Business marketing
Encyclopedia
Business Marketing is the practice of individuals, or organizations, including commercial businesses, governments and institutions, facilitating the sale of their products or services to other companies or organizations that in turn resell them, use them as components in products or services they offer, or use them to support their operations. Also known as industrial marketing
, business marketing is also called business-to-business marketing, or B2B marketing, for short. (Note that while marketing to government entities shares some of the same dynamics of organizational marketing, B2G Marketing is meaningfully different.)
's Zicklin School of Business
, notes that industrial marketing has been around since the mid-19th century, although the bulk of research on the discipline of business marketing has come about in the last 25 years.
Morris, Pitt and Honeycutt, 2001, point out that for many years business marketing took a back seat to consumer marketing, which entailed providers of goods or services selling directly to households through mass media
and retail channels. This began to change in middle to late 1970s. A variety of academic periodicals, such as the Journal of Business-to-Business Marketing and the Journal of Business & Industrial Marketing, now publish studies on the subject regularly, and professional conferences on
business-to-business marketing are held every year. What's more, business marketing courses are commonplace at many universities today. In fact, Dwyer and Tanner (2006) point out that more marketing majors begin their careers in business marketing today than in consumer marketing.
Business Markets -- (Business Marketing Management:B2B By Michael D Hutt & Thomas w Speh)
Business markets are markets for products & services, local to international,
bought by;
1. Business,
2.Government Bodies,
3.Institutions such as Hospitals or corporates for incorporation (E.G; ingredient materials or components) for consumption(E.g. process materials, office supplies & consulting services) for use or for resale..... The only markets not of direct interest are those dealing with products or services which are principally directed at personal use or consumption such as packaged grocery products , home appliances, or consumer banking
The factors that distinguish business marketing from consumer marketing are the nature of the customer & how the customer uses the product.
Thus business markets do not exist in isolation. Cities or countries with growing consumption are generally growing business markets too.
A single consumer market demand can give rise to hundreds of business market demands. The demand for cars in India creates demands for steel, tyres, forgings, castings, plastic components which in turn has created demands for mining, rubber, forging machines, casting sand and polymers. Each of these growing demands has further triggered more demands. Thus as the spending power of citizens increase, the country generally sees a upward wave in its economy.
While consumer marketing is aimed at large groups through mass media and retailers, the negotiation process between the buyer and seller is more personal in business marketing. According to Hutt and Speh (2004), most business marketers commit only a small part of their promotional budgets to advertising, and that is usually through direct mail
efforts and trade journals. While that advertising is limited, it often helps the business marketer set up successful sales calls.
Marketing to a business trying to make a profit (business-to-business marketing) as opposed to an individual for personal use (Business-to-Consumer, or B2C marketing) is similar in terms of the fundamental principles of marketing. In B2C, B2B
and B2G marketing situations, the marketer must always:
These are the fundamental principles of the 4 Ps of marketing (the marketing mix
) first documented by E. Jerome McCarthy
in 1960.
While "other businesses" might seem like the simple answer, Dwyer and Tanner (2006) say business customers fall into four broad categories: companies that consume products or services, government agencies, institutions and resellers.
The first category includes original equipment manufacturers, such as large automakers who buy gauges to put in their cars and also small firms owned by 1-2 individuals who purchase products to run their business. The second category - government agencies, is the biggest. In fact, the U.S. government
is the biggest single purchaser of products and services in the country, spending more than $300 billion annually. But this category also includes state and local government
s. The third category, institutions, includes schools, hospitals and nursing home
s, churches and charities. Finally, resellers consist of wholesalers, brokers and industrial distributors.
So what are the meaningful differences between B2B and B2C marketing?
A B2C sale is to a "Consumer" i.e. an individual who may be influenced by other factors such as family members or friends, but ultimately the sale is to a single person who pays for the transaction. A B2B sale is to a "Business" i.e. organization or firm. Given the complexity of organizational structure
, B2B sales typically involve multiple decision makers.
