Business-to-Business Marketing

How to Understand and Succeed in Business Marketing in an Emerging Africa

Richard Owusu, Robert Hinson, Ogechi Adeola, Nnamdi Oguji, Richard Afriyie Owusu

• Publisher: Productivity Press
• Year: 2021
• Print ISBN: 9780367770884
• eBook ISBN: 9780429535413
• Topic: Business
• Subtopic: IT Industry
• Index: Business

Business-to-Business Marketing: An African Perspective: How to Understand and Succeed in Business Marketing in an Emerging Africa is a comprehensive application of the most current research results, concepts and frameworks to the African business-to-business (B-to-B) context. The chapters are designed to provide the reader with a thorough analysis of b-to-b. Important aspects like competitive strategy in B-to-B, marketing mix strategies, relationship management and collaboration, business services, big data analysis, and emerging issues in B-to-B are discussed with African examples and cases. As a result, the book is easy to read and pedagogical. It is suitable for courses at universities and other tertiary levels, undergraduate and graduate courses, MBA and professional B-to-B marketing programmes. Working managers will find it a useful reference for practical insights and as a useful resource to develop and implement successful strategies.

The Authors

Collectively the four authors have over 60 years of teaching and research in B-to-B marketing and management in and outside Africa. They have the managerial and consulting experience that has enabled them to combine theory with practice. Their experience and knowledge provide the needed background to uniquely integrate teaching and research with the realities of the African B-to-B market. Their command of and insight into the subject are unparalleled.

1

CHARACTERISTICS
OF THE BUSINESS-TO-
BUSINESS MARKET

Introduction and Learning Goals

In Part 1, we will describe the characteristics of the business-to-business (B2B) market and explain the foundational strategies and philosophies of marketing as they apply to the B2B sphere. Each chapter ends with an African case study.

Chapter 1

The Business-to-Business Market

Introduction and Objectives

In this chapter, we will define and describe the business-to-business (B2B) market, the differences between B2B and the business-to-consumer (B2C) markets, and the parties in the market.

At the end of this chapter, the reader will understand the following:

• ■ The characteristics of the B2B market
• ■ Core marketing concepts in the B2B context
• ■ The different parties involved in the B2B market and their roles in the market
• ■ Similarities and differences between B2B and B2C marketing.

1.1 What Is Business-to-Business Marketing?

Following the definition of marketing by the American Marketing Association (AMA) mentioned in the introduction, B2B marketing can be defined as “the activity, set of institutions, and processes for creating, communicating, delivering, and exchanging offerings that have value for business-to-business customers, clients, partners, and society at large”. Paraphrasing the relationship marketing paradigm, B2B marketing can be defined as the development, management and maintenance of interactions, relationships and networks between companies and organisations (see Hadjikhani & LaPlaca, 2013). Thus, B2B marketing includes various aspects of the functions and behaviours of companies, organisations and institutions that are actors in the business market. All these actors undertake B2B marketing in multiple ways both internally and externally towards “B2B suppliers, customers, clients, partners and society at large”. In this book, our emphasis is the inter-organisational aspect that is the relationships with other parties. We will only briefly, at times, analyse the actors, activities and resources used internally to achieve the inter-organisational value creation and exchange.

In the following section, we will summarise how B2B marketing is done, using the extended marketing mix (“7Ps”), and the philosophies of marketing (see Ellis, 2010; Ford et al., 2011; Grönroos, 2017, 2006, 1994; Johanson & Vahlne, 2011; Kotler & Armstrong, 2010).

1.1.1 What Are the Key Components of Business-to-Business Marketing?

In the following two sections we describe the key components of B2B marketing using the marketing mix factors and the philosophies or concepts of marketing.

1.1.2 Marketing Mix Factors in Business-to-Business Marketing

Product: There are several aspects of the product in general – quality, innovation, features, durability, goods, services, etc. (Kotler & Armstrong, 2010). Companies and organisations have a product or service which they sell/provide/offer to and buy/demand/need from other companies. For example, the South African power production company ESKOM produces electrical power, heating and energy that it supplies to companies and organisations in South Africa and other neighbouring countries. ESKOM builds various power production facilities, transformer stations, connection lines and software to ensure that it can supply power to government departments, factories, office complexes, universities, etc. The company plans its power production to ensure a right mix of different production sources – coal, nuclear, solar, wind, etc. As power demand grows and ESKOM has to deal with the challenges and requirements of environmental degradation, it might undertake product innovation – e.g. innovate more efficient solar, wind and geothermal energy technologies.

On the other hand, ESKOM purchases products that go into its production. It purchases technologies, combinations of products and services (systems) that go into its power production (e.g. transformer stations), and projects (full power production stations purchased from another company that plans, builds and delivers them as complete functioning facilities). Product strategies will be discussed in more detail in Chapter 3.

Price: The aspect of the price includes the quoted price of a product, discounts and credit terms (Kotler & Armstrong, 2010). The Kenyan telecommunications company SAFARICOM sells mobile communication, digital communication, and related products and services to other companies and organisations. As a private company, it may have to pay dividends to its owners so that they continue to invest in the company. To maintain and raise its share price, it cannot continue to lose money forever. Thus, it must break even, which means charging its customers at least to cover its cost or make profits, which means charging prices to provide a margin above its costs. While being considered a leading telecommunications company, it has current and potential competitors. Thus, while SAFARICOM must charge a price as to break even or make profits, it also has to match the prices of competitors. It might consider older customers for discounts, and new customers for entry prices to get them to experience the company’s products for the first time. It might provide payment periods that will enable the customers to receive products and pay later. SAFARICOM, on its part, buys equipment (systems) from suppliers like SAMSUNG and networks in the form of projects from suppliers like ERICSSON, NOKIA or HUAWEI. The company’s pricing decision is, thus, complex and has to take account of a myriad of factors and parties that impact its market. Pricing strategies will be discussed in more detail in Chapter 3.

