Business to Business Marketing
Business to Business can be defined as a relationship between two companies, where transactions take place between a manufacturer and a wholesaler or else a wholesaler and a retailer. Therefore, in B2C markets there is a transaction that takes place between the company and the consumer, where the consumer is the end-user of the product or service purchased from the company (Staff, 2018).
A fundamental component of Business Marketing is for the marketer to analyse and understand the nature of the customer they are dealing with and not to hold all their attention solely on the product they are trying to sell. It is important to identify whether your potential customer need your product and how often will they require your services. Once this is established it is likely you will then begin to sell with repeat custom.
Business to consumer marketing contains many more variables which affects decision making in the purchasing process with price, popularity and convenience just a few making it more difficult to persuade a potential buyer. Business to business is simply based on price as this contributes to profit directly. A disadvantage with B2B is that there are less buyers per seller making the market very competitive and increasingly difficult to trade in (Marketing-schools.org, 2018).
Long term relationships can arise in B2B markets whereas B2C have short term relationships. Why is this the case? B2B market transactions are often agreed by a contract, therefore relationships are a lot longer and can last up to several years and sometimes even more (Wong, 2018). B2B markets build long term relationships as they depend on each other to survive. A great example of this is Europe’s 3rd leading food processing company, ABP Food Group. In early 2018, ABP secured a three-year contract with an Asian restaurant company called ‘Wowprime Corporation’ which is a popular restaurant chain in China. The agreement states that ABP Food Group will supply €50 million worth of beef to this company (ABP Food Group, 2018). B2C markets tend to have a short-term relationship because of the characteristics of the products and services that they sell. Consumers involved in B2C can often be one-time purchasers. Therefore, B2C companies must treat their marketing activities with paramount importance in successfully competing with their competitors (Kcdpr.com, 2018).
B2B is the sale of one company’s products to another company as it facilitates the production process. Johnson Controls Inc. is a leading manufacturer in automotive interiors for cars and light trucks. It designs the systems which help operate car features such as doors and overhead controls for motor industry giants like Ford, Toyota and VW. Mechanical staff recruitment and further necessary training is an internal environmental factor which needs to be acknowledged and implemented correctly to achieve full productivity. Johnson Controls had a net worth of $28 billion (2010) (Business Insider, 2018) Johnson Controls recorded a $2.266 billion net income in 2018 (Macrotrends.net, 2018).
Business Marketing has been proven to hold higher transaction values than Business to Consumer. The book ‘Business-to-Business Marketing’ clearly illustrates that, “The metaphor of a river is often used to describe the chain of derived demand, where ‘downstream activities’ are those that take place in close proximity to the consumer and ‘upstream activities’ are those that take place far away from the consumer” (Brennan et al, 2010). B2B has a much more complex purchasing process from B2C as it involves a formal negotiation between two or more professionals with the result of trying to both benefit themselves and their businesses. A focus group was conducted made up of twelve people consisting of our family and friends. We asked did they recognise either company A and/or company B Johnson Controls Inc. and British retail outlet River Island. River Island largely a B2C supplier of fashionable clothing has a net worth of $2.4billion (2018) which is simply dwarfed in comparison to our B2B example, however it strongly came out on top in our market research (Forbes.com, 2018). Three people knew both, two knew just Johnson Controls Inc. and seven were only able to recognise River Island. Focus groups carry certain advantages and limitations, although the people within a focus group can be easily persuaded by those around them our question was based on their truth rather than opinion. What the focus group did achieve was gathering interesting insight into why we received their answers. We were able to conclude that large B2B firms are less recognisable than smaller B2C organisations simply because the final consumer does not deal directly with B2B.
A marketing strategy that Johnson Controls Inc. could possibly incorporate to increase image recognition is event sponsorship and connecting with well-known public figures. Sponsorship at sporting related events for example and the introduction of a brand ambassador to endorse the company name are simple yet proven ways of growing an organisations name as they connect with the final consumer.