The marketing mix is affected by the B2B uniqueness which include complexity of business products and services, diversity of demand and the differing nature of the sales itself (including fewer customers buying larger volumes). Because there are some important subtleties to the B2B sale, the issues are broken down beyond just the original 4 Ps developed by McCarthy.
is different from B2C in some crucial ways, including the need to closely align corporate brands, divisional brands and product/service brands and to apply your brand standards to material often considered “informal” such as email and other electronic correspondence. it is mainly of large scale when compared with B2C
for themselves, the cost-saving or revenue-producing benefits of products and services are important to factor in throughout the product development
and marketing cycles.
for a business product or service is smaller and has more specialized needs reflective of a specific industry or niche. A B2B niche, a segment of the market, can be described in terms of firmographics
which requires marketers to have good business intelligence in order to increase response rates. Regardless of the size of the target market, the business customer is making an organizational purchase decision and the dynamics of this, both procedurally and in terms of how they value what they are buying from you, differ dramatically from the consumer market. There may be multiple influencers on the purchase decision, which may also have to be marketed to, though they may not be members of the decision making unit.
, not to mention the vocabulary unique to their segment. Specific trade shows
, analysts, publications, blogs and retail/wholesale outlets tend to be fairly common to each industry/product area. What this means is that once you figure it out for your industry/product, the promotion plan almost writes itself (depending on your budget) but figuring it out can be a special skill and it takes time to build up experience in your specific field. Promotion techniques rely heavily on marketing communications
strategies (see below).
force is often critical in the business market. If you sell through distribution channels
also, the number and type of sales forces can vary tremendously and your success as a marketer is highly dependent on their success.
, direct mail, trade show support, sales collateral, branding, and interactive services such as website design
and search engine optimization
. The Business Marketing Association http://www.marketing.org is the trade organization
that serves B2B marketing professionals. It was founded in 1922 and offers certification programs
, research services, conferences, industry awards and training programs.
, and make sure you have all the infrastructure in place to support each stage of the marketing process - and that doesn't just include developing the lead - make sure the entire organization is geared up to handle the inquiries appropriately.
, product, campaign description, your product positioning, graphical considerations, corporate guidelines, and any other supporting material and distribution.
and IBM spend more than $60 million a day on purchases to support their operations.
Dwyer and Tanner (2006) say the purchases made by companies, government agencies and institutions "account for more than half of the economic activity in industrialized countries
such as the United States, Canada and France."
A 2003 study sponsored by the Business Marketing Association
estimated that business-to-business marketers in the United States spend about $85 billion a year to promote their goods and services
. The BMA study breaks that spending out as follows (figures are in billions of dollars):
The fact that there is such a thing as the Business Marketing Association speaks to the size and credibility of the industry. BMA traces its origins to 1922 with the formation of the National Industrial Advertising Association. Today, BMA, headquartered in Chicago, has more than 2,000 members in 19 chapters across the country. Among its members are marketing communications agencies that are largely or exclusively business-to-business-oriented.
First is the technological revolution. Technology is changing at an unprecedented pace, and these changes are speeding up the pace of new product and service development. A large part of that has to do with the Internet, which is discussed in more detail below.
Technology and business strategy
go hand in hand. Both are corelated. While technology supports forming organization strategy, the business strategy is also helpful in technology development
. Both play a great role in business marketing.
Second is the entrepreneurial revolution. To stay competitive, many companies have downsized and reinvented themselves. Adaptability, flexibility, speed, aggressiveness and innovativeness are the keys to remaining competitive today. Marketing is taking the entrepreneurial lead by finding market segment
s, untapped needs and new uses for existing products, and by creating new processes for sales, distribution and customer service.
The third revolution is one occurring within marketing itself. Companies are looking beyond traditional assumptions and adopting new frameworks, theories, models and concepts. They're also moving away from the mass market and the preoccupation with the transaction. Relationships, partnerships and alliances are what define marketing today. The cookie-cutter approach is out. Companies are customizing marketing programs to individual accounts.
strategy for business marketers. Dwyer and Tanner (2006) note that business marketers not only use the Internet to improve customer service
but also to improve opportunities with distributors.
