Service Quality and Marketing Performance in Business to Business Markets - Research Paper Example

Business to Business Marketing Table of Contents Introduction 3 Discussion 3 Section Benefits of employing a sales force 3 Section Suitable options to organise sales force 4 Figure 1: Sales force structure organising 5 Section2: Importance of relationship variables and business networks 6 Figure 2: Comparison between transactional marketing and relationship marketing 7 Figure 3: Trust and reliance in business relationship 9 Section 2: Develop customer loyalty 10 Section 3: Differences between B2B and B2C 11 Section 3: Advantages and disadvantages of businesses and consumers servicing 13 Conclusion 14 Reference List 15 Introduction The study is based on the analysis of business to business (B2B) marketing relationship of hypothetical plumbing service providing company known as Saxon Plumbic Services London Ltd (SPSL). The organisation is based on South London, UK and it only provides high quality plumbing services to different small and medium sized businesses such as local and national retailers, manufacturer, insurance businesses and distributors. The employees of SPSL are properly trained and updated regarding customer services and latest development in sector. Though the directors, Peter and Harvey Blair, offer the scope of price negotiation to their clients, their charges generally serves the premium end of the market. The B2B promotion and relationship of the organisation is mainly based on the word-of-mouth communication and recommendations. The further discussion will evaluate the future business venture of the organisation in Manchester, UK. The study will discuss the importance of sales force incorporation and relationship variables in the business network and promotional procedure of the organisation within Manchester. It will also illustrate the advantages and disadvantages of expanding their services within business to customer segment. Discussion Section 1: Benefits of employing a sales force Business promotion is an essential tool to generate awareness of potential consumers regarding the brand and services of any organisation. Marketers can utilize different promotional variables, such as advertisement, sales promotion, publicity, personal selling and sponsorship, that can assist the marketers to reach their goals (Sunday and Bayode, 2011). The directors of SPSL have decided to employ sales force to promote their business and services within the potential business clients of Manchester. Incorporation of sales force promotes personal selling process which allows organisations to utilize the skills and competencies of sales force to build and strengthen personal relationship with consumers (Siguaw, et al., 2003). Apart from motivating the consumer to purchase a service, the sales force is also responsible for building the image of organisation, imparting information on services, maintain two-way communications and handling queries and complaints (Jaramillo and Marshall, 2004). The liberty of two-way communication allows the sales force to adjust and modify their messages as per the understanding and feedbacks of the consumers (Johlke, et al., 2000). On the contrary, other promotional tools, such as advertising, sponsorship and sales promotion, can be considered as one-way communication procedures which have less scope to gather the feedbacks from the consumers. Therefore, these processes lack consumer centric modification of the services and sales processes (Sunday and Bayode, 2011). The enthusiasm of sales force to provide prompt solutions to the queries and complaints assists organisation to build and strengthen the interactive relationship with the potential consumers. The interactive relationship also ensures the satisfaction and loyalty of the consumers. Incorporating highly trained sales force is the most effective tool to build relationship with consumers within the business to business market (Liu and Leach, 2001). Other inflexible promotional tools such as third-party publicity hamper easy and smooth access of organisational information. This process also restricts the organisations to create a personal and long lasting relationship with the consumers (Slater and Olson, 2000). The processes of advertising sales promotion and public relation are applicable to business to consumer (B2C) market while these are not very well received in business to business market. Sales force allows organisation to reach the consumers who are not easily accessible through digital, internet or print media advertising. Various initiatives through sales force such as cold calling, frequent visiting, interpersonal relationship and service news update, assist organisation to accrue new business client and establish long relationship with them (Johnston and Marshall, 2013). Section 1: Suitable options to organise sales force Proper structure of sales force is essential to utilize the workforce and resources strategically. There are generally five kinds of options available for the directors of the company to organise the sales force. These options include territory-based, product-based, customer-based, national account-based and inside/outside sales based sales-force structure (Churchill, et al., 2000). Figure 1: Sales force structure organising The directors of SPSL need to focus on territory-based sales force structure to assign