Overview: Business texts typically have an overemphasis on old news. Undergraduate students today are confronted with texts that are behind the curve of current research and practices in the marketplace. Regardless of the edition number of the text, most authors are not willing (or able) to discard an outdated format and attack the subject from an entirely new (yet appropriate) perspective to reflect current thinking and desirable practices. This is probably one of the key reasons that practicing managers today seldom reference texts for gaining a greater understanding of specific situations confronting them in carrying out their craft within the organization.
There has been a concerted effort in recent reviews to bring you books that fortunately fail to follow tradition and this month is no exception. Business Market Management: Understanding, Creating, and Delivering Value is a radical, yet necessary departure from the classic business marketing text. As you scan the table of contents, you are struck by the absence of the historical subject headings found in most texts targeted to this segment. You will not find the neat division of product, price, place, and promotion as they relate to the business marketer as key divisions of the text. This same scan will reveal that the text centers on value as the defining principle from which all subjects are then crafted. Value is treated as three major sections of the work, the first being, Understanding Value followed by Creating Value and concluding with Delivering Value. There is a hint of classical marketing in the chapter titles, yet they do not betray the concepts suggested by the section titles. This is a text on value and the marketing activities that should be pursued in understanding, creating, and delivering value to the business customer. This is not to say that the classical activities of marketing have been somehow eliminated in the process. They have only been dissected and reassembled in a format that fits the global order of intense competition and customer demands as they currently exist in the business marketing community.
Content
The concept of value is nothing new in the consumer marketing field where it is becoming fully exploited in the literature; yet it is only recently that competition has reached a level where the business customer must seek out the best value, not necessarily the lowest price. One of the key areas addressed by the authors is that few business organizations know how to effectively determine and present value to the business customer. This is critical to justify the potential price that can be achieved, even in the face of increasing pressure from competing offerings. They use value to express in monetary terms the functionality or performance of a market offering in specific business applications. This would imply that a given product in various business applications could achieve different prices depending on its value in each application. The job of the business marketer is to define and quantify the value offered in each application to maximize the profitability of the product to the firm. Value is thus determined in terms of the economic, technical, service, and social benefits a business firm receives in exchange for the price it pays. The authors regard value in business markets as a construct, similar to market share. Treating it as a construct, the business marketer can only estimate value similar to only estimating market share.
From the first chapter, the authors indicate a number of factors that significantly ‘‘<$>\ldots<$> affect a customer′s perception of the value it receives<?tlb>:
he length of customer lead times,
variation from promised delivery dates,
condition of the product on arrival,
sales calls and order initiation requirements,
credit, billing, and collection procedures,
effectiveness of after‐sales support,
product documentation and instructions,
product performance, fit, and function,
product downtime frequency and duration, and
maintenance cost and difficulty′′.
It can be seen that factors other than the product itself can significantly affect a customer′s perception of value. They continue by pointing out that most firms enjoy a make‐versus‐buy decision power; thus, the value provided by a supplier must exceed the price paid. ‘‘This difference between value and price is the customer incentive to purchase.′′ With this approach, the advantage of raising or lowering of price should be strictly to better align the price with the customer′s perception of value. If the value of the product or service has been properly researched and defined by the offering company, then a price increase should not diminish the customer′s desire to purchase, although the incentive to purchase has been decreased.
For this to have real application, the authors point out that the marketer must perform an actual assessment of value in the marketplace. The supplying firm needs to recognize that for different segments and for various customers within a specific segment, the value of a given product will vary. The business marketer must direct resources into properly defining actual value to the various segments served. This is done by defining specific values assigned to individual benefits related to corresponding features. Meeting specifications is no longer enough; intimate knowledge of each customer is required to assess the associated values. The authors suggest a value analysis needs to be conducted by a cross‐functional team within the customer firm, often with supplier personnel assisting in the process. This points to a new course of action to be followed by the business‐marketing manager in assuring supplier success. This should not come as a surprise to anyone who has been a student of marketing for any period of time. Page 12 provides Peter Drucker′s 1980 comment, ‘‘The true meaning of marketing [is] knowing what is value for the customer.′′ So why is this book news in the business‐marketing field? Drucker′s comments were readily accepted by consumer marketing advocates, but in the business‐marketing arena it is just now getting noticed. As is pointed out, neglected or absent in most firms in business markets is any machinery to better perform value assessment. Such assessment will provide an advantage for a firm over its competitors
Value‐based segmentation moves beyond the conventional basis of partitioning markets based on the size of the business firm or geographical proximity. Emerging to the forefront now are such segmentation issues as product application, customer skill base, and usage definitions. The more creative and definitive the business marketer is in defining these unique segmentation parameters, the more the firm is able to differentiate itself in the segments served. Following these thoughts, the authors then update the ‘‘classical′′ definitions associated with the four Ps of marketing as follows:
(1) Product. Business marketers construct flexible market offerings that consist of naked solutions ‐‐ only those product and service elements that all segment members value ‐‐ wrapped with options that some, but not all, segment members value. In this way, the supplier′s offerings are responsive to the residual variation in customer requirements and preferences that remains, no matter how finely the market is segmented.
