
Support
Marketing
CRM
Service
TM
(C) 2007, ISBM - Penn State
Gap
Sales
3. Get the Basics Right: S, T, P
Fragmentation of Supplier Value Proposition
Based on Information

“. . . the biggest
challenge for
every business in
every industry is
to better
understand how
their target
market segments
define value, and
how those same
segments view
the value
delivered by the
organization
relative to other
options they have
. . .”
Customer
Intellectual
Tier 1
Value Proposition
Physical
Value
Proposition
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(C) 2007, ISBM - Penn State
4. Refine Sales/Marketing
Budget Process and Metrics
Average Cost of Customer Contact
Changing channel
economics
redefine go to
market strategies
$500+
$65
< $5
Field Visits
Call Center
Website
TM
Source: Based on Forrester Research
(C) 2007, ISBM - Penn State
5. Build/Market/Harvest HigherValue Solutions
“Most B-to-B businesses manage products and price-sensitive commodities.
They need the discipline, energy and imagination to build solutions based on
a view of the entire customer process: how they acquire, install, finance, use,
repair, re-order, and dispose of products.”
Industry
Average
4
Rip-off
Premium
Price
1
Industry
Average
Value
2
3
Economy
TM
Quality(Effectiveness)
(C) 2007, ISBM - Penn State
6. Better Manage Changing
Channel Relationships
“Marketers need to better understand the critical role of channel
management: how to extract the best value from channel partners?”
Dupont’s value delivery network
Order
Du Pont
(Fibers)
Order
Milliken
(Fabric)
Delivery
Order
Levi’s
(Apparel)
Delivery
Order
Sears
(Retail)
Delivery
Competition is between networks, not companies.
The winner is the company with the better network.
TM
(C) 2007, ISBM - Penn State
Customer
Delivery
7. Deploy the Power of B-to-B
Brands
Intel
HP
IBM
DuPont
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2011: Shaky Growth; “Upturn with
Uncertainty”…
?
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ISBM/CBIM Trends Study – 2011
1. Better understand customer needs/
segmentation/opportunities to add real value
2. China/India: The new face of “globalization”
3. Stronger quantitative skills/analytical tools
4. Innovation: rebuilding the engine of growth
5. New organizational models and linkages
6. Marketing/marketing programs ROI
7. Demonstrating/documenting value
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1. Better Customer Understanding…
Nearly half the respondents 1,2,3…
 “Better tools…”
 “Listening”
 “Communicating”
 “Discerning”
 The necessary skill for real
innovation/focus/investment allocation
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1. Better Customer Understanding…
 “Learning to account not only for tangible
differences between offerings, but also for
emotional differences related to relationships,
reputation and trust…”
 “…Understanding the underlying motivations of
the customer…”
 “…Positioning companies to chose customers,
narrow focus and dominate markets vs. everything
to everybody.”
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1. Better Customer Understanding…
 “The assumption that we know how firms make
decisions now is often false. I’m beginning to
think that Gerry Zaltman is right and everyone
else is wrong!”
ZMET
 “Current market research methodologies are just
not working today; yet these methodologies are so
entrenched it will be tough to move past them.”
 “A real culprit in this problem: Six Sigma. Fine for
fixed processes – not for the way buying
processes/players are changing now…”
TM
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Slywotzky
Pete Pande, Author, “The Six Sigma Way”, and “What is Six Sigma?”
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1. Better Customer Understanding…
 Companies Cited: GE, 3M, Dell
 “…I would argue that this is not a good
question. Sorry. The problem is that the
typical poster children – IBM, HP’s
DuPont’s etc—really are behind the
curve…the best players are a B minus…”
 Needed: New tools!
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ISBM/CBIM Trends Study – 2011
1. Better understand customer needs/
segmentation/opportunities to add real value
2. China/India: The new face of “globalization”
3. Stronger quantitative skills/analytical tools
4. Innovation: rebuilding the engine of growth
5. New organizational models and linkages
6. Marketing/marketing programs ROI
7. Demonstrating/documenting value
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2. China/India: The new face of
“Globalization”
 Beyond the “new, emerging market”
 The impact of marketing to U.S./Global
businesses who are parsing out key
activities around the world which are part of
the buy/value-creation process, and…
 “The China Price”
$$
$$
$
$
$
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2. China/India: The new face of
“Globalization”
 “…China is realizing that economies of scale will only go so
far – and is moving beyond re-inventing how manufacturing
is done –and turning attention toward marketing.
 They are working to build, acquire, or license brands that
buy them market relationships, salesforce connections
emotional ties with customers and markets…”
 This is more than an “emerging new economy”. The very
nature of business markets will change—we need to
understand and model how this will evolve…”
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2. China/India: The new face of
“Globalization”
 “…In a world driven by outsourcing,
companies need to redefine
themselves into business models that
create value by leveraging assets of
suppliers and partners...”
Emerging
Benchmarks ?
India
China
Customer Buying Center
TM
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(C) 2007, ISBM - Penn State
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China
 The Hype ?
 The Reality ?

