I recently read several discussions related to marketing in the B2B (Business to Business) world. Since much of my research is in this area and, as associate editor of the Journal of Business and Industrial Marketing, I read much of what is written in this area, I thought I’d discuss some of my thoughts about what I see happening related to marketing in this context.
Importance of Relationships
While not necessarily new, business relationships are even more important for marketing today than at any time in the past. Some of the types of relationships that help marketing within the firm are:
- Supply chain relationships (with both upstream and downstream partners)
- Collaborative new product development
- Import/ Export alliances
- Cooperative advertising
- Consortium combining expertise on large projects
These relationships require new ways of working together that rely on cooperation rather than competition. The term cooptition has been coined to reflect some types of business marketing relationships where collaborators work collaboratively on some aspects, yet compete in the finished goods market. A good example of this is how the auto makers have worked together to develop technology to enable recharging of electric cars, yet these cars will ultimately compete against each other.
Marketing relationships between businesses also require a new way of working together cooperatively. Unlike hierarchical relationships where the superior simply orders subordinates to perform certain tasks (including setting tactics, tools, and timetables for these tasks) inter-organizational relationships require finesse. Care must be taken to encourage compliance without destroying the relationship.
Trust is also a critical element of B2B relationships.
Just as marketing technology is changing in B2C markets (business to consumer), marketing technology is changing in B2B markets. Examples of these include:
- EDI (electronic data interchange) and ECR
- RFDI (radio frequency data identification)
- Improved analytics
- Inbound marketing (including social networking)
- GPS tracking
B2B marketing is traditionally more technology based than B2C marketing, in part, because the cost of a mistake can be larger when it involves a customer who buys millions of dollars worth of product from you than one involving a customer who spends $5.95. I blogged a week or so ago about new graphic interface technology to improve analytics in mid-sized businesses. Lots of other technologies are being used and these often vary based on the specific needs of a particular industry.
Cross-Pollination from B2C Markting
Traditionally, business marketing relied very heavily on sales. In fact, much of the research in the area involves improving and managing sales. Advertising was not particularly innovative or exciting. Overwhelmingly, business marketing was information rich. Today’s business marketing is using tools more common from B2C marketing, such as branding, social media, and other tools. The advertising is also starting to make the leap from trade journals to regular magazines and TV. For instance, a colleague has developed a branding campaign for a pharma company using brand stories similar to the ones we might see in a B2C context.
A thread I’ve seen discussed recently deals with whether B2B marketing is dead, with general agreement among those involved that it is . I would argue that opinion is shortsighted. Thus, while B2B marketing has adopted a number of techniques used in B2C marketing, there are still vast differences between the two and these differences are important in developing marketing strategy.
Derived demand is the classic difference between B2B and B2C markets. Derived demand means a firm’s need to buy products (like lumber, steel, oil) comes from consumer desires to buy the output of the firm. In contract, primary demand refers to consumers needs to buy things for themselves, their families, and friends.
Derived demand means you approach B2B marketing differently. For instance, firms are often less interested in price and more interested in quality. A conveyor system might be less expensive than competitors, but require more expensive maintenance or have to be replaced sooner than a more expensive model. Since the conveyor is likely an integral part of the manufacturing process, a B2B firm may be most concerned about prospective downtime since this downtime can cost the firm thousands or even millions of dollars and snowball to cost them accounts when deliveries fall behind.
Businesses often employ professional buyers, but buyers may be a part of a larger buying center comprised on users, influencers, specifiers, etc in addition to the professional buyer. Each member of this team likely needs a different approach since they are probably interested in different aspects of the product such as its price, durability, suitability, etc. As an example, when IBM moved into the business machines market as an extension from its mainframe market, they didn’t know how to approach office managers and address concerns common in this market. They were more prepared to discuss megahertz, kilobites, (things office managers knew nothing about in the mid 1980’s before the PC became de rigor) rather than how easy it was to change the cartridge.
What do you think? How does marketing to businesses work in your industry? Your country?