Strategies for Reaching the New Hybrid Consumer - Research Proposal Example

B2B Marketing Reflective essays are the one which intended to reflect our ideas, thoughts on any particular topic and make us more knowledgeable about what the topic is likely to impact the whole society and the domain of its industry/business. So as an individual, I had gone through the reading material which I had collected from various resources like books, periodicals, reports, market research, Internet, and experiences. Searching and collecting almost all the known aspects of B2B marketing as well its changing face with the time has provided me the insight that today’s economy and most companies are a hybrid of the old and the new economy. Companies need to retain skills and competencies that have worked in the past, but they also needed to add new knowledge and competencies if they hope to grow and proper. Today’s market place is made up of traditional consumers, cyber consumers and hybrid consumers (Yova, Mahajan & Gunther, 2002). Major research firms estimate that B2B commerce is ten to fifteen times greater than B2C commerce. Business buyers often get better prices by using B2B auction sites, spot exchanges, online product catalogues, barter sites and other online resources. Many major enterprises, including Ford, General electric and Merck, have invested millions in web based procurement systems. This result invoice that use to cost $100 to process now cost as little as $20. Companies are also forming online buying alliances to secure even deeper volume discounts from suppliers. GM, Ford and Daimler Chrysler formed co-visit and believe they can save as much as $1,200 a car by combining their purchases on this electronic market place (Kotler, 2003). As a coordinator of the team I collected my team members with all their study materials what they had collected. I organized regular meetings of team members and as a team we collected and debated all the information we have about B2B marketing time to time. These collective analysis of study material as well as its critical analysis provided us deeper insight into the various aspects of B2B marketing. A critical reading and collective understanding provided us B2B marketing greater understanding which was free from pre set ideologies, self deception and confinement. This collective searching and reading has provided us the openness to change through sustained process of questioning. This process of questioning through collective reading and searching, provided and opened us to various kinds of exploration, experiments with ideas, new possibilities or potential of new ways of thinking. This collective team work has provided us the information that business buyers have different sources and they use to analyze lots of information before buying the products/services required. Business buyers have access to more information from Suppliers’ website; Market Makers; third parties that create market linking buyers and sellers; Infomediaries; third parties that add values by aggregating information about alternatives; Customer communities, online groups in which customers swap stories about suppliers’ product and services (Oliva, 2001). In the process of writing, reflective essay on B2B marketing, the information sources have been evaluated on the basis of its authenticity and availability. After analyzing all the information collected by the team members and from the various sources like books on B2B marketing, reports, discussions within the classroom teaching and notes we have got from the tutor established the authenticity of the information about the subject. In the process we found that the authors of business–to–business marketing text often adopted an approach which was clearly rooted in consumer goods transactional marketing framework. The only difference was that these authors, when discussing issues such as strategic planning and the selection of an appropriate marketing mix attempted to present examples of practice in terms of industrial market scenario. Some of these researchers concentrated on determining whether differences in market structure influenced the marketing process (Powers, 1991), while others concentrated in understanding buyer behavior. American academics such as Sheth (1973) and Webster and wind (1972) began to construct and validate realistic buyer behavior models reflecting the real nature of events which occur in B2B markets. The available literature provided us the actual meaning of B2B marketing, its changing process, theoretical framework and development of the subject and its practicability. Further analysis of the available literature from various sources provided us the following definition of B2B marketing and its main attributes. Business-to-business marketing has been described as the marketing of goods and services to commercial enterprises, governments and other non-profit institutions for use in the goods and services that they in turn, produce for resale to other industrial customer (Corey, 1991, 4). This definition implies that the type of customer and nature of goods purchased are both very different from consumer markets where goods are brought for the purpose of final consumption. This means that B2B markets are likely to exhibit the following attributes (Power, 1991; Rangan et al., 1995): * One characteristic of business–to–business markets is that demand will be of a derived nature because B2B customer purchase in response to what they perceive are the economic cycle trends in their downstream final consumption market, industrial marketers often have to adopt a much longer planning orientation en their counter parts in consumer goods markets. Due to the fact that demand is often more volatile than in consumer goods markets an added complication for the B2B marketers is that sales revenue can fluctuate quite dramatically. This is especially true in the market for new plant and equipment, because a given percentage of increase in the demand for the building and machinery to produce additional output. Total demand in B2B markets also tends to be relatively inelastic because customers are usually unwilling and /or unable to make major changes in their plans merely to respond to a change in the prevailing prices of a component which only constitutes a minor element in their overall costs. * In