KMBNMK03 B2B and Services Marketing

Notes
of
B2B and Services Marketing

Prepared By:
Pavan Agrawal
Assistant Professor-Dept. of Management
Rajiv Academy for Technology and
Management, Mathura

Prepared By: [Link] Agrawal

Email Id: pavankumar@[Link]
Mob No: 8130402515
Assistant Professor-Dept. of Management
Rajiv Academy for Technology and Management, Mathura Page 1
 KMBNMK03 B2B and Services Marketing

Introduction to Subject
1.1 Meaning of B2B and Services Marketing:
B2B (business-to-business) marketing is a type of marketing where one business sells its
products or services to another business. It is different from B2C (business-to-consumer)
marketing, which focuses on selling products or services directly to consumers. Here are
some fundamental principles of B2B marketing.

1.2 Spirit:
Buying Process: The buying process in the consumer market is relatively short and
straightforward. Consumers make purchasing decisions based on personal preferences,
emotions, and needs. In contrast, the buying process in the business market is more complex
and involves multiple decision-makers. Business buyers typically use a formal procurement
process and consider factors such as cost, quality, and delivery time.
Purchase Volume: Consumers typically purchase goods and services in small quantities,
whereas business buyers purchase in larger volumes. Business buyers often make bulk
purchases to take advantage of volume discounts or to meet their production needs.
The consumer market is composed of individuals or households who purchase goods and
services for personal consumption, while the business market is composed of organizations
that purchase goods and services for use in the production of other goods and services or for
resale. The marketing strategies used in both markets differ significantly based on the target
audience, buying process, purchase volume, relationship building, and decision-making
process.

1.3 Scope:
B2B marketing involves various strategies and techniques to effectively reach and engage
with target businesses, such as utilizing targeted advertising campaigns, networking and
relationship-building activities, creating valuable content, and delivering personalized
messaging and offers.

Professionals in B2B roles typically deal with longer sales cycles, multiple decision-makers,
and more complex products or services. The focus is on building long-term relationships with
clients and providing tailored solutions to meet specific business needs.

Prepared By: [Link] Agrawal

Email Id: pavankumar@[Link]
Mob No: 8130402515
Assistant Professor-Dept. of Management
Rajiv Academy for Technology and Management, Mathura Page 2
 KMBNMK03 B2B and Services Marketing

Unit-1
Fundamentals of B2B marketing:

B2B marketing, or business-to-business marketing, involves the sale of goods

or services from one business to another. Unlike B2C (business-to-consumer)
marketing, which targets individual consumers, B2B marketing focuses on
building relationships and delivering value to other businesses. Here are some
fundamentals of B2B marketing:
1. Target Audience Identification: Understanding your target audience is
crucial in B2B marketing. This involves identifying the industries, businesses,
and decision-makers who are most likely to benefit from your products or
services.
2. Value Proposition Development: Clearly articulate the value proposition
of your products or services. What specific benefits do you offer to other
businesses? How does your offering solve their problems or fulfill their needs?
Highlighting your unique selling points is essential in B2B marketing.
3. Relationship Building: B2B marketing often involves longer sales cycles
and relationship-building efforts. Establishing trust and credibility with
potential clients is key. This can be achieved through content marketing,
networking events, personalized communication, and providing exceptional
customer service.
4. Content Marketing: Produce high-quality content that educates and
informs your target audience. This can include blog posts, whitepapers, case
studies, webinars, and videos. By sharing valuable insights and industry
expertise, you position your company as a thought leader in your field.
5. Lead Generation: Implement strategies to attract and generate leads.
This can involve inbound marketing tactics such as search engine optimization
(SEO), social media marketing, email marketing, and paid advertising.
Additionally, attending industry trade shows and conferences can help connect
with potential clients.
6. Account-Based Marketing (ABM): ABM is a strategic approach that
targets specific high-value accounts with personalized marketing campaigns.

Prepared By: [Link] Agrawal

Email Id: pavankumar@[Link]
Mob No: 8130402515
Assistant Professor-Dept. of Management
Rajiv Academy for Technology and Management, Mathura Page 3
 KMBNMK03 B2B and Services Marketing

By tailoring your messaging and content to the needs of individual accounts,

you can increase the likelihood of converting leads into customers.
7. Data-driven Decision Making: Utilize data and analytics to measure the
effectiveness of your marketing efforts. Track key performance indicators
(KPIs) such as website traffic, lead conversion rates, and customer acquisition
costs. Analyzing this data enables you to optimize your marketing strategies for
better results.
8. Sales and Marketing Alignment: Ensure alignment between your sales
and marketing teams. Collaboration between these departments is essential
for nurturing leads effectively and closing deals. Establish clear communication
channels and shared goals to maximize efficiency and effectiveness.
9. Customer Retention: Focus on retaining existing customers and fostering
long-term relationships. Providing excellent customer service, offering ongoing
support, and seeking feedback are crucial for customer satisfaction and loyalty.
10. Adaptability and Innovation: The B2B landscape is constantly evolving,
so it's important to stay adaptable and innovative. Keep abreast of industry
trends, technological advancements, and changes in customer preferences.
Continuously refine your marketing strategies to stay ahead of the
competition.

Characteristics of Consumer Markets:

On the other hand, refers to the transaction of goods and services between organizations and
potential customers.

B2C markets, on the other hand, presents a very simplified procurement process because influences
are not as complex as it is with B2Bs. The most common factors that affect consumers purchasing
decisions include; reference groups, tastes and preferences, marketing campaigns and economic
conditions.

 Behaviouristic characteristics: These include consumer interests in a product

such as how they intend to use it.
 Demographic characteristics: This is the foundation for understanding
consumers and include ethnicity, age, income, gender, occupation, religion,
nationality, social class, education and social class.
 Geographic characteristics: This is information regarding where the consumer
lives. It includes the climate, religion or how densely populated the geographical
area is.
 Psychographic characteristics: This entails the kind of lifestyle the customer
lives, their interest, opinions and attitudes as well as personal values.

Prepared By: [Link] Agrawal

Email Id: pavankumar@[Link]
Mob No: 8130402515
Assistant Professor-Dept. of Management
Rajiv Academy for Technology and Management, Mathura Page 4
 KMBNMK03 B2B and Services Marketing

Characteristics of business markets:

Business Marketing refers to the sale of either products or services or both by one organization to
other organizations that further resell the same or utilize to support their own system.

 Geographically concentrated customers: Customers in these markets are at

vast geographical locations.
 Presence of fewer but larger buyers: While the buyers may be few, they often
buy in large quantities.
 Final customer demand-driven: Since production is tailored for the final
consumer, the products are tailored towards the final consumers’ wants and needs.
 Quick fluctuation in demand: Since businesses prefer to buy sat the lowest
prices, an increase in prices decreases the products purchases since high price selling
products do not sell well in the market.
 Inelastic demand: The prices in these markets do not affect the demands as they
do not change much.
 Has a formalized buying process: The purchasing process involves following the
organization’s protocol and the complete chain of command.
 Professional purchasing units: Due to the need of maintaining a high level of
professionalism, the purchasing process is very detail-oriented.

Business markets refer to organizations, businesses or entities that acquire products and services for
use in the production of other services and products. On the other hand, consumer markets refer to
markets whereby businesses or producers sell their products or services directly to the final
consumers.

Demand

While business markets have inelastic demand, consumer markets have an elastic demand.

Buying process

While business markets have formalized buying processes whereby the purchasing process involves
following the organization’s protocol and the complete chain of command, consumer markets do not
have formalized buying processes.

Number of buyers

Business markets have fewer buyers who often buy in large quantities. On the other hand, consumer
markets have many buyers who purchase in small quantities.

Investments

While business markets invest heavily in capital equipment, consumer markets invest heavily in
marketing and promotion activities.

Prepared By: [Link] Agrawal

Email Id: pavankumar@[Link]
Mob No: 8130402515
Assistant Professor-Dept. of Management
Rajiv Academy for Technology and Management, Mathura Page 5
 KMBNMK03 B2B and Services Marketing

Decision making

Since business markets entail many products, decision making before purchases are made is slow. On
the other hand, the decision making in consumer markets is fast since impulse buying is rampant.

Market Segmentation

Business markets refer to organizations, businesses or entities that acquire products and services for
use in the production of other services and products. On the other hand, consumer markets refer to
markets whereby businesses or producers sell their products or services directly to the final
consumers.

Classification of Business products &

Customer’s products
Business products

Entering goods and services: These are products and services that become part of other
products. We are referring to raw materials, component parts and materials. Examples of this type of
B2B product include steering wheels for an automobile, lumber or metallic ores, formed parts or
electronic products like integrated circuits. From the accounting perspective, entering goods and
services are usually expensed rather than capitalized.

Foundation goods and services: These are products that are used to make other products. This
includes installations and accessory equipment. The former are items like offices and buildings and
the latter are machine tools. In contrast to entering goods and services, foundation goods do not
become part of the end product. While the majority of them are capital items, some foundation goods
can also be expensed.

Facilitating goods and services: These are products and services that help an organization
achieve its objectives. In other words, they assist and support. Facilitating goods also do not enter
the product or even the production process. Generally speaking, facilitating goods and services are
expensed rather than capitalized. Examples include market research services, cleaning supplies and
copiers. Facilitating goods can be divided into supplies and business services.

Consumer’s Product

Consumer products are products purchased for personal, family, or household use. They are often
grouped into four subcategories on the basis of consumer buying habits: convenience products,
shopping products, specialty products and unsought products.

Consumer products can also be differentiated on the basis of durability. Durable products are
products that have a long life, such as furniture and garden tools. Non-durable products are those
that are quickly used up or worn out, or that become outdated, such as food, school supplies, and
disposable cameras.

Prepared By: [Link] Agrawal

Email Id: pavankumar@[Link]
Mob No: 8130402515
Assistant Professor-Dept. of Management
Rajiv Academy for Technology and Management, Mathura Page 6
 KMBNMK03 B2B and Services Marketing

Shopping Products

Shopping products are purchased only after the buyer compares the various products and brands
available through different retailers before making a deliberate buying decision. These products are
usually of higher value than convenience goods, bought less frequently, and are durable. Price,
quality, style, and color are typically factors in the buying decision. Televisions, computers, lawn
mowers, bedding, and appliances are all examples of shopping products.

Because customers are going to shop for these products, a fundamental strategy in establishing
stores that specialize in shopping products is to locate near similar stores in active shopping areas.
Promotion for shopping products is often done cooperatively with the manufacturers and frequently
includes the heavy use of advertising in local media, including newspapers, radio, and television.

Convenience Products

Convenience products are items that buyers want to purchase with the least amount of effort, that is,
as conveniently as possible. Most are non-durable products of low value that are frequently
purchased in small quantities. These products can be further divided into three subcategories: staple,
impulse, and emergency items.

Staple convenience products are basic items that buyers plan to buy before they enter a store, and
include milk, bread, and toilet paper. Impulse items are other convenience products that are
purchased without prior planning, such as candy bars, soft drinks, and tabloid newspapers.
Emergency products are those that are purchased in response to an immediate, unexpected need
such as ambulance service or a fuel pump for the car.

Since convenience products are not actually sought out by consumers, producers attempt to get as
wide a distribution as possible through various marketing channels which may include different types
of wholesale and retail vendors. Convenience stores, vending machines, and fast food are examples
of retailer focus on convenience products. Within stores, they are placed at checkout stands and
other high-traffic areas.

Specialty Products

Specialty products are items that consumers seek out because of their unique characteristics or brand
identification. Buyers know exactly what they want and are willing to exert considerable effort to
obtain it. These products are usually, but not necessarily, of high value. This category includes both
durable and non-durable products. Specialty products differ from shopping products primarily because
price is not the chief consideration. Often the attributes that make them unique are brand preference
(e.g., a certain make of automobile) or personal preference (e.g., a food dish prepared in a specific
way). Other items that fall into this category are wedding dresses, antiques, fine jewelry, and golf
clubs.

Producers and distributors of specialty products prefer to place their products only in selected retail
outlets. These outlets are chosen on the basis of their willingness and ability to provide an image of
status, targeted advertising, and personal selling for the product. Consistency of image between the
product and the store is also important.

Unsought Products

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Email Id: pavankumar@[Link]
Mob No: 8130402515
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 KMBNMK03 B2B and Services Marketing

Unsought products are those products that consumers are either unaware of or have little interest in
actively pursuing. Examples are new innovations, life insurance, and preplanned funeral services.
Because of the lack of awareness of these products or the need for them, heavy promotion is often
required.

The distinction among convenience, shopping, specialty, and unsought products is not always clear.
As noted earlier, these classifications are based on consumers’ buying habits. Consequently, a given
item may be a convenience good for one person, a shopping good for another, and a specialty good
for a third, depending on the situation and the demographics and attitudes of the consumer.

Elements of B2B offering

Branding and sub-branding

In Business-to-Consumer (B2C) markets, the role of branding and sub-branding has already been
highlighted, but Business-to-business (B2B) companies do not rely on branding as 5% of the
decision-making is only based on brand influences. Some B2B companies have created sub-brands for
every aspect of their product range in their urge to use branding strategies. However, the importance
of relationship-building over brand-building for Business-to-business (B2B) has already been
emphasized. Some Business-to-business (B2B) marketers are increasingly relying on the web and
social media to reach out to the potential market.

Price:

Business buyers are far more focused on price and value than consumer buyers, as it directly affects
their profitability. “Trends” and “style” hold much less importance in the business buying landscape.

Business-to-business (B2B) marketers need to focus on innovation

Products thrive on the innovative spirit of the companies that develop them. They, in turn, have to
depend on other suppliers to fine-tune the devices and components. Since innovations are planned
and successfully commercialized in the B2B market, the sellers need to work hand-in-hand to benefit
from new market opportunities. B2B marketers need to undertake detailed market research,
combining it with upstream information to build a complete market intelligence picture.

Business-to-Consumer (B2C) businesses are likely to be less risk-averse as they need to predict to the
whims and irrational behaviour of consumers rather than the more calculated decision-making of
businesses.

Building personal relationships

In consumer selling, the companies depend on the mass media to market their products- it includes
newspapers, television, radio, internet, and at the physical level- banners, hoardings, arches, among
others. Here, the several consumers who buy the products are not known to the company as the
products are sold through wholesale and retail channels except in the case of some products such as
Vaccum Cleaners, mobile phones, water purifiers, books that are sold online or directly at customer
premises.

Prepared By: [Link] Agrawal

Email Id: pavankumar@[Link]
Mob No: 8130402515
Assistant Professor-Dept. of Management
Rajiv Academy for Technology and Management, Mathura Page 8
 KMBNMK03 B2B and Services Marketing

Here, brand building is more important and providing incentives to channel partners who include
distributors, C&F agents, wholesalers, and retailers who in turn would push the product. However, in
Business-to-business (B2B) marketing, building a personal relationship with the key decision-makers
in the target company is very important. Often the marketing team members are the brand
ambassadors. Therefore, the first impression of a company is formed during the first visits by
salesmen to pitch for the account.

Less number of buyers and probably more sellers

Unlike a consumer market where there could be thousands and millions of buyers, the Business-to-
business (B2B) market is more restricted to a limited number of perhaps large and medium scale
buyers who have the option to choose from several suppliers. The Business-to-business (B2B) market
works on the Pareto Principle of 80: 20, whereby eighty percent of the suppliers vie for 20% of the
buyers in the market. However, the few key business buyers may be buying in large quantities
compared to an average consumer in the market whose spending will be limited to a few thousand
dollars for that product category.

The limited number of buyers presents a challenge and an opportunity for sellers as the process
involves presentations, creating awareness, working closely with a client to make modifications to the
product if required, do the selling process and thereafter provide after-sales service.

Rational buying

Unlike a normal consumer who buys from retail which could be triggered by a variety of factors
including status, impulse buying, conspicuous consumption and so on, the business house buys based
on rational analysis of cost and benefits to the company.

Consumers are less likely to have full information of the products or services they buy, but business
houses base their buying on several parameters with the objective of making profits to the company
or a return on investment (ROI).

With the proliferation of credit cards and more disposable income at the hands of a consumer,
spending habits have changed. They could buy without cash in hand and pay in six months or one
year equated monthly instalments.

The job of Business-to-business (B2B) marketers becomes challenging as the buying is based on
critical analysis of pros and cons; however, buying could also be based on the reputation of the
supplier and his previous track record. No B2B buyer will risk his stake on an unknown product, even
if cost factors are favorable for the company.

Business buying is a complicated process

Business buying is a complicated process that may involve a various hierarchy of decision-makers and
final approval from the finance department or sometimes even by the board of directors if it’s a major
purchase. Moreover, decision-makers keep changing, and that creates a huge problem for Business-
to-business (B2B) marketers. Some companies may go for the lowest quote as their objective is to
keep costs down and earn more margin on product sales.

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Email Id: pavankumar@[Link]
Mob No: 8130402515
Assistant Professor-Dept. of Management
Rajiv Academy for Technology and Management, Mathura Page 9
 KMBNMK03 B2B and Services Marketing

Business purchases are classified into low risk, low-value purchases that involve decision making at
lower levels, low-risk, high-value goods that require the approval of technical and finance levels, low-
value high risk involving specialists and purchases, and finally, high-value high-risk purchases
involving senior decision-makers in the company.

Complexity of products

Consumer products are bought based on brand building and awareness created by the company.
Consumers may not be bothered about the finer technical details of the product, but the company
needs to evaluate it in detail and see whether customization is required or changes in product
specifications are required.

The Business-to-business (B2B) marketer needs to be armed with all the technical information and
standardization protocols to gain access to the company’s top decision-makers. Information provided
should be factual and not a value-building created in the mind of the buyer. On the other hand, a lot
of investment required for brand building and value creation in the mind of the consumer can be
eliminated In a sale based on ‘technical’ parameters.

Fewer Segmentation and needs

In a consumer market, a particular product could be divided into different segments based on need,
buying power and features. There could be a set of brands from a company that is in the premium
segment- Timex Watches, Unilever consumer products, Levis jeans may have different offerings at
different price points that cater to entry-level, average, and premium buyers.

However, the industrial buyer is not looking at products for end consumption and hence not bothered
to look at them from the perspective of a consumer. Segmentation of the market is much lesser as
whims, insecurities, and indulgences are not the factors that drive the purchasing. Several people are
involved in Business-to-business (B2B) decision making and segments are based on price, quality,
service, and partnership. The challenge for Business-to-business (B2B) marketer is to focus on the
right segment and work with them to evolve a long-term strategic partnership although limited
segmentation helps to an extent when compared to consumer markets.

Long-term buying

For an average consumer buying fast-moving consumer goods (FMCG), a purchase could be for a
lifetime at least for 5 to 10 years, as in the case of TV, Refrigerator, microwave oven, and others.
Groceries, grains, and consumable goods may be required on a continuous basis.

In the Business-to-business (B2B) industry, it could be a requirement of a component or kit on a

continuous basis until a particular brand or product may be taken off from the market. Or changes in
design or product specifications may make the particular device, component, or kit useless or
obsolete.

In Business-to-business (B2B) business, since customers are fewer and business is long-term, the
sales team needs to build long-term relationships; the company should adequately train the sales
force in the latest technologies and ensure that they are successfully communicating it to the clients.

Prepared By: [Link] Agrawal

Email Id: pavankumar@[Link]
Mob No: 8130402515
Assistant Professor-Dept. of Management
Rajiv Academy for Technology and Management, Mathura Page 10
 KMBNMK03 B2B and Services Marketing

Looks & packaging do not matter

Consumer goods depend on good packaging and branding for their success. Huge amounts may be
spent on the attractive design of cartons and logos. However, in Business-to-business (B2B),
marketing packaging has lesser importance as buying is not based on looks and design. A product is
judged primarily on its intrinsic merits and not on its attractive looks. Moreover, the decision-makers
may not see the packing at all. It may be opened and used on the production floor by technical and
production personnel.

B2B Marketing mix

Price:

Business buyers are far more focused on price and value than consumer buyers, as it directly affects
their profitability. “Trends” and “style” hold much less importance in the business buying landscape.

When selling to organisations it is pivotal that marketers have a clearly structured pricing plan that is
easy to communicate and understand so that decision makers for the business are not deterred and
can easily pass on the information to those in the C-suit of the company for approval.

Place:

Regardless of your client type, it is always essential to provide the right product, at the right place
and at the optimal time. Marketing your product in a location where you client is not present is a
waste of time and money. Focus your marketing strategy on targeting your clients in the optimal
buying environment.

Place is not necessarily just a physical location though. Your “place” can be determined by the
industry you serve. For instance a pharmaceutical company that sells direct to hospitals works within
the space of medical equipment and services, this medical industry segment is therefore a type of
non-physical space in which they must develop a presence.

Promotion:

This refers to the method of communication used to promote a product. This can vary greatly
between B2B and B2C, as individual consumers tend to seek out information differently than business
buyers. Some excellent communication channels for those in the B2B field include:

Brochures/Pamphlets:

Strategically placed in locations where you prospects have access to them, these types of materials
can house a huge amount of detailed information as well as provide a physical, tangible good for
prospects to take away with them that has your contact information.

Prepared By: [Link] Agrawal

Email Id: pavankumar@[Link]
Mob No: 8130402515
Assistant Professor-Dept. of Management
Rajiv Academy for Technology and Management, Mathura Page 11
 KMBNMK03 B2B and Services Marketing

Emails:

Email marketing is a hugely important tool for B2B Marketers. When done well this can provide an
easy, cheap avenue to communicate with clients and prospects in a way that is measurable in terms
of your conversions and return on investment.

People:

When it comes to selling a consumer good marketers don’t generally need to concern themselves
with sales people. A homogenous product, such as a can of Coca Cola, doesn’t need a sales person to
convince the buyer that it is the best can of Coke for them. Every Coca Cola is created equal so there
is no added benefit of getting a skilled salesman to persuade prospects that this particular Coca Cola
is fresher or better somehow than any other.

B2B marketers, however, need to provide evidence as to why their offering is the perfect fit. They do
not have the luxury of selling a one-size-fits-all product, this means that salespeople are essential for
building trust and motivating prospects to buy.

Physical Evidence:

The B2B marketing mix places a great deal of emphasis on actively building trust in your audience.
This is done through a variety of tangible and intangible means, for instance:

 Given the variation in offerings for B2B marketers; especially when offering a tailored
service such as consultancy, personalised web and office solutions and so on
testimonials and reviews are vital in building confidence in buyers. When consumers
buy a Coca Cola they are completing a very low-risk transaction and thus trust
building is not an essential component of the sale. Business-level transactions,
however, are often high-risk, high-involvement purchases that require trust and
confidence before closing the deal.
 Your office set-up is a huge factor in how clients and prospects perceive you. B2B
selling often involves in-person meetings to gain trust (something which is becoming
less and less prevalent in the B2C realm with the rise of ecommerce). It is therefore
of high importance to present yourself in a manner fitting to your offering, whether
that is as a distinguished, high-end, professional or a relatable, small-business for
the everyday man, this can be a selling point for prospective clients.

Process:

With the added “people” element in the B2B marketing mix, the buying process becomes a key selling
point of your offering. Your process can demonstrate your expertise and be a key element of the
value proposition.

Given that B2B marketers often offer solutions to their clients that are not standardised, this makes
the process of delivering this solution becomes vitally important, as it differentiates you from your
competition.

Prepared By: [Link] Agrawal

Email Id: pavankumar@[Link]
Mob No: 8130402515
Assistant Professor-Dept. of Management
Rajiv Academy for Technology and Management, Mathura Page 12
 KMBNMK03 B2B and Services Marketing

Strategic tools for managing product offerings

Marketing Activities Roadmap

Where you want your tech startup to be in the near future guides your marketing activities from
month to month. Using your objectives as a guide, create a blueprint with specific steps to take in
your marketing journey. Include details about:

 Amount and types of content

 Social media outreach and engagement
 Balancing content types
 Posting schedules to various channels
 Following up with contacts
 Analyzing data

Marketing and Sales Funnel

B2B tech startups face the challenge of generating quality leads with real potential to move from
prospect to client. Companies go through a different process than consumers when making
purchasing decisions, and this often includes a lengthy period of research. To design marketing
tactics with the power to steer clients in your direction, create messages pertinent to each part of the
sales funnel. Analyze metrics to clarify purchasing behaviors, and tailor your lead generation efforts to
capture the most likely prospects. Once clients show interest in your services, be sure to follow up so
that your brand stays fresh in their minds.

Competitive Analysis

Look at what your closest local and online competitors are doing to attract customers. Their campaign
designs, keywords, advertising and pricing strategies can help you determine the best way to bring
more clients to your startup. Determine if there are unmet needs your services can fulfill, and use this
to draw B2B customers to you rather than using your competitors’ tactics to try and outdo them.

Target Customers

Who are you selling to, and why are they looking for your services? What needs must you meet for
successful lead generation? B2B clients want personalized experiences with targeted solutions just as
much as B2C customers, and the problems they’re trying to solve influence the way they search. Gain
as much insight into your audience as possible, and use your discoveries to influence the content you
deliver as part of your inbound marketing plan.

Company Branding

To establish your brand, you need more than a recognizable logo and a company “voice.” A strong
value proposition expands your mission statement to communicate the benefits clients get from
working with you. It differentiates your startup from other tech companies with a clear declaration of
how your services help your target audience.

Prepared By: [Link] Agrawal

Email Id: pavankumar@[Link]
Mob No: 8130402515
Assistant Professor-Dept. of Management
Rajiv Academy for Technology and Management, Mathura Page 13
 KMBNMK03 B2B and Services Marketing

Complete your company’s image with a positioning statement on which to base your inbound
marketing campaign. By unifying all the elements of successful marketing, this statement helps keep
your message in line with your business vision.

Mission Statement

You company’s mission statement reflects the purposes and objectives on which the business was
established. What story do you tell potential clients? Distill your vision and values into a strong
statement showing the heart of your company, the reliability of your services and why other
businesses should take advantage of what you offer.

Business Goals and Challenges

B2B marketing is an investment in growth, so it’s important for startups to establish what the
company should accomplish in the coming year and identify any obstacles standing in the way. Be
realistic as you map out your goals for the next 12 months, but don’t hesitate to dream big. Creating
a list of milestones you wish to reach prepares you to take action when you find a stumbling block in
your way. In addition to finding solutions to the challenges that are holding you back right now,
brainstorm solutions to the most likely problems that you may encounter, and you won’t flinch in the
face of inevitable challenges.

Customer Personas

Creating customer personas takes you deeper into the mind of your target audience. While it may
seem strange to profile the fictitious Robert the CEO from Widgets, Inc. and figure out why he’s in
the market for your services, the act of coming up with a realistic portrait of your ideal customer can
help you deliver more relevant marketing messages.

Create detailed and specific personas for your ideal customers. Consider who your mission statement,
value proposition and positioning statement speak to. Conduct market research to see how the
decision makers at similar companies search for solutions. Where potential clients are, the platforms
they use to research purchases and whether they primarily search from PCs or mobile devices
influences your marketing objectives.

Product Positioning:The technology landscape is filled with me-too products that have limited
differentiation versus other offerings. Without proper product positioning, your marketing messages
will not resonate with customers or partners. If you have a unique product or service, clearly identify
and articulate what makes it different from other similar offerings in the market. We like Geoffrey
Moore’s (author of “Crossing the Chasm”) format for this exercise.

Month Marketing Objectives

Do you know how many new customers you want by the end of the year? Have you decided on a
percentage of growth to strive for? How does social media engagement factor into your marketing
plan? Successful marketing requires concrete answers to these questions using numbers and
percentages rather than vague statements. Instead of deciding you want “a bigger client base” or
“more long-term contracts,” aim for growing your client base by a set percentage or establishing a
specific number of contracts in the next 12 months.

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Email Id: pavankumar@[Link]
Mob No: 8130402515
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 KMBNMK03 B2B and Services Marketing

Organizational Buying and Buyer Behavior

Individual consumers are not the only buyers in a market. Companies and other organizations also need goods
and services to operate, run their businesses, and produce the offerings they provide to one another and to
consumers. These organizations, which include producers, resellers, government and nonprofit groups, buy a
huge variety of products including equipment, raw materials, finished goods, labor, and other services. Some
organizations sell exclusively to other organizations and never come into contact with consumer buyers.

B2B markets have their own patterns of behavior and decision-making dynamics that are important to
understand for two major reasons. First, when you are a member of an organization, it’s helpful to appreciate
how and why organization buying decisions are different from the decisions you make as an individual
consumer. Second, many marketing roles focus on B2B rather than B2C marketing, or they may be a
combination of the two. If you have opportunities to work in B2B marketing, you need to recognize how the
decision-making process differs in order to create effective marketing for B2B customers and target segments.

Who Are the Organizational Buyers?

Unlike the consumer buying process, multiple individuals are usually involved in making B2B buying decisions.
A purchasing agent or procurement team (also called a buying center) may also be involved to help move the
decision through the organization’s decision process and to negotiate advantageous terms of sale.

Organizations define and enforce rules for making buying decisions with purchasing policies, processes, and
systems designed to ensure the right people have oversight and final approval of these decisions. Typically,
more levels of consideration, review, and approval are required for more expensive purchases.

For anyone involved in B2B marketing or selling, it is important to know:

 Who will take part in the buying process?

 What criteria does each person use to evaluate prospective suppliers?
 What level of influence does each member of the process have?
 What interpersonal, psychological, or other factors about the decision team might influence
this buying process?
 How well do the individuals work together as a group?
 Who makes the final decision to buy?

Because every organization is unique, the answers to these questions will be different for every organization and
every sale. Marketers should understand their target segments well enough to identify commonalities where they
exist and then create effective marketing to address the common roles and decision makers identified.

For example, a technology company selling a travel- and expense-management system should expect decision
makers from several departments to be involved in the purchasing decision: the HR department (to ensure the
system is user-friendly for employees and compatible with company travel policies), the accounting department
(to ensure the system is a good complement to the company’s accounting and finance systems), and the IT
department (to ensure the system is compatible with the other systems and technologies the company uses).
Marketers should focus first on managers in the group most responsible for travel and expense policy—typically
the HR department. As the company generates serious interest and leads, marketing and sales staff should take
the time to learn about decision dynamics within each organization considering the system. Marketing and sales
support activities can focus on getting each of the essential decision makers acquainted with the product and
then convincing them to make it their final selection.

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Mob No: 8130402515
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B2B Buying Situations

Who makes the buying decision depends, in part, on the situation. Common types of buying situations include
the straight rebuy, the modified rebuy, and the new task.

The straight rebuy is the simplest situation: the organization reorders a good or service without any
modifications. These transactions are usually routine and may handled entirely by the purchasing department
because the initial selection of the product and supplier already took place. With the modified rebuy, the buyer
wants to reorder a product but with some modification to the product specifications, prices, or other aspects of
the order. In this situation, a purchasing agent may be involved in negotiating the terms for the new order, and
several other participants who will use the product may participate in the buying decision.

The buying situation is a new task when an organization considers buying a product for the first time. The
number of participants and the amount of information sought tend to increase with the cost and risks associated
with the transaction. For marketers, the new task is the best opportunity for winning new business because there
is no need to displace another supplier (which would be the case for the rebuy situations).

For sales opportunities that are new tasks, there may be an opportunity for a solution sale (sometimes
called system selling). In these opportunities, the buyer may be interested in a provider that offers a complete
package or solution for the business problem, rather than individual components that address separate aspects of
the problem. Providers win these opportunities by being the company that has both the vision and the capability
to provide combination of products, technologies, and services that address the problem–and to make everything
work together smoothly. Solution sales are particularly common in the technology industry.

Characteristics of Organizational Buying

B2B purchasing decisions include levels of complexity that are unique to organizations and the environments in
which they operate.

Timing Complexity

The organizational decision process frequently spans a long period of time, which creates a significant lag
between the marketer’s initial contact with the customer and the purchasing decision. In some situations,
organizational buying can move very quickly, but it is more likely to be slow. When personnel change, go on
leave, or get reassigned to other projects, the decision process can take even longer as new players and new
priorities or requirements are introduced. Since a variety of factors can enter the picture during the longer
decision cycles of B2B transactions, the marketer’s ability to monitor and adjust to these changes is critical.

Technical Complexity

Organizational buying decisions frequently involve a range of complex technical dimensions. These could be
complex technical specifications of the physical products, or complex technical specifications associated with
services, timing, and terms of delivery and payment. Purchases need to fit into the broader supply chain an
organization uses to operate and produce its own products, and the payment schedule needs to align with the
organization’s budget and fiscal plans. For example, a purchasing agent for Volvo automobiles must consider a
number of technical factors before ordering a radio to be installed in a new vehicle model. The electronic
system, the acoustics of the interior, and the shape of the dashboard are a few of these considerations.

Organizational Complexity

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Because every organization is unique, it is nearly impossible to group them into precise categories with regard
to dynamics of buying decisions. Each organization has a characteristic way of functioning, as well as a
personality and unique culture. Each organization has its own business philosophy that guides its actions in
resolving conflicts, handling uncertainty and risk, searching for solutions, and adapting to change. Marketing
and sales staff need to learn about each customer or prospect and how to work with them to effectively navigate
the product selection process.

Unique Factors Influencing B2B Buying Behavior

Because organizations are made up of individual people, many of the same influencing factors discussed earlier
in this module apply in B2B settings: situational, personal, psychological, and social factors. At the same time,
B2B purchasing decisions are influenced by a variety of factors that are unique to organizations, the people they
employ, and the broader business environment.

Individual Factors

B2B decisions are influenced by characteristics of the individuals involved in the selection process. A person’s
job position, tenure, and level in the organization may all play a role influencing a purchasing
decision. Additionally, a decision maker’s relationships with peers and managers could lead them to exert more–
or less–influence over the final selection. Individuals’ professional motives, personal style, and credibility as a
colleague, manager, or leader may play a role. To illustrate, a new department head might want to introduce an
updated technology system to help her organization work more productively. However, her short time in the role
and rivalry from other department heads could slow down a buying decision until she has proven her leadership
capability and made a strong case for investment in the new technology.

Organizational Factors

Purchasing decisions, especially big-ticket expenditures, may be influenced by the organization’s strategies,
priorities, and performance. Generally the decision makers and the providers competing for the business must
present a compelling explanation for how the new purchase will help the organization become more effective at
achieving its mission and goals. If a company goes through a quarter with poor sales performance, for example,
the management team might slow down or halt purchasing decisions until performance improves. As suggested
above, organizational structure plays a central role determining who participates in the buying process and what
that process entails. Internal organizational politics and culture may also impact who the decision makers are,
what power they exert in the decision, the pace of the buying process, and so forth. An organization’s existing
systems, products, or technology might also influence the buying process when new purchases need to be
compatible with whatever is already in place.

Business Environment

B2B purchasing is also influenced by factors in the external business environment. The health of the economy
and the company’s industry may determine whether an organization chooses to move ahead with a significant
purchase or hold off until economic indicators improve. Competitive pressures can create a strong sense of
urgency around organizational decision making and purchasing. For instance, if a leading competitor introduces
a compelling new product feature that causes your organization to lose business, managers might be anxious to
move forward with a project or purchase that can help them regain a competitive edge. When new technology
becomes available that can improve products, services, processes, or efficiency, it can create demand and sales
opportunities among companies that want the new technology in order to compete more effectively.

Government and the regulatory environment can also influence purchasing decisions. Governmental
organizations often have very strict, highly regulated purchasing processes to prevent corruption, and companies
must comply with these regulations in order to win government contracts and business. Similarly, lawmakers or
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Mob No: 8130402515
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governmental agencies might create new laws and regulations that require organizations to alter how they do
business—or face penalties. In these situations, organizations tend to be highly motivated to do whatever it
takes, including purchasing new products or altering how they operate, in order to comply.

Consumer and Organization Buying Behavior

Consumer Buying Behavior

Consumer buying behavior is the result of the attitudes, preferences, intentions and decisions made by the
consumer s in a market place before buying a product. The study of consumer buying behavior is an
interdisciplinary subject area drawing widely from sociology, psychology, anthropology etc.