Significant global power

Significant global power

30 years of growth

30 years of growth

9%+ annual growth

9% annual growth

Will pass the US

China is an island

Will buy the US

Massive inequalities

Will rule the World

Regional animosities

Will dominate for Global for at
least next 100 years

Capital allocation system

Growth is profitable?

State banking giants have no
bad debt
TM
(C) 2007, ISBM - Penn State
India
 Hype?
 Reality?
 Another China
 Buying top
brands
TM
 2nd largest
trade deficit
 Huge poverty
 All software
 Huge debt
 Executives at
top companies
in US
 Unorganized
government
 Leading
professors
 Largest English
speaking
democracy
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(C) 2007, ISBM - Penn State
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Impact on Global Markets
Emergence of
Rising tide lifts
largest
all boats
(S&P 500)
consumer
markets
(cell phones)
6
Fusion of
1
2
5
Cultures
(music, food &
spirituality)
4
Affordability
becomes
focus of
innovation
(Nano car)
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Rise of Chindia’s
global enterprises
(Hauwei, Tata)
R&D shifts to
Chindia
(pharma &
technology)
Impact on Global Resources
Raising resource
life expectancy
(sustainability)
6
Shortage driven
breakthrough
Innovations
(cloning)
Resource driven
global expansion
(IBM)
1
2
5
4
Rise of scarcity
driven profits
(commodities)
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3
Resource driven
global mergers
(mining)
Emergence of
strange bedfellows
(China in Africa)
Impact on Global Politics
Redefining
Economics as
capitalism &
driver of politics
democracy
(caring capitalism, (Japan & India)
disciplined
democracy)
Emergence of
new global
Currency
(future of the $)
6
1
2
5
4
Chindia leadership
in world bodies
(UN, World Bank)
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(C) 2007, ISBM - Penn State
3
G-8 becomes
G-20
(Chindia)
Rise of
multilateral
politics
(Asia, Europe,
America)
ISBM/CBIM Trends Study – 2011
1. Better understand customer needs/
segmentation/opportunities to add real value
2. China/India: The new face of “globalization”
3. Stronger quantitative skills/analytical tools
4. Innovation: rebuilding the engine of growth
5. New organizational models and linkages
6. Marketing/marketing programs ROI
7. Demonstrating/documenting value
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3. Stronger quantitative skills/tools
Quantitative tools facing outward…
 Can marketers get to/talk to their own CFO…?
 What about your customers CFO?
 …and explain the impact of your offerings on
the customer’s business model?
 “Business Model to Business Model Marketing”
 Cited: Sony, AMEX…
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(C) 2007, ISBM - Penn State
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ISBM/CBIM Trends Study – 2011
1. Better understand customer needs/
segmentation/opportunities to add real value
2. China/India: The new face of “globalization”
3. Stronger quantitative skills/analytical tools
4. Innovation: rebuilding the engine of growth
5. New organizational models and linkages
6. Marketing/marketing programs ROI
7. Demonstrating/documenting value
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4. Innovation:
Rebuilding the engine for growth
 “…Engineering, R&D and marketing suffered
heavily in the quest for short-term profits, so
much so that some businesses have lost their
ability to innovate…
The folks that are left are skilled at doing the
day-to-day stuff, but not well suited to handle
longer-term, bolder innovations.
This skill set, capacity and resource must be
rebuilt…”
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4. Innovation – Re-building the Engine of Growth
“Our portfolios are killing us…”
“…Simply stated, businesses are preoccupied today with
minor modifications, product tweaks, and responses to
salespeople's requests, while true product development
has taken a back seat…”
1980’s
2004
New to the world – true innovation
20.4%
11.5%
New product line
Addition to existing line
Improvements to existing products
Total
38.8%
20.4%
27.1%
24.7%
20.4%
100%
36.7%
100%
Two Important lines of research…
 Direct effect: New product sales down from
32.6% in the late 90’s to 28% in 2004; Profit
from new products down from 33% to 28.3%
 A more sinister effect/line of study: The sort
of products we develop are correlated to the
kind of company we become. Are we hurting
product innovation in the sort-term, or are we
destroying the innovation “engine” itself?
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10 types of innovation: move beyond products to win
1. Business model
how the enterprise makes money
5. Product performance
basic features, performance and functionality
6. Product system
extended system that surrounds an offering
2. Networking
enterprise’s structure/
value chain
7. Service
how you service your customers
Finance
Process.
Offering
Business
model
Enabling
process
Product
performance
Networking
Core
process
Delivery
Product
system
Service
Channel
Brand
Customer
experience
8. Channel
how you connect your offerings
to your customers
3. Enabling process
assembled capabilities
4. Core process
proprietary processes that add value
9. Brand
how you express your offering’s
benefit to customers
10. Customer experience
how you create an overall
experience for customers
B2B INNOVATION EFFECTIVENESS • AUGUST 2006
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Learning from Xiameter… 6 types of innovation
Six types:
B2B INNOVATION EFFECTIVENESS • AUGUST 2006
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ISBM/CBIM Trends Study – 2011
1. Better understand customer needs/
segmentation/opportunities to add real value
2. China/India: The new face of “globalization”
3. Stronger quantitative skills/analytical tools
4. Innovation: rebuilding the engine of growth
5. New organizational models and linkages
6. Marketing/marketing programs ROI
7. Demonstrating/documenting value
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5. Organizational Models and Linkages
 The fundamental role of marketing in growth, decommoditization, and business strategy not well
understood across B-to-B firms…
 Alignment: Marketing, R&D, Sales
 Central/DeCentral Balance
 Marketers as C-Level executives vs. “Marketers”
 “The ability to affect corporate vision and
respond to market demands is a challenge as
marketing continues to fragment in B-to-B”
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The Quest: Organization Balance
Prevailing
Trend
De-Centralized
Centralized
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ISBM/CBIM Trends Study – 2011
1. Better understand customer needs/
segmentation/opportunities to add real value
2. China/India: The new face of “globalization”
3. Stronger quantitative skills/analytical tools
4. Innovation: rebuilding the engine of growth
5. New organizational models and linkages
6. Marketing/marketing programs ROI
7. Demonstrating/documenting value
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6. Marketing/Programs ROI…
Ongoing Questions:
 Which/What “R”?
 Which/What “I”?
 Over which time period?
 Critical: For which Functions?
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Marketing Function/ROI…










