Business to Business Marketing of Intel Corporation - Case Study Example

Business to Business Marketing Table of Contents Business to Business Marketing 1 Table of Contents 1 Executive Summary 2 1.0 Introduction 3 2.0 Research 4 3.0 Conclusion 13 4.0 References 14 Executive Summary There are many conventional forms of marketing and conducting business, but these conventional forms are being phased out by the new business to business marketing strategy, commonly known as the B2B marketing strategy. The B2B strategy covers every transaction and relation or exchange of whichever kind between a business and other businesses as opposed to the ordinary relationship between a business and the consumer market. In this paper, the organization that will be focused on in the light of the B2B marketing strategy is the Intel Corporation. Intel Corporation is so far the world’s largest manufacturer and supplier of semiconductors and related computer applications. The Intel Corporation was founded in 1968, and its innovative microprocessor products became a breakthrough to the digital world because of the introduction of the micro-chip. Today, more than 80% of the entire world’s computers use Intel’s microprocessors. The Intel Corporation has many strategies in purchasing, and these strategies are applied differently according to the buying situation. The main situations in purchasing include straight re-buy, modified re-buy and new-task buying. The Intel Corporation, being a corporation that has managed to be above all other similar corporations and competitors have a relationship management strategy in place. There are supplier relationship management (SRM) strategies and customer relationship management (CRM) strategies used by the Intel Corporation. Of all the conventional marketing methods, the B2B marketing strategy seems to work best for the Intel Corporation and for other organizations. 1.0 Introduction There are many conventional forms of marketing and conducting business, but these conventional forms are being phased out by the new business to business marketing strategy, commonly known as the B2B marketing strategy. The B2B marketing strategy basically entails trade between enterprises, and these enterprises are not only customer enterprises but also supplying enterprises (Zimmerman, 2008). Therefore, the business with the B2B marketing strategy does its marketing relations both with its suppliers and its customers. Generally speaking, B2B covers every transaction and relation or exchange of whichever kind between a business and other businesses as opposed to the ordinary relationship between a business and the consumer market. The business using the B2B marketing strategy buys from other businesses and sells to other businesses that need the organization’s products for manufacture of their products. However, there are other strategies such as business to government and business to consumer, B2G and B2C respectively (Haig, 2001). In this paper, the organization that will be focused on in the light of the B2B marketing strategy is the Intel Corporation. The Intel Corporation is a company that is known all over the world for manufacture of semiconductors and other computer-related hardware or applications (Minnet, 2002). This paper is going to focus on its B2B marketing strategy by studying its relations with the upstream suppliers and downstream customers the organization has. The various strategies used by Intel Corporation in purchasing situations will also be discussed and the B2B organizational structure will be illustrated and discussed. Also, ways through which customer relationship management strategies and supplier relationship management strategies can be implemented, improved or maintained will be discussed. 2.0 Research 2.1 Background Information Intel Corporation is so far the world’s largest manufacturer and supplier of semiconductors and related computer applications. It does both the fabrication and assembly of its merchandize, with almost twenty facilities around the world for these tasks. The Intel Corporation was founded in 1968, and its innovative microprocessor products became a breakthrough to the digital world because of the introduction of the micro-chip. Today, more than 80% of the entire world’s computers use Intel’s microprocessors. However, the company does not only deal with microprocessors, but they also deal with flash memory, motherboards for PC’s, computer devices for use with LAN and other networks. They also deal with other peripheral devices such as printers, scanners, cellular phones and equipment used in automated processes in industries. It can be confidently said that Intel Corporation has somehow managed to keep its head above the sea of competition in the digital and IT world, basically because it has invested a lot of time and resources in R&D, strategic HRM and by forming alliances with other related organizations. It is important to mention, at this point, that Intel Corporation is the only microprocessor company that has the largest form of partnership with the world’s largest software company, Microsoft (Rafinejad, 2007). Intel Corporation does not take chances with its relationships and strategies with its suppliers. It commits a lot of resources to establish a working B2B marketing strategy by establishing the best relationships both with suppliers and customers. The Intel