each sales representative with specific geographical locations. According to this process, each sales representative will be responsible to handle the sales activities of their own territory (Churchill, et al., 2000). This sales force structure will be one of the suitable choices for the future business venture of SPSL within the market of Manchester. It will allow the management to divide the entire market into small and manageable territories. It will also assist the management to eliminate ambiguity within the sales force by defining their responsibilities and fixing their accountabilities. This process will enable the management to lower down the sales expenses by reducing the chances of sales force overlapping. Therefore, it will encourage the sales force to improve the effectiveness of relationship building as well as sales of services (Zoltners, et al., 2006). Another suitable option for SPSL will be the customer-based sales force structure. It will allow the management to segregate the sales force according to industries or business lines they are servicing (Zoltners, et al., 2006). The organisation mainly provides services to the SME’s within retailing, insurance, manufacturing and distribution sector. After allocating certain number of sales person on each geographical territory, the customer-based structure will allow the organisation to further segregate the sales forces according to different business lines. For instance, if the organisation allocates 4 sales persons for one territory, they can further divide each of them for retailing, insurance, manufacturing and distribution businesses within that territory. This process will enable the organisation to efficiently attract new consumers. It will also assist them to improve the customer relationship (Zoltners, et al., 2006). On the other hand, the product-based and complex sales force structure will not be suitable options for the organisation. The product oriented sales force structure involves each sales person to sell along a particular product line. Therefore, it can create territorial conflict. The complex sales force structure will not be suitable for SPSL as it only supports organisation that sells a wide variety of product or services to a large section of geography (Sinha and Zoltners, 2001). Section2: Importance of relationship variables and business networks The directors of SPSL have stated that 90% of their business in London is based on the word-of-mouth promotion and relationship building procedure with different business clients. The organisation also needs to analyse the importance of the relationship variables and business networks while establishing their business venture within new market of Manchester. The Industrial Marketing and Purchasing (IMP) group has elaborated various aspects of buyer and supplier relationships in the B2B market. The group has been formed by various researchers of European Universities during the mid phase of 1970s. The researches of IMP have evaluated the relationship between organisations in the B2B market and their effectiveness in the development of strong business network (Leek and Christodoulides, 2011). According to Ford (2004), the analysis of IMP group provides alternative viewpoint to the traditional marketing approach of organisations which therefore eliminate the importance of one-way communication of marketing. Wilkinson (2008) has stated that analysis of relationship variables during the business operations in B2B market is essential as the relationship within organisations assists the management to gain external economies of scale and scope. Maintaining the relationship within different variables of business network within Manchester market will allow the organization to strengthen their business reputation. Researcher Bruhn (2003) has offered distinctive comparison between transactional marketing and relationship marketing. The author described that transactional marketing depends on single objective that is marketing and sales of the organization. It only emphasize on maximizing the volume of sales. Alternatively, relationship marketing provides broader and long-term goal to organizations which assists the management to maintain long-term relationship with the consumers (Bruhn, 2003). Figure 2: Comparison between transactional marketing and relationship marketing Differentiation criteria Transaction marketing Relationship marketing Overall view Transaction marketing is based on managing the product portfolio of organization. It also dependent on setting as well as Modifying the elements of marketing mix to achieve optimal business configuration. The relationship marketing is based on managing organization’s customer portfolio as well as building of long-term business relationship. Assessment horizon Transactional marketing provides short term marketing strategy for organizations. Relationship marketing provides long-term customer relationship assessment to the organization. Key concepts Transactional marketing is dependent on the marketing mix, branding and market segmentation. This marketing approach is based on interaction, relationship and network building with consumers. Marketing interaction This type of marketing only follows one way marketing communication. This process is focused on interactive communication, adaptation and mutual learning. Marketing goal The major goal of this marketing