The dynamics of B2B marketing

The dynamics of B2B marketing

Some of the most valuable companies in India operate in the business-to-business (B2B) segment and yet, there is a dearth of information about the dynamics that revolve around it. Does the concept of marketing for B2B companies vary vastly from those of business-to-consumer (B2C) companies? And with most transactions for B2B companies happening one-on-one, is branding even necessary? Here, we discuss some of these aspects with Jessie Paul, a well-known B2B marketing expert.

Paul is the managing director and founder of Paul Writer, a marketing advisory firm started in early 2010 that works with clients in the B2B services and technology space. Previously, she worked as the chief marketing officer of Wipro’s IT business and as a global brand manager at Infosys. At Infosys, she earned the Chairman’s Award and also the Diamond Award from IT Services Marketing Association, U.S. With over 15 years in services marketing, including a stint with Ogilvy & Mather Advertising, she is often considered a leading voice in marketing concepts. In 2009, she penned No Money Marketing that discusses marketing on a simple budget. Paul holds an MBA from Indian Institute of Management (IIM) – Calcutta and did her Bachelor’s degree in computer science and engineering from National Institute of Technology (NIT), Trichy.

Most companies that can benefit from digital marketing are taking up to it. But India likes push marketing, which is putting feet on the street. Ideally, 50 per cent of a company’s sales must come directly and not through its sales team, else it will eventually erode margins and the brand name.

Could you outline the importance of B2B marketing and branding? From an overall industry perspective, do you often find it sidelined during discussions or forums?

On a macro level, B2B marketing and branding does take a backseat but that is not necessarily because it is less important. From a commercial background, advertising (ad)/ marketing agencies often sponsor or underwrite most such discussions since in B2B, advertising plays a lesser role. But if you take many of India’s thriving industries, they are B2B – be it IT, pharmaceuticals, automobile components etc. The awareness about B2B has slowly improved but one cannot blame the slow pace of this as India has still not developed into a very mature ecosystem when it comes to marketing concepts – even those in the B2C segment are still finding their way.

Considering most B2B companies rely more on performance and pricing, and sell commodities that are often not considered as aspirational products, how necessary is to invest in marketing/branding?

In many B2B cases, demand often outstrips supply so companies figure marketing is not required. What I have noticed is that many companies wake up to the idea of marketing only when that demand starts to decline or margins erode when another player enters the market and advertises. We worked with one such client, who were leaders in their domain for 20 years offering a great product but chose not to engage in marketing but invested in a good sales team since there were no competitors. A US-based player, which decided to enter India when their home market was on the decline, did a blitzkrieg marketing campaign offering their product to be used free for one year and wrote it off as a marketing cost. By the time the Indian player caught up, the competitor probably would have owned most of their customers. This would not happen in countries like the U.S., where even a sole player will take up marketing early on.

The primary difference between a B2B and a B2C customer is that a B2B customer uses someone else’s money to make his purchase. Hence, it is more difficult for B2B consumers since not only do they have to think about end consumers but justify their purchases to the company board as well. Branding makes that decision easier. Even in the commodities market, a marble branded as Italian marble or cement as German cement, though the chemical composition is the same, fares better. Another important attribute in B2B marketing is trust. In most cases, B2B customers do not see the product/service that they buy and it will also be used for many years – if one is in the business of setting up plants, the customer cannot see it beforehand and it will also take up to 10 years to complete it. So, the vendor often convinces the buyer by showing the accolades the company has received, people on its board, its past projects and patented technology etc., which is also a marketing exercise, only it is not a mass outreach program like ads. But all other elements of marketing hold true whether you are selling a plant, cement or chocolate. Celebrity endorsements also work for B2B – a Hafeez Contractor for a development project is a sure way of getting the project noticed and reassuring its customers. While mass ads are not necessary in the B2B market, trade shows, direct marketing or social media can be its various mediums. However, firms like Accenture or IBM cater to such a wide audience that they behave more like B2C companies and hence, take up mass scale advertising.

What are the major changes in marketing of B2B businesses you have seen over the years?

