Business to Business Marketing - Essay Example

?BUSINESS TO BUSINESS MARKETING Table of Contents Introduction 3 2.Marketing Mix 3 2.1Product Strategy 4 2.2Pricing Strategy 5 2.3Promotion Strategy 5 2.4Place or Distribution Strategy 6 3.Relationship Variables and Business Networks 6 3.1Importance of Relationship Variables 7 3.2Importance of Business Networks 8 4.Structuring the Sales Force 9 5.Conclusion 12 References 12 Bibliography 15 1. Introduction Triangle Creative Limited (TCL) is a service based company situated at Cambridge. It is a small business firm having a limited workforce. It is engaged in the business of providing services for its clients like media services, advertisement and marketing services. The company has a good reputation in the market and is well known for the quality of services provided by them. Until recently, due to the ongoing economic downturn, the business of TCL has been severely affected and its sales revenue has went down drastically. This is an issue of serious concern for the company and it needs to resolve this issue very soon to sustain its business in the competitive market. The various changes and reforms that may be beneficial for TCL in order to boost up its profits again are discussed in this study. It has been looked into from three perspectives. Firstly various changes in strategy regarding its marketing mix have been discussed. Each of the four P’s under marketing mix has been dealt with separately. Next, TCL being a core service agency, public relationships is a key factor for its performance improvement. Hence the importance of its various relationship variables and its business network relationships has also been discussed in details. Lastly, the need and requirement of a sales team for TCL has been justified. Various means to develop its sales team and structuring them to achieve the objectives of the company has also been discussed. 2. Marketing Mix Marketing mix can be defined as the process of formulating strategy in order to have a unique and correct blend of the 4 P’s of marketing. The 4 P’s include Product, Price, Place and Promotion. The strategies related to all these four components of marketing mix must be properly blended with each other so as to have optimal results (Lamb, Hair, & McDaniel, 2011, p.47). The current economic downturn had a significant impact on TCL and has resulted in the reduction of sales revenue for the company in last year. TCL needs to review its marketing mix strategies in order to have a competitive advantage in the market and make its business sustainable in future. The various changes in the marketing mix strategies that could be helpful for TCL to achieve its objectives are as mentioned below: 2.1 Product Strategy For every marketing strategy of a company the starting point is its product. One cannot set the price or plan for the distribution system of the product without having the knowledge about what product they are offering. Product here refers to both products and services which the company has in offer (Gitman, & McDaniel, 2008, p.295). TCL is a SME which is engaged in the business of providing wide range of services to its clients. Their product or service offerings include mainly four services. They are Media Services, Advertising and Marketing Services. Apart from having its own production unit, TCL also outsources most of its production to another company namely, ‘PJW Media Production’. Hence TCL has a wide variety of products and services in its offerings. Now since TCL is a small business unit with limited workforce its product strategy would be more effective if it concentrates on having a small product line. After narrowing down its product line, TCL should develop the products or services which are highly specialised in nature. It would help TCL to ensure that it provides its customers a service package which is unique in nature (Brock, et al., n.d.). Hence it would be beneficial for TCL to gradually cut down on its product line and concentrate more on those services which are profitable to them and have competitive advantage over its competitors. As for example TCL can try to develop more unique service packages related to Media and Marketing services which they are very good. This would enable TCL to retain its existing customers and develop new customer base as well. Moreover TCL should stop outsourcing its production and give more emphasis on the expansion of its own production. This would enable TCL to cut down on its cost of outsourcing and boosting its profit. 2.2 Pricing Strategy There are various considerations that should be taken into account while setting pricing strategies for a company. Those factors include market considerations, production costs, competitive forces, business size, etc (Knowles, & Castillo, 2010, p.131). TCL follows a very rigid pricing policy. The products and services offered by TCL are priced at a rate based on the percentage of the total marketing budget that is placed by its clients. However its competitors have started reducing its product prices and have introduced flat fees system for its services. Given the current economic scenario, the TCL clients are presently looking for their business promotions which are more cost effective in nature. Hence, TCL should be more flexible in its pricing strategy and start offering unique services for its clients which would result in lowering of prices for its services. This would help TCL to attract new customers and retaining its existing customers. 2.3 Promotion Strategy The promotion strategy of a company helps it to effectively communicate its marketing objectives to its target customers (Peterson, Jaret, & Schenck, 2010, p.168). TCL is heavily dependent on using word-of-mouth communication system as its promotion strategy. In order to increase its customer base TCL should resort to other ways of promoting their business too. TCL already has its own website. Hence it could be the right option to try communicating about its business in a more detailed and better way through its website. It would also be a cost effective way of promotion for TCL. With the rapid advancement of technology people are more familiar with internet and spend most of their time in internet. Print media can also be a good option of promoting their business but they should be careful about the cost involved in it. Giving more stress on its promotional strategies would help TCL to attract more net customers for them. 2.4 Place or Distribution Strategy TCL is already situated in an advantageous location where it has ample growth opportunities for its business. However, to attract more people and increase its customer base TCL needs to move out of its local limits (Longenecker, & Loeza. 