Transcript Marketing Research

Business to Business
(B2B) and SME Marketing
Lecture 9
Karen Knibbs
Marketing Practice – U14210 S2 08/09
Learning objectives
By the end of the session, you should be able to:

Understand a range of issues specific to
the nature of marketing operations for:
B2B (Business-to-business / Industrial)
 and SME (Small to medium sized
enterprises)

organisations
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Marketing Practice S2 2008
Marketing in context (Lect 1)

Marketing is useful to ALL types
of business
Textbooks often focus on large
“blue chip” companies, typically
consumer oriented, American
and globally operating
 Let’s consider SME’s (account for
99.8% of all UK businesses – ONS, BERR 2006),
B2B, NFP & Dotcoms

• Plus many SME’s are B2B!
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Marketing Practice S2 2008
Setting the context…


B2B
Business 1:
Goth Cloth, S’ton
Business 1:
BMW Group AG
Buys products and services from
Buys products and services from
Business 2:
Shell Group
Prolonged process of establishing
centrally controlled formal buying
procedures and policies, sending out
tenders and comparing contracts,
suppliers will be selected due to
strategic fit with demographic,
economic and geographic
characteristics and relationship factors
Business 2:
Actinic , Surrey
Only a handful of employees in the whole
company, may be no formalised supplier
selection and acquisition processes,
relationships may be created through ad
hoc networking, and choices made due to
gut feel, comparison of promises, price
quotes and payment terms. Purchases
may be one-offs.
Marketing Practice S2 2009
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SME
Influences Shaping Organisational
Buying Behaviour
Baines, Fill & Page, (2008)
Membership of the B2B
Decision Making Unit
N.B. This may
be the format for
a large MNE
with centralised
buying policies,
but all of these
roles may be
performed by
one ownermanager in a
SME
Baines, Fill & Page, (2008)
Business decision process & stimuli
POSSIBLE INFLUENCING FACTORS
Environmental
PESTEL
Organisational
Objectives
Purchasing Policies
Resources
Buying Centre Structure
Interpersonal
Cooperation
Conflict
Power Relationships
Individual
Age
Educational Level
Job status
Personality
Income
Business to Business buying process decisions
Problem
Recognition
Develop
Product
Specs
Search for
Products &
Suppliers
Evaluate
relative to
Specification
Select &
Order
FEEDBACK
Dibb, Simkin, Pride & Ferrell (2006)
Evaluate
Performance
Key Characteristics of
Business Markets
Baines, Fill & Page, (2008)
Characteristics of
organisational markets (from Principles)

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Fewer buyers
Larger buyers
Closer suppliercustomer
relationships
Geographically
concentrated buyers
Derived demand
Inelastic demand






Fluctuating demand
Professional purchasing
Several buying
influences
Direct purchasing
Reciprocity
Leasing / Contractual
Agreements
B2B Business examples
Volvo Group
“Big Blue” = IBM
•Used to be more consumer
focussed when it owned PC /
desktop business
–Sold this to Chinese firm
Lenovo
–Hard disk drives business
sold to Japanese firm Hitachi
Selling to VARs, much of the
marketing spend is on trade
promotions
 Now their focus is on those 90%+
of firms which are SME’s, offering
“business solutions”
Volvo Group
• Often considered as purely a
car maker, focussing on
automotive consumers
–But with Marine,Truck and
Industrial vehicle/engine SBU’s,
their major income is from
selling to other businesses
Hence they have to consider both
the derived demand of their
intermediaries, and the consumer
demand which affects all of the
partners involved from supply, to
production, to consumption
IBM solutions
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Marketing Practice S2 2008
The Concept of Value in B2B
Customers will choose between alternative offerings
and select the one they perceive will offer them the
best value
Customers are not interested in
products and features, they want their
needs met and satisfied
It is more profitable to a long term relationship between a
company at its customers than to have a series of oneoff transactions [and with suppliers = “partnering”]
Doyle, (2000), cited in Fill, (2005)
B2B Partnership Success Factors
Attributes of
Partnership
Communication
Behaviour
Conflict
Resolution
Techniques
Commitment, Coordination, Trust and
Interdependence
Quality, Information Sharing and
Participation
Joint Problem Solving, Persuasion,
Smoothing, Domination, Harsh Words and
Arbitration
Mohr and Spekman (1996), cited in Fill (2000)
Summary of Differences


Consumers often:




Businesses often:

