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The Marketing Of Goods And Services Marketing Essay

To understand B2B marketing one should identify the value chain that starts with a consumer demand and from which dozens of business products or services are required.  For example of the Computer we use.  They do not arrive in the shops by accident.  There is a value chain of enormous complexity that begins with raw materials for hardware, then building hardware, then assembling from the scratch.  Businesses sell hardware to the computer production companies. They buy them with the ultimate aim of adding value in order that they can move the products down the chain until they finally reach us, the general public. Strauss and Frost (2001) support the above statement and suggested that, sales, public relations, direct marketing, and advertising are marketing communication that comprises the crucial components of e-marketing strategy. In the B2B services context different types of costs can easily be identified. For example, in the insurance industry, speed to settle a claim may differentiate one firm from others, while incurring added cost to deliver that uniqueness. In software, differentiation may be achieved (at increased cost) by designing a product that functions identically across different operating systems. Insurance production costs include developing efficient underwriting processes, while in software these costs would be initial code development costs (Jones and Butler, 1988). The “both” business unit invests such that higher transaction costs are offset by higher revenues from products that customers are willing to pay a premium for, while higher production investments are offset by higher margins due to scale economies. An example of this enormous chain could be found in figure 1.1 below.

Figure: 1.1

The development of the internet and the world wide web (www) as a tool for the global sharing of information has opened up new opportunities in marketing practices. “The rapid growth of internet users has made the internet an increasingly important and attractive platform for business transactions” (Liang et al., 2004, p. 538). The e-marketing refers to the use of electronic methods or media to build upon and maintain customer relationship through electronic platforms (e.g. business-to-business (B2B) e-marketplaces) that facilitates the exchange of ideas, products, and services to satisfy both buyers and sellers (Ngai, 2003). Sales, public relations, direct marketing, and advertising are marketing communication that comprises the crucial components of e-marketing strategy (Strauss and Frost 2001).

The following figure shows the usage of internet in Europe which is a crucial factor for B2B marketing (Internet World Stats, 2010).

B2B e-marketplace, as one of the major trading platforms brought by the internet technology has made a significant contribution to the e-marketers. The larger organisations in UK are taking advantages from the vast array of suppliers/buyers via the B2B e-marketplace (Stockdale and Standing, 2004). However, small and medium sized enterprises (SMEs) are also eager to compete in the electronic environment remain concerns as how their businesses can gain benefits from B2B e-marketplace. According to Eid et al. (2006), the e-marketing has been considered an important propriety asset to compete in the global marketplace. The need for marketing for gaining a competitive edge in global markets is the main reasons for marketers to participate in e-marketing. Despite the potential of e-marketing, it would be beneficial to review the benefits and challenges to the marketers.

Example of UK e-commerce values on 2010:

E-Commerce - UK - February 2010 - Retailer Competitor Analysis

Figure 13: Retail websites visited by UK residents, Jan 2010

Unique visitors, Jan 2010

Growth on Jan 2009

All retail

35,091

17

1

Amazon sites

19,494

24.3

2

Home Retail Group (Argos)

9,876

13.7

3

Apple.com worldwide sites

9,497

39.8

4

Tesco stores

7,925

16.3

5

Shop Direct Group

5,798

36.6

6

The Carphone Warehouse Group

5,528

114.7

7

Play.com sites

5,306

8.6

8

Dixons Stores Group

4,886

3.3

9

Walmart (Asda)

4,209

39.6

10

John Lewis Partnership

3,662

47.3

11

ASOS.com

3,507

69.3

12

NEXT Group

3,433

22.2

13

Marks & Spencer

3,220

26.1

14

GAME Group

3,110

10.5

15

HMV

2,828

14.9

16

Arcadia Group

2,802

25.7

17

DIY.com (B&Q)

2,500

39.6

18

Comet

2,445

7.9

19

Orange e-shop and internet

2,336

31.8

20

Sainsbury’s

2,285

15.5

Source: ComScore/Mintel

Online food retailers market positioning, Nov 2009-Jan 2010

Source: ComScore/Mintel

B2B environment, UK e-marketing strategy: SWOT analysis

Strength

Better relationship with customers

Improve in sales

Reduced marketing costs

Competitive advantage

Opportunities

Exposure to new market segments

Cost reductions

More customer feedback

Make a global presence

Threats

Problems in implementation

Lack of expertise

Security technology

Weakness

Limited resources

Lack of expertise

Lack of senior management support

More UK B2B companies are expanding their operations internationally since international activities are fundamental to their performance (Katsikeas, 2006). Moreover, B2B companies tend to start internationalizing at early stages in their development (Rialp et al., 2005; Knight et al., 2004). It can be seen new network-based approaches of internationalization and renewed efforts of international streamlining resulting in a subtle strategy mix of adaptation, aggregation and arbitrage (Ghemawat, 2007). Business-to-business international Internet marketing (B2B IIM) has emerged as one of the key drivers in sustaining an organisation’s competitive advantage. However, market entry and communication via the Internet have affected the dynamics and traditional process in B2B commerce. The differences between consumer and B2B marketing are well documented (Simkin, 2000). Traditionally, the contrasts revolve around:

market structure and demand;

the nature of the buying unit; and

the types of decisions and the decision process involved (Kotler et al., 2001).