According to Anderson and Narus (2004), two new types of resellers have emerged as by-products of the Internet: infomediaries and metamediaries. Infomediaries, such as Google
and Yahoo, are search engine
companies that also function as brokers, or middlemen, in the business marketing world. They charge companies fees to find information on the Web as well as for banner and pop-up ad
s and search engine optimization services. Metamediaries are companies with robust Internet sites that furnish customers with multiproduct, multivendor and multiservice marketspace in return for commissions on sales.
With the advent of b-to-b exchanges, the Internet ushered in an enthusiasm for collaboration that never existed before—and in fact might have even seemed ludicrous 10 years ago. For example, a decade ago who would have imagined Ford, General Motors
and DaimlerChrysler
entering into a joint venture? That's exactly what happened after all three of the Big Three
began moving their purchases online in the late 1990s. All three companies were pursuing their own initiatives when they realized the economies of scale
they could achieve by pooling their efforts. Thus was born what then was the world's largest Internet business
when Ford's Auto-Xchange and GM's TradeXchange merged, with DaimlerChrysler representing the third partner.
While this exchange did not stand the test of time, others have, including Agentrics, which was formed in 2005 with the merger of WorldWide Retail Exchange and GlobalNetXchange, or GNX. Agentrics serves more 50 retailers around the world and more than 300 customers, and its members have combined sales of about $1 trillion. Hutt and Speh (2001) note that such virtual marketplaces enable companies and their suppliers to conduct business in real time as well as simplify purchase processes and cut costs.
Industrial marketing
Industrial marketing is the marketing of goods and services by one business to another. Industrial goods are those an industry uses to produce an end product from one or more raw materials....
, business marketing is also called business-to-business marketing, or B2B marketing, for short. (Note that while marketing to government entities shares some of the same dynamics of organizational marketing, B2G Marketing is meaningfully different.)
Origins of business marketing
In the broadest sense, the practice of one purveyor of goods doing trade with another is as old as commerce itself. As a niche in the field of marketing as we know it today, however, its history is more recent. In his introduction to Fundamentals of Business Marketing Research, J. David Lichtenthal, professor of marketing at the City University of New YorkCity University of New York
The City University of New York is the public university system of New York City, with its administrative offices in Yorkville in Manhattan. It is the largest urban university in the United States, consisting of 23 institutions: 11 senior colleges, six community colleges, the William E...
's Zicklin School of Business
Zicklin School of Business
The Zicklin School of Business is Baruch College's business school. It was established in 1919 and is one of the oldest business schools in the world. It is named after financier and alumnus Lawrence Zicklin...
, notes that industrial marketing has been around since the mid-19th century, although the bulk of research on the discipline of business marketing has come about in the last 25 years.
Morris, Pitt and Honeycutt, 2001, point out that for many years business marketing took a back seat to consumer marketing, which entailed providers of goods or services selling directly to households through mass media
Mass media
Mass media refers collectively to all media technologies which are intended to reach a large audience via mass communication. Broadcast media transmit their information electronically and comprise of television, film and radio, movies, CDs, DVDs and some other gadgets like cameras or video consoles...
and retail channels. This began to change in middle to late 1970s. A variety of academic periodicals, such as the Journal of Business-to-Business Marketing and the Journal of Business & Industrial Marketing, now publish studies on the subject regularly, and professional conferences on
business-to-business marketing are held every year. What's more, business marketing courses are commonplace at many universities today. In fact, Dwyer and Tanner (2006) point out that more marketing majors begin their careers in business marketing today than in consumer marketing.
