Type: Process Essays
Sample donated: Stuart Hodges
Last updated: April 17, 2019
The marketing concept holds that the key to achieving organizational goals consists of determining the needs and wants of target markets and delivering the desired satisfaction more effectively and efficiently than competitors (Kotler,2003).
Under the traditional consumer markets environment, company sells mass goods and services to reach and meet different needs of its target customers by means of various marketing channels and try to establish a superior brand image in the market through applying appropriate marketing mix. However, Business-to-business (B2B) market is relatively complicated and involves not just sell, it requires a special, unique set of marketing concepts and principles. Basically, it varies to its counterpart-B2C marketing in terms of organization’s structure, participants’ behaviors, and other influential factors in the buying decision process.Admittedly, there are many differences between B2B and B2C market. However, does it necessarily to make a justification that they are mutual exclusive or should be managed totally different as what many literatures mentioned? Current market is a buyers’ market and emphasizes much on CRM building. The relationship marketing was first defined in the mid-1980s, proponents of relationship marketing base their views in B2B market. Building good customers relationship is key successful factor in current new economic environment and future business market.
Just as Gronroos states that marketing has been described simply as the process of managing relationship. (Gronroos, 1999).As the marketing literature has evolved over recent decades, a number of classic dichotomies emerged as a tool used to define research and educational practices, journals and textbooks. Such dichotomies suggest that marketing practice is different for firms with different types of customers (e.g. consumer vs business), different market offerings (e.
g. goods vs services), different geographic scope (e.g. domestic vs international), or different size and age characteristics (e.g. small vs large, or newer vs more established firms). In this paper, I will focus on a classic dichotomy: consumer versus B2B marketing. By examining the practices of consumer and B2B firms in the context of a conceptual framework that integrates both transactional and relational marketing, I will seek to identify and understand both differences and similarities across these types of organizations, in order to improve my academic research, educational processes, and future managerial practice.
Literature ReviewThere are various views towards this highly debatable dichotomy. Lilien (2000) argues that B2B markets are unique due to their derived demand, long purchase cycles, and a varying and fragmented market structure. Industrial buyers are described by Lilien as heterogeneous in terms of their number and size, and often multiple individuals are involved in the purchase decision process.
He argues that systems-selling typifies B2B marketing, with products sold in a decentralized manner.Kotler (2003) differentiates B2B marketing by focusing on the characteristics of product complexity and buying process complexity. From a managerial perspective, Arnes (1998) also argues that marketing in the industrial world is more of a general management responsibility than in consumer firms, and both he and Kotler note that B2B markets are characterized by functional interdependence and buyer-seller interdependence. The latter point is reinforced by Gruen (2000) who share the same view as Gronroos argue that business marketing is driven by relationships.Overall, the prevailing view of the literature supporting the dichotomy rests on the conceptual argument that B2B market characteristics and influences, buyer decision processes, and buyer-seller relationships differ from those found in consumer markets.
Indeed, Lilien (2000, p.16) argues that any similarities that might be identified between B2B and consumer markets are superficial, B2B markets must be handled differently than consumer markets. But, question about whether marketing practices really different between consumer and B2B firms are still under hard debate.Key theoretical and practical implications between consumers and B2B marketWe can see their distinct variances from following perspectives respectively — differences of participants in the buying process; different factors that influence both side’s buying decision; differences among each stage of buying decision process; differences under new economic environment and other distinct variances between B2B and B2C marketing.Generally speaking, first of all, B2B marketers buy products or services with the ultimate aim of adding value in order that they can move the products down the value chain until they finally reach us, the general public. In contrast, B2C suppliers solely target at the ultimate users, it doesn’t involve the complex value chain.
Secondly, B2B market generally has fewer and large buyers and it emphasizes the role of buying center as decision-making unit. The business marketers pay great efforts to target and attract participants of the center, whereas B2C relationship is very flexible, and basically, the suppliers mainly focus on the end users.Thirdly, the environmental factors, organizational factors, interpersonal and the buying center’s individual factors exert the broadest influence on B2B transaction while traditional consumer’s buying behavior is mostly influenced by some cultural, social, personal and psychological factors. Fourthly, many of the buying instruments, for example, request for quotation, proposals, and purchase contracts are not typical been found in B2C buying.In addition, comparing the e-commerce, B2B market encompasses many other types of activities than simply placing orders between businesses. Companies participating in B2B commerce include close collaborative planning and forecasting, order fulfillment, payment execution and status tracking (Healey&Samtani, 2002). For example, ChemConnect.
com and Chemdex.org (which deal with chemicals) are B2B e-commerce initiatives, which bring two firms together on the virtual market place. The focus is on providing services such as product catalogs, ordering and payment and status checking. In contrast, B2C business support communications via the Internet, phone, fax and e-mail.
The typical example is Amazon, who sells books over the Internet, thereby get in touch with its consumers directly. This is equivalent to the direct selling concept popularized by company such as Amway, which deal with cosmetics and daily necessities and under most circumstances, they share the same characteristics that their buyers are mostly end users. The only difference is that the selling is done via the Net.Last but not least, B2B’s brand value of a site is not critical; instead, suppliers and buyers care more for the value-added services. Consequently, B2B e-commerce initiatives are mostly experts in the business whereas the valuation of a B2C initiative grows as the number of visitors to the site goes up, though the consumer gain little in the process. On the other hand, for a B2B initiative, this kind of eyeball count benefits both buyers and sellers. Suppliers’ marketing costs go down as they find buyers more easily, even as buyers spend little in tracking down suppliers. B2B e-commerce initiative brings together large numbers of buyers and sellers, thereby creating a community of traders.