Corporation has upstream suppliers from whom it gets the supplies it needs for manufacture and assembly of its merchandize. Also, the Intel Corporation has other customer companies and businesses that buy from it so that they can use the Intel’s products as primary products for manufacture of their products. The Intel Corporation makes some purchases from different suppliers across the world, and these supplies include flash memory, random access memory, integrated circuits, electronics components, software, USB accessories, CD ROM, DVD ROM, hard drives and printers. The main customers of Intel Corporation include those who manufacture original computers and digital devices, those who are users and manufacturers of telecommunication products and devices, and, finally, those who manufacture industrial equipment (Rafinejad, 2007). 2.2 Purchasing Situations The Intel Corporation has many strategies in purchasing, and these strategies are applied differently according to the buying situation. The buying situation adopted also depends on the type or classification of the products and services being purchased. The main situations in purchasing include straight re-buy, modified re-buy and new-task buying. These three will each be reviewed in turns. In the straight re-buy scenario, the corporation maintains a specific pattern of purchasing without making any changes to the pattern. The supplier’s duty in this scenario is to ensure that the supplies they bring to the company are of good quality and that they do not lower in quality at all, lest the supplies contract be terminated. The systems by which orders are made in the straight re-buy scenario are usually automated, and keeping of the records off such purchases is usually easy. The Intel Corporation mainly buys hard drives and electronic components using this scenario, whereby the supplier is maintained as the company’s supplier for many years. Because of the loyalty between the Intel Corporation and the suppliers built over time, there is an arrangement and an agreement; hard drives and electronic components have a fluctuating capacity, which approximately fluctuates twice or thrice a year. Therefore, the agreement is that if the Intel Corporation does not make any returns of purchases to its suppliers within the period designated, then the supplies will be made to the Intel; Corporation at the same cost even when the capacity has fluctuated (Business Marketing Association, 2011). In the modified re-buy scenario, the Intel Corporation either maintains the supplier but changes the contents of the purchase orders or totally stops ordering from that supplier and starts getting the same products from another. Also, this scenario may be used when the organization wants to use the straight re-buy but wants to modify the ordering list before the fixed orders are reached at. The Intel Corporation uses the modified re-buy scenario any time it wants to introduce a new or modified product in the market and therefore needs a different model of a supply from the same supplier, prompting the supplier to modify the automated list. Not only does the organization intend to maintain the volume of purchases of this different model, but it also requests for a maintained discount as was in the previous list. If the supplier does not agree to this or close to this, then the corporation switches to another supplier for the purchases they need (Sandhusen, 2000). The new-task buying scenario is used when the Intel Corporation wants to start making fresh orders of supplies they have never ordered before from any supplier. This scenario of quite often used especially because of the fact that the IT and computer world is fast changing. For instance, you may get a situation where Intel Corporation has been getting supplies for CD ROMs from a certain supplier, only for the market demands and technological advancements to change to a place where the Intel products with CD ROMS are no longer competitive enough in the market, and a new DVD ROM era has emerged. If Intel Corporation tries to change the purchase order with its current supplier but finds that this supplier does not manufacture the DVD ROM applications needed, then the Intel Corporation has no choice but to switch to a new supplier of the DVD ROM applications (Kurtz, 2010). 2.3 Organizational Network Structure and Information Flows One mistake that most companies using B2B strategy make is focus on automation of processes and relationships, and they forget to improve good information flow. Concentration of information in one area of the organization does not help other departments therein, and poor information flow causes fragmentation and decision making processes that are incomplete or inconsistent. A company needs to understand the type of information flow being used within it so that the necessary improvements will be made. Also, there should be a great and clear understanding of all the hindrances of information flow if the company is to make any improvements at all. When these two areas are adequately reviewed, the necessary steps need to be taken to create the best model for flow of information in the organization, and this can be started by first creating a well defined but simple internal network of information flow. Also, it is important to note that doing all this will still not work if the culture of the organization is that which