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Business Market Management
Business Market Management: Understanding, Creating, and Delivering Value
Overview
Business market management is the process of understanding, creating, and delivering value to targeted business markets and customers. Business market management provides a means of gaining an equitable return on the value delivered and of enhancing a supplier firm's present and future profitability. It is a progressive way of thinking about business markets and what supplier firms are attempting to accomplish in them. Business markets are firms, institutions, or governments that acquire goods and services either for their own use, to incorporate into the products or services that they produce, or for resale along with other products and services to other firms, institutions, or governments.
Chapter 1 provides an overview of business market management. In doing so, it also provides an overview for the book, which is organized around nine constituent processes of business market management. Some fundamental ideas recur throughout this book. We think of these as defining or guiding principles of business market management:
- Regard value as the cornerstone of business market management;
- focus on business market management processes;
- stress doing business across borders; and
- accentuate working relationships and business networks.
We sketch the business market processes and guiding principles of business market management in Figure 1.1. The figure organizes the business market processes, which constitute business market management into three groups, based on whether they are a part of understanding, creating, or delivering value. We devote a chapter to each business market process.
Business Market Management and Business Marketing
We have purposefully chosen Business Market Management rather than Business Marketing for the title of this book. Why? Isn't this a book about business marketing? Yes, it is a book about business marketing, but we recognize that the nature of marketing practice in business markets is changing. A growing requirement for marketplace success is that marketing work processes, such as segmentation, targeting, and positioning, take place within business market processes such as market sensing and managing the market offering. Business market processes cut across functional areas and depend upon seamless cross-functional cooperation for marketplace success. Therefore, business market management requires significant participation from many functional areas, not just marketing, to decide what market segments and customer firms are of primary interest (i.e., targeting) and how to deliver superior value to them (i.e., positioning). We think that business market management better conveys this broader responsibility for the marketplace, and this perspective makes our book not only of greater interest to those in a marketing functional area, but also to those in related functional areas and general management. What are the constituent business market processes of business market management and what role does business marketing play?
Business Market Processes
As we depict in Figure 1.1, the business market processes that constitute business market management can be organized into three groups, based on whether they are a part of understanding, creating, or delivering value. Because a number of market initiatives are underway at any given time, the firm will be engaged in most or all of these business market processes concurrently.
Market sensing, understanding firms as customers, and crafting market strategy are the component business market processes for understanding value. Market sensing is the process of generating knowledge about the marketplace that individuals in the firm use to inform and guide their decision making. It is a market-driven process of learning about present and prospective customers and competitors, as well as other actors that affect them and the firm, such as resellers and regulatory agencies. The substantive facets of market sensing are: defining the market, monitoring competition, assessing value, and gaining customer feedback. Understanding firms as customers is the process of learning how companies rely on a network of suppliers to add value to their offerings, integrate purchasing activities with those of other functional areas and outside firms, and make purchase decisions. Crafting market strategy is the process of studying how to exploit a firm's resources to achieve short-term and long-term marketplace success, deciding upon a course of action, and flexibly updating it as learning occurs during implementation. We discuss these business market processes in chapters 2, 3, and 4, respectively.
Managing market offerings, new offering realization, and business channel management are the component business market processes of creating value. Managing market offerings is the process of putting products, services, programs, and systems together in ways that create the greatest value for targeted market segments and customer firms. New offering realization is the process of developing new core products or services, augmenting them to construct market offerings, and bringing them to market. Realization encompasses all of the activities a firm does to transform an idea into a market offering that the firm commercializes. Business channel management is the process of designing a set of marketing and distribution arrangements that fulfill the requirements and preferences of targeted segments and customers, creating value through direct sales forces and logistics systems, and constructing offerings for resellers that build marketplace equity. We devote chapters 5, 6, and 7, respectively, to these business market processes.
The component business market processes for each of the first two sets come together for the firm to understand and create value, respectively. In contrast, the firm delivers value in three distinct ways. We indicate this in Figure 1.1 by the direction of the arrows linking the business market processes to the metaprocesses of understanding, creating, and delivering value.
Gaining customers, sustaining reseller partnerships, and sustaining customer relationships are the business market processes for delivering value. Gaining customers is the process of prospecting for new business relationships, assessing the mutual fit between prospective customer requirements and supplier offerings and priorities, making the initial sale, and fulfilling the initial order to the customer's complete satisfaction. Sustaining reseller partnerships is the process of a supplier and its resellers fulfilling commitments they have made to one another, strengthening overall channel performance, and working progressively together to continue to fulfill changing marketplace requirements. Sustaining customer relationships is the process of fulfilling mutually agreed-upon customer requirements in a superior way over time, and pursuing a targeted share of customer's business through building mutual self-interest. We discuss these business market processes in chapters 8, 9, and 10, respectively.