 Standard Buying Process

The buying behaviour can be broken down into a series of tasks.

1. Problem recognition:

During this stage, the consumer becomes aware of an unfulfilled need or want. For example, his old laptop may
be broken and a need arises for a new laptop.

2. Information search:

in this stage, the consumer gathers information relevant to solving his problem. Example, collection of
information about various laptop models.

3. Evaluation:

The various alternatives are evaluated against the consumer’s wants needs, preferences, financial resources etc.

4. Purchase:

In this stage, the consumer will commit to a particular choice and make the final decision. The choice maybe
influenced by price and availability.

5. Post purchase evaluation:

In this stage, the consumer evaluates whether the purchase actually satisfied her need or not.

Types of Buying Behaviour

1. Complex: High degree of consumer involvement with significant brand differences. Eg: –
Cars.
2. Dissonance Reducing: High degree of involvement with little brand differences. Eg: –
Carpeting
3. Habitual: Low involvement with little brand difference. Eg:- Salt

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Mob No: 8130402515
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 KMBNMK03 B2B and Services Marketing

4. Variety seeking: Low involvement with significant perceived brand difference. Eg:-
Chocolates

 Organizational Buying Behavior

Organization buying behavior is defined as the rational decision-making process in which organization buys
goods and services when they have need of any goods or service for their organization. The purchased products
and services get identified, evaluated, and chosen among alternative brands and suppliers. Organizational
buying is similar to the consumer buyer behavior without any major differences. Organizations buy the products
and services for the betterment of organizational objectives such as manufacture and deliver goods and services
to members, customers or the community. Three types of buying situation have been distinguished: the straight
rebuy, the modified rebuy, and the new task.

The straight rebuy:

It is the buying condition in which the buyers buy the product frequently. Buying of those products will be a
routine task for the organization.

The modified rebuy:

A business buying condition in which the buyer wants to change the product specification, its price as well as
terms or suppliers.

The new task:

When the organization buys any products or services for the first time then it is called new task. In this cases,
the larger the cost, there will be more decision participants and also there will be more efforts for collecting
information. The new task situation creates more opportunity as well as challenges.

Participants in the business buying process:

The buying center who actually participates in buying the products and services, their roles will play a
significant role while making a decision to purchase any products for the organization.

 Users:

The members who uses the products or services. In various cases, users start off with buying proposal and also
help in defining the product specification.

 Influencer

The people who affect the buying decision in an organization are called influencers. They help to define
specifications and they also provide information for evaluating alternatives.

 Buyers

In organizational buying center, the person who actually purchases the goods and services are called buyers.

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 Decider

The people who have formal or informal power in order to select or approve the final supplier in organizational
buying center are called decider.

 Gatekeepers

The person who controls the flow of information to others in organizational buying is called gatekeepers.

Major influence on Organization Buyers

Business buyers are subject to many influences when they make their buying decisions. Some marketers assume
that the major influences are economic. However, business buyers actually respond to both economic and
personal factors.

1. Environmental Factors:

Business buyers are mostly influenced by the current economy and future economy of the state or the world
while making any decision. Economic environment consists level of primary demand, the economic outlook and
the cost of money. They are also affected by technological, political and competitive developments in the
environment.

2. Organizational factors:

The major organizational factors like objectives, policies, procedures, structure and system must be understood
well.

3. Interpersonal factors:

There are many participants who influence each other so interpersonal skills also matter in the business buying
process. However, it will be difficult to implement such interpersonal factors and group dynamics.

4. Individual factors

The people who participate in business buying decision process bring in personal motives, perceptions, and
preferences. These individual factors are affected by individual characteristics such as age, income, education,
professional identification, personality and attitudes towards risk.

The Organization buying process:

There are total eight stages and by going through these stages an organization will be able to make a rational
decision. If the desired result is not achieved then the steps will be repeated again until they meet their goals and
objectives.

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Email Id: pavankumar@[Link]
Mob No: 8130402515
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 Problem Recognition:

The first stage of the business buying process in which people identify the need of the organization which will
be met by purchasing any goods or services. Problem recognition can result from internal or external stimuli.
Internally , the company may take a decision to launch a new product that requires new production equipment
and materials. Or, a machine may break down and need another new part. Externally, the buyer gets some new
ideas at a trade show, see an ad, or receive a call from a seller who offers best products at low price.

 General Need Description:

After the need is recognized, the buyers prepare a general need description which reports both characteristics
and quantity needed and item for the organization. For standard items, this process presents very few problems
but for complex problems the buyer needs to work with the other engineers, users, consultants in order to define
the item.

 Product Specification:

In this stage, the buying organization decides and specifies the technical product features for the needed item.
Product value analysis is the approach that helps to reduce the cost in which the components are studied. After
studying it carefully they can be redesigned, standardized or made by fewer cost methods of production. The
team will decide best product features and specifies them accordingly.

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Email Id: pavankumar@[Link]
Mob No: 8130402515
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 Supplier Search:

In this stage, the buyer conducts supplier search to find the best sellers. The buyer can assemble a list of
qualified suppliers by analyzing trade directories, doing computer searches or contacting other companies for
recommendation letters.

 Proposal Solicitation:

The stage of the business buying in which the buyer ask qualified suppliers to submit proposals is called
proposal solicitation. After this supplier will send only a catalogue or a salesperson. However, when the item is
complex or expensive, the buyer ask for the detailed written proposals or formal presentations for each potential
supplier.

 Supplier Selection:

In this stage, the buyer reviews proposals and choose a supplier or suppliers. During supplier selection, the
buying center often will prepare up a list of the desired supplier trait and their relative importance. Such trait
includes product and service quality, reputation, on-time delivery, ethical corporate behavior, honest
communication and competitive prices.

 Order- Routine Specification:

This is the stage of buying process in which the buyer choose the final supplier by listing various things like
technical specifications, quantity needed, expected time of delivery, return policies, and warranties.

 Performance Review:

The stage of buying process in which the buyer analyze the supplier’s performance on the basis of different
criteria and decides to continue, modify or drop the arrangement. The seller’s job is to observe and examine the
same factors used by the buyer to make sure that the seller is giving the expected satisfaction.

CRM Process for Marketing Organization

CRM as an essential marketing tool

In the same way that your sales and marketing teams are connected during the sales process, so should your
sales and marketing software. Clever use of customer data is the building block for smart marketing and is
typically held in CRM.

CRM software is fundamentally a sales tool, and can therefore be perceived as unfavourable by marketing
teams. Systems will often be configured to help sales teams get the most out of their deals and pipeline, and
marketing targets are forgotten. However, nothing is stopping you from claiming ownership and making the
following important processes work for you in CRM:

1. Lead management

Lead management and qualification can be a very manual and time consuming process. Capturing leads from
your web forms and entering them in CRM is not the most exciting or useful way for a marketer to spend their
time. You can find a number of quick wins by automating and streamlining your lead management processes.

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Mob No: 8130402515
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 Lead capture: Your inbound web traffic can be split into two sources, web forms &
anonymous website visitors. Connect your website with your CRM, so website form leads are
captured and entered as such in your system. To ensure none of them slip through the cracks,
set up notifications for you and your team to take action.
 Lead scoring: Not all leads that come into your business are created equal. There is no point
in wasting sales or marketing time chasing down leads who aren’t worth the effort. Your lead
scoring plan is how you qualify leads until they’re a MQL and you feel confident handing
them over to sales teams.
 Lead scoring is all about highlighting multiple valuable interactions with your business and
should be automated to let your CRM do the scoring for you. The next part to automate in
CRM will be alerting your teams when leads or prospects reach high scores. As long as
you’ve pre-defined when your leads are qualified, CRM can also do this job for you.

2. Lead nurture

In B2B businesses, the sales cycle is typically longer than their B2C counterparts. To avoid leads and prospects
going cold, keep them engaged throughout the buying cycle. One way to achieve engagement is by sending drip
emails at regular intervals with relevant content. Aim to build trust and relationships, until your leads are ready
to engage with your sales team. Don’t be afraid to re-purpose existing content. After all, this is all about time
saving. There’s no need to re-invent the wheel, your whitepapers could easily be a basis for 1 or 2 good blogs.
Use the resources you already have and build on them.

3. Customer retention and upselling

A marketer’s job doesn’t stop after a prospect is converted and a sale has been made. Customer retention should
carry as much weight as acquiring new business. Keeping your hard-won customers happy and engaged is
essential to long-term recurring sales.

Happy users of your products or services will come back for more and will also be your greatest brand advocate.
In the long run, they will be a great referral lead source and help to generate new business for you. CRM can
automate parts of your customer engagement processes. By allowing you to make the most of your customer
data, you can automate marketing workflows such as:

Automated upselling

 Customer welcome series: Customers are always at risk of falling through the cracks after
their initial purchase. Marketing automation backed by customer data from CRM ensures you
stay in touch and keep your brand/product top of mind. Automate a quick email or phone call
1 month after they become a customer.
 Cross and up-selling campaigns: Segmenting customers by activity data in CRM will allow
you to identify which additional products or services may be useful for your existing
customers. Automate email campaigns to customers who purchased one service and inform
them about the other service or product
 Customer engagement: Staying in touch with your customers and keeping them engaged
takes a lot of effort. Automate certain interactions and keep them personalised using CRM
data.
 When a contact posts on your Facebook wall or tweets your brand, you could automatically
create activities for your social media team.
 When a contact makes a purchase, follow up 30 days later by automatically creating an
activity to ask for feedback or a review. Take full advantage of using an integrated sales and
marketing software, combining CRM data and marketing automation.
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Mob No: 8130402515
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 KMBNMK03 B2B and Services Marketing

4. Marketing organization and planning

Another process to automate in your CRM is the marketing workload planning. In your CRM system, make a
project, add all activities, documents, and relevant emails. Add some automated project workflow in there to
ensure no steps are being missed before your next marketing campaign goes out. For instance, a new customer
newsletter project can automatically launch design & content creation activities for team members.

Marketing spend can be logged against these activities to create a clear picture of ROI of each marketing
activity. The benefits are that management is always aware of the progress of items and every step is traceable
in CRM.

Marketing planning

Now that you’ve automated these 4 key marketing processes in CRM, you will have freed up significant time
for the marketing team. The time you can spend interpreting and refining your marketing strategy or trying out
the next big marketing idea on your list. Smaller companies or organizations who don’t yet have the marketing
tech stack to make this work can start by automating just one process in CRM which could be a quick win for
them, and build on this for the future.

4C’s (Elements) of CRM Process

 Customer Experience: people love to talk about your service and your products. It is the key
driver of consumer conversations.

The basis of positive conversations about your company is very simple: offer strong products and a decent
customer service. These two drive conversations. If you do them well: conversations will boost the business, if
your performing just a little below expectations, conversations will decrease the business. It is the foundation of
a Conversation Company.

The Conversation Company believes in a total philosophy towards customer experience. The role of social
media within this philosophy is to react in real time to people’s problems and complaints. Companies like KLM
and Best Buy demonstrate perfectly how this pillar fits in to the overall picture. Other companies, such as Dell,
build mission control centres. These centres are manned 24/7 by staff who answer the online questions put by
customers and prospects. No single conversation is left without a response; everyone is helped.

 Conversation: The Heineken Champions League stunt makes clear that the effect of small offline
events can be magnified many times by social media. Heineken facilitated this process by providing the
right content in the right form. Some time ago Kraft had the idea of integrating customer tweets into its
offline advertisements. People quickly caught on to this idea and were super-keen to get their quotes in
the adverts. As a result, more than 1.5 million tweets were sent to Kraft in the course of the campaign.

 Content: give people stuff to talk about, but do it in an authentic, positive and relevant way.

Companies should no longer be concerned with the planning of one-off advertising campaigns, but with the
global planning and management of their content. Your company must learn to think like the publisher of a
newspaper. The paper with the most interesting content is the paper that is read the most. Good content is the
ideal way to increase your reach.

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Mob No: 8130402515
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 Collaboration: involve customers in everything your company does. Let them be part of your
boardroom and let them be involved in your decision-making processes.

The Conversation Company collaborates structurally with its customers. This increases the average level of
consumer commitment. It is possible to be fairly creative within this pillar. 4Food, a successful hamburger outlet
in Manhattan, draws up a new menu every day with the help of its own customers. Using a series of tablets left
on the tables, the diners can put together their own recipe for the perfect? hamburger. Every new concept put on
display for the other customers and the best-selling burgers are promoted via Twitter and Facebook. For each
burger sold, the recipe-maker receives 25 cents. In a similar vein, Proctor and Gamble has developed
Vocalpoint, a community in which 350,000 mothers help to develop new product ideas for the P&G brand.
These mothers are also the first users of the new products during the development phase, so that they can
provide feedback with regard to possible problems/weaknesses before the product is finally launched on the
market.

Phases in CRM Process

CRM process involves the activities and strategies that companies use to manage their interaction with current
and potential customers. The keyword here is “relationship.” Nurture that with existing customers and they’ll be
coming back, which means you achieve customer retention and loyalty. Harness that relationship even with
prospects and they’ll be converted into actual customers. In both cases, they translate to revenues that come into
your coffers.

A CRM is a significant tool whether you are a freelancer, sole entrepreneur, startup or global corporation. The
reasons why a CRM system matters much for a business are far too many if we list down specifics and details.
For this section, we go for the big picture. Here are some of them:

(I) Discover: by uncovering useful insights and information about your customers, you are in the position to
understand them better – who they are, how and why they buy your products. Identifying and unraveling
customer trends and interactions are crucial not only because you can readily anticipate their needs and address
their issues but also keep you ahead of competitors who may not be as attuned as you are to customers’ pulse.

(II) Organize: you have the ways and means to keep everything in order – from the whole customer life cycle
to customer channel engagement, from sales process automation to marketing campaigns, and from business
analytics to storing and accessing customer data, among others. An otherwise string of complex situations and
convoluted processes are all streamlined and automated to give you a clearer perspective and solid grasp of
things.

(III) Optimize: you can improve, build and manage customer related operations through a host of CRM tools.
These are designed to give you the flexibility and convenience you need to be responsive to your customers and
at the same time make it easy for customers to do business with you.

Strategic Alliances
The Strategic Alliance refers to the agreement between two or more firms that unite to pursue the common set
of goals but remain independent after the formation of the alliance. In other words, when two companies come
together to achieve the common objective by sharing the particular strengths (resources) with each other is
called as a strategic alliance.

The partner firms in the strategic alliance share the benefits and control over the performance of the assigned
task but are less involved and less permanent than the joint venture. Unlike joint venture where the partner firms

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pool their resources to form a separate business entity, in a strategic alliance, the firms to the agreement remain
independent and come together just to capitalize on the strengths of each other.

There are four types of strategic alliances. These are:

1. Procompetitive Alliances
2. Noncompetitive Alliances
3. Competitive Alliances
4. Precompetitive Alliance

Disadvantages of Strategic Alliances

Though, the strategic alliance brings lots of advantages for the partnered firms it has certain loopholes.

 Since each firm maintains its autonomy and has a different way to perform the business
operations, there could be a difficulty in coping with each other’s style of performing the
business operations.
 There could be a mistrust among the parties when some competitive or proprietary
information is required to be shared.
 Often, the firms become so much dependent on each other that they find difficult to operate
distinctively and individually at times when they are required to perform as a separate entity.

Often, the companies enter into the strategic alliance agreement to develop a more effective process, enhance
the production capacity, develop an effective distribution channel, expand into new market segments, etc. There
are several real-time examples of strategic alliances, such as Apple has partnered with Sony, Motorola, Philips
and AT&T., Disney and Hewlett-Packard, Starbucks and Barnes and Nobles Bookstore, etc.

Prepared By: [Link] Agrawal

Email Id: pavankumar@[Link]
Mob No: 8130402515
Assistant Professor-Dept. of Management
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 KMBNMK03 B2B and Services Marketing

Unit-2
Role of Marketing Communications in B2B Markets
Various marketing communications tools are used by B2B companies is to retain existing customers, connect
with new customers and focus on helping to turn prospective customers into sales.

Therefore understanding the buying behaviour of your market, targeting the right prospects and providing the
right information/messages at the right time, through the right channels is of the upmost importance. And as
your B2B buyers are more likely than B2C buyers to research and seek out information on the products they
buy, it’s important that any communication your buyer receives is targeted, highly relevant and easily
accessible.

There are many ways you can reach out to your target market, both off line and online. According to industry
reports on where buyers go to gather information on products or services, it seems that websites still remain the
most popular destination with nearly half of people saying they go straight to a company’s website if they are
interested in finding out more (B2B Marketing and Base One: Buyersphere report 2013).

Although it’s also good to know that traditional methods remain important with many buyers still relying on
material such as sales brochures or downloading pdfs for their information gathering. Additionally, tools such as
Social media are a growing influencer and source of knowledge so should also be considered an important part
of your marketing mix.b2b marketing communications tools Below, we’ve put together a check list of the b2b
marketing communications tools you should be using to connect with your customers and enhance your sales

1. Website – A B2B website helps buyers connect with manufacturers, wholesalers and
exporters and vice versa. It acts as your online shop window and is the most likely go-to place
for any prospective customer or end user wanting to investigate your services or products.
B2B buyers aren’t shoppers they’re researchers and therefore you need to ensure that your
website not only communicates the right level of information but also appeals to your
customers as well as end users – two distinct audiences with two distinct demands. Your trade
customers will require detailed, easily accessible information on products, whilst your end
users tend to take a broader approach, being, attracted to you as a company, your
professionalism and what you have to offer. Therefore building an easy to navigate,
information rich, professional and clearly branded website to satisfy all channels is essential.
Taking into account how they use the site and on what platform – mobile/tablet/laptop – also
goes without saying.
2. Branding – Branding is said to directly affect lead generation and ultimately sales. Get it
wrong, by using the wrong messages and images and you’ll turn potential customers away.
Create, develop and use it in the right way and your brand will attract the right people for the
right reasons.
3. Social media – As of 2012, 91% of B2B marketers now use social media but its how you use
it that counts. For B2B companies, businesses should go deep, not broad. It’s better to become
a master of one or two channels than struggle in many. Social platforms allow you to establish
your expertise and credibility and also provide a method for feedback and discussion. Social
networks are more like a real-world networking event. Think about Facebook, YouTube
Twitter, LinkedIn, Google+ and possibly Pinterest. It’s beneficial to choose one platform and
one network to focus on initially, and really n engage with your ideal customers there. As you
master those channels, you can then start to expand into other realms.
4. Technology – Treat technology and technological advances as your ally and you could
seriously improve your marketing communications. From developing product Apps that your

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Email Id: pavankumar@[Link]
Mob No: 8130402515
Assistant Professor-Dept. of Management
Rajiv Academy for Technology and Management, Mathura Page 27
 KMBNMK03 B2B and Services Marketing

sales people can use as demonstration tools to mobile websites, dealership sites, improved
direct mail logistics and 3d printing, new technologies allow you to easily and effectively
target and connect with potential customers and improve your ‘pulling power’.
5. Lead Generation – Building a database from your own leads, gives you a powerful
marketing tool. Using a range of marketing techniques both online and offline to generate and
nurture leads will help to increase your potential customer base, communicate to existing and
potential customers and promote your company’s offering. Your website, social media
channels, targeted email marketing, direct mail, exhibitions and telemarketing are all tools to
aid data capture and build your customer relationship marketing (CRM).
6. Email Marketing – Used as an important CRM tool, it will help you retain as well as gain
customers. Well executed, targeted email campaigns to potential buyers in the market or
regular e-newsletters are an effective way of engaging and staying in touch with existing and
potential customers.
7. The Right Sales Team Support – Statistics show that a high percentage of sales reps are
typically not well enough prepared for initial sales meetings. Making sure that your sales team
or dealers are equipped with the most relevant information is essential, so give them easy
access to product details and tech info through dealership sites, product apps; mobile friendly
websites and up-to-date, well branded sales literature and brochures. The right information,
accessible at the right time can make the difference between a sale and a fail.
8. Traditional Marketing Techniques: Print, direct mail, and telemarketing can still be a very
effective way to target prospective customers in the B2B world. Correctly targeted and
effectively produced direct mail can be more effective than email at converting potential
customers, whilst trade shows and exhibitions offer face to face meetings, data collection
possibilities, strong brand messages and the demonstration of new products and initiatives.

Consumer communication and persuasion is an essential part of any

Marketing Strategy. In fact, it is the starting point of all improvement as
consumer voices provide companies with the data such as where they are lacking and
what all they could do to improve the product or service.

Do all companies listen to the consumer voices? Not really. It is only the ones which have an
effective consumer communication process in place, that are really able to focus on consumer
needs. Are you one of them? Let us take a look at the consumer communication process at
Suntory to understand the Consumer Communication Process.

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Email Id: pavankumar@[Link]
Mob No: 8130402515
Assistant Professor-Dept. of Management
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 KMBNMK03 B2B and Services Marketing

This company has set up a Customer Centre which takes up all inquiries, complaints, and proposals from
customers. Though most of the queries are answered, the customer voices are sent across to related departments
of the company. These departments analyze the gap between the customer needs and the products and services.
After doing so, the quality improvements are suggested and the product development takes place in keeping
with the customer demands.

Consumer communication should be used effectively to drive maximum benefits to the company. You
must be thinking how. Let us look at few ways which will help you market effectively even in a downturn.

1. When economy is changing, it is all the more important to get the customer feedback. It is not
a good idea to fill their inboxes and mobiles with promotional messages. More so, you can
use online surveys to understand how they are thinking and what they want. You can then
make changes in your strategies, processes and so on to deliver the product that your
consumers are aiming for.
2. It is just not important to feed information to your consumers. Having a dialogue with them
from time to time is also important. You can use the email marketing newsletters to invite
them for such conversations. Apart from understanding their concerns, showing your
consumers that you care is also very important. This will have far-reaching consequence and
will benefit your company’s image.
3. Try and co-host an event with another local business. This will highlight your product’s
image in a positive manner. This is a kind of customer relationship building activity where
you interact face-to-face with the consumer and show him your expertise.
4. Consumers are becoming more and more environmentally aware these days. Anything against
the environment would put you in a bad light. So focus that your product or service is
following all the environment friendly standards. You can also show your concern by teaming
up with local charity and involving your consumers in the event too.

The above points can also be used for consumer persuasion too. Face-to-face meetings are more effective in
persuading people to buy your stuff. People can judge easily whether what you are saying has substance or not.
Therefore, try your level best to portray the positive image of your product in a positive fashion. Once you learn
the essence of consumer communication, you would never have to look back.

Elements of the Communications Process

 The Message Initiator (the Source)

 The Sender
 The Receiver
 The Medium
 The Message
 The Target Audience (the Receivers)
 Feedback – the Receiver’s Response
 Medium can be:
 Impersonal (mass media)
 Interpersonal (with salesperson or a friend)
 Interactive (direct feedback possibility exists)

Marketing communications is essentially a part of the marketing mix. Promotion is what marketing
communications is all about.

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Email Id: pavankumar@[Link]
Mob No: 8130402515
Assistant Professor-Dept. of Management
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 KMBNMK03 B2B and Services Marketing

Marketing communication aims at conveying a firm’s message as effectively and accurately as possible.

The process is as follows: Sender, Encoding, Transfer Mechanism, Feedback, Response and Decoding.

 Source: A source is also referred to as a sender. The sender has a message to convey to
others. The sender can be anyone from a brand manager (in a major corporation such as Nike
or Budweiser) to a salesperson in a smaller organization. At times, celebrities are used to
endorse products and act as a sender for the product. It is always important to make sure
that the source is credible and trustworthy.
 A direct source can be a salesperson delivering a message about a product.
 An indirect source uses a well known public figure to draw attention to a product.
 Encode: The source encodes or translates ideas into a message. For example, a brand
manager decides to promote a new product.
 Message: After defining the target market, the marketer designs an effective message that
will achieve the communication objectives.
 Receiver: The receiver is the person or group with whom the sender attempts to share
ideas. Marketers want a response, the reactions of the receiver, after being exposed to the
message: for example, a consumer receiving the message about the new product.
 Decode: The receiver decodes or interprets the message. For a message to be decoded by a
receiver the way it was intended by the sender, the sender and receiver need to have common
experiences. In other words, a receiver may not decode a message the way it was intended to
if her background and experience differ greatly from the sender’s. A marketer has to be
sensitive to the intended audience.
 Noise: Noise interferes with or disrupts effective communication. This can include a poor
television or radio signal.
 Feedback: Feedback is monitoring and evaluating how accurately the intended message is
being received. This can be done by conducting market research. Essentially, this involves
asking consumers if they have seen the message, if they recall the message, and what their
attitude was towards the product.

Brand expression
Branding has many functions that go beyond its most basic requirement of identification of a
product. Branding, when done well, frames what consumers can expect from a product and can
become an important part of the proposition itself. While creating a brand experience independent of
the product is not always the goal of marketing, creating distinctive brand positioning is needed.

 Coke stands for Happiness

 Apple stands for Creativity
 Harley-Davidson stands for Freedom

How your brand expresses itself from its name, logo, corporate ID, packaging design and copy, web
design and copy all the annoying rules that fill its style guide is the most tangible manifestation of
your brand’s essence; intimations before purchase of the brand’s soul, validation and reminder of its
promise after trial.

No matter what industry, changing the culture is hard, lonesome, demanding work. But in our
experience, most higher education brands don’t need to change their culture as much as they need to
capture it and create a consistent “Brand Experience.”

Prepared By: [Link] Agrawal

Email Id: pavankumar@[Link]
Mob No: 8130402515
Assistant Professor-Dept. of Management
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 KMBNMK03 B2B and Services Marketing

Brand as motivational tool

The roar of the dotcom revolution, reduced to the whimper of de-listed penny stocks, left behind at
least one important legacy. It changed forever the employer/employee dynamic.

Maybe it’s not as easy as it was to quit on Friday and find a better job by Monday, but the revolving
door of employee turnover hasn’t slowed dramatically.

Employers need to earn the loyalty of their employees. Employees need to be reminded why they
should get up and go to work. Off-site vision quests, benefits and perks only go so far.

Brand design extends your ad budget

If you’ve got an unlimited ad budget, skip this section. The rest of you, trying to squeeze every ounce
of value from each hard-fought penny, listen up.

In this world of fractured media the number (and cost) of messages needed to hit your target
between the eyes increases every season. Consumers are multitasking and zoning out from ad
saturation (or digitally avoid your messages entirely). But these same consumers are meeting your
brand face-to-face on shelf or online.

Brand design protects turf

The current cycle of innovation is constant. The time you can afford to rest on the laurels of product
superiority is shorter than a pit stop. Today’s improvement is tomorrow’s price of entry. No wonder
companies are becoming addicted to the heroin of R&D, minute “product improvements” and
promotions. Again, brand design can help.

Your consumers’ connection with your brand results from its behaviour over time. But the connection
is sustained at the level of look, feel and voice. If your consumers know most of the brands in the
category are alike, what criteria do they have left with which to make their choice?

We’ve all stayed with brands we suspect have lost their original claim to superiority because of an
emotional connection. Their “voice” speaks to us. Or, they make up for their deficits (or parity) with a
great personality. We like them more.

Brand design or voice can’t cover up for product flaws. Bill Bernbach said: “Nothing is worse for a bad
product than good advertising.” But investment in brilliant brand design can provide as much
insulation against encroaching competition as investment in product improvement R&D.

Strategies:

 Discover an ideal in one of five fields of fundamental human values.

 Build your culture around your ideal.
 Communicate your ideal to engage employees and customers.
 Deliver a near-ideal customer experience.
 Evaluate your progress and people against your ideal.

Prepared By: [Link] Agrawal

Email Id: pavankumar@[Link]
Mob No: 8130402515
Assistant Professor-Dept. of Management
Rajiv Academy for Technology and Management, Mathura Page 31
 KMBNMK03 B2B and Services Marketing

Communication Mix: Components

The marketing communication mix, sometimes referred to as the promotion mix, is a set of five tools that
businesses use to communicate with their customers, prospects and stakeholders. It doesn’t matter how large or
small your organization is, or what kind of products or services you sell, utilizing an effective marketing
communication mix can help you increase your revenue.

Elements of the Marketing Communication Mix

There are five key elements of the marketing communications mix: advertising, public relations, sales
promotion, personal selling and direct marketing. Some organizations also add a sixth component, which is
events and sponsorship.

Advertising refers to any paid promotion of products, services or ideas by an identified sponsor. Organizations
can advertise in a number of ways, such as on television, radio, magazines, newspapers, billboards and online.
It’s an effective way to reach large quantities of people, but it can be very expensive as well.

1. Advertising
We are very well with the impact that advertising has on our purchase
behavior. Advertising may be in many forms but the two most common
forms are ATL advertising which includes television, radio and print and
the other type is BTL advertising which majorly includes out of home
advertising.

Prepared By: [Link] Agrawal

Email Id: pavankumar@[Link]
Mob No: 8130402515
Assistant Professor-Dept. of Management
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 KMBNMK03 B2B and Services Marketing

Advertising is strongly used by brands who have deep pockets or who

have a lot of competitors in the market. Advertising requires that you have
a unique advertising message as well. The more unique and impactful the
message, the more is the connect between the brand which is advertising
and the consumers.

2. Personal Selling
Personal selling is the second most common method to communicate the
benefits of your products to the end customer and convert him from a lead
to a prospect and ultimately to your customer. This is the reason that many
top companies and even small businesses nowadays are focused on
personal selling.

If you enter a branded retail outlet, you will many times find that the
company promoter is already present in the retail outlet. The reason that
the company appoints their own brand promoter is because this ensures
that the customer will have better attention from their individual brand.
Along with this, the company’s salesman will also have more knowledge
of product and competition as he has been dedicatedly hired by the brand.

If instead of a brand promoter, there was the retailers own salesman, he

would have promoted any brand on the shelf. At the same time, the
retailers salesman might not be as knowledgeable as the brand salesman
because he has so many brands and products to sell. He gets overloaded
and ultimately forgets the features of products he is selling. So, if a
company wants to communicate the benefits of its products, convince and
convert the customer, then personal selling with hand picked and trained
executives is the best option.

3. Sales Promotion
There are many different ways of running sales promotions and many
different tips and tactics present depending on the sector you are in. Where
trade discounts and freebies work very well in FMCG, in consumer
durables, free services and value addition (free installation) works better
then discounts.

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Email Id: pavankumar@[Link]
Mob No: 8130402515
Assistant Professor-Dept. of Management
Rajiv Academy for Technology and Management, Mathura Page 33
 KMBNMK03 B2B and Services Marketing

Sales promotion also involves providing the consumer with an incentive

for the purchase of the product. At the same time, it may involve giving
incentives to dealers or distributors to get the product selling & moving in
the market. The expenses in Sales promotion is lower and the investment
is very less because it gets the product moving.

Sales promotions is increasingly being used as a tool especially after the

rising popularity of E-commerce and online sales. Every other day you
will see a “Sale” or “Deal” online which will be time bound and which
customers will impulsively purchase. Due to some discount being given
for certain amount of time, online retailers can move huge quantities of
products across the country or the region they are selling in.

4. Public Relations
Public relations is the art of spreading the news about your products or
services in the public domain so that some hype is created and people talk
to each other about it. One of the most commonly observed public
relations exercise is when there is some news related to a Movie or related
to a product which is published in the newspapers just before the movie is
supposed to be released or the product is supposed to be launched.

Similarly, there are multiple public relation exercises which can be carried out by a brand. In today’s date, social
media is one of the biggest platforms for public relations exercise. You will see a lot of news being published
with regards to what is trending. Similarly, press conferences, face to face interaction with consumers,
newspaper advertorials, involving the community are various ways that public relations exercises can be
implemented.

Public relations is an important part of the communications mix. It helps in building a strong brand image and a
brand can slowly release the information therefore keeping the public attention intact. In fact, if you notice,
information about a movie which is going to be big starts coming in newspapers much before the movie launch
date is announced.

This is nothing else but Public relations wherein the marketing manager wants the public to be hooked to what’s
about to happen in the movie. They want to create hype. Off course, some movies (like the latest star wars
franchise) would rather hide their details then show it to public.

5. Direct marketing / Internet marketing

In the last few years, Digital marketing was giving tough competition to television advertising as well as
newspaper advertising. As of end quarter of 2016, digital marketing has practically overtaken Television
advertising and has a major spend amongst all media.

Prepared By: [Link] Agrawal

Email Id: pavankumar@[Link]
Mob No: 8130402515
Assistant Professor-Dept. of Management
Rajiv Academy for Technology and Management, Mathura Page 34
 KMBNMK03 B2B and Services Marketing

Off course, the benefit of digital advertising is that even small businesses can get involved and it is not as costly
as Television advertising. As a result, the overall revenue generated from digital advertising is much more then
television or newspaper. But even then, not only small businesses, even top brands take part in digital marketing
because it helps the brand in reaching the end consumer.

The key attraction of digital marketing is the personal connect that the brand makes with the consumer. Your
email box, your facebook wall, your twitter feed are your private space and via social marketing, brands can
enter this private space and make a connection. The brand which really does good campaigns can actually walk
away with a large population of digital followers.

6. Packaging

Although packaging is supposed to be a part of the marketing mix and not the communications mix, lately, due
to competition and the increasing rivalry between businesses, even packaging is considered as an important
medium of communicating with your consumers.

The packaging of the product is the last point of sales for the company. When the consumer is standing in a
retail aisle, he or she has a plethora of products in front of them to choose from. Many a times, the decision is
made looking at the overall packaging of the product as well as the information written on the product.

If a customer wants an aloe vera shampoo, he might look at the packaging and decide against an Anti dandruff
shampoo. However, if the packaging is poor, and the distinguishing feature is not mentioned clearly, the
consumer might ignore the product altogether. As a result, BECAUSE even packaging communicates to the
consumer, it is now considered as an element of the communications mix.

So overall, the above 6 media vehicles are the ones which are considered as the communications mix. Whenever
a brand wants to communicate to their consumers, they will use one of the above methods to do the same.

Customer acquisition process

Customer acquisition is the process of acquiring new customers for business or converting existing
prospect into new customers. The importance of customer acquisition varies according to the specific
business situation of an organization. This process is specifically concerned with issues like acquiring
customers at less cost, acquiring as many customers as possible, acquiring customers who are
indigenous and business oriented, acquiring customers who utilize newer business channels etc. The
whole process should concentrate on following considerations:

 Primarily it is important to determine and focus on psychology of customers, like how

the customers feel and think and then selecting the product segment to be
presented to them.
 Concentrating on how the customers are influenced by the surrounding environment
like the business culture, technology, media etc.
 Analysis of customer behavior and tendency while buying specific range of product.
 Studying the customer’s limitation of knowledge processing power which influence
the decision making power.
 Finally it’s very important to engage best strategies for effectively convincing new
customers and improving marketing campaigns.

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Email Id: pavankumar@[Link]
Mob No: 8130402515
Assistant Professor-Dept. of Management
Rajiv Academy for Technology and Management, Mathura Page 35
 KMBNMK03 B2B and Services Marketing

Customer acquisition techniques change with technological changes. There is always a need to
optimize and upgrade the traditional ways of marketing channels available. Exploring new methods to
entertain customers is important to remain in competition and have high acquisition rate.

It allows the business to:

 Cover the cost of its expenses, including the cost of labor.

 Increase its profits over time.
 Reinvest in its own growth.
 Show evidence of growth to partners, investors, influencers and other outside
parties.

Acquiring a customer depends on how effectively the organization is able to build a comprehensive
relationship with that customer. When suppliers have healthy relationship with customers, the
revenue of the organization always increases as customers tend to buy more and more. There is
possibility that a satisfied customer seek to buy special category of related products apart from the
regular ones from that particular supplier. For instance if a satisfied and loyal customer has a home
insurance policy from an insurance company then there are positive chances that he could also insure
his property and car if he is fully satisfied with the services of that insurance company. This will
definitely result in growth of business.

