Business Market Management James C Anderson Pdf File
Austin Vermont
Professor Anderson taught the graduate-level course in business marketing. He was the program director of the Business Marketing Strategy executive program for over 20 years and taught in a number of executive development programs at the Kellogg School. He has consulted and provided seminars for a number of companies in North America, South America, Europe, Asia, and Australia, such as American Express, bioMrieux, ExxonMobil, GE, Holcim, International Paper, C.P. Kelco, Orkla, PPG Industries, and Tetra Pak. He is Principal of James C. Anderson LLC, an international management consulting firm focusing on implementing customer value management at client firms.
Professor Anderson was the Irwin Gross Distinguished ISBM Research Fellow at the Institute for the Study of Business Markets. He has been a visiting research professor at the School of Business, Public Administration, and Technology, University of Twente, The Netherlands; Eindhoven University of Technology, the Netherlands; and Uppsala University and Stockholm School of Economics, Sweden. He also has been vice president of the business marketing division of the American Marketing Association (AMA) and a member of the board of directors of the AMA.
Professor Anderson came to Kellogg after three years as a member of the marketing faculty of the University of Texas at Austin. Prior to that, from 1978 to 1981, he worked as a senior research psychologist in the corporate marketing research division of E.I. duPont de Nemours and Company, Inc. He earned his Ph.D. in Psychology from Michigan State University in 1978.
Do your salespeople feel under extreme pressure to retain accounts or gain new business at any cost? If so, you may be leaving big money on the table. Consider the integrated-circuit supplier representative who lost $500,000 of potential profit on a single transaction, just to "win" a deal that he would have closed anyway at the higher price. Do not make price concessions. Become a value merchant instead. In this authoritative book, James Anderson, Nirmalya Kumar, and James Narus explain how companies in business markets can use customer value management techniques to estimate the value of your market offerings, create value propositions that resonate with your customers, and maximize the return you will get on the superior value that you deliver. Drawing on extensive research and detailed case studies of companies like Sonoco, Tata Steel, and Quaker Chemical, "Value Merchants" will change the mindset and behavior of your executives, sales management, representatives, and marketers--as well as your customers.
A common lament that we hear from these managers is that although they believe their offerings deliver superior value to customers, their businesses have difficulty persuading customers of this. Our book enables general managers, marketing managers, and sales managers to overcome such obstacles and get a better return on the superior value that their market offerings deliver to target customers.
The first alternative is sometimes called a penetration pricing strategy because the firm intends to make its overall profit through selling a larger number of units at a lower profit per unit. The second alternative is sometimes called a skimming pricing strategy because the firm intends to make its overall profits through selling fewer units at a higher profit per unit.
Customer value management is an enabler, not a substitute, for technical prowess. Insights into changing market offerings to improve their value, for example, are of little use if a business and its suppliers lack the technical capability to create and produce the offering customers would value.
To gain a chance of adoption in a business, the customer value research projects have to generate success stories. These persuasively recount the significant gains in knowledge and profitability that have resulted from the projects.
Juan de Castro: Hello, my name is Juan de Castro and you're listening to Making Risk Flow. Every episode, I sit down with my industry-leading guests to demystify digital risk flows, share practical knowledge, and help you use them to unlock scalability in commercial insurance. James, thank you so much for joining me today. And you've got a very unique background and experience, you're one of those professionals who spend a lot of time as an actuary in different insurers and now you've shifted or moved to consulting, advising insurers. So let's start. Give us an overview of your background. Where do you focus on?
James Anderson: Yeah, sure. Happy to. So yeah, as you said, right now, I'm a consultant, I work at Ernst & Young and I lead their pricing practice, so really helping our clients develop and transform their pricing capabilities, a key part of the underwriting process and that you've got that strong pricing framework to allow the management of the portfolio. I've been doing that for about a year and a half. Prior to that, I worked for a long time in the industry. I worked at Swiss Re, at Brit Syndicates, and for 12 years at Allianz. And in that time, I did all sorts of traditional actuarial roles, reserving, capital, a lot of pricing, but I've also kind of done roles maybe a little bit outside of traditional actuarial, so a lot of data analytics, quite a bit of portfolio management, and also some underwriting strategy roles. But I guess if I was going to pull them all together, it's always this sort of combination of using analytics and technology and data to help improve the business and drive business improvement, whether that's incremental improvement over time or kind of transformational leaps.
