Marketing Applications & Practices B2B Marketing

CHAP 03 - B2B MARKETING

Business Marketing is the practice of individuals, or organization, including commercial
businesses, governments and institutions, facilitating the sale of their products or services to
other companies or organizations that in turn resell them, use them as components in products or
services they offer, or use them to support their operations. Also known as industrial marketing,
business marketing is also called business-to-business marketing, or B2B marketing, for short.
(Note that while marketing to government entities shares some of the same dynamics of
organizational marketing, B2B marketing is meaningfully different.)

ORIGINS OF BUSINESS MARKETING

In the broadest sense, the practice of one purveyor of goods doing trade with another is as old as
commerce itself. As a niche in the field of marketing as we know it today, however, its history is
more recent. In his introduction to Fundamentals of Business Marketing Research, J. David
Lichtenthal, professor of marketing at the City University of New York's Zicklin School of
Business, notes that industrial marketing has been around since the mid-19th century, although
the bulk of research on the discipline of business marketing has come about in the last 25 years.

Morris, Pitt and Honeycutt, 2001, point out that for many years business marketing took a back
seat to consumer marketing, which entailed providers of goods or services selling directly to
households through mass media and retail channels. This began to change in middle to late
1970s. A variety of academic periodicals, such as the Journal of Business-to-Business
Marketing and the Journal of Business & Industrial Marketing, now publish studies on the
subject regularly, and professional conferences on business-to-business marketing are held every
year. What's more, business marketing courses are commonplace at many universities today. In
fact, Dwyer and Tanner (2006) point out those more marketing majors begin their careers in
business marketing today than in consumer marketing.
WHO IS THE CUSTOMER OF B2B SALE?

While "other businesses" might seem like the simple answer, Dwyer and Tanner (2006) say
business customers fall into four broad categories: companies that consumer products or
services, government agencies, institutions and resellers.

The first category includes original equipment manufacturers, such as automakers, who buy
gauges to put in their cars, and users, which are companies that purchase products for their own
consumption. The second category, government agencies, is the biggest. In fact, the U.S.
government is the biggest single purchaser of products and services in the country, spending
more than $300 billion annually. But this category also includes state and local governments.

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The third category, institutions, includes schools, hospitals and nursing homes, churches and
charities. Finally, resellers consist of wholesalers, brokers and industrial distributors.

So what are the meaningful differences between B2B and B2C marketing?
A B2C sale is to an individual. That individual may be influenced by other factors such as family
members or friends, but ultimately it’s a single person that pulls out their wallet. A B2B sale is to
an organization. And in that simple distinction lies a web of complications that differ because of
the organizational. The marketing mix is affected by the B2B uniqueness which includes
complexity of business products and services, diversity of demand and the differing nature of the
sales itself (including fewer customers buying larger volumes Because there are some important
subtleties to the B2B sale, the issues are broken down beyond just the original 4 Ps developed by
McCarthy
B2B MARKETING STRATEGIES

B2B Branding is different from B2C in some crucial ways, including the need to closely align
corporate brands, divisional brands and product/service brands and to apply your brand standards
to material often considered “informal” such as email and other electronic correspondence.
Product (or Service)
Because business customers are focused on creating shareholder value for themselves, the cost-
saving or revenue-producing benefits of products and services are important to factor in
throughout the product development and marketing cycles.
People (Target Market)
Quite often, the target market for a business product or service is smaller and has more
specialized needs reflective of a specific industry or niche. A B2B niche, a segment of the
market, can be described in terms of firmographics which requires marketers to have good
business intelligence in order to increase response rates. Regardless of the size of the target
market, the business customer is making an organizational purchase decision and the dynamics
of this, both procedurally and in terms of how they value what they are buying from you, differ
dramatically from the consumer market. There may be multiple influencers on the purchase
decision, which may also have to be marketed to, though they may not be members of
the decision making unit.
Pricing
The business market can be convinced to pay premium prices more often than the consumer
market if you know how to structure your pricing and payment terms well. This price premium is
particularly achievable if you support it with a strong brand.

