The Buying Process Used by Different Segments of Business Customers - Research Paper Example

? Power integrations case study Contents Part 4 Analyze the buying process used by different segments of business s. 4 2.Discuss the key factors that will affect the buying process and decisions for a business customer 4 3. How do customers evaluate suppliers on their ability to meet criteria and the buying process requirements? 5 Part 2 6 4.Describes the product and services bundles that business customers expect from the suppliers in the case study. 6 5.What are the product attributes that meet the business customer’s criteria? 6 6.Describe the service attributes that contribute to the total value offer 7 Part 3 8 7. Identify and discuss the marketing and distribution channels used to communicate and deliver value to their business customers 8 8.What is the industrial network developed by the company to support their business customers? 9 Part 4 9 9.Describe the marketing strategy used by the suppliers to reach the different segment of customers 9 10.How does the company segment their business customers and create value for each segment? 10 11.Describe each segment and the relevant relationship type and communication activities for each segment. 10 Part 5 11 12.Describe the types of relationships that can be developed with business customers and identify the key communication strategies that are relevant to each relationship approach 11 13.Describe the sales management approach used by the company to build relationship 12 14.Analyse the channel and sales management the company uses to deliver services and value 12 Part 6 13 15.How business customer does perceive cost, benefits and price in evaluating a product/services offer from a supplier? 13 Part 7 14 17.Discuss how the company uses the business marketing mix to create a competitive advantage and deliver value 14 Reference 16 Part 1 1. Analyze the buying process used by different segments of business customers. In the year 2001, the industry for power supply generated revenue of $22.4 billion through the sales of AC/DC converters, DC/DC converters and the DC telecommunication power systems. 44% of the sale of these products was originated from the United States; Europe and Asia accounted for 26% and 25% of the sale respectively. The merchant or independent power supply companies accounted for more than 62% of the global power supply revenues, while the captive manufacturers accounted for the remaining 38% of the revenue of the company. While the total number of manufacturers of power supplies exceeded 1000, there were only 30 power supply companies whose yearly revenues exceeded $100 million, while another three quarters yielded less than $5 million of revenue every year. The manufacturer sales of the AC/DC converter power supplies accounted for a total of $11.2 billion in the year 2001. The yearly shipment of new internal and external AC/DC power supplies totalled around 1 billion units in the same year. The custom power supplies were designed for specific applications and the standard power supplies were designed for meeting multiple applications. 2. Discuss the key factors that will affect the buying process and decisions for a business customer One of the important characteristic of business customers is the buying process and the decision making process. The organisational buying decision or the behaviour is often termed as the “decision making process” through which formal organisation tends to establish the required needs for the required products as well as services and in addition identify and evaluate and finally choose from the desired brand and suppliers. Thus two key factors of buying behaviour include the actors of exchange and the nature of exchange. The actors are the formal organisations and as a result the buying process is very complex. The number of members in the buying decision centre often varies and the role of the manger shift which depends on the buying decision and various stages of the buying decisions. Secondly the exchange volume and power in the B2B exchange differs from the individual buying decision process (Glynn & Woodside, 2009, p. 200). 3. How do customers evaluate suppliers on their ability to meet criteria and the buying process requirements? In order for firms to survive in the competitive global world and economy it becomes necessary to not only develop existing suppliers but at the same time evaluate them and discover new suppliers to fit in to the competitive global economy. Therefore suppliers becomes an integral part of the business and for this buyer needs to evaluate the suppliers performance. The important remedy is to switch on to different and new suppliers. The intent of evaluation system is to examine the suppliers based on certain based criteria which are important to customers (Bossert, 2004, p. 5). The main objective behind evaluating the suppliers is to qualify the potential suppliers than selecting the suppliers for future purpose and finally reviewing the performance of its present suppliers. A technique such as the Weighted Point is used for supplier’s evaluation which tends to give performance to each of the criteria. The rating usually provides information of the purchase decisions so that buying firms can discuss with the present suppliers about their respective performance and how to improve their performance in order to match up with the current economic condition. Thus finding a new supplier is challenging for the customers due to the need in order to verify the ability of the suppliers to meet the expectation of the buyer (Beil, 2009, p.3). In order to avoid the consequences such as non performance and hence to avoid buyers take some proactive steps and try to match up to the expected criteria. Part 2 4. Describes the product and services bundles that business customers expect from the suppliers in the case study. The company’s product line combines of the proprietary transistors also along with a variety of other important components which includes into the monolithic and integrated circuit and was constructed with the process of water fabrication process. The product line of individual product line differs both in terms of size and the number of types of the additional factors. Some of the product associated with the company is such as TOP Switch I, II; Tiny switch I, II; TOP Switch FX, GX; DPA switch; communicators and consumers and also computing, industrial and other factors. The product line helps in services such as charges of cell phone, power suppliers of the PC, AC adapter, speakers which works for both TOP switch I and II. Other product are used for LCD monitors, digital camera printers, internet appliances, note book, VoIP, temperature control and other necessary and day to day services. 