Business to Business Marketing

Sensitizing to B2B marketing

October 2011

Program based on and adapted from the books written by Philippe Malaval, with the collaboration of Christophe Bnaroya :
- Lefficience commerciale en BtoB EMS 2010 - Marques BtoB - Pearson Education 2010 - Marketing Business to Business Pearson Education 4me Ed 2009 - Aerospace Marketing Management Kluwer Academic Publishers 2002 - Marketing Aronautique et Spatial Pearson Education 2002

Christophe Bnaroya

Christophe Bnaroya

From Marketing to B2B Marketing: behindhand or ahead?

Not just one but 3 B2Bs!

Key advices to implement an efficient B2B marketing approach

Industrial Marketing or B2B Marketing?

Main B2B features

Christophe Bnaroya

A business marketing perspective

Business Markets Who buys Organizations (commercial enterprises, institutions both profit and not-for-profit, governments) Buy goods or services to incorporate into another product or to support organizational needs

Consumer Markets Individuals (individual buyers, household consumers) Buy goods or services for personal gratification

Buying motives

Christophe Bnaroya Programme based on Philippe Malaval & Christophe Bnaroya book Marketing Business to Business , Pearson Education, 4th ed.

A business marketing perspective

WHY B-TO-B MARKETING APPEARED LATELY COMPARED TO CONSUMER GOODS MARKETING ?

"Engineer" culture Basic products High-tech products and project marketing

Christophe Bnaroya Programme based on Philippe Malaval & Christophe Bnaroya book Marketing Business to Business , Pearson Education, 4th ed.

Introduction to business-to-business marketing

1 Core Product
Core Benefit or Service

2 Actual Product
Packaging, Design Brand Name

3 Augmented Product
Installation After-sale Service Warranty Credit

THE THREE LEVELS OF PRODUCT

Christophe Bnaroya Programme based on Philippe Malaval & Christophe Bnaroya book Marketing Business to Business , Pearson Education, 4th ed.

Understanding the B2B environment and its changes

Physical environment Financial publics : investment houses, stock brokerage firms, Ecology individual stockholders, institutional investors Internal public : directors, board Culture of managers, employees, workers Buyer-seller interface General public Publics Technology Macroenvironment Economics Independent press : mass media, trade media Public interest groups

Business markets are megamarkets

Government

Christophe Bnaroya Programme based on Philippe Malaval & Christophe Bnaroya book Marketing Business to Business , Pearson Education, 4th ed.

B2B versus B2C marketing areas of differences

Business Markets
Market Structure
Geographically concentrated Relatively fewer buyers Oligopolistic competition Technical complexity Customized Service, delivery and availability very important Functional involvement Rational/task motives predominate Technical expertise Stable relations Interpersonal relationships Reciprocity

Consumer Markets
Geographically dispersed Mass markets Monopolistic competition Standardized Service, delivery, and availability somewhat important Family involvement Social/psychological motives predominate Less technical expertise Nonpersonal relationships

Products

Buyer behavior

Decision making Distinct, observable stages Channels Promotion Price

Shorter, more direct, fewer linkages Emphasis on personal selling Competitive bidding, negotiating on complex purchases List prices on standard items

Unobservable, mental stages Indirect, multiple linkages Emphasis on advertising List prices

Christophe Bnaroya Programme based on Philippe Malaval & Christophe Bnaroya book Marketing Business to Business , Pearson Education, 4th ed.

B to B: different types of business transactions

Request for proposals Complex sales

Classic negotiation

Traditional sales

Transactional sales Purchase on Internet

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The 3 main types of B2B marketing

Mass B2B Non strategic products/services

Recurrent B2B (regular) formerly called industrial marketing Strategic issues

Project or business B2B

Huge stakes

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Marketing lifecycle
Amount of new brands created Level of advertising investments Marketing/sales new job creation

B2C Services

B2C Products

Mass B2B Recurrent B2B

Project B2B Time

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Different B2Bs according to the final target

In addition, diverse strategies might be implemented throughout operations and leverages based on the final customer (or user), leading to 4 approaches:

