Stimulation in the product promotion system in the b2b-market

The article presents the questions of the brand supply effectiveness improvement for target group of customers at the b-2-b market. The special attention is given to urgency of marketing communication establishment and sales stimulation improvement in the b-2-b market.

Marketing and marketing communications are actively developing and increasingly used in the practice of companies in our country. As the marketing approach to business develops, the theory and practice of marketing and marketing communications are increasingly specialized. Separate areas of marketing communications are developed depending on the scope of company's activity, the characteristics of the product, and the channels used to communicate with consumers.

All organizations - large and small, commercial, government, charities, educational and other not-for- profit organizations - need to communicate with a range of stakeholders. This may be in order to get materials and services to undertake their business activities, or to collaborate and coordinate with others to secure suitable distribution of their goods and services. In addition, there are consumers - people who are free to choose among the many hundreds and thousands of product offerings. Marketing communications provides a core activity so that all interested parties can understand the intentions of others and appreciate the value of the goods and services offered.

Traditionally there are five main marketing communication disciplines or tools: advertising, sales promotion, personal selling, public relations and direct marketing. In addition, there are media in which time and space can be bought or used to deliver messages to target audiences. The appropriate mix of these tools and the choice of media have for a long time been largely predictable. Distinct mixes could be identified for business-to-consumer (b2c) and business-to-business (b2b) audiences. There were variations reflecting particular brand circumstances, but essentially in the b2c market advertising was used to build brand values, sales promotions were used to encourage customer action, and public relations sought to generate goodwill and interest about the company. Personal selling was regarded as the primary tool in b2b markets, but it also had a role to play in retail environments, for example selling consumer durables. In the 1990s direct marketing became a more prominent tool in the mix because technology had enabled a form of communication by appealing personally and directly to the target customer. This change introduced new media formats, and the subsequent development of the Internet and related digital technologies has accelerated change in the marketing communications industry. There are now a myriad of opportunities to reach audiences, with the Internet representing a new, yet challenging, form of communication channel.

At the same time as the media world has splintered into many different parts so have the audiences with whom organizations need to communicate. Consumers now have a variety of different ways to spend their leisure time. Some of those who choose to incorporate the media as part of their relaxation now have access to numerous television channels; all have access to an increasing number of general and specific interest magazines, a multitude of new cinema complexes and, of course, the Internet, with an explosion of websites offering a seemingly endless source of information, opportunities to buy online and a form of global entertainment. The world of marketing communications is bright, exciting, sometimes unpredictable, yet always challenging and evolving.

Managers are now required not only to find new ways to communicate but also to do so on reduced budgets, and they must account for their communications spend. The development of long-term relationships with customers, whether in b2b or b2c markets, is now an essential aspect of marketing policy. Customer retention is crucial today, and various devices, such as loyalty schemes, are used to shape long-term customer behaviour. Organizations now accept that the tools of the promotional mix are not the only way in which brands communicate. All parts of the marketing mix communicate. The behaviour of employees and the performance of products, the actions of competitors - all serve to influence the way in which each customer perceives a brand. Corporate branding is now recognized as an integral part of the overall communication effort. Corporate reputation and the actions undertaken by organizations are perceived not only in terms of brand values and profits but also in terms of their ethics, and the impact that organizations have on the environment.

Traditionally, marketing has had its focus on the last step in the value chain, i.e. when the private customer buys something. However, before the customer acquires the goods, it has been refined and resold many times. These steps that are taken place before the goods actually reach the end consumer are called Business Marketing. Business marketing is the task of selecting, developing and managing customer relationships for the advantage of both the supplier and the customer, with regard to their respective skills, resources, strategies, objectives and technologies.

Marketing communication is of significant importance in both B2B and B2C markets. It is essential for all firms to communicate its message to customers in order to increase their sale. To be able to communicate efficiently with the customers, firms need to decide which marketing communication concepts they will use.

B2B market has some fundamental differences from the consumer market, what has a significant impact on the strategy and promotion tools used in this area. Firstly, we will define the features of the B2B market, and then, on this basis we will consider the specifics of marketing communications in this area.

Marketing in a B2C world is one-way communication to a passive buyer whereas in a B2B context the buyer is active and interactions take place. When it comes to pricing the B2B marketer need to prove the difference between their product and the competitor's product to the buyer based on hard facts. Marketers in B2C can often rely solely on the brand, advertising and consumers' emotions and the consumers buying decisions is dominated by the initial purchase price.

B2B marketing relies deeply on direct sales and marketers and sales people need to work closely together. A good advertisement can single-handedly create a buyer in B2C, whereas advertisement in B2B has a different role and due to the smaller amount of customers in B2B, word-of-mouth has a greater effect than what it has in B2C. In B2B the brand tends to have a smaller influence on the buyers whereas in B2C, the power ofbrands can be a tremendous tool for influencing the buyers.

