Business to Business Marketing

1 Business to Business Marketing

Table of Contents Business to Business Marketing......................................................................................................3 1.0 Introduction................................................................................................................................3 2.0 Possible changes that TCL should make to their marketing mix..............................................3 2.1 Product...................................................................................................................................3 2.2 Price.......................................................................................................................................4 2.3 Place.......................................................................................................................................5 2.4 Promotion..............................................................................................................................6 3.0 Importance of relationships in business-to-business marketing................................................6 3.1 Improved policies and other relationship practices...............................................................7 3.2 Relationship commitment......................................................................................................7 3.3 Improved trust within the relationship...................................................................................8 3.4 Improved mutual cooperation................................................................................................9 3.5 Customer satisfaction...........................................................................................................10 4.0 Integrating a sales force into TLC...........................................................................................11 5.0 Conclusion...............................................................................................................................12 List of References..........................................................................................................................13

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Business to Business Marketing 1.0 Introduction The business world has witnessed marked increase in the number of service companies or agencies that provide supportive activities to client companies. As technological advances and competition revolutionises the manner in which business is done, companies have resorted to full specialisation of operations. They have set focus on their main business activity as they hire agencies to cover other related and important services, like marketing, distribution, advertising, hiring, as well as public relations. The service agencies ensure they obtain all the necessary detail and requirements from the client company and deliver their services as expected. They have specialised in the areas they deal in and therefore produce quality and professional service to their clients. This paper will consider the business-to-business marketing undertaken by a specific service agency, Triangle Creative Ltd, based in Cambridge, in the United Kingdom.

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2.0 Possible Changes that TCL Should Make to their Marketing Mix 2.1 Product Although TCL’s main business is advertising in marketing client organisations, the agency lacks its own media facilities. Instead, it seeks to outsource such services in order to serve its clients. This has a possible and probable negative effect of failing to meet customer specifications and wishes. It also becomes difficult to plan the budget expectations effectively because the agency would need to analyse customer specifications first before seeking a media service provider that can effectively deliver on the demands. Such an arrangement might either result in the agency overcharging the client, or, quoting low figures which in the end might prove very costly for the firm (Slater & Olson, 2001).

Thus, it would be more appropriate for TCL to acquire its own media facilities so that it could work efficiently and effectively on customer demands. This would mean that the agency hires a few experts in this field who will work in tandem with the existing designers to produce quality advertisement. Although the cost of hiring and maintaining extra staff might prove costly in the beginning, the improved quality of TV and radio advertisements will be worth it in the long run. In other words, marketing and advertising is TCL’s main business area and therefore the agency needs to work hard at ensuring that it builds sustainable competitive advantage in this area. Outsourcing such a core business competency might be less effective because it might be impossible for the outsourcer to match every requirement and specification of the customer (Li & Atuahene-Gima, 2002).

4 2.2 Price The rigid pricing system that TCL has adopted is more likely to hurt its future business prospects. The pricing aspect should be flexible enough to allow clients room for negotiation and arrive at a figure that will be agreeable to both parties. This will provide TCL with an advantage because client companies could easily plan in advance and roughly determine the cost of doing business with the agency. But with the current rigid pricing framework, it is difficult for client firms to determine in their individual budgets how much it will cost them to hire TCL’s services.

The agency has to analyse the requirements of the client before sitting down and drawing out a budget. This is a cumbersome process that leaves the client in a position that is too shrouded in uncertainty.

In the contemporary business climate, clients need to have estimates that are almost certain concerning all the costs they are likely to incur in a financial period. This will go a long way to assist in their planning when they allocate funds to various projects. Given that some other agencies in the industry negotiate on pricing and instead charge a flat fee, TCL could easily loose business to these competitors unless they change their pricing system. Basing pricing on a commission percentage means clients who offer massive business to the firm are not enjoying any discounts. In other words, the pricing system does not give considerations to economies of scale which could play a vital role in attracting and maintaining many clients (Jagpal & Brick, 1982).

