B2B Marketing

Introduction

• A business markets its goods or services to another business and/or organizations, it's a B2B.
• B2B marketing shares conceptual foundations with B2C marketing.
• B2B marketers face challenges in their customers' buying criteria and purchasing processes, as well as B2B marketing choices on business strategy.
• Business markets typically have fewer customers who expect customized products, applications, or prices.
• B2B sellers often call on multiple company representatives.
• B2B demand is derived from demand for consumer products.
• Example: Restaurants order more ovens when people eat out more frequently. Oven manufacturers then order more steel, and steel processors order more iron, carbon, and alloy components.
• B2B transactions accounted for 41% of US total sales revenues in 2010.
• US B2B sales accounted for 85% of total e-commerce dollar volume in 2016.
• Forrester estimated that B2B e-commerce generated over $1.13 trillion.
• B2B e-commerce transactions in the Chinese market reached $3.07 trillion in 2017, an increase of 22.75% year-on-year.

B2B Strategy

• Key steps organizations should consider when undertaking B2B marketing include determining a strategy, selecting markets, knowing the buyer, understanding and communicating product/service benefits, and aligning the organization.
• Market selection, pricing, distribution, and communication all impact resource allocation.

B2B marketing components

• A B2B marketing effort involves four basic elements: market selection, pricing, distribution, and communication.
• Market selection ties a firm to certain customers, technologies, and processes.
• In 2012, IBM invested $2 billion in research and development (R&D) and acquisitions to develop PureSystems aimed at business customers handling high-frequency, high-volume transactions.
• The focus on big data also created opportunities to expand to serve cloud-based software vendors in Malaysia, India, Brazil, and Hong Kong.
• In business markets, the same product's value differs among classes of customers depending on substitutues.
• The most critical marketing decision in a B2B context hinges on how the product is used.
• A firm that buys pipes for underground installations may be willing to pay a premium for high quality to avoid digging up defective products.
• The most common distribution channels are direct sales personnel, distributors, manufacturers' representatives or agents, and brokers.
• Firms use direct sales personnel to maximize supervision and control of the sales force.
• Distributors are resellers who deal in goods from many producers.
• They are the standard channel in the industry such as plumbing supplies or small hardware items.
• Manufacturers' representatives or agents sell on commission, offering a limited number of product lines.
• Brokers sell on commission, too, but specialize in finding buyers for large lots of products from many producers.
• Many B2B marketers develop multichannel distribution systems using website links for routine, low-price orders.
• Another way to get resources is channel partners, which could include other vendors, consultants, systems integrators (SI), and other such organizations.
• Oversight Technology's channel partner was Concur Technologies, as it shared many customers with Oversight, resulting in referrals for interested clients.
• Trade shows, direct mail, email campaigns, advertising in trade journals, and telemarketing are typically more prevalent in B2B than in B2C marketing efforts.
• Event marketing is often the biggest line item in many B2B firms' marketing budgets, after sales force costs.
• Companies are now combining these live marketing events with social media engagement.
• Solution provider InsideSales.com designed seminars both to educate potential customers about the features of its software and to advise on improving sales strategy and organizational efficiencies, building thought leadership as it reached out to prospects.
• Personal selling is the workhorse of B2B marketing communication, where a company representative interacts directly with a prospective customer to influence the purchase decision.

Interacting with Strategy

• The purpose of any strategy is to maximize the value of the capabilities that distinguish one firm from its competitors.
• Any strategy includes three components: objectives, scope, and advantage.
• Hawker Beechcraft was a leading supplier of private and business jets for over a decade.
• Unlike competitors with diversified product lines, Hawker tailored all of its brands to buyers of low-end jets.
• Scope refers to where the firm plans to operate and Advantage describes what the firm does differently, better, or as well as the best.
• Ashok Leyland underwent a strategic realignment in 2013 to shed investments and refocus on its core manufacturing business due to the cost of significant price discounts.
• Market selection requires B2B firms to develop skills, capabilities, and contractual commitments.
• Market selection choices cannot be made solely based on a given market’s growth forecasts and should analyze the fits between markets, firms, and products.
• B2B segments are commonly based on demographics, operating variables, purchasing situations, customer economics, and/or buyer characteristics.
• For a single customer to have a lion's share of the revenue is not the correct option for the business

Questions of Fit

• a B2B firm may choose to bundle its core product with additional services and benefits its customers seek.
• New or emerging markets can be significant opportunities but also mean low entry barriers, many entrants, and market maturity or saturation.
• F.C. Meyer Packaging proved adept at changing the form of its folding cartons. Meyer later shifted into gift boxes, serving retailers that desired customized lettering or finishes, then the food industry.
• Hillenbrand sought acquisition opportunities only with entities sharing its efficiency-focused culture and split off the health care division due to its emphasis on government regulation.

