Business to Business Marketing-SPSL Case Study - Essay Example

? Business to Business Marketing-SPSL Case Study In promoting their services to the Manchester region Peter and Harvey intend employing a sales force. Discuss why you think that this is a suitable way of promoting the business. In addition, analyse the options available to the brothers with regards to organising the sales force. Which method do you believe is the most appropriate? Justify your answer. The ability to create and sustain strong relationships with customers is a key success factor in B2B markets. Sales forces can be highly effective at communicating and delivering value to business customers and consequently help a company achieve its financial goals. Looking at practical examples, sales forces have been employed globally to improve the position of companies, companies such as Microsoft, Cisco and General Electric, all of which generate substantial revenue through B2B sales, have a sales force of about 14000 people each in the United States alone (Zoltners, Sinha & Lorimer, 2009.p.3). On average, companies invest about 10 percent of their annual revenues in their sales forces to pay for salaries, benefits taxes, bonuses, travel, expense among other administrative and field support. The importance of the sales force is not only based on cost. If Saxon employs a sales force then it will be the most highly empowered organization within the company. They will be assigned to handle the company’s most vital asset, its association with its clientele. Often, salespeople have considerable control over this relationship; to some customers the salesperson is the company (Lilien & Grewal, 2012.p.522). Due to the sales force’s significant effect on customer relationships, its consequence on the firm’s revenues and market share is momentous. The sales force is made up of individuals with alternate capabilities, motivators and values. People bring flexibility, creativity and initiative to the sales process; they can adapt sales strategies and messages as needed to meet individual customer needs and build customer loyalty. Sales forces enable B2B companies to build strong personal relationships with customers through face-to-face interaction and hands-on problem solving. This personal attention has high sales impact. Yet at the same time, personal selling is expensive. It costs a company much more to make a face-to-face sales call than it does to contact customers through a call centre or the web (Zoltners, Sinha & Lorimer, 2009.p.6). Consequently a sales force is most appropriately deployed to select customers, products and selling activities; specifically, those for which the benefit is worth the cost. When deployed to the right opportunities, an effective sales force is an invaluable asset for a B2B company; a powerful customer-facing force that can be a source of considerable competitive advantage. In Saxons case, the sales force will be by far the most relied upon department within the organization. This is mainly because they are required to deal directly with the customers and every other department within the organization relies on them to bring in the business. Typically, they are the only department which brings in money; everything else generates costs (Blythe & Zimmerman, 2005.p.252). It has been observed that a very good sales force, one that has talented salespeople who engage in the right selling activities produces at least 10 percent more revenues in the short term than an average sales force of the same force. In the long term, the revenue impact can be much greater: 50 percent or more. However, it is not a guarantee that everything will go well with Saxon once a sales force in place. Due to the criticalness and power of the sales force they become difficult to control, direct and manage. The fact that they are dominated by motivated people who bring in capabilities and values it also means that they bring egos and the need for security and meaning (Lilien & Grewal, 2012.p.522). Unlike advertising, salespeople cannot be turned on and off. Unlike a website, they cannot be expanded and upgraded overnight. This presents a challenge to most organizations and if not handled properly it can present a downfall for the respective organizations. In light of these considerations, it is clear that a well assembled and effective sales force would help move SPSL forward and realise Peter and Harvey’s growth targets. However, for optimal performance, Peter and Harvey must ensure they have the required resources to constitute and compensate the sales force. Compensation is indeed a critical factor in sales forces, they need to remain motivated and feel that they are getting a fair share of the business they bring to the company (Brennan, Canning & McDowell, 2010.p.335). Indeed, a sales force provides a personal touch to the company’s business it will especially be a better approach in Manchester where SPSL cannot bank on word of mouth which served them well in London. In Manchester, the company has to establish new clientele, basically breaking new ground which requires dedicated individuals who will sell the company services. A sales force is a better option as compared to other means of marketing, this is because salespersons are able to sell and clarify variant issues, and simply they provide a personal touch which is critical in a competitive and fragmented industry as plumbing. The other fundamental aspect for SPSL is organizing the sales force. Basically, the sales force can be organized on bases of product, territory, and customer or segment-based as well as a matrix structure (Saxena, 2006.p.444). A product based sales force is organized on the basis of an individual product. This is best suited for a multi-product company. Territory organization is the most common and is organised on basis of territory where a salesperson is assigned a sales territory and it is his/her responsibility to achieve sales objective in the territory. On customer/segment based organization the salesperson is allotted a market segment or customers in a particular industrial group (Zoltners, Sinha, & Lorimer, 2012). Lastly, a matrix structured grouping is one where an organization considers product, territory, and segment together and allocates sales efforts accordingly. Given these forms of organization, the best organization approach for SPSL would be one based on territory. The new market, Manchester, can be divided into zones where the sales force would be organised to take charge of each of the sales territory (Brennan, Canning & McDowell, 2010.p.223). This form is much better than product organization as SPSL’s products are not so many and are much better sold as a package as opposed to isolated products. Both Peter and Harvey have highlighted the importance of relationships in B2B. Discuss to what extent relationship variables and business networks are likely to be important for SPSL when establishing their new office in Manchester. How can the company maintain these relationships in order to develop customer loyalty? An especially important characteristic of B2B marketing is the relationship between buyers and sellers. These relationships often are more complex than consumer relationships, and they require superior communication among the organizations personnel (Kurtz, 2012.p.179). Satisfying one major customer may mean the difference of millions of dollars to a firm. Relationship marketing involves developing long-term, value-added customer relationships. A primary goal of business-to-business relationships is to present merits that no other vendor can provide. For the business marketer, according these merits means expanding the company’s external relationship to include suppliers, distributors, and other organizational partners. When building relationships with other business organizations, a decision has to be made concerning the nature of the relationship that will be developed (Brink & Berndt, 2008.p.142). The most common relationship in B2B marketing is the collaborative exchanges that develop between organisations. This collaboration is such that both parties work together to form very close links and relationships so that both parties are able to obtain the highest long-term merits from the association. This will entail combined problem resolution and information sharing, and there will be a high degree of commitment from both parties. The most basic type of relationship for a B2B marketer is that of retaining a personal relationship with customers. A company such as SPSL should focus its marketing activities on establishing, developing and maintaining a fruitful relationship with customers (Kurtz, 2012.p.182). SPSL sales force should continually provide value adds to their customers, they should not only seek to provide business solutions as requested by customers but they should also identify potential challenges for their customers and propose solutions. An important aspect to note in B2B marketing is that the focus is usually on listening and cultivating a few, lasting relationships as opposed to the obviously quantity driven transactional approach common in consumer markets (Brink & Berndt, 2008.p.144). This draws greater emphasis on face-to-face contact, and places a great deal of responsibility on the marketer to fully understand the product they are selling. Consumer relationship is the most fundamental but is obviously not the only relationship. The other most critical is a relationship with suppliers. At the moment, SPSL is already engaged with ABC suppliers whom they have dealt with for a while and whose relationship is bound to continue in the foreseeable future. In strengthening B2B relationships a higher degree of collaboration and cooperation between the suppliers and organisations is necessary. Co-makership is a contemporary strategy that organisations are implementing in order to improve relationships with suppliers, Co-makership is the decision to limit the number of suppliers with whom the organisation will do business (Brink & Berndt, 2008.p.145). This is already the case with SPSL which solely deals with ABC for all its supplies. This results in closer relationships developing with the supplier, as there is a greater degree of commitment and involvement between the supplier and organisation. This reduces the friction in the relationship and replaces it with co-operative spirit that results in greater profitability for all parties. These relationships are characterised by different variables. These variables include, continuity major relationships especially with customers are often continuous and are relatively stable. The other variable/characteristic is complexity most of the relationships involve a varying number of individuals especially in the case of B2B relationships. These account for complexity as they represent different levels, status and personal backgrounds. Lastly, there is some aspect of informality, as businesses continually engage in relationships the very high degree of formalization present at the start slowly wanes. This paves way for informal bonding in resolving business concerns. The reasoning behind strengthening these relationships and networks is the understanding that greater benefits can accrue for all parties as a result of this approach. The organisation is able to provide more information about its customers, and this enables suppliers to provide products that are more suitable to the customers (Kamp, 2006.p.58). This benefits both the suppliers and the organisation from a customer satisfaction perspective as well as from a financial perspective. A good relationship with the suppliers ensures that the customers are able to get services and goods that meet their expectations. Customer loyalty is enabled by maintaining a good relationship between customers and the organisation. This is in entirety a responsibility of the sales force which continually interacts with the customer to assure them of the business’s commitment to meeting their expectations. Successful establishment of healthy relationships will be fundamental for SPSL’s success in Manchester. Being a new location, SPSL can continue with the same supplier but will definitely need to engage with new customers. As mentioned in the first part of this assignment having a capable workforce will be critical in this regard. This is because it is the sale force’s responsibility to establish relationships and networks that will serve the business well into the future. It is through satisfactory services, continued contact and support that these relationships and networks are sustained enabling customer loyalty. This can be the start of a successful word of mouth and referrals marketing which has served the company well in London. However, this will only come if initial relationships are successful. Although SPSL operates in the B2B sector, long-term they may also decide to enter the B2C market. Analyse the likely differences between the B2B and B2C part of the business. There is a definite distinction between B2C and B2B firms. B2C firms are organizations that