Business-to-business marketing What is important to the practitioner?

Transcription

1 The Emerald Research Register for this journal is available at wwwemeraldinsightcom/researchregister The current issue and full text archive of this journal is available at wwwemeraldinsightcom/ htm Business-to-business marketing What is important to the practitioner? Gary Reed, Vicky Story and Jim Saker Business School, Loughborough University, Loughborough, UK Keywords Business-to-business marketing, Marketing intelligence, Private sector organizations, Public sector organizations Abstract The paper reports on research sponsored by the Chartered Institute of Marketing as part of its Canon of Knowledge initiative The paper addresses the issue of what areas currently being taught as part of the discipline of marketing are considered important by business-to-business marketing practitioners It also examines how these differ between the private and public sectors and identifies the tools and techniques felt to be most useful to practitioners Business-tobusiness marketing Introduction The paper reports on research sponsored by The Chartered Institute of Marketing (CIM) and undertaken as part of its Canon of Knowledge initiative The Canon aims to bring together the best in marketing principles, best practices and case studies on the CIM web site as an up to date information source for marketing professionals in order to improve knowledge transfer between academics and practitioners The research aims to establish the extent of the divide between academics and practitioners in terms of relevance of teaching content and the vehicles for disseminating academic research It examines the use of marketing tools, techniques and research within the business-to-business (B2B) marketing context and identifies sector differences in the application of marketing knowledge disseminated by academics Specifically, the paper addresses three key questions: (1) What areas and techniques within the discipline of marketing are considered important by practitioners operating in organisational buyer markets? (2) How do these differ for practitioners in the public as opposed to the private sector? (3) What are the implications for those involved in the development of marketing education? 2 Background 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) B2B organisations are typified as having a large number of customers that have to be handled individually (Håkansson et al, 1976), and also require relationship development, frequently long term, between the selling and the buying organisations (Ford, 2003) These areas have been highlighted in the work of the Marketing Intelligence & Planning Vol 22 No 5, 2004 pp q Emerald Group Publishing Limited DOI /

2 MIP 22,5 502 Industrial Marketing and Purchasing Group (IMP) and epitomised in their writing over the last two decades and represented more recently in Turnbull et al (1996), Håkansson and Snehota (2000) and Ford (2002) In contrast, much consumer marketing is based around a large number of individual customers with mass communication and brand development being key pillars of this activity Fletcher and Hart (1990) also identified that B2B organisations have a tendency not to employ marketing directors, nor have people in senior positions with a responsibility for marketing In contrast, consumer market organisations have a high level of marketing, and senior managers with a responsibility for marketing are heavily involved in strategic planning procedures Their suggestion is that the B2B sector has not embraced the concept of marketing in the same way as the fast moving consumer goods (fmcg) sector with a lower level of priority given to marketing within the organisational power structure Marketing education has compounded this problem by being consumer market focussed, implying that somehow machinery and components are less sexy than hair sprays, cars or stereos The CIM s initiative is driven by a desire to counter this and provide a reference source for B2B marketing practitioners From textbooks published in the area it is clear what is being taught within marketing courses but it is apparent that no work had been done to identify what current B2B marketing practitioners believe are the most useful elements of this body of knowledge This gap provided the motivation for this piece of research Much of marketing practice is based around common principles In B2B marketing theory, organisational buyer behaviour concepts are also undifferentiated between industrial sectors In public and private sector organisations, final organisational objectives may well vary, which could lead to different aspects being emphasised as important Therefore, the difference between these sectors is also explored in this research 3 Research design and methodology To address the three research questions there was a need to obtain an informed response from senior marketing practitioners from both the public and private sector All the respondents were to have had some formalised marketing training and were regarded from a career perspective as being marketing professionals, as opposed to simply undertaking a marketing role as part of a broader career development To enable a good response rate from senior executives the data was collected using telephone interviews This method provided the means of obtaining responses from a broad sample of marketing practitioners, and was predicted to yield higher response rates than postal questionnaires (Oppenheim, 1992) Telephone interviews also gave the advantage of enabling the interviewer the opportunity to explain and clarify any difficult questions, and allow the probing of responses to open-ended questions (Malhotra and Birks, 2003) This was felt to be important if there was ambiguity in the use of marketing terms 31 Questionnaire development A questionnaire was developed using an expert panel of academics and senior industrial company personnel involved in the B2B sector The panel consisted of