B2B market, buying process is very complex. Purchase negotiations between buyers and sellers will probably involve complex discussion about product specifications, development lead times and customization of design to suit specific application scenarios. A side-effect of buying process complexity is that the time taken to reach a purchase decision and the life of the sales contract are both of a much longer duration then in many consumer goods markets. The purchaser will spend a considerable time making sure they have chosen the best available option. B2B marketers have fewer potential customers towards whom promotional efforts will need to be directed, failure to win only a small number of bids can create massive problem over sustaining future plant throughput, which in turn may lead to work force redundancies and /or plant closures. * In contrast with most consumer goods markets, B2B markets tend to have fewer customers who individually purchase a large proportion of their suppliers’ total output. The advantage to the marketers is that this concentration of power and geographical clustering of customers means direct marketing and one-to-one selling are economically viable proposition. As a result marketers can avoid the need for massive promotional budgets which are mandatory in branded consumer goods markets where firms are seeking to communicate with a highly dispersed customer base. On the other hand, the small number of B2B customer means that the marketers must continually be ready to respond to the possibility that the purchasing organizations may exploit their tremendous buying power to place pressure on their suppliers to often significant price reduction or risk losing a major contract. * The small number of customers in B2B markets and their potential to use their buying power to extract highly favorable terms from their suppliers does result in much closer buyer-seller relationships than those encountered in most consumer goods markets. B2B marketers frequently find that the customer expects product offerings to be customized and that the suppliers marketing team must have the technical skills to handle customer concerns during both the pre and post purchase phase. Under these circumstances, a major role of the suppliers’ marketers is to act as project coordinator in order to identify rapidly and problems which might arise and immediately to invoke appropriate actions for resolving customer concerns. Ford (1990) posits that the repeated occurrence of buying episodes over time leads to the development of longer-term mutually dependent relationships between the employees with in the participant organizations. The perspective on the importance of employee interaction is supported by the earlier work of Hakansson and Ostberg (1975) who concluded that the social exchanges which occur between individuals from the buyer and seller organizations during repeated execution of the order placement/ order delivery cycle lead to the development of clear expectations of each other’s capabilities and responsibilities. Eventually these expectations become institutionalized to such an extent that they become incorporated onto operating procedures which form the basis for a long-term relationship. Variables such as technology, strategy and individual employee behavior can all contribute towards influencing buyer-seller relationships. Macro variables such as market structure, market stability, industry internationalism and social system have the potential to influence the buyer-seller relationship. Another factor such as uncertainty of market, seen by the buyer force them to consider carefully the implications of forming the long-term relationship with one suppliers if it appears a better offer may become available from another source in the very near future. Transactional uncertainty involves the issues of ensuring the product is delivered on time and meets the performance specifications agreed during the purchase negotiation phase. As far as the supplier is concerned, it is also essential that the marketing management system contains elements designed to minimize the effects of uncertainty. Another dimension of uncertainty management for the suppliers is to handle social interactions with the customer effectively in order that mutual trust and commitment can develop within the buyer seller relationship. Given the critical influence of uncertainty in B2B market scenarios Ford (1980) has proposed that effective management of the buyer-seller interaction demands that the supplier marketer must exhibit a high level of relationship management competence. He argues that to overcome any barriers which might exist between participant organizations, the suppliers marketer will first need to analyze market conditions carefully to determine the exact nature of the relationship that each customer requires within a market sector. The marketer will also need to assess what on going activities will further enhance customer loyalty (e.g. inviting customer employees to become involved in joint project teams to examine issues such as optimizing quality and /or defining the operating performance parameters for components that would be suitable for incorporation into the customer’s next generation of new products). Solberg (1995) has proposed that development of effective B2B marketing strategies involves analysis both of opportunities to reduce uncertainty and of the potential to form long-term functional relationships. After going through all the above literature about B2B marketing and its main attributes as well as the development of B2B marketing process we sorted out and prepared the main features of the subject. The available literature provided us the actual meaning of B2B marketing, its changing process, theoretical framework and development of the subject and its practicability. After collecting and analyzing all the available information resources about B2B marketing we started the preparation of debate of the said topic. We took this approach because we know that this approach of collective debate provide us the greater insight of the subject. After identifying and analyzing the main features of B2B marketing, its pros and cons we have clear understanding of B2B marketing as a concept and its applicability. Then we took the approach that B2B marketing is the need of