Improving Business to Business Marketing in TCL Business - Research Paper Example

?XYZ Consulting Limited Marketing Consultants Report On Improving Business To Business Marketing in TCL Business Submission date Report commissioned by: David Thorpe and Angela Brown, TCL From: John Smith, XYZ Consulting Ltd Number of Words: 2972 words REPORT SUMMARY This report analyses and provides recommendations on how TCL can restructure its marketing mix, how the business networks and relationships impacts TCL’s business, how it can rearrange its sales team for effective impact at low cost. The business report suggests a focus on online marketing services for client businesses, as well restructuring other marketing services such as advertising to be low cost and affordable to clients through adopting a more flexible pricing structure. In addition, the report suggests an improvement in word of mouth marketing of the business through leveraging it using social media, taking clients feedbacks and using these as testimonials on the company website as well as for newer inquiring customers, and through getting business clients to actively talk about TCL by organising marketing training sessions or conferences aimed at showing businesses how to meet their marketing needs in the current climate, while still cost cut. In addition the sales team need be organised based on customers and products. 1.0 INTRODUCTION Over the past two years most small and medium businesses have been badly impacted by the recent economic downturn with TCL not having been spared from the impact. During this period most businesses are cutting costs in order to remain competitive in the business, this grossly affects TCL’s business as its revenue stream is mostly reliant on the marketing budgets that companies set. Over the past year, with reduced business, TCL recorded a drop in revenue by 25%, and the business is increasingly finding it hard to get new business and establish new clients. It is imperative that TCL make a change to its current business to business marketing. In view of this, this business report analyses and addresses various aspects of business to business marketing that TCL needs to address in order to be able to efficiently meet its objectives. In doing so, the report will focus on how TCL can restructure its marketing mix, how the business networks and relationships impacts TCL’s business, how it can rearrange its sales team for effective impact at low cost. 2.0 HOW TO RESTRUCTURE THE MARKETING MIX 2.1 Exploring the product portfolio to identify low cost effective marketing services to render to firms With the recession, most of TCL customers are cutting back on their marketing spending. As can be noted from TCL’s product portfolio, TCL gives precedence to offline business marketing using tools such as radio and television for their clients. The very nature of such advertising means being expensive implies that TCL is losing a lot of money in this area. Since TCL also offers other marketing services such as online marketing, it is important for the company to explore its product portfolio and see how it can restructure it well enough for the business that are focused on cost cutting. Trends in the recession show that more companies which are cutting costs are tending towards online marketing not only because it is cheaper, but because of the reasoning that most end consumers being thrifty during these periods also tend to go online in search of better and cheaper deals (Chlebisova, et al, 2011:1234-1236). Indeed Court (2009:71) note that key advertising tools that most companies use for advertising and marketing during recession are the use of the internet, mobile devices and the social networking which are far cheaper and much more effective in a recession stricken economy. Most companies prefer to use a combination of these with traditional media (Bulearca, & Bulearca, 2010). These changing trends in companies advertising and marketing implies that TCL needs to focus more on its online marketing services, providing more strategic low cost offerings and perfect mix between the online marketing and offline marketing. 2.2 How can price be restructured to align with current economic climate and meet client business cost cutting objectives as well as being competitive in the industry? The economic downturn may shift the priorities and preferences of business clients to much more flexible negotiable pricing structure. Indeed Court (2009:70) show that with the effects of the recession there is continued need for companies to assess the needs of their business customers from a customer to customer basis based on their budget constraints and liquidity status. With such considerations, TCL would be able to analyse how the crisis impacts the various aspects of the profitability of such business, and in doing so develop focused pricing that is favourable to such a company. The success of pricing and marketing strategies employed in post recession businesses mainly rely on “deep understanding of new business processes of the post recession company” (Piercy, Cravens, and Lane, 2010:7). It is important that TCL adopts a more flexible pricing strategy similar to those used by competitors in the industry. This would enable the company be able to meet some of their clients changing budget needs, help the company retain its customers, gain new ones, and also remain competitive in the industry. 2.3 Restructuring the distribution model to reach a wider business customer audience Currently TCL mainly serves SMEs in and around Cambridge and some businesses further away such as those located in London. This distribution model which is more focused within limited regions constrains the company’s ability to reach out to more SME businesses within the United Kingdom. A key tool of expanding the place element of the company is its website. While the website is only focused on providing information about the company and its product offerings, it can be expanded further to be a key transactional tool through which people in other regions can access services offered by the company. In this sense, it will be a virtual channel of distribution thereby enabling the company to have a multiple distribution channel strategy for its services (Jeanpert, 2010; Fruchter & Tapiero, 2005).Wallace, Johnson, and Umesh (2009:875) point out that a multiple distribution channel to an organisation is a critical resource for the firm not only to remain competitive but also acquire more customers. 