Chapter 5: Researching business-tobusiness markets

Tips for introducing the concepts

Overview

The chapter begins by considering the value of marketing information, which can be judged in terms of accuracy, timeliness, relevance and uniqueness. Some consideration is given to the question of whether there are any fundamental differences between B2B marketing research and B2C marketing research. Although many aspects of market research are the same in business and consumer markets – such as sampling theory – there are several practical differences that arise from the basic characteristics of business markets. As well as understanding their direct customers, business marketers need to be aware of developments further downstream in the chain of derived demand, at the level of their customer’s customer and perhaps even beyond that. In addition, response rates to business marketing surveys are often low. Various methods are available to try to increase response rates. In this chapter, we discuss the standard industrial classification (SIC) system for classifying economic activity, which is also discussed for purposes of segmentation analysis in Chapter 6. We also discuss the Internet as a vehicle for obtaining secondary market research. While the Internet has made many more secondary market research sources readily available, it is important to use information from trustworthy sources and to use critical judgment in evaluating secondary research sources.

Ideas for the class

This is an exercise that can be used either in a lecture or a seminar class, which is designed to develop integrated understanding of organizational buying behaviour and B2B marketing research. Students are given the following scenarios:

1. You are employed by a medium-sized manufacturing company, Manuco Manuco has decided that it needs to invest in a new photocopying machine. This will be a sophisticated and high-volume machine, capable of colour and black & white reproduction, which will be used by every department in the company for their own business purposes. The budget for such a machine is around £15,000 to £20,000 for outright purchase (some suppliers will probably offer leasing schemes, which you will also take into consideration when making your buying decision). The photocopying machine will be used for internal purposes (e.g., reproducing documents for circulation within the company) and for external purposes (e.g., reproducing brochures to be sent to customers). It will be located in the main administrative office, where the 10 clerical and administrative staff sit; three members of the clerical support team will be trained to use the machine. The acquisition of this machine is an important decision for Manuco, so the Managing Director has established a team of four people to make the decision – the Managing Director, the Finance Director, the Marketing Director and the Head of Administration. This team obtains administrative support from the Managing Director’s personal assistant.

The tutor takes on the role of the Managing Director. Students are allocated to three teams, representing the views of the Finance Director, the Marketing Director and the Head of Administration. They are required to come up with a list, in priority order, of their key buying criteria for the photocopying machine. The student teams then explain their choice of key buying criteria to the class.

2. You are on the sales support team for an office equipment distributor. The Sales Director heard that Manuco may be interested in buying a top-end photocopying machine, and has asked you to put together a short briefing document (around 3 pages) for the Sales Executive who has been allocated this prospect.

Question: What are the key headings that you would include in the briefing document? What sources of information would you use for the information under each of those key headings?

Key learning points that are expected to emerge from question 1 concern the structure of the buying centre, and the different – and possibly conflicting – key buying criteria of different members of the buying centre. When considering question 2 students should be expected to think about information concerning the manufacturing sector generally, the specific needs of medium-sized firms, the extent and nature of competition and likely buying criteria. However, a key question in this exercise is the extent to which the selling team can gain any real understanding of the processes taking place within the buying team. If so, how? Perhaps from prior experience with similar customers, or from previous sales visits, if any, to Manuco, or from published market research that provides insight into the buying process in this industry sector. Students should begin to understand that while generic market research information is readily available, the more specific information that would help a Sales Executive make an informed sales pitch is more difficult to obtain.

B2B Scenarios

B2B Scenario 5.1 What should Dan McIntosh do next?

There are many things that Dan McIntosh could write in his new document. Here are a few suggestions.

Both internal information and external information are needed. Need region-by-region analysis of the strength of competition. Who are the major competitors ineachregion?Whoisthemarketleaderineachregion?Whatarethestrengthsandweaknesses of the major competitors? What market positioning is adopted by the major competitors? What new product launches have taken place in last 12 months, and are anticipated in the next 12 months?

Need region-by-region analysis of sales channels for air conditioning systems. Who are the major distributors in each region? What is the split between direct sales to end customers and salesviadistributorsineachregion?Canwefindoutanythingaboutthestrengthofthebusiness relationships between major competitors and major distributors on a region-by-region basis? Need internal sales force data. For each regional sales team: sales volume per head and sales value per head (quarterly for the last 8 quarters); average number of sales visits per week; sales performance against quota; recent training attended. Analyse sales force customer visit reports to identify any characteristic issues raised, particularly in respect of product performance, availability, service and after-sales support, pricing, and product features. Need pricing information from both internal and external sources. List prices and typical discounts offered (to intermediaries and end customers) by Airco and estimates for major competitors (region-by-region).

Chapter case study Overview

The Liqui-Gas case study both introduces the concept of SERVQUAL, and presents some realistic data based around a SERVQUAL study conducted in a European industrial market. Although disguised and adapted, the basic ideas in this case study are drawn from a real-world study that was intended to achieve the goals described. The case study addresses the question of whether, and to what extent, service quality is important in a highly tangible, industrial marketing situation. A considerable amount of detail is provided about the SERVQUAL methodology. The results of the SERVQUAL study are presented in two tables – customer expectations of service quality, and customer perceptions of service quality. The standard SERVQUAL 7-point scale is used with 7 representing the high end (high expectations/high perceptions) of each of the 22 SERVQUAL indicators. Then the third table presents the European Marketing Manager’s initial analysis, showing the calculation of the SERVQUAL ‘gaps’ for all of the 22 indicators.

The indicative questions

There are different ways to use this case study depending on your desired learning goals. The case study could easily be used for an assessment task, with students being asked to prepare theirownindividual analysis, reportandpresentation respondingto therequest from theGlobal Marketing Director. This is a good way of requiring students to engage with a task involving the analysis of data and the presentation of conclusions and recommendations based on their ownanalysis. Anotherapproachis to usethecase study foragroupexercise. Competing groups can be asked to prepare their own analysis, conclusions and recommendations, and to present their findings.

Using the supplementary readings

The suggested journal article is: Cater, B., & Zabkar, V. (2009). Antecedents and consequences of commitment in marketing research services: The client’s perspective Industrial Marketing Management, 38 (7), 785–797.

There areseveral good reasons to take alook at this article. Firstly,it deals with the relationship between market research agencies and their clients, a topic that we discuss towards the end of the chapter. Secondly, it provides a good overview of much of the research into the concept of commitment in B2B relationships. Thirdly, it provides an interesting example of empirical research among B2B organizations. Finally, this research was undertaken in Eastern Europe, which has thus far been an under-researched geographical region in B2B marketing. The suggested websites are the codes of conduct of the ESOMAR (European Society for Market Research) and the MRS (Market Research Society):

• https://www.esomar.org/uploads/public/knowledge-and-standards/codes-andguidelines/ICCESOMAR_Code_English_.pdf (also available in other European languages through www.esomar.org)

• the Market Research Society Code of Conduct, at https://www.mrs.org.uk/pdf/mrs%20code%20of%20conduct%202014.pdf

We suggest that when asking the student to look at these codes of conduct you also remind them of the material about B2B marketing ethics, particularly deontological ethics and codes of conduct, to be found in Chapter 4.