As many buyers and sellers gather at a common place, the information flow increases as well as its transparency. This in turn reduces the overall transactions cost. Also, a B2B initiative needs a large infrastructure, so a company would need to restructure its systems and business processes. It involves many participants with complex rules, higher purchasing amounts and complex products. Unlike B2C, greater certainty is required for order fulfillment.
Overall, the belief that marketing in consumer and B2B firms is fundamentally different appears to have been heavily influenced by strong conceptual arguments. Sheth and Parvatiyar (2001) explain that traditional or transaction marketing is focused on a single sale in the short term, while relationship marketing is focused on customer retention over the longer term. Transaction marketing is said to be oriented towards product features with low service emphasis, and involves moderate customer contact and limited customer commitment. In contrast, relationship marketing emphasizes product benefits with high service, customer contact, and customer commitment.From the transactional perspective and relational perspective, the market can be categorized into transaction marketing, database marketing, interaction marketing and network marketing (Sheth, J.N., Gardner, 1998).
Transaction marketing involves activities where a firm attracts and satisfies potential customers by managing the elements in the marketing mix. Database marketing involves applying a tool or technique to develop and manage long-term relationships between the company and its targeted customers. Interaction marketing involve face-to-face interactions within relationships, it’s truly with the customer, as both parties to develop a mutually beneficial and interpersonal relationship. Network marketing activities occur across organizations, where firms commit resources to develop a position in a network of relationships.
The literature review suggests that the marketing practices of firms serving business markets are driven by relationships that are complex, interpersonal, and involving interdependence between buyer and seller (Webster, 2001), where the seller can be any or a number of a individuals in the organization, including senior executive. All parties and their communication efforts are directed towards relationship building between buyers and seller at a micro level and firms at a macro level. Consequently, almost all of the analyses tend to form the following theory hypothesis:H1. Firms serving business markets are more likely to practice interaction marketing and network marketing, whereas lay less emphasis on purely transactional perspective.H2. Firms serving consumer markets are more likely to practice transaction marketing and database marketing, whereas lay less emphasis on building direct or interactive customer relationship.Theoretical Analysing and FindingsAgain, according to Lilien’s argument, B2B firms are more likely to practice higher levels of interaction marketing. For example, they tend to emphasize interpersonal contact with primary customer, and marketing communication that involves individual employees with their customers, whereas this kind of communication hardly been found under B2C environment between employees and end users.
Similar patterns appear for network marketing, where B2B firms are more likely to emphasize interpersonal contact with primary customers and participate in relationships that involve ongoing contact with the organizational network.However, after carefully analysing contemporary marketing theory and combining with some managerial practices, the validity of both hypotheses is being challenged.In contrast to B2B firms, the relationship between buyers and sellers in consumer firms is one characterized as an arms-length marketplace transaction enacted through relatively indirect channels, it could involve wholesalers or retailers.
Volume sales and market share are particularly important to these firms, and communication efforts typically involve advertising, sales promotion, and public relations efforts reach a large, geographically disperse market. Consumer firms are therefore more likely to emphasize practices associated with transactional marketing. However, it is recognized that relational concepts have begun to be applied in consumer markets. This is facilitated by technological advancements that allow for the development of more direct one-to-one relationships with consumer in mass markets, such as personal interview research method to get feedback of customers, building company website with assorted merchandises online to meet various customers needs and get their feedbacks, etc. Consequently, it is likely that in contemporary marketing, consumer firms also utilize technology to get closer to their various customers as a defensive measure in increasingly competitive markets, all of which lead to somewhat contradict the second hypothesis.Consumer and B2B firms also have a large number of similarities in their marketing practice across three dimensions describing the intent of marketing decisions, the managerial planning focus, and the purpose of exchange, other dimensions such as resource investment, customer contact and managerial level of marketing planning,etc.
These findings contradict the marketing literature that has consistently argued for consumer and B2B marketing differences. The current business practices of both consumer and B2B firms involve managing the marketing mix to attract customers, which belongs to transactional marketing concept, and utilizing technology to enhance customer relationships which belongs to database marketing concept. Both of them also emphasize the development and management of personal relationships with individual customers (interaction marketing category), and efforts to position the firm in a net of various market relationships (network marketing category).
So, it does not necessarily to differentiate against each other strictly and stubbornly between consumer and business firm’s marketing practice.ConclusionCombing with the hypotheses and analyses, although buyer market structure, demand patterns, and buyer behaviours may be different across firms serving these two types of market, I will argue that the traditional divide between consumer and B2B marketing practice is somewhat oversimplified in a contemporary environment. They’re not fundamentally different with each other, since the marketing environment continues to evolve, theoretical frameworks must also evolve to reflect new developments in practice and research.
As a result, consumer firms may attempt to get closer to their various customers as a defensive measure in increasingly competitive markets, and they might continue to emphasize relational marketing in the form of database marketing approach as well. Similarly, B2B firms might develop more sophisticated transactional marketing abilities and infrastructure, given that the core product and its supporting marketing mix lie at the heart of the firm’s relational offer. Meanwhile, as e-business continues to grow, B2B firms would also seek to enhance their database marketing capabilities upon which B2C firms always emphasize.Therefore, in a word, it is likely that consumer and B2B firms might learn from one another in their ongoing development of broader marketing capacity instead of treating each other as exclusive or incompatible business practices under this new economic environment.