Business to Business Marketing: Triangle Creative Ltd - Case Study Example

? Business to Business Marketing (Triangle Creative Ltd) Table of Contents Introduction 3 2. Marketing Mix 3 2 4 Ps 4 3. Relationship variables and business 7 3.1 Key Relationship Variables 10 4. Structuring the sales force 12 4.1 TCL Sales force 13 5. Conclusion 14 Reference 15 1. Introduction The economic downturn has severely impacted the growth of business in the UK and as per the forecast for the current year by BBC analysts; the economy is going to attain a stalled position in the current year. This clearly signifies that companies are holding back investments and are looking forward to do business in a much leaner form. Undoubtedly, this has impacted the way of doing business for the advertising sector as well. A service based company, which deals in B2B scenario, Triangle Creative Limited (TCL) offers a range of services comprising of direct marketing, online marketing, advertising, public relationship management and even development of websites. TCL is highly respected by its clients for friendliness, cost effectiveness, creativity and speed of delivery of the service. The organisation offers its services to SMEs located in and around Cambridge. The current economic situation has hampered the inflow of clients and has also led to the decline of revenue by as much as 25% compared to that of the previous year. The company is also finding it increasingly difficult to retain some of its established clients, which in turn, is vital to the growth of the company. TCL needs to improve its business strategies like marketing mix, customer relation and sales force to propel future growth of the company. It also needs to look for newer markets to continue the expansion of the company. 2. Marketing Mix The main motive for designing a marketing strategy is to deliver values to the customer and generate revenue. To begin with, the organisation needs to do proper segmentation, targeting and positioning for its product or service. 2.1 4 Ps Then comes the importance of the 4Ps of marketing and the marketing department generally tries to fiddle around with the 4 prime elements while taking into consideration the macro and micro economic factors of the marketplace (Crane, 1993, p.15). The main objective is to make effective strategy based on these key parameters in order to create a high demand for the product or the brand for generating a positive response from the potential customers. Each firm strives to build up effective marketing strategies so that it can create and deliver values to the customer and thereby increase the satisfaction of the consumers. The marketing mix is assembled keeping in mind the customer needs regarding the features and benefits of that particular product and service. It differs from one organisation to another according to the varying marketing objectives and resources of the companies (NIOS, 2012, p.103). Figure 1: Marketing Mix; a bird’s eye view (Source: NIOS, 2012, p.3) Product: Product refers to the goods and services offered by the company which carries the brand name as well as the brand value to the customers. It can be tangible or intangible in nature. Products and services are purchased by the customers because they fulfil the needs of the customers. Customers pay for the benefits that the products or services provide to them. Therefore, it can be said, a product can be represented as a bundle of benefits which has one key feature and some other benefits related to the main feature. TCL is a service based company and it offers to the clients a wide range of services including online marketing, advertising, direct marketing, website development and public relations. The client base comprises of a wide range of companies. TCL has built a reputation for providing reliable, efficient and friendly services. At the current economic condition, the prospect of getting a new client is comparatively tougher than maintaining an existing client in order to maintain a sustainable revenue source for the company. So TCL needs to keep the current customer base by means of effective service. Also they should diversify their business to foreign markets so that they can acquire new clients from emerging economies (Ehmke, Fulton & Lusk, 2011, p.1). Price: Price is the value capture for a particular product or service. It is a vital parameter in the marketing mix. Fixing price for a product or service is a tricky as well as tough job for the company as it is determined by the internal and external factors of a business like market demand, cost involved, purchasing power of the target consumers, competitors’ price, inflation, economic slowdown etc. Fixing prices for the services offered by TCL depend on the timeframe, type of media and the service design. In the current financial situation, TCL follows a very rigid pricing system. The industry competition has increased due to the presence of many fragmented players who are serving domestic as well as international clients. Though David and Angela have found that a simple, rigid pricing structure is often preferred by existing and potential clients; there are many competitors in this industry who are negotiating on price and prefer to charge a flat fee as compared to a percentage commission rate. Therefore, in order to get a price advantage in this current economic scenario, TCL needs to operate on both the rigid percentage pricing i.e. the commission based pricing as well as the negotiated flat pricing. Both pricing strategies can enhance the opportunities for acquiring new clients. Many companies have reduced their marketing budget and have attempted to find out more cost effective ways of promoting their business (Ehmke, Fulton & Lusk, 2011, p.2). Place (Distribution): Distribution is another major variable of marketing mix. In case of products, the availability of a particular supply can create the demand as availability forces the potential consumers to taste new arrivals as well as an existing product. In case of services, especially in the B2B sector, distribution of the service is dependent on the convincing power of an efficient professional of the organisation, regarding the organization’s services to the client. This is applicable in case of a strong distribution process in a particular market or location. For a large market, or in the global market, the company branches or the franchises of a company represent its distribution networks. Small regional level companies will be aware of the benefits of the services offered by companies like TCL, if the latter has a better market penetration and market presence (NIOS, 2012, p.111). TCL is located in Cambridge and it is serving the SMEs based on that location. It can also diversify