The target audience of business communications is organizations, but not individuals. So, we can identify a number of features which are specific to client organizations and the B2B market as a whole:

  1. Client organizations are relatively few in number in comparison with the final consumer market. A company-manufacturer often can have only 2 or 3 customers because its product is quite specific and can be applied only in a particular field (for example, in the market of means of production). In this situation the loss of at least one client can result catastrophic consequences for manufacturer in terms of business development opportunities. Thus, the significance of each customer in B2B market is much higher than in the consumer market.
  2. The buyer decision process is significantly different in the organizational market. A lot of people are involved in the procurement process - the company management, procurement managers, marketing specialists, employees of production and financial departments, etc. Consequently, the buyer decision process becomes much longer and multi-staged, and it requires the compliance with a sufficiently great number of formalities and approvals.
  3. Organizations usually buy products batch wise rather than individual units of goods. Here we are talking about procurement, rather than purchases. Therefore, purchase on the B2B market is in a higher degree of risk for a customer, as this refers to quite large investments.
  4. Organizations as customers usually possess a sufficiently high degree of competence in relation to selected goods, what imposes certain requirements - firstly, on the quality of information in the vendor's representative materials - brochures, product catalogs, advertising messages, and secondly, on the performance of the company's sales staff which should have high professionalism. ~

Client organizations often do not tend to change suppliers. If a company is able to respond to a client's need efficiently and competently, it will be applied again. On the one hand, this is connected with the desire of customers to simplify the procurement process - repeated purchases take much less time as the process is already arranged; on the other hand, the risk for a client organization with the purchase from one and the same proved supplier decreases.

Thus, the establishment of contact with a potential client on the B2B market is almost always focused on the long term.

In the final consumer market the situation of brand choice is often impulsive and is affected by external factors, the effect of which is difficult to envisage.

However, the constancy of client organizations in the choice of supplier can make some obstacles at the company's entrance to the market, as it is difficult to convince organizations to buy your products if they already have a supplier without any complaints.

  1. The B2B market demand often depends on the final consumer market demand.

The growth in demand for certain products in the consumer market leads to the growth in demand for raw materials for the production of these products in the enterprise market.

  1. The B2B market development has linear character and is associated with the development of technology, while the development of the consumer market is cyclical and is mainly determined by fashion.
  2. We can to point out the relatively small budget for marketing communications. Major investments in B2B are made in the improvement of technology and R&D (research and development).

However, these features of client organizations cannot be considered as universal. The organizational market is plural. Characteristics of the client organizations are defined by the field of activities, the scope of organization, the properties of the proposed product / service, and the communication policy of a client company.

The B2B market can be divided by the criterion of the procurement value. The sector of minimum procurements - for example, office supplies, small parts and others - is very similar in its properties to the final consumer market. Here classic marketing schemes and instruments applied in the mass market operate. Clients in this sector tend to be very sensitive to the price of good / service.

The medium procurement sector (means of production, supplies and equipment, and etc.) significantly differs from the final consumer market and meets the above peculiarities of client organizations. This sector is most revealing in terms of the specifics of marketing communications in the B2B area.

The sector of very large procurement having decisive importance for the development of the industry or the state in general (for example, defense, aerospace and other industries) is characterized by a low role of marketing strategies in the procurement process. Here, there are crucial political factors, which ultimately determine suppliers.

So, when considering the specifics of marketing communications in B2B area we will predominantly analyze the medium procurement sector as the most typical.

The overall objectives of marketing communications regardless of activity can be determined as follows:

  • The target market definition
  • The formation of demand for products / services of organization
  • Sales promotion

These objectives have different content filling in the organizational market and in the final consumer market.

At determining the target audience in the consumer market we are talking about identifying common features for large segments of consumers. Customers' profiles are made by socio-demographic, psychological, behavioral criteria, lifestyle characteristics, etc. At the same time not individual consumers but a quite large group of consumers is distinguished.

While analyzing the B2B market’s target audience we are talking about certain organizations that are real or potential customers.

The base of such organizations is made with quite detailed description of each of them. The important point is the description of client organization staffs professional roles, as this determines the choice of representatives for the initial contact and affects the structure and the buyer decision process duration. In the future, if there is sufficiently large number of client organizations and they are plural in their important characteristics, they can be grouped by any of features for development of separate strategy to promote each of subgroups.

The product demand making supposes the certain awareness among the target audience about the vendor and its products and the establishment of positive attitude to the proposed product  service. The demand making in the consumer market is influenced by company's clear positioning towards its competitors and by creation of opportunities for a consumer's selfexpression with the help of company's products. In the B2B market the rational (utilitarian) buying motivation has fundamental importance; it is important to show opportunities of proposed products to a potential customer specifically for his company, and the basic properties and features of a product I service.

Sales promotion is designed to increase the frequency and size of purchases, motivate the consumer to repeat purchases. In the consumer market these objectives are usually realized through the impact on the price of the supposed goods or offer of additional bonuses with a particular type of consumer behavior. In the B2B market the change of price has usually little effect on the demand for products.

Sales promotion comprises various marketing techniques that are often used tactically to provide added value to an offering, with the aim of accelerating sales and gathering marketing information. Like advertising, sales promotion is a non-personal form of communication, but it has a greater capability to be targeted at smaller audiences. It is controllable, and although it has to be paid for, the associated costs can be much lower than those of advertising. As a generalization, the credibility of sales promotion is not very high, as the sponsor is - or should be - easily identifiable. However, the ability to add value and to bring forward future sales is strong and complements a macroeconomic need that focuses on short-term financial performance.