does not allow free communication, and this therefore calls for a better strategy of leadership and human resource (Sandhusen, 2000). The Intel Corporation has an information flow structure both for internal organizational affairs and for the suppliers and customers. Within the organization, there is upward and horizontal/ lateral flows of communication. The downward information flow is not used in the Intel Corporation, reason being that the authoritarian leadership is not used therein. The upward flow is that in which communication moves upwards, from the employees to their managers or to those they report to. The horizontal/lateral flow is used for people within the organization that are either at the same level (horizontal) or at different levels (diagonal) but are not supposed to report to each other (Kurtz, 2010). There is need for management of information flow within the supply chain; else the business may not survive the competition. The flow needs to be coordinated such that the internal and external flows are synchronized. For instance, the Intel Corporation has the following information flow structure: When the company’s downstream customers need specific supplies, they place an order by filling a certain form, which is forwarded to the sales department. This department forwards the order to the production team and, simultaneously, to the accounts team. The production department starts making the products requested by the customer. However, if the production department feels that the materials for production are inadequate, they send the appropriate order of what they need to the accounts department. The order is then forwarded from accounts to purchases department. It is this department that has direct contact with the Intel Corporation’s suppliers, who supply the company with the products needed for manufacture (Sandhusen, 2000). 2.4 Relationship Management Strategies 2.4.1 Supplier relationship management As mentioned earlier, the Intel Corporation has upstream suppliers, who supply the corporation with the wares and applications needed for manufacture and assembly of the various products of Intel Corporation. Also, there are other businesses and individuals that buy from the Intel Corporation and these are the downstream customers of the corporation. In this particular study, only one upstream supplier and one downstream customer will be focused on. These include the renowned Tokyo Electron Limited (upstream supplier) and the HP Company (downstream customer). The Intel Corporation, being a corporation that has managed to be above all other similar corporations and competitors has a relationship management strategy in place. There are supplier relationship management (SRM) strategies and customer relationship management (CRM) strategies used by the Intel Corporation (Nash, 2001). SRM strategies are used by the corporation to maintain a healthy balance of relationships between it and its suppliers. These strategies are employed to ensure that there is an effective and smooth chain of communication and exchange between the two parties, and it is used as a tool for competitive advantage. Having an SRM strategy is usually part of the Intel Corporation’s strategy in maintaining and managing the supply chain. There has to be employed a certain type or model of information flow in the SRM strategy so that there will be effective exchange and relationship between the supplier and Intel Corporation, regardless of the fat that the supplier may be using a marketing mix and strategy that is quite different from the one used by the Intel Corporation. The use of an effective SRM strategy ensures that the Intel Corporation is able to get supplies of the products and services it needs on time and at the best prices and packages (Bourne, 2009). It is quite evident that the Intel Corporation is committed to having the best suppliers of their purchases and to have the best SRM strategies in place. It has a Supplier Program implemented in its structure, which is used to ensure that the strategies for maintaining good relationships with suppliers work. The Tokyo Electron Limited is one of the suppliers of the Intel Corporation, and they mainly supply semiconductors. The Intel Corporation uses several SRM strategies to maintain its relationship with its supplier. First and foremost, the Intel Corporation recognizes and awards its best suppliers every year, and Tokyo Electron Limited is one of them. Another thing the Intel Corporation does is minimizing on purchases returns. It does careful ordering of purchases according top the much it needs, and it avoids inconveniencing the Tokyo Electron Limited by not returning supplies (Nash, 2001). 