process is the acquisition of potential consumers. Relationship marketing focuses on long-term customer retention and recovery. Promotion strategy This process generally concentrates on non-personal advertising and brand management. This process requires personal interaction through reliable supplier’s network. Economic profit and control parameters The profit is calculated by profit margin contribution and sales cost. This process is based on customer profit contribution and customer value. (Source: Bruhn, 2003). The relationship variables include service quality, organizational involvement, attention, information exchange and competence (Leek, et al., 2002). Service quality in B2B relation signifies the responses of organization to the expectation of the consumers. Mouzas, et al., (2007) have explained the relationship between trust and organisational reliance through a matrix. The authors have explained that interpersonal relationship and consumer’s trust in organisation operations assists organisations to increase the stability of organisations. On the contrary, low interpersonal relationship and unstable trust on organisational operation creates a fragile structure of organisation (Mouzas, et al., 2007). Figure 3: Trust and reliance in business relationship (Source: Mouzas, et al., 2007) Håkansson, et al., (1994) has demonstrated the ARA model which represented a detailed framework towards the conceptualization of B2B relationships and networks. This model provides details about the bond between different actors within the organizational end-to-end supply chain. Actors of organisation are the workforce which can be considered as individuals or collectivises such as departments, groups, etc. Resources of organisations can be tangible or intangible. It can also be stable or unstable depending on their configuration. Activities are different types of business processes which can take place at different levels of the individuals or organisational groups. Actors of organisation possess control over resources. The actors of organisation have the access to indulge in a strong relationship with different stakeholders to combine, generate, develop, destroy or exchange resources. Adaption of the ARA model in the business operation can assist SPSL to improve their business network. Improved service quality will assist SPSL to strengthen their bond with customer and suppliers in the Manchester market (Leek, et al., 2002). As per Chumpitaz, et al., (2004), involvement, openness and attention of organization reduce the distance between the interacting parties. Therefore, the adequate business transparency and involvement will allow SPSL to generate trustworthiness of consumers of new market segment towards their services. The information exchange procedure within B2B relationship ensures the proper delivery of organizational data to the consumers. It also exchange the information related to consumer preferences to the suppliers. This variable suggests the transparency of businesses within new market segment (Woo and Ennew, 2004). Therefore, this relationship variable will be an important part of SPSL’s business venture. Competence in organizational relationship determines the proper access of resources and integration of intra-organizational communication. It provides an open picture of organizational culture of the suppliers to the buyer companies (Ulaga and Eggert, 2006). Hence, proper abidance to this relationship variable will enable the management of SPSL to establish a strong business network within the market of Manchester. The IMP group has also extended the explanation by demonstrating the importance of organisational relationship in developing business network. The researchers have suggested that the relationship of organisations in B2B market are interrelated and embedded in business network. Therefore, all the direct and indirect transactions in business relationships tend to affect the wider aspect business network (Henneberg, et al., 2010). According to Ulaga (2006), the success of B2B marketing depends on the integration of organizations internal capabilities and external relationships with different variables of the market such as customer, supplier, competitor and other stakeholders. This connection within the market variables allows organization to create a strong business network within the Manchester market. SPSL needs to concentrate on their relationship with different parts of this business network such as business customers, suppliers and competitors. Strong business network will assist the marketers to gather high quality client referral and generate new client connections which will subsequently influence the business growth in new market area (Woo and Ennew, 2004). The strong business networking will also enable SPSL to generate long lasting partnership with new business clients. Business networking will assist SPSL to frequently attend business and social events in Manchester. This process can assist SPSL to raise their profile and build their reputation as a knowledgeable, reliable and supportive organization. Section 2: Develop customer loyalty One of the main motives of business relationship building and maintenance is to develop customer loyalty (Rauyruen and Miller, 2007). The management and sales force of SPSL need to follow various steps to generate and maintain the loyalty of potential consumer towards