- Core-BtoB (information systems, machine-tools) - BtoBtoC (components, car or building equipment) - BtoAtoU (collective equipment, trains, hospitals, schools, water,
energy)

- BtoBtoE (Individual protection equipment, catering, car fleet

lease)

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Business-to-business marketing characteristics

1. Scope of the industrial sector 2. Clientele : number of clients, heterogeneity, international 3. Demand Supply chain : top requirement, specialization, opportunities of the Derived Demand 4. Marketing research in B to B 5. Active role of the customer Customer-Supplier Mutual involvement 6. A purchasing process involving many players 7. Communication, sales force, promotion 8. Longer product life cycle (new applications)
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Business-to-business marketing research

Similar to B to C :
Internal sources before external sources

Desk research before field research

A qualitative phase before the quantitative one Ad hoc and permanent surveys

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Business-to-business marketing research The specificities of the surveys in B to B :

Generally not available data Generally not possible to give money to obtain answers to our questions (Too few : an insult ! Too much : perceived corruption !) Necessary to explain a joint interest in the survey Generally a synthesis (not confidential) to promise Necessary to use the support of friends : - In the top management of the targeted organization - Better: among the customer purchasers of the organization Invitation to a meeting with a celebrity (opinion leader) from the business field: physician professor, famous architect / designer, famous gastronomy chef, test pilot in aeronautics
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Derived Demand & Supply chain

Value

ARCELOR MITTAL steel Electric household appliances Brandt, Ariston, Whirlpool...

Distributors Darty, But...

End consumer

Recycling
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Derived Demand & Supply chain

THE PRODUCT (SERVICE) DEMAND DEPENDS ON THE DEMAND OF THE FINAL PRODUCT... ... IN WHICH OURS IS GOING TO BE : INCORPORATED (Ingredients, Raw Materials...) ASSEMBLED (Components, Spare Parts...) ... OR FOR THE PRODUCTION OF WHICH IT MUST BE : CONSUMED (Lubricants, Energy...) USED (Vehicles, Machine-tools, Bureautics...) 2 CONSEQUENCES : ECONOMIC DEPENDENCE MULTI-LEVEL ACTIONS (pull marketing programs)
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FAURECIA CAR PARTS MANUFACTURER

RENAULT CAR BUILDER

FINAL CUSTOMER

Satisfaction Surveys (Comfort, Ergonomic...) Medical Surveys

Studying customers customer to get business customers more loyal

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Derived Demand & Supply chain

IN INDUSTRIAL MARKETING, BEST IS TO USE MARKETING METHODS FOR EACH CLIENTELE LEVEL :

CUSTOMER CUSTOMERS CUSTOMER CUSTOMER OF CUSTOMERS CUSTOMER

IN TERMS OF : MARKETS SURVEYS MARKETING INFLUENCE

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Selling Firm
Organizational Selling Center

Buying Firm
Organizational Buying Center
Purchasing Agent

EXCHANGE PROCESS

Salesperson

Marketing Manufacturing R&D

Information Problem-solving Negotiation Friendship, trust

Purchasing Manufacturing Engineering R&D Marketing

Engineering Physical Distribution

Products / services Payment Reciprocity

Relationship management
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The Buying Center or DMU

BUYING CENTER MEMBERS CAN BE DIVIDED INTO 4 CATEGORIES :
DECIDER (S) PURCHASER (S) (Data gathering, short list, negotiation... Purchase Marketing) INFLUENCERS - Within the company (Marketing, RD, Quality, )
- functional - individual

- Outside the company (architects, journalists, customers, engineering

consultants + advocate: customer providing unpaid promotion for your organization, product or service)

USERS (complexity level, national and company culture) + (GATEKEEPERS : hidden influencers)
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The evolution of the influence power in the customer organization

Observed Changes A more and more adaptable composition in the Buying Center Ad hoc teams for each business type with temporary leaderships More important perceived risks: need of more precise information for complex purchases Part of the Human Resources Dpt for the purchases involving employees (BtoBtoE) & of the Marketing Dpt for the purchases concerning the final customers (BtoBtoC) Growing importance of the Users, especially, those with a prestigious status (pilots, surgeons, engineers)