3 representatives from Corus, AMEC, BAE Systems, Rolls-Royce, Loughborough University, the CIM and two independent marketing consultants involved with both the public and private sector The aim was to identify the most significant topics usually encountered by the business community and to backfill these with reference to areas covered by standard texts recommended by the CIM These were then incorporated into the questionnaire, which ended up addressing nine key thematic areas: (1) Customers and relationships (2) Competitors and the nature of competition (3) The promotional mix (4) Winning B2B business (5) Resource allocation (6) Sales campaigns (7) Sales force management (8) Supply chain management (9) E-business The questionnaire framework was used in three stages First, interviewees were asked to score the importance of a marketing subject area using a Likert scale A four-point scale was chosen to avoid interviewees choosing the middle ground (Malhotra and Birks, 2003), the assumption being that you could expect marketers to consider the subjects either to be important to their role or not Second, in those subject areas where interviewees scored the subject as high importance, they were asked for the key topics that were particularly relevant, either because it reflected excellent practice or was a cause for concern in its application Third, at the end of the questionnaire, in order to confirm that all appropriate issues had been discussed, interviewees were asked for information on other topics they considered important They were also asked for recommendations on sources of information/knowledge, such as articles, reports or books Business-tobusiness marketing Pre-test The questionnaire was then pre-tested with six of the potential interviewees to ensure that the subject areas were appropriate, that there was no ambiguity in the terminology used, and ensure it was in practitioner speak rather than academic terminology The questionnaire was then reviewed and minor amendments, in terms of terminology, were made by the panel 33 Data collection Potential interviewees were sourced from the CIM membership database and the four contributing organisations and were all confirmed to be senior B2B marketers Respondents were first sent a letter advising them of the survey and seeking their support The letter was followed up with a telephone call seeking a suitable time for a telephone interview Prior to the interview the questionnaire was faxed/ ed to the interviewee to aid question understanding and allow participants time to think about their responses prior to the interview In order to reduce interviewer bias, only one

4 MIP 22,5 504 telephone interviewer was employed who was clearly briefed on the terminology to avoid ambiguity in the interviews, and to be able to offer clarification to interviewees (Oppenheim, 1992) While the authors acknowledge there are limitations with using the CIM database for such a large proportion of interviewees, it can be justified for this study in that all included had received some formal marketing education and they would include representation from both the public and private sectors The inclusion of a random sample of additional interviewees from the four industrial partners, and the fact that all interviewees were contacted systematically from the database and, if available, asked to participate, makes the researchers confident that minimal selection bias has been introduced at the data collection stage In total, 75 interviews were conducted, 31 from the public sector and 44 from the private sector, all respondents had a senior role within their marketing operation 4 Findings 41 Responses common to both sectors Interviewees identified the following subject areas as the most important 411 Customers and relationships The predominant area of discussion in this section was concerned with managing relationships with customers, especially key accounts In particular, there was an emphasis on building long standing relationships in order to retain customers, which reflects Ford et al (2003) position A concern reported in this section was the lack of cross-organisational understanding of the importance of customer relationships, consequently, a major challenge for interviewees was trying to encourage their businesses to be client-facing and market-led Although marketing courses touched on this area the respondents felt that there was a need for a greater emphasis and a need for the development of relevant materials The concept of market orientation was understood but it was felt that there were insufficient tools and guidance on how the concept could be practically implemented 412 Market research: customers, products, services, competitors In this section interviewees discussed the types of research they carried out, this was frequently quoted as qualitative and quantitative, without explaining further the actual research undertaken The main concentration of research effort was on customers, the state of play in the market place ie competition, and identifying market segments Networking was also emphasised as an important tool for gleaning information about competition or developments in the market place Two of the challenges facing respondents in the area of research were the availability of resources to find relevant and timely information, and the short time scales in which to collect, process and develop actions to win new business or maintain an existing customer The view was that conventional marketing education emphasised structured research but failed to cover areas such as market intelligence networks 413 Planning the marketing and selling activities This was identified by interviewees as critical to the success of any business Respondents considered this to be more important over the last few years due to the increased focus on customer relationships and retention Challenges reported in this section included allocation of resources where planning and prioritising can be difficult especially over the longer term, and getting everyone in the organisation on side supporting the activities The respondents felt that there was a greater need to concentrate on the

