Managing Business Markets

Creating Value
New Offering Realization
 New Offering Realization

• New offering realization is the process of developing new

core products or services, augmenting them to construct
market offerings, and bringing them to market.
 New Offering Realization
Why pursue new offering realization?

• To strengthen market position

• To improve resource utilization
• To renew and reinvigorate the firm
 Crafting Realization Strategy

Technology Strategy

Technology
Assessment and
Forecasting

Development Project
Aggregate
Goals & Management &
Project
Objectives Execution
Plan

Market
Sensing

Market Strategy

(Adapted from Wheelright & Clark 1992)

Designing Realization Process Model
Common Features of Models

• a funnel process
• distinct phases of activities
• “gates” between phases
• timetables
• milestones
• periodic in-process reviews
 Designing Realization Process Model
How can a firm increase speed-to-market?

• move from sequential to concurrent engineering

• replace “stage gates” with “fuzzy gates”

 Designing Realization Process Model
How can a firm better utilize its business networks during the realization
process?

• early supplier involvement

• outsourcing
• licensing
• cross-licensing
• collaboration
• agree to a “dominant design” early on
 Designing Realization Process Model
How can a firm make model market-driven?

• Better linking technological developments to

customer requirements:
• create focused research centers
• conduct R&D in-the-field
• use Quality Function Deployment (QFD)
• conduct value assessments
• re-examine value proposition at each “gate”
 :
Creating Value:
Managing Market Offerings
 Managing Market Offerings

1. Flexible Market Offerings

2. Becoming More Flexible

3. Getting an Equitable Return on Services

 1. Flexible Market Offerings

Changing marketplace requirements appear to create a

paradox for the business market manager:

– more customized offerings

– Customers increasingly expect differentiation and

added-value in the form of an augmenting bundle
of services, programs, and systems

– Yet, customers are demanding the lowest total cost,

or worse, the lowest price.
 Flexible Market Offerings
No matter how markets are segmented,
residual variation among firms within
segments remains.

To more closely meet customers’

varying requirements at low cost:

– On the product side, firms have responded with:

• product platform designs

• modularization
• flexible manufacturing
– On the services, programs and systems side, firms are
beginning to respond with:

• flexible market offerings

 Flexible Market Offerings

Naked Solutions, With Options provide

Customers with:

– greater choice
– more-customized services
– superior value by better meeting their
individual requirements

Naked Solutions, With Options provide

Suppliers with:

– lower costs in service delivery

– greater latitude in pricing decisions
– a market offering for even the stingiest
accounts
– a platform for consultative selling
 2. Becoming More Flexible

To move to flexible market offerings,

suppliers need to:

1. Articulate Present Market Offerings

2. Assess Customer Value and Own Cost &

3. Formulate Flexible Market Offerings

for each market segment.

 3. Getting an Equitable Return
on Services

Decide upon a business model for service provision:

1. No charge (Standard)

2. Partial cost recovery

3. Full cost recovery

4. Supporting profit center

5. Stand-alone profit center

 3. Getting an Equitable Return
on Services

Practical Considerations:

– Putting into practice a philosophy that products and services

generate value.

– Having capable systems support for service provision business

model

– Responsibility and compensation for selling services

– Breaking away from the pack

 3. Getting an Equitable Return
on Services

A Final Practical Consideration:

To achieve success, supplier managers need to develop a most

difficult to acquire skill:

• Adroitly saying “No” to some

customers
Practiced deftly, this skill builds a reputation for the supplier within
the industry as firm, consistent and fair.
Managing Business Markets:
Delivering Value
 Gaining Customers

Gaining customers is the process of

• prospecting for new business relationships
• assessing mutual fit between customer requirements
and supplier offerings and priorities &
• fulfilling the initial order to the customer’s complete
satisfaction.
 Prospecting Funnel
• Leads are names of possible clients that managers
generate from databases.

• Inquiries are customer-initiated business contacts

with a supplier firm.

• Prospects are leads and inquiries that the supplier

firm has qualified as having significant sales and
profit potential.
 Gaining Customers

1. Methods for prospecting for new customers

2. Understanding customers; determine match

3. Organising the selling effort

– Tailor the value proposition
– Negotiate an equitable transaction
 Gaining Customers

1. Methods for prospecting for new customers

– Generating leads from business market databases
– Prompting and gathering enquiries via IMC
– Qualifying leads and enquiries
– Getting sales force to follow with the prospects
 Gaining Customers

2. Understanding customers; determine match

Understanding value dimensions

Mapping the DMU
Building the value stack
 Gaining Customers

3. Organising the selling effort:

– Transactional
– Consultative
– Enterprise selling
 Prospecting Funnel

Target Market Segments

Leads

Inquiries

Prospects

New
Customers

Established
Accounts

Loyal and Profitable Customer Base

 Prospecting Funnel
Intensive Growth Strategies

Current New
Offerings Offerings

Current Market Product

Markets Penetration Development

New
Markets Market
Diversification
Development
(Based on Ansoff 1957)
Transactional, Consultative, and Enterprise Selling

• Transactional Selling focuses on gaining the

immediate order as quickly as possible.
• Consultative Selling entails gaining an in-depth
understanding of customer requirements and
operations, contributing analytical expertise to resolve
pressing problems, and becoming a long-term, value-
adding resource.
• Enterprise Selling requires senior managers to
convincingly elaborate the benefits of combining and
sharing complementary competencies and capabilities
across firms to form a strategic alliance.

(Rackham and DeVincentis 1999)

 Transactional Selling

1) Call Preparation and Planning

2) Opening (Complement, mystify, intrigue
buyer; Opening Statement)
3) Selling Benefits (personalise)
4) Handling Objections
5) Managing the Presentation
6) Closing
Gain the order as quickly as possible
 Consultative Selling
The SPIN Selling Approach
1) Preliminaries
2) Investigating
3) Demonstrating Capabilities
4) Obtaining Commitment
SR a long term trusted value added resource

(Rackham 1988)
 Consultative Selling
Investigating

SPIN sequence of questions:

1) Situation Questions -- data gathering questions about
facts and background.
2) Problem Questions -- explore problems, difficulties, and
dissatisfaction areas which may be exploited.
3) Implication Questions -- examine the consequences of
customer problems.
4) Need-Payoff Questions -- get the customer to tell you
the benefits your product could offer.
The purpose of questions in the larger sale is to uncover Implied Needs and to develop
them into Explicit Needs.

(Rackham 1988)
 Consultative Selling
Obtaining Commitment
Types of Sales Commitments:
1) Orders -- Where the customer makes a firm commitment to buy
2) Advances -- Where an event takes place, either in the call or after
it, that moves the sale forward toward a decision
3) Continuations -- Where the sale will continue but where no
specific action has been agreed upon by the customer to move it
forward
4) No-Sales -- Where the customer actively refuses a commitment

(Rackham 1988)
End of Session Review Slides