the hour and becoming popular as well as its necessity for the new marketing practices. We found that in the era of supply chain management and end-to-end processes B2B marketers must concern with the issues like managing and understanding the issues of relationship within the supply chain to sustain competitive advantage. Though B2B marketing has to be performed between two or more organizations but if it has to remain effective and moving it must have final customer in its all activities. As end user satisfaction should drive the marketing process, and then clearly all participants need to base their internal control systems on metrics determined by the final end user. Managing the process of effectively fulfilling final customer needs can only be achieved if all parties are cognizant of how changes in customer needs will influence future demand. By the creation of linked data bases and adoption of common production management software systems such as MRP II, all organizations within the system are then able to interact instantly with each other over discussions concerning planning future output and the timing of production schedules. In B2B marketing final customer driven real time logistics system is the necessary requirement for efficient supply management. Sustaining ongoing satisfaction of end user needs can be achieved if knowledge of gaps between actual and desired product performance can through product and /or improved products. Given the need for integration of decisions and actions at all levels across the supply system, then clearly it is necessary to ensure that differences in intra-organizational management processes do not place obstacles in the path of responding to end user needs. It is probably safer that B2B marketers comprehend the nature of the managerial philosophies which exist across their market system and then endeavor to ensure inter-organizational interfaces are constructed in a form which optimizes inter-organizational trading activities. The wider perspectives and broader role demanded of marketers operating in network based, business-to-business markets clearly places major burdens on these individuals when contrasted with the circumstances confronting their counter parts in the more classical active supplier- passive buyer, transactional markets. The starting point in the new world of institutional /B2B marketing is to assess realistically the scale of future demand and then to determine the degree to which it can be met by available public sector resources. A common obstacle facing the marketers in many organizations especially in govt. /public organization is that senior management are continuing to specific no change in service quality targets even through it is quite apparent that declining availability of resources makes achievement of these targets completely unrealistic. These two facets of B2B marketing have poses ample opportunity for the debate. In the process, several bare facts have crop up with the debate. Through the debating process each member of the team has put his/her views (pros and cons) about B2B marketing, how it is developing, what are the benefits and drawbacks for the organizations and how it will be facilitated as an alternative channel of marketing, are some of the basic points of debate. We got appreciation from our class and from the tutor as well on the whole debate. As we approached the final stage of the debate on B2B marketing we are able to understand the importance of B2B marketing, and its expansion. New technology like e-commerce has provided us the new meaning and ways of B2B marketing. This whole new concepts and practices has speeded the process of B2B marketing. As a result of whole discussion and evaluation of B2B marketing we finally have a new kind of reflective and critically evaluated idea on B2B marketing. We further come to the conclusion that over the next few years, it is reasonable to expect that institutional/B2B marketing will truly come of age. As this occurs, no doubt this sector will evolve new operating paradigm. To manage business-to-business markets effectively, suppliers and their customers usually need to focus on how mutual advantages can be identified in down stream markets. One approach is to examine marketing planning in the context of the two dimensions of reducing uncertainty and determining the potential for forging long-term functional relationships from which all parties can benefit. Over the last two decades, management of the business–to–business marketing process has been strongly influenced by JIT and TQM because both processes are dependent upon the formation of closer customer supplier relationships. Initially the focus of JIT was in optimizing the production of existing goods and services. Within only a few years, however JIT principles were found to have important implications in relation to reducing time –to-market for the development and launch of new products. As firms sought to become immersed in TQM and JIT, they soon realized that these concepts could not succeed if organizations sustained their traditional adversarial relationships with other organizations within their market system. Hence in attempting to justify the superiority of adopting a network, relationship oriented approach to the business–to–business marketing management process, it is probably worth nothing that this philosophy is seen as the reason most of the organization have retained their world class standing even in the face of increasingly fierce competition world wide. Further more B2B marketing has provided us an excellent source of managerial practices which marketers can transfer back into other sectors such as consumer goods, not –for –profit and service industry marketing. References: 1. Yoram J. wind and Vijay Mahajan with Robert E. Gunther, (2002) Convergence marketing: Strategies for reaching the new hybrid consumer (Upper saddle river, NJ: Prentice Hall. PTR. 2. Oliva, Ralph A. (2001), “Nowhere to hide”, Marketing Management, July/august, PP.44-46. 3. Kolter, Philip (2003), A framework for marketing, Pearson Education Inc. 4. Corey, ER. (1991), Industrial marketing cases and concept 4th edn, Englewood cliffs, NT: Prentice- Hale. 5. Powers T.L. (1991), Modern business marketing: a strategic planning approach to business and industrial markets, St. Paul, M Read More