Juan de Castro: And your type of background, I always find it fascinating, because you've done it. But you were probably not happy enough with how things work or how some of the pricing works in different insurers. And now you're on the other side, kind of advising and helping the industry move as a whole, but while keeping your knowledge of why things are the way they are and why some things are difficult to change, right? So that realistic view, I think it's also very important. I think that's why I'm very excited about this chat.
James Anderson: Completely agree. It's a real privilege getting to do the job I'm doing now. And I just get to see how all the different companies tackle what are very similar problems in quite different ways. And yeah, as you say, the real aim is to transform the market and really make technical pricing in the London market, not a sort of back office function, but an integral part of the business.
Juan de Castro: Definitely. So one of the areas I know you focus quite a lot on is helping insurers, what we call, managing the cycle. So this transition from soft to hard cycle and the other way around. Perhaps let's start there with some context. So some people might be too young to know what happened in the last soft cycle and what can we learn from it? So let's start perhaps there. What happened in the last soft cycle?
James Anderson: Absolutely, sure. I mean, I was in the trenches for this, so yeah, happy to share. So obviously the insurance market is very cyclical. Capacity comes in and out, rates go up and down, and it is in a large cycle. If we're looking back sort of prior to 2020, there were some very soft years and the decision-making wasn't great. If you look at Lloyd's data, you had sort of five years in a row where the combined ratio was at or above 100, and that's just not a good place to be. And a lot of the companies, I think we went beyond the point of the early years of the softening market. It's hard to spot and it's hard to know when to turn, but it sort of went beyond that until everyone knew we weren't in a place where we were long-term profitability sustainable, but there was a real struggle to react and show the courage to draw the line. Unfortunately, in the end, it was the regulator, Lloyd's, that particularly for the Lloyd's market drove it. They brought in the Decile 10 quite a blunt instrument, but it was what really drove the change in the market. And that isn't the greatest advertisement for us as a profession that we let it get that far. So as you say, we have spent a lot of time thinking about both what happened last time in terms of the performance, but also how can we do better in the future? And that's definitely one of the areas we're focusing on. And I think the area we kind of thought was particularly interesting to talk about today.
Juan de Castro7: Definitely. And one of the things you mentioned, show courage to draw the line in that period. So when something like that happens, five years in a row of losses in the London market space, is it driven by rates going down, and that's obviously a big part of that, is that the major reason why the market as a whole loses money? Or is it that there's not enough rigour on risk selection and being more granular on how you price different types of risks?
James Anderson: It's definitely both in that I think, and maybe we'll come on to it later, but we've done a lot of analysis, particularly on the Lloyds market, where there's a lot of available data. We've got 10 plus years of data, and we can categorise Lloyd's syndicates by loss performance and who's done well and who's not done well. I think what's definitely clear is if you look at the top quartile, actually they made money in almost all of the last 10 years. So you can do better than the average. You can outperform and you can make money through the cycle. But it does get increasingly challenging as the rates go down. Part of it is that the rates are going down, but also the terms and conditions are widening. It's a lot harder to make those good selections and in a very defensive mode. And that probably comes on to one of the big insights we've got, which isn't, I doubt, a surprise to anyone, which is when we look at that sort of the top performers versus the kind of worst performers over the last 10 years, one of the real differentials when you look at them in terms of their growth trajectory is that the top performers during those soft market years, they were growing a little to stable, definitely shrinking their market share. And then when the market turned and it was hard, they very aggressively grew and regained all of that market share in the years where they were making money. You contrast that to the insurers who were in the bottom quartile and they were growing hard into the soft market, and then once the market turned, they were actually often remediating and shrinking when the most logical thing would be to grow, and then only caught up with the growth later. And across all the analysis we've done in terms of looking at what's the drivers of under and over-performance, I think probably that is the starkest one of what really is driving the differential in the market.
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