Business Markets -- (Business Marketing Management:B2B By Michael D Hutt & Thomas w Speh)
Business markets are markets for products & services, local to international,
bought by;
1. Business,
2.Government Bodies,
3.Institutions such as Hospitals or corporates for incorporation (E.G; ingredient materials or components) for consumption(E.g. process materials, office supplies & consulting services) for use or for resale..... The only markets not of direct interest are those dealing with products or services which are principally directed at personal use or consumption such as packaged grocery products , home appliances, or consumer banking
The factors that distinguish business marketing from consumer marketing are the nature of the customer & how the customer uses the product.
Business & consumer markets - the link
Business markets have a derived demand - this means that a demand in business markets exists only because of another demand somewhere in the consumer market. Lets take a few examples :- The government of India wishes to purchase equipment for a nuclear power plant in Jaitapur - a business market demand. The underlying consumer demands that have triggered this demand are that the people of India are now consuming more electricity - they have bought more washing machines, microwaves, computers, charged devices etc.
- The demand for restaurant furniture is based on the consumer demand of more restaurants.
Thus business markets do not exist in isolation. Cities or countries with growing consumption are generally growing business markets too.
A single consumer market demand can give rise to hundreds of business market demands. The demand for cars in India creates demands for steel, tyres, forgings, castings, plastic components which in turn has created demands for mining, rubber, forging machines, casting sand and polymers. Each of these growing demands has further triggered more demands. Thus as the spending power of citizens increase, the country generally sees a upward wave in its economy.
Business marketing vs. consumer marketing
Although on the surface the differences between business and consumer marketing may seem obvious, there are more subtle distinctions between the two with substantial ramifications. Dwyer and Tanner (2006) note that business marketing generally entails shorter and more direct channels of distribution.While consumer marketing is aimed at large groups through mass media and retailers, the negotiation process between the buyer and seller is more personal in business marketing. According to Hutt and Speh (2004), most business marketers commit only a small part of their promotional budgets to advertising, and that is usually through direct mail
Direct marketing
Direct marketing is a channel-agnostic form of advertising that allows businesses and nonprofits to communicate straight to the customer, with advertising techniques such as mobile messaging, email, interactive consumer websites, online display ads, fliers, catalog distribution, promotional...
efforts and trade journals. While that advertising is limited, it often helps the business marketer set up successful sales calls.
Marketing to a business trying to make a profit (business-to-business marketing) as opposed to an individual for personal use (Business-to-Consumer, or B2C marketing) is similar in terms of the fundamental principles of marketing. In B2C, B2B
Business-to-business
Business-to-business describes commerce transactions between businesses, such as between a manufacturer and a wholesaler, or between a wholesaler and a retailer...
and B2G marketing situations, the marketer must always:
- successfully match the product or service strengths with the needs of a definable target market;
- position and price to align the product or service with its market, often an intricate balance; and
- communicate and sell it in the fashion that demonstrates its value effectively to the target market.
These are the fundamental principles of the 4 Ps of marketing (the marketing mix
Marketing mix
The term "marketing mix" was coined in 1953 by Neil Borden in his American Marketing Association presidential address. However, this was actually a reformulation of an earlier idea by his associate, James Culliton, who in 1948 described the role of the marketing manager as a "mixer of ingredients",...
) first documented by E. Jerome McCarthy
E. Jerome McCarthy
Edmund Jerome McCarthy was an American marketing professor at Michigan State University and others such as the University of Notre Dame. He is the author of the influential book Basic Marketing. A Managerial Approach . Professor E...
in 1960.
While "other businesses" might seem like the simple answer, Dwyer and Tanner (2006) say business customers fall into four broad categories: companies that consume products or services, government agencies, institutions and resellers.