2.3 Place TCL should consider opening up branch offices in other physical locations other than Cambridge. As the agency anticipates for growth in the near future, it is only important that they begin planning on how such growth will be realised. It will be difficult for the agency to grow in

5 business size unless it expands its client base. Thus, there needs to be branch offices particularly in towns and urban centres where there is a huge concentration of SMEs and other companies that might need the support and services of TCL. The purpose of these branch offices would mainly be to coordinate field operations that are meant at marketing the agency to potential client companies.

Since opening up branches could turn out to be costly for the firm due to additional expenses, such as office rent and other associated bills, these branch offices could only be staffed with one or two individuals. Their main responsibility would be to canvass through the market and sell TCL to potential client firms. The potential clients can be given the main Cambridge office’s contacts in case they needed to make further inquiries. This would help in winning more customers and, eventually, expanding TCL’s potential and size. It would also have placed the account executives closer to the market and thus reduce the amount of time these group of workers spend on the road travelling as they go to meet their clients (Nail, Raman & Winer, 2005).

2.4 Promotion The agency’s promotional strategy also needs to be addressed and changed for the better.

Although word-of-mouth communication tends to be less costly for the firm and more reliable due to its convincing power, it tends to be slow and only covers a smaller area. It also does not give the full message or information about what the company deals with in actual sense. TCL anticipates fast growth and the only way it can realise this dream is by ensuring that a wider market gets to learn and understand what their numerous services are. More elaborate advertising practices therefore needs to be explored. The agency should consider using media with wider coverage, such as national newspapers, radios and TVs to advertise to the general public what

6 their services are. The message in the advertisement should be short and clear but also needs to be comprehensive enough so as to cover all the areas that TCL deals in.

Since advertising is also an expensive venture, it should be done in different times but target seasons or periods when firms are likely to experience increased business activity. The agency can also carry its own internal research and establish which among the various advertising modes are more reliable when it comes to producing expected results. This can only be possible if each advertising mode is used alone or one at a time without mixing them together (Wierenga & Van Bruggen, 2001).

3.0 Importance of Relationships in Business-to-Business Marketing It is important for TCLs management to continue working on building relationships between their agency and potential client firms, as well as with the already established client firms. This has a far reaching benefit to the agency in the following aspects; 3.1 Improved policies and other relationship practices Like in any other business, business-to-business marketing’s eventual target is improved business and optimised profits. However, maximising on profits cannot be achieved without building a business environment that is conducive between the client and the business. Thus, relationship management mainly attempts to build a friendly working relation between TCL and the client companies. With such friendly atmosphere existing in the business world, it becomes easier for the service provider to achieve return business and therefore reduce on customer acquisition costs. This is achieved through the formulation of friendly policies that further encourage business between the parties. For instance, TCL could formulate a policy that awards

7 discount on price to all client firms who have attained a certain revenue figure or value in doing business with the agency (Lewis & Zolkiewski, 2003).

Policies on after sales service could also be formulated that particularly aim at improving the quality of service delivered. Building loyalty in business is the greatest key to success and TLC should aim at achieving it successfully by ensuring that their client companies have easy access to information. Policies should also be formulated which allow for forums that will give clients the opportunity to critique and condemn particular services that they deem to be below par. The reaction of the clients will act like an evaluation to TCL because they would eventually be able to determine their areas of strength and weakness. Any client who feels he is being given audience and that his sentiments are given due considerations will often be confident enough in doing business with the agency and will find no reason of seeking for alternative service providers (McLean & Shaw, 2000).

3.2 Relationship commitment The continued relationship management between TLC and its clients is also resulting in an enhanced commitment that is very vital for continued business between the two parties. When clients seek a service from a provider or manufacturer, they always do it with the hope that the provider will perform as expected. In other words, clients pay in expectation of a service being rendered to them which should be equivalent to the cost incurred. However, when the resultant service fails to measure up to the expectations of the client, then it is easy that trust will be broken between the two parties. It is therefore up to TCL to follow up on the client even after the tender has been awarded to them and ensure that they clearly understand what the client’s expectations are.