Recently, the internet is a key facilitator for supply chain management, negotiations, virtual communities, virtual market places, servicing contracts, marketing, and so forth. Although entry in the global market is made substantially easier with current technology available to B2B companies, e-internationalization is till challenging because companies may lose their intellectual property on the web and B2B relationships are more difficult to manage in the electronic highway (Samiee, 2008). An example of B2BIIM can be found from following figure.

For example e-CRM(internet based Customer Relationship Management). Northern Ireland (NI) has the largest relative SME(Small and Medium Sized Enterprises) base in the UK, where in the private sector, it accounts for approximately 80 per cent of employment and 75 per cent of turnover (BERR, 2005). The Republic of Ireland (ROI) presents similar statistics where over 185,000 of Ireland's 190,000 companies (i.e. 98 per cent) employ less than 50 people (SFA, 2005). The SME sector is a significant employer, employing approximately 60 per cent of the workforce (SFA, 2005). Northern Ireland is also a peripheral economy, both in European Union (EU) and global market terms. Being located on this economic periphery, the motivation to utilise e-CRM, may be accentuated among SMEs (Ritchie and Brindley, 2005). ).

SMEs are different in their B2B environment compare to large organisations with particular characteristics. Their adoption of e-business tools and development of associated practices can be expected to follow patterns which differ from the models and theories put forward for large enterprises (Lawson-Body and O'Keefe, 2006; Xu et al., 2007). Most SMEs tend to be informal social entities with a short-term focus on profit in a B2B environment and the likelihood of engagement in conventional marketing is extremely unlikely (Zhang et al., 2008; Gilmore and Carson, 1999).

Larger organisations in UK practicing e-commerce, an example:

UK: Internet sales of home shopping companies, 2007-09

Retailer (parent)

2007

2008

2009 (e)

Mail order retailers:

Shop Direct

700

950

1,150

Otto (Freemans/Grattan)

230

280

300

Redcats (Empire etc)

170

40(a)

40

N. Brown

160

225

270

QVC

58

65

66

Pure plays:

Electricals etc

Amazon

962

1,372

1,550

play.com

340

445

500

Dell

600

630

700

Apple

230

390

500

Hughes Direct

40

44

46

Fashion

Asos

81

133

180

M&M Direct

74

95

120

Figleaves

27

30

32

Net-a-porter

55

62

70

Food

Direct Wines

114

135

94

The Wine Society

13

21

27

Abel & Cole

7

11

13

Riverford

7

13

14

Total

4,123

5,242

6,047

(a) Empire sold to Shop Direct, Jan 2008

SOURCE: Company Report and Accounts/Mintel

B2B markets typically have fewer behavioural or needs-based segments.

A price-focused segment, which has a transactional outlook to doing business and does not seek any ‘extras’.  Companies in this segment are often small, for example SMEs working to low margins and regard the product/service in question as of low strategic importance to their business.

A quality and brand-focused segment, which wants the best possible product and is prepared to pay for it.  Companies in this segment often work to high margins, are medium-sized or large, and regard the product/service as of high strategic importance.

A service-focused segment, which has high requirements in terms of product quality and range, but also in terms of aftersales, delivery, etc.  These companies tend to work in time-critical industries and can be small, medium or large.  They are usually purchasing relatively high volumes.

A partnership-focused segment, usually consisting of key accounts, which seeks trust and reliability and regards the supplier as a strategic partner.  Such companies tend to be large, operate on relatively high margins, and regard the product or service in question as strategically important.

B2B e-marketplace, as one of the major trading platforms brought by the internet technology has made a significant contribution to the e-marketers. The larger organisations are taking advantages from the vast array of suppliers/buyers via the B2B e-marketplace (Stockdale and Standing, 2004). However, small and medium sized enterprises (SMEs) are also eager to compete in the electronic environment remain concerns as how their businesses can gain benefits from B2B e-marketplace.

The marketing benefits from treating B2B and B2C (business-to-consumer) as part of the same marketing context and service system. B2B demand is derived from consumer markets; suppliers can profit from helping their customers' customers become more competitive; and almost all companies serve both organizational customers and consumers. This is not new but we want marketing to put more explicit emphasis on the interdependency between B2B and B2C. Which B in B2B represents the supplier and which represents the customer is not apparent. In conventional marketing management the seller is the aggressive party that takes initiatives and the buyer is persuaded and managed to behave according to the supplier's desires. Consequently the first B represents the supplier. Further, B can represent a huge global corporation but just as well a small one-man business but today a business can be global through a personal or Internet network without having many people engaged.

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