The purpose of this paper is to provide a business-to-business marketing which addresses various marketing concerns. The analysis focuses on the case study of TCL Company and addresses various issues including marketing mix, relationship variables and business networks using two major theories, IMP and TCL, and applies the same to the case study. Besides, the report evaluate how the sales forces can be restructured focusing mainly on how the roles of account executives and how sales force can be divided and applies the same to the TCL company.
2.0 Marketing mix
Marketing mix is very crucial tool in marketing of products as it determines a products distinctive selling point (David, 2010). It refers to the four Ps’, the price, promotion, product and place (David, 2010). TCL current marketing mix has been very decisive in determining its customer base and profit margins. All the same more needs to be done especially in the marketing service department which is in charge of the product promotion. In the current global situation it is of paramount importance that any institution has a website. TCL has mainly relied on word-of-mouth in its promotion agenda. This in the short run may work but in the future it may cost the company. The economic downturn has coerced individuals to revert to less costly options meaning that the existing customers may not be preaching the same gospel they were used to a few years ago. Use of website has two main advantages, it is relatively cheap and it will enable the company to increase its customer base at a lower cost.
TCL must also look at its pricing system; the current system can be described as rigid. Despite the fact that the existing customers seem to bode well with the current system it may make prospective customers shy away especially with most companies preferring charging a flat fee as compared to percentage commission rate. For the company to be able to get the right price is has to closely examine the customers perceptions and the price of rival products. Price is an important aspect of the marketing mix as it dictates to a large extent the sales volume. In this regard TCL should research on the customers opinion about its pricing system .This will provide the company with vital information about how much customer’s value their services and how much they are willing to pay for the service. The company’s pricing system should change as time changes and with the changing circumstances.
The location of TCL is said to be strategic especially for the retail firms in Cambridge but if the company has any ambitions of increasing its market share it has to focus on other regions both in the country and outside. With the rise of internet place has become irrelevant especially bearing in mind that this company is more in the service sector than commodity. The key aspect should be the ease at which customers can access the services and how fast they can get information about the company when they need it.
Closely examining the products, the services that the company is offering it is evident that the product range is limited. The range may be diversified so as to avoid loss of revenue due to seasonal fluctuations and also as a tactic fir survival amid the intense competition. For example TCL could enlarge its boundaries by also approaching large companies even though its financial base may limit it. By offering services that are repositioned to meet specific customer requirement the company can been able to strengthen customer loyalty and attract new customers.
3.0 Relationship Variables and Business Networks
The importance of relationships in B2B given the current economic climate
Business to business relationship is paramount to an organization for it improves its competitive edge in the marketplace (Hennig-Thurau et al., 2002). Business to business relationship can be defined as the process where two organizations build strong economic, social, technical and service ties with the main intention of reducing their average costs and improve their competitiveness in the market (Biggemann, 2004). It is generally agreed that the capacity of an organization to survive in the face of competition is to a large extent determined by the relationship that the business sustain with other firms and its zeal to maintain its competitive advantage. For business to business relationship to yield the anticipated results there needs to be high level of commitment, trust, satisfaction and service quality. Firms strive to build a long time relationship to be able to conduct successful business activities especially in the future (Hennig-Thurau et al., 2002). The success of this relationship will be indicated by the nature of the product or services that will be offered and to what extent they satisfy consumer needs and wants.
In many of the business to business relationship the goal is that both firms will benefit from the relationship and be able to serve their customers better (Biggemann, 2004). This leads us to the value that the relationship brings to the seller and in the process reinforcing their competitive advantage. Well managed relationship concentrate on core activities, increases economies of scale and lowers the overall costs of offering the services.
Relationship helps the partners in serving the needs of their buyers efficiently. Firms that contract TCL for their services for example advertising expect that the company will meet their demand and in the process reach their customers .TCL on the other hand expects that their customers will give them feedback so that they are able to serve them better, in a nutshell it is a symbiosis relationship and both parties benefit from the link.
Business to business relationship helps lowering transaction costs and assist firms to achieve more flexibility in order to react to the changing market environment and conditions.