Pricing.Pricing is based on what a market offering is worth to the customer, rather than its cost to the supplier or simply matching a competitor′s price.
(3) Promotion Marketing communications are more focussed, tailored to varying requirements for gaining customers or sustaining relationships with customers and resellers, and shape and reinforce the supplier′s value proposition to each constituency.
(4) Place. Business marketers design distribution channels that are customer‐driven. They also provide channel offerings that build marketplace equity, and implement cooperative channel arrangements that are adaptive to customer requirements, which sometimes can change from order to order.
During the introductory phases of the work, the authors detail the importance of international marketing ‐‐ a subject that is interwoven throughout each chapter and is not treated as an addendum in each area. Some of the international flavor is classical in that it involves language and culture issues (that we have come to expect) but expands to deal with present‐day realities such as cross‐border negotiation and dispute resolution issues. The Nancy Adler quote was especially appropriate, ‘‘ ‘When in Rome, do as the Romans do?′ No, when in Rome, or Beijing, or Osaka, act like an effective foreigner <$>\ldots\<$> In preparing for an international negotiation, team members should learn as much as possible about the foreign culture, its negotiating patterns, and its style of negotiating with outsiders, and then approach the actual bargaining sessions with as wide a range of options and alternatives ‐‐ in behavior and substance ‐‐ as possible.′′ The point is made that since business marketing primarily deals with functionality and performance, offerings in the international marketplace are valued similarly in most countries compared to the personal preferences involved with consumer goods directed to foreign buyers. Again, the authors are pragmatic and direct with the content of the subject area.
Analysis
The text is well laid out with an abundance of examples to support the author′s developing theories surrounding the value concept. The examples that are included follow boxed insert profiles that are easily recognized as the reader progresses through the text material. The examples support the international integration with many of them being European or Asian firms. Each chapter has an overview and summary, but lacks review questions for a student verification of understanding for academic use of the work. The titles of the chapters are:
(1) Introduction and Overview,
(2) Market Sensing: Generating and Using Knowledge about the Marketplace,
(3) Understanding Firms as Customers,
(4) Crafting Market Strategy,
(5) Managing Market Offerings,
(6) New Offering Realization,
(7) Business Channel Management,
(8) Delivering Value,
(9) Sustaining Reseller Partnerships, and
(10)Sustaining Customer Relationships.
The ten chapters average 41 pages with chapter nine containing a four‐page Appendix assisting in content issues for writing reseller sales agreements. An outline of a typical reseller sales agreement and policy statements discussion concludes the Appendix. The work has strong underpinnings of marketing intelligence with over 50 cites per chapter. The authors have not been afraid to cite worthy efforts from the popular business press as well as the usual journals. Thus, this book will find interested readers in business as well as academic circles. The book is printed in two‐color, using screens to give the appearance of greater color diversity. As can be seen from the samples included in this review, the writing style is easy to follow and understand.
The only drawback found was the number and length of the chapters. From an academic perspective, the chapters are long and will have to be creatively distributed over a typical 15‐week semester. For the practitioner, shorter chapters would be easier to digest in the short windows of reading time confronting most executives today.
For those teaching the subject, the authors have assembled a strong support package consisting of a teaching manual containing study guides for each chapter, suggested cases to use, a set of transparencies of advertisements for firms that reinforce concepts in the book, and a disk containing eight PowerPoint presentations. For what it′s worth, I plan to adopt this text for my next business marketing class scheduled for summer of 1999.
In conclusion, this text is an excellent step forward for the field of business marketing and will enable the reader to gain an effective perspective on the status of this field in the emerging competitive global marketplace. The perspective of value as the underpinning for business marketing is nothing more than a current assessment of the market as it is today. We thank Jim Anderson and James Narus for delivering reality in an understandable framework in this most recent contribution to business marketing management.
