Key Elements for B2B Market Model Development PPT

This PPT slide, part of the 24-slide Pricing Strategy: B2B Markets PowerPoint presentation, outlines the fundamental elements necessary for creating a market model within the context of B2B pricing strategy, specifically through a Wargaming approach. It emphasizes that the model should reflect real-life market attributes, focusing on several key components.

First, the "Restricted Number of Firms" section highlights the nature of oligopolistic B2B markets, where a limited number of suppliers—specifically 3 in this study—are involved. This restriction simplifies the analysis while still allowing for meaningful insights. The suppliers are noted to have flexibility in production, adapting to demand without capacity constraints.

Next, the "Restricted Number of Customers" segment points out that these markets often feature a small number of large customers who account for the majority of sales. The study indicates that customers are required to purchase from at least one supplier each period, regardless of price, suggesting a lack of price sensitivity among buyers.

The "Differentiated Prices" column discusses how suppliers can negotiate distinct prices for each customer, reflecting the complexity of B2B relationships. This differentiation is crucial for understanding how pricing strategies can be tailored to individual clients, although actual negotiations were not detailed in the study.

Switching costs are addressed in the "Switching Costs" section, where it is explained that buyers face costs when changing suppliers. The study quantifies these costs as ranging from 5% to 7% of variable manufacturing costs, indicating a significant consideration for buyers contemplating a switch.

Lastly, the "Comparing Scenarios" section suggests that analyzing different scenarios based on available data can provide valuable insights for players in the market. This comparative analysis can help stakeholders understand potential outcomes based on varying conditions.

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Pricing Strategy B2B Sales Manufacturing Production Wargaming