3.1 The Key Relationship Variables
There are a number of key relationships variables and they encompass the following:
According to research, value is a significant aspect for the entire marketing activities. This is due to the fact that market exchanges happen since the encompassed parties anticipate gaining from such relationships (Ulaga, 2003). According to Sheth and Parvatiyar (1996) parties involved in relationships should abandon traditional concepts and replace them with the concept of value creation. Rempel et al. (1985) puts forth that relationships is a factor which assist in attaining the aspired value. According to Flint et al, (2002), customers usually seek value whilst interacting with various persons such as manufacturers or whilst using the services or products. Accordingly, Ulaga puts forth that (2003) whilst partners are making vital decisions in the current time which may impact them in future, they usually attempt to forecast or except the value involved in making a certain choice. This may encompass imaging or understanding the pain drawn or future pleasures from the repercussions of current choices made (Mellers, 2000).
It is apparent that in B2B relationships, results usually depend on the partners’ intention and behaviour, and as a result, trust is particularly vital (Johnson & Cullen, 2002). In fact, Berry (1996, p.42) affirms that trust is a major and prevailing relationship marketing instrument which is available to organizations. He asserts that trust is vital to relationship marketing due to the following benefits:
- Marketers are encouraged to perform their duties towards preserving relationships through collaborating with exchange partners.
- Allowing reduced transaction costs and facilitating for more flexibility in order to react to the modifying market conditions.
Rempel ata al. (1985) puts forth that in relationships, novel forces and stresses which were not expected may come up and these may encompass changing of executives in one organization, modification of firm needs by uncontrollable environmental conditions, or a company may start a novel relationship. This implies that effective relationship between businesses is not an assured preposition.
According to Lages et al., (2008) satisfaction is one of the major factors that are vital for the development of business relationships and fundamental for the enhancement of relationship performance. For Instance, customer satisfaction is essential as it is a measure of company’s profits and acts as a foundation of long-term success of a firm (Huber et al., 2007). Some of the major terms employed whilst defining satisfaction include fulfillment, consequence, expectation, experience, evaluation, and performance (Huber et al., 2007).
This is another aspect that has been put forth by scholars as a significant component for successful relationships (Anderson & Weitz, 1992). Commitment allows partners to reduce costs and amplify benefits, boost supplier sales, take part in reliable requests, work towards improving the quality of relationships and towards serving the requirements of their buyers in an efficient way (Morgan & Hunt, 1994). The heart of commitment in relationships is the aspiration to endure a constant relationship, the intent of remaining in such a relationship, and the enthusiasm of making sacrifices in order to sustain the relationship quality.
Maintaining loyalty is a main factor which assists in building equally long-term and profitable linkages (Ravald and Grönroos, 1996). Such terms as predisposition, intention commitment, rebuying and the action of staying are used to define loyalty.
3.2 Business networks
There are many models developed to explain business network but there is none that analysis it better than the ARA model. The model is constructed from three key aspects of the business environment, the actors who could be individuals or firms and organizations, these carry out the function of bringing the product or service in the market and it encompasses production, communication and distribution. Resource is the other aspect of this model and it includes energy, knowledge and production machines. The ongoing activities in the process of using resources to produce commodities or services because activities to merge bringing network into existence.ARA model deals with network that have no limit when it comes to who joins the relationship. It main focus is on the emerging aspects and the connectedness.
Strategic network is another model though this unlike the ARA model only focuses on the actors with the resources aspect being in the background. It places main emphasis on the top levels of the firm .It encompasses formal strategic relationship between two or more firms .Relationship of this nature are primarily meant to fill the structural holes that may exist in a firm operations. Empirical studies show that business networks are different and have significant importance to the competitiveness of a firm.
The IMP model
In the IMP tradition, there are two major models which encompass ‘the early interaction model’ and the business network model, principally the ARA model (Lages et al., 2008). These models have been greatly employed in explicating business linkages. The IMP model comprises of four major variables which encompass:
- The process of interaction is a characteristic of that which is exchanged (information, products, financial and social content) in addition to prioritized matters and the characters who are involved. Relationships may be classified as being old or new.
- The features of the parties that are involved. This encompasses purchasing and marketing strategies employed, process and product technologies, organizational designs, as well as the aims of the involved persons.
- The surrounding atmosphere which is part of the B2B relationship. Generally, this expressed based on the level of conflict/cooperation, dependency/power amongst the groups.