While acquiring, the nature of response provided to acquisition is the key aspect to create an
impressive opinion in customer’s mindset. Hence, the suppliers should always have prompt,
responsive and experienced executives to serve customers. For example, if a customer calls and asks
about some critical features of any product and the executive fails to explain it or being non-
responsive to most of his questions then the customer could probably divert his way to some other
organization for better response which could definitely result in end of the deal and relationship with
that customer.

Improving customer acquisition is the primary challenge which an organization faces. Hence it is
important to identify critical approaches to enhance customer acquisition power. This includes
acquiring more number of customers or more number of attractive customers at low cost. One of the
best strategies to acquire new customers is performing promotional campaigns. These campaigns
should be efficient and well targeted to customers. Encouragement of customer referrals can also
attract new customers. It is always a cost-free advocacy by customers to provide referrals to supplier
when they feel satisfied and encouraged and when they have a healthy relationship with customers.
These referrals or customer’s reference of other customers act like a piece of cake for suppliers as
there is no cost and struggle involved in this.

Process:

Identify the target customers

The first step in the customer acquisition process is to identify your target audience, the people who
are most likely to purchase your products and services. Unless the product or service your business
sells meets a universal need, the best way to promote your products and grow your business is by
identifying one or two of the best market segments for your business.

Identify where your target audience is

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Email Id: pavankumar@[Link]
Mob No: 8130402515
Assistant Professor-Dept. of Management
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 KMBNMK03 B2B and Services Marketing

To enhance your customer acquisition process, you need to know where to find your customers both
online and offline. Once you identify the places your target audience frequents, you can then develop
strategies to target them there. As an example, if your ideal audience frequents a particular social
media site, you may want to consider advertising there.

If you’re unsure where your target audience spends time, consider polling your existing audience.
You could also reach out to potential customers individually to learn more about them, their interests
and what sites they spend the majority of their time on.

Start a blog

Blogging on your website is a highly effective customer acquisition method that allows you to discuss
different topics, demonstrate how much you know about the industry and establish yourself as a
source of authority. It also allows you to regularly engage your audience, providing them with a
resource they can go to for information related to your niche. You could write for the blog yourself,
task a member of your team with doing the writing or outsource to a freelancer.

Create video content

Video content is very popular online, which is why you should consider creating videos as part of your
customer acquisition strategy. Create a mixture of educational and entertaining videos. Your
educational videos should provide your target audience with valuable information about your industry,
topics that are relevant to your industry and your products and services. Your other video content
should focus on entertaining and engaging your target audience online.

Optimize your website for the search engines

Search marketing is also another important strategy that you should prioritize. Also referred to as
search engine optimization (SEO), this strategy involves modifying your content to increase the
likelihood that it will rank in the search engines. While this strategy takes longer to grow than some
of the others, once you optimize your content, you can see a steady flow of clients into the business.

Build an email list

Email marketing is an effective way to maintain contact with customers as well as potential buyers
who have expressed interest in your products and services. As you email your list, it’s important to
monitor the behavior of your subscribers. For example, take note of the links that your subscribers
are clicking on within your emails.

Also, pay attention to the emails that have the highest open rates or unsubscribe rates. This
information can help you create better content that your audience is interested in, which can help you
to increase customer acquisition and conversions.

Produce quality content frequently

Another effective customer acquisition strategy is to establish yourself as a trustworthy source of

information in your industry or niche. One way you can accomplish this is by creating high-quality,

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Email Id: pavankumar@[Link]
Mob No: 8130402515
Assistant Professor-Dept. of Management
Rajiv Academy for Technology and Management, Mathura Page 37
 KMBNMK03 B2B and Services Marketing

useful content on a regular basis. Many companies use social media, blogs or even email newsletters
to establish themselves as a reliable source of information and build trust for their brand.

Create gated content

Gated content is a different type of content marketing strategy that typically involves creating an in-
depth and highly valuable piece of content that potential customers can access in exchange for
personal information like their name and email address. Relevant, gated content is an important part
of a customer acquisition strategy since it can help you grow your email list and generate more leads
and, ultimately, sales.

Create a referral strategy

Referrals are a great way to increase the profitability of your business while keeping marketing costs
low. For this reason, a referral program is a powerful method for acquiring new customers. The
easiest way to encourage customers to refer your products and services to your family and friends is
by offering some kind of incentive. Many businesses, for example, offer extra features or discounts to
customers who successfully refer other people to their products and services.

Track your customer acquisition

Once you have different types of content in place, it’s important to monitor incoming leads to identify
the acquisition channels for your new customers. Monitoring will make it possible for you to
determine which channels are most effective for generating quality customers. It also helps you
monitor word-of-mouth referrals and determine whether the feedback from customers is positive.
This can guide your company decision-making to ensure any word-of-mouth referrals you receive are
positive.

Identifying the Sales to Marketing Effort

Relationship and its Modeling
Sales and Marketing are both working towards the same goal: securing business and helping their company
grow.

Sales is a direct process in which the salesperson talks to the customer and steers them towards making a
purchase. This might be in person, over the phone, or using a digital communication medium like email or even
social media. The process might be very long, taking place over multiple conversations in which the salesperson
learns about the customer and their pain points, and helps them understand how the product on offer can help
solve them.

It could also be a very short process consisting of a single conversation in which the salesperson lays out the
terms of the deal and processes the sale.

Marketing is a much more holistic process that is designed to increase awareness of a brand or product to the
target consumer as a whole. Rarely will a marketer deal one-on-one with a customer.

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The methods, tactics, and channels used by the marketing department look very little like they did even 15 years
ago. It’s primarily digital, including (but not limited to):

 Content marketing
 Social media marketing (SMM)
 Email marketing
 Organic traffic and search engine optimization (SEO)
 PPC ads
 Influencer marketing

1. Collaborate on sales content creation

A recent CSO Insights study showed that 32% of a sales rep’s time was spent looking for or creating sales
content. Creating content that sales teams can use in their proposals and throughout the selling process is a
major factor in an outstanding sales enablement strategy.

Both sales and marketing need to work together to understand their audience and create targeted content that
speaks directly to customers.

2. Inform outbound emails

In an ideal world, all sales would be inbound with customers lining up to get their hands on your product or
service. But the reality is that, at some point, sales needs to be in charge of sourcing and contacting their own
leads.

To effectively do this, sales should work with marketing to be knowledgeable on what marketing materials are
already readily available. Marketing and sales can also work together to create new, dynamic material that
focuses on the winning strategies of each department. This creates a unified brand image and voice.

3. Systemize lead scoring

Marketing and sales teams need to have an ongoing conversation about lead conversion — what’s working,
what’s not, who it’s working for, etc. Creating and converting MQLs to SQLs and, ultimately, to win deals is an
always moving target — that’s why it’s important to ask these questions, to figure out why it’s working or not
working.

Those changing results and targets of a company’s “why” increase the urgency for clear communication and
getting on the same page. Both sales and marketing teams need to create one system for scoring and evaluating.
The system is entirely conditional and depends entirely on the product, the audience, and the buying cycle.
Turning an MQL into an SQL too soon can hurt conversion, so you need to find the sweet spot in the life cycle.
This can only be found by trial and error, communication, and evolution.

4. Develop buyer personas

Sales is the front line of any successful company. They know who’s buying and why those customers are
motivated to buy in the first place. Marketing understands the industry at large and who they should be
targeting. The best buyer personas are born from a mixture of marketing research and insights from your actual
customer base.

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The sales team can provide important insights and generalizations on the leads they’re interacting with the most,
while marketing research can inform broader insights like patterns and commonalities. Sales and marketing
must direct their efforts at the same prospects and be completely aligned on decisions and pricing.

Together, sales and marketing need to create comprehensive buyer personas to better target their ideal customer,
increase acquisition, and create targeted ads and pitches that are symbiotic.

5. Leverage marketing to showcase your sales team’s expertise

Ideally, sales teams are brilliant at lead generation and closing sales but aren’t always their own best advocates
when it comes to selling themselves. That’s why they need your marketing team’s power to create materials that
showcase their expertise.

6. Hold regular meetings

Even the most amicable and aligned departments need actual face time to develop their internal relationships
and sense of how the other works. Hold regular meetings to discuss new strategies, go over the results of current
campaigns, and learn more about each team’s processes. An added benefit is getting marketing’s feedback and
insight on the sales team’s agenda, and vice versa.

7. Break down barriers

Aligning your sales and marketing teams may require more than weekly meetings, and it might take a refresh in
terminology and perspective. Break down departmental barriers and replace the concept of a sales funnel with a
revenue cycle.

Work through the foundation of what that revenue cycle should look like. This is the time when both sales and
marketing get to flex their muscles and bring their expertise to the table.

8. Use collaborative analysis

When you’re trying to align two departments, it’s not enough to just focus on KPIs and collaborative practices.
When you’re breaking down departmental barriers, the lines will likely blur between what the marketing and
sales teams are working on.

It’s important to analyze and measure the results as a team, which will help everyone get on the same page about
ROI and understand how collaborative efforts are impacting your bottom line. Your team ROI may require both
departments to analyze email campaigns or lead generation data to determine what’s working and what’s not.
Looking at these numbers individually just pushes your teams back into a silo situation where the work becomes
fragmented.

MARKETING MIX MODELING (MMM)

Marketing mix modeling (MMM) is statistical analysis such as multivariate regressions on sales and marketing
time series data to estimate the impact of various marketing tactics (marketing mix) on sales and then forecast
the impact of future sets of tactics. It is often used to optimize advertising mix and promotional tactics with
respect to sales revenue or profit.

The techniques were developed by econometricians and were first applied to consumer packaged goods, since
manufacturers of those goods had access to good data on sales and marketing support.[citation needed]

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Improved availability of data, massively greater computing power, and the pressure to measure and optimize
marketing spend has driven the explosion in popularity as a marketing tool. In the recent times MMM has found
acceptance as a trustworthy marketing tool among the major consumer marketing companies. Often in the
digital media context, MMM is referred to as attribution modeling.

Marketing mix modeling is an analytical approach that uses historic information, such as syndicated point-of-
sale data and companies’ internal data, to quantify the sales impact of various marketing activities.
Mathematically, this is done by establishing a simultaneous relation of various marketing activities with the
sales, in the form of a linear or a non-linear equation, through the statistical technique of regression. MMM
defines the effectiveness of each of the marketing elements in terms of its contribution to sales-volume,
effectiveness (volume generated by each unit of effort), efficiency (sales volume generated divided by cost) and
ROI. These learnings are then adopted to adjust marketing tactics and strategies, optimize the marketing plan
and also to forecast sales while simulating various scenarios.

Components of Marketing mix modeling (MMM)

Marketing-mix models decompose total sales into two components:

 Base Sales: This is the natural demand for the product driven by economic factors like
pricing, long-term trends, seasonality, and also qualitative factors like brand awareness and
brand loyalty.
 Incremental Sales: Incremental sales are the component of sales driven by marketing and
promotional activities. This component can be further decomposed into sales due to each
marketing component like Television advertising or Radio advertising, Print Advertising
(magazines, newspapers etc.), Coupons, Direct Mail, Internet, Feature or Display Promotions
and Temporary Price Reductions. Some of these activities have short-term returns (Coupons,
Promotions), while others have longer term returns (TV, Radio, Magazine/Print).

Elements measured in Marketing mix modeling (MMM)

(i) Base and incremental volume

The very break-up of sales volume into base (volume that would be generated in absence of any marketing
activity) and incremental (volume generated by marketing activities in the short run) across time gain gives
wonderful insights. The base grows or declines across longer periods of time while the activities generating the
incremental volume in the short run also impact the base volume in the long run. The variation in the base
volume is a good indicator of the strength of the brand and the loyalty it commands from its users.

(ii) Media and advertising

Market mix modeling can determine the sales impact generated by individual media such as television,
magazine, and online display ads. In some cases it can be used to determine the impact of individual advertising
campaigns or even ad executions upon sales. For example, for TV advertising activity, it is possible to examine
how each ad execution has performed in the market in terms of its impact on sales volume.

(iii) Trade promotions

Trade promotion is a key activity in every marketing plan. It is aimed at increasing sales in the short term by
employing promotion schemes which effectively increases the customer awareness of the business and its
products. The response of consumers to trade promotions is not straight forward and is the subject of much

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debate. Non-linear models exist to simulate the response. Using MMM we can understand the impact of trade
promotion at generating incremental volumes. It is possible to obtain an estimate of the volume generated per
promotion event in each of the different retail outlets by region. This way we can identify the most and least
effective trade channels. If detailed spend information is available we can compare the Return on Investment of
various trade activities like Every Day Low Price, Off-Shelf Display. We can use this information to optimize
the trade plan by choosing the most effective trade channels and targeting the most effective promotion activity.

(iv) Pricing

Price increases of the brand impact the sales volume negatively. This effect can be captured through modeling
the price in MMM. The model provides the price elasticity of the brand which tells us the percentage change in
the sales for each percentage change in price. Using this, the marketing manager can evaluate the impact of a
price change decision.

(v) Distribution

For the element of distribution, we can know how the volume will move by changing distribution efforts or, in
other words, by each percentage shift in the width or the depth of distribution. This can be identified specifically
for each channel and even for each kind of outlet for off-take sales. In view of these insights, the distribution
efforts can be prioritized for each channel or store-type to get the maximum out of the same. A recent study of a
laundry brand showed that the incremental volume through 1% more presence in a neighborhood Kirana store is
180% greater than that through 1% more presence in a supermarket.[6] Based upon the cost of such efforts,
managers identified the right channel to invest more for distribution.

(vi) Launches

When a new product is launched, the associated publicity and promotions typically results in higher volume
generation than expected. This extra volume cannot be completely captured in the model using the existing
variables. Often special variables to capture this incremental effect of launches are used. The combined
contribution of these variables and that of the marketing effort associated with the launch will give the total
launch contribution. Different launches can be compared by calculating their effectiveness and ROI.

(vii) Competition

The impact of competition on the brand sales is captured by creating the competition variables accordingly. The
variables are created from the marketing activities of the competition like television advertising, trade
promotions, product launches etc. The results from the model can be used to identify the biggest threat to own
brand sales from competition. The cross-price elasticity and the cross-promotional elasticity can be used to
devise appropriate response to competition tactics. A successful competitive campaign can be analyzed to learn
valuable lesson for the own brand. television & Broadcasting: the application of MMM can also be applied in
the broadcast media. Broadcasters may want to know what determine whether a particular will be sponsored.
This could depend on the presenter attributes, the content, and the time the program is aired. these will therefore
form the independent variables in our quest to design a program salability function. Program salabibility is a
function of the presenter attributes, the program content and the time the program is aired.

Functions and Responsibilities of Sales Person

A salesperson is an important sales management position maintaining vital link between an enterprise and
customers, society, distributors, retailers and others. Nature of roles played by a sales person is given as follows.

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(i) Diagnostic

This involves a salesperson probing and finding the cause of a problem, i.e., why a customer often changes a
brand or why a customer is loyal to a particular brand.

(ii) Analyst

le:

A farmer prefers a motorcycle compared to a scooter, so marketer must segment rural middle class for various
types of motorcycles.

(iii) Information Provider

A salesperson is also an intelligent agent. He keeps the management informed of any significant development in
his territory, i.e., any strategic change of competitor etc.

(iv) Strategist

A salesperson being in the forefront of sales organization can command on time and route plans of sales
organization.

For Example:

A salesperson may at time make the announcement of a price change in his territory in such a way that it will
give him maximum benefit. Likewise, evolving a strategy to sell to an aggressive customer is the role of a
salesperson.

(v) Tactician

He is a tactician in the sense that he (or she) evolves tactics to win over the customer or enhance
distribution/retailer satisfaction. A tactic is a short-term action plan and is part of a strategy, which is a long-
term concept.

(vi) Change Agent

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A salesperson acts as a Change Agent in his territory. For it is he who introduces new product ideas and
influences the life styles and consumption pattern by making new products and services available in the territory
and influencing opinion of manager to accept and recommend the same to other salesperson.

Thus, the modern society owes a lot to salespersons, for it is they who help upgrade life style and quality of
living. The Selling process or The Selling Theories on which the salespersons depend are Stimulus- Response
Theory, Product Oriented Selling and Need-Satisfaction Theory.

Other Functions Performed by a Sales Person

(a) Line functions

i. Achieves volume of sales

ii. Responsible for enhancing market share

iii. Responsible for profitability of the organization

iv. Attends to customer service.

(b) Staff functions

i. Provides assistance for ware housing In charge

ii. Provides assistance for Transport Department

iii. Provides assistance to Production Department regarding Product knowledge and knowledge about specific
customers.

(c) Line and staff functions

i. Helps General Sales Manager with sales fore-cost, market information and information about competitors

ii. Helps Corporate Management in respect of product development, Diversification and information about
market and competitors.

Responsibilities of Sales Person

The duties and responsibilities of a salesman differ from one business to another depending upon the nature of
the business, the size of the business, the type of selling job, the sales policies of the concern, etc. However,
there are certain duties and responsibilities which are common to all types of business.

Responsibilities of a Salesman

1. Selling

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The fundamental duty of a salesman is selling. This duty includes meeting the prospects, presenting and
demonstrating the products, inducing the prospects to buy, taking orders and effecting sales.

2. Guiding the buyers

A salesman should guide the buyers in buying the goods they want.

3. Attending to complaints

A salesman should attend to the complaints of the customers immediately and try to settle their grievances
quickly and sincerely.

4. Collection of bills

Sometimes, a salesman may be required to collect the outstanding bills relating to the goods sold by him. In
such a case, he has to collect the bills and remit the amount to his firm.

5. Collection of credit information

A salesman may, sometimes, be required to collect information about the credit-worthiness of the customers. In
such a case, he has to collect detailed information and submit it to his firm in time.

6. Reporting

A salesman, especially a traveling salesman, is required to send daily, weekly or monthly reports to his firm,
providing information about the calls made, sales effected, services rendered, route schedule, expenses incurred,
business conditions, competition, if any, etc.

7. Organizing

A salesman, i.e., a traveling salesman, is required to organize his tour programme. He has to prepare the route
and time schedules for his tour so as to systematize his sales efforts.

8. Attending sales meetings

A salesman is required to attend the sales meetings convened by his employer at periodical intervals to discuss
the marketing problems, sales promotion activities, sales policies, etc.

9. Touring

A traveling salesman has to undertake touring regularly to cover the sales territories assigned to him.

10. Arranging for packing and delivery

A salesman, i.e., a counter salesman, has to arrange for the packing of the goods sold and the delivery of the
packages to the buyers.

11. Window and counter displays

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A salesman, i.e., an indoor or counter salesman, has to arrange for the window and counter displays of the
products in an attractive manner so as to attract or induce the prospects to buy.

12. Promotion of goodwill

Every salesman has to build up satisfied clientele (i.e., customers) for his employer and thereby promote the
goodwill of his firm.

13. Recruiting and Training

Recruiting new salesmen, imparting training, by accompanying them while making sales calls.

14. Working with Middlemen

Salesmen establish direct relations with middlemen — distributors, wholesalers, etc., and collect market
information and pass it on to their firm.

Relationship Communication
Marketing focuses mainly on Establishing, Developing, Maintaining
successful exchanges with customers. In marketing vertical every
relationship is an exchange process where each one gives
something in return for a payoff perceived to be or of greater
value.

Types of Relationships

 Value Added Exchanges

 Transactional Exchanges
 Collaborative Exchanges
Transactional Exchange

Centers on timely exchange of basic products at highly competitive

market prices. These types of transactions are autonomous in
nature i.e. there is little or no concern as to the needs of buyer or
seller.

Example: A person goes in a shop and buys a toothpaste. The

buyer wants a toothpaste and the seller sells him one.
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Transactional Exchanges

Packaging machines and products, cleaning and sanitizing technology and Products, Commodity type
products, Service activity where bidding is applied. Transactional exchanges employ a type of arms-
length relationship.

Collaborative Exchange

Exists when alternatives are few, market is dynamic, the purchase is complex and the prices are high.

Main features include close information, social, and operational linkages and mutual commitments.

Switching costs are highly esssential to collaborative customers. Trust is the main factor and it there
when one party has complete confidence in their partner’s ability and integrity.

Managing Buyer Seller Relationships

a) Switching Costs

b) Value Drivers in Collaborative Relationships

c) Increasing Collaborative Relationships

d) Improving Transactional Customer Loyalty

Motivate the Employees

Dedicated employees are the key to a successful customer relationship strategy.

1. Hire good people.

2. Invest in them to increase their value to the company and its customers.
3. Develop challenging careers and align incentives to performance measures.

Precaution to be Care:

Take care of your tone and pitch as well. Make sure you are not too loud or too soft. Being loud
might hurt the other person. Speak softly in a convincing way. The other person must be able to
understand what you intend to communicate.

An individual must interact with the other person regularly for the relationship to grow and reach to
the next level. Speaking over the phone. SMSing are ways of communicating and staying in touch
especially in long distance relationships where individuals hardly meet.

Choice of words is important in relationships. Think twice before you speak. Remember one wrong
word can change the meaning of an entire conversation. The other person might misinterpret you

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and spoil the relationship. Be crisp. Express your feelings clearly. Do not try to confuse the other
person. Being straightforward helps you in relationships.

Try to understand the other person’s point of view as well. Be a patient listener. Unless you listen
carefully, you will never be able to communicate effectively.

Be polite. Never ever shout on your partner even if he has done something wrong. Discuss issues and
try to sort out your differences amicably. Abusing, fighting, criticizing spoil the relationship and in
adverse cases might end it as well. Being rude is a crime in relationships.

Call preparation
Before you start making sales calls, it’s a good idea to prepare for them. A lack of preparation means
a much higher chance of things not going according to plan when you make the call. Of course,
preparing for a sales call can’t promise a favourable outcome, but it’ll increase the chances of getting
what you want from the call.

Before you pick up the phone or charge into someone’s office to try and sell something, do a little
preparation. The idea is to develop a comfortable framework where you have enough knowledge to
get started and to ensure that you’re prepared for certain eventualities on the call itself.

Steps:

Define Your Goals

Make your objectives clear. What do you want to accomplish before the call ends? What does your
potential customer want to achieve during this call?

Write down specific, targeted questions that are relevant to your potential customer’s business,
industry, pain points, needs, and buying behaviors. Be ready to listen and take notes so that you can
react to what the potential buyer says. Limit your questions so that the meeting feels like a
conversation, not an interview.

Call objectives include:

 Finding out the name (and other contact details) of the person who buys services
like yours.
 Scheduling a meeting with the person who buys services like yours.
 Getting the person to request marketing materials (such as your portfolio, CV,
corporate brochure, etc.).
 Getting the person to ask for a quotation on a particular project
 Closing a sale.

Structure the Call

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Creating an informal itinerary for the conversation will help you maintain control. First, practice how
you’d start the meeting to point it in the right direction. Then, map out how to shift the conversation
from topic to topic so that you reach all defined goals.

Know Your Value

The truth is that your potential customer is extremely busy. They only have a small window of time to
devote attention towards their buying decision. That means they want to feel like they spent their
time wisely when they talk to you.

Do you know the value you can provide to this potential buyer? How can you inspire them to speed
up their buying decision or move them to the next step in the sales process?

Provide information that answers their questions, speaks to their needs, or explains any concerns
they may have. The call should end with your potential customer having actionable steps to carry out
and feeling positive about the experience.

Basic information on your potential customer is essential, but it’s not always enough. Sometimes you
need to do your homework in order to understand the big picture as well as the details about the
specific challenges they face and how you can provide the solution.

Before every sales call, you should check out the company’s:

 LinkedIn page as well as your potential customer’s professional profile

 Twitter stream
 Website, particularly the About Us and News sections
 Their previous conversations with your company as recorded in your CRM

Visualize Success

Think of how athletes prepare for an Olympic race. They control their breathing, stretch and shake
out their arms and legs. They visualize each step around the track, picturing how hard to swing their
arms, how wide to make each step, and how much energy will be needed to push through the finish
line.

This is how you should approach your sales calls. Like an athlete, a balance of adrenaline and oxygen
is what you need to maintain performance and focus.

Value Selling and Consequences

Value-based selling is a process of defining the real needs, measurable objectives, possible impact on
the potential customer’s bottom line, and pricing accordingly to the value our product can deliver.

Value selling is a hot concept in the technology industry, and one that sales leaders are researching
and discussing frequently. Outcome selling is trending on a similar curve. Unfortunately, too many
leaders think these two motions are similar and interchangeable.

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Cost savings and financial outcomes are only part of the story. In fact, anchoring around value selling
can be detrimental to your sales efforts when used at the wrong time and with the wrong buyer.

Here’s an example: let’s say you’re a hardware company selling a new Managed Services offering.
You formulate a calculation of how much money a customer will save over the course of the next
three years if they pay you to operate their infrastructure rather than purchasing and managing it
themselves. Maybe your numbers are solid, and you’re confident you can stand behind your ROI
calculations.

Outcome selling is a new and better approach to enterprise technology sales that centers around two
objectives:

 Allowing the supplier to demonstrate how their solution contributes to the

achievement of the outcome.
 Providing priority business outcomes that your customer is trying to achieve.

Outcome selling is about leading with insights; sharing your knowledge of what other similar
companies are doing and then building the connection between your offering and their highest
priority business outcomes. And here’s the thing you (the supplier) are providing insight and input as
to what those outcomes should be.

It’s not about saying that you understand their business better than they do; that can come across as
arrogant and alienating. However, you’re in a position to share your insights and experience based on
the fact that you’ve worked with dozens, or even hundreds, of similar companies before. It is obvious
why this approach would be far more strategic and valuable to the customer.

Outcome-based selling is about being able to confidently articulate how your solution contributes to:

 Financial goals
 Operating KPIs
 Priority business outcomes

Strategies:

Elevate The Conversation to A Business Level

The first key to effective value selling is to elevate your conversations to business-level discussions.
The conventional approach to sales is to identify a problem and sell your solution to that problem. So,
if you sell technology that delivers a manufacturing solution, the easy or conventional wisdom is that
you go in and uncover problems that you can solve with that solution. Then, you have a conversation
with your prospect about manufacturing problems or supply chain problems.

Requalify Every Opportunity in The Pipeline

In any crisis, sales leaders will take stock and reevaluate current opportunities; this is the second key.
Lately, we’ve been talking to our clients about their pipelines and the fact that every opportunity must
now be requalified. Business priorities have shifted. Staff has changed. Some companies have had to
adjust their business models or make changes to their supply chain.

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Ask Smart Questions

The third key explains how to best execute point one (driving a valuable business conversation) and
point two (continuous qualification). This third key focuses on the questions you ask your prospect
and your ability to understand their point of view and circumstances and the context of the issues
they face. To gain these insights, you should ask thoughtful, deliberate questions that go beyond
merely scratching the surface of open-ended questions. You should prepare to approach a
conversation with pointed and specific probing questions in mind, as well as confirming questions to
ensure you have a mutual understanding.

By asking smart questions, you can position yourself to direct a value-based conversation. This
conversation is not about the product or service you are selling, but instead is a discussion built on
questions that uncover your prospect’s point of view around the business issue and how this impacts
their position and their company’s results. Asking smart questions also lends itself to establishing your
credibility as someone they want to do business with.

Principles:

Focus on the value of solving their problem

That’s why the first principle of value-based selling is to focus on the value to the prospect of dealing
with the issue they have identified. If the prospect cannot articulate the costs and consequences of
the problem and the value of solving it, their chances of getting their organisation to agree to invest
in any solution is remote as are your chances of winning.

It’s dangerous to assume that your prospect is fully aware of all of these costs and consequences. In
fact, a key role of the sales person in these early stages must be to help the prospect recognise the
full horror of sticking with the status quo. Almost always, this will involve drawing their attention to
aspects of the problem they may not have recognised or even better introducing high-impact issues
that they may not have previously been aware of.

But if, despite all your efforts, the value of solving the problem remains unclear or weak, it’s usually
best to qualify out the “opportunity” and defer it for future nurturing even if you appear to have a
good solution fit.

Be specific about the value you offer

Marketers sometimes make a great deal of fuss about articulating your company’s “unique value
proposition”. But no matter how agonisingly carefully they are crafted, these can only ever be generic
statements designed to appeal to your target market as a whole. Value-based selling requires that
you get very specific about the value you offer each prospect in effect you need a personally tailored
unique value position.

Rather than a broad description of all that you can offer, you’ll get much more traction by selectively
identifying and highlighting the small subset of your total capabilities that are most relevant to
successfully addressing the issue you have identified. And you need to clearly explain how you deliver
unique and relevant value to every member of the decision-making team.

Create and capture mutually meaningful value in every interaction

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If your contacts are serious decision-makers with substantial workloads, they will not appreciate
being involved in conversations and meetings that leave them wondering why they just wasted their
valuable time. So, the third core principle of value-based selling is to seek to establish mutually
meaningful value in every customer interaction.

This value might be expressed by responding their questions simply, directly and completely rather
than leading them around the houses with an ambiguous or deliberately obfuscated response. Or it
might be expressed by sharing an insight that causes them to think differently or by revealing a
relevant fact they were previously unaware of.

Facilitate their buying process, not your sales process

Conventional sales processes are all-too-often designed around the needs of the seller, not the buyer.
So, it’s hardly surprising that things the sales person sees as important are often regarded by the
prospect as irrelevant or (even worse) profoundly irritating, while at the same time their interests and
concerns are being poorly served by the sales person.

That’s why your sales approach and the key stages in your sales pipeline and CRM system must be
designed around the key stages and milestones in your prospect’s buying decision journey. Your sales
activities, sales enablement tools and shareable content must be designed to advance a well-qualified
opportunity through their buying decision process.

If you can’t contribute distinctive value, qualify out

The final principle is simple: if your solution doesn’t offer a distinctively different and higher-value
approach solving to the prospect’s identified problem than any of the other options they are
considering, you need to either do something about it or qualify out.

Order fulfilment, Relationship building

Order fulfilment

The method by which a company processes a sales order to the customer’s specifications, that
understates its importance. Customers hold more power than ever, are more informed and have
higher expectations. Efficient order fulfillment is key to your brand’s reputation, your company’s
profits and your ability to retain clients.

Order fulfillment is a process consisting of receiving and processing goods for distribution to
customers.

Order fulfillment means fulfilling a sales order to the customer’s specifications. That is, delivering
goods as promised at the time of sale. There are three main steps in this process: receiving,
processing and shipping.

Companies make money by selling goods, products and services to businesses or direct to
consumers. No matter whether you’re B2B or D2C, the sale is not complete until the sold items are
received by that customer. Order fulfillment is how companies complete the sale and it’s at the heart
of every business.
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Process

Receiving inventory

Goods may come from a third party, another company department or a company warehouse; a
pipeline (as with oil, fuel, water or some other fluid product); as digital data from a database; or in a
variety of forms from other external or internal sources.

In any case, the incoming inventory must be counted, inspected and inventoried to ensure the proper
amount was received and the quality is acceptable. SKUs or bar codes on the arriving products are
used in the receiving and storage processes, and to retrieve goods from internal storage later.

Inventory Storage

Once goods are received in the fulfillment center, they are inventoried and either immediately
disbursed or sent to short- or longer-term storage. Items are ideally stored just long enough to help
organize the orderly distribution of goods for existing sales, rather than to hold product for future
sales.

Order Processing

An order processing management system dictates the product picking and packing activities per each
newly received customer order. In the online marketplace, order management software can be
integrated with the shopping cart on an ecommerce website to automatically initiate order
processing.

Picking

A picking team or automated warehouse robots select items from the warehouse according to a
packing slip’s instructions. The packing slip contains specific information, such as a list of item SKUs,
product colors, sizes, number of units and location in the distribution center’s warehouse.

Packing

Packing materials are selected by a packing team or automated fulfillment robots to achieve the
lowest practical dimensional weight, which is calculated by multiplying package length times width
times height. Since space on delivery trucks is at a premium, optimizing dimensional weight (or DIM
weight) is important to speed transport while also potentially lowering shipment costs.

Further, packing teams often include return shipping materials and labels in case the customer wishes
to exchange or return the item for a refund later.

Shipping

The order is sent to a transportation channel or shipping node to be shipped to the customer.
Shippers and carriers be they freight lines or airlines, FedEx, UPS, the U.S. Postal Service (USPS) or

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other carriers determine freight billable costs by whichever is greater: actual package weight or its
dimensional weight.

Even if the actual weight is low, such as with a t-shirt, packing it in the lowest DIM is often worth it to
keep the packaging from adding significantly to the overall package weight. Also, most carriers have
packaging rules to optimize their own profits from the shipping space they have available. Failing to
meet those requirements can delay shipments if carriers refuse to accept the order.

Delivery

It is common for shipping routes to include more than one carrier. For example, FedEx may pick up a
package at the fulfillment center that will later be delivered by the USPS to the customer’s home.
There are many reasons for these hybrid shipping methods. One common example is that the USPS
delivers even to remote areas where most other commercial carriers do not. It’s simply more practical
to use the USPS for the last mile of delivery in those cases.

Relationship building

Relationship building skills are a combination of soft skills that a person applies to connect with others
and form positive relationships. In the workplace, relationship building skills are essential for getting
along with coworkers, contributing to a team and building an understanding between yourself and
others.

The following skill sets can typically be considered as essential skill sets to developing successful
relationship building skills:

Non-verbal communication skills

Non-verbal communication can have an impact on how you build relationships with others. For
instance, learning how to read body language can help you pick up on other people’s emotions.

Interpersonal skills

Relationships are people-centered. To form successful and strong work relationships, you should
possess effective interpersonal skills. Being able to understand another person’s perspective, showing
respect when you feel it’s unwarranted or showing compassion for your team can all be attributed to
developing interpersonal skills.

Listening skills

Active listening is an essential part of communication, however, developing active listening skills can
sometimes be more effective than learning how to speak in a meeting. Active listening encompasses
making eye contact, being aware of non-verbal cues and asking questions that show you are invested
in the conversation. This not only shows that you respect your team’s ideas, it can also show that you
care about all perspectives.

Verbal communication skills

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Verbal communication is also essential to building strong relationships. For instance, if you join a
meeting with your colleagues, you can practice your verbal communication by finding opportunities to
contribute ideas and ask questions. This can show that you are interested and open to hearing your
team’s ideas as well as motivated to contribute your thoughts, too.

Emotional intelligence

Emotional intelligence can be beneficial to develop overall and not just in the workplace. However,
being emotionally intelligent can mean that you observe the dynamics in the office and find ways to
contribute to your team, help solve conflict and generally work from a place of understanding.

Empathy

Empathy is another key aspect of effective relationship building skills. Having empathy for your
friends and co-workers means you seek to understand their feelings and emotions. When you actively
practice empathy in the workplace, you can show your teammates and managers your dedication to
maintaining your work relationships.

Networking skills

Building successful work relationships can also benefit from developing your networking skills.
Meeting new people, exchanging ideas with other professionals and offering assistance to other
business professionals can all help to boost your networking skills. With effective networking skills,
you can increase your professional reach as well as form lasting professional relationships.

Team-building skills

Working as part of a team will almost always require effective relationship building. Develop your
teamwork skills by practicing effective communication, showing respect for others’ ideas and
contributing and assisting where it’s needed.

Relationship with Customers

Be transparent in your dealings. Keep your customers well informed. Communicate with them
through mails, SMses or over the phone. Your client has all the rights to know even the minutest
detail of a product. After all he /she is paying for the same. Do not hide anything from them. They
would in any case come to know about it and it is always advisable if they come to know through you
rather than from others.

Do not be after your client’s life to take quick decisions. Give them time and space. Too much of
phone calls will definitely spoil your relationship with the other person. Moreover, if you are
constantly bothering your client, in due course of time, he/she would stop attending your calls.
Rather than calling up the other person every single day, a gentle reminder either through SMs or
email can do the trick. After all, if someone is convinced about your product, he/she would invest in
any case; no matter you call him/her once or twice.

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Be polite in your conversations. Never use foul words in your speech. It is completely unethical and
unprofessional. For maintaining a healthy relationship with your clients, you need to learn to keep a
check on your words. Never be rude to your clients.