The first category includes original equipment manufacturers, such as large automakers who buy gauges to put in their cars and also small firms owned by 1-2 individuals who purchase products to run their business. The second category - government agencies, is the biggest. In fact, the U.S. government
Federal government of the United States
The federal government of the United States is the national government of the constitutional republic of fifty states that is the United States of America. The federal government comprises three distinct branches of government: a legislative, an executive and a judiciary. These branches and...
is the biggest single purchaser of products and services in the country, spending more than $300 billion annually. But this category also includes state and local government
Local government
Local government refers collectively to administrative authorities over areas that are smaller than a state.The term is used to contrast with offices at nation-state level, which are referred to as the central government, national government, or federal government...
s. The third category, institutions, includes schools, hospitals and nursing home
Nursing home
A nursing home, convalescent home, skilled nursing unit , care home, rest home, or old people's home provides a type of care of residents: it is a place of residence for people who require constant nursing care and have significant deficiencies with activities of daily living...
s, churches and charities. Finally, resellers consist of wholesalers, brokers and industrial distributors.
So what are the meaningful differences between B2B and B2C marketing?
A B2C sale is to a "Consumer" i.e. an individual who may be influenced by other factors such as family members or friends, but ultimately the sale is to a single person who pays for the transaction. A B2B sale is to a "Business" i.e. organization or firm. Given the complexity of organizational structure
Organizational structure
An organizational structure consists of activities such as task allocation, coordination and supervision, which are directed towards the achievement of organizational aims. It can also be considered as the viewing glass or perspective through which individuals see their organization and its...
, B2B sales typically involve multiple decision makers.
The marketing mix is affected by the B2B uniqueness which include complexity of business products and services, diversity of demand and the differing nature of the sales itself (including fewer customers buying larger volumes). Because there are some important subtleties to the B2B sale, the issues are broken down beyond just the original 4 Ps developed by McCarthy.
B2B Branding
B2B BrandingB2B Branding
B2B Branding is a term used in marketing.-Definition B2B vs. B2C:The terms B2B and B2C are short forms for Business-to-Business and Business-to-Consumer . Both describe the nature and selling process of goods and services...
is different from B2C in some crucial ways, including the need to closely align corporate brands, divisional brands and product/service brands and to apply your brand standards to material often considered “informal” such as email and other electronic correspondence. it is mainly of large scale when compared with B2C
Product (or Service)
Because business customers are focused on creating shareholder valueShareholder value
Shareholder value is a business term, sometimes phrased as shareholder value maximization or as the shareholder value model, which implies that the ultimate measure of a company's success is the extent to which it enriches shareholders...
for themselves, the cost-saving or revenue-producing benefits of products and services are important to factor in throughout the product development
New product development
In business and engineering, new product development is the term used to describe the complete process of bringing a new product to market. A product is a set of benefits offered for exchange and can be tangible or intangible...
and marketing cycles.
People (Target Market)
Quite often, the target marketTarget market
A target market is a group of customers that the business has decided to aim its marketing efforts and ultimately its merchandise. A well-defined target market is the first element to a marketing strategy...
for a business product or service is smaller and has more specialized needs reflective of a specific industry or niche. A B2B niche, a segment of the market, can be described in terms of firmographics
Firmographics
Firmographics are the characteristics of an organization especially when used to segment markets in market research. What demographics are to people, firmographics are to organizations....
which requires marketers to have good business intelligence in order to increase response rates. Regardless of the size of the target market, the business customer is making an organizational purchase decision and the dynamics of this, both procedurally and in terms of how they value what they are buying from you, differ dramatically from the consumer market. There may be multiple influencers on the purchase decision, which may also have to be marketed to, though they may not be members of the decision making unit.
Pricing
The business market can be convinced to pay premium prices more often than the consumer market if you know how to structure your pricing and payment terms well. This price premium is particularly achievable if you support it with a strong brand.Promotion
Promotion planning is relatively easy when you know the media, information seeking and decision making habits of your customer baseCustomer base
The customer base is the group of customers and/or consumers that a business serves. In the most situations, a large part of this group is made up of repeat customers with a high ratio of purchase over time. These customers are the main source of consumer spending...
, not to mention the vocabulary unique to their segment. Specific trade shows
Trade fair
A trade fair is an exhibition organized so that companies in a specific industry can showcase and demonstrate their latest products, service, study activities of rivals and examine recent market trends and opportunities...