Buying Center Members Purchasers Deciders

Weight and influence

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Influencers

Users

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Buying Center
A STRATEGIC B TO B PURCHASE HAS MULTIPLE CONSEQUENCES. SEVERAL FUNCTIONS ARE CONCERNED :
FUNCTION Production Manager Quality Manager RD Manager Marketing Manager Sales Manager Maintenance Manager Purchase Manager Financial Manager MAIN ARGUMENT TO USE
- ability to be used with in-plant machine tools - productivity - working conditions - production process - final product - interest to integrate it for new projects - help him innovating and finding new applications - enhancing the advantages for his product - influencer on production - facilitator for final product selling - influencer on marketing - new supply is easy to master - his task gets easier - to anticipate new tendencies : materials, processes... (purchase marketing) - better profit in spite of higher price (and costing price)

Understanding Buying Center Members Motivations Choosing the Arguments

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Buying Center
BUYING CENTER (OR PURCHASE COMMITTEE) THAT VARIES ACCORDING TO CIRCUMSTANCES : PROJECT IMPORTANCE HIS TECHNICAL SPECIFICITIES A COLLECTIVE DECISION TAKEN BY A VARIABLE NUMBER OF MANAGERS, HETEROGENEOUS BY THEIR MOTIVATIONS : WITH DIFFERENT EXPERIENCES (within the company and before)

WITH DIFFERENT DEGREES AND TRAINING LEVELS

WITH DIFFERENT RESPONSIBILITIES DESERVING DIFFERENT CONFIDENCE LEVELS (results, number of years service with the company) WITH DIFFERENT INFLUENCE LEVELS
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Industrial Buying Process

There are many models of Industrial Purchase BUY GRID
Components

BUY CLASSES
- New Task - Modified Rebuy - Straight Rebuy

BUY PHASES
1. Recognition, anticipation of a need 2. Definition of the characteristics and quantities necessary 3. Search and qualification of potential sources 4. Collection and analysis of propositions 5. Choice of suppliers and ordering process 6. Information feedback and performance evaluation

(source : Robinson, Faris) Christophe Bnaroya

Buying Process
THE SHETH MODEL
The members of the buying center have different needs and expectations : the stronger the expectations, the more active will be the search for information with a view to buying. Two expectations levels : EXPLICIT EXPECTATIONS :
Product Quality Delivery Delays Services associated with the products Prices

IMPLICIT EXPECTATIONS :
Reputation Size Geographical Location Existence of reciprocal agreements between the Buyers and the Suppliers Personality Perceived Competences Christophe Bnaroya Lifestyle of the supplier s sales staff

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A key-concept to understand the B-to-B buying behavior (2/2)

UNCERTAINTY LEVEL ABOUT THE CONSEQUENCES OF THE CHOICE

PERCEIVED RISK
FOR THE COMPANY

IMPACT OF THE CONSEQUENCES OF THE CHOICE

FOR THE EMPLOYEE

To

reduce perceived risks: specific buying agreements

contracts, contracts with supply parts guarantee (10 years) even in case of
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Reciprocity

business closed down (Armament, machine-tools)

Buying Agreements Purchasing agreements affect the buyers purchasing styles. This might complicate (or facilitate !) the buyer-seller relationships. All of the agreements are exchange-oriented. 4 main agreements :

Barter

Countertrade
Buy-back Offset
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TO SUCCEED IN BUSINESS NEGOTIATIONS, IT IS THEREFORE NECESSARY TO KNOW : 1- THE BUYING CENTER MEMBERS
- their precise role in this negotiation, their individual motivations - their previous responsibilities - their degree and training level - personal information (family, hobbies...)

