B2B Marketing
B2B marketing, business to business marketing, industrial marketing, or business marketing is the practice of individuals or organizations, including companies, governments, and institutions, to promote their products or services to other organizations who, in turn, will resell them, use them as components of your products and services, or support your operations.
 |
| BUSINESS TO BUSINESS MARKETING |
This marketing niche was initially linked to the industrial sector, generating the name “industrial marketing”. But from the 1980s onwards it was extended to all companies that do business with other companies, whether or not this is their main vocation, covering markets such as distribution and business services.
Industrial marketing or B2B marketing is generally carried out by companies – or areas of companies – whose main market is not final consumers but other companies.
Origin and Evolution
The practice of one producer of trading goods with another is as old as the trade itself. However, the origin of B2B marketing is very recent. Industrial marketing was born in the mid-19th century, although most of the research in this area was developed in the last 25 years.
For years, industrial marketing was relegated to the background of consumer marketing (B2C), favoring suppliers of goods or services that are sold directly to families through the media and retail channels. This began to change in the mid-1970s. Today, several academic publications regularly publish studies on the subject in English, such as the Journal of Business-to-Business Marketing and the Journal of Business & Industrial Marketing.
However, it was only in 2019 that the first book written in Portuguese on the subject was published. Additionally, business marketing conferences are held every year and university courses are now common, with more students being trained in this area than in consumer marketing.
The recognition of the specificities of B2B marketing has resulted in the emergence of companies specializing in this area. Some are incorporated into large international communication groups, such as WPP, Omnicom, or Publicis, which thus include business-to-business in their range of specialties. Larger and more developed markets such as the American or English have a greater offer of agencies dedicated to B2B.
B2B Marketing Applications
Broadly speaking, marketing can be divided into consumer marketing and industrial marketing. The need for B2B communication for companies that sell products and services to other companies is obvious, but the need to develop B2B communication is not unique to these companies.
Companies dedicated to the B2C market also often need to communicate with other companies too. for example, promote their products, services, and brands with distributors, as well as influence the opinion of investors or analysts.
Marketing value in B2B
General marketing principles and best practices apply equally to B2C and B2B communication. Both must align the strengths of the product or service with the needs of the target market; position product and price according to the market, in a delicate balance; communicate and sell by effectively demonstrating the value of the product or service to the target market. These are the fundamental principles of the 4Ps of marketing ( marketing mix ) first documented by Jerome McCarthy in 1960. Although B2B marketing has specifics:
Price
- B2B customers are better informed and have a more rational perception of price
- A different price elasticity of the B2C market
- Purchasing power is stronger than mass consumption, so prices are very negotiable
Distribution
- Direct sales are the most frequent
- Products are less dependent on a few large distributors
- Importance of salesforce
Communication
- The objectives are: Inform, create a favorable image, obtain personalized contact and retain
- personalized communication
- Advertising on special media and specialized professional press
- Salesforce, relational marketing, and public relations are the most appropriate instruments
B2B Marketing vs B2C Marketing
General marketing principles and best practices apply equally to B2C and B2B communication. But business-to-business marketing communication has its own characteristics related to the specifics of these markets. Given the communication addressed to the final consumer, these differences are, among others:
- Larger markets and transactions: Values per transaction and customer lifetime value are much higher. The volume of transactions in the industrial marketing or B2B market is significantly higher than in the consumer market, with a single customer representing a turnover of many millions of euros and a more sophisticated decision-maker, who requires a greater volume of information.
- Target audiences made up of socio-professional groups and communities of small and homogeneous interests compared to the usual targets of B2C communication – which allows the use of more targeted communication tools and a more surgical segmentation.
- Purchasing decisions are normally subject to complex chains of influence, with many stages – in which distance communication and face-to-face communication can be alternated – and various actors, each with different roles in the process according to their hierarchical position, specific competence, role in the company and involvement with the process.
- It involves more complex and differentiable products and services. External influences – economic, political, regulatory – with consequences for communication strategies and tools.
