Page 214 - Marketing Management

ANALYZING BUSINESS MARKETS | CHAPTER 7 191

TARGETING FIRMS As we will discuss in detail in Chapter 8, business marketers may divide
the marketplace in many different ways to decide on the types of firms to which they will sell.
Finding those business sectors with the greatest growth prospects,
most profitable customers, and most promising opportunities for
the firm is crucial, as Timken found out.

Timken When Timken, which manufactures
bearings and rotaries for companies in a variety of indus-
tries, saw its net income and shareholder returns dip
compared to competitors, the firm became concerned that
it was not investing in the most profitable areas. To iden-
tify businesses that operated in financially attractive sectors and
would be most likely to value its offerings, the company conducted an
extensive market study. It revealed that some customers generated a
lot of business but had little profit potential, while for others the
opposite was true. As a result, Timken shifted its attention away from
the auto industry and into the heavy processing, aerospace, and
defense industries, and it also addressed customers that were finan-
cially unattractive or minimally attractive. A tractor manufacturer
complained that Timken’s bearings prices were too high for its
medium-sized tractors. Timken suggested the firm look elsewhere but
continued to sell bearings for the manufacturer’s large tractors to the
satisfaction of both sides. By adjusting its products, prices, and com-
munications to appeal to the right types of firms, Timken experienced
record revenue of $5.7 billion in 2008. 25 Timken has fine-tuned its
marketing activities to sell its
It’s also true, however, that as a slowing economy has put a stranglehold on large corporations’pur- specialized bearing and rotary
chasing departments, the small and midsize business markets are offering new opportunities for sup- products only to the most
pliers. See “Marketing Insight: Big Sales to Small Businesses,” for more on this important B2B market. promising prospects.

• IBM counts small to midsize customers as 20 percent of its
business and has launched Express, a line of hardware, soft-
ware services, and financing, for this market. IBM sells through
regional reps as well as independent software vendors and re-
sellers, and it supports its small–midsize push with millions of
g
Marketin
Marketing InsightInsight dollars in advertising annually, including in publications such as
American Banker and Inc. The company has also directly tar-
geted gay business owners with ads in The Advocate and Out
and has partnered with nonprofits to reach racial and ethnic
Big Sales to Small Businesses minority segments.
• American Express has been steadily adding new features to its
Small businesses—defined as those with fewer than 500 employees— credit card for small business, which some small companies use
represent 99.7 percent of all employer firms and employ about half of all to cover hundreds of thousands of dollars a month in cash
private-sector employees. They have generated 60 percent to 80 percent needs. It has also created a small business network called OPEN
of net new jobs annually over the past decade. According to the Small Forum to bring together various services, Web tools, and dis-
Business Administration’s Office of Advocacy, nearly 640,000 small busi- count programs with other giants such as FedEx, JetBlue, Hertz,
nesses opened in the United States in 2007.Those new ventures all need and Hyatt. With OPEN Forum, American Express not only allows
capital equipment, technology, supplies, and services. Look beyond the customers to save money on common expenses, it also encour-
United States to new ventures around the world and you have a huge and ages them to do much of their recordkeeping on its Web site
growing B-to-B market. Here’s how two top companies are reaching it: and gain business insights.