b2b marketing in india

8/8/2019 B2B Marketing in India

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B2BBusiness Marketing in India : Opportunities and Challenges

Business markets have grown significantly in size and scope in recenttimes in developed economies. In India, since liberalization, this

discipline has acquired new dimensions and importance. Businessmarketers in order to succeed need to be fully abreast of marketstructure and demand, the nature of the buying unit and the types ofdecisions, and the decision process involved. Relationship marketingdeveloping long-term, cost-effective and mutually beneficialrelationships with customer scan only brings in the desired results forthe business marketers in the days ahead.

The business market is defined to include organizations that buy goodsand services for use in the production of other products and servicesthat are sold, rented and supplied to others. The full business tobusiness (B2B) market includes government purchases, quasi-government operations, commercial enterprises, NGOs, hospitals,charities, resellers and other bodies and institutions engaged in thepurchase of physical goods and services.

Growing Importance of Business MarketingThe present decade of the 21st Century can be appropriately termedas the decade of business to business (B2B) marketing. In recentlypublished US government trade data, the value of business to business(B2B) and business to consumer (B2C) shipments appear nearly at

same level (at around $8.3 tn each), but the number of items involvedin sales to business buyers are much more than to retail consumers,highlighting the high importance of business marketing.In India, with the onset of economic reforms and thrust onglobalization in different sectors of Indian economy, there have beentremendous changes, both in value and content of marketing ofindustrial products and services. The factors likeadvances intechnology, newer product and service offerings, higher levels ofcustomer orientation and increased customer expectation, growth ininvestments, including FDI leading to international expansion ofproducts and serviceshave caused significant changes in marketingpractices of industrial products and services in recent years ascompared to the past. Still, most companies in business markets tendto apply consumer marketing solutions to industrial markets, willy-nilly, with poor results. The key reason for such dichotomy is that thebusiness marketing texts and teaching curriculum have so fardepended heavily on consumer marketing concepts and principles. Thissituation has begun to change of late, and business marketing is


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gradually emerging as a distinct area of marketing practice andknowledge having its own unique dimensions.

Business Marketing vis--vis Consumer MarketingIn order to appreciate the specific nuances of business marketing, it

will be appropriate to capture the key differences between businessand consumer markets. While on the surface the basics of marketingare the same for attracting the consumers, businesses, governmentsand institutions, there are a number of crucial differences which makethe marketing of products and services in the B2B market quitedifferent from marketing to consumers. These differences can bebetter understood under three main categories as spelled out below.

Internal Factors Interdepartmental and Cross- functional CoordinationMost of the products and services in business markets are made toorder with appropriate emphasis on technology, innovation, design andhigh level of customization. The marketing, selling and operationfunctions, including engineering, manufacturing, technical andinformation resources must have close integration. Wider Management ResponsibilitiesIn a business market situation, the marketing product manager has tofunction as a mini general manager. The need for marketing andoperations integration means business marketers have to make orparticipate in decisions that go beyond strict functional boundaries.Product development/ improvement, application engineering, capacity

planning, quality assurance, product costing are only a few amongmany non-marketing activities that a business marketing manager hasto undertake regularly. Closer Link between Marketing Strategy and CorporateStrategyIn business marketing, the marketing strategy often acquires thedimensions of the overall corporate strategy. For reasons statedabove, particularly when pursuing significant marketing opportunitiesinvolving large government and key customer contracts, the entirebusiness has to change its strategy from purely commercial to

strategic and involve many of the firms functional areas and itsresources for strategy formulation.External Factors More Rational Decision-makingBusiness goods and services are purchased by highly trainedprofessionals who strive hard to achieve corporate targets likelowering cost, improving quality, etc., as laid down, within theframework of organizations purchasing policies, constraints and


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requirements. While emotions do play some role from time to time,buying decisions in business markets tend to be more rational andbased on specific performance characteristics or benefits sought by thecustomer, as compared to consumer marketing. Concentrated Customer Base

Business marketers generally have a much smaller base of potentialcustomer and in many cases a small number of key customer firmsrepresent a large percentage of the industrys buying potential. Thisnarrow base means that in many markets, the buyers have morepower than the sellers. Small numbers of customers, many of themlarge enough to demand personalized marketing, often requirecustomized products and prices. Several Buying Influences and LocationsIn business markets, the decision-making groups or buyingcommittees consisting of technical and commercial experts and oftensenior management personnel in case of critical and high valuepurchases are common. These individuals who are involved inprocurement decision-making take on specific roles and make orinfluence decisions based on these roles. Furthermore, severallocations or factory/business units may be involved in decision-making. Communication of BenefitsBusiness marketers, in order to succeed, should track the needs andconcerns of each key member of the buying team and thencommunicate the benefits of their offering appropriately to eachmember. They must also make each manager aware of all these

benefits that are offered to others, as purchase decisions are oftenarrived after joint consultation among members of the decision-makinggroup. Direct PurchasingBusiness buyers often buy directly, more particularly for technicallycomplex and expensive items, though smaller and dispersedcustomers may be serviced through many different channels. Eacheffort, either through direct sales force or through different distributionchannels reaching different customers requires a different marketingstrategy.

