.Chapter

13

Products and Services for Businesses

Modular:

Afjal HossainAssistant Professor, Department of Marketing

PSTUMcGraw-Hill/Irwin International Marketing, 13/e

Major Categories U.S. Exports

• Insert Exhibit 13.1

Demand in Global Business-to-Business Markets

• Demand in industrial markets is by nature more volatile

• Stages of industrial and economic development affect demand for industrial products

• The level of technology of products and services make their sales more appropriate for some countries than others

The Volatility of Industrial Demand

• Cyclical swings in demand– Professional buyers tend to act in concert– Derived demand accelerates changes in markets

• Measures to manage volatility:– Maintain broad product lines– Raise prices faster and reduce advertising

expenditures during booms– Ignore market share as a strategic goal– Eschew layoffs– Focus on stability

Derived demand can be defined as demand dependent on another source.

Derived Demand Example

• Insert Exhibit 13.2

Stages of Economic Development

• Stage 1 – the traditional society• Stage 2 – preconditions for takeoff• Stage 3 – take off• Stage 4 – drive to maturity• Stage 5 – the age of mass consumption

Technology and Market Demand

• Trends spurring demand for technologically advanced products:– Expanding economic and industrial growth in Asia– The disintegration of the Soviet empire– The privatization of government-owned industries worldwide

• The companies with the competitive edge will be those whose products are:– Technologically advanced– Of the highest quality– Accompanied by world-class service

Quality and Global Standards

• Perception of quality rests solely with the customer– Level of technology reflected in the product– Compliance with standards that reflect customer

needs– Support services and follow-through– Price relative to competitive products

• Relevant quality features

Quality is Defined by the Buyer

• How well a product meets the specific needs of the buyer

• The price-quality relationship• Product design must be viewed from all aspects of use

– Climate– Terrain

• Total Quality Management (TQM)• Lack of universal standards• Country-specific standards• The metric system

ISO 9000 Certification: An International Standard of Quality

• Positively affects the performance and stock prices of firms

• Certification of the existence of a quality control system a company has in place to ensure it can meet published quality standards

• Generally voluntary• EU Product Liability Directive• Now a competitive marketing tool in Europe

and around the world• The ACSI approach

Business Services

• For many industrial products the revenues from associates services exceed the revenues from the products– Cellular phones– Printers

• Leasing capital equipment• Services not associated with products– Boeing at-sea-satellite-launch services– Ukrainian cargo company space rental on

giant jets

After-Sale Services

• Installation• Training• Spare and replacement parts– Delivery time– Cost of parts

• Service personnel• Crucial in building strong customer loyalty• Almost always more profitable than the

actual sale of the machinery or product

Other Business Services

• Client followers• Mode of entry– Licensing– Franchising– Direct investment

• Protectionism• Restrictions on cross-border data flows

Expansion of U.S. Law Firms in Selected Cities Worldwide

• Insert Exhibit 13.3

Trade Shows: A Crucial Part of Business-to-Business Marketing

• Secondary methods for marketing:– Advertising in print media– Catalogs– Web sites– Direct mail

• Trade shows have become the primary and most important vehicle for doing business in many foreign countries

• Total annual media budget spent on trade events:– Europeans – 22 percent– Americans – 5 percent

Trade Shows: A Crucial Part of Business-to-Business Marketing (continued)

• Trade shows:– Provide the facilities for a manufacturer to exhibit

and demonstrate products to potential users– Allow manufacturers to view competitors

products– Are an opportunity to create sales and establish

relationships with agents, distributors, franchisees, and suppliers

• Online trade shows:– Become useful in difficult economic and/or

political circumstances– Are obviously a less than adequate substitute for

live trade shows

Relationship Marketing in Business-to-Business Contexts

• It is not a matter of selling the right product the first time, but rather of continuously changed the product to keep it right over time.

• The objective of relationship marketing is to make the relationship an important attribute of the transaction, thus differentiating oneself from competitors.

• Using the Internet to facilitate relationship building and maintenance– Cisco Systems– IBM