Be a patient listener. Listen to what your clients have to say, rather than imposing your own ideas on
them. Do not go unprepared in any of your business meetings. Remember, your client can ask you
anything. If you do not know something at that point of time, it is always better to check and get
back to him/her later rather than lying. Try to resolve all your client’s queries.

Try to give a personal touch in all your business meetings. Help your clients in taking decisions. Give
them the right suggestion.

Never speak ill about your competitors and their products. Such a behaviour is completely unethical.
If your products are genuinely good and have an edge over competitors, your client would definitely
invest in them. You do not have to be too pushy.

Never ignore your client’s calls. If you have missed any of their calls, make sure you call them later.

Do remember to take proper feedbacks. After sales service is one of the major factors which plays a
crucial role in maintaining healthy and long term relationship with your clients. If your client is not
satisfied with any of your products, replace the same immediately. Action needs to be taken at the
earliest. Do not keep issues pending for long.

Always maintain a folder of personal information of your clients. Wish them on their birthdays,
anniversaries or any other special occasion. It would further strengthen your bond with your client.
Moreover, if you share a healthy relationship with your client; trust me they will always come back to
you. In fact they would not even think of going to your competitors. Networking is the key to success
in today’s business scenario. Contacts help in the long run. Always remember to take business cards
of people you meet on a daily basis. Even if you are through with your deal, make sure you are in
constant touch with your client. Drop him at his office sometimes or call him to your office for a cup
of coffee.

Marketing Distribution: Distinctive nature

Industrial distribution is unique as there are several different methods of channeling the products and
services to industrial consumers. The type of product, the selling price of the product and technical
knowledge required to sell the product all play a considerable role in selecting the proper sales or
distribution channel. Unlike consumer organizations, the decisions taken by the industrial
organizations on distribution channels is of great significance as the decisions involved are of long-
term nature that cannot be changed frequently. The industrial organizations carry on certain
important functions till the products reach the consumers like utilizing the services of transportation
companies for distribution, the services of warehouses for safe storage of goods, inventory control,
order processing and selection of marketing channels. This necessitate taking important decisions like
devising effective communication tools, planning promotional activities, managing finances etc that
help in serving the consumers better.

 Size: Unlike consumer markets, the industrial markets tend to have fewer channels
of distribution. Even the industrial channel is shorter in size as organizational buyers
expect immediate product availability, technical expertise and prompt after-sales
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service. This indirectly demands investment in training and physical facilities for the
industrial organizations.
 Geographical Distribution: The industrial distributors are concentrated highly in
the industrial markets they serve and certain other places that have large number of
industries like large towns and cities.
 Mixed channels: A combination of direct and indirect channels is used by some
industrial marketers to cater to different market segments or when they have some
resource constraints. To cater to large-volume customers, industrial firms generally
use their own sales force, and to cover small scale organizations, they use
independent distributors. In case of large geographical territories, due to resource
constraints they use their agents called as ‘manufacturers representatives’.
 Intermediary characters: The intermediaries involved in industrial marketing are
technically qualified who maintain very close relationship with industrial
organizations. Industrial manufacturers tend to depend more heavily on each
member of the channel and may do more to support that channel member.
Industrial distributors, brokers and agents are some types of intermediaries used by
industrial marketers to reach customers.

Types of Industrial Middlemen

The industrial middlemen are the intermediaries used by the manufacturers to deliver their products
to the end users. They are categorized based on the number and the extent to which they specialize
in the performance of certain functions. Different types of industrial middlemen are manufacturers
representatives (also called agents), brokers, commission merchants, industrial dealers or
distributors, value-added resellers (VARs), jobbers and drop shippers.

 Brokers: Brokers are the middlemen who represent either the buyer or the seller.
They help the manufacturer to find potential buyers and vice versa and take the
commission when sales process is complete.
 Manufacturers Representatives: The manufacturers’ representatives (sales
agents or manufacturers agents) are very commonly seen middlemen who secure
orders from existing and potential customers. They provide relevant information on
market conditions to the manufacturers as well as customers. They are paid a certain
amount of pre-specified commission on sales and other tasks performed to make the
sales. Generally small and medium-sized industrial firms use the services of agents in
territories with low market potential. Agents are cost-effective for them because
commission is paid as per the orders generated. The agents particularly have good
knowledge about the product, their target market apart from excellent contacts with
the buyers.
 Commission Merchants: They deal with large quantities of items like raw
materials. They are paid commission by the manufacturers when they perform
certain functions. Their general functions include getting the raw materials inspected,
negotiating during sales and finally close the sales. They receive the commission
based on the net sales value as is compensated to agents and brokers.
 Industrial Distributors: Industrial distributors are the important and most
preferred middlemen that are typically small and independent serving narrow
geographic markets. They perform functions like buying, transportation and
warehousing, promotion and selling, and offering credit. Because of such varied
functions, they are sometimes referred to as full function intermediaries. They are
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offered trade discounts on the price list of the products as their compensation.
Industrial distributors are categorized as general line distributors or mill supplies
houses that stock wide variety of products and sell to a diversified group of
customers. They are referred to as the supermarkets of industry. The products
stocked by them include maintenance repair and operating (MRO) supplies, original
equipment manufacturer (OEM) supplies, and equipment used in the operation of a
business, such as hand tools, power tools and conveyors etc. The second type of
distributors known as specialized distributors specializes in products they handle or
customers they serve. Because of increase in specialized markets, their numbers are
increasing. Specialized distributors limit their inventories to specific product range
like bearings, office equipment and supplies, electrical equipment and supplies, or
abrasives etc. The third category called the combination house sell directly to
industrial customers as well as some other retailers or dealers.
 Value-added Resellers (VARs): They add some value or feature to an existing
product and sell to end-users as a new package. This is found often in the computer
industry, where a company purchases computer components and builds a fully
operational personal computer. By doing this, the company has added value above
the cost of the individual computer components. Customers would purchase a
computer from the reseller to either save time or if they do not have the skills to
build a unit themselves.
 Drop Shippers: When an online marketer has certain concerns like where to get
the goods from, where to store them until they are sold, and what amount to charge
for shipping the goods to the customers, then drop shippers come to the rescue of
such marketers who work with merchants to move the products. Drop Shipping is
generally used by web site owners, shop owners and mail order firms who do not
stock inventory of the products sold for future delivery through mail order, catalog
and internet advertising. Middlemen send single unit orders for products to
manufacturers, or major stocking distributors, who in turn drop ship the merchandise
direct to the customers of the middlemen. Manufacturers providing drop shipping
services can gain additional sales, shift advertising costs to middlemen, offer
advertising material and reduce inventory requirements. Middlemen who initiate drop
ship orders shift the risks of stocking inventory to the supply source, including
storage, insurance, overhead, and personnel by spending nothing on inventory.
 Jobbers: They get orders from the customers and pass them to the manufacturers.
Though they do not handle the goods physically in any form, they take the title to
the products they sell. Jobbers specialize in marketing bulky products like coal, iron
ore etc, that are transported in huge quantities and do not require assorting or
grouping of products.

Channel Strategy and design

Marketing channels are set of mutually dependent organizations involved in the process of making product or
service available for utilization. It is established in academic studies that Marketing channels are the means by
which goods and services are made available for use by the customers. All goods go through channels of
distribution, and marketing will depend on the way goods are distributed. The direction that the product takes on
its way from production to the consumer is imperative because a marketer must choose which channel is best for
his particular product. It can be said that channel is the link between manufactures and purchasers. Decisions
about the marketing channel system are decisive for management.

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The marketing channels chosen by marketers influence all other marketing decisions. The firm’s sales force and
advertising decisions depend on how much training and inspiration dealers need. Further, channel decisions
involve comparatively long-term commitments to other firms. Holistic marketers guarantee that marketing
decisions in all these different areas are made to jointly maximize value.

Channel of distribution (Marketing channel)

In current competitive climate, big companies are using hybrid channels in

any one area. The firm must choose how much effort is needed to assign to
push versus pull marketing. A push strategy uses the manufacturer’s sales
force and trade promotion to encourage intermediaries to carry, promote,
and sell the product to customers. This is suitable where there is low brand
loyalty in a category, brand choice is made in the store, the product is
desired item, and product benefits are well understood. In a pull strategy,
the manufacturer uses advertising and promotion to influence customers to
ask intermediaries for the product, thus inducing the intermediaries to
order it. This is suitable when there is high brand loyalty and high
involvement in the category, people perceive differences between brands,
and people choose the brand before they shop. A marketing channel
executes the work of moving products from producers to consumers, beat
the time, place, and possession gaps that separate goods and services from
those who need or want them.

Channel level: The producer and the final customer are part of every
channel. There are numerous channels by which goods and services are
distributed. It is divided into direct and indirect channel. In direct channel
also known as zero-level channel, manufacturer and customer deal directly
with each other. There is no middleman in this channel. It consists of a

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producer selling directly to final customers through door-to-door sales,

Internet selling, mail order, telemarketing, home parties, TV selling,
manufacturer-owned stores, and other methods.

In indirect channel, companies manufacture products in huge scale and sell

these products to middle man for example whole seller and retailers. This
channel can be very expensive.

Manufacturer to Customer: Manufacturer produces the goods and sells

them to the customer directly with no mediator, such as a wholesaler,
agent or retailer. Goods come from the manufacturer to the user without an
intermediary.

Manufacturer to Retailer to Consumer: Purchases are made by the seller

from the manufacturer and then the retailer sells the products to the
consumer. This channel is used by manufacturers that specialize in
producing shopping goods.

Manufacturer to Wholesaler to Customer: Consumers can buy directly

from the wholesaler. The wholesaler breaks down bulk packages for resale
to the consumer. The wholesaler reduces some of the cost to the consumer
such as service cost or sales force cost, which makes the purchase price
cheaper for the consumer.

Manufacturer to Agent to Wholesaler to Retailer to Customer: This type of

distribution involves more than one intermediary involves an agent called
in to be the middleman and help with the sale of the goods. An agent
receives a commission from the producer. Agents are useful when
products or services need to move rapidly into the market soon after the
order is placed.

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Market channels by which goods and services are distributed

Characteristics of Marketing Channels

Link between Producer and Consumer.

Flow of Goods

Remuneration.

Classification-Direct and Indirect.

Activities- Financing, Credit Facility

It is important to consider some factors when choosing appropriate

marketing channel such as product, market, company. It is observed that
middle man plays vital role in distribution of product in market channel.
The core responsibility of intermediaries is to deliver products to
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customers in their desired location. To accomplish this objective, they

purchase goods and store these and then ship to customers.

Marketing channel function performed by middleman.

Designing a Marketing Channel System

Designing a marketing channel system entails factors such as analysing

customer needs, establishing channel objectives, identifying major channel
alternatives, and evaluating major channel alternatives.

Analysing Customers’ Desired Service Output Levels: The marketer must

recognize the service output levels which its target customers want.
Channels produce five service outputs:

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1. Lot size: The number of units the channel allows a particular

customer to buy at one time.
2. Waiting and delivery time: The average time consumers of
that channel wait for receipt of the goods. Customers
generally prefer fast delivery channels.
3. Spatial convenience: The extent to which the marketing
channel facilitate for customers to obtain the product.
4. Product variety: The variety provided by the channel.
Usually, consumers prefer a greater collection, which
enhances the chance of finding what they need.
5. Service backup: The add-on services such as credit,
delivery, installation, repairs provided by the channel.
Providing greater service outputs denotes increased channel costs and
higher prices for consumers. The triumph of discount resellers (online and
offline) designates that many consumers will accept lower outputs if they
can save money.

Establishing Objectives and Constraints

Another factor in designing a marketing channel system is that marketers

must declare their channel objectives in terms of targeted service output
levels. In competitive conditions, channel institutions should coordinate
their functional tasks to reduce total channel costs and still offer desired
levels of service outputs. Generally, planners can recognize several market
segments that want different service levels. Successful planning needs to
determine which market segments to serve and the best channels for each.
Channel objectives differ with product characteristics. Channel design is
also affected by numerous environmental factors as competitors’ channels,
monetary conditions, and legal regulations and limitations.

Channel Design Decisions, Selecting Channel

Members
CHANNEL DESIGN DECISIONS

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Designing a marketing channel system involves analyzing customer needs, establishing channel objectives,
identifying major channel alternatives, and evaluating major channel alternatives.

Marketing channels are set of mutually dependent organizations involved in the process of making product or
service available for utilization. It is established in academic studies that Marketing channels are the means by
which goods and services are made available for use by the customers. All goods go through channels of
distribution, and marketing will depend on the way goods are distributed. The direction that the product takes on
its way from production to the consumer is imperative because a marketer must choose which channel is best for
his particular product. It can be said that channel is the link between manufactures and purchasers. Decisions
about the marketing channel system are decisive for management.

Selection, Motivation and Evaluation of

intermediaries
Identify Major Channel Alternatives

Other decisive factor in developing market channel is to recognize alternatives. Companies may select array of
channels to approach customers, each of which has distinctive strengths as well as limitations. Each channel
alternative is explained by

(i) The types of available intermediaries

(ii) The number of intermediaries needed; and

(iii) The terms and responsibilities of each channel member.

Types of Intermediaries entails a firm needs to discover the types of intermediaries available to run its channel
work. Some intermediary merchants such as wholesalers and retailers buy, take title to, and resell the products.
Agents such as brokers, manufacturers’ representatives, and sales agents chase customers and may bargain on
the producer’s behalf but do not take title to the merchandise. Facilitators, including transportation companies,
independent warehouses, banks, and advertising agencies, help in the distribution process but neither neither
take title to goods nor negotiate purchases or sales.

Companies should recognize pioneering marketing channels. Number of Intermediaries indicates that to choose
intermediaries to use, companies can adopt one of three strategies: exclusive, selective, or intensive distribution.
Exclusive distribution means severely limiting the number of intermediaries. Selective distribution depends on
more than a few but less than all of the intermediaries willing to carry a particular product. In intensive
distribution, the producer places the goods or services in as many outlets as possible. This strategy is usually
used for items such as snack foods, newspapers, and gum. Terms and Responsibilities of Channel Members
signify that each channel member must be treated courteously and given the opportunity to be lucrative. The
main constituents in the “trade-relations mix” are price policy, conditions of sale, territorial rights, and specific
services to be performed by each party. Price policy assists the producer to ascertain a price list and schedule of
discounts and allowances that intermediaries see as equitable and sufficient.

Evaluating the Major Alternatives

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The Company must assess each alternative against suitable economic, control, and adaptive criteria. The firm
should verify whether its own sales force or a sales agency will create more sales and it estimates the costs of
selling different quantities through each channel.

Managing Marketing Channel

In order to maximize profit, companies must manage their marketing channel effectively. Management of
marketing channel refers to the process of analysing, planning, organizing and controlling its marketing channel.
In marketing channel two different activities occur. One is the establishment of physical distribution system and
other is management of marketing objectives. Management of marketing channel involves all functions of
marketing mix which include product, price, physical distribution, program and people. The physical
distribution system and channel structure is established through which products flow in the marketing channel.

Marketing Mix Activities In Marketing Channel Management: (McCalley, 1996)

To Mange marketing channel, firms must adopt motivational strategies such as paying higher slotting
allowances, offering higher trade discount, providing strong promotional and advertising support,
training channel member sales people, giving high level logistic support. Management professional stated
that after a firm has selected a channel system, it must select, train, motivate, and evaluate individual
intermediaries for each channel. It must also modify channel design and arrangements over time.

Selecting Channel Members: For successful management, Companies must have to choose talented channel
members cautiously because for customers, the channels are the company. Producers should decide what
features distinguish the better intermediaries and scrutinize the number of years in business, other lines carried,
growth and profit record, financial strength, cooperativeness, and service reputation of potential channel
members. If the intermediaries are sales agents, producers should assess the number and character of other lines
carried and the size and quality of the sales force. If the intermediaries want exclusive distribution, the
manufacturer should assess locations, future growth potential, and type of customers.

Training and Motivating Channel Members: It is a major responsibility of a company to examine its
intermediaries in the same way it views its customers. It needs to establish intermediaries’ needs and build a
channel positioning such that its channel offering is tailored to provide superior value to these intermediaries. To
enhance intermediaries’ performance, the company should offer training, market research, and other capability-
building programs. The company must also continually strengthen that its intermediaries are to jointly gratify
the needs of end users. Producers differ greatly in channel power, the ability to change channel members’
behaviour therefore the members take corrective actions. Often, gaining intermediaries’ collaboration is a major
challenge. Sometimes, Producers try to forge a long-term affiliation with channel members. The manufacturer
must talk clearly what it expects from its distributors in the way of market coverage and other channel issues
and may ascertain a compensation plan for adhering to these policies. Motivating channel members takes
numerous forms in order to gratify the requirements at each level in channel. Profitability is major Motivational
force for whole seller for product selection. When profit motivation is satisfied, whole seller will look for
marketing programs offered by producers to sell products to retailers. Whole seller checks the credit option and
terms of payment when assessing the profit option for business when dealing with particular supplier. Retailers
are mainly concerned with maintenance of product supply and availability. It is observed in market that when
customers cannot get product in one retail shop, they immediately search for it in another retailers. But retailers
do not want to lose customers. Another interest of retailers is profitability of the product.

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Motivational consideration for channel members: (McCalley, 1996)

Evaluate Channel Members: To successfully manage market channel, producers must assess intermediaries’
performance at regular intervals against such standards as sales-quota attainment, average inventory levels,
customer delivery time, treatment of damaged and lost goods, and cooperation in promotional and training
programs. A producer will occasionally determine that it is paying particular intermediaries too much for what
they are actually doing. Producers should establish functional discounts in which they pay specific amounts for
the intermediary’s performance of each agreed-upon service. People who are not performing must be given
extra training or counselling.

Modifying Channel Arrangements: Channel arrangements must be reassessed regularly and altered when
distribution does not work as planned, consumer buying patterns change, the market develops, new competition
occurs, inventive distribution channels appear, and the product moves into later stages in the product life cycle.
No marketing channel remains successful over the entire product life cycle. Early purchaser might be willing to
pay for high-cost value-added channels, but later buyers will change to lower-cost channels. In highly
competitive markets with low entry barriers, the best channel structure will transform over time. The company
may add or drop individual channel members, add or drop particular market channels, or develop a new way to
sell merchandise. The process of adding or dropping an individual channel member needs an incremental
analysis to decide profitability of company. Additionally, marketers adopt data mining to analyse customer
shopping data as input for channel decisions. The most complicated decision is whether to modify the overall
channel scheme. Channels can become old-fashioned when gap occurs between the existing distribution system
and the ideal system to gratify customer’s needs and wants.

The most challenging face of channel management is the maintenance of control over all parts of distribution
flow and marketing activities. Marketers have to undergo legal issues in controlling marketing channels
therefore they need to develop successful channel programs that will stimulate the action planned without
creating conflict among competitive channel members.

To summarize, market channel is medium through product from raw material move to costumer. In designing
market channel it is important to comprehend customer’s need. The task of managing marketing channel falls to
marketing and sales managers. These people directly involve with channel members and company’s
competitors. They know how to find valuable information for good management decisions. To organize
marketing channel, it is imperative to gather relevant information. It assists in writing accurate and detail market
profile statement. Most marketing channels are created with one or more intermediaries between the
manufacturer and consumer.

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Email Id: pavankumar@[Link]
Mob No: 8130402515
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 KMBNMK03 B2B and Services Marketing

Business Marketing Channels: Direct and

Indirect Distribution Channels
Distribution channels in marketing are one of the classic “4 Ps” (product, promotion, price, placement a.k.a.
“distribution”). They’re a key element in your entire marketing strategy — they help you expand your reach and
grow revenue.

B2B and B2C companies can sell through a single distribution channel or through multiple channels that may
include:

 Wholesaler/Distributor
 Direct/Internet
 Direct/Catalog
 Direct/Sales Team
 Value-Added Reseller (VAR)
 Consultant
 Dealer
 Retail
 Sales Agent/Manufacturer’s Rep

Here are three examples of distribution channels in marketing:

Business Marketing Channels: Direct and

Indirect Distribution Channels
Distribution channels in marketing are one of the classic “4 Ps” (product, promotion, price, placement a.k.a.
“distribution”). They’re a key element in your entire marketing strategy — they help you expand your reach and
grow revenue.

B2B and B2C companies can sell through a single distribution channel or through multiple channels that may
include:

 Wholesaler/Distributor
 Direct/Internet
 Direct/Catalog
 Direct/Sales Team
 Value-Added Reseller (VAR)
 Consultant
 Dealer
 Retail
 Sales Agent/Manufacturer’s Rep

Here are three examples of distribution channels in marketing:

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Distribution Channels Concepts & Steps

Before you begin

You can evaluate a new distribution channel or improve your channel marketing / management at any time. It’s
especially important to think about distribution when you’re going after a new customer segment, releasing a
new product, or looking for ways to aggressively grow your business.

Evaluate how your end-users need to buy

Your distribution strategy should deliver the information and service your prospects need. For each customer
segment, consider:

 How and where they prefer to buy

 Whether they need personalized education and training
 Whether they need additional products or services to be used along with yours
 Whether your product needs to be customized or installed
 Whether your product needs to be serviced

Match end-user needs to a distribution strategy

 If your end-users need a great deal of information and service, your company can deliver it
directly through a sales force. You can also build a channel of qualified resellers or
consultants. The size of the market and your price will probably dictate which scenario is
best.
 If the buying process is fairly straightforward, you can sell direct via a website/catalog or
perhaps through a wholesale/retail structure. You may also use an inbound telemarketing
group or a field sales team.
 If you need complete control over your product’s delivery and service, adding a channel
probably isn’t right for you.

Identify natural partners

If you want to grow beyond the direct model, look for companies that have relationships with your end-users. If
consultants, wholesalers or retailers already reach your customer base, they’re natural partners.

Build your distribution channel

If you’re setting up a distribution channel with one or more partners, treat it as a sales process:

 Approach the potential channel partner and “sell” the value of the partnership.
 Establish goals, service requirements and reporting requirements.
 Deliver inventory (if necessary) and sales/support materials.
 Train the partner.
 Run promotions and programs to support the partner and help them increase sales.

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Minimize pricing conflicts

If you use multiple channels, carefully map out the price for each step in your channel and include a fair profit
for each type of partner. Then compare the price that the end-user will pay; if a customer can buy from one
channel at a lower price than from another, your partners will rightfully have concerns. Pricing conflict is
common, and it can jeopardize your entire strategy, so do your best to map out the price at each step and
develop the best solution possible.

Drive revenue through the channel

Service your channel partners as you’d service your best customers and work with them to drive revenue. For
example, provide them with marketing funds or materials to promote your products; run campaigns to generate
leads and forward them to your partners.

Introduction to Logistics and Supply chain

Management
The term “Supply Chain Management” was coined in 1982 by Keith
Oliver of Booz, Allen and Hamilton Inc. But the discipline and practice
has been in existence for centuries.

The terms Logistics and Supply Chain Management are used

interchangeably these days, but there is a subtle difference that exists
between the two.

‘Logistics’ has a military origin, and used to be associated with the

movement of troops and their supplies in the battlefield. But like so many
other technologies and terminologies, it entered into the business lexicon
gradually and has now become synonymous with the set of activities
ranging from procurement of raw materials, to the delivery of the final
polished good to the end consumer.

In a typical business scenario, many organizations work in tandem

(knowingly or unknowingly) to get the final product in hand of the end
consumer. The supply chain is a network of these organizations that
coalesce with each other (downstream or upstream) to make the final
shipment successful.

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A group of farmers, a cotton mill, a designer and a tailor is the least

number of stakeholders you can expect from a regular shirt you wear every
day

Introduction to Logistics and Supply Chain Management (SCM)

Logistics is generally seen as a differentiator in terms of the final bottom line of a typical “hard and tangible
goods” organization; enabling either a lower cost or providing higher value.

While a lower cost is mostly a one-time feel good factor and has been the traditional focus area in logistics, high
value comes into the picture much later and may be tangible or intangible in a good’s initial stages.

So while an organization like Zappos may look costly at a first glance, the extraordinary customer service due to
robust policies is a value which more than offsets the slightly higher cost.

Logistics is concerned with both materials flow and information flow. While the materials flow from the
supplier to consumer, the information flows the other way round. It is not only concerned with inventory and
resource utilization, customer response also falls under the ambit of logistics.

In simple terms, logistics can be seen as a link between the manufacturing and marketing operations of a
company. The traditional organizations used to think of them separately, but there is a definite value addition in
integrating the two due to the interdependence and feedback channel between the two.

The level of coordination required to minimize the overall cost for the end
consumer gets tougher to achieve as the number of participants in a supply
chain increase, as an extremely efficient flow of material and information
is required for optimization.

Logistics cover the following broad functional areas: network design,

transportation and inventory management.

Manufacturing plants, warehouses, stores etc. are all facilities which form
key components in the network design. Transportation: the cost and
consistency (reliability) required out of the transportation network
determines the type and mode of the movement of goods and also affects
the inventory.

Buffer (or safety) stock is the reserve stock held to safeguard against
shortages or unexpected surge in demand, to avoid “stock-outs”. Fewer
inventories with negligible stock-outs — the hallmark of an efficient
logistical system

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Basic concepts of Logistics and SCM

Inventory Planning

Organizations want to minimize the inventory levels due to its almost linear relationship with the cost. Yet if the
demand is forecasted accurately, there would ideally be no need for inventory and the goods will move
seamlessly from warehouses to customers.

 That would have been awesome, but it is deep into the ideal world zone. In the real world, the
forecasted numbers can only take you so far and some inventory has to be maintained to
satiate any surges in demand; the cost of unhappy consumers who are not serviced is often
huge, and is immeasurable in most cases.
 Yet overstocks lead to increase in working capital requirements, insurance costs and blocked
resources which could have been productive someplace else.
 Making a business forecast has largely been a gut-based process, but is changing rapidly in
the era of data-based decision making. The forecast depends on the historical baseline for
sales, seasonality (soft drinks have higher sales volume in May), recent trends (Samsung is
losing out to competitors when it comes to phones, a declining trend), business cycles
(economies go through expansion and contraction every few years), promotional offers (up to
50% off can drive the average fashionista mad) etc.

Transportation

The kind of transportation employed by an organization is a strategic decision (it usually accounts for around
1/3rdof the total logistics cost) based on the required level of risk exposure, customer service profiles, geographic
area covered etc. Truck shipments take more time for delivery compared to air transport (customers with relaxed
turnaround times); is cheaper but necessitates maintenance of higher inventory levels.

 Transportation serves the purpose of not just product movement, but storage as well (not very
intuitive). Time spent for delivery means saved time for warehousing, and many times the
cost to offload and reload shipments can be greater than the cost of letting the goods stay in
the transportation vehicles itself.
 Two basic thumb rules apply for transportation decisions: truck load (TL) shipments are
better than less-than-truckload (LTL) shipments as storage space is a perishable commodity
(just like a commercial airline does not want to fly with empty seats), and the cost per
kilometer decreases as the distance increases (two 500 km shipments is usually more
expensive than a single 1000 km shipment).
 The factors which determine the economies of transportation decisions include but are not
limited to: distance between the starting and destination points, and density (higher density
products take less space — space constraints outweigh weight constraints by a huge margin),
stow ability (spherical packaging will lead to more empty spaces compared to cubical) and
volume of the goods. Different modes of transport serve different strategic ends (rail, road,
air, water etc).
 FlipKart has eKart for its logistical operations and warehousing, whereas smaller e-commerce
players generally outsource their operations to specialized logistics players such BlueDart,
DHL and now Delhivery.

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Packaging

The end goals differ: can either be done for end consumers or for logistical considerations. The packaging will
then depend on the end goal; form factor plays the lead role when packaging goods for the end consumers, while
function plays the lead role in packaging for logistical operation.

Warehousing

It is the back-end building for storing goods. Based on the needs of the organization, it can be in-house or
outsourced.

 Primary functions of a warehouse are product movement and storage. Activities such as
offloading of the goods coming from the suppliers, the intermediate packaging (if required),
and shipping to other destinations (retailers or end consumers) are handled in the warehouse.
Similarly, they can also serve as a storage house for handing peak consumer demand to avoid
stock out of items, and acts as a buffer between the starting point (usually manufacturing
plant) and ending point (think about a typical retail outlet).

Different distribution strategies can be adopted by an organization based on its needs and infrastructure in place,
namely:

 Cross-Docking: Relies on minimal processing at the warehouse level and facilitate seamless
connection between “incoming” and “outgoing” goods through technologies such as bar code
scanners; becoming increasingly important due to established structured communication
between retailers and manufacturers; best for high velocity goods with predictable demand
patterns.
 Milk Runs: The delivery guy is out to deliver items from a single supplier to multiple
retailers or to pick up items from multiple suppliers for a single retailer (An Indian
Doodhwala can literally teach a thing or two about this, hence the naming we think).
 Direct Shipping: A supplier directly ships to a particular retailer without any intermediaries.
Mostly happens with big-name stores with huge good volumes, and very frequent
replenishments. Big savings on time.
 Hub and Spoke Model: Hub serves as the central node for nearby places, and the spokes
depend on the hub for their needs (think of a metropolitan and various tier-2 cities in its
proximity).
 Pooled Distribution: Region is the most important factor driving this strategy. Delivers to
every destination point in a geographical area, smart for handling peak time loads and LTL
shipments. Plus one for the planet as a bonus!

Human : Arteries :: Logistics : Information

Traditional paper-based information systems are increasingly on their way out, and electronic exchanges are
making rapid inroads into the logistical process flow. The initial investment in electronic systems is recouped
quickly by cost savings due to better operational efficiency and enhanced customer service. Advances in
electronic data interchange (EDI), artificial intelligence and wireless communication is partly responsible for
this intelligent shift.

 The principal information flow can be subdivided in two main streams: one for planning
(looking into the future) and the other for operational flows (in the past and present). Plans are
to be made for production, storage and movement of goods. Manufacturing constraints

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(internal) and expected sales (external) are the key areas focused upon. Operating flows refer
to the information generated (or required) to serve the orders to the customer.
 Enterprise Resource Planning (ERP) is a fancy term used by IT people for one-stop,
integrated packages to support multiple functions across an organization. It serves as a central
destination to capture data which aids in making optimal decisions, while also serving as a
repository to better understand the current business scenario and plan for any future needs.

Green Supply Chain Management: Lean Practices

Green is the new way to go about things, and the myth that profits and environment cannot go hand in hand is
evaporating fast. Commitment to lean practices is a promise to do away with inefficiencies in the system to
reduce wastes and have a minimal impact on the environment.

The emphasis on continuous product flows, standardization within the organization/industries and a greater
integration between producers and consumers — all these have contributed to efficient supply chains with
gradually decreasing waste levels.

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 KMBNMK03 B2B and Services Marketing

Unit-3
Pricing & Negotiation
B2B pricing is the process of setting prices on goods or services with the intent of marketing and
selling them to other businesses, and not directly to consumers.

Three common B2B pricing strategies are Value-Based Pricing, Cost-Plus Pricing, and Competitor-
Based pricing. The most powerful B2B pricing strategy is Value-Based Pricing, as it forces you to look
outward at your customers to form the perfect pricing strategy for your B2B business.

B2B pricing strategy should be:

 Always testing its pricing

 Always evaluating its pricing
 Using personas for pricing
 Using the correct value metrics
 Basing price tiers off of pricing personas
 Listening to customers

The pricing process for B2B customers includes the following steps:

Product Understanding -> Price Model -> Price Research -> Price Strategy -
> Index Price

B2B Tiered Pricing Model

The tiered pricing model is a pricing method based on different segments in the same price range to
attract a wider audience of B2B customers.

In wholesale, since the buying/selling product quantity will often be large, setting different tiers for
price and discounts will help stimulate B2B customers to buy more, which often results in higher sales
for your business.

This pricing model is best suited for the case of excess stock and category control, especially when
you already have an edge of pricing advantage compared to competitors.

B2B Dynamic Pricing Model

Dynamic pricing is a model that does not follow a fixed price but dynamically changes the price to suit
the actual situation and the factors affecting it.

Dynamic pricing also isn’t a new pricing model but has been applied a lot in areas such as aviation,
transportation, tourism, or even chemicals. These are all areas that require price flexibility to
minimize costs/increase profits for each service execution.

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Applying dynamic pricing for B2B, prices will need to change flexibly based on your subjective and
objective assessment of a different B2B audience or group of customers.

B2B Lead Generation Pricing Model

Typically, only service-related businesses use lead generation pricing models for B2B customers since
it depends on the marketing costs for the service.

Price negotiation is a common way for individuals to receive a discount off the posted price. However,
not all consumers bargain when given the opportunity. For example, consumer reports indicate that
61% of consumers negotiate prices of goods and services and 33% bargain for expensive home
appliances specifically. One explanation for this behavior is that there exists a cost (henceforth called
bargaining cost) to initiate a negotiation. This is the fixed psychological cost associated with the
decision to haggle, and does not influence the negotiated price (conditional on bargaining). In
contrast, bargaining power is the relative bargaining ability of the participants and is the key
determinant of the final negotiated price.

Price and Pricing Decision for Business

Markets: Factor influencing Pricing of New
Products
1. Product Cost:

The most important factor affecting the price of a product is its cost.

Product cost refers to the total of fixed costs, variable costs and semi variable costs incurred during the
production, distribution and selling of the product. Fixed costs are those costs which remain fixed at all the
levels of production or sales.

For example, rent of building, salary, etc. Variable costs refer to the costs which are directly related to the levels
of production or sales. For example, costs of raw material, labour costs etc. Semi variable costs are those which
change with the level of activity but not in direct proportion. For example, fixed salary of Rs 12,000 + upto 6%
graded commission on increase in volume of sales.

The price for a commodity is determined on the basis of the total cost. So sometimes, while entering a new
market or launching a new product, business firm has to keep its price below the cost level but in the long rim, it
is necessary for a firm to cover more than its total cost if it wants to survive amidst cut-throat competition.

2. The Utility and Demand:

Usually, consumers demand more units of a product when its price is low and vice versa. However, when the
demand for a product is elastic, little variation in the price may result in large changes in quantity demanded. In
case of inelastic demand, a change in the prices does not affect the demand significantly. Thus, a firm can
charge higher profits in case of inelastic demand.

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Moreover, the buyer is ready to pay up to that point where he perceives utility from product to be at least equal
to price paid. Thus, both utility and demand for a product affect its price.

3. Extent of Competition in the Market:

The next important factor affecting the price for a product is the nature and degree of competition in the market.
A firm can fix any price for its product if the degree of competition is low.

However, when the level of competition is very high, the price of a product is determined on the basis of price
of competitors’ products, their features and quality etc. For example, MRF Tyre company cannot fix the prices
of its Tyres without considering the prices of Bridgestone Tyre Company, Goodyear Tyre company etc.

4. Government and Legal Regulations:

The firms which have monopoly in the market, usually charge high price for their products. In order to protect
the interest of the public, the government intervenes and regulates the prices of the commodities for this
purpose; it declares some products as essential products for example. Life saving drugs etc.

5. Pricing Objectives:

Another important factor, affecting the price of a product or service is the pricing objectives.

Following are the pricing objectives of any business:

(a) Profit Maximisation:

Usually the objective of any business is to maximise the profit. During short run, a firm can earn maximum
profit by charging high price. However, during long run, a firm reduces price per unit to capture bigger share of
the market and hence earn high profits through increased sales.

(b) Obtaining Market Share Leadership:

If the firm’s objective is to obtain a big market share, it keeps the price per unit low so that there is an increase
in sales.

(c) Surviving in a Competitive Market:

If a firm is not able to face the competition and is finding difficulties in surviving, it may resort to free offer,
discount or may try to liquidate its stock even at BOP (Best Obtainable Price).

(d) Attaining Product Quality Leadership:

Generally, firm charges higher prices to cover high quality and high cost if it’s backed by above objective.

