Business to Business Marketing - Assignment Example

Business to Business Marketing and Section # of QUESTION Personal selling is one of the tools used in the promotion mix which is used by the organizations in their marketing campaign. Sales force is employed by the organization to sell its goods and services to the business customers as well as the end consumers. Ariel Plumbing Services (APS) has decided to use sales force for the promotion of their plumbing services in the eastern region. The intention of the directors of APS is to personally communicate their services to the prospective corporate customers through employing the sales force. The sales force acts as a critical connection between the organization and its customers that is why APS should also employ sales force to promote their business (Kotler, Armstrong, 2008) in the new region. The company currently is only concentrating on B2B sales; therefore the sales force will play an important role in winning contracts with medium and small clients. The sales force will conduct market research, will provide customer service, build contacts and win contracts with organizations (Kotler, Armstrong, 2008). Through employing a sales force, the company will be able to know its customers better, develop market intelligence and gain an edge over its competitors. The right organizations and businesses will be targeted with the help of sales force and the relationships with these prospective clients and existing clients will be maintained by the sales force. The services of APS will be promoted through personal presentations to the corporate customers by the sales force. The purpose of these presentations is to make sales to the prospective customers and to build long-term relationships with the customers. The sales force represents the company when it is with the clients, informing the clients about the company and about the services and answering any clients' queries (McGraw-Hill Companies, 2003). When they are inside the company, they represent the customers, stating the clients' needs, interests and expectations to the company. The information that the sales force brings about the customers is very vital for the company, so that it can modify the services or introduce any new service that is in demand. The sales force can be organized into product sales force structure in which the sales force specializes in selling only a segment of the company's products or services (Spiro, Stanton and Rich, 2003). In this type of sales force organization, the sales people should be expert in the product that they are selling. APS provides a range of plumbing services like drain cleaning, leak detection and repair, toilet repair, etc. Therefore under the product sales force organization, the sales force of APC will need to be specialized to sell a single category of service. The second type of sales force organization is territorial sales force structure (Spiro, Stanton and Rich, 2003). Under this structure, each salesperson is given an exclusive geographic location to sell the full line of products or services of the company (Spiro, Stanton and Rich, 2003). The salesperson who is assigned a particular territory will be responsible for the sales to all the customers in that territory. APS will be using sales force only in the eastern region where it is thinking to open up a new office. Therefore the eastern region will be divided into different territories and the assigned to a sales person. The third type of sales force structure is customer sales force organization (Spiro, Stanton and Rich, 2003). Under this organization, the salespeople will specialize in selling to only particular customers or industries. The company can either organize its sales force along the industry line or for serving particular customers. The most appropriate method of organizing the sales force for APS would be territorial sales force structure. This is because through this organization, each salesperson's role and responsibility will be defined and each salesperson can be held accountable for making sales in his territory. This will increase the efficiency of the sales force and the sales people will focus on making customer relationships with the clients in their territory. Effectiveness in selling the services of the company will also be improved. Travel expenses of the sales force will also be relatively low as compared to other structures as each sales person will travel only in a limited geographic site. QUESTION 2 In a B2B business, more of the investment is done into personal selling and personal relations as compared to advertising and sales promotions (Kotler, Armstrong, 2008). Relationships with the prior clients and the current clients are very important in the B2B business as these relationships can make the business grow. Plumbing services are the services that every business need in their office and the company APS already has the favor of many companies which it has satisfied and maintained relationships. These relationships will help in the future when the company will open up its services in Cambridge. The clients having any of their offices, branches or facilities in Cambridge will favor the services of APS and will immediately bind themselves in contract with the company as most of the clients have been pretty satisfied with the company's services. As the company places great importance on relationship