into neighbouring market like London or even other cities in the UK to diversify the risk posed by the fragmented competition. Market diversification might help to get a different set of competitive advantages as every market has its own level of competition. Promotion: This is the last but one of the most important component of marketing mix. For the marketing plan to succeed the product or service needs to reach the target customers and for this, the potential customers should be made aware of the product. The customer awareness about a particular product or service is possible only by the effective promotion like proper advertisement of the product and service which describes the actual benefit of the product and service. TCL does promotion of its services through word of mouth (WOM) marketing. The company website of TCL is a type of shop window that tells the company background, the wide range of services it offers and other testimonials. It also does advertisement by attending trade fairs and occasional advertisement in the ad magazines like PR week and Advertising Agent. Though the company is an established one, a large percentage of its new clients are the result of positive word of mouth communication from the existing customers of the company, but only this promotional activity might not generate sufficient new client for the company. In the current economic scenario, clients have reduced their marketing budget and have attempted to look for more cost effective ways of promoting their business. So the company needs to maintain an effective sales force for promotion purposes as the company needs to organise advertising campaign in different potential markets where SMEs as well big companies’ headquarters are located. Also TCL has to organise different business seminars where the SBUs of many companies might come and TCL needs to convince them to use their services by making them well aware of the competitive benefits of their services. This will create an effective promotion and might generate new potential customers (Borden, 2007, p.12). 3. Relationship variables and business B2B market characteristics are different from B2C market. B2B marketing is relationship driven because the target market focused at is small and mostly consists of organisational clients. Here business transactions are broadly called business deals which can be maintained by nurturing the relationship with the clients. Multistep buying process increases the selling cycle. As this type of business industry is generally service oriented, so the offered services have many categories like regular, standard, premium etc. Starting from regular service to standard to premium, the price increases and the quality, efficiency and effectiveness of the service offered also increases. It is directly proportional to the price. The brand value or brand identity is created on the basis of personal relationship with the clients (Wenderoth, 2009, p.7). The seller provides training to the user of services for better acceptance and maximum utilisation of the service. In this market, acquiring new clients is tougher than retaining the existing clients and being able to do that, the company can gain continuous profit. The process of converting a prospective client or a new client to a high value customer or premium customer is a long way process. Relationship building and communication are the two important ways of doing marketing activities so that the desired leads can be generated during the sales cycle. B2B companies generally do a marketing campaign to make the industry aware of its product offerings. The reason being, purchase decisions are not made by an individual in an organisation but by the buying centre of the organisation (Lilien & Grewal, 2012, p.5). Figure 2: Relationship Variables Development Process (Source: Wilson, 1995, p.15) Relationship variables are intangible variables of customer relationship management especially in business to business marketing. A personal motivation is established when the seller generally builds a relationship with the buyer or the client. It is an affective and cognitive act, which is represented as the function of behavioural, cognitive and affective components. In a buyer - seller relationship, value and trust are considered from the buyer’s perspective and an effective cognitive dimension has an impact on these two constraints of effective relationship. Loyalty and commitment are important functions of behavioural dimension. As the B2B business is basically based on the relationship building with the existing customers, the seller always tries to keep a balance among all the behavioural components or the relationship variables in order to maintain an efficient relationship performance with the existing clients. 3.1 Key Relationship Variables Proper understanding, implementation and evaluation of key relationship variables reduce the ambiguities involved in the customer relationship management by the sellers. As retention of existing customers is more important than acquisition of new customers in B2B, effective relationship is the only way to maintain and extend the deal. In most cases, durability of relationship is determined by the satisfaction of the customers, commitment of the seller to the buyers and the loyalty honoured by the seller to their priority customers (Morgan & Hunt, 1994, p.20). The key relationship variables are the followings (Siva, Dey & Palmer, 2010, p.2). Trust: In B2B, the relationship between buyer and seller depends on mutual trust. It is crucial in terms of maintenance of long term relation with the priority customers. In business transactions, trust is a psychological state of both the buyer and the seller. It is a generalised expectation of the probabilistic future events related to the business deal between both the parties (Byrnes, 2007, p.26). Value: It has always been the basic parameter of relationship for B2B marketing activities as the sales revenue is generated through repeat purchase by the buyers and it is only possible if the seller provides value based services to the customers. The term value became popular in recent days of business marketing and its rational approach has integrated a pluralistic relationship in customer values. Other important relationship variables are satisfaction, commitment and loyalty. These variables have a major impact on the long term relationship building with the customers in B2B. The important key relationship variables which influence a business deal between two business institutions are value, commitment, loyalty, cooperation, and mutual goal. The relationship developed in first business deal by the effective combination of all these key variables might lead to a long term relationship