, analysts, publications, blogs and retail/wholesale outlets tend to be fairly common to each industry/product area. What this means is that once you figure it out for your industry/product, the promotion plan almost writes itself (depending on your budget) but figuring it out can be a special skill and it takes time to build up experience in your specific field. Promotion techniques rely heavily on marketing communications
Marketing communications
Marketing Communications are messages and related media used to communicate with a market...
strategies (see below).
Place (Sales and Distribution)
The importance of a knowledgeable, experienced and effective direct (inside or outside) salesSales
A sale is the act of selling a product or service in return for money or other compensation. It is an act of completion of a commercial activity....
force is often critical in the business market. If you sell through distribution channels
Distribution (business)
Product distribution is one of the four elements of the marketing mix. An organization or set of organizations involved in the process of making a product or service available for use or consumption by a consumer or business user.The other three parts of the marketing mix are product, pricing,...
also, the number and type of sales forces can vary tremendously and your success as a marketer is highly dependent on their success.
B2B Marketing Communications Methodologies
The purpose of B2B marketing communications is to support the organizations' sales effort and improve company profitability. B2B marketing communications tactics generally include advertising, public relationsPublic relations
Public relations is the actions of a corporation, store, government, individual, etc., in promoting goodwill between itself and the public, the community, employees, customers, etc....
, direct mail, trade show support, sales collateral, branding, and interactive services such as website design
Web design
Web design is the process of planning and creating a website. Text, images, digital media and interactive elements are used by web designers to produce the page seen on the web browser...
and search engine optimization
Search engine optimization
Search engine optimization is the process of improving the visibility of a website or a web page in search engines via the "natural" or un-paid search results...
. The Business Marketing Association http://www.marketing.org is the trade organization
Industry trade group
A trade association, also known as an industry trade group, business association or sector association, is an organization founded and funded by businesses that operate in a specific industry...
that serves B2B marketing professionals. It was founded in 1922 and offers certification programs
Professional certification
Professional certification, trade certification, or professional designation, often called simply certification or qualification, is a designation earned by a person to assure qualification to perform a job or task...
, research services, conferences, industry awards and training programs.
Positioning Statement
An important first step in business to business marketing is the development of your positioning statement. This is a statement of what you do and how you do it differently and better and more efficiently than your competitors.Developing your messages
The next step is to develop your messages. There is usually a primary message that conveys more strongly to your customers what you do and the benefit it offers to them, supported by a number of secondary messages, each of which may have a number of supporting arguments, facts and figures.Building a campaign plan
Whatever form your B2B marketing campaign will take, build a comprehensive plan up front to target resources where you believe they will deliver the best return on investmentRate of return
In finance, rate of return , also known as return on investment , rate of profit or sometimes just return, is the ratio of money gained or lost on an investment relative to the amount of money invested. The amount of money gained or lost may be referred to as interest, profit/loss, gain/loss, or...
, and make sure you have all the infrastructure in place to support each stage of the marketing process - and that doesn't just include developing the lead - make sure the entire organization is geared up to handle the inquiries appropriately.
Briefing an agency
A standard briefing document is usually a good idea for briefing an agency. As well as focusing the agency on what's important to you and your campaign, it serves as a checklist of all the important things to consider as part of your brief. Typical elements to an agency brief are: Your objectives, target market, target audienceTarget audience
In marketing and advertising, a target audience, is a specific group of people within the target market at which the marketing message is aimed .....
, product, campaign description, your product positioning, graphical considerations, corporate guidelines, and any other supporting material and distribution.
Measuring results
The real value in results measurement is in tying the marketing campaign back to business results. After all, you’re not in the business of developing marketing campaigns for marketing sake. So always put metrics in place to measure your campaigns, and if at all possible, measure your impact upon your desired objectives, be it Cost Per Acquisition, Cost per Lead or tangible changes in customer perception.How big is business marketing?