building and social bonding, most of the clients have lasting relationship with the company. Customer loyalty adds a lot of value to profits and sales in B2B operations of the business. But if the customer service and communication is poor or the relationships are weak, then the customer loyalty can be wrecked (Foss, 2007). It is much harder and more expensive to win new customers and make them loyal with the passage of time. If the company uses its existing customers for referrals in the new city, the company can save a lot of expenditure (Buchnan and Gilles, 1990). The existing customers can use their business network to make references and give testimonials about APS to the companies in its business network. These companies which are present in Cambridge and require plumbing services will surely contact APS and will be much more loyal as they have already heard about the company's good service from other businesses. For the reasons mentioned above, the company needs to maintain the valuable relationships that have been built with the clients. The clients should be treated in such a way that the service creates customer's delight (Buchnan and Gilles, 1990). The quality of service should never be down and whenever the client wants the service, it should be provided as soon as possible. The promises should never be broken and the average time for responding to the service of three hours should be always held (Buchnan and Gilles, 1990). The existing customers should always be given preference over the new ones so that a sense of loyalty develops in the customer for the company (Buchnan and Gilles, 1990). Even if the customer is making the company to lose on a particular transaction, it should not refrain from operating on that transaction if it helps in building customer loyalty (Buchnan and Gilles, 1990). The company will greatly benefit in the future in the form of a long term relationships and complete loyalty. The company's concern for the welfare of the customers should be so strong that sometimes even the profits concern should be replaced by the welfare of customers. QUESTION 3 APS is considering entering the B2C market in the future and is currently catering to only the B2B market. The company will have to undergo certain changes if it wants to enter the B2C market. The B2B part of the business only serves the corporate clients who are a part of a supply chain for a product to be delivered to the final consumer (Ameen, 2006). While the B2C business will serve the final household; the plumbing services will be provided to the final consumer on request and will not involve any contract or a long-term relationship. The clients in the B2B part if the business will be limited to certain number, whereas the clientele in the B2C part of the business will be large in number and diversified (Ameen, 2006). B2B purchasers are making the purchase for the company and hence they are held accountable for that purchase (Ameen, 2006). Therefore the buying process of B2B client will be long and complex. The B2C consumer is making the purchase for his own household or for the family, therefore the buying process is fairly simple and involves only single person most usually. B2C businesses usually put more of their investments into advertisement and sales promotions than personal selling or public relations. Therefore, the company will need to divert more of its resources towards advertising and sales promotions. Currently the company is just relying on the word-of-mouth marketing, attends trade fairs and advertises in local newspapers occasionally as it is a B2B company, but if it wants to expedite the B2C business also, then heavier advertisement and a better marketing strategy will be needed. The B2C business will cater to millions of consumers who will call the plumbing services whenever they like and will call for whichever service they want. On the other hand, the B2B part of the business will cover the hundreds or may be thousands of corporate customers. These corporate customers are mainly in contract with the company and they will demand only certain products that are in contract. The B2B customers are usually bind in contract with the company and the contract mentions the time period till which the client is under contract with company. Therefore once the contract is reached, the client is bound to use only the services of the company till the specified time period. In the case of B2C market, the consumers are not bound to use the services of only one firm. One more difference between the two types of businesses is that the dollar value of each corporate client in the B2B business is much more than that of the final consumer in the B2C business. The buying process in the B2B segment of the business is significantly longer and involves much more people in the sales process than that of B2C. The sales process can sometimes even exceed 12 months and may involve around 10 people who are managing the relationships and making business decisions (Young, 2007). The B2B sales process is quite complex than that of B2C where not many selling skills are not required and the incentives for the salespeople are also not significant. The B2B sales process requires the sales force to be learned and to acquire business intelligence in order to make sales. In B2B market, the fulfillment of services with quality and in-time is very important as future