8 This shows the full commitment on the part of the agency to offer high quality service to the client. The good relationship that exists between the parties will enable the client to point out at any shortcomings that exists on the service delivery of TLC. The agency can take that up and improve its general performance to standards that will be acceptable across board. In so doing, TLCs performance will attain the best and most preferred quality standards in the industry thus winning more customers. It will build the agency’s competitive advantage which will be very attractive thus eventually receiving additional business from the market (Palmer, 2001).

3.3 Improved trust within the relationship Customer’s faith is important in ensuring and ascertaining TLC’s future business prospects. With enhanced faith, the client companies will be more assured working with TLC rather than taking business elsewhere. An enhanced corporate reputation that is based on trust is more crucial particularly in environments that have limited traditional relationships, with little relational history and limited interpersonal communication. Thus managing relationship between TLC and its client companies will foster a transitional relationship, the result of which will ensure there is easy access to information, as well as provide the right environment to set up forums for discussing issues (Gander & Catulli, 2004).

The proactive manner in which TLC’s management is taking upon relational issues is an important business mantra especially in the modern world economy where quality and trust have become the basis of performing business. As every player in the market attempts to win customers for better business, it becomes prudent that an organisation settles on creating and nurturing good reputation and trust. It is easier that way than attempting to regain trust after it has suffered a fatal blow. The computer and information age in which we are living has completely altered the power structure as well as relationships between clients and businesses.

9 Thanks to the internet, there is a paradigm shift from the traditional corporate communication which followed vertical and horizontal patterns (Mason & Leek, 2006).

3.4 Improved mutual cooperation Business needs to build and enhance mutual cooperation between the parties involved. It is not a one-off process that begins and ends immediately after the consumer obtains the intended service or good. It is advisable that the service provider or product manufacturer initiates the process even at a time when the potential client has little need for the commodity or service. This can only be done effectively in an environment where mutual trust exists. The mutual trust will in the long run lead to the development of mutual cooperation between the parties involved. In such an instance, the client will benefit from quality and customised service from the agency.

The client will rely on TLC knowing very well that services offered by the agency will help it to satisfy its own customers and achieve market leadership.

In return, TLC is set to get a lot of business from the client because of the assurance that comes with their service. It will sustain growth due to increased revenues and service quality will also improve. Even competing firms will seek TLC’s services on realising that they have successfully succeeded to market another firm in the industry. Mutual cooperation is also important because it reduces the cost of doing business and both parties share the benefits between themselves (Sommerfeld & Paulssen, 2006).

3.5 Customer satisfaction Proper and sustained relationship management will in the long run result in enhanced customer satisfaction. The level of satisfaction on the part of the consumer is very important as it determines whether there would be repeat buying or not. In this era, the consumer is more

10 informed and knows what he wants exactly. The quality of service being offered should therefore match with the client’s expectations. The cost that the client is paying for the service should also be justifiable, gauging on the extent of its performance. However, it is difficult to effectively satisfy customers without first of all establishing what their needs and wants are. Communication between TLC and all the client firms is therefore important and should always be maintained as a way of building on satisfaction (Roberta & Tunisini, 2010).

Through relationship management, it is possible that the agency’s management will be able to establish a strong bond with clients which will in time result in enhanced satisfaction. It will be possible to establish the desired specifications for each client firm and plan in advance on how to fully and effectively serve their desires and wishes. The business climate has changed and many consumers prefer customised services which specifically fit their operations. These individual specifications differ from each other and require close scrutiny in order to determine what the client’s actual specifications are. The essence of relationship management would sufficiently determine such requirements and even afford the agency ample time to plan and prepare on how to tackle demands. Where special resources and other materials would be necessary, relationship management will make it possible for their acquisition well in advance (Moller & Salminen, 2006).

4.0 Integrating a Sales Force into TLC Incorporating a new sales force would require that the management plans in advance on how their activities and general presence in the agency would be integrated such that there is no conflict arising. The first strategy would be to organise the sales team into groups of 3 or 4 people and then placing them directly under the guidance and leadership of account executives.

