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5.5.1 Buying Benefits and Strategies in Business Markets

Four Types of Benefits in B2B Business

1. Tangible Financial Benefits

  • Definition: Values that the seller can communicate and the buyer can verify readily.
  • Examples:
    • Horsepower in engines.
    • Processing speed in computers.
    • Fuel efficiency in machinery.
  • Key Feature: These benefits are measurable and verifiable, making it easier for buyers to understand their value proposition.

2. Non-Tangible Financial Benefits

  • Definition: Values that the seller conveys but are not easily validated by the buyer.
  • Examples:
    • Revenue increase through improved CRM software.
    • Enhanced profitability using advanced hardware.
  • Challenges:
    • Buyers don’t typically calculate the financial implications of these benefits.
    • Sellers must tangibilize the intangible by:
    • Showing clear paths to benefits (e.g., increased repeat orders due to big data analytics).
    • Providing third-party reports or case studies demonstrating success.
    • Offering performance-based payment models (e.g., leasing, pay-per-use).
  • Objective: Make the intangible benefits concrete by demonstrating their potential impact on the customer’s business.

3. Tangible Non-Financial Benefits

  • Definition: Values that are difficult for the seller to quantify but are appreciable by the buyer.
  • Examples:
    • Ease of use of a familiar operating system.
    • Reputation of the supplier.
    • International sourcing ensuring uninterrupted supply chains.
  • Importance:
    • Buyers often reward these benefits with price premiums or preferred vendor status.
    • Although not directly tied to financial metrics, these benefits enhance the trust and reliability perceived by the buyer.

4. Non-Tangible Non-Financial Benefits

  • Definition: Values that neither the buyer nor the seller can easily quantify in monetary terms.
  • Examples:
    • Vendors exceeding contractual obligations, such as offering 24/7 maintenance.
  • Challenges:
    • Buyers may not prioritize these benefits without clear proof of their value.
    • Sellers must tangibilize these benefits by:
    • Presenting past breakdowns and associated losses to justify the value of round-the-clock maintenance.
    • Highlighting potential savings or business continuity benefits.

Importance of Benefits in Strategy Development

1. Quantifying Benefits

  • Regardless of the type of benefit, it must be represented in measurable terms:
    • Reducing costs.
    • Increasing revenue.
    • Avoiding losses.
  • Sellers should clearly demonstrate how their offering aligns with the customer’s performance metrics.

2. Role of Salesmanship

  • Key Tool: Personal selling is the cornerstone of B2B marketing.
  • Process:
    • Providing detailed presentations and demonstrations.
    • Engaging in multiple rounds of negotiations.
    • Building long-term relationships with the customer.

3. Government and Tender Processes

  • Typical Process:
    1. Advertisement of tender.
    2. Submission of technical and financial bids.
    3. Evaluation of technical qualifications.
    4. Selection based on the lowest financial bid (L1).
  • Significance: Sellers must meet both technical and financial criteria to secure contracts.

Strategy Implications

  • A clear understanding of benefits allows sellers to:
    • Convince customers by demonstrating how offerings solve specific problems.
    • Tailor value propositions to address tangible and intangible needs.
  • Tangibilizing benefits and providing measurable outcomes ensures trust and facilitates decision-making.
  • Personal interaction and sales engagement play a pivotal role in delivering and reinforcing the perceived value of these benefits.
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