- The environment in which the relationships happen and it is characterized by dynamic or stable setting; global or domestic in scope (Lages et al., 2008).
Extent to which relationship variables and business network are important to TCL
A successful business to business relationship to many occurs when the profit margin of the firms in the relationship improve. It can also be measured using sales volume achieved by both firms or through effective measure such as the extent to which consumer needs and wants is met (satisfaction) .The fact that more than 80 per cent of TCL’s new customers is as result of word of mouth from loyal customer means that the company has achieved some level of customer satisfaction. But this has been achieved almost solely with little regard to the other stakeholders input. In respect to business to business relationship the company’s strategies has been a total failure.
Despite the fact that this company is a fully fledged service provider, it is evident that it outsources most of production activities to other companies. This means that a positive and strong relationship is paramount to the company. There are factors that indicate whether a business to business relationship is successful or not. One of the key factors is commitment. The performance of the company is pegged on the commitments of the outsourced. The media houses contracted are expected to make the intended impact but in actual sense the company can do very little to influence the media houses. With the existence of a sound business to business relationship both parties will feel obliged to perform their part for the common good.
Firms should push for business to business relationship to the extent that the risk involved in the operation of the business is reduced. Firms should consider this before committing their trust to the other partners. One of the key aspects leading to creation of relationship according to the ARA model is resource allocation. Resources in this respect may be knowledge, inputs and sometimes information. All these shape the achievement of a business in a big way. Participating firms are expected to exchange expertise and information regarding the different aspects that both parties have interest in and in this they improve their competitiveness.
In order to make any meaningful stride the parties should be conscious of the various areas which impact most on their perfiormance.TCL has taken PJL media house as its main advertising partner and this means that it relationship with this company should be functional. Sound relationship means that it will be in a position to articulate its wishes with ease at a considerable cost. All the same it should not close its eye to other avenues that may be cheaper and more effective like opening a website.
4.0 Structuring the Sales Force
The roles of account executives/sales force
The roles played by account executives depend on the type of industry they are employed but mostly covers sales and marketing. In advertising and marketing industry for instance, account executives are generally responsible for customer acquisition and servicing. The account executives links the company with its customers, managing daily affairs and making certain that the clients are highly satisfied. Specifically executive signifies the act of executing; this means that they are performs more practical jobs such as distributions, placements and contract placements amongst others. In addition to this, accounts executives have the responsibility of looking and bringing additional clients to the company in order to amplify revenues. Basically, account executives have an assistant and they usually report to the account director/service director or account manager.
Ways of dividing the sales force
There are various ways in which the sales force may be divided, for instance, geography. Sales force are usually divided in terms of geography when the product line the company is dealing with is narrow, when the needs of the clients are the same, when the product is easily understandable or when selling duties necessitates the same skills. Another way in which the sales forces can be divided is by customer type. In this case, various factors including diverse client requirements, narrowness of product line and similar skills required for the selling tasks should be considered. Lastly, sales force can be divided by product or task when client requirements are the same, product line is complex or broad, and while selling duties necessitates different skills.
Recommendation for TCL
In order to be successful, companies should consider these divisions and adopt the one which mostly suits them. A company may adopt one for internal operations and one for external operations, or a similar division for both but this depends on the type of the company. For TCL, the sales force has a vital role of looking and bringing additional clients to the company in order to amplify revenues as the company deals with online marketing and advertising. This means that the sales force major responsibility is to look for novel customers and also ensure retention of the existing clients. TCL may divide its sales force in terms of customer type. This is due to the fact that different customers have different needs and thus they may seek to understand such needs and satisfy them. However, similar skills may be employed to satisfy such needs and the company’s product line is narrow enough.
This report has focused on business to business marketing. In particular, the report hasfocused on the TCL Company and addresses various issues including marketing mix. TCL current marketing mix has been very decisive in determining its customer base and profit margins. All the same more needs to be done for all the company’s aspects including product, promotion and pricing as they are not efficient enough. Relationship variables which encompass loyalty, trust, commitment and satisfaction; in addition to business networks are also very vital for the company in order to be successful. The Account executives who plays a vital role in TCL should be increased and divided in terms of customer type in order to ensure that the diverse needs of the company’s customers are satisfied.