Place: The strategy of place is to determine where the company should locate its offices, sales and purchasing facilities to reach its customers in the best way (Kotler & Armstrong, 2010). The nature of place is changing with online access and modern communication technologies. As ECOBANK considers how it can better serve its business and organisational customers across the continent, it considers where it should set up new offices. This decision considers the cost of offices and the business prospects in different cities and countries of Africa, as well as the role of digital and mobile communication in providing access to its business and organisational customers. As banking is increasingly being done in Africa on mobile phones and online, the company could consider a mix of physical offices and online presence as well as applications and technologies that will enable business customers to choose to do business with the company safely and smoothly either online or by coming to the banking hall. Place strategies will be discussed in more detail in Chapter 3.

Promotion: This includes advertising, public relations, personal selling and sales promotion activities (Kotler & Armstrong, 2010). In 2017, former Gambian minister Momodou Sabally launched a consultancy company called Pen’s Den Consulting. The question for such a company is how to advertise and publicise itself locally and internationally to companies, organisations, international multilateral organisations and governments, among others, to inform them of the company’s services. Should the company depend mainly on the personal networks and public image of the founder, contact possible customers and partners by phone and email, or depend mostly on its online presence to spread the word about what it can offer and gain customers? Promotion strategies will be discussed in more detail in Chapter 3.

People: A company or organisation consists of people in different positions. The quality of staff, expertise, ability to deal with customers, ability to provide product and service quality, and exceeding customer expectations in interactions are vital for its competitiveness (Kotler & Armstrong, 2010). As EY expands its management consulting in Africa, it has to employ qualified, innovative and motivated staff to promote and sell its services to companies and governments. Some of these qualities are already available in the staff they employ, and others can be developed through training after employment. In the final analysis, the quality of the company’s products and services will be achieved through the people who work for it. People strategies will be discussed in more detail in Chapter 3.

Process: How the company delivers its products and services to customers, how it is organised internally to achieve its marketing goals, how interactions and relationships are developed with its publics, are aspects of the process strategy (Kotler & Armstrong, 2010). Digitalisation has brought new possibilities to B2B processes, and B2B companies are fast adopting digital communications for managing their value creation processes. Process strategies will be discussed in more detail in Chapter 3.

Physical Evidence: The concept of physical evidence was developed, particularly concerning services. As discussed in Chapter 6, as a result of the intangibility and other characteristics of business services, marketers need to show evidence of the quality of the potential service and their ability to deliver the promise (Booms & Bitner, 1980; Grönroos, 2017; Kotler & Armstrong, 2010). Therefore, physical evidence is the ability to convince the purchaser that the marketer will provide the promised value. This is more important in B2B than B2C. As discussed in Chapter 8, many B2B sales are systems and projects, whose characteristics and quality cannot be shown in the initial negotiations but only promised. The B2B marketer shows “physical evidence” through reputation and references, among others (Salminen & Möller, 2006).

The 7Ps are integral parts of every B2B marketing organisation. Every B2B company has to have a product, price it, have selling points, promote it, have people/staff to deal with customers, and have a process for doing that. Institutions and organisations that are dealing with B2B companies have to implement similar strategies. What differentiates different B2B companies, institutions and organisations are the components of each part in the organisation’s strategy. How much emphasis does a B2B company place on product, price, process, people, etc. that provide value to the customers and give it a competitive advantage, as compared to a government agency or organisation? Many industrial companies are known to concentrate on their product characteristics and believe that “a quality product sells itself”. In that situation, they may not invest very much in process and people, for example. On the other hand, government institutions and organisations may be more concerned about their nearness to the public, and the services they provide than making profits. Therefore, they may invest more in product, place, people and process than price.

1.1.3 The Marketing Philosophies/Concepts in the Business-to-Business Marketing Context

The Marketing Concept: According to the marketing concept, companies would succeed best by meeting their customers’ needs better than their competitors (Kotler & Armstrong, 2010). This requires that companies understand what their customers and other important actors want and provide these better than their competitors. This means that the customers are satisfied, and all aspects of the product, price, place, promotion, people and process are altogether better than their competitors. ECOBANK should ensure that the customers would not leave for competing banks as a result of the competitors offering better information, access, longer-term financial support, etc. Besides companies, ECOBANK has to deal with regulators, and they have to meet ...

Table of contents

• Cover
• Half Title
• Title Page
• Copyright Page
• Table of Contents
• List of Figures
• List of Tables
• Preface
• Acknowledgments
• Authors
• Introduction
• Section 1 Characteristics of the Business-to-Business Market
• Section 2 Marketing and Purchasing in the Business-to-Business Market
• Section 3 Competitive Aspects of the Business-to-Business Market
• Section 4 Strategic Alliances and Collaborative Relationships Management in the Business-to-Business Market
• Section 5 Capacity Development in the African Business-to-Business Context
• Section 6 Emerging Issues in Business-to-Business Marketing