5. What are the product attributes that meet the business customer’s criteria? In the above answer the different product lines have been discussed. However these product lines have different attributes for its business customers. Tiny Switch is a solution towards energy leakage which is a multibillion and a problem that was mostly invisible to the customers. With the introduction of EcoSmart technology, the customers were aware of the energy efficient power suppliers. Advantages included a reduction of almost 50% in the power supply and need of only one global design. In the year 2000 POWI had introduced the top Switch GX and FX which had in build eco smart technology and a soft start function. The GX and FX product featured several functions related to programs and thus these features of programmable hence were incorporated into the Tiny Switch II which was introduced in the year 2001. The DPA Switch was launched into the market in 2002 was the first DC integrated circuit. Some of the potential applications were router, server and also network line card, equipment of the telecom central office. This product however was able to meet the business customer’s criteria of improved technology so that they are able to compete with the competitive world. 6. Describe the service attributes that contribute to the total value offer The above products have shown various services which contribute to the total value offer. Its new technology helps the business customers to compete globally with its competitors in an around the globe. Its eco smart technology adds on to the competitive advantage. The company strategy which was to target the application constituting of high volume and initially to focus on the markets that would benefit the most from it’s highly power conversion ICs. It had its sales offices based on different countries such as China, Germany, England, India, Korea, Japan, Singapore and Taiwan. However the business customers were not satisfied with the product but the executives of POWI believed that the power suppliers which featured that the Link Switch offered several advantages over the power supplies. It would provide lower shipping costs which is relative to competing the linear design and the appeal of end users in the sense of matching with the high tech product and power supply. Thus the potential products application included wireless handset, cordless phones, digital camera, PDAs, MP# player, home appliances and shavers. Part 3 7. Identify and discuss the marketing and distribution channels used to communicate and deliver value to their business customers The company targets the high volume applications and focuses on markets which have the maximum potential to get benefited through its highly integrated power conversion ICs. The company sells it ICs to the distributors, original manufacturers of equipments and the merchant power supply manufacturers. Its distributors accounted for a huge amount of the company’s revenue. In the year 2001, distributors accounted for almost 51% of the entire revenue of the company. The company divided its customer base into four end markets. It has sales offices in places like California, Illinois, Georgia, China, India, Korea, Taiwan, Singapore, Germany and England. The company’s marketing efforts were directed towards incorporation of POWI products with new design of power supplies. The company provided extensive application and design support, which included provision of data books; application notes, design guides and personal computer based software etc. It also provided engineering support from the company headquarters located in San Jose and the field application engineering labs. Almost 35% of the technical workforce of the organization was dedicated to the application engineering. 8. What is the industrial network developed by the company to support their business customers? The company to support its business customers has used the network of price and value. The industrial network developed by the company is through value and price. Part 4 9. Describe the marketing strategy used by the suppliers to reach the different segment of customers The company has targeted various business customers ranging from the DC/DC converter market which were used to transform the DC power within the DC devices. The marketing strategy adopted by the company was of differentiation strategy by introducing different technology for its business customers which would help the business customers to differentiate itself from the rest of the globe. And in the era of new technology it becomes increasingly necessary to update and bring into new technology. The company has introduced new technology such as the eco smart technology for their business customer who adds on to the competitive advantage of the customers and also of the suppliers. Another market segment is the power management integrated circuit market. The total market for such segment was about $9.07billion in the year 2001. It was predicted that the annual average growth would be approximately 5.8 % in 2006. As a result almost about 805 of the firm competed into the market segment and some of the multinationals included Mitsubishi and others. The main reason was to diversify the risk and thus indulge in competitive advantage and success globally in the competitive economy. 10. How does the company segment their business customers and create value for each segment? It becomes necessary for the company to segment its product in order to create value for each of its segment and create an additional advantage for its customers and suppliers. The company has segmented its business customers based on the needs of the different customers and hence is able to create value for each of the segment. The company has created different segments such as one segment for the power supply technology, power supply market which aims to take care of the different requirements of the business customers. Therefore it can be said that the company has segmented its business customers according to the needs and requirements of the customers. The main objective of the company is to fulfil the requirements of the business customers and this is done through segmenting the customers required and need with the required products which have been introduced by the company in the due course of time. 11. Describe each segment and the relevant relationship type and communication activities for each segment. The different segment of the company includes the power supply market which accounted to 62% of the global revenue of supply. Although it was noted that the total number of power supply has manufactured more than 1000 which accounted to 30 power supply organisations and had exceeded annual revenue of $100 million. The next segment undertaken by the company is of AC/ DC power supply market. The total power supplies accounted to $11.2billion in the year 2001. Custom power suppliers were designed to take care of the specific applications and the standard were designed to take care of the multiple application. The modified standard power was basically the standard products with slight changes in order to fit the specific applications. The DC/DC converter was mainly used to transform the power with its devices. The benefit included greater energy efficiency, voltage regulation, greater customization and significant reduction in the usage of copper. Key application included network and telecommunication line card, the high end PC servers, internet phones and industrial applications. Some of the communication activities included such as personal selling which forms an integral part in B2B marketing. It is usually carried on when the products and services offered are complex; efficient for sophisticated