6. Marketing Methods Used:

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The various marketing methods such as distribution system, quality of salesmen, advertising, type of packaging,
customer services, etc. also affect the price of a product. For example, a firm will charge high profit if it is using
expensive material for packing its product.

Pricing objectives and Determinants

PRICING OBJECTIVES

1. Profits-related Objectives:

Profit has remained a dominant objective of business activities.

Company’s pricing policies and strategies are aimed at following profits-related objectives:

i. Maximum Current Profit:

One of the objectives of pricing is to maximize current profits. This objective is aimed at making as much
money as possible. Company tries to set its price in a way that more current profits can be earned. However,
company cannot set its price beyond the limit. But, it concentrates on maximum profits.

ii. Target Return on Investment:

Most companies want to earn reasonable rate of return on investment.

Target return may be:

(1) fixed percentage of sales,

(2) Return on investment, or

(3) A fixed rupee amount.

Company sets its pricing policies and strategies in a way that sales revenue ultimately yields average return on
total investment. For example, company decides to earn 20% return on total investment of 3 crore rupees. It
must set price of product in a way that it can earn 60 lakh rupees.

2. Sales-related Objectives:

The main sales-related objectives of pricing may include:

i. Sales Growth:

Company’s objective is to increase sales volume. It sets its price in such a way that more and more sales can be
achieved. It is assumed that sales growth has direct positive impact on the profits. So, pricing decisions are taken
in way that sales volume can be raised. Setting price, altering in price, and modifying pricing policies are
targeted to improve sales.

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ii. Target Market Share:

A company aims its pricing policies at achieving or maintaining the target market share. Pricing decisions are
taken in such a manner that enables the company to achieve targeted market share. Market share is a specific
volume of sales determined in light of total sales in an industry. For example, company may try to achieve 25%
market shares in the relevant industry.

iii. Increase in Market Share:

Sometimes, price and pricing are taken as the tool to increase its market share. When company assumes that its
market share is below than expected, it can raise it by appropriate pricing; pricing is aimed at improving market
share.

3. Competition-related Objectives:

Competition is a powerful factor affecting marketing performance. Every company tries to react to the
competitors by appropriate business strategies.

With reference to price, following competition-related objectives may be priorized:

i. To Face Competition:

Pricing is primarily concerns with facing competition. Today’s market is characterized by the severe
competition. Company sets and modifies its pricing policies so as to respond the competitors strongly. Many
companies use price as a powerful means to react to level and intensity of competition.

ii. To Keep Competitors Away:

To prevent the entry of competitors can be one of the main objectives of pricing. The phase ‘prevention is better
than cure’ is equally applicable here. If competitors are kept away, no need to fight with them. To achieve the
objective, a company keeps its price as low as possible to minimize profit attractiveness of products. In some
cases, a company reacts offensively to prevent entry of competitors by selling product even at a loss.

iii. To Achieve Quality Leadership by Pricing:

Pricing is also aimed at achieving the quality leadership. The quality leadership is the image in mind of buyers
that high price is related to high quality product. In order to create a positive image that company’s product is
standard or superior than offered by the close competitors; the company designs its pricing policies accordingly.

iv. To Remove Competitors from the Market:

The pricing policies and practices are directed to remove the competitors away from the market. This can be
done by forgoing the current profits – by keeping price as low as possible – in order to maximize the future
profits by charging a high price after removing competitors from the market. Price competition can remove
weak competitors.

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4. Customer-related Objectives:

Customers are in center of every marketing decision.

Company wants to achieve following objectives by the suitable pricing policies and practices:

i. To Win Confidence of Customers:

Customers are the target to serve. Company sets and practices its pricing policies to win the confidence of the
target market. Company, by appropriate pricing policies, can establish, maintain or even strengthen the
confidence of customers that price charged for the product is reasonable one. Customers are made feel that they
are not being cheated.

ii. To Satisfy Customers:

To satisfy customers is the prime objective of the entire range of marketing efforts. And, pricing is no exception.
Company sets, adjusts, and readjusts its pricing to satisfy its target customers. In short, a company should design
pricing in such a way that results into maximum consumer satisfaction.

5. Other Objectives:

Over and above the objectives discussed so far, there are certain objectives that company wants to achieve by
pricing.

They are as under:

i. Market Penetration:

This objective concerns with entering the deep into the market to attract maximum number of customers. This
objective calls for charging the lowest possible price to win price-sensitive buyers.

ii. Promoting a New Product:

To promote a new product successfully, the company sets low price for its products in the initial stage to
encourage for trial and repeat buying. The sound pricing can help the company introduce a new product
successfully.

iii. Maintaining Image and Reputation in the Market:

Company’s effective pricing policies have positive impact on its image and reputation in the market. Company,
by charging reasonable price, stabilizing price, or keeping fixed price can create a good image and reputation in
the mind of the target customers.

Prepared By: [Link] Agrawal

Email Id: pavankumar@[Link]
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iv. To Skim the Cream from the Market:

This objective concerns with skimming maximum profit in initial stage of product life cycle. Because a product
is new, offering new and superior advantages, the company can charge relatively high price. Some segments
will buy product even at a premium price.

v. Price Stability:

Company with stable price is ranked high in the market. Company formulates pricing policies and strategies to
eliminate seasonal and cyclical fluctuations. Stability in price has a good impression on the buyers. Frequent
changes in pricing affect adversely the prestige of company.

vi. Survival and Growth:

Finally, pricing is aimed at survival and growth of company’s business activities and operations. It is a
fundamental pricing objective. Pricing policies are set in a way that company’s existence is not threatened.

DETERMINANTS OF PRICING

Competition

A competitive pricing strategy, where prices for a product or service are set based primarily on the prices of the
competition, is best suited for a price-sensitive and highly competitive market. Whether you use this type of
strategy or not, you should always take your competition’s pricing into account when setting your own pricing,
unless you hold a monopoly. If consumers perceive your product and your competition’s as having equal value,
you could lose out in a big way if your competitor’s price is lower than yours is.

Market Demand

The laws of supply and demand should always come into play when setting your pricing. If a product is in high
demand, particularly if demand exceeds supply, then the market can bear a higher price. Conversely, if demand
dwindles, consumers will not be willing to pay higher prices. Your pricing should remain relatively stable over
time, but you can put promotions in place to discount the price when needed.

Brand Strategy

Setting your prices without a thorough grasp of your brand objectives can destroy any brand-building efforts.
Your price is a part of your brand image. Think about Walmart, which has built its entire brand around low
pricing, or Tiffany & Co., whose consumers expect high-end pricing. If your products’ prices are not in line
with your brand image, you will most likely confuse consumers instead of convert them.

Cost of Goods Sold

If you want to make a profit on the sale of your products, you must charge a higher price than what it cost you to
actually produce and transport them. The cost of goods sold almost always plays an integral role in any pricing
strategy. The exception to this is if you are promoting your product as a loss leader. A loss leader is a product
that is sold below cost as an incentive for consumers to purchase other products at normal prices. Many mobile
carriers, for example, sell cell phones at hugely discounted rates so that consumers will sign on for one of their
cell phone service packages.

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Price models and skills, Pricing tactics,

Negotiated pricing
Price models

Cost-based Pricing

This is perhaps the most-common way to price the products that you take to market. With this
model, you are going to use the cost of production as the basis for the final price that consumers see
when they make a purchase. The multiple that you use to price your goods is going to depend on the
industry in which you are working. Some industries see multiples around 2-3 times the cost of
production, while other industries are around 5 times or higher.

Portfolio Pricing

This is a great model to use if you are offering a service or, more specifically, a selection of services.
In the portfolio pricing model you are going to set up a pricing structure that makes sense throughout
your product or service line. For instance, if you run an accounting agency, you may offer basic tax
preparation services for a certain rate. Then from there, your more advanced accounting services
move up the pricing scale. It makes sense to price out all of your services in this way so that each of
your customers feels they are getting a good deal.

Market Pricing

As the name would indicate, this pricing model is all about the market conditions that you find around
you. Fortunately, in the internet age, it is relatively easy to determine market pricing for just about
any product or service. A quick internet search should lead you to the prices of your competitors, and
you can then react appropriately. Trying to sell a product that falls well outside the market norms for
pricing is always going to be an uphill battle, so the market pricing model is a smart one to use.

Flat-rate pricing

Flat-rate pricing means offering one product, with the same set of features, for one price.

This model is easy to sell and communicate. Sales and marketing can focus on a single offer that is
clearly defined.

Freemium Pricing

The last model on our list is one that will only work for a specific segment of the market. In freemium
pricing, you give away your base service or product for free, in the hopes that satisfied customers will
decide to pay for more advanced features.

Pricing tactics

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There are several different value metrics to consider:

Users: Customers pay more as the number of individuals who can access the product increases

Active users: Customers pay more as the number of people using the product increases

Feature usage: Customers pay more as the number of features they use increases, regardless of
the number of users

Activity: Customers pay for each activity conducted. For example, email marketing platform users
could pay per email sent

Negotiated pricing

A price agreed upon for the supply of goods or services by both buyer and seller. The final price for a
deal is determined through Negotiation between the buyer and seller. The effect of Negotiation on
pricing depends on the negotiating skills and positions of both parties, as well as the commitment of
both parties to pursue a long-term business relationship.

Pricing Skills

Results Orientation: We heard negatives about analysts who think the analysis itself is the
objective. On the other hand, we heard positives about analysts who recognize that their work is a
means to an end, and who always “keep their eye on the prize” i.e. business and financial results.

Change Management: Most participants cited a need for pricing analysts to understand
organizational dynamics and how to go about fostering change within their organizations. They
expressed a need for pricing analysts to be masters of “influence without authority”. As one
participant put it, “Pricing is 40% figuring out what to do and 60% getting the company to do it.”

Problem Solving: We heard strong negatives about pricing analysts who could identify potential
problems, but had no idea how to go about solving them or preventing them from happening in the
future. Positives were expressed toward analysts who were capable of devising multiple potential
solutions to the same problem or issue.

Price setting in B2B markets

Cost-plus pricing is the standard strategy. It’s easy because it doesn’t require market research or understanding
the psychology of customers or competitors. It is also inefficient and does not maximize profits. Cost-plus
pricing assigns the same margin to every customer even though we know that customers have different price
sensitivities and emotional values. Cost-plus pricing can be effectively used to set price and margin floors.
These floors can be used as the starting point for developing a value-based pricing strategy.

Value-based pricing takes time and data but it maximizes profit per customer. By pricing per customer, per
product, and per market, you focus on the customer to set your price. For example, large customers with
tremendous buying power are priced differently than small customers who make infrequent purchases. Unlike
static cost-plus or competitive pricing strategies, value-based pricing is more dynamic and because it is more

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customer-based, it can improve marketing efforts as well. After all, once you understand your high-value
customers, you can grow by targeting leads that resemble these customers.

Competitive pricing is essentially price plagiarism. You look at what the competition is doing and price your
products accordingly. Using this strategy places, no more value on your products or brand than that of your
competitors.

Choosing Your Pricing Strategy

Know Your Value Metric

Your value metric is how you measure your product’s per-unit value, and ultimately one of the main factors in
how you arrive at an actual price. If you’re selling a straightforward product say, pencils your value metric
would be per pencil. If you’re selling a consulting service, your value metric would likely be per hour.

Decide on a Pricing Model

Value metrics also help you determine your pricing model. Your pricing model depends on whether you’ll
charge one price for a product or different prices based on product packages or levels of service.

Your pencils, for instance, would likely follow a flat-rate pricing model (every pencil or pack of pencils costs
the same amount). Consulting services, on the other hand, may require a tiered pricing approach where buyers
can decide on the level of service they need and be priced accordingly.

Utilize Buyer Personas

Buyer personas can be used to determine the price buyers would be willing to pay for your product. A customer
purchasing a high-volume of office supplies (like your pencils) is likely to have cost savings at the top of their
priority list.

A large corporation purchasing an enterprise-wide software system and consulting service is likely to put more
focus on value and relationships, then worry about price as one of many contributing factors.

3 C’s of pricing cost

Customer: Who is your customer? Have you done your market research to determine how much
they would be willing to pay for your product or service? Which customers do you want to attract? Is
your product or service aimed at a smaller group of customers willing to pay a higher price for a
premium offering? Or does it have mass appeal? In which case you might be looking more at budget
pricing.

Competition: You need to analyse your competition; and their pricing structure. Because you can
bet your bottom dollar that’s exactly what your potential customers will be doing. That’s not to say
you should always price match; indeed this can be a risky policy for small businesses as competitive
pricing results in a narrower profit margin, making your business vulnerable if costs rise. As a smaller
business think about value pricing, what are you offering that your competitors are not?

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Costs: A fundamental consideration in pricing is that you need to cover your costs and make a profit.
After all, we’re all in business to make money. How much does your product cost you? Don’t forget
that the cost of a product is more than the actual cost of an item, you’ll need to factor in your
overheads. Here at Johnston Associates South we can help you determine the prices you should be
setting for your product or service by ensuring you have a fuller understanding of your costs and
overheads.

Only by integrating these three, a sustained competitive advantage can exist. Ohmae refers to these
key factors as the three Cs or strategic triangle.

Customers have wants and needs. The company recognises these and offers a basic product. To
cater to their expectations and also to differentiate from competitors, companies try to offer
differentiated products. Similarly, competitors attempt to offer differentiated products to generate
profits and growth.

There is also a new 3 Cs model emerging which centers on sustainability. This model is:

 Capability
 Consistency
 Cultivation

The Customer

Clients are the base of any strategy according to Ohmae. Therefore, the primary goal is supposed to
be the interest of the customer and not those of the shareholders for example. In the long run, a
company that is genuinely interested in its customers will be interesting for its investors and take care
of their interests automatically. Segmentation is helping to understand the customer.

Segmenting by objectives

The differentiation is done in terms of the different ways that various customers use a product.
Customer thinking is not one of the prime functions for consideration.

Segmenting by customer coverage

This segmentation normally emerges from a trade-off study of marketing costs versus market
coverage. There appears always to be a point of diminishing returns in the cost versus coverage
relationship. The corporation’s task is to optimize its range of market coverage, geographically and/
or channel wise.

Segmenting the market once more

In fierce competition, competitors are likely to be dissecting the market in similar ways. Over an
extended period of time, the effectiveness of a given initial strategic segmentation will tend to
decline. In such situations it is useful to pick a small group of customers and reexamine what it is that
they are really looking for.

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A market segment change occurs where the market forces are altering the distribution of the user-
mix over time by influencing demography, distribution channels, customer size, etc. This kind of
change means that the allocation of corporate resources must be shifted and/ or the absolute level of
resources committed in the business must be changed.

The Competitors

Competitor based strategies can be constructed by looking at possible sources of differentiation in

functions such as: purchasing, design, engineering, sales and servicing. The following aspects show
ways in order to achieve this differentiation:

Making it big in the industry

Hito-Kane-Mono

A favorite phrase of Japanese business planners is hito-kane-mono, standing for people, money and
things. They believe that streamlined corporate management is achieved when these three critical
resources are in balance without surplus or waste. For example: Cash over and beyond what
competent people can intelligently expend is wasted. Of the three critical resources, funds should be
allocated last. The corporation should firstly allocate management talent, based on the available
mono (things): plant, machinery, technology, process know-how and functional strength. Once these
hito (people) have developed creative and imaginative ideas to capture the business’s upward
potential, the kane (money) should be given to the specific ideas and programs generated by the
individual managers.

The Corporation (The industry)

Selectivity and sequencing

The corporation does not have to excel in every function to win. If it can gain a decisive edge in one
key function, it will eventually be able to improve its other functions which are now average.

Make or buy

In case of rapidly rising wage costs, it becomes a critical decision for a company to subcontract a
major share of its assembly operations. If its competitors are unable to shift production so rapidly to
subcontractors and vendors, the resulting difference in cost structure and/ or in the company’s ability
to cope with demand fluctuations may have significant strategic implications.

In essence, the company should seek to stay ahead of competition by either outsourcing some of its
activities that are quite costly but do not have direct value addition or it should apply backward
integration techniques for its core business areas.

Price positioning
Price positioning is the act of setting a price on a particular product/service that is within a specific
price range. The price positioning shows where a product is positioned as regards to its competitors

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in a particular market as well as to the customer’s perception. With price positioning, you will know
whether the product is viewed as cheap (low-priced) or expensive high-priced). Price positioning is
significant to businesses that are trying to persuade customers to buy a certain product/service.

When choosing the price, you should therefore consider the following criteria:

 Credible/believable
 Compelling to the target customers
 Differentiated from competitors
 Brands can be positioned on different attributes such as functional benefits,
emotional benefits, self-expressive benefits, heritage, personality and sensory assets.

3 price positions

 Penetration Pricing is the favoured alternative when a business is trying to attract

a new customer and convince to try the new offering by initially providing a lower
price. In doing so, it helps a new product/service enter the market and entice
customers away from rivals. The aim of a price penetration strategy is to convince
customers to try a new product and create a market share with the expectation of
keeping the new customers when prices go back to normal levels.
 Neutral Pricing is the most common strategy and preferred option when the
market has fierce competition and little differentiation among competing offers.
Prices are set so that customers are somewhat indifferent between your product and
your rival’s product after considering all features and benefits, including price.
 Skimming Pricing is the opposite of penetration pricing. In price skimming, a
business sets the initial price high and then lowers it over time. During the new
product launch, when companies skim, they sell to customers with a high
willingness-to-pay. As the demand of the first customers slows down, the company
lowers the price to attract another tier of customers.

Roles of sales force in pricing

Sales management comprises the sales force, operations and practices to make the business reach its
target sales. Altogether, the management keeps up with the changing business trends of the industry
to stay ahead of the competition.

Sales Management Get Involved in the Pricing

 Identify market trends like what is selling the most

 Know what the competitors’ prices
 Affordability of the consumers
 Review old accounts to keep track of accurate pricing
 Inform guidelines to find the best customer pricing
 Educate sales force with value-based pricing and negotiations
 Analyse contracts and provide recommendations

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Sales Analytics

With every sales transaction, businesses’ are generating crucial data on customer purchases.
Including the ability to highlight the hottest item today. Taking into consideration what’s going to be
popular to shoppers tomorrow. Also, what’s not working so well. Additionally, this helps the pricing
team and sale manager plan any price changes for new products and launches. What’s more, it keeps
the sales manager up to date on performance charts, pipeline and monthly sale goals.

Sale Pipeline

A sale pipeline is a tool used by sales. In other words, it’s a progressive line of communications and
actions to monitor and track different customers along a sales process: i.e., from the initial prospect
to final sale. The pipeline helps sales to understand what the buyer wants. In essence, pipeline stats
such as quote to book or won or lost sales help the pricing team understand what prices are
converting and what prices customers are rejecting.

 Observations and inputs of the sales manager on customers’ habits and feedback can
be a valuable tool for the pricing team to plan any future pricing strategy or structure
for new and existing products.
 Field sales input gives the pricing team a much better picture of the market which
they then use to improve price positioning and new product pricing.
 Understanding the parameters that influence the buyer’s decision to buy from the
business can help the sales manager and pricing team set optimal prices by product
and segment.

Auction Sale
An auction sale is a public sale. The goods are sold to all members of the public at large who are assembled in
one place for the auction. Such interested buyers are the bidders.

The price they are offering for the goods is the bid. And the goods will be sold to the bidder with the highest bid.

The person carrying out the auction sale is the auctioneer. He is the agent of the seller. So all the rules of
the Law of Agency apply to him.

But if an auctioneer wishes to sell his own property as the principal he can do so. And he need not disclose this
fact, it is not a requirement under the law.

Rules of an Auction Sale

As we saw previously, the rules regarding an auction sale are found in the Sale of Goods Act. Section 64 of the
Act specifically deals with the rules governing an auction sale. Let us take a brief look.

1) Goods Sold in Lots

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In an auction sale, there can be many goods up for sale of many kinds. If some particular goods are put up for
sale in a lot, then each such lot will be considered a separate subject of a separate contract of sale. So each lot ill
prima facie be the subject of its own contract of sale.

2) Completion of Sale

The sale is complete when the auctioneer says it is complete. This can be done by actions also – like the falling
of the hammer, or any such customary action. Till the auctioneer does not announce the completion of the sale
the prospective buyers can keep bidding.

3) Seller may Reserve Right to Bid

The seller may reserve his right to bid. To do so he must expressly reserve such right to bid. In this case, the
seller on any person on his behalf can bid at the auction.

4) Sale Not Notified

If the seller has not notified of his right to bid he may not do so under any circumstances. Then neither the seller
nor any person on his behalf can bid at the auction. If done then it will be unlawful.

The auctioneer also cannot accept such bids from the seller or any other person on his behalf. And any sale that
contravenes this rule is to be treated as fraudulent by the buyer.

5) Reserve Price

An auction sale may be subject to a reserve price or an upset price. This means the auctioneer will not sell the
goods for any price below the said reserve price.

6) Pretend Bidding

But if the seller or any other person appointed by him employs pretend bidding to raise the price of the goods,
the sale is voidable at the option of the buyer. That means the buyer can choose to honor the contract or he can
choose to void it.

7) No Credit

The auctioneer cannot sell the goods on credit as per his wishes. He cannot accept a bill of exchange either
unless the seller is expressly fine with it.

Online Auctions
An online auction is a service in which auction users or participants sell or bid for products or services via the
Internet. Virtual auctions facilitate online activities between buyers and sellers in different locations or
geographical areas. Various auction sites provide users with platforms powered by different types of auction
software.

An online auction is also known as a virtual auction.

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Online auctions mirror traditional auctions and usually involve multiple bidder participation. In both scenarios,
bidders and sellers buy and sell tangible and intangible products and services. Starting bids are low but increase
at steady rates to meet market demand and item popularity. The time span of an online auction ranges from one
to 10 days for items offered 24/7 worldwide.

Online auctions are a widely accepted business model for the following reasons:

 No fixed time constraint

 Flexible time limits
 No geographical limitations
 Offers highly intensive social interactions
 Includes a large numbers of sellers and bidders, which encourages a high-volume online
business

Online auctions include business to business (B2B), business to consumer (B2C), and consumer to consumer
(C2C) auctions. Ebay is the best example of an auction site that uses all three methodologies.

The online auction business model continues to evolve according to market needs. Examples include eBay,
WebStore, OnlineAuction and Overstock. Ebay and other providers encourage legitimate bidding activity
through bidder block lists. EBay also offers Dutch auctions for large inventories, where auction bidders pay
according to an item’s highest sale price.

Ethical aspects of B2B pricing

Pricing a product ethically is a major decision for any business. Businesses who use ethical pricing
strategies to sell their products and earn a profit are far more respected than those that hurt and
defraud competitors or even consumers. To practice ethical pricing, you need to be able to spot the
ethical issues that hinder fair pricing.

An ethical pricing strategy goes beyond simply following the law. Similarly, not all unethical pricing
strategies are fraudulent or illegal. Ethical decisions are difficult sometimes because there isn’t a
defined line for morally right and wrong decisions. As with many ethical problems in business, we
need to take a step back, and view our decisions as a greater part of the business community, and
set ethical standards for ourselves.

Price fixing

The principal ethical issues that arise in B2B pricing decisions are anti-competitive pricing, price fixing,
price discrimination, and predatory pricing or dumping. For starters, anti-competitive pricing arises
where a group of producers collude to raise prices above the level that would apply in a freely
operating market.

Collusive tendering

Another instance of unethical pricing elaborately discussed in the book is collusive tendering, which
occurs where there is ‘an exclusive agreement between competitors either not to tender, or to tender
in such a manner as not to be competitive with one of the other tenderers.’ You may only have to
look around to find the malaise in the construction and defence sectors, as also in a wide-range of
government procurement arrangements.
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Price discrimination: Anti-favoritism

Price discrimination is the strategy of selling the same product at different prices to different groups
of consumers, usually based on the maximum they are willing to pay. The practice also surfaces in
hiding lower priced items from customers who have a higher willingness to pay. This one is a little
tricky, because it is socially accepted in some cases, yet rejected in others.

Bid rigging: Favoritism

This one’s more for the proposal crows, but bid rigging involves promising a commercial contract to
one group, even though you make it look like multiple parties had the opportunity to submit a bid.
Not only is this a moral no no, but it’s also one of the few the government follows up on, especially
within their own ranks, because of the number of bids and contracts the government deals with on a
yearly bases. This practice hurts consumers considerably, because the best producer doesn’t receive
the work necessarily.

Supra competitive pricing: Monopoly gouging

Sometimes the value that consumers place on a good is much greater than the cost of producing that
good. In such cases, there is controversy about whether the corporation is justified in charging a
much higher price and matches the perceived value. This situation can take place during a shortage,
such as the price of food or fresh water after a hurricane, or when a certain product is the only one of
its kind available. Pharmaceuticals and the patents that surround them are a great example.

Producers in these instances can charge an exorbitant amount of money, but should they? I think
we’d agree that setting skyrocketing prices for food or generators following a hurricanse is wrong
(and some states have laws against it), but most software costs are relatively cheap compared to the
value provided to a customer. Very different contexts, but more generally, some consider taking
advantage of consumers’ needs unethical, while others feel like it’s an inevitable result of a free
market and a just reward for innovation.

Price skimming: Discriminating through time

Once again, another shady area. Price skimming is when the price for a product is first sold at a very
high price and then gradually lowered. The goal here is pretty obvious, producers want to capture
each step on the demand curve; consumers who are willing to pay more buy the product first, and
then a new groups’ purchases are triggered with each decrease in price.

Pricing: More ethics than legality

There is a general consensus that marketing strategies must not infringe on values like honesty,
transparency, and autonomy. As such, the main crux of pricing ethics concerns the establishment of a
balance of power (through information) between the producer and the consumer. In a completely
free market, producers often have the upper hand because they are in control of their products and
processes. This potentially lead to unethical practices (using cheap or harmful materials, lying about
benefits, etc.), which are deemed harmful for society as a whole.

Interestingly enough though, even with this possibility only a handful of pricing practices are
regulated by the government, mainly because you’re not really sure someone had broken a pricing
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law until you see results. For example, while predatory pricing, aka pricing extremely low to drive
competitors out the market, is illegal, it’s difficult to prove that the price decreases had such an
intention and were not simply the result of competitor-based pricing. It’s like telling a child that he
can have a cookie only if he finishes his vegetables, but with no way to discern if the kid ate the peas
or if they were slipped to the dog. Essentially, most laws blindly attempt to curb motivations for doing
things, rather than results.

Sales Process
The 7 Steps of the Sales Process

1. Product Knowledge

This step is fairly straight forward, but it is also the great undoing of many a technical expert turned sales
person. When one is extremely well versed in a particular product especially a technical one, it is easy to get
caught up in a monologue of all the great features it provides.

The technical expert turned sales person is so eager to explain how the product works or why it’s unique that the
benefits to the customer are left out of the discussion. Never assume that a prospect will easily link a feature to a
benefit. That relationship must be stated clearly (something done in the presentation step 4, after the needs
assessment step 5). The acquiring of product knowledge for a “technician” therefore, is less about the features
of the product itself, and more about how the customer will benefit from those features. When discussing
product, the technicians mantra should be; “So what?” Consider those two words to be what the prospect thinks
every time a feature is mentioned, and re-learn your product from that perspective.

2. Prospecting

Prospecting, just as the word implies, is about searching for new customers. Like product knowledge, this step
may seem fairly straight forward but upon closer examination it becomes more complex. The key to prospecting
effectively is knowing where to dig and what to look for. It’s also important to distinguish between a lead, a
prospect, and a qualified prospect. The most important element in this step is to create a profile of existing
customers. This may have been done at your company, but have approach tactics (step3) been tailored to match
each profile. For instance, you may have identified the following major market segments: State Governments,
County Governments, Consulting Firms, Federal Agencies, Utilities, Universities, but have you fully profiled
each of these in order to adjust marketing tactics appropriately? A direct mail, seminar invitation might work
well to generate State Government leads, but will it be effective in developing Consulting Firm leads? For each
market segment do you really know what the ideal customer looks like? These questions should be answered
fully in the “Tactics” portion of a marketing plan.

In the broadest sense, prospecting is an ongoing process that everyone in the company (particularly the sales
force) should be involved in. This simply means everyone should have their “prospecting radar” up when they
are out and about in the world. Very often, a great lead turned customer was first discovered after being heard or
seen in the news at a party, or event, etc.

3. The Approach

This is where the rubber meets the road in the sales process. For our present purposes lets consider the approach
in the context of a sales call rather than lead generation (i.e. the difference between a mass mailing and a
telephone call). This is the step where you begin to build a relationship and the intelligence gathering continues
(it started with prospecting). A good approach is crucial to sales success because it will either identify you as a
bothersome salesperson and cause a prospect’s guard to go up, or it will identify you as an obliging salesperson
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with something of value to offer. (There is probably a middle road too, but you get the idea.). Consider the
example of tele-marketers selling a seminar:

Their product is a seminar, about which they presumably have sufficient knowledge. They prospect by scanning
the house lists for appropriately titled leads, (generated by earlier prospecting efforts). They approach by saying
“I’m Jay from XYZ and I’m calling to follow up on an invitation to a seminar that we mailed to you last week.
Do you recall receiving it?” Then the dialog begins, often it’s perfunctory, other times however it can be
extremely informative. The difference more often than not depends on how astute and articulate the caller is.
What do you think is good about this approach? What do you think is bad?”

Quite often the type of call one makes is a follow up to some action i.e. seminar attendance, brochure mailed,
etc. Technically these calls are part of follow up step 7, but let us address them in the context of a sales
approach. What would be a good approach for each of the above follow up actions? Think about eliciting
information and advancing the sale (closing, step 6). What would be a good approach for a cold call?

Additional Note on recording information: Regardless of the type of call or the results, it is important to take
detailed call notes and schedule a subsequent action item, no matter what it is be it a week, a month, or a year
down the road. (One can invent a system of abbreviations to make this easier i.e. LVM = left voice mail.)
History notes are important for a variety of reasons, not the least of which is tracking where a prospect is in the
sales process, including what follow up is necessary and when. Noting that “packet was mailed” or “attended
seminar” or “inquired about model” is only half the information and not the most important. Why?

4. The Needs Assessment

This is arguably the most important step of the sales process because it allows you to determine how you can
truly be of service. To be a highly effective salesperson, that is to sell to the prospect’s needs, you first have to
understand what those needs are. This means you must think in terms of solving a prospects problem. The only
way to do that is by asking lots of questions. Does a health practitioner prescribe remedies before a thorough
exam? Asking good questions will not only help you determine what will best suit the prospects needs, but it
builds confidence, trust, and will very often help the prospect consider issues they may never have thought of.
This last point is powerful because it provides an opportunity to showcase features, which the prospects answers
led you to. What questions would you ask to illustrate how your product is different/better than a competitor’s.
Although intelligence gathering occurs throughout the sales process, it is at step four where it happens in
earnest. What other information would be important to gather at this stage? (hint: who’s who, referrals).

5. The Presentation

Remember the discussion in step one, focus on benefits rather than features? If you consider your
product/service in terms of how it benefits the customer, your presentation will be a focused and relevant
dialogue rather than a self aggrandizing monologue. Nothing is worse than a sales presentation which proceeds
from the sellers perspective. This is why the needs assessment is so important and why it will ideally flow in
and out of this step. A good needs assessment allows you to tailor your presentation to your audience, and keep
it interactive.

6. The Close

Eighty percent of sales are lost because a salesperson fails to close. Closing is about advancing the sales process
to ultimately get an order. What you are trying to sell at each stage may be different. For example, a close early
in the sales process may be to get an appointment to discuss your product/service, in that case you are selling an
appointment not a widget. In a later stage you might need to meet with a committee, in that case what you are
selling is a meeting. Seeing the sale process in this light takes a little pressure off of each encounter and makes
things a bit more manageable. But don’t be lulled into complacency, you must ultimately ask for the order and

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Mob No: 8130402515
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no sales conversation should ever end without an agreement to some next step. Do not be satisfied with “we’ll
get back to you”, where is the agreement in that? What could you say in response to such a remark in order to
advance the sale?

In large part, closing is about discovering obstacles. Have you heard these before: “I’ll need to think about it.”,
“It’s too expensive.”, “Let me run it buy some other people.” “Sounds good but I’ve already got one.” What
could you say to overcome these objections?

There are lots of ways to close, indeed closing a sale has become a science unto itself. Books have been written
on this topic alone. But there is one elemental truth – if you don’t ask you don’t get. Just for fun, following is a
sampling of a few closing techniques from among the many:

The Ask For It Close. “What do we need to do to get this model into your organization?”
— The If-Then Close. “If I could demonstrate how an XYZ model provides you with, (things you know are
important based on the prospect needs assessment) then would you be willing to… demo, rent, buy, switch, etc.”
— The Process Of Elimination Close. “So you like the model, you have use for it, it’s not too expensive!”
— The Either Or Close. “Will that be cash or charge?”
— The Lost Puppy Close. “I guess I didn’t do my job very well.”

Additional note: The question “How much does it cost?” Is a great buying signal yet it is a question you want
to avoid early in the sales process. What could you say to defer that question politely? When you do mention
price, don’t be afraid that they are too high, say it with pride. Don’t forget to ask for the referral.

7. Follow-up

Good follow up will double your closing ratio. When a sales person makes contact with a prospect a relationship
has been built, and follow up is how it is nurtured. Staying at the forefront of a prospect’s mind requires
persistence and should not be confused with being bothersome. This is why it’s important to get agreement on
some next step each time there is contact. Follow up therefore should never end. The pace may slow but it will
never end. When a sale is made, then a new type of follow up begins.

Follow up conversations are best handled by the salesperson who started the relationship. Who else can better
gauge a prospect’s “willingness to buy”, or pick up where “we last left off”. This means that detailed notes must
be kept on each prospect with particular emphasis on their “state of mind”. It is unwise and ineffective to keep
track of this information anywhere other than a centralized database.

Additional note: It’s important to hold some follow up ammunition in reserve. Overwhelming your prospects
with every piece of information you possess on their first request hampers your ability to stay in touch. Having a
stable of collateral materials gives you reason to follow up.

Personal Selling: Purpose, Types, Limitations

Personal selling happens when companies and business firms send out their salesmen to use the sale force and
sell the products and services by meeting the consumer face – to – face. Here, the producers promote
their products, the attitude of the product, appearance and specialist product knowledge with the help of their
agents. They aim to inform and encourage the customer to buy, or at least trial the product.

For example, salesmen go to different societies to sell the products. Another example is found in department
stores on the perfume and cosmetic counters. A customer can get advice on how to apply the product and can try
different products. Products with relatively high prices, or with complex features, are often sold using personal

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selling. Great examples include cars, office equipment (e.g. photocopiers) and many products that are sold by
businesses to other industrial customers.

Types of Personal Selling

Retail Selling: Retail selling the product the consumers through retail store or door to door visit .in door sales
persons work at the store and they deal with the customers visiting the sorters and outdoor sales personal visit
the potential costomers in their homes or offices and persuade them to buy the product.

Trade Selling: It involves selling the product to the retailers and wholesellers trade saales personal made
regular contact to the wholeseller and retailers and receved bulk order from them, trade sales personal work
either for wholeseller or manufactures.

Missionary Selling: In missionary selling missionary sales personal create demand for the product they do not
directly sales the product .they visit retial staores and incourage them to place orders from the deailers and
wholesellers they work for manufactures.

Industrial Selling: It involves selling the capital item like equipment ,machineres to the industrial users
,industrial sales personal are useually very well educated experience and train people they provides technical
information and assitances.

Advantages of Personal Selling

 It is a two-way communication. So the selling agent can get instant feedback from the
prospective buyer. If it is not according to plan he can even adjust his approach accordingly.
 Since it is an interactive form of selling, it helps build trust with the customer. When you are
selling high-value products like cars, it is important that the customer trusts not only the
product but the seller also. This is possible in personal selling.
 It also is a more persuasive form of marketing. Since the customer is face to face with the
salesperson it is not easy to dismiss them. The customer at least makes an effort to listen.
 Finally, direct selling helps reach the audience that we cannot reach in any other form. There
are sometimes customers that cannot be reached by any other method.