Key features of the B2B sales process
- Marketing is one-to-one in nature. Identifying customers is relatively easier for the seller ( account manager ) by creating a partnership or preferred supplier relationship.
- Highly qualified and trained professionals are involved in the purchase process. In many cases, two or three suppliers are consulted when purchasing industrial products.
- The purchase price is relatively high.
- Purchase decision is normally made by a group of people ("buying team"), not one person.
- Often the buying/selling process is complex and includes several steps (eg request for expression of interest, tender request, selection process, tender award, contract negotiations, and signature of the final contract).
- Selling involves long processes of prospecting, qualifying, courting, making representations, preparing proposals, developing strategies, and negotiating contracts.
Key features of the B2C sales process
- Marketing is one-to-many in nature. It is not practical for salespeople to individually identify potential customers or to meet them individually.
- The purchase price is usually less.
- Decision making is often on impulse.
- Greater confidence in distribution (entering retail stores).
- More effort put into mass marketing (one too many).
- More confidence in the brand.
- Greater use of the main means of communication (television, radio communication, print) of advertising to build the brand and be remembered at the time of purchase or indication.
Who are the consumers in B2B sales?
"Other businesses" may seem like an easy answer, but Dwyer and Tanner (2006) divide business consumers into four broad categories: companies that use products or services, government departments, institutions, and distributors.
The first category includes original equipment manufacturers, such as automakers who put purchased gauges in their cars, and corporate users who purchase products for their own consumption. The second category, government departments, is the largest. In fact, the U.S. government is the nation's largest purchaser of goods and services, spending $300 billion a year. This category also includes state and local governments. The third category, institutions, includes schools, hospitals, nursing homes, churches, and charities. Finally, distributors include wholesalers, brokers, and industrial distributors.
So what are the main differences between corporate marketing and consumer marketing?
B2C sales target individuals. That person's decision may be influenced by other factors (such as family members or friends), but it is the individual who ultimately pays for it. B2B sales are aimed at organizations. This simple distinction encompasses a series of complex differences that arise from the organizational structure of sales, but also from the size, location, industry, source of income, etc. groups").
Marketing mixes are often influenced by the uniqueness of B2B, which includes the complexity of a company's products and services, the diversity of needs, and the different characteristics of the sale itself (including fewer customers buying larger quantities). Because of these important subtleties of B2BA sales, McCarthy's original four P's have more categories.
B2B Marketing Strategy
B2B brand management
B2B branding differs significantly from B2C, including the need to align group, divisional, and product service brands and to apply branding standards to objects that are often considered "informal", such as email and other electronic communications.
Product (or service)
Because corporate customers focus on creating shareholder value, it is important to incorporate the cost-saving and revenue-generating benefits of products and services into product development and marketing.
People (target market)
Usually, the target market of enterprise products and services is smaller and the demand is more specialized, reflecting its specific industry or market position. Aside from the size of the target market, enterprise customers make organizational purchasing decisions, and its dynamics, both procedurally and in how they judge the value of what they buy, are very different from consumer markets. There may be many factors that affect the purchase decision, even if they are not the decision-maker of the purchase, they should probably be the object of marketing.
Pricing
If you know how to package pricing and payment terms, you will be able to persuade the corporate market to pay high prices more often than the consumer market. Getting a high price is especially easy if you have a strong brand.
Promotion
Promotional planning is easy if you know the media and information-gathering and decision-making habits of your customer base, not to mention their group-specific vocabulary. Usually, each industry or product area has specific exhibitions, analysts, publications, blogs, and retail and wholesale outlets.
This means that once you figure out these are relevant to your industry or product, the promotion plan is self-explanatory (depending on your budget). But finding these relevant to your particular field requires special skills and time to gain experience. Promotional techniques largely depend on the marketing communication strategy (see below).
Location (sales and distribution)
For the enterprise market, familiarity with product services, and an experienced and effective direct sales team (internal or external) are often important. If you also sell through distribution channels, the number and type of sales teams can be very different, and your success as a marketer depends largely on their success.