their services. The first step of this procedure details the importance of responsiveness of the marketers towards the needs and demands of the consumers. The marketers need to utilize the two way communication channel to gather knowledge about the specific requirement of their potential consumer. They also need to provide prompt solutions to the service requirement of the consumers in the new market segment. This process will elevate the trust and loyalty of their consumer (Rauyruen and Miller, 2007). The maintenance of business relationship with suppliers will certainly enable the organization to abide to the regulations for safety and health. Therefore, it will assist the business to deliver values to the customers. Continuous improvement of the values of their services will also enable the management of SPSL to generate consumer loyalty. The organization should initiate feedback collection program to increase the involvement of consumers in their value addition process. This will enhance the feeling of importance within consumers. Therefore, it will also enhance the consumer supplier relationship within the new market area. Section 3: Differences between B2B and B2C The long-term mission of SPSL indicates their tendency to enter in the business to customer (B2C) segment of the market. The business procedure and approaches for B2B and B2C market with the different elements of service marketing mix will differ in a number of ways (Teece, 2010). Product/Services: SPSL offers intangible services to their consumers that include leaks detection, repairing, drain cleaning, radiator maintenance etc. The B2B aspect of marketing mainly focuses on large scale service proving facilities such as plumbing service requirement of an entire building (Teece, 2010). Due to the large scale work, organisations tend to allocate sufficient number of workers while providing services to business locations. Therefore, they can assign multiple employees with different skills to perform a number of services. Alternatively, B2C market requires small scale plumbing services which influence the marketers to allocate single or small number of workers per consumer (Teece, 2010). Hence, each employee providing B2C services needs to be highly skilled to perform each task efficiently. The B2B services allow the marketers to customize their service offering as per the different needs of their business clients while the small scale and similar kinds of service requirement in B2C market influences the organisation to standardize service providing facility. Price: The pricing policy of B2B services of SPSL is dependent on size of business clients, type of service required, frequency of client visit and the contracts with different business location. The organisation tends to continue a long-term business relationship within their B2B clients. Therefore, they prefer to provide the power of price negotiation while dealing with the business client. SPSL offers mostly premium pricing to B2B clients due to the large scale and complex service requirement. On the contrary, the pricing process of B2C marketing will only depend on the type and size of service required (Hesselink, 2010). B2C marketing will not be contract dependent. Therefore, SPSL needs to focus on more competitive and affordable pricing for similar services to ensure the satisfaction of consumers. Simultaneously, the scope of price negotiation for consumer will be very low due to the limited service requirement. Place: B2B marketing generally follows multi-step buying process which demonstrates a longer sales cycle. The distribution of services within B2B market takes a long period of time which includes a series of meetings (Hesselink, 2010). Therefore, the organisation can handle all the B2B distribution procedure from a single point of location while the requirement of staff is also limited. Alternatively, B2C marketing follows single-step purchasing procedure that requires a smaller sales cycle. B2C service distribution process needs to be more rapid as the organisation tends to receive more frequent service calls. B2C servicing does not entertain the pre-service meeting procedure with clients (Homburg and Fürst, 2005). Therefore, it will be very hard for the marketers to distribute their services to consumers from single service point. The organisation needs to setup small service locations in different regions of Manchester to increase the frequency of their B2C services. Promotion: B2B marketing process is largely relationship driven. The identity of the brand within the B2B market generally depends on the personal and long-term relationship with the clients. The B2B business promotion does not rely on frequent advertising on digital, print or any other media (Homburg and Fürst, 2005). SPSL hugely depends on the relationship with their business clients and word-of-mouth advertising. Other promotional process of the organisation includes occasional trade fair visit and news paper advertising. On the contrary, B2C segment is largely influenced by brand visibility and advertising. Consumers in B2C market are more focused on the service types and organisational reputation of businesses rather than their prior relationship (Hesselink, 2010). Therefore, SPSL needs to consider different media such as radio, local newspaper, pamphlets and hoardings to generate awareness and visibility of their services. They