sales depend upon these attributes. The marketing and promotion cost for the B2B business is much higher than the B2C business as corporate sales force needs to be hired and they have to be compensated healthy salaries and benefits. The successful B2B sales require personal calls to the prospective client, marketing and advertising expenses (Young, 2007). The B2C sale is successful if direct selling is used or public relations are used in the marketing mix. When the business will enter the B2C segment of the market, the company will need to divert more investments to advertising and promotions to capture the consumer market. The value of a single sale in the B2B part of the business is very high as the initial sale can earn a lot of money. Also the B2B client is expected to have a long life and will purchase more of the services of the company in the future in its entire lifetime if the quality of service is acceptable to the client. In contrast, the B2C sales are less valuable in terms of revenue and future sales expectations. The B2C consumer usually will buy the company's services for his household and will hardly make any referrals and will not contribute much to the business networking. This is because B2C customers mostly order single service or small quantities of goods and services at a time (Macleod, 2005). The B2B customers mostly require guarantee of deliver and sometimes even just in time delivery because their business operations will be effected if the service is not delivered within the specified time period. This is not the case with the B2C clients as most of the times the case is not an emergency, so even if the service delivery is late, the clients will not make an issue. The B2C customer will usually pay in the form of cash for the services. In contrast, the small or medium B2B type of clients pays mostly in terms of checks, credit cards or sometimes cash it the service amount is too low (Macleod, 2005). Larger B2B customers may have open orders which are paid at the month end or may have credit lines with the company (Macleod, 2005). While the B2B customers used to hear about the service from the source of word of mouth and newspapers, the B2C consumer will require catalogs and websites to obtain information about the service of the company. The company will need to develop a website portal for the B2C consumers so that the end consumer can get information about every service that is available and their prices. Placing order should be easy for the B2C consumers, may be from the website or by short messaging service (SMS) or by phone call. This is because the end consumer will never walk by himself in to the company office, whereas the B2B customers might get to know about the company from its business network. Another difference between the two types of customers is that the B2B customer performs much more research before making the purchase as this research is a part of the buying process. The goal of the marketers of the company here should be to establish confidence in the personnel of the client. The B2C consumer does not perform so much research because he just wants his work to be done. Many times the consumer will engage in impulse buying and sometimes emotional element can also be attached to the purchase decision. The products can be sold to the end consumers if the product is presented to him attractively, it appeals his emotions and the price is appropriate. But for the B2B sales, the sales arguments should be very clear and product should be positioned well in the market. Price is not the main criteria when deciding for buying the service in the B2B segment of the market, this is because the employees want the quality and reliability if service and they have little regards for the company's expenditure. BIBLIOGRAPHY Kotler, P, Armstrong, G. (2008). Principles of Marketing. 12th Edition. India. Dorling Kindersley. Spiro, R, Stanton,W, Rich, G. (2003). Management of a Sales Force. 11th Edition. McGraw-Hill Irwin. Perry, Richard. (2006). B2C vs. B2B - Spot the Difference. The Marketing Leaders. Available from http://www.themarketingleaders.com/tml_interim/articles/march06/rp.htm, August 25, 2009. Foss, Bryan. (2007). The B2B customer loyalty files: Experiences of the good, the bad and the ugly. The Marketing Leaders. Available from http://www.themarketingleaders.com/articles/aug07/bryan_foss.html, August 25, 2009. Macleaod, Rob. (2005). What is the Difference between B2B and B2C Internet. Available from http://www.theallineed.com/business/07062081.htm, August 25, 2009. Young, Gelen De. (2007). The Difference between B2B and B2C SEO. MarketingProfs. Available from http://www.marketingprofs.com/7/young47.asp, August 25, 2009. Ameen, S. (2006). Difference between B2B and B2C Explained thoroughly. Trade Key. Available from http://www.community.tradekey.com/article.../Difference_Between_B2B_and_B2C_Explained_Thoroughly.html, August 25, 2009. McGraw-Hill Companies. (2003). Sales Force Organization. B Net. Available from http://jobfunctions.bnet.com/abstract.aspxdocid=81288, August 25, 2009. Glickman, R. (2009). Optimize your Sales Organization. Optimal Thinking. Available from http://www.optimalthinking.com/sales-optimization.html, August 26, 2009. Buchnan, R. and Gilles, C. (1990). Value managed relationship: The key to Customer Retention and Profitability. European Management Journal, Vol. 8, no. 4. Read More