MarketingEssay Preview: MarketingReport this essayThe term “marketing” usually conjures images of consumer packaged goods and advertising campaigns, but, as the millennial decade winds down, business-to-business (B2B) marketing actually dwarfs the consumer side of the business. Forecasters expect domestic B2B purchases will continue to total trillions of dollars annually. For example, the available data comparing B2B and B2C e-commerce have estimated that domestic B2B online sales totaled $2.7 trillion in 2004, compared to just $184 billion for online retail sales. By any measure, estimates on B2B commerce dwarf what U.S. consumers buy in a typical year.
More important than B2B marketings relative size, however, is its role as a complex discipline integral to selling products or services to business, industrial, institutional, and government buyers. In past decades, innovative products, great engineering, or great salesmanship alone might have been enough to close a business sale. But todays shorter product lifecycles and the intense pressures of global competition no longer allow companies the luxury of “build it and they will come” thinking.
Just what is business marketing anyway? Because the answer forms the core of our mission at the Institute for the Study of Business Markets (ISBM), weve spent considerable time discussing it with the leading marketers who comprise our membership. Through these discussions it became clear that the foundation of the B2B marketing discipline is to both understand the concept of value–in tangible, numeric terms–and implementing a systemic process for managing value. We worked with our members and key thought leaders to define a framework for the B2B marketing process at the highest level. This “Value Delivery Framework,” shown in Exhibit 1, lists the categories of processes that define business marketing management.
The Value of Management Systems (VMS) and the System of Management (VM)
While the term “value assurance” is generally defined as having a measurable, “objective, quantifiable value” or “value per dollar” (VPC), the B2B marketing model has often associated a unique or measurable function to its members. This term has been applied in B2B marketing frameworks to characterize value-assurance systems (YATs/Ys) and to assess product management success, as well as to analyze the organization to determine their underlying systems and processes.
For instance, a YAT, which has a defined value, is a system for monitoring the quality of a product or service(s) that are made available for purchase to employees of the company. One of the primary tools of B2B management systems (RMSs) is the use of the B2B YAT. Although a YAT is a set of steps in the design, construction or maintenance of a system (e.g. program), the program is designed to be validated before, during, or after the purchase and distribution process. The B2B YAT is used to measure, measure, and evaluate quality and to determine the relative amounts expended, the need for inventory reduction over time, cost savings, and service delivery. It is important to recognize that the value of such a system, when properly configured, can reduce employee cost and productivity for employees on the service delivery, inventory management, administrative, and marketing levels. One component of this process is to monitor or evaluate product management readiness and performance to minimize time spent in the preparation of the unit or individual product.
A YAT is an effective “value management system to manage and manage the organization to identify, manage, and improve business performance”; in other words, it measures value, results, and measures the quality and quantity of a company’s products & services so that they are as effective for its customers as they can be for its leaders. In other words, a YAT identifies, examines, and assesses the effectiveness of the organization’s product management system in delivering its business goals. In a B2B, to create or maintain a YAT, a key characteristic of a YAT is a “value-attributed value.” For instance, a YAT evaluates all product and service cost. In one embodiment, a YAT can serve as the basis for determining each company’s market performance and to provide the customers with relevant information that informs them of which products to purchase versus which products to decline. Similarly, a YAT can be used to identify the cost of specific product categories and to assess the cost of certain segments of the business to the best benefit of its customers, to provide a baseline of company profitability, or in the case of the YAT, to demonstrate that a specific segment’s business results were within a reasonable range of the expected market prices.
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