also need to create an interactive website to handle consumer queries and complaints. They can also consider direct marketing for their B2C venture. People: People are an important element of service delivery procedure as consumers tend to judge the service quality by the treatment, behaviour and skills of the employees (Yoo, et al., 2000). B2B business process generally takes rational buying decision based on service values (Hesselink, 2010). SPSL mainly train their workforce in terms of services and sector requirements. Alternatively, B2C process hugely depends on emotional relationship with potential customers. General consumer tends to take emotional buying decisions based on desire and price. Hence, the B2C service provider of SPSL needs to be trained to build up an emotional relationship with the consumers by maximizing the value of transaction to ensure long term business contact (Hesselink, 2010). Process: The service delivery process to business locations tend to be similar, while the service delivery to consumers may vary from household to household. The B2B service generally follows a service blue print which the sales force can demonstrate to their clients during business meetings. Alternatively, the B2C services delivery process needs to be modified as per the differences in requirement. The organisation needs to upgrade its website to provide knowledge about their processes to the consumers (Homburg and Fürst, 2005). Physical evidence: The fully equipped commercial van of SPSL can be considered as their physical evidence of services. The reputation of their B2B service delivery process is hugely dependent on the availability of the latest equipments. On the other hand, the health and safety measurement in their equipment usage and service delivery plays an important role in the physical evidence for their B2C venture (Homburg and Fürst, 2005). Section 3: Advantages and disadvantages of businesses and consumers servicing The service marketing procedure of SPSL to both businesses and consumers will provide various advantages to the marketers. The B2B as well as B2C business venture of SPSL will allow the management to evaluate a large portion of the Manchester market. It will enable the marketers to enhance their target audience that subsequently improve the profit generation as well as market reputation. This procedure will also assist the organisation to improve their competitive position within the different players of the market. Accruing new consumer market segments along with the business segment will enhance their market growth capacity (Hunt and Lambe, 2000). The advertisement procedure for consumer segment will enable the organisation to enhance their visibility within different B2B as well as B2C market segment. The service delivery process within B2B as well as B2C market segment will assist the organisation to explore different kind of service needs of varieties of customer segments. Therefore, the organisation can upgrade their training and service delivery process according to the variation of requirements. This facility will enable the management to increase their efficiency to serve their potential consumers. Though the B2B service delivery process ensures huge financial gain, it also takes a long time to perform a single service lifecycle. The service call from businesses is less frequent than consumer calls. Therefore, the gains from B2B service delivery process may delay for uncertain time. During this period, the frequent call and short lifecycle of B2C services can ensure steady financial gain for the organisation (Hunt and Lambe, 2000). Alternatively, the process of providing services to both businesses and consumers may face a number of limitations. The competitive nature of the B2B market and the B2C market differs from each other. The organisation will require different sets of market servicing and business expansion strategies for both the sectors. The overlapping of strategies may cause inefficiency in service delivery process to each of the segment. The existing competitors in market of Manchester may have already explored the B2B and B2C segments. This situation will cause huge competition for the organisation to establish their business reputation in the new market segment (Fukukawa, 2003). The organization will face huge initial expenses to appoint different employees for B2B and B2C market segment. The expenses can also occur due to setting up of different service location for B2B and B2C and their separate promotional procedure. These expenses can reduce the profit margin of the organisation. The competitive pricing policy for similar services to the consumers may also hamper the profit generation of the organisation (Fukukawa, 2003). Conclusion The discussion has elaborated various aspects of B2B as well as B2C relationship of organisations. The study has elaborated the importance of allocating sales force and personal selling process for the new market venture of the organisation. It has also recommended the territorial and customer oriented sales force structure to increase their business reputation within the new market segment of Manchester. The further discussion has illustrated the importance of different relationship variable and business networking process in the development of customer relationship and loyalty. 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