Disadvantages of Personal Selling

 It is a relatively expensive method of selling. High capital costs are required.

 Also, it is an extremely labour intensive method. A large sales force is required to carry out
personal selling successfully.
 The training of the salesperson is also a very time consuming and costly.
 And the method can only reach a limited number of people. Unlike TV or Radio ads it does
not cover s huge demographic.

Merits:

The strength of personal selling is measured in terms of the merits to its credit as a distinct form of promotion.
These are:

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1. Flexibility and adaptability:

Personal selling by its very nature is capable of providing more flexibility, being adaptable. A salesman can
adjust’ himself to the varying needs, moods, motives, impulses, attitudes and other behavioural variables of the
prospects with a view to communicate effectively and effect the sales for the unit.

2. Minimum waste:

The efforts put in by the salesman are highly focused on a single customer or a small group of customers. The
message is likely to reach them without distortion and diffusion. This is perhaps the greatest merit in contrast to
advertising where the ad message is released en-masse resulting in message diffusion and distortion causing
more wastage or promotional efforts.

3. Acts as a feed-back:

The salesman is, in effect, a researcher. Being in direct contact with the consumers, he has the advantage of
collecting and transmitting the relevant market information affecting his company.

Such timely, authentic and verifiable data is the basis of vital decisions, strategies, and tactical adjustments.
Thus, he feels the pulse of the market that is ever changing.

4. Creates lasting impression:

The personal selling process is so direct and penetrating that lasting business relation can be developed between
the selling house and the clientele. In case of advertising, it acts like a flash of a thunder-bolt from the blue. The
light though very powerful, lasts only for a few seconds. The light of salesmanship is like an electric current that
lasts longer.

5. Pulls through logical sequence:

The personal selling follows a logical selling process which matches to the reasoning of one and all. A salesman
pulls through the customer in the step-by-step selling process starting with attention and ending with satisfaction
with interest, desire, conviction and action juxtaposed between.

Further, he detects loss of consumer attention and interest and brings the consumer back to the track by
repetitions and reinforcements.

Theories of Personal Selling

There has been a lot of research by behavioural scientists and marketing scholars to examine whether selling is
an art or science and various theories have been developed to explain the buyer-seller buying process. The
process of influencing others to buy may be viewed from four different angles on the basis of different theories:
thus there are four theories of selling viz.

1. AIDAS theory of personal selling

2. “Right Set of Circumstances” theory of selling
3. “Buying Formula” theory of selling
4. “Behavioral Equation” theory
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The first two of the four above-mentioned theories, are seller oriented and the third one is buyer’s oriented. The
fourth one emphasizes the buyer’s decision process but also takes the salesperson’s influence process into
account.

AIDAS Theory of Selling:

This theory, popularly known as AIDAS theory (attention, interest, desire, action and satisfaction), is based on
experimental knowledge. This theory is very common.

According to this theory potential buyer’s mind passes through the following stages:

1. Attention Getting:

It is the crucial step in the AIDAS process. The objective is to put the prospect into the right state of mind to
continue the sales talk. The salesperson has to convince the prospect for participating in the face-to-face
interview. A good beginning of conversation may set the stage for a full sales presentation. The salesperson
must apply his social and psychological skills to draw the attention of the prospect to his sales presentation.

2. Interest Creating:

The second step is to intensify the prospect’s attention so that it involves into strong interest. To achieve this, the
salesperson has to be enthusiastic about the product. Another method is to hand over the product to the prospect
and let him handle it. Brochures and other visual aids serve the same purpose. Throughout the interest phase, the
hope is to search out the selling appeal that is most likely to be effective.

3. Desire Stimulating:

After the attention getting and creating interest, the prospect must be kindled to develop a strong desire for the
product. This is a ready-to-buy point. Objection from the prospect will have to be carefully handled at this stage.
Time is saved and the chances of making a sale improved if objections are anticipated and answered before the
prospect raises them.

4. Action Inducing:

If the presentation has been perfect, the prospect is ready to act, that is, to buy. Very often there may be some
hesitation on the part of the prospect at this stage. The salesperson should very carefully handle this stage and
try to close the deal effectively. Once the buyer has asked the seller to pack the product, then it is the
responsibility of the seller to reassure the customer that the decision was correct.

5. Satisfaction:

The customer should be left with the impression that the salesperson merely helped in deciding. After the sale
has been made, the salesperson should ensure that the customer is satisfied with the product. The salesperson
should sense the prospect’s mind and brief his talks.

“Right set of circumstances” Theory of Selling:

It is also called the “situation-response” theory. It has its psychological origin in experiments with animals. The
major emphasis of the theory is that a particular circumstance prevailing in a given selling situation will cause
the prospect to respond in a predictable way. The set of circumstances can be both internal and external to the
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prospect. This is essentially a seller-oriented theory and it stresses that the salesman must control the situation in
such a way as to produce a sale ultimately.

“Buying Formula” Theory of Selling:

The buyer’s needs or problems receive major attention, and the salesperson’s role is to help the buyer to find
solutions. This theory purports to answer the question: What thinking process goes on in the prospects’s mind
that causes the decision to buy or not to buy? The name “buying formula” was given to this theory by strong.

The theory is based on the fact that there is a need or a problem for which a solution must be found which
would lead to purchase decision, as shown below:

Whenever an individual feels a need, he is said to be conscious of a deficiency of satisfaction. The solution will
always be a product or service or both and they may belong to a producer or seller. The buyer develops interest
in buying a solution.

In purchasing, the “solution” involves two parts:

1. Product or service or both,

2. The brand name, manufacturer or the salesperson of the particular brand name:

The product or service (Brand name) must be considered adequate to satisfy the need and the buyer must
experience a pleasant feeling or anticipated satisfaction. This ensure the purchase.

Behaviour Equation Theory of Selling:

This theory is a sophisticated version of the “right set of circumstances” and this theory was proposed by
Howard, using a stimulus response model and using large number of findings from behavioural research. This
theory explains buying behaviour in terms of purchasing decision process, viewed as a phase of the learning
process, four essential elements of learning processes included in the stimulus response model are drive, cues,
response and reinforcement, which are given below, in brief:

1. Drive is a strong internal stimuli that impel buyers’ response. Innate drives stem from
psychological needs and learned drives such as striving for status or social approval.
2. Cues are weak stimuli that determine when the buyer will respond. Triggering cues activate
the decision process whereas new triggering cues influence the decision process.
3. Response is what the buyer does.
4. A reinforcement is any event that strengthens the buyers’ tendency to make a particular
response.

Howard believed that selling effort and buying action variables are multiplicative rather than additive.

Therefore, Howard incorporated these four elements into a behavioural equation that is:

B=P×D×K×V

P = Response or internal response tendency, i.e. the act of purchasing a brand or a particular supplier.

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D = Present drive or motivation level

K = “Incentive potential” that is, the value of product or brand or its perceived potential value to the buyer.

V = Intensity of all cues: triggering, product or informational.

Industrial Sales force management

A salesperson not only communicates product information to customers but also relays the reactions
of customers towards company and its products to his employer. Hence, the management of sales
force is an important aspect of marketing management. It is concerned with the task of selection,
orientation training, supervision, motivation compensation and evaluation of the sales force of the
company.

Although in some organisation some of the above mentioned duties are assigned to the personnel
manager but in most cases it is the sales manager who is responsible for successful performance of
these functions.

Sales Force Management (SFM) is a sub-system of marketing management. It is Sales Management

that translates the marketing plan into marketing performance. That is why sales force management
is sometimes described as the muscle behind the marketing management. Actually, sales force
management does much more than serving as the muscle behind marketing management.

Sales managers in modern organization are required to be customer-oriented and profit-directed and
perform several tasks besides setting and achieving personal selling goals of the firm. Let us
understand briefly the sales force management, tasks involved in the sales force management. Sales
managers in modern organization are required to be customer- oriented and profit-directed and
perform several tasks besides setting and achieving personal selling goals of the firm.

A company takes into account its competitive setting, because this influences all its sales-related
policies; which in turn affects the formulation of strategies. Marketing plans are long-term and
strategic. Mostly, sales plan are short-term and tactical. A company may operate in pure competitive
environment which is hardly found in practice, but makes our understanding of other types of
competition more incisive.

In practice, we may encounter monopolistic competition which is most common, or oligopolistic

competition where there are, a number of competitors. Mostly, the qualitative personal selling
objectives respond to the competitive setting in which an organisation operates. Qualitative objectives
have a bearing on the sales job.

A company may have the objective to rely 100 per cent upon personal selling. It then needs a larger
and a trained salesforce. Another company relies more on advertising, and expects the salesperson to
provide just the support service, and order booking service. It may do well with an ordinary
salesforce, not so large in size.

Quantitative selling objectives also influence both the nature of the sales task on hand, and the size
of the salesforce. A larger sales volume target requires more effective and large-sized salesforce that

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covers the territory intensively. Sales-related marketing policies provide a framework within which the
salesforce performs.

In B2B marketing, the field sales force has always been critical; salespeople typically introduce
products/services directly to end users. Business customers increasingly want vendors to possess real
expertise in their specific industries/functions.

They expect salespeople to help solve business problems, not just sell widgets. In turn, many B2B
vendors have expanded product lines, added solutions specialists to help knit together disparate
products/services into integrated offers.

Step 1: Create Leads from CRM’s Management: According to a recent study, it has been observed
that 65 % of the B2B companies do not maintain a proper lead nurturing process. With the
overcrowded CRM systems, the team eventually ends up in storing the data in the spreadsheets.

Step 2: Integrate CRM with Marketing Automation Tool: In this stage, the marketing automation tool
can easily be integrated with the CRM. The effective lead process can be acquired by presenting
proper information to the sales team. Both the automation tool and the CRM combine to a single
system to perform a proper framework for the lead generation activities. They can be used as the
analytics or the elements can be customized for targeting suitable audiences.

Step 3: Prepare Real Time Insights: Different real time applications have been launched for
informing the sales team with instant alerts. The team can easily obtain the status and the activities
of the lead from the alerts. You can even track the individuals who have gone through your mails as
long as you use the Chrome browser. The sales professional can easily track whether the customer is
changing his requirement of job profile in the linkedIn and updating his current skills and positions,
whether a new lead has been generated through your website or not. Therefore, the team can easily
be aware whether the leads are matching the requirements or not and then act accordingly.

So, a B2B sales team being a part of the organizational strategy should focus on the lead nurturing
process. Online communities can be created keeping the niche focus in mind. The system engineers
and the product managers can directly connect with the salesforce team with the help of the
marketing automation tool. The communities can be well organized with the posts of the recent
topics. This will help the members to join the group discussion within the own community of the
organization instead of going to some external communities.

The social media activities can perform the role of a platform where new leads can be generated. For
measuring the return on investments the organization can use various products for tracking the
original source and the sales conversions. The strong content strategy of the social media accounts
can help the interested members to distribute them among the others. Trial and error method can be
used to check whether the content is attracting more leads to the organization or not. It can be
observed whether the prospects are turning into the customers or not. So, the B2B sales force team
can train their employees for assessing the salesforce community as well as to be proactive in the
online communities.

Management of sales consists of following:

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Recruitment is at the centre of an effective sales force. One approach in the selection is asking a
customer what characteristics they look for in a sales representative. Companies develop selection
procedure where behavioral and management skills are tested.

Training is essential to remain ahead of the competition. Sales force needs training before entering
the market as well as training at different stage of the product life cycle.

Supervision on sales force is decided on the profile of product portfolio. A general supervision is
maintained with respect to sales people dealing with potential clients. Another supervision is related
to efficient time management from preparation of client call to closing of the deal.

Motivation is a key aspect for management of the sales force. Here compensation plays an important
in driving up the motivational level. Compensation can be assigned based on sales quota. Other
motivational tools are social gathering and family outing.

Evaluation is essential to management of a sales force. Sales reports sent by the sales force serve a
good starting point of evaluation.

Art of negotiation and relationship marketing these two are the important aspects of successful sales
representative and long term benefit for the company.

Some of the metrics that are implemented in the sales force management processes are:

 Time management: Measures the tasks and time required for each task.
 Call management: Planning for customer interactions.
 Opportunity management: If the sales force management process is correctly
implemented, sales opportunity will be created.
 Account management: In case of multiple opportunities with a customer, the account
is to be measured by the tools, processes and objectives.
 Territory management: Managing sales territories is of utmost experience for
managing sales figures.

Major Steps in Sales Force Management:

1. Establishing Sales Force Objective:

Sales people must be given clear, feasible and attainable objectives.

2. Designing Sales Force Strategy, Structure, Size and Compensation:

(i) Sales Force Strategy:

This includes deciding the type of persons required, type of products added in product line etc.

(ii) Structure:

Strategy influences the structure.

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Recruitment & Selection of Sales Force

Right salesmen can help company achieve marketing objectives. Recruitment and selection are two important
decisions in sales force management that concern with ensuring the right type (right qualities, right
qualifications, and right experience) of sales personnel.

Problem of recruitment and selection arises when:

1. Starting a new company

2. Resigning and retiring of existing salesmen
3. Death of existing salesmen
4. Suspending of existing salesmen
5. Growth and development of company’s operations
6. Entering into new territories
7. Developing and introducing new products

Note that salesman is not only employee of a company, but he is its responsible representative; he is not dealing
only with selling products, but also with goodwill and reputation of company. A right salesman can create
positive effect on sales volume, profitability, customer satisfaction, dealer effectiveness, company’s goodwill,
promotional efforts, and so forth.

While recruiting and selecting salespersons, job analysis (consisting of job description and job specification) is
to be made for better selection. Recruitment and selection are interdependent decisions. Let us discuss both
terms separately.

Recruitment:

Recruitment means searching for prospective candidates and inspiring them to apply for the post. Recruitment
ends on the last day/date of receiving applications. Salesmen can be recruited through a number of sources.

Sources of Recruiting Sales Force:

Main sources, widely practiced in India, includes:

1. Advertisement
2. Other firms
3. Middlemen
4. Personal recommendations
5. Recommendation of existing staff
6. Special recruitment agencies
7. Private training institutes
8. Colleges and academic institutes, etc.

Types of sources to be used for recruiting the salesmen depend on certain criteria, like type of products to be
sold, types of customers to be served, paying capacity of company and type of remuneration plans, and other
relevant factors.

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Selection:

Selection means selecting the fixed number of suitable candidates from those who applied for the posts.
Selection process starts as soon as recruitment ends. Recruitment considers all applications received in a due
date while selection considers only the required number of most suitable candidates.

There is no ideal selection process that most companies can follow. Normally, for selecting salesmen, the simple
and short selection process is followed. However, some companies, when more salesmen are to be selected at
time, also follow lengthy and systematic selection process. Selection process depends on types of salesmen, cost
and financial position of company, time available, company’s objectives, and so forth.

Steps in Selection Process:

Systematic selection process consists of following steps:

1. Receiving applications
2. Screening applications
3. Preliminary interview
4. Written tests
5. Final interview
6. Medical examination
7. Final selection
8. Appointment and induction

Important Conditions:

At the time of final selection or appointment of salesmen, following conditions must be made clear:

1. Time to resume the duty

2. Company’ marketing objectives, policies, and strategies
3. Duties and restrictions
4. Place of work
5. Reporting system or procedure
6. Bill collecting system
7. Remuneration and incentives
8. Training and expenses

Training Sales Personnel

Sales organizations have their own option over the variety of methods and tools of training used for the sales
force, depending on its needs and resource constraints. These salesmen training methods may be divided into
two individual training methods and group training methods.

Salesmen Training: Individual Methods

Individual sales training methods are micro level training from the angle of each salesman. It is highly
personalized which involves direct interaction between the trainer and the trainee. This method is most suitable
where sales-force to be trained is limited and needs individual intensive attention. There are two such methods
namely — on the job training and programmed instruction method.

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1. On the job training

In this method, the salesman is given the opportunity of observing and performing the selling job of a typical
salesman. Keen observation and active participation are two important aspects of learning the job. The trainer
observes the performance of the trainee. The trainer corrects him in case of need. This method is also known
as field training method.

2. Programmed instruction method

In programmed instruction method, the total subject-matter of training is broken down into chunks called
‘Frames’ — the numbered instructional units. Each frame contains specific points, questions. problems and
solutions. The trainee is expected to learn through these frames by solving the problems and then verifying them
with solutions. He repeats the frame till he gets correct solutions to his problems.

Salesmen Training: Group Methods

1. Induction and orientation training

When a newly appointed employee reports for work, he must be assisted to get acquainted and adjusted with
work environment. Thus, it is necessary to give him a friendly welcome when he joins the organization, to get
him introduced to the organization and to help him to get a general idea about the rules and regulations, working
conditions, etc.

2. On-the-job training

This is considered to be the most effective method of training salesmen. Under this method, the salesperson is
trained on the job at his place of work. One of the easiest ways is to give him on-the-job coaching. This enables
him to get training under the same working conditions and with the same process, materials and equipment that
he will be using for the job execution.

The responsibility of training may be given to his immediate supervisor who knows exactly what he should
learn.

3. Off-the-job training

When the job is complicated and requires much technical information or when on-the-job experience has to be
supplemented by further knowledge and experience, the employees are required to attend training courses in
institutions outside the organization.

Training in a class-room is preferable as the atmosphere is congenial and there would be no fear of interruption
of work. In the classroom, actual working conditions may be reproduced to enable the trainees to acquire actual-
job experience.

Another increasingly popular technique of training is simulation experience. The widely used ‘case study’
method is a means of simulating experience in the classroom. Similarly, there may be group discussions,
brainstorming sessions, and seminars on various problems relating to the job.

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4. Organization of Lectures

Under this method, lectures by experts on various aspects of selling are organized by the firm for the benefit of
the salesmen (to make the salesmen know the principles of selling). The salesmen attending the lectures take
down notes of the lectures. They also take part in the group discussions, seminars and written tests that follow
the lectures.

The main advantages of this method are that salesmen get exhaustive information about the products, markets,
techniques of selling, etc., and it is an ideal method of imparting factual information. However, this method
suffers from a serious defect. That is, lectures provide the salesmen only theoretical knowledge of salesmanship.
They do not provide practical training to the salesmen.

5. Conducting of Sales Conferences and Seminars

Under this method, the salesmen are invited to attend the sales conferences at periodical intervals. In such
conferences, selling techniques, selling policies of the firm, complaints received from the customers,
competition faced by the firm, company’s advertising programme, difficulties faced by the salesmen, etc., are
discussed.

Merits of conducting sales conferences and seminars

The chief merits of this method are given below:

1. It helps the salesmen to think logically and take balanced decisions.

2. It facilitates exchange of ideas and experiences among the participants. This exchange helps
to broaden the knowledge of the salesmen.
3. Salesmen are able to get much information about the latest techniques of selling.
4. It brings administrative staff and sales staff together. This contributes to cordial relationship
between the staff of the two departments.
5. It helps to find out solutions by group discussions, for problems for which solutions could not
be found out by each individual salesman.

However, this method also suffers from certain limitations. It is a slow and time-consuming method, besides
being very expensive.

6. Supplying Sales Manuals

Under this method, sales manuals are prepared and distributed to the salesmen for their guidance. A sales
manual is a book prepared by experts to meet the specific needs of the salesmen. Sales manuals contain detailed
information, such as the history of the firm, description of the job, product specifications, their prices, sales
policies of the firm, selling techniques, etc.

The chief advantages of this method is that the sales manuals serve as ready reference material for the salesmen
at work. However, the preparation of sales manual will involve much expenditure.

7. Arranging Correspondence Training

Under this method, postal tuition to the salesmen working in different sales territories is given. The training
office of the firm prepares lessons on principles and techniques of selling and sends the lessons to the salesmen

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by post. The salesmen study these lessons thoroughly. Doubts if any, are referred to the training office by the
salesmen by post and clarifications for the doubts raised are received from the training office by post.

8. Sending the Salesmen to institutions Offering Courses on Salesmanship

Under this method, the firm sends the salesmen to institutions which conduct special courses on salesmanship.
The tuition fees and other incidental expenses of the salesmen attending such courses are borne by the firm. This
method is, no doubt, useful. But it is practicable only in countries like the U.S.A., the U.K. etc., where there are
a large number of institutions offering specialized courses on salesmanship.

In countries like India where there are not many specialized institutions offering such courses, this method may
not be suitable.

9. Arranging for Apprenticeship

Under this method, a newly appointed salesman is made to work as an apprentice under a senior salesman to
learn the art of selling. The newly appointed salesman works under the senior salesman, observes his work and
learns the art of salesmanship.

This method helps the salesman to observe and learn the work. But the serious drawback of this method is that
some seniors may not teach all the tricks of the trade to the apprentice.

10. Arranging for Field Training

Under this method, the salesmen undergoing training accompany the trainer (i.e., an experienced senior
salesman) who actually approaches the prospects with catalogues,
products, etc. The trainee salesmen observe the various steps of the sales talk made by the trainer.

The trainer, after the conclusion of his sales with the prospects, explains to the trainee salesmen the various
stages in his sales talk and the selling points he emphasized during the sales talk. After this, the trainee salesmen
are asked to approach the prospects and do the job of sales talk, while the trainer observes the whole process.

This gives practical training to the salesmen. However, it is a time consuming process besides being costly.

11. Provision of Visual Training

Under this method, through visual training aids, training is given to the salesmen. Visual, audio-visual and audio
aids, such as slides, etc., are used to demonstrate the steps involved in the selling process to the salesmen.
Pictures depicting the various stages of the work of a successful salesman are shown to others during certain
hours once or twice a week. Tape recorders, record players, etc., are used to record the talks of the salesmen so
as to make them improve their style of speaking.

Advantages

Visual aids have the following advantages:

1. Topics which cannot be made clear by explanation can be made very clear through visual
aids.
2. Visual aids create more interest in the trainees.
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3. They give some sort of practical knowledge to the trainees.

12. Brainstorming

Under this method, five or seven trainee-salesmen are grouped under the chairmanship of an experienced
salesman. The chairman gives problems to the trainees and the trainees try to find out the solutions to such
problems and write the same on notebooks. Either the chairman or the top executives examine the answers and
give instructions wherever necessary.

13. Case Discussion Method

The case discussion method is very effective because individual cases and problems are discussed between
seminar executives and salesmen. Before discussing the actual cases, some hypothetical cases are framed and
discussed at a higher level. The discussion is designed to involve all the salesmen with a view to finding suitable
solutions. Sales trainees should identify the problems and choose specific solutions from among the different
alternatives available to them.

Sales Force Motivation

Sales is one of the toughest jobs out there simply because of the number of rejections involved to reach a
sales target. You have to go against your better nature to make a sale.

You need guts to pick up the phone, not knowing what your potential customer might answer.

You need guts to approach someone whom you do not know, just to pitch your product.

And you need persistence to keep doing it time and time again, so that you become an excellent sales person.

Sales Motivation

On an average, only a few prospects out of hundred actually become clients. But because there are sales targets
for your sales staff, they have to keep approaching new customers so that they can achieve sales targets.
Because of this unsure and hectic life of sales, where performance is completely measurable against results,
your sales staff requires sales motivation from time to time.

here are various ways to provide sales motivation to your staff. One core method used for motivation of any
kind is “Recognition, Rewards and remuneration”. This can loosely stand for

 Recognition – Growing people in your organization

 Rewards – Rewarding them for their work and
 Remuneration – Offering incentives or salary hikes to appreciate them.

This article deals mainly with the objectives of sales motivation. There are numerous reasons that you will
want your staff motivated for sales. Sales motivation is not required only when the salesman is going through a
slump. Sales motivation is required at all times, and it becomes the culture of an organization to keep sales
force motivated.

Without further ado, let us check out the Objectives of sales motivation and why sales motivation is important.

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Objectives of Sales Motivation

1) To keep the spirits up

Due to the reasons mentioned above (cold calls, target pressure) a sales person might become demotivated and
disinterested much easier than any other employee in the organization. As a result, sales motivation is required
maximum in the sales department so that the sales staff has a positive spirit towards sales.

For example – If your sales employee is informed that he will be getting 3 months salary at once on over-
achieving a sales target, he will always have his spirits up because he has received hope from the company in
the form of remuneration or money he will be paid. This hope keeps his spirits up. Similarly, winning an award
or any other type of action can result in sales motivation of your employees, keeping the spirits high.

2) For the growth of the company and to achieve targets

This is a no brainer. If your sales force is positive towards the target they are asked to achieve, your organization
will get better revenues from sales. More the revenues from sales, more is the bottomline of the company and
more can be the future investments in better products or services.

There are many firms which have produced good products but have lost market share due to poor sales. Thus,
motivating your sales force is important for the growth of the company and there is actual profit when you are
investing in incentives for the sales force.

3) To show importance of sales in the organization

A reason for sales guys to be demotivated is that they don’t know whether they are in the right position in their
life. However, if you communicate to your sales employees, of their importance in the organization and how
they are helping this whole big machinery to move forward, the result will be a higher motivation of sales staff.
This ultimately helps the company move forward.

4) To make them brave

As I said above, it is not easy to keep meeting new customers and to keep pitching in front of people you have
never met before. In fact, over a period of time, the fear of rejection can paralyse sales people and they might
start resisting the sales process altogether. A little sales motivation in the form of the three R’s, can go a long
way in making the salesperson face their fears again and to be brave in front of stiff sales targets.

5) To improve co ordination within the team

A sales person might be frustrated or ignored when he is demotivated or when he is not achieving his sales
targets. In a high performance situation like sales, poor performance can affect an individual for the worse and
make him inferior to his high performing team.

Providing sales motivation and backing to the sales person (that such things do happen) can increase his
confidence. When the whole team is motivated, the bonding and co ordination between the team rises and they
help each other out, thereby helping your organization in the long run.

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6) To develop their skills

Sales motivation can help sales person to improve their skills so that they perform better for the organization.
These skills may be various such as their soft skills, their computer skills, their product knowledge, their
grooming or whatnot. In essence, if the sales person wants to perform better, and he is motivated to do that, he
will automatically improve his own skills.

7) To reach more customers and cover more territory

We always demand MORE from the sales person. We want more sales, we want more territory to be covered,
we want more dealers, we want more distributors etc. This naturally puts the sales person under too much
pressure.

Although pressure is negative in nature, sales motivation can be positive. Providing a bit of monetary incentives
will motivate the sales person to reach more customers and possibly convert them. At the same time, such an
approach will also help the company to cover more territory and perform better in new and old regions.

8) To introduce a new product in the market

Sales motivation in the form of incentives is most needed when the going is tough. Whenever a company enters
a new territory or brings a new product in the market, then the sales staff has to work very hard in convincing
their customers or their channel into buying the product.

At such times, sales motivation is important and should be in the form of remuneration as well as recognition.
This motivates the sales staff to perform better and capture more market share for the new product or market.

9) To maintain a sales pipeline

A motivated sales person is more likely to perform for a long period of time. This happens because the sales
person is reaching his targets and he can plan for the future. This is exactly what you want from a sales person.
Because of the fundamental of sales pipeline, we know that a sales person will always have a list of client which
are hot, normal or cold prospects.

However, it is the job of the sales person to find more and more prospects so that he can segment them and
target the hot prospects regularly. To maintain such a sales pipeline requires that the executives be motivated
regularly. Furthermore, by ensuring the maintenance of a strong sales pipeline, even the company will move
forward very fast. Aggression and results are two common factors of a successful sales department. If you
channel this aggression into building sales pipelines, you are sure to get better results.

10) To retain employees and reduce attrition

Demotivated people try to change their working environment and the best way to do so is to leave the company
and start fresh somewhere else. The total number of employees leaving the organization over a period of time is
known as employee attrition. If a company has a high attrition rate, it means their sales staff is not motivated
enough to stay back longer with the company.

On the other hand, a low attrition rate means that there is enough sales motivation in the staff and that they like
staying within the company. The objective of sales motivation is to reduce the attrition rate of the company and
to ensure that the sales staff stays longer with the company.

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When attrition happens, you have to recruit new employees in the company. These new employees come with
an associated cost because they have to be trained about the products and services ground up. Furthermore, they
will take time to settle in the organization and to start performing in terms of achieving sales figures.

This results in a lot of opportunity loss for the company. Hence, we can say that sales motivation is important
because it reduces the attrition in a company which is especially needed in the sales department where pressure
is high.

11) To perform in non season

Lastly, sales motivation in the form of remuneration or recognition is needed when the sales people have to
perform in non season. There are many brands which are seasonal. For example – Ice cream and Cola sales drop
drastically during the rainy season or during winters. At such time, the sales people have to be motivated to keep
performing.

In fact, during non seasons the motivation needs to be in form of rewards and recognition. Monetary motivation
does not help much at such times because even the sales people know that the targets are unlikely to be achieved
or are going to be very hard to achieve because it is non season. However, many companies have tried monetary
motivation as well and it has worked out for them during non season.

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Unit-4
Service Design and Development, Service
Blueprinting
New services can be of the following six types:

1. Radical innovations that are new to the world like guaranteed overnight courier delivery by
Federal Express
2. New services offered to customers having access to competitive products
3. New services offered to customers by a company which was not providing those services
earlier like Barnes and Noble booksellers offering coffee services
4. Service‐line extensions like an airline offering additional routes
5. Service improvements like augmenting hotel rooms with internet facilities
6. Style changes like changing the colour of the servicescape, redesigning the website, logo, etc.

Research published in BusinessWeek in 1993 indicated that only 56 percent of new products and services
remained in the market 5 years after those have been launched. Professor Robert G. Cooper wrote in
2001 that the primary reasons for failure of new products and services included:

1. No unique benefits offered

2. Insufficient demand
3. Unrealistic performance goals like market share, etc. for the new service
4. Poor fit between the new service and others within the organisation’s portfolio
5. Poor location
6. Insufficient financial backing
7. Failure to take the necessary time to develop and introduce the new service

Professors Henard and Szymanski wrote in 2001 that the primary reasons for success of new services are
that the new service:

1. Meets customer needs, has advantage over the competition, and is technologically
sophisticated,2. Has dedicated R&D, dedicated human resources and availability of
marketing, predevelopment, technological and launch proficiencies in the firm for new
service development and commercialisation, and3. Enjoys existence of the potential for
absorption in the market

Professor G. L. Shostack wrote in 1984 that as services are intangible, new service development system
should have the following four characteristics:

1. It must be objective, not subjective

2. It must be precise, not vague
3. It must be fact driven, not opinion driven
4. It must be methodological, not philosophical

As services are produced and consumed simultaneously, customers are heavily involved in the production and
consumption of services. Customers may be co-producing a service as in a self-service restaurant. Therefore,

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both employee and customer representatives must be a part of the new service design and development team
from the very beginning. For instance, some hotels involve their customers and service personnel in the design
of their hotel rooms besides architects, managers and other professionals.

Professor John T. Gourville wrote in 2004 that successful new product / services offer plenty of new benefits
while requiring little change in consumer behaviour. New offerings like Google became successful as it
provided a powerful search engine vehicle requiring no change in customer’s way of searching the Internet.

New Benefits Provided

Few Large

High Sure failures:DVORAK keyboard Long Hauls:Satellite Radio

Change in customer
Behaviour
Low Easy Sells:McDonald’s Vegetarian Menu Smash Hits:Google

Figure 18-1: Criteria for success of New Offerings

Stages in New Service Development

Professors Zeithaml, Bitner, Gremler and Pandit, have published the stages of new service development from
various sources in their book entitled “Services Marketing” in 2008.

Stage 1: Business Strategy Review

At this stage we must review and understand the vision, mission, values and strategic orientation of our
company. The vision of transporting goods, i.e., cargo service would be different from the vision of transporting
mail, i.e., courier service. In 1997, Michael Treacy and Fred Wiersema have written about three value
disciplines that companies must choose from.

These include:

(i) The operationally excellent firm, which is efficient and delivers services at the lowest cost to the customer,

(ii) The product/service leader, i.e., offering innovative services under a strong brand.

(iii) The customer intimate firm, that excels in customer attention and customer service.

Next, we must understand the strategic orientation that our company has decided to take to excel in the
marketplace. A strategy is essentially a means to reaching business goals that our company has decided for
itself. Generic strategies are game plans for operating and surviving in the marketplace. Michael Porter has
written about three generic strategies in 1980.

These are:

1. Cost leadership strategy, i.e., becoming the lowest cost provider of services,

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2. Differentiation strategy, i.e., providing unique set of benefits to the customers which are not offered by our
competitors, and

3. Focus strategy, i.e., focusing on a niche or narrow market segment and fulfilling the needs of that segment
through its service offerings.

Stage 2: Developing New Service Strategy

We must decide the strategy that our company would like to take to grow in the marketplace and align new
service development in that direction. These include

(i) Intensive growth

(ii) Integrative growth

(iii) Diversification.

For intensive growth, the company would strive to increase market share for its current services in the current
market or develop and launch new services in existing markets or take current services to new markets. These
strategies are depicted in the matrix. A company can increase its market share by changing the style of
operations and enhancing its customer intimacy, for instance. Ordinarily, service businesses choose to grow by
taking their current services to new markets, i.e., new countries and cities and adapt the offering to the
preferences of the customers in the new market. You may have noticed how McDonald’s opened its outlets in
various cities in India, one after another. On the other hand, post offices in India started providing fixed deposit
services and passport related services in the same markets where they were offering postal services. Similarly, a
customs agent may launch courier services in the city where they are located, as an example of growing their
business by offering new services in existing markets.

Market

Current New

New New Service Development (Diversification)

Services
Current Increasing market share Market development

Figure 11.3 Ansoff’s Matrix indicating Intensive Growth Strategies

For integrative growth, the company would form joint ventures or alliances with other companies in order to
deliver complementary services, such as catering services for airlines. It might also like to acquire other
companies or merge with them.

Under the diversification strategy, the company develops and launches new services in new markets. This step is
risky as the company does not have prior experience with the new service in the new market. However, once the
intensive and integrative modes of growth have been exhausted, a business would have no choice other than to
diversify its business into new services in new markets.

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Knowledge about the above strategic orientation of our company will help us formulate the new service
strategy. We can now initiate the new service development process in alignment with the new service strategy.

Stage 3: Idea generation

The third stage of new service development is that of idea generation. This stage requires a formal department to
be set up in our company. The activities in this stage would include conducting idea generation exercises like
brainstorming and focus group discussion with customers, observing customers in different situations wherein
they receive the same benefit through similar or ernative services and learning about the services provided by
competitors. The company must also place suggestion boxes and institute suggestion reward schemes to attract
suggestions from their employees. Listening to customers is the best way to receive ideas, not only for
improvements in the current services offering, but also for entirely new services. The idea must align with the
new service strategy; otherwise the idea must be dropped or shelved. It must also undergo preliminary
evaluation regarding the potential market for the benefit that customers are willing to receive from the service.
We must keep in mind that the quantum of investments starts increasing rapidly from this point onwards for
developing each idea. Unless the idea has clear potential, it must be dropped, otherwise the company will face
further losses if the idea is allowed to be developed further and is dropped at a later stage due to lack of
feasibility.

Stage 4: Service Concept Development

An idea that appears feasible and profitable is taken up for development of the service concept. The service
concept is the description of the service in terms of the value it will provide customers, the form and function of
the service, the type and level of experience that customers are likely to receive from the service, and the
outcome of the service. The concept is developed by involving customers, service personnel, service managers,
suppliers and other professionals such that it is acceptable to all and everybody agree that it is likely to provide
much needed benefits to the customers. The service concept is tested with customers and employees and is
dropped if it is not found to offer substantial benefits to customers in comparison to existing alternate methods
by which customers can satisfy their need.

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Customer Expectations and Perceptions of

Services- Evaluation of Services
An organization that understands customer expectations and is able to fulfill them to the best of its ability is the
one that succeeds in the competitive world of marketing. Fulfilling customer expectations leads to satisfaction
and exceeding expectations in terms of service delivery results in delight. However, when a customer expects
superior service and his experience is otherwise, he feels dissatisfied. Dissatisfaction of customers may result in
several adverse effects such as spread of negative word of mouth. Hence, it is important for a firm to promise
only what they can deliver in order to abstain from having dissatisfied customers.

