SMU MBA ASSIGNMENTS

Answer : Introduction

According to the American Marketing Association, “Marketing is an organizational function and set of a processes for creating, communicating, and delivering value to customers and for managing customer relationships in a way that benefits the organization and its stakeholders” (2006). In other words, it is how a company determines what a customer’s needs are and gears its products or services towards those needs in a way that their customers perceive value and the company makes money. Marketing can be broken down into two areas, between businesses and individual customers (B2C) and between businesses and businesses (B2B). When most people think of marketing, they picture consumer products being promoted through large advertising campaigns. 

While that area might be publicly perceived to be the largest area in marketing, the (B2B) market is actually much larger. According to researchers, “forecasters expect domestic B2B purchases will total several trillion a year” compared to “$269 billion expected [for] 2005” (American Marketing Association, 2006). The following paper will look at some of the differences between marketing on a B2B and a B2C website.

Marketing Strategy

When a company is creating its strategy for marketing, they “must consider both the nature of their products and the nature of their potential customers” (Schneider, 2004, p. 156). What a company is trying to sell or who they are trying to sell it to will help to determine how they market their product or service. A B2C site aims to sell its product or service to an individual end user, so they “organize their websites from an internal viewpoint, that is, according to the way that they arranged their product design and manufacturing processes” (Schneider, 2004, p. 158), which is a product based strategy. They may include categorized lists of all their available products and/or services on their website for users to search through, making it easier for customers to find what they are looking for. An example of this type of marketing strategy is the OfficeMax website, where there are several different categories of office supply materials, each with its own products. A B2B site, on the other hand, is based on a consumer based strategy. Because they have to meet the exact needs of a variety of different types of customer, they cannot base their marketing on a few products or services. Instead, they need to be geared to working with the client to provide their customized needs.

Market Segmentation

Market segmentation is defined as “the categorization of potential buyers into groups based on common characteristics such as age, gender, income, and geography or other attributes relating to purchase or consumption behaviour” (Plans, 2006). It is important for both B2B and B2C sites to determine who their different customers are and divide them into groups based on similar needs to make better use of their resources. B2C sites usually place large numbers of customers with similar desires into groups who then can be targeted with similar marketing and advertising campaigns. B2B sites deal with much smaller segments than B2C sites. Instead of targeting millions of customers like B2C sites, they might only target a handful of businesses or even a single firm at a time.

 

Customer Relationships

Due to the nature and complexity of B2B transactions, B2B websites need to be completely focused on their customers. They need to build value oriented relationships that will keep their customers coming back in the future. A B2B customer tends to be more intellectual and investigative than a B2C customer; therefore, many B2B sites include more technical information than their counterparts. B2B users are also usually part of a decision process chain and realize that more effort needs to go into researching their needs, so they tend to accept a more complicated website than a B2C user. To build customer relationships, B2B sites work at automating the trading process, saving both parties time and money. They also tend to be set up to get users who want to know more information about their product/service to register, which provides them with contact information. A company member can then contact the interested party to give them a more personal touch, aimed at building customer loyalty. B2C sites, however, are more focused on creating a direct relationship with end users and getting them to complete a transaction right away, so they tend to use type, colour, pictures, etc. to pull consumers in, as well as providing easy transaction processing with few steps. If their site is too complex, then consumers might perceive the whole process as too complicated and move on to other sites. If they did decide to purchase at that point, they probably would not return in the future due to the work involved on their part.

 

Branding

Having a strong brand is important for both the B2B and B2C site; however, it is for different reasons. The B2C site needs to have a powerful brand for customers to buy their product and remain loyal. Having a strong brand also means that the company has the potential to charge a higher price than a competitor. For example, Nike can charge more for its shoes, which might be similar to a competitor’s, because its brand name carries a certain image that consumers want to have. The same is true for an online brand. When consumers recognize a brand, there is a certain amount of trust that goes along with it. Consumers tend to trust sites they have heard of over those they have not. The B2C site, for the most part, relies on appealing to consumer’s emotions, playing to their desires, style trends, and image. With a B2B site, brand identity is created through personal relationships and will only help a business to be considered, not necessarily chosen. B2B buyers use more rational thought when choosing a product/service for their company and then to be motivated by cutting costs, increasing profitability, and increasing productivity.

Advertising

B2C sites’ online advertising tends to consist of e-mail marketing, pop-ups, banner ads, online communities, other companies websites, etc. B2B sites may use some of these techniques as well, but also use word of mouth, brochures at trade shows and conferences, field sales, e-mail marketing, etc.

The following chart highlights some of the key differences between B2B and B2C website marketing:

 

 

B2B Marketing features:	B2C Marketing features:
1.Strategy
Consumer based strategy	Product based strategy
2. Transactions
Transactions take place among and within value chains.	Transactions through the dealer to the end consumer
3.  Transaction Size
Large unit transactions	Small transactions
4. Value
Value primarily determined by business economic use.	Value determined by end-consumer perception.
5.   Market Size
Small, focused target market	Large target market
6. Branding
Brand identity created by personal relationships.	Brand identity created through repetition and imagery.
7. Products
Personalized marketing and customized products and prices for many types of customer.	Generally similar consumers looking for similar products.
8. Selling Process
Complex and lengthy selling processes, usually involving a demand decision chain.	Linear selling process, usually of short duration.
Educational and awareness building activities	Merchandising and point of purchase activities.
9. Sales Focus
Sales focused on key account management and multiple purchasing influencers.	Sales activity focused on the end user.
10.   Buying Decisions
Rational buying decision based on business value.	Emotional buying decision based on status, desire, or price.

 

 

Conclusion

Whether a site is geared to do business between other businesses or with individual consumers, marketing plays an important role. A company must know its product and the audience it is trying to target. Depending on who the site is trying to target will determine the marketing strategy that will be used. Personal relationships play a much more important role in the B2B site. It has to be flexible for the differing needs of all its different customers, while the B2C site needs to engage the user with bold and entertaining images to try to entice them to stay with the site.

 

 

Q.2   What is a social networking site? Discuss its merits and demerits.

 

Q.3    How does an e-CRM help? Explain briefly the method used to calculate the Life-cycle of a customer.

 

Q.4             Why is knowledge management necessary? What is knowledge management metrics and how important is it to an organisation?

 

Q.5            Explain briefly any three types of cyber-crimes. Explain the punishments given for cyber-crimes.

Q.6            Make a comparative study of advantages and disadvantages of B2B, B2C, B2G markets and how e-marketing can be successful in each.