This is because the account executives have been the ones directly charged with the

11 responsibility of executing the sales duties. They already know the market properly and can offer support through orientation to the new sales team being recruited. Thus, every sales representative will be answerable to the account executive that heads the unit that the representative belongs to. It will be easier for the executives to plan, organise, direct and control their respective teams towards attaining their objectives and goals easily and efficiently (Slater & Olson, 2000).

This kind of arrangement will also eliminate any chances of conflicting roles existing.

There will be no repetition of roles and duties as every individual sales representative will be expected to cover certain areas and also given targets to attain. At the end of every period, the actual performance will be analysed against the set targets and appropriate measures taken to ensure that desired results are attained.

Another strategy would be to organise the sales force into teams that specifically focus on particular market segments. With the poor economic climate, it would be improper for the company to enter the market in search of clients from a generalisation angle. Servicing big companies might be impractical due to the shrinking revenues and the largely uncertain future of the market. As such, the sales team can be arranged such that they focus on a market segment that is made up of small companies and retailers until such time when the prospects will improve (Sinha & Zoltners, 2001).

5.0 Conclusion TCL needs to consider a number of long term strategies that would eventually ensure the agency improves on its service delivery both at present in the future. This will see the agency win more client companies and therefore grow its revenue and profit base. The pricing strategy needs to be reviewed such that the agency can adopt a flexible kind of system where clients are

12 allowed to negotiate prices. The agency also needs to stop relying on outsourcing and instead acquire its own media facilities. This will have a positive implication on the quality of advertisements done on radio and TV. Expanding TCL’s market coverage in terms of geographical area could also improve on the prospects of the agency. This can be done by opening up field offices to coordinate activities in locations hitherto not served by TCL. A vigorous advertising campaign through print and electronic media will reach a wider audience and increase TCL’s chances of winning more customers.

Maintaining good business relationship between TCL and other stakeholders involved in the business, including clients, suppliers, and distributors will enhance business performance. It will increase customer satisfaction and also improve on commitment and customer trust. The intended hiring of sales force is important and they can be arranged in teams that will specialise in specific market segments and sector.

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List of References Gander, J. & Catulli, M., 2004. Relationship management versus brand management in SME business-to-business marketing. IMP Journal Jagpal, H. S. & Brick, I. E., 1982. The marketing mix decision under uncertainty. Marketing Science, 1(1), p. 79-92.

Lewis, B. & Zolkiewski, J., 2003. An assessment of customer service in business-to-business relationships, a literature review and methodological issues. IMP Journal Li, H. & Atuahene-Gima, L., 2002. The adoption of agency business activity, product innovation, and performance in Chinese technology ventures. Strategic Management Journal, 23(6), p. 469-490.

Mason, K. & Leek, S., 2006. An investigation of the utilisation of communication methods in a business to business relationship. IMP Journal McLean, A. & Shaw, E., 2000. The components of networking for business to business marketing: Empirical evidence from the financial service sector. IMP Journal Moller, K. & Salminen, R., 2006. Role of references in business marketing-Towards a normative theory of referencing. IMP Journal Nail, P. A., Raman, K. & Winer, R. S., 2005. Planning marketing-mix strategies in the presence of interaction effects. Marketing Science, 24(1), p. 25-34.

Palmer, R., 2001. The eternal triangle-A framework of business to business relationships. IMP Journal Roberta, B. & Tunisini, A., 2010. The relationship between marketing and purchasing in business-to-business markets. IMP Journal

14 Sinha, P. & Zoltners, A. A., 2001. Sales-force models: Insights from 25 years of implementation.

Interfaces, 31(3), p. S8-S44.

Slater, S. F. & Olson, E. M., 2000. Strategy type and performance: The influence of sales force management. Strategic Management Journal, 21(8), p. 813-829.

Slater, S. F. & Olson, E. M., 2001. Marketing's contribution to the implementation of business strategy: An empirical analysis. Strategic Management Journal, 22(11), p. 1055-1067.

Sommerfeld, A. & Paulssen, M., 2006. Multiple moderators at the trust-loyalty relationship in business-to-business relationships. IMP Journal Wierenga, B. & Van Bruggen, G. H., 2001. Developing a customized decision-support system for brand managers. Interfaces, 31(3), p. S128-S145.