Over time, there has been far more acknowledgement of B2B marketing and more tools available for assistance. Slowly, as more and more data is shifting online, there has also been better measurability. And with far more measurability in a segment, it attracts higher investment. Most companies that can benefit from digital marketing are engaging in it. But India likes push marketing, which is putting feet on the street. Ideally, 50 per cent of a company’s sales must come directly and not through its sales team, else it will eventually erode margins and the brand name. There should be enough sales through renewals or brand pull. If a hotel’s entire sales strategy relies on travel websites, its margins will drop with time, as it does not control the pricing, the deals or the customers. It should work on getting bookings from its website and thus, build brand loyalty.

Typically, at what stage should a B2B business seriously start looking at building a brand?

Branding is among the first things a company should think about – that is how it is done internationally or in more evolved markets. Unfortunately here, most conform to the idea that they are selling a commodity and not a brand. Hence, there are few loyalty programmes, no brand image nor recall. Any good product has good attributes but one needs to brand them. Investment in marketing does not show immediate results, unlike the case with sales teams and monthly targets, but it is beneficial in the long run. Even a Tier-II school now wants Borosil glassware for its laboratories while a local mechanic would be proud of his Bosch toolset. A term often used in B2B industries is ‘below specification’ or ‘below material’. If I were to design a plant, I would recommend the technology and get into a list of specifications. To be on that list, a brand should be heard. People buying an apartment would be glad to see Otis elevators associated with it. Likewise, Veneta Cucine is not a B2C brand but nevertheless, many request for kitchens modelled by it.

If a new B2B company is foraying into the market, what is the best way to get its brand heard?

The company needs to first concentrate on building trust before deciding on channels. It should ask itself three questions – (i) Who am I? (ii) Why buy my product? (iii) Why not buy my competitor’s product? Under each, it should write attributes that it believes are differentiators and then set out to prove each of them through approvals, research or even being associated with a well-known partner. After that, it is about choosing the right medium to send that message. Ideally, a services firm should invest a minimum of 2.5 per cent of its revenues into marketing and about 20 per cent for a product firm, depending on whether it is in a high or low growth stage.

How often should B2B companies realign with their customers’ needs? What are the metrics to measure it?

It should usually be once a year. Once in three years is all right for a slow moving industry except when an outlier like a big market crash takes place. To do this, each company should have a customer outreach programme through surveys – most companies have an informal one. While many smaller companies consider pricing as a key factor, they discover through such surveys that it is not always the case. Customers choose a company more out of trust or for its unique offering or simply because smaller companies are more responsive or they can directly interact with the CEO. A charismatic CEO can often be a great pull for a company.

How can B2B companies best leverage digital marketing?

Communication channels depend on the industry the company operates in. While there is an enormous amount of data available, one should not take to the digital medium unless they can share insight. Many big companies take to social media with low content and simply tweet about their product and thus, fail in digital campaigns. An insight can come from research, benchmarking, users’ feedback, industry trends and how the company compares with that, but it should be subtle and in a way that does not promote its product. People tend to trust a product that is backed by quality content.

How different are the branding strategies of a company that focuses on both B2B and B2C?

If a company is promoting similar products, then just the channel varies. In a B2C model, one can rarely hire enough sales people to reach target, hence there is more investment in marketing. While the core brand remains the same, B2C needs constant reinforcing – a model where the customer thinks of your product every time, without the company being involved. Channel strategy, franchises, value added resellers etc. all matter as they maximise reach. While Tupperware and Oriflame are still doing push marketing, most others do not see it as a viable model. The product should be easily available for people to buy it.

If a company decides to shift its focus from being known as a supplier of low-end services to high-end services, what are the important steps to be taken in this rebranding exercise?

While moving from top to bottom is not hard, very few have achieved the reverse. It is hard to reposition yourself in customers’ minds since most people think that a company that offers high-end can do low-end as well and they would also be happy to add value at that price point. It is hard to get your act together for a luxury offering if you have been offering low-end services. It would be better for the company to make a high-end offering under a different name. The only success story in this regard was when IBM moved from IT implementation to consulting and that was only through a public acquisition of a good brand, PricewaterhouseCoopers.

What do you consider to be the growth factors for the B2B marketing space?

Competitive prices and the entry of multinational companies will surely aid in the growth of this segment. Also, since India does not have a pool of experienced B2B marketing professionals and with some western markets drying up, the migration of these professionals from Europe and the U.S. to India will also be significant.