with that client in future (Ellis, 2011, p.8). Business networking is a socioeconomic business activity among the entrepreneurs and corporate around the world. It can be done at a regional, domestic and even on an international level where the businesses people from a particular sector can get access to various other businesses of the other sectors which will thereby provide them with learning and new insights. Effective participation in business networking is very much essential for B2B as efficient deals in businesses happen in this type of entrepreneurs’ network which can be beneficial for both forward and backward business operation. For example, one producer can tie up with one supplier and at the same time one service provider can get a potential client. All these kinds of effective negotiation in business networks are possible and happen by only relationship building (Brink & Berndt, 2009, p.140). Therefore, any business person needs to build and maintain effective relationship with the other members of the network to use it as an effective promotional platform for the business. But in today’s world, due to free flow of information using the internet medium, business customers are increasingly leaning towards checking out product or service reviews of other consumers and checking out feedback for other competitor products. This has led to the increase of buyer’s power in the B2B segment. And to respond to this, the sellers in the B2B market have to increasingly collaborate with each other in an effort to make their offerings stay competitive in the market (IMP2011, 2011). Continuous collaboration with the partners not only widens the sellers’ exposure to the various and diversified needs of the clients, but also provides an exposure to combined sharing of experiences and solutions for the problems faced by the clients (Snehota, 2003, p. 5). The joint directors of TCL, David and Angela, have developed a high profile in some regional business network of SMEs like in the Cambridge Business Community. The company has placed great importance on maintaining effective work relationship with its existing clients who have been unknowingly generating new clients by their word of mouth. It is a positive outcome of the good relationship which TCL maintains. But in the current economic scenario, TCL needs to expand its business network into other developing regions or the market which are in better economic position to get new potential clients. The company can maintain its regional level SME clients by effective maintenance of commitment-trust theory in the customer relationship management (Buttle, 1996, p.8). This might help in strengthening the bonding with its customers in the crucial economic phase which can in return help to maintain a revenue inflow by repeat selling of the services to its existing clients. 4. Structuring the sales force The objective of structuring a sales force especially in service based B2B sales is to build effective relationship with the customers to generate more sales through repeat purchases of the services the company offers. The objectives behind organising a sales force are to develop the techniques of selling in different business institution, to determine the tasks for individual sales person as well as overall sales team to achieve organisational sales target, to find the different ways to identifying and recruit potential salesperson, to analyse the ways of motivating and managing sales force and to structure the dimension of sales department. Selling is the most important function of an organisation as it determines the revenue turnover as well as the profitability of the organisation. Organisations, especially in B2B market, follow the relationship based sales force for their business customers. Different organisations follow different patterns of sales force like line organisation, functional organisation, line and staff organisation and horizontal organisation (Zoltners, Sinha & Zoltners, 2001, p.37). 4.1 TCL Sales force TCL is the type of line organisation which is divided into four different departments and each department has the line structure of hierarchy. To develop an effective sales force, specialisation within the sales division is needed. There are four different types of specialisation of the sales division like geographical, product-based, customer-based and market based. In geographical specialisation, the sales personnel are assigned in different geographical areas and they are responsible for sales as well as promotional activities in the individual assigned areas. The key advantages are better market penetration and customer service, efficient control of the sales force, prompt response to the fluctuation of regional market condition and competition. Product based specialisation are of two different types like product specialist managers and managers having knowledge of all products. The key advantage is solution providing better after sales service by the sales people (Darmon, 2007, p.129). In market or customer based specialisation, the potential customers are classified into channels, types and user industry. Different sales people take the responsibilities for different customer groups. The key benefit is satisfying the need of a specific group of customers by the individual salesperson. So TCL needs to develop its sales force by adopting combination of three sales specialisations which is called hybrid sales force. By this sales force, the company can provide effective customer satisfaction and achieve better market penetration. 5. Conclusion The top management of TCL needs to draw its attention towards a strategic reconstruction for the current economic scenario and towards the future growth of the company. They need to implement new strategies in the areas of marketing mix, customer relationship management and sales. In the current economic scenario, as the clients have reduced their marketing budget and have attempted to look for more cost effective ways of promoting their business, TCL has been suffering from low revenue. At this position, the company needs to concentrate more on the existing customers in order to maintain the existing client base. As for service based companies like TCL, customer retention is more important than acquiring new customers. In future, the company needs to get new clients to increase the client base and generate more revenue. In order to achieve that, TCL needs to diversify into the neighbouring markets where there are more potential business institutions. Reference Borden, N. H. 2007. The Concept of Marketing Mix. [Pdf]. Harvard Business School. Available at: [Accessed on 3 Apr. 2012]. Brink, A. & Berndt, A. 2009. 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