Hutt and Speh (2001) note that "business marketers serve the largest market of all; the dollar volume of transactions in the industrial or business market significantly exceeds that of the ultimate consumer market." For example, they note that companies such as GE, DuPontDuPont
E. I. du Pont de Nemours and Company , commonly referred to as DuPont, is an American chemical company that was founded in July 1802 as a gunpowder mill by Eleuthère Irénée du Pont. DuPont was the world's third largest chemical company based on market capitalization and ninth based on revenue in 2009...
and IBM spend more than $60 million a day on purchases to support their operations.
Dwyer and Tanner (2006) say the purchases made by companies, government agencies and institutions "account for more than half of the economic activity in industrialized countries
Developed country
A developed country is a country that has a high level of development according to some criteria. Which criteria, and which countries are classified as being developed, is a contentious issue...
such as the United States, Canada and France."
A 2003 study sponsored by the Business Marketing Association
Business Marketing Association
The Business Marketing Association is a professional association, and the world's premier community devoted exclusively to advancing the business-to-business marketing profession. BMA connects members with the kind of knowledge, people and programs that make achieving their b2b company objectives...
estimated that business-to-business marketers in the United States spend about $85 billion a year to promote their goods and services
Goods and services
In economics, economic output is divided into physical goods and intangible services. Consumption of goods and services is assumed to produce utility. It is often used when referring to a Goods and Services Tax....
. The BMA study breaks that spending out as follows (figures are in billions of dollars):
- Trade Shows/Events -- $17.3
- Internet/Electronic Media -- $12.5
- Promotion/Market Support -- $10.9
- Magazine Advertising -- $10.8
- Publicity/Public Relations -- $10.5
- Direct Mail -- $9.4
- Dealer/Distributor Materials -- $5.2
- Market ResearchMarket researchMarket research is any organized effort to gather information about markets or customers. It is a very important component of business strategy...
-- $3.8 - Telemarketing -- $2.4
- Directories -- $1.4
- Other -- $5.1
The fact that there is such a thing as the Business Marketing Association speaks to the size and credibility of the industry. BMA traces its origins to 1922 with the formation of the National Industrial Advertising Association. Today, BMA, headquartered in Chicago, has more than 2,000 members in 19 chapters across the country. Among its members are marketing communications agencies that are largely or exclusively business-to-business-oriented.
What's driving growth in B2B Marketing?
The tremendous growth and change that business marketing is experiencing is due in large part to three "revolutions" occurring around the world today, according to Morris, Pitt and Honeycutt (2001).First is the technological revolution. Technology is changing at an unprecedented pace, and these changes are speeding up the pace of new product and service development. A large part of that has to do with the Internet, which is discussed in more detail below.
Technology and business strategy
Strategic management
Strategic management is a field that deals with the major intended and emergent initiatives taken by general managers on behalf of owners, involving utilization of resources, to enhance the performance of firms in their external environments...
go hand in hand. Both are corelated. While technology supports forming organization strategy, the business strategy is also helpful in technology development
Research and development
The phrase research and development , according to the Organization for Economic Co-operation and Development, refers to "creative work undertaken on a systematic basis in order to increase the stock of knowledge, including knowledge of man, culture and society, and the use of this stock of...
. Both play a great role in business marketing.
Second is the entrepreneurial revolution. To stay competitive, many companies have downsized and reinvented themselves. Adaptability, flexibility, speed, aggressiveness and innovativeness are the keys to remaining competitive today. Marketing is taking the entrepreneurial lead by finding market segment
Market segment
Market segmentation is a concept in economics and marketing. A market segment is a sub-set of a market made up of people or organizations with one or more characteristics that cause them to demand similar product and/or services based on qualities of those products such as price or function...
s, untapped needs and new uses for existing products, and by creating new processes for sales, distribution and customer service.
The third revolution is one occurring within marketing itself. Companies are looking beyond traditional assumptions and adopting new frameworks, theories, models and concepts. They're also moving away from the mass market and the preoccupation with the transaction. Relationships, partnerships and alliances are what define marketing today. The cookie-cutter approach is out. Companies are customizing marketing programs to individual accounts.