2010, p.648). It can be easily achieved by employing its staffs who are allowed to work from home to reach out to prospective new customers in their native places. 3. Relationship Variables and Business Networks TCL has developed its competitive advantage over the years through its ability to live up to the expectations of its customers and providing excellent service to its clients. These two characteristics can be considered as the core competencies of TCL. TCL is onto the business of providing different types of services related to marketing and media services, and advertising to its clients. Hence it is quite obvious that developing business network and public relations are central to the sustainability of TCL and its growth and development in the long run. The current economic environment proves to be challenging one for TCL since it already had an adverse effect on its business in last year. The company’s revenue has dropped down alarmingly to a level which is 25% below, compared to its previous year’s figures. It is attributed to the fact that the existing clients of TCL are more concerned about cutting down their costs and are shifting to more cost effective ways to promote their business. The marketing budget has been significantly reduced by its clients and it had a direct impact on the revenue generation of TCL. In this situation the primary goal and objective of TCL should be developing means to effectively retain its prospective customers and at the same time increasing its customer base. In order to achieve these objectives business networking and customer relationships are ought to play a vital role for TCL. 3.1 Importance of Relationship Variables Customer relationships are very important to any small business organisation like TCL. Sales revenue for a company like TCL is derived mainly from two sources. They are the current or existing customers of TCL and the new customers. Both the potential and existing clients are valued by the small firms like TCL. However, sometimes the existing customers are ignored and are regarded as taken for granted. Adding up new clients to the customer base of a company is crucial for the growth of a company. However, retaining the existing customers of the firm is equally and even more important for the firm and should be given the highest priority by the firm (Moore, 2008, p.350). Relationships exist between any types of network between different firms. These relationships act as a linkage between the two firms. Relationships can encourage growth of a company in many ways (Ahlm, 2010, p.9). The relationship variables of TCL includes the relationship of the company with its existing clients, is prospective new clients, its suppliers, and other business organisations with which TCL are connected with. Given the current adverse condition of economy, it is quite critical for TCL to maintain a strong relationship with its existing clients. It should give greater efforts to cater to the changing requirements of its customers and provide them with the best service possible. Customer satisfaction is the key towards retaining the customers. It would ensure a sustainable growth of TCL in future. The primary advantages of maintaining good relationship with its existing clients for TCL are: a. The cost of acquisition for new clients is huge. b. The customers with whom TCL has a long term relationship are more often characterised with spending more money than the new customers. c. Word of mouth communication from the existing customers plays a greater role towards promotion of its business. d. The costs of order processing associated with new customers are quite high. e. Existing customers are often ready to pay more for the services offered by TCL (Longenecker, 2011, p.411). Hence, importance of relationship variables is quite significant for the growth and success of TCL and every employee of TCL need to ensure that customer needs and requirements are well addressed (Brock, et al., n.d.). It would make the customers feel happy after obtaining the services from TCL and they would be encouraged to return back to the company for their further requirements. 3.2 Importance of Business Networks Business networks play a significant role towards the growth and development of a small business firm like TCL (Galbraith, Rodriguez, & Stiles, 2006, p.39). TCL is engaged in the business of providing media and marketing services for its clients. TCL actually helps other business concerns to promote their business in an effective and efficient way. Hence maintaining a good business networking relationship is quite critical towards the improvement of performance of TCL. The business of TCL can prospers only if it provides such marketing solutions for its clients which can result in the growth of performance of its business too. In the current economic scenario it is a challenging task for TCL to acquire new clients and retain its existing clients. The client base of TCL spans over a wide range of customers. The customers of TCL are primarily different big and small business organisations. TCL actually caters to the service of its target markets which belongs to different market segments based on the geographical area, company size, and different sectors of the business industry. TCL being a small company is having only a limited amount of resources. Hence there is no point in increasing the sales of TCL by expanding its business because it is devoid of resources to do so. Hence the priority of TCL would be retaining its current customers. This in turn needs the development of a strong business network with various business organisations which act as clients to them. In order to make its business sustainable and compete effectively and efficiently TCL cannot afford to lose its existing clients. Building a close business network would also result in the development of social bonding with the business organisations and lead to greater customer satisfaction. TCL has already achieved to build a high profile status within the business community of Cambridge and needs to maintain it and further strengthen the linkage. 