2.4.2 Customer relationship management Relationship marketing is a priority of the Intel Corporation, whereby it mainly focuses on a marketing strategy in which the exchanges and relations it has with its customers are successful and smooth-running. This is because the Intel Corporation has come to the realization that the organization is certain to make more profits from customers who buy from it based on loyalty than those who buy from it based on low prices, better discounts and best bargains as compared to Intel Corporation’s competitors. Also, the Intel Corporation has come to the realization that the only way to get the best sustainability and competitive advantage that baffles the minds of its competitors is by establishing and maintaining the best and most stable relationships with customers (Bourne, 2009). The Intel Corporation puts its focus on several processes so that the CRM strategies can work. First, the way in which direct interactions with customers are handled is excellent. This goes down to the little details such as answering of customers’ calls and responding to their emails among other inflowing and out flowing customer interactions. Another process focused on is resolution of customer complaints and requests. There are other processes focused on, but these two are the main ones. Generally, the Intel Corporation does its best to ensure that the customer is satisfied by giving every customer personalized attention (Nash, 2001). HP has of late become the world’s largest customer of the Intel Corporation, with the second largest customer being Dell. As a matter of fact, more than twenty percent of the revenue that Intel Corporation gets is so because of HP. Some of the products supplied to HP by Intel Corporation include microprocessors, wireless devices, desktop computers, network servers and memory chips among other supplies. There are several strategies that can be employed for the Intel Corporation to maintain a healthy relationship with its customer, HP (Weele, 2009). First and foremost, the Intel Corporation needs to ensure that the organizational culture is changed in a way that makes it easy for strategies to be implemented that are geared towards better relations with customers. The culture embraced by most companies similar to Intel Corporation is that which causes the customer volume to wear out, and the Intel Corporation needs to change this culture for the better. The first thing that should be focused on is ensuring that HP has loyalty with the Intel Corporation. Also, a more flexible structure should be introduced to build more on the competitive advantage the Intel Corporation has. These new flexible structures should include business intelligence strategies (Business Marketing Association, 2011). The Intel Corporation should also advance its technology to a level where the customer finds it easy to get what they want. However, all focus should not be placed on technological advancement, because it is useless to have the best technology in place yet have the wrong organizational structure or poor business intelligence. The Intel Corporation should also put major focus on its human resource. This is the most underutilized reserve the corporation has at its disposal, and measures should be taken to empower the human resource. The model of leadership adopted in the corporation should also be reviewed, so that it is not one that hinders maximum output from the human resource. Generally, a strategy of best practice should be adopted (Nash, 2001). 3.0 Conclusion The Intel Corporation is the world’s largest manufacturer and supplier of microprocessors and other related computer or digital applications and devices. It is a purchaser and supplier of both primary and secondary products, meaning that it purchases from other businesses and it uses the supplies to make primary and secondary products; the secondary products it makes are bought by other businesses and companies for use in making of other primary products. Therefore, the Intel Corporation has upstream suppliers and downstream customers. For the corporation to maintain high sustainability and competitive advantage, an effective B2B marketing strategy needs to be employed. The Intel Corporation has to establish the best relationship with its suppliers and the best relations with its customers, hence the reason why it has adopted into its system a supplier relationship management strategy and a customer relationship management strategy. It also has in place strategies for purchasing its supplies from its suppliers, strategies in which the different products purchased are ordered using different scenarios, which include the straight re-buy, modified re-buy and new-task buying. Of all the conventional marketing methods, the B2B marketing strategy seems to work best for the Intel Corporation and for other organizations. 4.0 References Bourne, L. (2009). Stakeholder Relationship Management: A Maturity Model for Organizational Implementation. New Jersey: Gower Publishing Ltd. Business Marketing Association (2011). Advice from the Top: The Expert Guide to B2B Marketing. Indiana: Dog Ear Publishing. Haig, M. (2001). The B2B e-commerce handbook: how to transform your business-to-business global marketing strategy. New York: Kogan Page Publishers. Kurtz, D. L. (2010). Contemporary Marketing 2011. New York: Cengage Learning. Minnet, S. (2002). B2B marketing: a radically different approach for business-to-business marketers, Volume 10. New York: Prentice Hall. Nash, T. (2001). Relationship Management: Improving Business Relationships in the Internet Age. New York: Kogan Page Publishers. Rafinejad, D. (2007). Innovation, product development and commercialization: case studies and key practices for market leadership. Florida: J. Ross Publishing. Sandhusen, R. L. (2000). Marketing. New York: Barron's Educational Series. Weele, A. J. V. (2009). Purchasing and Supply Chain Management: Analysis, Strategy, Planning and Practice. New York: Cengage Learning. Zimmerman, J. (2008). Web Marketing for Dummies. New York: For Dummies. Read More