and also knowledgeable customers who usually requires a high level of personal services. Part 5 12. Describe the types of relationships that can be developed with business customers and identify the key communication strategies that are relevant to each relationship approach There is various kind of relationship that can be established and can help in the development with the business customers. The customers improve its business operations in order to implement its long terms relationship which would ultimately lead to long term success for the organisations. There are as stated above different types of relationship which gets established between the sellers and the buyers (Ingram, et al, 2012, p. 9). Business is about connecting and connection are not just matter of what one knows but it’s about the customers and the kind of relationship one firm tends to have with the organisation. The degree of relationship can be defined as intimate and deep and other to be more sallow and of short term basis. The relationship often differs based on purchase volume, frequency of contact between the people and the seller in the organisation, development of the product and technology and other physical attributes (Morris, 2001, p. 112). Therefore the different type of relation included customer partnership, supplier partnership, lateral or horizontal partnership and also internal partnership which involves the employees also. Some of the key communication strategies are targeted and focused communication push and pull strategy and reputation strategy. 13. Describe the sales management approach used by the company to build relationship Sales team and the sales management process plays a vital role in the process of building up of relationship in the organisations and is an integral part. The sales management approach includes the following steps, Lead generation, where the customers tend to respond to the direct mail or even through web request. The next step is lead qualification where the potential customers are screened through the required need for the product or the services, their buying interest, and others. The third step includes the bid and proposal which are prepared to meet the requirements of the customers followed by negotiation and sales closure. Negotiation of price, its terms and conditions are however followed by an agreement through a binding contract and fulfilment and finally customer care and support. 14. Analyse the channel and sales management the company uses to deliver services and value Marketing and distribution channels contribute to the value proposition and to enjoy an edge towards the competitive differentiation. Thus channel strategy is a long term and usually focuses on the creation as well as maintenance of the channels in order to ensure a smooth flow of the products and the services. Thus good supply chain management is based on good relationships. The company delivers services and value to its customers by way of reducing the complexity. The company has streamlined the number of points along with the length of the channel and thus improve the communication and the relationship in order to improve the efficiency. It tends to increase the value, efficiency in transactions through which it is possible to improve and reduce the cost and at the same time improve the efficiency. Through channel members the service quality also gets improved. Part 6 15. How business customer does perceive cost, benefits and price in evaluating a product/services offer from a supplier? Business customers tend to perceive cost by way of evaluating the cost of the product and the amount spent on the suppliers and their product. The product or the services offered by the suppliers should be cost effective and should profit the business customers in one way or the other. The product and the services should offer some kind of benefits to the business customers who should be able to keep the products and the services at par from the rest of the supplier’s products as well as suppliers. The company product line has offered the business customers both cost and benefits through its new build product and services. The eco smart technology developed by the company has been able to provide benefit to the customers and to the environment as a whole. Therefore it can be said that the company has been able to meet up to the expectation level of its business customers. With regards to the price, POWI has been able to keep up the level of its price to meet the customers need and affordability and has succeeded at a high rate. 16. Explain the pricing strategy used by the company The company has been performing well both in terms of its services, products and price range. The products have been accepted by the business customers and have used variety of technology to suit the basic needs of its customers. Assuming the pricing strategy to be based on the strategy of price skimming where the products and the services are usually charged a higher price at the introduction stage and after acquiring the market share, the rate of the products are reduced. This is mainly done because with the introduction of new technology, a huge amount has been spent and thus the supplier’s needs to overcome the cost incurred by way of charging a higher price. Part 7 17. Discuss how the company uses the business marketing mix to create a competitive advantage and deliver value Marketing mix comprises of the four Ps that are the most essential in marketing mix strategy. The four P includes product, price, place and promotion. The company has a huge product line as discussed before and each of the product aims to serve its business customers through one way or the other. The product includes Top Switch I and II, Tint Switch, and others. The prices are charged high by POWI and it is assumed that in order to bear the cost of production, the company uses the strategy of market skimming to increase the market share and create brand awareness among the business customers. POWI has been able to establish its offices in different part of the globe and it can be said that the marketing channel of the company are effective and has helped in the distribution of its products and services. Some of the countries where the products and services are available are China, Germany, England, India, Korea, Japan, Singapore and Taiwan. The company has used the means of public relation and both push and pull strategy in its promotional techniques. Promotion is one of the most important and essential factor for a product to be successful and thus it has applied its promotional strategy effectively. Along with the marketing mix the company has been able to deliver value and gain a competitive edge over its competitors. Reference Beil, D., 2009. Supplier Selection. [Pdf]. Avilable at: < http://www-personal.umich.edu/~dbeil/Supplier_Selection_Beil-EORMS.pdf> [Accessed 11 June 2012]. Bossert, J. L., 2004. The Supplier Management Handbook. USA: ASQ Quality Press. Glynn, M. S. & Woodside, A. G., 2009. Business-to-business Brand Management. Emerald Group Publishing. Ingram, T. N. Et al., 2012. Sales Management: Analysis and Decision Making. M. E. Sharpe. Morris, M. H. Et al., 2001. Business-To-Business Marketing: A Strategic Approach. SAGE. Read More