BUSINESS MARKETS AND CRM Assignment Help

Feedbacks from the lecturer:

• The seller is APMC.
• The buyer is the company in Austria that produces soft drinks.
• The products that you write about is shrink bags, Stretch film and equipment.
• The products that APMC sells to the company in Austria are Shrink bags, Stretch film and equipment.
• Please back to the slides

Executive summary

Buying of any particular product for any business cannot be categorized as an event but as a whole process that consist of various steps in it. The process of buying any product starts with “Problem Recognition”, what are the requirements and what needs to be delivered.

The underlying factors that influence the demand

Austria’s economy, driven by exports and buoyed by consumer spending, its economy features a large service sector, a sound industrial sector, and a small, but highly developed agricultural sector. Austrian GDP contracted 3.8% in 2009 but saw positive growth of about 2% in 2010 and 2.7% in 2011(Tirone. J, 2013). For APMC the demand of its products in the Austrian market can be considered as a derived demand mainly because of the reason that the demand for its products are coming from end product consumers. With the recent growth in the consumption of vegetable juice and other energy drinks, Austrian consumers are expected to continue with their spending and consumption patterns.

Buyer-seller relationships in the product’s supply chain

Considering the nature of relationship between buyers and sellers in the product supply chain is mainly based on the members involved in it from more than one functional department, that consist of production department, distribution department, R&D department and so on. Where as on the other hand the relationship between buyer and seller in the supply chain will vary based on the industry and its size.

Transactional Exchange 

In the case of APMC, it doesn’t fit the transactional exchange criteria, as there are not many alternatives available to the local market of soft drinks in Austria; most of the relationship in transactional exchange is categorized as a lower level of information exchange.

Collaborative Exchange

Under the collaborative exchange relationship, it’s more based on building a good and a strong relationship with each others as there are not many alternate available in the market. For manufacturers building a good relationship with its suppliers is as important as to gain customers.

Switching Costs

Switching cost mainly comprises of the cost related to the switching cost from one seller to another, the risk associated in switching. If the other supplier of the product would be as reliable as the previous one, business marketing is an important influence in the supply chain. Bagozzi (cited in Monga, Chen, Tsiros & Srivastava 2012, p.32) the presence of sellers and buyers and the interaction-taking place in between them are the fundamental of marketing. Considering the product supply chain, each actor (buyer or seller) has a vested in entering into a fair relationship with other, in return expecting the same as much as one gives (Mesly, 2009). The buyer-seller relationship in a product supply chain can be considered as a technique of linking a manufacturer’s operation with suppliers, key intermediaries and customers to enhance efficiencies and effectiveness.

Types of customers

For companies like Australian Packaging and Machinery Company (APMC), their Business-to-Business (B2B) marketing is huge and because of this very reason they have a wide range of customers that they can target in Austria. Business marketers serve the largest markets of all, depending on the nature of the industry. A single customer of APMC can account for enormous levels of purchasing activity from Austria. Though the company will only be marketing the soft drink industry in Austria, still the market is huge as there are various companies and brands that exist in Austria for e.g. company like Pepsi or Coca Cola alone can be a huge client for AMPC. In the B2B market there are different types of customers that can be classified

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Manufacturers

  Manufacturers of soft drinks in Austria that are locally based on for example, Gasteiner, Almdudler, etc.

Resellers

Resellers are private companies who will buy APMC products and then sell it at a higher price.

Distributors

 Distributors who take responsibility of distributing the products in the local market.

Basic characteristics of the product and service

The company manufactures and sells the equipment and consumable plastic “film” that is mainly use to wrap products for storage and transportation on pallets.

The consumables used to secure products onto pallets are:

1. Shrink bags, which are placed over the palletized product and heated until the bag shrinks.
2. Stretch “film” that is wrapped around pallets of products.

The company also specialize in manufacturing and supplying film to secure entire pallet loads. APMC is the one of the Australia leading manufacturer of a shrink and a stretch film, where a small hand held wrapping machine may cost $500 to up to several thousand of dollars, depending on the requirements of customers.

The nature of buyer-seller relationships for the product

Based on the products and services offered by APMC, the company has to develop a collaborative exchange relationship with both small and large companies in the Austrian soft drink market. Top 5 companies that hold a strong market share in the soft drink market in Austria are included in the table below.

Source –  Passport report Austrian Soft Drink Market

For APMC collaborative buyer seller relationship is highly recommended if the company is willing to achieve large number of customers.

Based on the above price calculated for each pallet, it is important for APMC to target the customers based on their annual sales figures and the demand of their products.

 Factors that influence customer profitability (refer to the slide named customer profitability. For example, Price-sensitive but few special demands, Costly to service, but pay top dollar, etc.) (Try to apply)

There are various factors that might be directly or indirectly linked with customer profitability, factors like switching costs, which APMC has to consider. What strategies can be implemented by AMPC to retain the existing customers and what can be done to transform unprofitable customers into profitable ones (Bagozzi, 1996). For example, if APMC can get a big order from a big company like Coca – Cola or other companies than providing the product on comparatively low price should be the first priority. Heavy investments can be made in terms of Money, People, Training Costs, Equipment’s, Procedure and various other processes.

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Reference

1. Raju, J & Roy, A 2011, ‘The Influence of Demand Factors on Dynamic Competitive Pricing Strategy: An empirical study’, pp. 259 – 281.
2. Mesly, O 2009, ‘In a sense of win-win in seller-buyer relationships related to perceived predation?’ Journal of Management and Marketing Research, pp.1-18.
3. A, Chen, H, Tsiros, M & Srivastava, M 2012, ‘How buyers forecast: Buyer–seller relationship as a boundary condition of the impact bias’, pp. 31-45.
4. Tirone. J, 2013, ‘Austrian Economy Poised to Expand Amid European Risk, Wifo Says’, viewed on 25^th April 2013 < http://www.bloomberg.com/news/2013-03-21/austrian-economy-poised-to-expand-amid-european-risk-wifo-says.html>