Expectations of service

People form expectations of the services they are about to avail based on their own prior experience, familiarity
or past experiences of near and dear ones. Perceptions are affected by expectations. Examples of expectations
and perceptions:

 A student who has taken admission in a reputed University and has heard of the high quality
education being offered by it shall probably perceive the institute in the same manner once he
starts studying there.
 A girl who has been told how horrifying a horror movie is will probably perceive it the same
way when she watches it.
 A boy who goes to a salon for a haircut shall probably like the services offered if the salon
has previously been praised by his friends.

Perceptions of Service

Perception, in general, is defined as a process through which people select organized stimuli and interpret it such
that it frames a meaningful picture. Perceptions vary from one person to the other. For marketers, perception of
customers is more important than reality since customers make purchases on the basis of their perceptions.

For example, people perceive Dominos to deliver their pizzas in 30 minutes. This is because they have
positioned their product and services in that manner. Adhering to promises and fulfilling them helps in building
brand image.

Perceived Quality of Services

A service may deliver high quality in reality, however it is not necessary that the quality of service offered is
perceived as superior by the consumer. Perceived quality of the service shall be dependent on various cues that
may be classified as extrinsic or intrinsic cues. It is difficult to gauge the quality of service being availed since it
is intangible and perishable.

At times, there exists a gap between what the customer expects and what he receives. This is best explained by
the framework called Gaps Model. The larger the gap between expectations and perceptions, more is the
dissatisfaction. Hence, it is in a marketer’s best interest that he narrows the gap to the maximum extent possible
to be able to fulfill the customer’s expectations.

The SERVQUAL scale is used for measuring the “gaps” that exist between the expectations of the consumer
and his perceptions of service availed. The measurement of these distances between expectations and
perceptions, called gaps, is done based on two major factors:
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1. Outcomes
These depend on the reliability of services being delivered to the consumer. For example, whether or not a flight
you took helped you reach the desired destination.

2. Processes
These predominantly focus on how desired core services were delivered. This includes aspects like assurance
and empathy. For example, the behavior of flight attendants while dealing with you in the flight.

Processes aid companies and service houses in not only meeting, but exceeding customer expectations.

For example, the core service of Amazon is to sell varied products and brands. However, what helps it succeed
in a competitive market is the superior “processes” that it follows, like timely and reliable delivery of products.
One can also track the ordered product while in transit. All of this contributes immensely in increasing the brand
loyalty of existing customers and also in customer acquisition

The Gaps Model Of Service Quality

The SERVQUAL Model (also called Gaps model) is an empiric model by Zeithaml, Parasuraman and Berry to
compare service quality performance with customer service quality needs. It is used to do a gap analysis of an
organization’s service quality performance against the service quality needs of its [Link]’s why it’s also
called the GAP model.

It takes into account the perceptions of customers of the relative importance of service attributes. This allows an
organization to prioritize.

There are five core components of service quality:

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 Tangibles: physical facilities, equipment, staff appearance, etc.

 Reliability: ability to perform service dependably and accurately.
 Responsiveness: willingness to help and respond to customer need.
 Assurance: ability of staff to inspire confidence and trust.
 Empathy: the extent to which caring individualized service is given.

The four themes that were identified by the SERVQUAL developers were numbered and labelled as:

1. Consumer expectation – Management perception gap (Gap 1)

Management may have inaccurate perceptions of what consumers (actually) expect. The reason for this gap is
lack of proper market/customer focus. The presence of a marketing department does not automatically guarantee
market focus. It requires the appropriate management processes, market analysis tools and attitude.

2. Service Quality Specification gap (Gap 2)

There may be an inability on the part of the management to translate customer expectations into service quality
specifications. This gap relates to aspects of service design.

3. Service delivery gap (Gap 3)

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Guidelines for service delivery do not guarantee high-quality service delivery or performance. There are several
reasons for this. These include: lack of sufficient support for the frontline staff, process problems, or
frontline/contact staff performance variability.

4. External communication gap (Gap 4)

Consumer expectations are fashioned by the external communications of an organization. A realistic expectation
will normally promote a more positive perception of service quality. A service organization must ensure that its
marketing and promotion material accurately describes the service offering and the way it is delivered

5. These four gaps cause a fifth gap (Gap 5)

which is the difference between customer expectations and perceptions of the service actually received
Perceived quality of service depends on the size and direction of Gap 5, which in turn depends on the nature of
the gaps associated with marketing, design and delivery of [Link],Gap 5 is the product of gaps 1, 2, 3 and
4. If these four gaps, all of which are located below the line that separates the customer from the company, are
closed then gap 5 will close.

SERVQUAL GAP Model

The SERVQUAL Model is an empiric model by Zeithaml, Parasuraman and Berry to compare service
quality performance with customer service quality needs. It is used to do a gap analysis of an organization’s
service quality performance against the service quality needs of its [Link]’s why it’s also called the
GAP model.

It takes into account the perceptions of customers of the relative importance of service attributes. This allows an
organization to prioritize.

There are five core components of service quality:

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 Tangibles – physical facilities, equipment, staff appearance, etc.

 Reliability – ability to perform service dependably and accurately.
 Responsiveness – willingness to help and respond to customer need.
 Assurance – ability of staff to inspire confidence and trust.
 Empathy – the extent to which caring individualized service is given.

The four themes that were identified by the SERVQUAL developers were numbered and labelled as:

1. Consumer expectation – Management perception gap (Gap 1)

Management may have inaccurate perceptions of what consumers (actually) expect. The reason for this gap is
lack of proper market/customer focus. The presence of a marketing department does not automatically guarantee
market focus. It requires the appropriate management processes, market analysis tools and attitude.

2. Service Quality Specification gap (Gap 2)

There may be an inability on the part of the management to translate customer expectations into service quality
specifications. This gap relates to aspects of service design.

3. Service delivery gap (Gap 3)

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Guidelines for service delivery do not guarantee high-quality service delivery or performance. There are several
reasons for this. These include: lack of sufficient support for the frontline staff, process problems, or
frontline/contact staff performance variability.

4. External communication gap (Gap 4)

Consumer expectations are fashioned by the external communications of an organization. A realistic expectation
will normally promote a more positive perception of service quality. A service organization must ensure that
its marketing and promotion material accurately describes the service offering and the way it is delivered

5. These four gaps cause a fifth gap (Gap 5)

which is the difference between customer expectations and perceptions of the service actually
received Perceived quality of service depends on the size and direction of Gap 5, which in turn depends on the
nature of the gaps associated with marketing, design and delivery of [Link],Gap 5 is the product of gaps 1,
2, 3 and 4. If these four gaps, all of which are located below the line that separates the customer from the
company, are closed then gap 5 will close.

Service Innovation
Service innovation as “a new or significantly improved service concept that is taken into practice. It can be for
example a new customer interaction channel, a distribution system or a technological concept or a combination
of them. A service innovation always includes replicable elements that can be identified and systematically
reproduced in other cases or environments. The replicable element can be the service outcome or the service
process as such or a part of them. A service innovation benefits both the service producer and customers and it
improves its developer’s competitive edge. A service innovation is a service product or service process that is
based on some technology or systematic method. In services however, the innovation does not necessarily relate
to the novelty of the technology itself but the innovation often lies in the non-technological areas. Service
innovations can for instance be new solutions in the customer interface, new distribution methods, novel
application of technology in the service process, new forms of operation with the supply chain or new ways to
organize and manage services.”

Another definition proposed by Van Ark states it as a “new or considerably changed service concept, client
interaction channel, service delivery system or technological concept that individually, but most likely in
combination, leads to one or more renewed service functions that are new to the firm and do change the
service/good offered on the market and do require structurally new technological, human or organizational
capabilities of the service organization.” This definition covers the notions of technological and non-
technological innovation. Non-technological innovations in services mainly arise from investment in intangible
inputs.

Service innovation is used to refer to many things. These include but not limited to:

Innovation in services, in service products: New or improved service products (commodities or public
services). Often this is contrasted with “technological innovation”, though service products can have
technological elements. This sense of service innovation is closely related to service design and “new service
development”.

Innovation in service processes: New or improved ways of designing and producing services. This may
include innovation in service delivery systems, though often this will be regarded instead as a service product

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innovation. Innovation of this sort may be technological, technique- or expertise-based,or a matter of work
organization (e.g. restructuring work between professionals and paraprofessionals).

nnovation in service firms, organizations, and industries: Organizational innovations, as well as service
product and process innovations, and the management of innovation processes, within service organizations.

Areas of innovation: Den Hertog’s model

Thus den Hertog who identifies four “dimensions” of service innovation, takes quite a different direction to
much standard innovation theorizing.

The Service Concept refers to a service concept that is new to its particular market a new service in effect, or
terminology, a “new value proposition”. Many service innovations involve fairly intangible characteristics of the
service, and others involve new ways of organizing solutions to problems (be these new or familiar ones).
Examples might include new types of bank account or information service. In some service sectors, such as
retail, there is much talk about “formats”, such as the organization of shops in different ways (more or less
specialized, more or less focused on quality or cost-saving, etc.).

The Client Interface refers to innovation in the interface between the service provider and its customers.
Clients are often highly involved in service production, and changes in the way in which they play their roles
and are related to suppliers can be major innovations for many services. Examples might include a greater
amount of self-service for clients visiting service organizations. There is a French literature on service
innovation that focuses especially on this type of innovation, identifying it as innovation in “servuction”.

The Service Delivery System also often relates to the linkage between the service provider and its client, since
delivery does involve an interaction across this interface. However, there are also internal organizational
arrangements that relate to the ways in which service workers perform their job so as to deliver the critical
services. Much innovation concerns the electronic delivery of services, but we can also think of, for instance,
transport and packaging innovations (e.g. pizza delivery). An emerging concept of SDP is the idea of taking a
“factory” approach to Service Innovation. A “service factory” approach is a standardized and industrialized
environment for more effective service innovation, development and operations for the IP era.

Technological Options resemble most familiar process innovation in manufacturing sectors. New information
technology is especially important to services, since it allows for greater efficiency and effectiveness in the
information-processing elements that are, as we have seen, prevalent to a great extent in services sectors. We
also often see physical products accompanying services, such as customer loyalty cards and “smart” RFID cards
for transactions, and a wide range of devices for communication services.

Features of services associated with service production

 Technology and Plant (Low levels of capital equipment; heavy investment in buildings >>>
Reduce costs of buildings by use of teleservices, toll-free phone numbers, etc.)
 Labor (Some services highly professional, esp. requiring interpersonal skills); others
relatively unskilled, often involving casual or part-time labor. Specialist knowledge may be
important, but rarely technological skills (other than Information Technology) >>> Reduce
reliance on expensive and scarce skills by use of expert systems and related innovations;
Relocation of key operations to areas of low labor costs (using telecommunications to
maintain coordination).
 Organization of Labor Process (Workforce often engaged in craft-like production with limited
management control of details of work. >>> Use IT to monitor workforce (e.g. tachometers

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and mobile communications for transport staff; Aim for ‘flatter’ organizational structures,
with data from field and front-office workers directly entering databases and thence
Management Information Systems.)
 Features of Production (Production is often non-continuous and economies of scale are
limited >>> Standardize production (e.g. ‘fast-food’ chains), reorganize in more assembly-
line-like feature with more standard components and higher division of labor.)
 Organization of Industry (Some services state-run public services; Others often small-scale
with high preponderance of family firms and self-employed >>> Externalization and
privatization of public services; combination of small firms using network technologies; IT-
based service management systems.)

Features of services associated with service product

 Nature of Product (Immaterial, often information-intensive; Hard to store or transport;

Process and product hard to distinguish. >>> Add material components (e.g. client cards,
membership cards). Use telematics for ordering, reservation, and if possible delivery.
Maintain elements of familiar ‘user-interfaces’.)
 Features of Product (Often customized to consumer requirements.>>> Use of Electronic Data
Interchange or Internet for remote input of client details; use software to record client
requirements and match to service product.

Features of services associated with services consumption

 Delivery of Product (Production and consumption coterminous in time and space; often client
or supplier has to move to meet the other party. >>> Telematics; Automated Teller Machines
and equivalent information services.)
 Role of Consumer (Services are consumer-intensive, requiring inputs from consumer into
design/production process. >>> Consumer use of standardized menus and new modes of
delivering orders.)
 Organization of Consumption (Often hard to separate production from consumption; Self-
service in formal and informal economies commonplace.>>> Increased use of self-service,
utilizing existing consumer (or intermediate producer) technology e.g. telephones, PCs and
user-friendly software interfaces.)

Features of services associated with services markets

 Organization of Markets (Some services delivered via public sector bureaucratic provision;
Some costs are invisibly bundled with goods (e.g. retail sector).>>> Introduction of quasi-
markets and/or privatization of services; New modes of charging (pay per society), new
reservation systems; more volatility in pricing using features of EPOS and related systems.)
 Regulation (Professional regulation common in some services. >>> Use of databases by
regulatory institutions and service providers to supply and examine performance indicators
and diagnostic evidence.)
 Marketing (Difficult to demonstrate products in advance.>>> Guarantees; demonstration
packages (e.g. demo software, shareware, trial periods of use).)

Customer Defined Service Standards

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Customer Service Standards

Customer service standards are a set of policies and expectations that have been created and adopted by a
company. The standards cover all the points of contact the business may have with the customer. In a sense,
they are the expectations or rules for conduct in any customer transaction and how you want customers to feel
about their experience with your company. After all, customers buy based on emotions rather than logic or
reason. Exceptional customer care inspires future purchasing behavior more than data and facts.

Sales and assistance after the sale is just one aspect of a company’s customer service standards. A thorough set
of standards must address the company’s customer service policies and practices at all key points of contact with
the customer. Customer service is an essential component of a company’s business. Whether the company sells
its products to individual consumers or to other businesses, the importance of customer service to the company
and its brand development efforts is the same.

Customer Service and the Buyer’s Journey

The buyer’s journey is a conceptual framework for thinking about your customer’s full range of experiences or
contacts with your company. While the precise contours and points of contact will vary depending on the
company and what it does or sells, generally it will consist of at least these three stages:

(i) Awareness: The customer becomes aware of a problem or a need, and has the desire to solve it or fill it.

(ii) Consideration: The customer thinks about possible solutions and options available for solving that problem
or filling that need.

iii) Decision: The customer makes a purchasing decision and buys one of the products or solutions he has
considered in stage two.

Customer service should ideally cover each of these stages, as well as the post-purchase phase. In one sense,
marketing is the art of helping customers move more rapidly and easily from one stage to the next.

Customer service serves as a support for people at every stage along the way, and beyond. Far from simply
helping people who have already purchased to use the product more effectively, customer service is there to
support both prospective and existing customers as they consider, evaluate, purchase and use a company’s
products and services.

It may mean offering additional information about the need or perceived problem in the awareness stage, or
stage one. In stage two, it could mean providing more detailed information about the lifespan of the product or
service cycle and how it can help resolve the problem. Finally, in stage three, the decision-making phase, it
usually revolves around assistance with the transaction itself or some aspect such as shipping and returns.

By crafting customer service standards to govern interactions with consumers at every possible point along the
buyer’s journey, a company expertly crafts the specific experience it wants its customers to enjoy. Maintaining
this sense of proactive design helps a business turn prospects and leads into loyal customers and brand
ambassadors.

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Importance of Service Standards

Taking the time and effort to formalize customer service standards is an important exercise for companies to
undertake. The process of developing those standards and guidelines helps the company solidify its thinking
about how it relates to its market and further enhance its brand.

Adopting formal customer service standards and communicating those standards to all employees who have any
contact with customers is essential for the company’s workers, especially those filling roles that are explicitly
devoted to the customer and technical service functions.

Additionally, adopting formal customer service standards helps the company in scripting the buyer’s journey.
Furthermore, standardized customer service helps the company by ensuring the maximum positive response
from the maximum number of customers.

A positive, enjoyable customer experience during a person’s first transaction with a company will often bring
that customer back for future purchases. For most companies, from an economic standpoint, it makes much
more sense to retain an existing customer than to acquire a new one. It could be up to 25 times more costly to
gain a new customer than to keep an existing one.

Physical Evidence
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The objective of our service business is to attract customers and ensure that they are able to satisfy their needs
while enjoying the service experience. They would like to spend their money if they perceive that they have
received net benefit from our company. If they are satisfied with the service, they would repurchase our services
and refer our services to others.

Roles played by Physical Environment

The physical environment affects customers and employees, i.e. anybody who uses it. It can play various roles
as discussed in the following sections:

1. Package: The physical evidence of a service plays a role similar to that of product packaging,
it wraps the service and communicates its characteristics to the customer. A clean, safe
servicescape conveys the image of a superior quality service to the customers and makes them
feel proud of being associated with the service, i.e., it enhances the image benefits received by
the customer.
2. Facilitator: A hindrance-free layout of the servicescape can enhance employee performance
and customer satisfaction. Physical evidence like comfortable chairs in the seating area
matches the requirements of customers thereby enhancing the perception of the quality of
service in their minds.
3. Socialiser: The servicescape helps customers and employees socialize and interact with each
other and among themselves as services are mainly delivered through interactions during the
moments of truth. The physical evidence also sets the mood for the service, a cheerful mood
at entertainment services, a professional mood around offices and calm, relaxing ambience in
healthcare establishments.
4. Differentiator: The physical evidence can help to differentiate and position a service for a
particular segment of customers when designed according to their tastes and preferences
including what they are willing to pay for. For instance, the physical evidence for a high-
priced upper class area would be enhanced and differentiated from a low-priced lower class
area in any service setting or among similar services.

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Employees would mainly serve the customer. It is important that they feel comfortable at our servicescape. This
would help them feel like staying till they complete their duty and do additional innovation for the benefit of the
customers and our organisation in the long term.

As we know very well by now, services are primarily delivered through interactions between and among
employees and customers.

In order that the above desirable behaviour can take place effectively and efficiently, it is important that they
receive the right cues from the environment that can elicit the right internal responses within customers and
employees. The responses would be of three types, cognitive, emotional and physiological. The right
environment would give them desirable cues. For instance, a clean and organized office would convey a sense
of efficiency to customers and employees alike. High quality, working equipment would give assurance to
customers that their problems would be flawlessly satisfied at the service outlet. Similarly, the availability of
efficient working equipment gives service providers the opportunity for doing a good job of their service. The
physical evidence, like presence and placement of chairs gives meaning to the space and indicates the category
or segment of customers who are likely to receive the service in those surroundings. These are the cognitive
responses of the physical evidence of service.

Lighting, music, decor, air temperature and freshness make up the ambience of the servicescape which is aided
by sparkling surroundings and equipment. This gives a positive mood and attitude to customers and service
providers. On the other hand, a poorly-lit, damp servicescape quickly conveys a negative attitude of the service
provider and elicits negative emotional response from the customers.

Above cognitions and emotions give rise to physiological responses like pain or comfort. The placement of
physical facilities gives them direction for movement and rest. On the whole, customers and employees feel fit
and comfortable at the service facility. These responses give employees an opportunity to provide flawless
service to customers that they can be proud of. Similarly, customers are able to negotiate their way in the service
facility and have their needs satisfied in the enabling atmosphere.

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Hence, it is clear that the appropriate physical evidence, consistent with the service concept and the brand
image, elicits positive cognitions, emotions and physiological responses from customers and service providers.
This enables the production and consumption of services thereby leading to fulfilment of customers’ and
organisations’ goals.

Design and Maintenance of Physical Facilities

We have understood by now that physical evidence is an important aspect of our service, which cannot be
ignored. Accordingly, we have to employ architects, interior designers and merchandise designers to design
physical features that are consistent with our service concept and conveys the value, form and function, outcome
and the nature of experience that customers are to receive from the servicescape.

More importantly, they must match the preferences of our customers, yet provide slightly more than what our
customer segment would have ordinarily expected from the facility. You may have noted how various elements
of the physical evidence of Jet Ariways are blue in colour while those are red in colour for Kingfisher Airlines.
These elements are consistent with the logo and masthead and reflect the value and nature of experience that
each airline has promised to deliver.

The physical evidence should have elements of surprise, joy, interest and captivation inbuilt in them, in order to
be perceived to be slightly beyond the expectations of the customers and delight them.

Elements of the physical evidence, particularly the servicescape, are costly and cannot be redone again and
again without making large outlays. Hence it has to be executed correctly the first time itself.

Every bit of the physical environment that is likely to affect employees, customers and visitors must be
identified in the service blueprint. Alternative designs for these facilities must be evaluated and the right one
must be executed with care. The opinion of customer representative, service personnel, service managers,
stockholders, collaborators and visitors must be taken and a consensus arrived at while selecting an appropriate
design.

This procedure will also help the service providers and their collaborators to get involved and invest interest and
time in the development of the facility while feeling a sense of ownership for the same. Care must be taken to
involve as many of the above people as possible in decisions related to the smallest details of the servicescape,
so that the very best is obtained without requirements for later replacement and rework.

Once the service is in operation, much attention must be given to the maintenance of the facility in order to keep
it spick and span and in working order. All unused, non-working and damaged objects should be removed
without delay and replaced with new components.

We must remember that visitors to our facility will quickly get used to the physical evidence in our service
facility. In order to maintain their interest in the company and to give them a feel of a renewing firm, the
servicescape should be modernised and updated beyond the expectations of customers.

It is a challenge to implement what customers could be suggesting later on, before they can expect it. This can
keep our customers interested in our organisation and patronise the same. Interesting elements of the
servicescape can become a matter of special attraction and customers would speak about it to others while
intentionally or unintentionally promoting the firm and its services to them.

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Unit-5
Delivering Services: Role of Employees and
Customers in Service Delivery
You will recall that, services are produced by employees and consumed by customers simultaneously. Hence,
customers must know the role that they would be expected to play at a particular service facility. They must be
educated and trained, if necessary, to play appropriate roles at the service outlet, so that they can get the benefit
of the service. Most customers learn their roles while growing up in life. However, they may not know the best
role that they can play at a new service facility.

Take the case of customers waiting to receive medicines at a hospital pharmacy. Ordinarily, customers would
submit their request for medicines and wait anxiously at the deliver counter for their medicines. In case there are
many people waiting for their medicines, each person has to stand for a long time to receive their medicines.
Few chairs might be placed near the counter for the patients to wait, but they might not consider being seated,
rather they would stand anxiously around the counter to check that their request receives due priority, other
people do not get their medicines out of turn, and the pharmacy employees do not delay delivering their
medicines out of plain laziness. This situation used to take place at a hospital pharmacy and is commonly
encountered in most hospital pharmacies.

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Role of customers in service delivery

Service delivery for customers can be seen in a factory. The place the service is produced and is consumed
interacting with the employees and other customers. E.g in a classroom or in a training situation, students
(customers) are sitting in the factory interacting with the instructor and other students as they consume the
educational services.

Since these customers are present during the service production, customers can contribute to or detract from the
successful delivery of the service and to their own satisfaction.

Importance of customers in service delivery

Customer participation at some level is inevitable in service delivery. Services are actions or performances,
typically produced and consumed simultaneously. In many situations employees, customers and even others in
the service environment interact to produce the ultimate service outcome. As the customers receiving the service
participates in the service delivery process. He or she can contribute to the gap through appropriate or
inappropriate, effective or ineffective, productive or unproductive behaviors.

Customers who are unprepared in terms of what they want to order can soak up the customer service
representative’s time as they seek advice. Similarly, shoppers who are not prepared with their credit cards can
“put the representative on hold”. While they search for their credit cards or go to another room or even out of
their cars to get them. Meanwhile, other customers and calls are left unattended, causing longer wait times and
potential dissatisfaction.

Customer’s Roles

(i) Customers as a productive process

Service customers are referred to as “partial employees” of the organization. They are human resources who
contribute to the organization’s productive capacity. In other words, if customers contribute effort, time or other
resources to the service production process, they should be considered as part of the organization.

(ii) Customers as quality contributors to service delivery and satisfaction

Another role customers play in service delivery is that of the contributor to their own satisfaction and the
ultimate quality of the services they receive. Customers may care little that they have increased the productivity
of the organization through their participation. But they likely care a great deal about whether their needs are
fulfilled. Effective customer participation can increase the likelihood of service delivery that their needs are met
and that benefits the customer seeks are attained. Services such as health care, education, personal fitness, and
weight loss, where the service outcome is highly dependent on the customers participation. In such services
unless the customers perform their roles effectively, the desired service outcomes cannot be achieved.

(iii) Customers as competitors

A final role played by service customers is that of a potential competitor. If self-service customers can be
viewed as resources of the firm, or as “partial employees,” self-service customers in some cases. They can
partially perform the service or the entire service for themselves and may not need the provider at all.

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Customers thus in that sense are competitors of the companies that supply the service. Whether to produce a
service for themselves (internal exchange). E.g. child care, home maintenance i.e. have someone else provide
home services for them (external exchange) is a common dilemma for consumers.

Similar internal versus external exchange decisions are made by organizations. Firms frequently choose to
outsource service activities such as payroll, data processing, research, accounting, maintenance, and facilities
management. They find that it is advantageous to focus on their core businesses and leave these essential
support services to others with greater expertise. Alternatively, a firm may decide to stop purchasing services
externally and bring the service production process in-house.

Demand and Capacity Management

Originally two strategies were suggested for managing demand and capacity: the first would involve adjusting
capacity to match demand (defined as ‘chasing demand’) and the second, altering demand to match available
capacity (known as ‘level capacity’).

1. Adjusting capacity to match demand

(i) Extend the opening hours – This is not an option open to all service organizations. Where it is possible it is
likely to occur only when demand levels are regarded as particularly excessive.

(ii) Encourage employees to work harder – The requirement here is usually that of processing more customers
per hour or per day. Although a mark of efficiency (more output from existing staff), service quality for
customers may deteriorate.

(iii) Cross-train employees – Enables organizations to operate with fewer staff. Instead of being confined to
handling few responsibilities staff are equipped to manage a variety of tasks and activities. It amounts to a move
in the direction of job enlargement and some might say job enrichment, increasing employee motivation,
satisfaction and morale. Not all employees will welcome it, particularly where there is seen to be little increase
in commensurate rewards. The type of service and the organizational culture will be two prominent factors that
need to be taken into account prior to such a move.

(iv) Recruiting part-time employees – This is an option low in cost and potentially one that can be achieved
quickly. Organizations should, of course, ensure that part-time employees be given the same support and
encouragement as given to full-time staff.

(v) Add facilities – Usually in the form of table, chairs or other equipment. Just how much scope there is for
this will depend on the initial configuration and layout designed to communicate a specific atmosphere and/or
level of service. Adding facilities may change both.

(vi) Hire or share facilities or equipment – May be in the form of additional physical space or vehicles
required either on a temporary or recurring basis. Using customers as productive resources – up to this point all
attempts at adjusting capacity have involved manipulating internal resources and assets. However some have
suggested that organizations should regard customers as ‘partial employees’ and make a contribution to
productive capacity.

(vii) Outsourcing – For small to medium-sized organizations, in particular, calling on outside assistance is a
valuable option in trying to meet market demand. Typical areas for outsourcing are technological and marketing
support, employee recruitment and training, and Web development. Large organizations also outsource.
Consider the recent case of British Airways and the outsourcing of its inflight catering to Gate Gourmet.

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Competitive pressures in the airline industry had forced this move. Unfortunately, the demand for lower costs
led to industrial action by Gate Gourmet employees. The above options, then, are aimed at increasing capacity
to absorb demand.

However, for service organizations there will inevitably be periods of time where capacity is under-utilized.
Such a situation will remain so if attempts to encourage demand during these periods prove unsuccessful. It has
been suggested that slack time be used ‘productively as a time to train new employees, do maintenance on the
equipment, clean the premises, prepare for the next peak and give the workers some relief from the frantic pace
of the peak periods’.

2. Altering demand to match available capacity

Whereas capacity management is a response to demand, demand management is an attempt to shift demand.
Given the relative inflexibility of capacity organizations may seek to smooth demand by reducing the variability
and fluctuation of existing patterns. Organizations can turn to the marketing mix for stimulating demand during
periods of spare capacity or shifting demand during periods where capacity is operating at or near maximum. Of
the ‘4 Ps’ price and, to a lesser extent, place, offer the most potential in this area.

(i) Manipulate price – This will be discussed in more detail in the following section on ‘Revenue
Management’. The central role of price is to discourage too many customers from using the service during ‘peak
demand’ periods and encourage more customers to select ‘off-peak’ periods. On price alone this strategy will
only work if enough customers can be attracted by the lower prices available during low demand periods.
Leisure, hospitality and transportation services would appear suited to this approach. However this strategy of
price differentiation is, it is argued, not without risk. Customers may become acclimatized to the lower prices
and expect them whenever the service is used. Equally there is risk to the organization’s image in that lower
prices may attract undesirable customers. This would be particularly relevant for a service that regards itself as
more upmarket or exclusive.

(ii) Offer a mobile service – For a number of reasons consumers have welcomed the emergence of mobile
services where the provider takes the service to the customer rather than or in addition to the customer having to
visit the provider in some fixed location. Libraries have used this approach for many years, the service being
particularly valued by the disabled and those living in remote locations. Other services that have found mobility
an effective method of managing demand include breakdown and maintenance, blood donation and catering.

(iii) Communicating with customers – The provision of information as to when demand is, or is likely to be,
high appears to be a strategy not well adopted by service organizations. In particular for customers in our ‘call
centre society’ it can be especially frustrating. Waiting is a feature of modern day society and will be addressed
later in the chapter.

(iv) Changing the service offer – For most organizations this is not an option. What they offer remains fixed.
Where services with a sizeable facility like hotels experience significant seasonal fluctuations however, action
may be taken to encourage varied usage of the facility when capacity is under-utilized.

Pricing of Services: Pricing Considerations and

Strategies
Once we have designed and developed the service product and its delivery, we would have to decide how to
price the service for earning revenue from it. Price setting consists of six steps as described in the following
sections:

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1. Selecting the pricing objective

Two major objectives of pricing are market penetration or market skimming. In case it is easy for competitors to
emulate our business, it is advisable to go for market penetration, which means increasing the market share. This
involves selling the services at a price that most customers are willing to pay. On the other hand, if the service
has lot of high-technology components and cannot be easily emulated by new competitors, the marketer can go
for price skimming, that is selling the services at a high price and slowly bring down the prices as competitors
emerge. Businesses may also have a survival objective in the short run, i.e. they would like to earn the operating
costs at the time being in order to establish the business firmly in the market, before raising prices later on.
Another pricing objective could be price-quality leadership in which the marketer provides superior quality
services at affordable prices which would be difficult for competitors to match.

2. Determining price elasticity of demand

At the next stage, the demand for the service at various price levels is elicited through customer surveys in
which customers may be asked to choose price options at which they would be willing to purchase the service.
A better way of pricing various levels of services is through a marketing research technique called conjoint
analysis. As part of this analysis, customers are asked to rank several sets of services with different alternatives
and price levels. Through statistical analysis of the data, the part worth of various options and prices are found
out and the most-preferred service-price combination is identified. The price that customers are willing to pay,
form the price ceiling, i.e. the company cannot offer its services at a price above the price ceiling.

3. Estimating costs

The cost of providing the service is estimated through a technique called activity based costing (ABC) in which
the cost of performing various activities for delivering the service is calculated in order to arrive at the total cost
of providing the service. The cost will form the price floor, i.e. the minimum price that should be requested from
customers to make the business viable.

4. Analysing competitors’ costs, prices and offers

The price charged by competitors for similar and alternative services are found out as these prices form the
reference price with which customers are likely to compare the price of the new service. The benefits offered by
the competitors and our company are also compared. Once it is ascertained that our service is superior to that of
the competitors, the price of the service can be calculated as the cost of alternative services plus the additional
value provided by extra benefits provided by our service. Thus, competitors’ prices help to modulate the price of
our services based on what the customers are accustomed to pay for similar services, or the cost of alternative
ways of fulfilling their needs.

5. Selecting a pricing method

Based on the cost of delivery and competitive prices, several price points for the new service can be determined.
Then the demand for each price point is established and the breakeven demand is calculated. Once, we are sure
that a certain demand can be met; the price can be fixed for attracting that level of demand. It is now ascertained
that the demand-price combination would be capable of achieving breakeven. The sale of services for the next
three years is estimated and the profit is calculated. This will help us calculate the return on investment and to
match the estimated return on investment with the returns expected in line with what the industry receives in
general. It is checked that the returns are higher than the prevailing bank interest rate.

One special method of pricing is called target costing. In this method, the price that customers are willing to pay
is ascertained from customer surveys and service delivery process is modified in order to ensure that the service
can be delivered at a cost and price that will result in expected returns for the business.

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An important method of pricing that is widely advocated is called value pricing. True economic value (TEV) is
the sum of the price of the alternative means of satisfying the need and any cost savings in the hands of the
customer, less, the cost of receiving the new service. Theoretically, the customer would gain even when he/she
pays the value price for the new service compared to consuming the alternate service. However, the price is then
modulated as per what customers are willing to pay for the service and is fixed at that level.

6. Selecting the final price

The final price is selected by keeping in mind that the price and other ‘P’s of the services marketing mix must be
consistent with the service concept. Low-quality-high-price or high-quality-low-price services would be
inconsistent whereas a price in tune with the quality of the service, the affordability and willingness of
customers to pay the price, substantial demand at the price which can be easily fulfilled by the service provider,
and, a price in tune with prices of competitive and comparable offerings would be perceived to be a consistent
price. The price should be such that our target market is able to purchase the services, our collaborators can
make a profit and our competitors can continue to offer their services to their target customers at their price
points. It is important to ensure that the price of our service is consistent with the value it provides to customers.

Role of Advertising
Advertisements play a major role in business. The business world is competitive, and advertising is used to
introduce a business, build a brand and position a company, product or service against the competition.
Advertising delivers strategic messaging and elevates awareness within the given market. Several advertising
media are used to deliver the advertisement to the market.

Advertising Media

Businesses can access audiences by advertising via a variety of media. Radio, television, print and digital are the
big outlets for advertisers. Numerous creative options also exist, such as gas pump ads, ads in bathrooms and
other eye-catching media. Radio, television and print are considered traditional media, whereas digital covers
everything online. Within the digital space, ads arrive via streaming radio and television, paid search, social
advertising and display or banner ads. All of these media enable a business to deliver their advertisements and to
measure response and sales increases as a result of the ad. Some digital media offer extremely granular data to
measure not only the response but also how those respondents behave. This data is then used to improve the
selling platform to increase conversions based on successful behavioral traits.

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Brand Awareness

Advertising drives brand awareness and builds trust with potential customers. Simply seeing your business
name more often than you see that of the competition will help in the long run. As an example, many Fortune
500 brand advertisements do not focus on their product. They buy so much exposure that simply pushing their
logo and name has a positive return. Partnering with non-profits in advertisements is another method of
increasing awareness and positive associations. Even donating to local organizations that show your brand on
their media in return, is a form of positive brand association and unintentional advertising.

Influence Buyer Decisions

The major influence of advertisements on business is the ability to influence buyer decisions and drive
purchases. Advertisers introduce their product or service in a credible and influential manner to educate their
potential customers. Unless a business has a high-traffic physical location, advertising is required to simply let
potential customers know they exist. In addition, advertisements can educate about a product or service, make
consumers aware of pricing or challenge the competition by showing how their features are more beneficial.

B2C and B2B

Advertising happens on two levels. Business-to-consumer advertising is selling a product directly to the public,
whereas business-to-business sells among various business. The advertising processes are more aggressive in
the B2C world, whereas B2B advertising focuses heavily on sales and education. An example of B2B business
is a credit-card processing machine or POS system that’s sold to retail stores.

Personal Selling
Personal selling can be termed as the oral presentation given by the salesperson to one or more than one
consumers face to face to sell the product or service. Personal selling is a highly peculiar form of promotion. It
is mostly two-way communication, which not only involves a particular individual but also social behavior.