Close Supplier-Customer RelationshipIn business markets, suppliers are frequently required to customizetheir offerings to individual customer needs. Managing individualcustomers has become imperative for those who want to succeed inbusiness markets today. As competition has intensified in businessmarkets, customers are demanding increasingly more services andsupport. Suppliers can deliver those services only if they understandwhat each customer wants. Thus, an extremely vital element in


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business marketing today is the development and maintenance ofclose customer relationships.Environmental Factors TechnologyTechnology and performance superiority can give the industrial

products or services competitive edge in marketplace. Continuousproduct improvements in successive generations of industrial productscan lead to market leadership position. With business customers, theapplication of proper technology in input items often has significanteffects on the success of their outputs and financial results.Furthermore, an industrial product sales engineer needs to beintimately familiar with the technology used by its customers in orderto serve these firms effectively and gain customer confidence. Demand IssuesThe demand for business goods is derived demand, ultimately derivedfrom demand from consumer goods. The demand is inelasticusuallynot much affected by price changes and tends to be volatile, as agiven increase in consumer demand can lead to a much greaterpercentage increase in the demand of equipment necessary for theincreased output.Thus, business marketing involves building profitable, value-orientedrelationships between the supplier and the customer organizations andmany individuals within them. Business marketers focus on a fewercustomers, with usually much larger, more complex and moretechnical sales processes. However, the emphasis on customerunderstanding can only succeed when based on intimate knowledge of

customer operations, economics and business priorities.Value PropositionsClearly, companies aiming for sustainable and profitable growth shouldmake customer value propositions fundamental to their businessstrategy and each value proposition must be: Distinctive: It must be clearly of higher order to those claimed by thecompetitors. Measurable: All value propositions should be based on tangiblepoints of difference that are quantifiable in monetary terms and can bebrought to the table.

Sustainable: The firm must be able to execute such value propositionover a considerable period of time.Paradoxically, most business marketers are concerned over decidinghow their firms can create value that they rarely pay attention tocommunicating the benefits to the executives in the client firms whodesire them and are involved in purchasing decision-making. Toacquire customers, firms must try to be at least at par with rivals ontangible benefits (points of parity) and use non-tangible benefits to


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differentiate their offerings (points of difference) from theircompetitors. To retain and build customer relationship, the efforts willbe to shift the customers focus from tangible benefits to non-financial,non-tangible benefits like the services they consistently deliver overand above their contractual obligations.

Customer RelationshipIn mature industrial markets, companies engaged in basic industrialproducts like metal, chemicals, wood, paper etc, are faced withflattening cost curves and virtually undifferentiated product quality andleading companies have taken a fresh look at how best to compete.These companies have turned their attention to their customersandbeyond, to their customers customers. Traditionally, manufacturers ofbasic materials used to see themselves as selling commodities, butnow, they are beginning to discard the notion of hard and fastboundaries between them and their key customers. Instead, they arefocusing on customer integration: Viewing supplier and customer as asingle entity and working closely together in order to minimizetransaction costs and maximize value to the next customer in thechain. Research shows that close collaboration with customers not onlyimproves profits but also drives innovation. Customer integration is, bynature, a game of give-and-take with advantages to both parties.Once the seeds of a fruitful partnership have been planted, strongroots emerge and intertwine, making it rather impossible to breaksupplier and customer apart and move in. There are several examplesof such a successful partnership in auto components, softwaresolutions and other areas in recent times.

Know Your Customers Well EnoughWhat does a business marketer need to do to excel in todays highlycompetitive market scenario? Managing individual customers is tough,and understanding the needs of their customers is tougher but thesehave become imperative in business markets today. Companies stillhave a long way to go before they can say they manage individualcustomers in business markets. However, all these do not require bigpromotional expenditures or complex and sophisticated softwareprograms. All it demands is a return to the basics of marketingunderstanding customer needs and what they really value.

b2b marketing in india

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