2- THE PHASE OF THE BUYING PROCESS

- anticipation and need recognition - product type and quantity definition - vendor search and evaluation - proposal analysis, evaluation and supplier selection - supplier and order process choice - feedback and performances evaluation

3- WHICH BUYING SITUATION

- Straight rebuy - Modified rebuy - New task
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BRAND LINKS TO THE ENVIRONMENT

Other economical players (Financial organizations, public bodies, labor market, experts, professional associations)

Suppliers

Customers

Company
Shareholders, employees,subsidiary

Competitors

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Key role of interpersonal Supplier-Customer relationships

1- TAILOR MADE ACTIONS FOR KEY ACCOUNTS

Example : Works council of a company

2- A CUSTOMIZED INTER-INDIVIDUAL APPROACH REQUIRING:

TARGETED ACTIONS : - technical manager - marketing manager - quality manager COHERENT ACTIONS AND CONSISTENT ACTIONS : A 360 APPROACH TO STRENGTHEN SYNERGIES AND AVOID CONTRADICTIONS BETWEEN INTERNAL AND EXTERNAL TARGETS

THE SUPPLIER NEEDS SEVERAL NEGOTIATOR PROFILES, AT LEAST 2, WITH A TECHNICAL AND A BUSINESS BACKGROUND
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B2B COMMUNICATION

Communication

Opinion leaders

Influencers Users

Decision makers

Purchasers

B to B communication main targets

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The use of specialized medias: trade-shows, professional press and DM

Budget TradeShows Trade Press Direct Marketing 1 2 3

Contacts 3 2 1

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FROM A SUPPLIER STATUS BECOMING A PERFORMANCE FACILITATOR

CONCEPTION TO HELP THE CUSTOMER TO PRODUCE PRODUCTION COMMUNICATION TO HELP THE CUSTOMER TO SELL SALE MANAGEMENT PRODUCTIVITY HUMAN CLIMATE

TO HELP THE CUSTOMERS RUNNING

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CUSTOMERS SATISFACTION TOOLS

INNOVATION SURVEYS DESIGN GREEN MARKETING NORMS & QUALITY MAINTENANCE CUSTOMERS TRAINING

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SHORT TERM

SUPPLIER

CUSTOMER

1- Simple business relationship : transaction

SUPPLIER

CUSTOMER

2- Toward a stronger business relationship

SUPPLIER
DESIGN TRAINING SURVEY QUALITY GREEN MARKETING MAINTENANCE COMMUNICATION LOGISTICS

CUSTOMER

LONG TERM

3- Loyalty : active and lasting customer s satisfaction

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BIBLIOGRAPHY
Books
Anderson, J.C. et Narus, J.A., (2004), Business Market Management: Understanding, Creating and Delivering Value, 2nd Ed., Upper Saddle River, NJ, Prentice-Hall. Bnaroya, Ch. et Lagrasse, H., (2010), Lefficience commerciale en BtoB. Marketing et vente pour les PME-PMI en mode affaire, ditions EMS. Blanc, F., (2003), Marketing industriel : vade-mecum, EMS. Bonoma, T.V., Zaltman, et Johnston, W.J., (1977), Industrial Buying Behavior, Cambridge, Marketing Science Institute. Cova, B., Ghauri, P. et Salle, R., (2002), Project Marketing: Beyond Competitive Bidding, New York: John Wiley & Sons Ltd, Chichester. Cova, B. et Salle, R. (2003), Le marketing d'affaires : stratgies et mthodes et mthodes pour vendre des projets ou des solutions, 2me d., Paris, Dunod. Dwyer, F.R. et Tanner, J.F.J., (2006), Business Marketing: Connecting strategy, relationships, and learning, 3rd. Ed., Boston, MA, Irwin/McGraw Hill. Fill, Ch. et Fill, K.E., (2005), Business to business marketing relationships, systems and communications, Harlow, England: Financial Times Prentice Hall, Pearson Education. Ford, D. et Snehota, I., (2000), Business Marketing Strategy, John Wiley & Sons. Ford, D., (2002), Understanding Business Marketing and Purchasing, 3rd. Ed., Thomson Learning, London. Gadde, L.-E. et Hkansson, H., (2001), Supply network strategies, New York, NY, John Wiley. Hague, P. et Jackson, P., (1994), The Power of Industrial Brands: An Effective Route to Competitive Advantage, London: McGraw Hill. Hkansson, H. et Snehota, I., (1995), Developing relationships in business networks, Routledge, London. Hutt, M.D. et Speh, Th. W., (2007), Business Marketing Management: B2B, 9th Ed., The Dryden Press Johnston, W.J., (1981), Patterns in Industrial Buying Behavior, Praeger. Kotler, Ph. et Pfrtsch, W., (2006), B2B brand management, Springer. Malaval, Ph. avec la collaboration de Bnaroya, Ch. (1998a), Stratgie et gestion de la marque industrielle, Paris, Publi-Union/Pearson. Malaval, Ph. et Bnaroya, Ch., (2009), Marketing Business to Business, 4me d., Paris, Pearson Education. Malaval, Ph. et Bnaroya, Ch., (2010), Marques BtoB, Paris, Pearson. Michel, D., Naud, P., Salle, R. et Valla, J.P., (2003), Business-to-Business Marketing, 3rd Edition, Bristol: McMillan, Palgrave. Michel, D., Salle, R. et Valla, J.-P., (2000), Marketing industriel, Stratgies et mise en uvre, 2me d., Economica. Morris, M.H., (2001), Business-To-Business Marketing: A Strategic Approach, Sage Publications. Pras, B. et Tarondeau, J.C., (1981), Comportement de lacheteur, Paris, Sirey. Reeder, R.R., Brierty, E.G. et Reeder, B.H., (1991), Industrial Marketing, Englewood Cliffs, N.J., Prentice-Hall. Webster, F.E. et Wind, Y., (1972), Organizational Buying Behavior, Upper Saddle River, NJ: Prentice-Hall.
Christophe Bnaroya