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Mob No: 8130402515
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The intention is to deliver the right product to the right customers. Depending upon the complexity of product,
personal selling plays an important role. Industries manufacturing technical products like laptops, computers,
digital phone, gadgets, etc., likely depend on personal selling as compared to the other manufactures.

The reason behind this is to explain the features of the product, tackle the customer queries and provide the best
customer service. The competition in the market has increased today and therefore the importance of the
salesperson in the organization.

Salespersons are also called salesman or salesgirl or sales representative and their payment is made as the
commission to push the product in the market by motivating the customer through oral conversation.

The consumer wants all kinds of goods and services in the market but lack of interest keeps them away from
making decisions or purchasing products. This is where the salesman needs to act as a catalyst and explain the
product or service to the customer. He/she should motivate the customer by giving a presentation and he may
sometimes act as a consultant. This helps the consumer to make a decision.

In case of technical products, the salesperson plays a more vital role as compared to the promotions. It becomes
difficult for the customers to make decision while purchasing high value products with complex nature. The
salesperson helps the customers by making personal contact with them and making them understand the quality
and utility of the product.

Objectives of Personal Selling

Personal selling contributes in achieving the long-term objectives for the organization.

The following are some of the objectives of personal selling:

 To do the complete selling job when there are no other components in promotional mix
 To provide service to the existing customers and try to maintain contacts with the present
customers
 Identify and find new prospective customers
 Promote the products to increase sales
 Provide the information to the customers regarding the change in product line
 Provide assistance to the customers to help in decision-making
 Provide technical advice to customers for complex products
 Gather the data in relation to market and provide it to company’s management

The reason behind setting personal selling objectives is to make decision on sales policies and personal selling
strategies, which helps in promoting the product. The objectives are set for long-term, as it becomes the
important element for qualitative personal selling objectives.

The objectives can also be quantitative if they are short-term and it could be adjusted from one promotional
period to another. The quantitative personal selling objective is related to sales volume objective. Hence, the
sales volume objective should also be explained.

Sales Promotion
Sales Promotion is one of the elements of the promotional mix. (The primary elements in the promotional mix
are advertising, personal selling, direct marketing and publicity/public relations). Sales promotion uses both

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media and non-media marketing communications for a pre-determined, limited time to increase consumer
demand, stimulate market demand or improve product availability. Examples include contests, coupons,
freebies, and loss leaders, point of purchase displays, premiums, prizes, product samples, and rebates.

Sales promotions can be directed at either the customer, sales staff, or distribution channel members (such as
retailers). Sales promotions targeted at the consumer are called consumer sales promotions. Sales promotions
targeted at retailers and wholesale are called trade sales promotions.

Sales promotion includes several communications activities that attempt to provide added value or incentives to
consumers, wholesalers, retailers, or other organizational customers to stimulate immediate sales. These efforts
can attempt to stimulate product interest, trial, or purchase. Examples of devices used in sales promotion include
coupons, samples, premiums, point-of-purchase (POP) displays, contests, rebates, and sweepstakes.

Sales promotion is implemented to attract new customers, to hold present customers, to counteract competition,
and to take advantage of opportunities that are revealed by market research. It is made up of activities, both
outside and inside activities, to enhance company sales. Outside sales promotion activities include advertising,
publicity, public relations activities, and special sales events. Inside sales promotion activities include window
displays, product and promotional material display and promotional programs such as premium awards and
contests.

Advantages of Sales Promotions

The main advantages in using sales promotional activity, either alone or to support mainstream marketing
activity and communications, are:

(i) Very flexible and adaptable in terms of tackling specific problems or supporting mainstream marketing
communications Bata national or local level

(ii) Capable of specific action through specific focus and structure

(iii) Relatively short lead times to design and implement (compared with media communications)

(iv) Often more easy to monitor the effect or tangible results

(v) Economical and cost saving, possibly with economies of scale

(vi) Can be adapted to large and small markets, major or minor products or brands.

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11 Important Techniques of Sales Promotion

1. Rebate

Under it in order to clear the excess stock, products are offered at some reduced price. For example, giving a
rebate by a car manufacturer to the tune of 12,000/- for a limited period of time.

2. Discount

Under this method, the customers are offered products on less than the listed price. For example, giving a
discount of 30% on the sale of Liberty Shoes. Similarly giving a discount of 50% + 40% by the KOUTONS.

3. Refunds

Under this method, some part of the price of an article is refunded to the customer on showing proof of
purchase. For example, refunding an amount of 5/- on showing the empty packet of the product priced 100/-.

4. Product Combination

Under this method, along with the main product some other product is offered to the customer as a gift. The
following are some of the examples:

5. Quantity Gift

Under this method, some extra quantity of the main product is passed on as a gift to the customers. For example,
25% extra toothpaste in a packet of 200 gm tooth paste. Similarly, a free gift of one RICH LOOK shirt on the
purchase of two shirts.

6. Instant Draw and Assigned Gift

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Under this method, a customer is asked to scratch a card on the purchase of a product and the name of the
product is inscribed thereupon which is immediately offered to the customer as a gift. For example, on buying a
car when the card is scratched such gifts are offered – TV, Refrigerator, Computer, Mixer, Dinner Set,
Wristwatch, T-shirt, Iron Press, etc.

7. Lucky Draw

Under this method, the customers of a particular product are offered gifts on a fixed date and the winners are
decided by the draw of lots. While purchasing the product, the customers are given a coupon with a specific
number printed on it.

On the basis of this number alone the buyer claims to have won the gift. For example, ‘Buy a bathing soap and
get a gold coin’ offer can be used under this method.

8. Usable Benefits

Under this method, coupons are distributed among the consumers on behalf of the producer. Coupon is a kind of
certificate telling that the product mentioned therein can be obtained at special discount.

It means that if a customer has a coupon of some product he will get the discount mentioned therein whenever
he buys it. Possession of a coupon motivates the consumer to buy the product, even when he has no need of it.

Such coupons are published in newspapers and magazines. Some companies distribute coupons among its
shareholders. Sellers collect the coupons from the customers and get the payment from the company that issues
the same.

9. Full Finance @ 0%

Under this method, the product is sold and money received in installment at 0% rate of interest. The seller
determines the number of installments in which the price of the product will be recovered from the customer. No
interest is charged on these installments.

10. Samples or Sampling

Under this method, the producer distributes free samples of his product among the consumers. Sales
representatives distribute these samples from door-to-door.

This method is used mostly in case of products of daily-use, e.g., Washing Powder, Tea, Toothpaste, etc. Thus,
the consumers willy-nilly make use of free sample. If it satisfies them, they buy it and in this way sales are
increased.

11. Contests

Some producers organize contests with a view to popularizing their products. Consumers taking part in the
contest are asked to answer some very simple questions on a form and forward the same to the company. The
blank form is made available to that consumer who buys the product first.

Publicity and Public Relations

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Publicity

Publicity is defined as the way of disseminating information to the public at large, through media. It can be in
the form of news, stories, event information or write-ups, that creates awareness and credibility in the people
regarding a brand, product or the company offering them.

Publicity aims at spreading the information or news, to the maximum number of people, in minimum time. It is
a non-paid form of communication, which is not under the control of the company. It can be a positive review
regarding a product, i.e. mobile, television, refrigerator, etc. given by a satisfied customer, or information
published in the newspaper regarding the quality-rich services provided by a company, or it can be a simple
word of mouth, etc.

In a nutshell, publicity has nothing to do with the company’s sales; it is all about creating awareness in general
public through editorial or unbiased comments concerning a product.

Public Relations

Public Relations can be understood as the strategic management tool, which helps an organization to
communicate with the public. Here, ‘public’ means the group of people that have an interest in or impact on a
company’s ability to achieve business objectives. It is not only concerned with getting public attention, but it
also aims at reaching the goals of the organization, by communicating the message to the target audience. It
includes press releases, crisis management, social media engagement, etc.

Public Relations is all about maintaining the positive image of the company in the eyes of the public and
developing strong relationships with them. It encompasses a range of programs organised by the company to
promote its product and services. There are many companies, which have public relations department, which
looks after the attitude of the appropriate public and also spread information to them, to increase the goodwill.

The functions performed by the public relations department include press relations, corporate communications,
counselling, product publicity, etc.

Key Differences between Publicity and Public Relations

The difference between publicity and public relations can be drawn clearly on the following grounds:

1. Publicity can be described as public visibility, wherein news or information is communicated

to the general public so as to build credibility or awareness in them, with the help of a
channel, i.e. mass media. On the other extreme, the term public relations, as the name suggest,
is a strategic management tool, that aims to create a company’s positive image in the eyes of
the public.
2. While publicity is not under the control of the company, public relations is fully under the
company’s control.
3. Publicity can be positive or negative, in the sense that it can be positive or negative feedback
regarding the product or service concerning a product given by the customer or controversial
news about the company. Conversely, public relations is always positive, because it is
strategised and managed by the public relations department of the company.
4. Publicity is free of cost; as it is made by the third party. As against, in case of public relations,
the company incurs money to organize events, sponsor programs, third-party endorsement,
etc.

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5. Publicity involves, gaining the attention of the media, that communicates any information or
news, regarding a product, service, person, organization, etc. so as to create awareness in
people. In contrast, public relations seek to attract the target audience, for the purpose of
boosting the company’s sales.

By and large, publicity and public relations are different from one another, as in publicity is when someone or
something is being noticed by the media, and people are informed about it. Unlike, public relations, is all about
taking such steps, to maintain a good relationship with the interested public, which includes customers,
government, shareholders, creditors, suppliers, government, etc.

Service Performance
To business analysts and project managers, Service performance is a matter of making sure that the
processes are performing according to the specifications. To developers, Service performance is a
matter of making sure that the functional requirements are being met. To the business, Service
performance is a matter of meeting Key Performance and Agility Indicators. And so, to properly
define Service Performance, we have to look at the concept from all these perspectives.

The relationship between service performance measures and the customer measures determines the
operational improvements that can achieve the required increase in customer satisfaction. This is
used to make improvement plans that specify how the current design should be improved.

To ensure that the right information is accurately collected and available when needed, the service
management term’s first priority should be to set up processes for regularly collecting quantitative
measures of the performance of the service.

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The correlation between the financial and customer measures determines the revenue generating
potential of the service. This correlation can indicate the increase in customer satisfaction needed to
achieve a specified market share gain or a strategic financial objective, which can then be used to set
service improvement targets or new performance standards.

The relationship between service performance measures and the customer measures determines the
operational improvements that can achieve the required increase in customer satisfaction. This is
used to make improvement plans that specify how the current design should be improved.

This procedure should follow the steps listed below:

Step 1: Select the design attributes to be analyzed.

Step 2: Measure the performance effectiveness of each selected attribute

Step 3: Measure the capability of each selected attribute

Step 4: Measure the efficiency of key processes

Step 5: Identify attributes whose performance does not conform to standards or shows unusual
change.

Step 6: Analyze the attributes identified in Step 5 in detail to determine the cause for poor
performance or for unusual change in performance.

Step 7: Decide whether any corrective action is necessary, and if so, what steps need to be taken.

Step 8: Take the corrective action. Before we move on, it is important to explain the term changes in
performance. Many teams take this to automatically imply that only changes in a negative direction
are worthy of further analysis. Improvement in performance is often treated as good news and
ignored.

Need for accurate data:

What is the key determinant of the service management team’s ability to successfully execute the
eight steps described above? Note that three steps begin with words “measure” and one step
contains the word “analysis”. It is impossible to underestimate the importance of quantitative analysis
using current and accurate data. This requires the following:

Metrics must be correctly defined to ensure that the right information is available. Data collection
procedures must be implemented and tested so that accurate information is available. Aggregation,
reporting, and distribution processes should be designed so that the information is available to the
team in a timely manner.

Team members should be trained in interpreting analysis results, charts, and diagrams. The data
should be stored in a system that allows easy access to historical performance information. Designing
a system and / or a process to satisfy these requirements, called a performance management system,

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should be the first activity of the service management team. This activity should be begun while the
service is being implemented so that the system is in place when the service goes into operation.

In practice, however, many teams responsible for managing a newly designed service do not take the
time to develop a complete and integrated performance management system. This is usually because
the teams are assembled several months (or years) after the service is in operation, by which time it
is difficult to replace the dozens of local reports and data collection techniques that are already in
place.

Many service management teams believe they base their decisions on quantitative data, but very
often the metrics used are inaccurate or incomplete, and present an erroneous picture of the
performance of the service. Incorrect data is sometimes more detrimental than no data at all, since
misleading or even counter-intuitive results obtained may be unquestionably accepted just because
they are presented as the output of quantitative analysis.

Metrics for Measuring Customer Service Performance

Below are the top customer service metrics examples businesses can monitor. When used in
combination with each other, these KPIs can provide a well-rounded view of your performance and
success.

1. Customer Service Abandonment Rates

We’ve found that about seven in 10 consumers will hang up a call or exit a chat if they’ve had to wait
a frustrating amount of time without receiving customer support. Ideally, your call or chat
abandonment rate would be zero. To calculate it, divide the number of abandoned customer service
inquiries by the total number of inquiries.

2. Average Resolution Time

Consumers are usually happiest when their issue can be resolved quickly. This metric will help you
see how your performance stacks up. To find your average resolution time, find the sum of all case
resolution durations, then divide this by the total number of customer cases.

3. Customer Effort Score (CES)

CES is one of the newer customer service measurement metrics to monitor. It essentially tracks how
much effort your customers feel they have to dedicate toward resolving an issue. The more effort
required, the more frustrating the experience. Following a customer service interaction, you can
capture these feelings with a Likert scale question.

4. Customer Satisfaction Score (CSAT)

CSAT measures your customers’ feelings immediately following an interaction with a customer service
agent. As with CES, you can send out a Likert scale survey question to capture your customer’s
satisfaction level on a scale from one to five.

5. Customer Retention Rate

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This customer satisfaction metric is the opposite of customer churn rate, but both show how likely
your customers are to stick around. To calculate retention rate, first subtract the number of new
customers from the total at the end of a specific period of time. Then, divide the number of
customers you retained by the total number of customers you had at the start of that period. A figure
close to 1 indicates high retention.

6. First Response Time

Customers expect immediate assistance, and you can find out how quickly they’re getting support by
calculating the first response time. Simply calculate the average duration between the moment a
customer reaches out and how long it takes a customer service agent to respond.

7. Resolution Rate

To calculate the overall resolution rate, subtract the number of unresolved cases from the number of
customer inquiries, then divide this by the total number of inquiries. The fewer left unresolved, the
more successful your customer service has been. You can adapt this metric by figuring out the first
contact resolution (FCR) rate, which identifies just the cases resolved during the first interaction.

8. Net Promoter Score (NPS)

NPS is a popular metric for how to measure customer service effectiveness and gauge customer
satisfaction. As with CSAT and CES, you can gather customer feedback with this type of survey
question: “How likely are you to recommend our brand to a friend?” High responses indicate higher
levels of satisfaction with your company and the customer experience.

9. Sentiment Analysis

Also known as opinion mining, sentiment analysis involves scanning the language a customer uses to
see if it skews positive, negative or neutral. Conducted through natural language processing
technology, this is a great way for agents to get an immediate read on customers’ emotions and
adjust their approach accordingly.

Service Quality and Measurement

Every customer has an ideal expectation of the service they want to receive when they go to a restaurant or
store. Service quality measures how well a service is delivered, compared to customer expectations. Businesses
that meet or exceed expectations are considered to have high service quality. Let’s say you go to a fast food
restaurant for dinner, where you can reasonably expect to receive your food within five minutes of ordering.
After you get your drink and find a table, your order is called, minutes earlier than you had expected! You
would probably consider this to be high service quality

9 Practical Methods for Measuring Service Quality

1. SERVQUAL

This is the most common method for measuring the subjective elements of service quality. Through a survey,
you ask your customers to rate the delivered service compared to their expectations.

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Mob No: 8130402515
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Its questions cover what SERVQUAL claims are the 5 elements of service quality:

 Reliability – The ability to deliver the promised service in a consistent and accurate manner.
 Assurance – The knowledge level and politeness of the employees and to what extend they
create trust and confidence.
 Tangibles – The appearance; of e.g. the building, website, equipment and employees.
 Empathy – To what extend the employees care and give individual attention.
 Responsiveness – How willing the employees are to offer a speedy service.

2. Mystery Shopping

This is a popular technique used for retail stores, hotels, and restaurants, but works for any other service as well.
It consists out of hiring an ‘undercover customer’ to test your service quality – or putting on a fake moustache
and going yourself, of course.

The undercover agent then assesses the service based on a number of criteria, for example those provided by
SERVQUAL. This offers more insights than simply observing how your employees work. Which will probably
be outstanding — as long as their boss is around.

3. Post Service Rating

This is the practice of asking customers to rate the service right after it’s been delivered.

With Userlike’s live chat, for example, you can set the chat window to change into a service rating view once it
closes. The customers make their rating, perhaps share some explanatory feedback, and close the chat.

Something similar is done with ticket systems like Help Scout, where you can rate the service response from
your email inbox.

It’s also done in phone support. The service rep asks whether you’re satisfied with her service delivery, or
you’re asked to stay on the line to complete an automatic survey. The latter version is so annoying, though, that
it kind of destroys the entire service experience.

4. Follow-Up Survey

With this method you ask your customers to rate your service quality through an email survey – for example via
Google Forms. It has a couple advantages over the post-service rating.

For one, it gives your customer the time and space for more detailed responses. You can send a SERVQUAL
type of survey, with multiple questions instead of one. That’d be terribly annoying in a post-service rating.

It also provides a more holistic overview of your service. Instead of a case-by-case assessment, the follow-up
survey measures your customers’ overall opinion of your service.

It’s also a useful technique if you didn’t have the post service rating in place yet and want a quick overview of
the state of your service quality.

But there are plenty of downsides as well. Such as the fact that the average inbox already looks more like a
jungle than a French garden. Nobody’s waiting for more emails – especially those that demand your time.
Prepared By: [Link] Agrawal
Email Id: pavankumar@[Link]
Mob No: 8130402515
Assistant Professor-Dept. of Management
Rajiv Academy for Technology and Management, Mathura Page 143
 KMBNMK03 B2B and Services Marketing

With a follow-up survey, the service experience will also be less fresh. Your customers might have forgotten
about it entirely, or they could confuse it with another experience.

And last but not least: to send an email survey, you must first know their emails.

5. In-App Survey

With an in-app survey, the questions are asked while the visitor is on the website or in the app, instead of after
the service or via email. It can be one simple question – e.g. ‘how would you rate our service’ – or it could be a
couple of questions.

6. Customer Effort Score (CES)

This metric was proposed in an influential Harvard Business Review article. In it, they argue that while many
companies aim to ‘delight’ the customer – to exceed service expectations – it’s more likely for a customer to
punish companies for bad service than it is for them to reward companies for good service.

While the costs of exceeding service expectations are high, they show that the payoffs are marginal. Instead of
delighting our customers, so the authors argue, we should make it as easy as possible for them to have their
problems solved. That’s what they found had the biggest positive impact on the customer experience, and what
they propose measuring.

7. Social Media Monitoring

This method has been gaining momentum with the rise of social media. For many people, social media serve as
an outlet. A place where they can unleash their frustrations and be heard.

And because of that, they are the perfect place to hear the unfiltered opinions of your customers – if you have
the right tools. Facebook and Twitter are obvious choices, but also review platforms like TripAdvisor or Yelp
can be very relevant. Buffer suggests to ask your social media followers for feedback on your service quality.

Two great tools to track who’s talking about you are Mention and Google Alerts.

8. Documentation Analysis

With this qualitative approach you read or listen to your respectively written or recorded service records. You’ll
definitely want to go through the documentation of low-rated service deliveries, but it can also be interesting to
read through the documentation of service agents that always rank high.

The hurdle with the method isn’t in the analysis, but in the documentation. For live chat and email support it’s
rather easy, but for phone support it requires an annoying voice at the start of the call: “This call could be
recorded for quality measurement”.

9. Objective Service Metrics

These stats deliver the objective, quantitative analysis of your service. These metrics aren’t enough to judge the
quality of your service by themselves, but they play a crucial role in showing you the areas you should improve
in.

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Email Id: pavankumar@[Link]
Mob No: 8130402515
Assistant Professor-Dept. of Management
Rajiv Academy for Technology and Management, Mathura Page 144
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 Volume per channel. This tracks the amount of inquiries per channel. When combined with
other metrics, like those covering efficiency or customer satisfaction, it allows you to decide
which channels to promote or cut down.
 First response time. This metric tracks how quickly a customer receives a response on her
inquiry. This doesn’t mean their issue are solved, but it’s the first sign of life – notifying them
that they’ve been heard.
 Response time. This is the total average of time between responses. So let’s say your email
ticket was resolved with 4 responses, with respective response times of 10, 20, 5, and 7
minutes. Your response time is 10.5 minutes. Concerning reply times, most people reaching
out via email expect a response within 24 hours; for social channels it’s 60 minutes. Phone
and live chat require an immediate response, under 2 minutes.
 First contact resolution ratio. Divide the number of issues that’s resolved through a single
response by the number that required more responses. Forrester research showed that first
contact resolutions are an important customer satisfaction factor for 73% of customers.
 Replies per ticket. This shows how many replies your service team needs on average to close
a ticket. It’s a measure of efficiency and customer effort.
 Backlog Inflow/Outflow. This is the number of cases submitted compared to the number of
cases closed. A growing number indicates that you’ll have to expand your service team.
 Customer Success Ratio. A good service doesn’t mean your customers always finds what
they want. But keeping track of the number that found what they looked for versus those that
didn’t, can show whether your customers have the right ideas about your offerings.
 ‘Handovers’ per issue. This tracks how many different service reps are involved per issue.
Especially in phone support, where repeating the issue is necessary, customers hate HBR
identified it as one of the four most common service complaints.
 Things Gone Wrong. The number of complaints/failures per customer inquiry. It helps you
identify products, departments, or service agents that need some ‘fixing’.
 Instant Service / Queueing Ratio. Nobody likes to wait. Instant service is the best service.
This metric keeps track of the ratio of customers that were served instantly versus those that
had to wait. The higher the ratio, the better your service.
 Average Queueing Waiting Time. The average time that queued customers have to wait to
be served.
 Queueing Hang-ups. How many customers quit the queueing process. These count as a lost
service opportunity.
 Problem Resolution Time. The average time before an issue is resolved.
 Minutes Spent Per Call. This can give you insight on who are your most efficient operators.

Prepared By: [Link] Agrawal

Email Id: pavankumar@[Link]
Mob No: 8130402515
Assistant Professor-Dept. of Management
Rajiv Academy for Technology and Management, Mathura Page 145
 KMBNMK03 B2B and Services Marketing

Complaint Handling
When a customer feels strongly enough that his or her expectations have not been met, he or she may make a
complaint.

A complaint is when a customer brings a problem to the attention of the organisation and expects some redress,
probably over and above simply supplying the original product or service that was the cause of the complaint.

Complaints are often used by regulators as one measure of the success of the organisation’s customer service.

“Complainants” are defined as customers who have had a recent problem, and have told a member of staff about
it. They have not necessarily lodged a formal complaint, and their issue may or may not be captured in an
organisation’s complaints tracking system. The research also covers ‘silent sufferers’ – customers who have a
problem but do not report it to the organisation in question. In the research we examine the different reasons
why these customers do not make a complaint even though they are dissatisfied, and the impact on their
subsequent satisfaction.

The 5 rules of complaints handling for organisations

1. Have a strategic plan

Have a clear, flexible welcoming and open policy on complaints. A complaint is a gift when a customer gives up
their time to help you improve your organisation.

2. Train your staff and management in complaints handling

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Mob No: 8130402515
Assistant Professor-Dept. of Management
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Give them confidence to tackle the difficult customers and support in their actions. Excellent complaint
handling isn’t easy and can sometimes be stressful and feel unrewarding. Confirm its importance in providing
great customer service.

3. Give complaining enough priority and authority

Staff should be aware that complaints are a top priority item for your operation, and anyone who deals with
them must have sufficient authority to resolve them completely.

4. Ensure that you can process complaints from all sources

There are 4 main ways to complain – in person, by telephone, by mail, by email/internet. Your organisation
must be able to handle all of these efficiently.

5. Set up processes to log and analyse all complaints and share with everyone

You can learn a lot about problems with internal processes, training, specific employees/managers, and product
for free.

10 processes and actions for setting up your complaints handling

1. Thank the customer for complaining

Say that you are sorry that the problem has happened. This is not an admission of guilt and it does demonstrate
respect for the customer.

2. Put yourself in the place of the customer

This will instantly give you an advantage, as you not only will have more empathy with the customer, but also
you know your business better than them and so can hopefully see the solution quicker.

3. Start with the view that the customer has a valid point, not that he/she are trying to rip
you off

It is true that there are some professional complainers, but they are in the minority. if you are a local store, you
probably know them anyway. Accepting the customer may well have a point can trigger ideas for an acceptable
resolution.

4. Get all the facts first

Let the customer give you all of the information. This will help you fully understand the situation and, if the
customer is emotional, this will give them time to calm down. Don’t offer the complainant a free gift straight
away. It’s very tempting to give the customer a gift, or vouchers. In many cases it is good service, but too often
it is done instead of solving the problem, which can lead to more complaints about the same thing because it
hasn’t been fixed.

5. Correct the mistake

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Email Id: pavankumar@[Link]
Mob No: 8130402515
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All of the other suggestions are pointless if you don’t fix the problem. Make sure that your definition of the right
fix is the same as the customer’s.

6. Learn from every complaint

Fix the process: Train staff in the issue and eliminate the fault. Wherever possible let the complaining customer
know that they have helped you resolve a problem. They’ll come back again and again and will probably spread
the word.

7. Minimise reasons for complaints

Do you have a continuous improvement culture? Do you check customer (and employee) satisfaction regularly?
Do you check the quality of the goods sold in your organisation? It costs at least 5 times as much to gain a new
customer than keep an existing one, and takes 56 days on average. Keeping this complaining customer should be
the top priority, and at these cost ratios you can afford to be generous in your time and effort.

8. Always respond

In person complainers hopefully always get dealt with, but make sure that everyone who complains on the
telephone, by letter, or by E-mail gets a rapid and appropriate response.

9. Listen to your staff

They nearly always care about your company and doing a good job and are much closer to the customers than
you are. Ask their views regularly and make changes when they are sensible. Make sure their complaints are
handled too.

10. Lead by example

It’s not that your staff don’t listen to what you say, it’s that they do listen, so make sure that you are always
setting the right example, and giving complaints your personal priority. Reward good complaints handling.

Prepared By: [Link] Agrawal

Email Id: pavankumar@[Link]
Mob No: 8130402515
Assistant Professor-Dept. of Management
Rajiv Academy for Technology and Management, Mathura Page 148
 KMBNMK03 B2B and Services Marketing

Recovery Management
In any given context of business services, service failure is inevitable as all services conforms to characteristic
of service; Intangible, heterogeneity, Simultaneous production & consumption and perishablility. No two
service encounters are precisely alike, hence increases discrepancy from each service encounters.

A service failure is usually described as service performance that falls below customer’s expectations which will
have adverse effects on their satisfaction level for service encounters.

Therefore, a service recovery involves taking proactive and reactive actions by the service organization to get
things right for the affected customers following a service failure. In order to conduct an effective service
recovery from the perspective of organization, they must understand the implications of service recovery and
take specific set of actions to conduct effective service recovery tactics and strategies.

Service Recovery Strategies

When a service failure occurs, service recovery strategies will be needed to be implemented by service
organizations. This long-term strategy will be embedded as part of organization’s overall service strategy.
Service recovery is about the combination of a variety of strategies to solve the specific context of the problem.
The proposed eight strategies by Zeithaml et al. are:

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The first strategy is to make the service fail-safe by doing it right the first time. It avoids negativities of failures
and it is the most important dimension of service quality. In order to achieve that, there must be a top
management commitment and a positive firm culture of ‘zero defection’ and appreciate ‘relationship value of
customers’ to uphold the standards of service without blindly adopting the Total Quality Management from the
product perspective.

The second strategy is to encourage and track complaints. According to research, almost 50% of customers
encountered problems by do not complain. This segment will have a higher chance of switching to competitor as
organization has no control over it. Encouraging complaint is healthy and it will allow organization to learn.
Tracking complaints will ensure no complaints are left out. Technology can be used to aid in handling of
complaints.

The third strategy is to act quickly. Complaining customers want quick responses and do not want to be ping-
pong around different employees, which will seem to be shirking responsibilities. Even when full resolution is
likely to take longer, fast acknowledgement is required to appease them. There is positive correlation between
fast service recovery with satisfaction and loyalty.

The fourth strategy is to provide adequate explanations. This allows customers to understand why the failure
occurred. According to attribution theory, customer will understand and appreciate what is going on and they
will be more forgiving. The content and the style of the delivery must be suitable to the affected customers
subjectively

The fifth strategy is to treat customers fairly. They want justice in their complaint-handling process, which
involves procedure (speed, convenience, follow-up etc), interaction (behavior of service representatives) and
outcome. Therefore it is important that the process be handled properly to return them the justice they seek.
Recent research indicates that justice considerations have a large impact on how customers evaluate firm’s
recovery effort. Therefore, if they do not perceive themselves being just, they will rate the recovery badly even
when it is perfectly done. (Tax and Brown 2000)

The sixth strategy is to cultivate relationship with customers. Long term relationship will allow customers to be
more forgiving and open to the recovery process. Cultivation of strong relationship can provide an important
buffer to service firms when failures occur. The biggest challenge would be to restore their confidence and trust
again.

The seventh strategy is to learn from recovery experience. Organizations can learn through using tools to help
evaluate experiences. They can use blueprinting, control charts, fishbone diagram (cause and effect diagram) to
use those acquired knowledge in their recovery effort. The last strategy is to learn from lost customers through
market research and get into the root cause analysis of why they left.

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Email Id: pavankumar@[Link]
Mob No: 8130402515
Assistant Professor-Dept. of Management
Rajiv Academy for Technology and Management, Mathura Page 150
 KMBNMK03 B2B and Services Marketing

Service Guarantees
A service guarantee is a marketing tool service firms have increasingly been using to reduce consumer risk
perceptions, signal quality, differentiate a service offering, and to institutionalize and professionalize their
internal management of customer complaint and service recovery. By delivering service guarantees, companies
entitle customers with one or more forms of compensation, namely easy-to-claim replacement, refund or credit,
under the circumstances of service delivery failure. Conditions are often put on these compensations; however,
some companies provide them unconditionally

Features of a Good Guarantee

(i) Easy to Collect: The remedy should be supplied immediately. For example, a dis-satisfied customer at
Hampton Inn should receive an immediate credit for the price of the dissatisfying service. The customer should
not have to drive across town to obtain payment, nor should the customer have to fill out a laborious form or
accumulate a tedious amount of documentation.

(ii) Easy to Invoke: Let us consider the Hampton Inn guarantee, for example – Suppose the customer’s air
conditioning did not work on a hot summer night, and the problem could not be rectified, in spite of bringing it
to the management’s attention. For the guarantee to be effective, management should make that night free,
without waiting for the customer to ask. If it evident that the customer is dissatisfied, and the problem has not
been solved, then management should invoke the guarantee itself.

In most cases, management does not really trust the guarantee, and, therefore, puts up barriers to invoking it.
Management may be concerned about loss of revenues, which may be linked to management compensation.
This creates a natural tension between the intended corporate culture, as desired by top management, and the
actual corporate culture, as implemented by middle management, may be the front line. Counteracting an
employee’s natural reluctance to invoke or carry out the guarantee requires careful training.

(iii) Easy to Understand: If the customer does not understand the guarantee, then that customer will not see any
benefit. For maximum effectiveness, the guarantee should be specific. For example, Domino’s pizza guaranteed
delivery in 30 minutes. That is much better than guaranteeing “fast delivery,” which is hard to pin down. Be
specific.

(iv) Meaningful: The guarantee must be about things that customers care about. A fast-food restaurant
guaranteeing 10-minute service at lunch will probably do better than one guaranteeing to address customers by
their first name. This is because fast service at lunch is important to fast-food customers, whereas personal
familiarity is not.

(v) Unconditional: If a guarantee applies only to left-handed people on Friday in a leap year when there is a full
moon, few customers will be very interested. By comparison, consider the Hampton Inn guarantee. It says
simply, “If you’re not completely satisfied, we don’t expect you to pay.

This is unconditional and you don’t need to be a lawyer to understand it. A guarantee loses power as conditions
are placed on it. Consider the Lufthansa on-time guarantee, for example. The conditions exempted 95% of the
cases to which it might be applied, reducing its effectiveness by at least that percentage.

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Benefits of Service Guarantee

(i) Sets Clear Standards for the Organisation: It prompts the company to clearly define what it expects of its
employees and to communicate that to them. The guarantee gives employees service-oriented goals that can
quickly align employee behaviours around customer strategies.

(ii) Forces the Company to Focus on its Customers: To develop a meaningful guarantee, the company must
know what is important to its customers — what they expect and value. In many cases “satisfaction” is
guaranteed, but in order for the guarantee to work effectively, the company must clearly understand what
satisfaction means for its customers (what they value and expect).

(iii) A Good Service Guarantee Studies the Impact on Employee Morale and Loyalty: A Guarantee
generates pride among employees. Through feedback from the guarantee, improvements can be made in the
service that benefits customers, and indirectly employees.

(iv) Immediate and Relevant Feedback from Customers: It provides an incentive for cu

stomers to complain
and, thereby, provides more representative feedback to the company than simply relying on the relatively few
customers who typically voice their concerns. The guarantee communicates to customers that they have the right
to complain.

(v) Reduces their Sense of Risk and Builds Confidence in the Organisation for Customers: Because
services are intangible and often highly personal or ego involving, customers seek information and cues that will
help reduce their sense of uncertainty.

Types of Service Guarantees

Further, previous research has identified four types of service guarantees:

(i) Specific

(ii) Unconditional

(iii) Implicit and

(iv) Internal

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(i) A Specific Guarantee: Signals firm commitment on specific attribute performance such as delivery time or
price. Specific guarantees allow customers to evaluate service by disconfirming attribute performance
expectations. From the firm’s perspective, a specific guarantee can serve not only as a benchmark to guide
employee efforts and firm process design, but also as a performance measure. However, the narrow focus on
some attributes may not be highly valued or appreciated by a heterogeneous customer base, although it may
appeal to certain segments.

(ii) An Unconditional Guarantee: Promises performance on all aspects of service, and “in its pure form,
promises complete customer satisfaction, and at a minimum, a full refund or complete, no cost problem
resolution for the payout.” Unconditional guarantees require a slightly different firm approach since variables
that determine customer satisfaction such as effect and cognitive evaluations of attribute performance (Oliver)
are not within the firm’s control.

Implementation of unconditional guarantees requires firms to focus efforts on managing customer interactions
instead of specific service attributes. The distinction between specific or overall (unconditional) performance is
important as it defines the scope of the marketing effort required to communicate and support the guarantee, and
has widely different implications for service guarantee design and management.

(iii) Implicit Guarantee: As the term suggests, it is an unwritten, unspoken guarantee that establishes an
understanding between the firm and its customers. Customers may infer that an implicit guarantee is in place
when a firm has an outstanding reputation for service quality. The focus of an implicit guarantee is customer
satisfaction. Previous research suggests that customers are more likely to rely on explicit firm promises instead
of implicit cues to make inferences about the firm.

(iv) An Internal Guarantee: It is “a promise or commitment by one part of the organization to another to
deliver its products or services in a specified way or incur a meaningful penalty, monetary or otherwise.” Since
implicit guarantees are unconditional guarantees (without formal expression of explicit commitment) and the
focus of internal guarantees is limited to coordinating functions and employees, the subsequent discussion
includes only specific and unconditional guarantees.

Prepared By: [Link] Agrawal

Email Id: pavankumar@[Link]
Mob No: 8130402515
Assistant Professor-Dept. of Management
Rajiv Academy for Technology and Management, Mathura Page 153