process and sell products to consumers, whereas B2B firms are firms that produce sell to other companies (Davis, 2010.p.6). Business-to-consumer (B2C) buying and selling has a head start on B2B. Therefore, B2C buying patterns are important to follow as illustrate important trends that we think will be mirrored as B2B markets mature. And while there are many points of difference, there is enough similarity to justify drawing the analogy (Taylor, 2001.p.199). In the B2B market, the buying process is more specialized, logical and task oriented than is the case in the consumer market. Buying in the consumer market sometimes depends on an impulsive, emotional decision made by a member of a household. B2B customers, in contrast, have teams and even departments who buy products for the business. Since people are involved in the business buying process, as is the case in the consumer buying process, emotion can still affect any decision to buy (Kotler & Pfoertsch, 2006.p.58). However, many people are involved in buying decisions in the B2B market, and various individuals have specific roles in the buying decision process. This is designed to make the business buying process as rational as possible. Clearly, the prevalent distinction between business and individual buying is the reason motivating the purchase. The concept that consumers more often than not buy for complex figurative and expressive reasons as opposed to practical and logical reasons is apparent in consumer behaviour studies (Wright, 2006.p.443). This is why branding and advertising assumes such a critical role in the process. On the other hand, however, the buyer in an organisation will be buying products for the organisation and though there might be some aspect of sentiments motivating the decision, such as a liking towards a salesperson or company status, the major factor motivating the buying will be realistic and practical (Taylor, 2001.p.200). In the case of B2B purchases the buying process is initiated and completed buy professional. The person buying for an organisation will, often, be educated and vastly trained and he or she will know the advantages they want to gain from acquiring the products and services. This places enormous pressure on the supplier and the supplier’s salespeople, to have an intense knowledge about the customer’s functional needs and wants, the relevant market and industry and the products and services offered by the competitors (Klopper, 2006.p.363). The sale pitch must be based on a rational understanding of the customer and any benefit over emphasis or exaggeration will soon be spotted and the salesman or woman will be quickly dismissed. On the contrary, those involved in B2C buying are often not as detailed. They are isolated consumers, buying only for self or family. In relation to the organisation they could be said to be the amateur relying on information from B2C literature, packaging, consumer support associations and the salesperson in the shop (Wright, 2006.p.445). As much as consumers shop around looking for information about product value and safety, ultimately they will only ever garner a small amount of information on brands and so have to rely on the integrity of the selling organisation. The other difference between B2B and B2Csector that SPSL need to be aware of is the kind of information sought by the customers in each case. This will be macro and micro secondary research looking at areas such as political and legal condition, economic, industry and market growth, numbers and sizes of competitors and possible competitive advantages, types of services and products wanted and so on. It will also include such things as existing partner supply chain relationships, types of distribution channels, cost and profit structures and methods of promotion. A host of this information is gathered through secondary research and will be quantitative and summed up using statistics and models. This is very different from B2C, in the B2C markets consumers often rely on primary research largely gathered by asking opinions (Shankar et al 2012.p.107). Thus to reach and satisfy B2C consumers, SPSL will definitely need to alter how it gets its information out there. It needs to capitalise on branding and promotions and ensure that these reach a wide audience a factor that may force it to reconsider its selling and promotional strategies. Most importantly, employing a sales force may not be the most ideal in the case of B2C, rather direct advertising among other mass promotional activities will be required. The idea in B2C is availing simple but effective information capable of creating a buzz. This is unlike B2B situations where much detailed information is required (Shankar et al 2012.p.109). In regard to product branding, unlike customers, companies will be reluctant to buy branded products because of the expressive pull of the name. A large part of the cost in B2C branding is in the promotion and advertising and industrial organisations will not be prepared to pay this premium. Because the purchase is for the company; rather that for own use, the value presented in the merchandise must be seen as actual and functional as opposed to conceptual and representative (Wright, 2006.p.455). Not all benefits associated with the brand name are emotional benefits and B2B buyers will be interested in corporate branding as this can be a sign of reliance and worth, service and extensive value when associating with a respectable and established organisation. Lastly, there is the issue of competition. In most B2B markets competition is as intense as is in B2C markets but, because consumers want different benefits than business buyers, it tends to be of a different kind, Competition in B2C markets is just as likely to be on the product and service brands as it is on price, while in B2B it is more likely to be on functional benefits offered and after-sales-service as it is on the brand or the price (Davis, 2010.p.8). Although price is important in the latter market, functionality and reliability can be crucial as a dysfunction in some way would be catastrophic in terms of lost production or disrupted services. Rivalry in B2B markets emanate from comparatively small number of organizations and organisational behaviour will be founded on such aspects as key partnerships. On the other hand, rivalry in B2C markets will emanate from multiple retailers and a variety of diverse merchandise and brands based on the consumer’s continuously varying demands. 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