BIBLIOGRAPHY Articles
Artto, K.A. et Wikstrom, K., (2005), What is project business?, International Journal of Project Management, 23, 5, p. 343-353. Avlonitis, G.J., Karayanni, D.A. (2000), The Impact of Internet Use on Business-to-Business Marketing, Industrial Marketing Management, Vol. 29, 441-459 Ballantyne, D. et Aitken, R., (2007), Branding in B2B markets: insights from the service-dominant logic of marketing, Journal of Business & Industrial Marketing, 22, 6, p. 363-371. Cova, B. et R. Salle (1992), L'volution de la modlisation du comportement d'achat industriel : panorama des nouveaux courants de recherche , Recherche et Applications en Marketing, vol. VII no 2/92, 83-106. Coviello, N. E et R.J Brodie (2001), Contemporary Marketing Practices of Consumer and Business-to-Business Firms: How Different Are They? The Journal of Business and Industrial Marketing, V. 16 N. 5, 382 400. Dwyer, D., P. Schurr, et S. Oh (1987), Developing Buyer-Seller Relationships Journal of Marketing, 11-27. Johnston, W. et L. J. E. Lewin, Organizational Buying Behavior : Toward an Integrative Framework , Journal of Business Research, 35, 1996, 1-15 Johnston, W.J. and T.V. Bonoma (1981), The Buying Center: Structure and Interaction Patterns, Journal of Marketing, t, 143156. Kohli, A. (1989), Determinants of Influence in Organizational Buying: A Contingency Approach , Journal of Marketing, juillet, 50-65. Lichtenthal, D.J. et S. Eliaz (2003), Internet Integration in business Marketing Tactics, Industrial Marketing Management, 31, 3-13. Mouzas, S. (2006), Efficiency versus effectiveness in business networks, Journal of Business Research. New York: Oct 2006. Vol. 59, Iss. 10/11; 1124. Reed, G., Story, V., Saker, J. (2004), Business-to-Business Marketing : What is Important to the Practitioner?, Marketing Intelligence & Planning, Vol. 22, No. 5, 501-510. Seppnen, R., K. Blomqvist et S. Sundqvist (2007), Measuring Inter-organizational Trusta Critical Review of the Empirical Research in 19902003, 249-265. Sheth, J. (1973), A Model of Industrial Buyer Behavior, Journal of Marketing, printemps, 50-56. Simkin, L. (2000), Marketing is marketing - maybe!, Marketing Intelligence & Planning. Bradford: 2000. V.. 18, no.3; 154- 159. Webster, F. and Y. Wind (1972) A General Model of Organizational Buying Behavior , Journal of Marketing, 12-19. Wilson, D.T. (1995), An Integrated Model of Buyer-Seller Relationships, Journal of The Academy of Marketing Science, Vol. 23, No. 4, 335-345.
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