Purchase goods and
services alone, which meet
individual or family needs

Buy on impulse or switch
supplier with minimal
processes

Experience minor irritation if
supply fails

Accept the stated price

Purchase goods and
services, as part of a team, to
meet specific business needs
Use formalised, lengthy
purchasing policies and
processes
Find switching supplier
difficult
Experience major problems if
supply fails
Negotiate on price
SME business examples
One-off restaurants
 Legal services firms
 Independent Financial Advisors


Tradespeople: Plumbers, Electricians,
Carpenters, Mechanics
“the most contented people I know, they are their own boss, they decide
when they want to take a job on, they earn highly per hour, and take
holidays when it suits them…”

Specialised/niche product manufacturers

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E.g. small applications software
Marketing Practice S2 2008
SME Characteristics
SME’s do not often have the same levels of:

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Resources - in terms of cash flow, investment finding, equipment,
technical equipment, premises, time etc.
Numbers of staff (1-250), Skill sets / competencies
Numbers of customers and recruit these via ad hoc networks
Market share or brand awareness (regional only)
Influence over their micro or macro environments
as compared to larger MNE’s
As a consequence, their employees often:


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Are generalists in terms of company operations, but specialists in their
market knowledge, benefit from reduced bureaucracy
Are owner-manager opportunistic “entrepreneurs” whose actions are
not always conformist! (e.g. Richard Branson, Anita Roddick)
Marketing Practice S2 2008
SME Marketing in practice
SME’s operate through:
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Relationship building, in much the same way as larger B2B
organisations, but increased likelihood of face-to-face,
personalised meetings and communication
Treating all stakeholders as “partners”
Generating business via “networking”
Taking a reactive stance: formalised planning is secondary as it
takes focus and time away from current activity
“…decision making occurs in a haphazard and apparently chaotic
way, according to personal and business priorities at any given
point in time (Scase and Goffee, 1980)
Gilmore, Carson and Grant (2001)
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Marketing Practice S2 2008
Marketing Planning for
Small Businesses (SME)
BUT,
SME Marketing
authors/researchers
consistently state the
need for effective
marketing analysis and
research: Chaston,
(2000), Hunt & Morgan,
(1996) and Mintzberg
and Waters, (1982).
Brassington &
Pettitt, (2006)
SME Marketing in practice
“Where a manager depends mainly on social networks, decisions
are likely to be based on incomplete information and will rely
more on intuition. As the owner/manager gathers more
business contacts and networking becomes more strategic, his
decision making will become more rigorous… increased
experiential knowledge [means] having made certain decisions
before in the past, the manager will have learned from previous
mistakes and will approach the task in a more structured way.
Such a realisation allows for a speculation that networking can
be harnessed into a proactive marketing infrastructure.”
Gilmore, Carson and Grant (2001)
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Marketing Practice S2 2008
SME Characteristics
However there are advantages to being an SME:
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Research evidence indicates staff are more loyal, have a harmonious
workplace, “team” attitude and socialise more
Closeness to customers through small customer base and personalised,
shorter lines of communication, which can lead to increased loyalty and
decisions based on experience rather than purely on price
Increased speed and flexibility in dealing with customer need changes
and environmental forces
Opportunity focussed – externally aware, decision making is quicker
Able to focus on smaller, profitable niches (e.g. Farmer’s markets)
information through closer customer and competitive links
Informal, easy access to market
as compared to larger MNE’s
Carson, Cromie, McGowan & Hill (1995)
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Summary
Youtube funny!

Reviewed:
Characteristics
 Challenges
 DMU’s

of B2B and SME marketing
• Useful to compare these to “standard” /
consumer oriented and multinational
marketing
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Marketing Practice S2 2008
Further reading suggestions:
Journals:
 Gilmore, A., Carson, D., & Grant, K. (2001). SME marketing in practice.
Marketing intelligence and planning. 19, (1), 6-11.
Texts:
 Carson, Cromie, McGowan & Hill (1995). Marketing and
entrepreneurship in SMEs: an innovative approach. Harlow: Prentice
Hall.
 Chaston & Mangles (2002). Small business marketing management.
Basingstoke:Palgrave.
 Ford, Gadde, Hakansson & Snehota (2003). Managing Business
Relationships. (2e).
 Websites:
• www.impgroup.org = IMO: Industrial Marketing and Purchasing
• http://www.ibm.com/us/ = IBM Business Solutions dedicated
pages