2.4 Improving the word of mouth promotional tool, as well as leveraging it in social media, and placing client testimonials on the company website TCL’s key promotional tool is through word of mouth. This tool is very important and has been key to the growth of the business. However, word of mouth for the business can be further improved to make it more sophisticated, efficient and fast. In this case word of mouth can further be improved using social media as much as possible. The company can blog about a wide array of issues that affect various businesses in the current economic climate and the possible solution for such marketing problems. It may also pay highly influential bloggers to write about the company on their blogs. This will take the word of mouth marketing a notch higher. Court (2009) and Chlebisova, Kyzekova and Zajarosov, (2011:1234) note that during a recession, it is imperative for businesses to prioritise their promotional tools, especially the new communication tools such as social networking, the company’s website and the internet, that can be cheaply employed and used to drive sales in the company. The business should also encourage feedbacks from clients and use such as testimonials for newer customers who may inquire of their services, or may place those testimonials on their websites to leverage word of mouth promotion right from the mouth of the clients. In addition, the TCL can get business customers actively talking about them by developing marketing training sessions and conferences that address the current economic conditions that companies face and how businesses need to deal with it 3.0 RELATIONSHIP VARIABLES AND BUSINESS NETWORKS Developing business relationships and networks is critical for a B2B business. Numerous researchers have identified the importance of relationships and business networks in a B2B business. Regan (Bagdoniene & Zilione, 2009: 16) shows that such relationship is critical for developing the reputation of a firm, developing structural bonds and enhancing the performance of the company. Business relationships are critical to TCL as it may affect the way TCL conducts its business, and the structure it adopts in doing so (Hakansson and Snehota, 1995:28; Olkkonen, et al, 2000). This is especially so during the recession period when such relationships may be changing due to the impact of recession on companies profitability. 3.1 The Value of Relationships and Business networks Biggerman and Buttle (2004) found in their research that the value of B2B relationships was beyond any financial benefits that a business would enjoy. In this IMP research, B2B relationships deliver different forms of value to the business, that is, financial value, personal value, knowledge value and strategic value. A relationship which permits both parties in the relationship to receive favourable prices and also enable such businesses be able to cut costs in such tough economic times is what defines the financial value that is within such a relationship. In addition, through such networks the business is not only able to retain these customers with whom it has a relationship, but is also able to refer more other more customers. Where there is higher personal relationship, the business parties involved are more willing to stay in the business relationship and recommend others (Biggerman and Buttle, 2004:4). Knowledge value enables the business to get access to key market intelligence, and generation of innovative concepts and ideas through understanding what customers in the market need. This is critical and key to enabling communication among business parties in the exchange of important information such as emerging business needs in the recession stricken economy, ways to improve business processes or even feedback on business performance. By working together in generating solutions, then amicable solutions can be arrived at to enable survival of business relationships in recession period. Long term stronger business relationships give the business a competitive edge in the recession stricken economy where the business has the trust of its loyal customers (Biggerman and Buttle, 2004:6-7). Indeed B2B relationships and networks are critical resources for economic performance, leveraging knowledge on key business customers and actors so as to transform products and services offered to these business customers to have a unique customised value. They are also critical as it shows the competency of the products offered, and help in developing customer focused solutions (Bagdoniene & Zilione, 2009:7). In service firms where business may have a hard time in evaluating the quality of the product offered, strong business relationships are critical as they assure customers of high quality of service and in facilitating integrated solutions where business linkages are strong (Eisingerich and Bell, 2008:500). Strong relationships also enable open inter-company communication, minimises transactions costs for both businesses, enables access to valuable capabilities and resources among the companies, and also enables development of strategies that reduce risks in doing business thereby enabling long term survival of the business networks (Gounaris, 2005:135). 3.2 How to manage B2B relationships and networks to the advantage of TCL TCL mainly uses social bonding in order to maintain relationships and build new ones. Business relationship variables are different from consumer relationship variables as they entail rational buyers not influenced by emotions but by business objectives. This implies that for a B2B relationship to survive there are key success factors that need be taken into consideration. These are: service quality, flexibility in negotiation, trust and sharing of risks, openness, information exchange, and cooperation, involvement, aligning of mutual goal, and commitment, Stability and stronger structural bonds (Bagdoniene & Zilione, 2009: 18-19). In view of these, it is therefore imperative that TCL be more flexible to changing economic times and hardships faced by their clients in a manner that both parties attain mutual goals in their business. Research shows that in times of economic distress, companies prefer doing business with companies which are more stable both in their services and financial performance (Piercy, Cravens, and Lane, 2010:17; Olkkonen, et al, 2000). A dropping TCL performance therefore does not positively help in attaining new customers. In managing its loyal customer base TCL can adopt customer loyalty programs that provide addition services free of charge on top of already provided services. For newly acquired customers, TCL should seek to build stronger bonds through constant communication, and quick response to the needs of these new customers in order to build rapport. 