Sales promotion stems from the premise that any brand or service has an established perceived price or value, the "regular" price or some other reference value. Sales promotion is believed to change this accepted price-value relationship by increasing the value and/or lowering the price. Familiar examples of consumer sales promotion tools include contests and sweepstakes, branded give-away merchandise, bonus-size packaging, limited-time discounts, rebates, coupons, free trials, demonstrations, and point-accumulation systems.

The progression of sales promotion has been spurred by business, especially big business. Top managers and product managers have played direct roles in encouraging the recent growth of sales promotion. The product manager's goals and desires have provided the initial impetus. Product managers are challenged to differentiate their product in a meaningful way from competitors' products because buyers have many choices among brands and products offering similar satisfactions. Sales promotion techniques provide solutions to this dilemma. Heads of companies today focus increasingly on short-term results. They want sales tomorrow, not next quarter or next year. Sales promotions can provide immediate hikes in sales.

Promotion is therefore one of the elements of the marketing mix, and is responsible for the communication of the marketing offer to the target market. Certainly there is implicit and important communication through the other elements of the marketing mix (through a high price, for example, symbolic of high quality), but it is the task of a planned and integrated set of communication activities to communicate effectively with each of an organization's stakeholder groups. Marketing communications are sometimes perceived as dealing only with communications that are external to the organization, but good communications with internal stakeholders, such as employees, are also vital if successful favorable images, perceptions and attitudes are to be established, in the long term

Three issues clarify sales promotion. First, sales promotion ranks in importance with advertising and requires similar care in planning and strategy development. Second, three audiences can be targeted by sales promotion: consumers, resellers, and the sales force. And third, sales promotion as a competitive weapon provides an extra incentive for the target audience to purchase or support one brand over another. This last factor distinguishes sales promotion from other promotional mix tactics. For example, unplanned purchases may be directly related to one or more sales promotion offers.

Sales promotion can be caưĩed out here through the influence on the final consumer market's demand. For example, while motivating final consumers use a certain product more often, we stimulate demand for components for its production in the B2B market.

Thus, the objectives of marketing communications in the organizational market have a number of substantial differences from those in the consumer market.

There is no universal definition of sales promotion, and there are many interpretations of the subject. Different sources also give the definitions of sales promotion that are different with emphases on certain specific features of this field of communications.

  1. "Sales promotion is a direct incentive motive that supports products all the way in the market from the producer to the consumer". [1, p. 147]
  2. "... Sales promotion is a complex of incentive techniques, which are mostly short-term, designed to accelerate or increase the purchase of certain goods or services by customers or resellers" [2, p. 536].
  3. "Sales promotion includes a variety of shortterm incentives which are usually offered on a temporary or territorial basis, to stimulate immediate purchase and accelerated sales of products" [3, p. 78].
  4. "Sales promotion refers to a set of incentives used to initialize sales" [4, p. 96].
  5. "Consumer promotion is massive personal marketing communication with the consumer, based on the brand’s temporary offer of added bonuses or values when making a purchase" [5, p. 412].

In the last quote the definition does not mean the entire complex of stimulation, but only one of its components - the stimulation of final consumers.

The stimulation of distribution channels' participants is carried out by a manufacturer in relation to wholesale or retail trade or by a wholesaler in relation to retail trade in order to accelerate the promotion of goods through the channels of distribution.

When we stimulate resellers, they can be considered both as buyers and sellers providing movement of goods through the channel of distribution, so they can be applied by three methods of stimulation.

  1. Stimulation of purchase: for example, discount for wholesale purchase.
  2. Stimulation of sale: for example, bonuses for the realization of all purchased goods within the stated period of time.
  3. Stimulation of purchase and further sale: discount on the purchase of parcel of goods offered with the condition that the entire amount of discounts or its part will be spent by buyer on advertising of purchased goods for further sale. In this case, buyers advertise both themselves and the product of a seller.

Stimulation of company's own sales staff is conducted within the firm for the intensification of the sales process. These activities include awards for sales, competition for the best seller, and so on.

While planning and conducting sales promotions the complex approach is important, when the whole chain of goods movement from the producer to the final consumer is activated. The most common mistake is non-stimulation of sales staff.

 

References:

  1. Baranovsky S.I., Lagodich L.V. Strategic marketing. Data-Computing center of Ministry of Finance, 2005. - 299 p.
  2. Braerty E. Business marketing. Moscow: Grebennikov Press, 2007. -736 p.
  3. BurtsevaT-A., Sizov V.S., Tsen' O.A. Marketing management: textbook - Moscow: Economist Press, 2005. - 223 p.
  4. Minett S. Industrial marketing: fundamental new approach to the marketing tasks decision. Moscow: Williams Press, 2003. - 208 p.
  5. Write P. B2B-marketing. Moscow: BalanceBusmessBooks Press, 2007. - 624 p.
Year: 2014
City: Karaganda
Category: Economy