5 principles of implementing marketing, which was felt to be weak in traditional marketing education programmes 414 Allocation of resources to the business winning process The majority of respondents discussed the types of resources (usually money, time and personnel), how they were allocated, and in particular getting the right resources in the right place, at the right time Prioritising, budgeting and justification of resource allocation were identified as key skills The respondents highlighted the need for internal marketing to market marketing as a key activity within the organisation The role of internal marketing has become more of a feature of marketing programmes in recent years (Ahmed and Rafiq, 2002), but for many people currently in senior positions the subject was not covered when they underwent their formal marketing training 415 Finance, accounting and profitability Many interviewees stressed the importance of understanding finance and accounting, predominantly in terms making a profit and understanding the workings of the balance sheet to ensure profit opportunities are maximised Only isolated marketing texts integrate finance within the subject (Wilson, 1999) but many fail to cover this subject at all In many courses marketing is taught in isolation, almost as a separate discipline, the need to take a more integrated approach highlighting the impact on other aspects of the organisational performance came through as a major factor for the respondents In summary, the questionnaire interviewees reiterated the importance of relationships, people skills, networking and internal marketing, which supported Ford (2002) view on the key marketing activities in business markets Business-tobusiness marketing Differences between public and private sector responses Significant differences were identified between the ratings given by the public and private sector interviewees on a number of subject areas These differences are listed in Table I and will now be discussed The t-test identified a statistically significant difference between the public and private sector interviewees on the scores for Customers and relationships, with the private sector scoring higher However, the mean scores show that both sectors actually identify this area as being of high importance (public sector ¼ 348, private sector ¼ 383) Competitors and nature of competition also showed a significant difference, with private organisations having a higher focus on competition, which would be expected It is, however, surprising to note that the actual mean importance rating given by the private organisation interviewees was only just above the scale mid-point (mean ¼ 280), which shows that they do not rate it of high importance This rating was supported by a number of additional comments that highlight the lack of competitor analysis undertaken, such as: there s no formal process of identifying competitors just know they are around, more aware of this recently, perform some kind of SWOT analysis, difficult to take advantage of weaknesses in this industry quite a friendly environment However, there were a few more positive statements made by interviewees showing an understanding of the importance of assessing competitors, for example, marketing research, networking and data sources are all crucial in supplying information about competition Other differences of interest included the lack of importance rated by the public sector interviewees for winning B2B business The comments from one interviewee give an indication of why this might be the case local authorities just assumed that

6 MIP 22,5 506 Table I Variable Mean score a t df Sig (two-tailed) Customers and relationships Competitors and nature of competition Advertising, promotion, events, market communications Identifying the major activities in winning B2B business Allocating resources to the business winning process Build and manage sales campaigns or sales projects Manage the sales process and the sales force; Strategic selling, managing key accounts and customer relationships Manage the supply chain for customer value Apply e-business Note: a Based on a Likert scale 1 to 4, where 1 = low importance, 4 = high importance, 1 = public sector, 2 = private sector they will always get the business The situation is similar in allocating resources to the business winning process A public sector interviewee said it (the allocation of resources) reflects the local government approach to marketing, ie they only have one person involved in marketing and the process of winning and retaining business is not matched by the resource allocation, which equals a constant battle By comparison, a private sector opinion was sound marketing principles equals budgeting effectively suggesting that the resource allocation mirrors the attitude to marketing and its status in the organisation While there was a significant difference in the mean scores for Building and managing a sales campaign or project, with the score being higher for private sector, it was not rated of high importance The mean scores for both groups were below the scale mid-point, the private sector just below (private ¼ 243), and the public sector showing very low importance (mean ¼ 172) It is interesting to note that only ten interviewees offered any comment on this area A common theme comment was that sales planning is simplistic, supporting the low score that was given The biggest difference in importance was in the area of managing the sales process and the sales force; strategic selling, managing key accounts and customer relationships The private sector, perhaps unsurprisingly, considered this to be important (mean ¼ 328), unlike the public sector who score this as unimportant (mean ¼ 210) The main theme of the comments in this area was developing relationships, showing what they feel this area is all about There were also a few references to marketing tools, as one interviewee said, few policies are in place about key account management of

