Business to Business Marketing

There are many different types of organisations:

Institutional oganisations:

• Not for profit
• Community-based organisations

Government organisations:

• Health
• Environmental protection
• Education
• Policing
• Transport
• National defence and security

Commercial organisations:

• Distributors
• Original equipment manufacturers
• Users
• Retailers

All of which are working alongside one another to supply each other with all the different elements required to make their businesses a success. The main method for businesses to do this is through personal selling, often taking the form of a sales person pitching the relevant information to the other business. Business to business marketing is vast as there are so many of them and so many different elements that contribute to a business such as the manufacturer, the distributer and the supplier, and B2B transactions will tend to be of higher value but fewer transactions than B2C (business to consumer), and because of this it will make it highly important for B2B to keep hold of their customers, which in turn means that they must work harder on building a relationship with their customer.

We were set a task in lesson today to look at three different companies: Coca-Cola, a financial software company and an MRI scanner manufacturer. Working in groups we were to consider the number of potential customers to each company. For example starting with coca cola in the UK alone they potentially have around 50 million customers whereas a financial service software company have hundreds they will consist of all banks, mortgage lenders, loan companies and building societies. however the MRI scanner manufacturers comes in with the fewest customer being 1 which is the NHS. In terms of marketing the fewer customers you have the more you are going to get to know your customers on a more personal level.
Each different company will use different stages of Kotlers buying decision process mentioned in previous blogs. for example coca-cola use thre out of the 5 stages: Need recognition, evaluation of alternative and purchase. The other 2 companies will use all 5 stages in the process.
we then looked at which FTPEPS applied to these individual companies, broken down this is Finance, Time, Performance, Ego, Physical and Social. It would seem that Coca- cola had none of these, whereas the MRI scanner had all of them indicating the major difference between the B2C company and B2B company.

Becuase there are few substitutes for B2B the demand for products is likely to be more inelastic. this means it will be harder to simulate sales through price cuts and promotions etc but it also m,eand that the marketer can set the price. So the bottom line is if a business needs a product then it needs a product therefore no matter what the price the product is essential.

Culture

Three essential components come together to make culture;

1. Beliefs - processes that reflect our knowledge and assessment of products/ services.

2. Values - an indicator, which is used as a guide, for what, is an appropriate behaviour.

3. Customs - modes of behaviour that are culturally approved ways of behaving in certain situations.

The core of a culture is formed by values. They are broad tendencies for preferences of certain state of affairs to others (good-evil, right-wrong, natural-unnatural). Many values remain unconscious to those who hold them. Therefore they often cannot be discussed. Values can only be inferred from the way people act under different circumstances.

The Terpstra and Sarathy Cultural Framework help marketing managers to assess the cultural nature of an international market. It is very straightforward, and uses eight categories in its analysis. The Eight categories are Language, Religion, Values and Attitudes, Education, Social Organizations, Technology and Material Culture, Law and Politics and Aesthetics.

The anthropologist, Clifford Geertz, defines culture as a “historically transmitted pattern of meanings embodied in symbols…by means of which men can communicate, perpetuate and develop their own knowledge about and attitudes towards life.”

Good examples of different cultures are the HSBC adverts they show the different cultures and rituals around the globe please click on the links

HSBC 1

HSBC 2

HSBC 3

• Society's perception (meaning the way the society wants you to behave, here the factor of pro and anti social behaviour is appointed).
  
• An individuals family values (For example, some families are independent and do not interfer in one another's lives. However in some familes their lives are connected with one another and would consult one another whilst doing anything like taking a decison regarding their life).
  
• Society's values and attitudes (integrates with society's perception)Community learning (basically learning how to behave in socity by observing other people's behaviour in socity).
  
• Communal or collective memory (meaning memorising the behaviour conducted by others in society and performing that form of behaviour in the next scenrio)
  

Culture is a complex concept, this is shown in the brief descriptions above. Culture is very difficult to define. Ralph Linton (1995) states that ''culture is the configuration of learned behaviour and results of behaviour whose component elements are shared and transmitted by members of a particular society.''

