Business-to-Business Marketing

1. Business-to-Business Marketing Chapter 8 Relationship Communication

2. Learning outcomes • Understand the nature and role of direct marketing and personal selling in relationship communication; • Be able to describe how direct marketing and personal selling can be used to acquire new customers and win orders; • Be able to describe the customer and order acquisition process; • Understand the issues and decisions that a firm must address to enable the coordination of relationship communication between firms and within the vendor company; • Be able describe the control systems that a firm can use to direct the behaviour of employees that communicate with customers.

3. Direct marketing • Key features of direct marketing are • the absence of face-to-face contact, and instead: • the use of media such as directmail, telemarketing, electronic media (such as the internet and email) for communication and transactions • the facility to measure responses to communications (which can be difficult for advertising campaigns and personal selling activities) • the use of a database from which targets for communications activities are drawn and to which responses and transactions are added

4. Telemarketing • Account management • when sales to a customer are insufficient to warrant field sales calls, telemarketing can be used to service accounts • Field support • where customers require personal visits but handling all aspects of an account is beyond the capacity of a single sales person • Prospecting

5. Personal selling • Communication between the customer and the supplier to determine precise supply requirements • The negotiation of adjustments to the supplier’s product offer or the formulation of a bespoke offering to match the customer’s needs • Interaction between representatives from both organizations which underpins the initiation, development and ongoing handling of supplier-customer relationships

6. Categories of salesperson • Missionary salespeople • direct efforts at creating business by influencing individuals or companies who have the authority to specify suppliers • Frontline salespeople • win orders from existing customers and target new ones • Internal salespeople • responsible for administering the order process, from initial receipt to the eventual delivery of an order

7. Figure 8.1 New customer and order acquisition Lead generation Prospecting Call preparation Selling Order fulfilment

8. Figure 8.2 Functional contributions to order management cycle Sales Marketing Customer Engineering Purchasing Finance Operations Logistics service Customer participation Plans to buy Get sales pitch Negotiates Orders Waits Waits Accepts delivery Pays Negotiates Complains • Steps in order • management cycle • Order planning • Order generation • Cost estimation • and pricing • Order receipt • and entry • 5. Order selection • and prioritization • Scheduling • Fulfilment • Billing • Returns and claims • Post-sales service Top management participation coordinates some some none some none none none some none leading role supporting role no role (Source: Shapiro et al., 2004)

9. Sample objectives for a sales call • Making the customer aware of the company as a viable alternative source of supply • Establishing customer difficulties with existing product supply • Encouraging the customer to reveal information on future sourcing strategies • Presenting supplier solutions to previously discussed sourcing requirements • Negotiating supply contracts with and getting definite purchase decisions from customers

10. Relationship-building tasks • Overseeing the handling of ongoing contracts • Obtaining and acting on feedback from the customer regarding the supplier’s performance • Determining the scope for and negotiating the expansion of the supplier’s share of the customer’s existing product requirements • Responding to and seeking to resolve new sourcing problems communicated by the customer • Monitoring developments within the client organization and identifying new product opportunities for the business marketer • Negotiating new contracts

11. Figure 8.3 Intra-firm communication Customers pulp industry paper industry energy industry Sales and service account manager service and maintenance personnel project managers sales personnel application system development development Product management marketing communications manager Communications interaction flow of information moderate intensity high intensity production and R&D research engineering centres labs (Adapted from Möller and Rajala, 1999)

12. Questions for discussion • Describe the different direct marketing tools and how they can be used for relationship communication. • Describe the customer/order acquisition process. What stages do you think are the most critical? • Why might a business marketer use different types of sales people and sales approaches? • What effect has key account management had on personal selling? • What challenges does the business marketer face in trying to coordinate relationship communication activities internally? How might these be addressed?