7 customer relationship management just personal contact Interpreting the qualitative comments, it appears that although respondents identify this as a key area, knowledge of appropriate frameworks and approaches is poor The private sector interviewees also identified Managing the supply chain for customer value as more important than their public sector counterparts The private sector s challenges were to develop relationships with suppliers and subcontractors and set-up partnership agreements but it is also important for these relationships to produce value, customers actually want a demonstration of the supply chain in full working order eliminating waste One of the issues in overcoming these challenges is that departments in the company aren t customer facing the challenge is to get them to understand one another to help prevent duplication and become cross functional In terms of the public sector, their focus was also on showing value for money and justifying that every part of the chain is effective However, these comments do seem to contradict the relatively low importance score given by public sector as a whole on managing the supply chain (mean ¼ 231) Two areas were scored of significantly higher importance to the public sector than the private First advertising, promotion, events and market communications, where the private sector responses considered this standard practice, necessary for supporting the brand, although there were some issues regarding corporate versus regional responsibility, where major conflicts of interest exist The comments from the public sector explain their higher importance score based on the fact that they have more limited resources, therefore the challenge is in getting people to come up with ideas in house and being creative and innovative to get the most out of the budget Another interviewee reported that this (advertising) is what the local government views marketing as: solely promotional and nothing else The other area of higher importance to the public sector interviewees was applying e-business This may be the direct result of government policy, as shown by the following comment several government targets set for improving e-business In the private sector opinions varied from all in all, it has tremendous potential and we need to capture that to just another method of communication Views also varied in terms of use, as shown by the fact that some saw the challenge to be to use it to effectively complement face to face selling and customer management, whereas others see its use in supporting increasingly remote teams Many of the highlighted differences between the sectors were to be expected The role of marketing in the public sector has been an area of research and writing for a number of years (Aaker, 1980; Coffman, 1986; Lovelock and Weinberg, 1989; Fine, 1992; Titman, 1994; Chapman and Cowdell, 1998) The key issue for this paper was to examine the areas that would normally be associated with B2B marketing in both the public and private sector From this particular perspective the low scores in areas such as building and managing a project and managing key accounts and customer relationships would suggest that there is a need for marketing educators to look at ways in which these basic B2B concepts can be introduced in wider contexts Business-tobusiness marketing Discussion 51 General issues The general consensus from both sectors reflected the lack of understanding of the wider organisational implications for the implementation of marketing demonstrating

8 MIP 22,5 508 a lack of organisational marketing orientation This lack of marketing orientation leads to very little cross-departmental collaboration, a practise often found in the consumer market companies It appears from the responses that the concept of market orientation and holistic relationship management across organisations is problematic It is difficult to see how the marketing community can formally influence people in senior management who come from other disciplines unless it is done through effective internal marketing The issue of internal marketing is also relevant when considering one of the other areas of contention; that of gaining appropriate resources to deliver B2B marketing activity The requirement to market marketing in B2B organisations came out as one of the key findings of this study Another area of concern was the issue of market intelligence Many conventional courses teach a formalised market research approach with questionnaire design followed by data analysis Informal networks and market intelligence gathering are areas not found in many mainstream market research modules When examining the public/private comparison, the public sector interviewees varied from having little concept of marketing s role in their organisation, through to having a good grasp on marketing theory and practice, and the ability to apply it However, regardless of level of knowledge most public sector interviewees felt that little marketing material was specific to their situation or really suitable for their needs Interviewees from private organisations generally had a more consistent grasp on the marketing role, but less in terms of using or referring to marketing theory or practice One interviewee s response was marketing publications are not that much help, I just go on experience and information from contacts in the industry Another had absorbed the theory ages ago, but it still comes into play today not a direct link, ie I don t go and read books and try to directly apply these ideas One considered that there was no real use for marketing theory resourcing is a top priority Others just felt that their industry sector was an odd case and overlooked, with the focus being on fmcg, hence, they felt that marketing theory was of no or little use to them One interviewee found it frustrating that theoretical marketing models don t lend themselves to [my] industry Evidently, both the public and private B2B sectors feel that much of the discipline of marketing is inaccessible (ie do not/cannot find) and/or inappropriate 6 Conclusions In order to identify the extent of the academic-practitioner divide, this paper attempted to address three questions, what areas within marketing are considered important by practitioners, how do these differ between the public and private sectors and what are the implications for the development of marketing education? The findings identify a clear divide between academics and practitioners in terms of the use of standard marketing teaching subjects and research in the workplace due to issues of access and relevance Also identified is the importance of the role of marketing education and educators to teach B2B marketing as well as consumer marketing 61 What areas are considered important to practitioners? It is apparent that the B2B sector views mainstream marketing as being too consumer focussed The respondents struggled to see the application of principles based on the