Social Class

Krech, Crutchfield & Ballachey say that social class is a division of society made up or persons possessing certain common social characteristics which are taken to qualify them for intimate, equal status relations with one another, and which restrict their interaction with members of other social classes.

Once upon a time society was only split into 3 class systems as the majority of people were of working class and therefore regarded as lower class, then there were the middle classes and a tiny minority of upper class. Nowadays though society can be split into as many as 8 classes: poverty, upper lower class, working class, lower middle, middle middle, upper middle class, upper class and luxurious upper class. This can be compared to an animal pecking order whereby the people at the upper end of the hierarchy have better access to resources such as education, housing and consumer goods. People will try to improve their social ranking by moving up the order whenever possible. We tend to have a desire to improve our social ranking and to let other know when we have done so by bragging about it, and this can often be at the core of marketing strategies.

 

It is important, however, to note that when measuring social class, the measures were designed for the typical ‘nuclear family’ mentioned in one of my previous blogs, with a male wage earner in the middle of his career and a female full time homemaker. It also does not take into consideration subjective social class for example the class someone identifies with but may not belong to.

 

By taking a survey at quizfarm.com I was able to answer a series of questions to establish which class I fell into. The results were that I am Upper Middle Class. 

 

Social class will be important to the marketer because the place that we have in the social structure reflects on how much money is spent and what it is spent on. For instance social class is a better indicator of purchases that have a symbolic aspect but low to moderate prices for example cosmetics or liqueurs. Income is a better indicator of purchase behaviour for non-symbolic, high expenditure products e.g. fridge freezers. Both social class and income data are needed to predict behaviour with expensive and symbolic products such as cars and homes.

 

But is income a sufficiently good indicator of social class? Personally I feel that its not just income that determines your social class but where you went to school, how you were brought up, where you grew up, where you live, what hobbies you have, possibly your level of intelligence, the list could go on!!

Have a look at these links:

• The frost report-social class 
  
• Social class sketch
• Understanding class (i know this guys voice is boring but it is interesting)

 

Marketing To Children

Pester power.

"Pester power" refers to children’s ability to nag their parents into purchasing items they may not otherwise buy.

"The emergence of a child-centered society in which parents prioritise the wants and needs of their children means that many parents are focused on pleasing their children". Mintel [online] 2008 

Piaget states that children are working through an intuitive phase. This is where the child will have an intuitive grasp on some logical concepts, but will still only be able to focus on one aspect of an objet whilst ignoring others.

A study conducted by the Center for a New American Dream in 2002 produced statistics that reinforced the marketers belief in pester power:

• American children aged 12 to 17 will ask their parents for products they have seen advertised an average of nine times until the parents finally give in.
• More than 10 percent of 12- to 13-year-olds admitted to asking their parents more than 50 times for products they have seen advertised.
• The nagging strategy is paying dividends for kids and marketers alike: 55% of kids surveyed said they are usually successful in getting their parents to give in.

In terms of marketing, this may mean that a child will pick up on the most desirable aspect of a product and not pay attention to any other detail, which a parent obviously would. The image above depicts Piaget's four stages of cognitive development. These demonstrate the intellectual abilities of a child and highlight that children are not little adults, in fact, until they reach the age of fifteen they are incapable of reasoning as an adult.

Take a look at this: Buy Me That!!

 

Family Decision Making.

Purchase behaviour is substantially determined by the nature of the family.

You may never have thought about it before but there are many different types of family:

Nuclear Family- father, mother and children who live together

Extended Family- nuclear family plus relatives such as grand parents, aunts, etc

Family of Orientation- the family you are born into

Family of Procreation- the family you marry into

There can be a number of changes to the family structure for example single parents as there is an increase in the number of births out of marriage, 1 out of every 7 families are one parent families. There is also an increase in step families so the nuclear family is being challenged by the 'horizontal' family of step children and step parents. 

The average household size is 2.4 people in 2001, however it has seen a dramatic increase in one person households from 12% in 1961 to 28% in 2001. Often within every household there are 2 main breadwinners and the employment rate of women is one of the highest in Europe and one quarter of married women work 30 hours plus.