Value Analysis
Market Analysis
Competitive Analysis
Segmentation
Targeting
Positioning
New Offering Mgmt
Marcom
Sales Support
CRM










Leverage entire process
Resource allocation
Deployment/Pricing
Resource allocation/pricing
Focus/Sales Productivity
Higher prices/lower COS
Win rate/Prices/growth
Demand Gen/Brand value
Lower Cost/Hit rate
Loyalty/Prices/COS
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The Long and Short of ROI
Marketing
Outcome
Thanks to and © 2006,
Dr. Mohan Sawhney, Kellogg
Thought
Leadership
Shaping
Markets
Asset
Leadership
Changing
Perceptions
Market
Leadership
Generating
Demand
Short
Time
Frame
Medium
Long
Needed…
Show me the ROI – or else
Marketing
Finance/CFO
Which R?
Which I?
What functions?
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7. Demonstrating/Documenting Value
Another perennial favorite:
 “The ability to construct and deliver persuasive
value propositions, which requires capability in
customer value management and substantiation.
 …Demonstrating and documenting in monetary
terms how the customer will be more profitable from
doing business with your firm as opposed to your
competitors…”
$
TM
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ISBM/CBIM Trends Study – 2011
1. Better understand customer needs/
segmentation/opportunities to add real value
2. China/India: The new face of “globalization”
3. Stronger quantitative skills/analytical tools
4. Innovation: rebuilding the engine of growth
5. New organizational models and linkages
6. Marketing/marketing programs ROI
7. Demonstrating/documenting value
TM
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Implications…
 Be the trend spotter
 Find and deploy new tools for
assessing customer needs
 Study the big implications of
China and India
 Take the lead in innovation
 Appraise you firm of the
importance of talent
management
Olympic-Level Marketing: R O V
Risk
Originality
“Virtuosity”
Final Thoughts…
 Don’t stop getting better.
 Step up to the challenge:
Marketing/Marketers as the
leadership for growth.
Today’s Markets Demand
the Best Marketing –
R.O.V.
TM
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Discussion
 Q&A



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