The impact of the Internet
The Internet has become an integral component of the customer relationship managementCustomer relationship management
Customer relationship management is a widely implemented strategy for managing a company’s interactions with customers, clients and sales prospects. It involves using technology to organize, automate, and synchronize business processes—principally sales activities, but also those for marketing,...
strategy for business marketers. Dwyer and Tanner (2006) note that business marketers not only use the Internet to improve customer service
Customer service
Customer service is the provision of service to customers before, during and after a purchase.According to Turban et al. , “Customer service is a series of activities designed to enhance the level of customer satisfaction – that is, the feeling that a product or service has met the customer...
but also to improve opportunities with distributors.
According to Anderson and Narus (2004), two new types of resellers have emerged as by-products of the Internet: infomediaries and metamediaries. Infomediaries, such as Google
Google
Google Inc. is an American multinational public corporation invested in Internet search, cloud computing, and advertising technologies. Google hosts and develops a number of Internet-based services and products, and generates profit primarily from advertising through its AdWords program...
and Yahoo, are search engine
Search engine
A search engine is an information retrieval system designed to help find information stored on a computer system. The search results are usually presented in a list and are commonly called hits. Search engines help to minimize the time required to find information and the amount of information...
companies that also function as brokers, or middlemen, in the business marketing world. They charge companies fees to find information on the Web as well as for banner and pop-up ad
Pop-up ad
Pop-up ads or pop-ups are a form of online advertising on the World Wide Web intended to attract web traffic or capture email addresses. Pop-ups are generally new web browser windows to display advertisements...
s and search engine optimization services. Metamediaries are companies with robust Internet sites that furnish customers with multiproduct, multivendor and multiservice marketspace in return for commissions on sales.
With the advent of b-to-b exchanges, the Internet ushered in an enthusiasm for collaboration that never existed before—and in fact might have even seemed ludicrous 10 years ago. For example, a decade ago who would have imagined Ford, General Motors
General Motors
General Motors Company , commonly known as GM, formerly incorporated as General Motors Corporation, is an American multinational automotive corporation headquartered in Detroit, Michigan and the world's second-largest automaker in 2010...
and DaimlerChrysler
DaimlerChrysler
Daimler AG is a German car corporation. By unit sales, it is the thirteenth-largest car manufacturer and second-largest truck manufacturer in the world. In addition to automobiles, Daimler manufactures buses and provides financial services through its Daimler Financial Services arm...
entering into a joint venture? That's exactly what happened after all three of the Big Three
Big three
Big Three is a term used colloquially to refer to the three most prominent entities in any given grouping or subject.It may refer to:- People :* The leaders of the three major Allies of World War I: David Lloyd George, Georges Clemenceau, and Woodrow Wilson...
began moving their purchases online in the late 1990s. All three companies were pursuing their own initiatives when they realized the economies of scale
Returns to scale
In economics, returns to scale and economies of scale are related terms that describe what happens as the scale of production increases in the long run, when all input levels including physical capital usage are variable...
they could achieve by pooling their efforts. Thus was born what then was the world's largest Internet business
Dot-com company
A dot-com company, or simply a dot-com , is a company that does most of its business on the Internet, usually through a website that uses the popular top-level domain, ".com" .While the term can refer to present-day companies, it is also used specifically to refer to companies with...
when Ford's Auto-Xchange and GM's TradeXchange merged, with DaimlerChrysler representing the third partner.
While this exchange did not stand the test of time, others have, including Agentrics, which was formed in 2005 with the merger of WorldWide Retail Exchange and GlobalNetXchange, or GNX. Agentrics serves more 50 retailers around the world and more than 300 customers, and its members have combined sales of about $1 trillion. Hutt and Speh (2001) note that such virtual marketplaces enable companies and their suppliers to conduct business in real time as well as simplify purchase processes and cut costs.