Problem solving and giving a sense of value to your business can be the difference between confirming a long-term business partnership or not. When creating your marketing strategy these must be identified within the plan. To maintain coherency, the marketing strategy must implement a controlled yet efficient communicational channel. This can be done by establishing an account manager who will work with each company you are dealing with by offering them support and giving each the respect warranted in result it allows each business to feel like you are invested in their growth. It is key to remember that having a partnership is a huge opportunity and businesses when creating their marketing strategy should think further then simply selling to each other but along with that providing a helpful service and encouraging new and improved business ideas. Help them innovate and they will look at you as indispensable thus growing the relationship to an alliance. Yes, price is important but value will dictate stability within the B2B environment.
Blythe explains in the book ‘Business to Business Marketing Management’, “In fact, the members of the DMU are affected both by rational and emotional motivations. Salespeople are well aware that buyers are affected by their liking or dis-liking for the suppliers representatives and buyers will often be working to their own agendas.” (Blythe et al, 2018). Businesses buying for their organization will have more than one person affected by the purchase and this needs to be a key factor when considering a marketing strategy. Sellers need to allow for time to draw out a web of who is affected by who within the organization and to see if there are any relationship issues that might affect the flow of the transaction process from one department to another.
The sales cycle in a B2B market is a lot more complicated and slower than the sales cycle in a B2C market for example, it usually only takes one final decision maker when buying a coffee machine and that one person might look at the reviews of the product online and take into consideration the value of the product based on the reviews (Wong, 2018). On the other hand, the B2B sales cycle is slow and final decisions are often made by the top managers. As a group, we conducted primary research on ABP Food Group Bandon and how they purchase packaging supplies. They use the ‘Buyers Journey Map’ when purchasing from another B2B market and take into consideration factors such as why they need a certain packaging, which packaging supplier is best to go with, how much does it cost and will they deliver the packaging, payment details and finally if the packaging is up to ABP’s standards. In the end, ABP Bandon purchase the majority of their products from Limerick Packaging Supplies as it meets all their requirements.
Internal factors, such as other employees, shareholders and anyone else involved in the decision-making process should be taken into consideration when developing your marketing strategy. This in mind we have decided that we think a good marketing strategy for B2B is understanding the businesses model and adapting your sales funnel to fit into their requirements. This strategy is crucial and allows for you to map out a sales cycle for the business to show them exactly what is going to be happening. The advantage of this is that the business is definitively able to see step by step the sales cycle which makes it easier for them to say yes. For example, say one of the initial steps of your sales funnel is blogging. In this stage you are building brand awareness but at the same time you are showcasing that you can be trusted and have a valuable reputation. (Kent, K. 2018). A good marketing strategy for B2B is understanding your businesses needs and delivering them a sales pitch that allows them to understand why you feel your product and service is going to save them time and money. Understanding who within the organisation it is going to effect and building a personal working relationship with these people. A personal working relationship involves getting to know your customer beyond the business and about making them feel comfortable enough to trust you as this will increase efficiency in business dealings. These people are going to define the success or failure your selling abilities endure.
External factors, such as potential competitors are often a threat in B2B markets and often destroy relationships. M. Jeyarathmm illustrates in the book of ‘Strategic Management’, “In any industry, new entrants bring in new capacity, substantial resources and aggressiveness to gain market share” (Jeyarathmm, 2008). Therefore, in our opinion B2B marketers have to consider the marketing strategies that they want to proceed with to ensure a long relationship with other B2B markets. Companies use Customer Relationship Management (CRM) techniques after sales to determine how happy customers are with the product/service and they do this by communicating by phone, email and sometimes by even using social media sites such as Facebook, Instagram, LinkedIn, ; Twitter (Relationships et al., 2018). Most B2B companies use a software called salesforce to manage their relationships with other B2B companies. The advantage of using this CRM software is that it records personal information about the company you’re in contract with such as email, phone number, website etc. Salesforce also catches new information/news about a company, for example their preferences when it comes to products/services and improves CRM by creating a “360 view of the customer” (Salesforce.com, 2018).
In conclusion, as a group we learned a great amount of differences between B2B and B2C markets and how it is critically important for each market to pick the right marketing strategy while considering internal and external factors that can affect the marketing strategy of an organisation.
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