A family's values needs are mostly affected by the number of children, their ages and whether one, two or more adults are employed outside of the family.

So who keeps track of the family bills? it is thought that in traditional families the man earns it, the women spends it…the way it should be right!?

However, unfortunately, in the modern family there is more shared participation. It is thought that newlyweds will share the decision of how the money is spent, and as time goes by one spouse or the other will take over these responsibilities. Cultural background will impact the dominance of husband or wife; husbands tend to be more dominant in decision making amongst couples with a strong Mediterranean ethnic identification. Even in northern Europe, the traditional pattern of ‘male’ and ‘female’ roles is still fairly strong. When it comes to men and women and decision-making, traditionally some buying decisions were made by one spouse. For instance men would choose the car, the telly and women would be in charge of decorative decisions, and things like holidays were made jointly. However of recent times there has been evidence of role change with men taking more of an interest in household affairs and woman making joint decisions on products such as cars.

Knowing who the decision maker is, is of high importance to the marketer because they need to know who they are to target and whether or not they are to target a single spouse or both. In some cases though they may be targeting the children however, as research shows that many family purchases other than toys are influenced by children. Children tend to be heavy TV viewers so are likely to be exposed to more ads than other groups and therefore influenced more.

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Take a look at this link: Wife is the decision maker while husband is an obedient follower. This gives an insight into what people really think about the decisions in the home and often backs up the theory mentioned above.

Generational Marketing

'Your only as old as you feel'

The era that a consumer grew up in immediately creates a bond with the millions of others that were also born into that era. As we grow older our needs and preferences change and that is often in unison with other people of the same age. A consumers age gives influence to his or her identity and then also on their spending patterns. The method of marketing to a specific generation is affecting the way that we promote and sell products, therefore in order for a marketer to appeal to diverse age subcultures they must understand the characteristics of key age groups such as:

Millennials: or Generation 2001ers, born after 1980-

It is thought that todays teens are recasting the image of youth from downbeat and alienated to upbeat and engaged. Millennials are held to higher standards than adults apply to themselves, they're a lot less violent, vulgar and sexually charged as the teen culture older people are producing for them, and it is thought that over the next decade they will totally recast what it means to be young and in time they could emerge as the next great generation.

Baby Busters or Generation Xers: born between 1965 and 1980-

This age group includes people, both in and out of higher education, whose taste and priorities are beginning to be felt in fashion, popular culture, politics and marketing. They are thought to still live at home and so have more discretionary income and products mostly bought by them are beer, fast food and cosmetics. They can be targeted with advertising that is entertaining but not if it takes itself too seriously. Vice president of Marketing for MTV said: "You must let them know that you know who they are, that you understand their life experiences. You want them to feel you are talking directly to them".

Baby Boomers: born between 1946 and 1964-

Boomers represent a major economic force in many developed markets and due to their sheer size have tended to reshape each phase of life as they have have passed through it. Important drivers such as spending power, attitudes towards retirement and health/fitness as well as living trends and travel are focused on. attention is paid to their impact on specific markets and their impact on retail trends.

Mature Citizens: born between 1909 and 1945-

Populations are aging due to the fact that people are living longer as a result of medical advances, rising disposable incomes and increased awareness of health and nutrition. They tend to be more set in their ways, more frugal and less hedonistic and more likely to save than to spend freely, however, like boomers they do intend to enjoy their retirement.

I am part of Generation Y. We are typically children of affluent baby boomers. My generation is entering its student years or embarking on their professional careers. Many are still single, very technology-driven, fashion-conscious, status-aware, keen to spend and not affraid of credit (as i have just found out when my card was refused and i realised i had reached my overdraft limit ahhhhhhh! oh well not to worry!) And they have high expectations of themselves and others. Market focus on cosmetics and toiletries, consumer food service, and alcoholic drinks (All the important things then!)

Age cohorts are groups of people with similar ages who have had similar experiences, therefore they experience many of the same memories and have the same cultural heroes. Marketers will often target products or services to one or more of these age cohorts and they will use different campaigns to attract different age groups, and to differentiate these campaigns they will use different media, images and prices.


Take a read of this article: Power of Generational Marketing