4.0 STRUCTURING THE SALES FORCE 4.1 Organising the sales team based on geographical divisions In organising the sales team based on geographical divisions, the various sales teams employed will be responsible for generating sales and business in assigned regions (Sinha, & Zoltners, 2005). For instance, the TCL sales force would be divided based on the regions within which TCL operates, that is Cambridge, London, and the other smaller regional segments, and they would generally focus on all business customers in their respective regions, and sales generally all the service products offered by TCL. The regional sales managers would be able to adjust the marketing plans and sales plan to align with the local needs of the businesses in specific regions. Notable advantages of this kind of sales team organisation are that it enables a wider coverage of the market, better localised customer service, quick response to local market needs, and changing competition environment and more effective control over the sales force. The key disadvantage of this type of sales force organisation is that the marketing and sales tasks are more generalised and there is little specialisation. In this sense it is always recommendable that also product based and client based approaches be used to complement this approach (Havaldar & Cavale, 2006:56). 4.2 Organising the sales team based on product divisions In product based organisation of the sales force, the sales team is organised in terms of product specialists who deal in providing specialised products to their client base. This is often recommendable where the company deals in many products or brands in the market (Havaldar & Cavale, 2006:57). In TCL’s case, media services and advertising services would be having different sales teams where sales groups only sale the product that they deal with. The advantages of organising the sales force in this manner is that each of the company’s products will get focused and specialised attention in sales, product managers can develop an effective marketing and sales plan for each product category. A key disadvantage is that several sales people may contact one business client resulting to higher cost in doing business and higher customer dissatisfaction due to weaker business relationships (Havaldar & Cavale, 2006:57). 4.3 Organising the sales team based on customers In customer focused organisation of the sales force, the sales peoples will focus on specific types of customers with the view that the sales persons understand well their area of their businesses. This is often desirable when the company’s customers have been divided in terms of industry or type. These sales people sell all the company products that the customer groups they deal in would need. Advantages in this, is that this approach meets specific customer’s needs, enables the sales people to understand changing needs within the customer group, and develops a customer-centred approach in selling its products. A key disadvantage though is that there may duplication of resources in various geographical regions and the company may incur higher cost (Havaldar & Cavale, 2006:58). 4.4 Recommendable way to Organise TCL The most recommendable way to organise the sales force would be based on a customer and product focused approach. This is because TCL both operate in limited regional areas has fewer product offerings which are interrelated. Organising the sales force focused on key clients segments of the business, that is, entertainment companies, and retailers. Since the company is not operating in a wider area and has a defined customer target segmented in terms of sector, size, and area, then the cost of having a customer focused sales force would not be significantly higher. A sales force which is more focused on specific customers has been found to build stronger relationships and stronger brands in B2B environment which have been noted by a wide array of literature to be significant in the success of any business (Morena, 2011). In this structure, the account executives can be the sales managers of various customer segments that the sales force are assigned. Customer focused approach enables effective business customer management which Naumann et al (2009) point is critical in building loyalty and satisfaction in B2B relationships and Richard et al (2007) note enhances effective customer relationship management in terms of communications, commitment and trust. 5.0 CONCLUSION This report sought to recommend changes to the marketing structure of TCL Company, highlight the extent to which business relationships was critical for the success of TCL Company, and recommend the best way to organise a new sales team. From the report it can conclusively be noted that developing more online marketing products which are cheaper, developing a flexible pricing systems that allows for negotiation with clients, expanding the presence of the company through its website by incorporating within it a transaction interphase and switching to online media for promotion, are ways upon which the marketing mix of the company can be modified to be in line with the changing economic times and to remain competitive. The value of business relationships and networks in the company is critical as it delivers different forms of value to the business ranging from financial value, personal value, and knowledge value to strategic value. This value can be enhanced through positive relationship with client businesses via the company’s sales force. Taking into account that the company seeks to develop a sales force in the company, it would be recommended that they be organised based on customer and product segments. 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