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Promotion planning is relatively easy when you know the media, information seeking and
decision making habits of your customer base, not to mention the vocabulary unique to their
segment. Specific trade, analysts, publications, blogs and retail/wholesale outlets tend to be fairly
common to each industry/product area. What this means is that once you figure it out for your
industry/product, the promotion plan almost writes itself (depending on your budget) but figuring
it out can be a special skill and it takes time to build up experience in your specific field.
Promotion techniques rely heavily on marketing communications strategies
Place (Sales and Distribution)
The importance of a knowledgeable, experienced and effective direct (inside or
outside) sales force is often critical in the business market. If you sell through distribution
channels also, the number and type of sales forces can vary tremendously and your success as a
marketer is highly dependent on their success.
B2B MARKETING COMMUNICATION METHODOLOGIES
The purpose of B2B marketing communications is to support the organizations' sales effort and
improve company profitability. B2B marketing communications tactics generally include
advertising, public relations, direct mail, trade show support, sales collateral, branding, and
interactive services such as website and search engine optimization. The Business Marketing
Association is the trade organization that serves B2B marketing professionals. It was founded in
1922 and offers certification programs, research services, conferences, industry awards and
training programs.
Positioning Statement
An important first step in business to business marketing is the development of your positioning
statement. This is a statement of what you do and how you do it differently and better and more
efficiently than your competitors.
Developing your messages
The next step is to develop your messages. There is usually a primary message that conveys
more strongly to your customers what you do and the benefit it offers to them, supported by a
number of secondary messages, each of which may have a number of supporting arguments,
facts and figures.
Building a campaign plan
Whatever form your B2B marketing campaign will take, build a comprehensive plan up front to
target resources where you believe they will deliver the best return on investment, and make sure
you have all the infrastructure in place to support each stage of the marketing process - and that

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doesn't just include developing the lead - make sure the entire organization is geared up to handle
the inquiries appropriately.
Briefing an agency
A standard briefing document is usually a good idea for briefing an agency. As well as focusing
the agency on what's important to you and your campaign, it serves as a checklist of all the
important things to consider as part of your brief. Typical elements to an agency brief are: Your
objectives, target market, target audience, product, campaign description, your product
positioning, graphical considerations, corporate guidelines, and any other supporting material
and distribution.
Measuring results
The real value in results measurement is in tying the marketing campaign back to business
results. After all, you’re not in the business of developing marketing campaigns for marketing
sake. So always put metrics in place to measure your campaigns, and if at all possible, measure
your impact upon your desired objectives, be it Cost per Acquisition, Cost per Lead or tangible
changes in customer perception.
WHAT’S DRIVING GROWTH IN B2B MARKETING?
The tremendous growth and change that business marketing is experiencing is due in large part
to three "revolutions" occurring around the world today, according to Morris, Pitt and Honeycutt
(2001).
First is the technological revolution. Technology is changing at an unprecedented pace, and these
changes are speeding up the pace of new product and service development. A large part of that
has to do with the Internet.
Technology and business strategy go hand in hand. Both are corelated .While technology
supports forming organization strategy, the business strategy is also helpful in technology
development. Both play a great role in business marketing.
Second is the entrepreneurial revolution. To stay competitive, many companies have downsized
and reinvented themselves. Adaptability, flexibility, speed, aggressiveness and innovativeness
are the keys to remaining competitive today. Marketing is taking the entrepreneurial lead by
finding market segments, untapped needs and new uses for existing products, and by creating
new processes for sales, distribution and customer service.
The third revolution is one occurring within marketing itself. Companies are looking beyond
traditional assumptions and adopting new frameworks, theories, models and concepts. They're
also moving away from the mass market and the preoccupation with the transaction.
Relationships, partnerships and alliances are what define marketing today. The cookie-
cutter approach is out. Companies are customizing marketing programs to individual accounts.