4. Structuring the Sales Force Structuring of sales force is actually a long range planning of a firm (Meidan, 1986, p.29). The present workforce of TCL consists of 25 employees. It is a small business firm operating mainly in the local business area of Cambridge. TCL is recognised as a reputed firm in Cambridge and is well known for its reliable, friendly and efficient services provided by them. As a result of this word of mouth communication formed the primary means of the business sources of TCL and was considered to be the main factor behind the firm’s success. Until now TCL did not require any separate sales team for its promotion or other business activities. Account Executives of TCL primarily held the responsibility of sales for the company. However, the recent downturn in economy and its adverse effect on the company revenues last year have made the managing directors of the company to rethink about this strategy. They are thinking of employing 6 to 8 new full time staffs for TCL who will hold the responsibility of sales workforce for the company. The sales people of a company are generally the end contacts of a company with its clients. Presentation of services or products of a company to its clients are primarily done by the sales team members of the company (Womack, 2009, p.2). Hence with the current primary objective of TCL being retention of its existing clients, it is quite necessary for the company to specifically understand the changing needs and requirements of the clients and then providing them with the best service possible. Until now the Accounts Executives of TCL managed to perform these additional sales responsibilities. They were the person who used to visit the potential and existing clients. However the current situation demands structuring of a specialised sales force for TCL so that it results in the development of strong customer relationship for the company. Well organised sales force is required for meeting the customer requirements effectively and efficiently. This would affect in the increase of the sales revenue of the company as well. The decision to structure the sales force have an influence on the perception of the customers about the firm (A. A. Zoltners, P. Sinha, & G. Joltners, 2001, p.111). However before deciding on the employment of sales force for TCL it is crucial to know few factors associates with it. First of TCL has to make sure that the Accounts Executives are in favour of these changes or not. The development of the thinking of resistance to change amongst the Accounts Executive should be properly assessed. They must be made aware of the benefits that can be derived from this change. A feel good factor must exist amongst the Account Executives of TCL and they must be motivated and encouraged to accept the change. The structuring of sales force for TCL can be thought of a five step process and it should be done very carefully keeping in mind various factors underlying the change. Those five steps have been discussed below: 1. Firstly, proper assessment should be done regarding the need and requirement of specialisation which the sales team must possess keeping in mind the current economic scenario. 2. Secondly, a proper coverage matrix for TCL must be developed. The matrix would display all the services offered by TCL, The markets that are needed to be covered along with the activities related to selling of each of the services of TCL. 3. Thirdly, different structure of sales force can be formulated using the coverage matrix prepared above. 4. Next, for each of the alternatives formulated above the reporting relationships, and the structure of the sales team are needed to be formulated. 5. Lastly, all the alternatives should be properly assessed and the best sales structure should be accepted and implemented in the organisation (Zoltners, Sinha, & Lorimer, 2004, p.170-177). 5. Conclusion TCL is a completely service based company situated in Cambridge. The company is running a small business and has a limiting workforce. The recent economic condition had an adverse effect on the performances of the company. The sales revenue of the company has gone down significantly. TCL should look into this issue seriously and various reforms are necessary for the sustainable development of the company in future. Firstly it needs to address its marketing mix strategy. Regarding the product strategy, TCL should think of reducing its wide range of services and concentrate on specialising some of its core services which they are specialised at. Next regarding its pricing strategy, TCL must be flexible in its pricing strategy to cater to the current expectations of its clients. The company should utilise its website to a greater effect for the promotion of its business. Since TCL is a core service agency, public relationships are vital for its development and growth. Developing strong relationships with its clients and forming a strong business network is quite necessary for TCL. Next, the company should think of structuring and developing an effective sales force to boost up its sales and creating strong relationships with its clients. Hence, TCL’s current primary focus would be retaining its existing clients and adding up new clients to its customer base. References Ahlm, V. (2010). The Importance of Business Networks of Small- to Medium Sized Enterprises in Environmental Technology Industry. [Pdf]. Available at: http://www.swedfund.se/wp-content/uploads/2010/08/Thesis_VictorAhlm_small.pdf. [Accessed on May 7, 2012]. Brock, et al. (no date). Marketing for Small Business: An Overview. [Online]. Available at: http://archive.sba.gov/idc/groups/public/documents/sba_homepage/pub_mt2x.txt. [Accessed on May 7, 2012]. Galbraith, C. S., Rodriguez, C. L., & Stiles, C. S. (2006). False Myths and Indigenous Entrepreneurial Strategies. JSBE. 19(1). 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