9 fmcg market to the B2B environment If the education community is to address the needs of the B2B sector there is a need to focus on areas such as: in-depth coverage of internal marketing; market intelligence gathering and network development; a greater integration of the financial aspects of marketing and its balance sheet implications; and practical emphasis on interpersonal skill development in a B2B context Business-tobusiness marketing 509 Differences between the public and private sector? The respondents from the public sector reinforced the view that too much marketing education and training is based on principles from the consumer marketing arena and where the emphasis is on B2B there is a lack of emphasis and application on the issues facing the not for profit sector Interestingly, the interviewees from the public sector, tended to be better qualified in marketing and have a better understanding of the tools and concepts However, they found that their education was of even less relevance to their role in the public sector, shown by the lower importance scores Again, this highlights the need for marketing educators to teach B2B and more specifically, B2B marketing in the public sector This teaching needs to be underpinned by relevant research, which could present an opportunity for academics, as only limited marketing research has been done within the public sector The other key issue for this group of interviewees was the difficulties they faced working in an organisation that places less value on the role of marketing Therefore, public sector marketers will only adopt the results of any research in this area if they are disseminated in such a way that senior managers within public sector organisations are also apprised of the benefits 62 Implications The findings of the study identify that while there is research work being done by academics in B2B marketing, this research does not seem to be identified or used by practitioners The conclusion must be that the research is not being published in journals or other media that are easily accessible to the interviewees and/or the format is not practical for application in the field The research supports Piercy s (2000, p 30) contention that the way in which University academics are assessed by research output results in publishing in scholarly outlets read only by other academics Consequently, academic institutions do not direct effort into wider dissemination of research findings into journals/publications that managers read This, along with the need for a more proactive inclusion of B2B marketing practise in mainstream marketing courses will go at least some way to address the criticisms expressed by practitioners in this sector References Aaker, DA (1980), Marketing Research Private and Public Sector Decisions, Wiley Series in Marketing, John Wiley and Sons Inc, New York, NY Ahmed, PK and Rafiq, M (2002), Internal Marketing: Tools and Concepts for Customer-focused Management, Butterworth-Heinemann, Oxford

10 MIP 22,5 510 Chapman, D and Cowdell, T (1998), New Public Sector Marketing, FT Prentice Hall, Englewood Cliffs, NJ Coffman, L (1986), Public Sector Marketing: A Guide for Practitioners, Wiley Series on Business Strategy, John Wiley and Sons Inc, New York, NY Fine, SH (1992), Marketing the Public Sector: Promoting the Causes of Public and Nonprofit Organizations, Transaction Publishers, New Brunswick, NJ Fletcher, K and Hart, SJ (1990), Marketing strategy and planning in the UK pharmaceutical industry: some preliminary findings, European Journal of Marketing, Vol 24 No 2, pp Ford, D (2002), Understanding Business Marketing and Purchasing, 3rd ed, Thomson Learning, London Ford, D, Gadde, L, Håkansson, H and Snehota, I (2003), Managing Business Relationships, 2nd ed, John Wiley & Sons Limited, Chichester Håkansson, H and Snehota, I (2000), The IMP perspective, assets and liabilities of relationships, in Sheth, J (Ed), Handbook of Relationship Marketing, Sage Publications, Thousand Oaks, CA Håkansson, H, Johanson, J and Wootz, B (1976), Influence tactics in buyer-seller processes, Industrial Marketing Management, Vol 5, December, pp Kotler, P, Armstrong, G, Saunders, S and Wong, V (2001), Principles of Marketing, 3rd ed, McGraw Hill, New York, NY Lovelock, CH and Weinberg, CB (1989), Public and Non Profit Marketing, Scientific Press, San Francisco, CA Malhotra, NK and Birks, DF (2003), Marketing Research: An Applied Approach, 2nd European ed, Financial Times Prentice Hall, Harlow Oppenheim, AN (1992), Questionnaire Design, Interviewing and Attitude Measurement, Pinter Publishers, London Piercy, N (2000), Commentary: why it is fundamentally stupid for a business school to try to improve its research assessment exercise score, European Journal of Marketing, Vol 34 No 1/2, pp Simkin, L (2000), Marketing is marketing maybe!, Marketing Intelligence & Planning, Vol 18 No 3, pp Titman, L (1994), Marketing and the Public Sector: Managing the Public Sector, Longman Information and Reference, Harlow Turnbull, P, Ford, D and Cunningham, M (1996), Interaction, relationships and networks in business markets: an evolving perspective, Journal of Business and Industrial Marketing, Vol 11 No 3/4, pp Wilson, RMS (1999), Accounting for Marketing, Advanced Management and Accounting Series, International Thomson Business Press, Boston, MA Further reading Churchill, GA (1995), Marketing Research: Methodological Foundations, Dryden Press, New York, NY Dibb, S, Simkin, LP, Pride, WM and Ferrell, F (2000), Marketing Concepts and Strategies, 4th ed, Houghton Mifflin, Boston, MA