B2B marketing communication methods
The purpose of B2B marketing communications is to support an organization's sales and increase company profits. B2B marketing communications tactics typically include interactive services such as advertising, public relations, direct mail, trade shows, sales contracts, branding and website design, and search engine optimization. The Corporate Marketing Association is an industry organization serving B2B marketing professionals. Founded in 1922, it offers certification programs, research services, conferences, industry awards, and training programs.
Positioning in one sentence
An important first step in business marketing is finding a positioning sentence. This sentence should say what you do and how to differentiate you from the competition, where you are good, and where it is effective.
Determining the message to be disseminated
The next step is to decide what information to spread. It usually includes the main message that clearly tells customers what you do and what you can get them and several supporting messages that include supporting arguments, facts, and figures.
Planning events
Whatever the form of your business marketing campaign, start with a comprehensive plan for the resources that will generate the highest return on investment, and make sure your infrastructure can support every step of the marketing process, not just the beginning. Organizations are prepared to handle inquiries gracefully.
Notifying the PR firm
A standard notification document is a good idea. Not only does it allow the PR firm to focus on what's important to you and your campaign, but it also serves as a list of important events for your notification document. Typical elements of a notification document include your goals, target market, target audience, product, campaign introduction, product positioning, graphic considerations, business instruction manuals, and other supporting materials and distribution products.
Measuring results
The real value of measuring results is in linking marketing activities to business interests. After all, you're not doing marketing for marketing's sake. So it is imperative to always measure the results of your campaign. If possible, measure your impact on desired goals, such as cost per customer acquired, cost per lead, or other changes in customer perception.
How big is Corporate Marketing?
Hutt and Speh (2001) pointed out that "the market for corporate marketers is the largest; the industrial or corporate market, measured in dollars, significantly exceeds the final consumer market in terms of transaction value". For example, they found that companies like GE, DuPont, and IBM spend more than $600 billion a day in purchases to support their operations.
Dwyer and Tanner (2006) argue that purchases by companies, government departments, and institutions account for at least half of economic activity in industrialized countries such as the United States, Canada, and France.
A 2003 study sponsored by the Corporate Marketing Association estimated that corporate marketers in the United States spend $85 billion annually to promote their products and services. The study categorizes these expenditures as follows (in billions of dollars):
- Exhibition activities -- 17.3
- Internet or other electronic media -- 12.5
- Promotions and other marketing support -- 10.9
- Magazine Ads -- 10.8
- Advocacy and Public Relations -- 10.5
- Direct Mail -- 9.4
- Agent Distributor Materials -- 5.2
- Market Research -- 3.8
- Telemarketing -- 2.4
- Mail Order Catalog -- 1.4
- Other -- 5.1
The fact that there is a corporate marketing association speaks to the size and credibility of the industry. The predecessor of the Corporate Marketing Association was the National Industrial Advertising Association established in 1922.
Today, the Chicago-based Corporate Marketing Association has more than 2,000 members in 19 chapters nationwide. Its membership includes marketing communications companies specializing in corporate marketing.
What drives Corporate Marketing?
According to Morris, Pitt, and Honeycutt (2001), most of the rapid development and change experienced by corporate marketing is due to three "revolutions" taking place in the world today.
The first is the technological revolution. Technology is advancing at an unprecedented rate, and these changes drive the pace of new product and service development. Much of this is related to the Internet and will be discussed in more detail below.
Technology and corporate strategy go hand in hand. The two are related. Technology underpins organizational strategy, and corporate strategy drives technology. Both are vital to business marketing.
The second is the corporate revolution. To remain competitive, many companies have cut jobs and restructured. Today, adaptability, flexibility, speed, aggressiveness, and innovation are the keys to staying competitive. Marketing leads businesses by discovering market space, untapped needs, and new users for existing products and creating new processes for sales, distribution, and customer service.
The third is the revolution in the field of marketing. Companies are no longer satisfied with traditional ideas and are adopting new frameworks, theories, models, and concepts. They are no longer just focused on the mass market and deals. Relationships, partners, and alliances define today's markets. The way of dividing the cake is outdated. Companies are tailoring their marketing plans to individual clients.