Knowing the Buyer

• In B2B markets, buying can involve any number of individuals who come together in an organizational buying center (OBC) or a decision-making unit (DMU).
• Functional areas commonly represented include engineering, manufacturing, marketing, general management, and purchasing.
• Size of the OBC is likely to increase when the group is selecting major equipment, key components, and other important and/or complex products
• Venkatesan, Reinartz, and Ravishanker revealed buyers’ attitudes toward a firm help predict their spending and aid vendors in identifying commitment and loyalty.
• Narayandas and Rangan showed that a buyer’s feeling of trust in a seller’s salespeople and other boundary-role individuals is a cornerstone of organizational commitment.
• Buying decisions are both “rational” and personal and made in the firm’s interests expressing the decision-maker’s unique background, beliefs, experiences, and aspirations, as well as the perceived personal consequences of a decision.
• Buyers take into consideration both the type of purchase being made and where they are in the buying process.

Type of Purchase

• The three general types of purchases B2B organizations make are straight rebuys, modified rebuys, and new tasks.
• Straight rebuys are routine reorders from current vendors of low- or no-risk items like office supplies.
• Modified rebuys occur when an organization decides to alter the specifications or purchasing terms for a product it is already using or has used.
• A new task occurs when an organization considers purchasing something it has never used before and involves considerable risk.

Stage in the Buying Process

• Organizational buying comprises four generic steps or stages and there are distinct challenges and behaviors associated with each stage.
• Recognizing a need and identifying the benefits the organization seeks will influence OBC's needs.
• Establish suppliers through various channels, including trade shows that facilitate direct interaction, specialized websites that showcase products, and professional networks that promote partnerships and collaborations.
• B2B customers often issue a request for proposals (RFP) to vendors on the qualified list.
• The final stage is the post-purchase evaluation and OBC plays an important role in gathering and assessing information about vendor performance.

Communicating Benefits

• In B2B markets, benefits are what determine value and ultimately price.
• A B2B marketer's understanding of and ability to deliver relevant benefits is crucial.
• Types of benefits, there are tangible, no economic, benefits, and the nature of value proportions.

Benefit Typology

• Categories of benefits include tangible, no economic benefits, and the nature of value proportions.
• Economic, tangible benefits are readily measured, verified, and quantified in terms of price performance, while non-economic creates vendor operation scale.
• Economic, intangible benefits are those that the vendor claims to be quantifiable but seem unverifiable by the customer.
• Non-economic, intangible benefits include qualities such as trustworthiness or consciousness.

Matching Benefits

• Benefit matching depends on various objectives among the buyers, who seeks benefits, and then ensures that each person gets precisely the right information.
• Example; the vendor lists all the benefits it offers and creates a list of the players involved in making the buying decision.
• A value proposition is key to communicating benefits to buyers, because it uses the customer’s own language to do so.

Types of Propositions

• Anderson, Narus, and van Rossum classified value propositions based on benefits.
• Effective propositions is known as resonating focus and focuses on motivating benefits for the customer.
• Simplest value proposition of all benefits is every benefit that companies think might appeal to those that require customers.
• Favorable points focuses on differentiate an offering from the competition and requires knowledge about product.
• A challenge for B2B marketers is to identify the optimal pricing zone, which can vary by customer, product, order, space, time, etc.
• Zolam Chemical's top-level benefit was to minimize acquisition costs for pharmaceutical packagers, and that stopppers could help reduce errors and lowers costs.
• Tighter links between value and price mean better-differentiated offerings, stronger customer relationships, and fewer profit-sapping price wars.

Aligning

• B2B organizations create market value at interfaces between product, sales, and service units.
• Product managers focus is tracking product in market and making plans, but more time is spent on product design for product managers.
• High-impact glass could be useful for car manufactures and or to building retailers.
• The salespeople represent their company and its capabilities to the customer and may need engineers to explain benefits along with verifying with manufacturing and financial benefits.
• The product manager’s insights need to be connected by making and following through promises.

Interdependencies

• The outcomes of product, sales, and service activities are affected by plans and the actions of functional groups.
• Engineers must check of quality standards with the ability to help with production and customization.
• There are structural linkages to legitimize team focus and for product service experts to customize.
• Data can help foster a common understanding of activities, managers are coordinating to gain research.
• Cross-functional coordination includes cross-functional career tracks, training programs, and performance evaluation across management.

B2B marketing involves businesses selling to other businesses or organizations. While sharing principles with B2C marketing, B2B faces unique challenges in customer criteria and purchasing. Key aspects include fewer customers with higher expectations for customization and derived demand from consumer products.