Definition of B2B marketing
Business to Business or B2B marketing refers to the marketing of products and services to other business for the production of goods and services necessary to run their business. An example of a B2B marketing can be the list of transactional activities carried out between a company producing iron and steel products and an automobile engineering company using those iron and steel products to manufacture cars, engines and vehicles (Wiersema 2013).
B2B marketing is nothing but all about meeting the needs and demands of other businesses whose demands have been derived from the needs of their consumers. In B2B, the buying decision is always rational because the relationship between the two businesses is focused (Möller and Parvinen 2015).
Although B2B marketing existed a long ago, research and understanding on the concept in the field of marketing have developed only towards the early part of the eighteenth century. Business to business marketing is employed by almost all organizations today to maintain a steady balance within its functioning. Such a model develops relationship between different businesses in the markets in order to meet the supply and demand of these firms.
Companies and firms that use their products
Government agencies and departments
Social institutions like school, colleges, universities, hospitals and nursing homes
Companies that resell goods to consumers like wholesalers, brokers
General Electrics is an American multinational corporation that has its headquarters in Massasuchetts in USA. Established in 1892, this 125 year old conglomerate operates in various segments like aviation, digital and energy connections, health and medical services, life sciences, medical equipments and devices, research and development, transportation, oil, gas, power and renewable energy, financial services, software, automotives, pharmaceuticals and engineering industries. The brand is a global digital industrial company which transforms industry with software-defined machines and their solutions. The total revenue earned by the conglomerate is $123,693 million (GE.com 2016). The Fortune magazine has ranked GE in the 11th position in its list of top 500 companies in the world.
GE is a conglomerate that runs in 190 countries dealing with various types of industrial segments. The products and services of GE are sought after by big businesses like TCS, PT Garuda Indonesia, Briggs & Stratton Corporation and NASA. This diverse customer base is evident of the fact that the reach of the company has been wide ranging equally focusing on the fact that there are challenges too in the course of its business. Therefore, it becomes a necessity of the company to adopt B2B marketing to promote its diverse products and services to increase sales (Leeflang et.al 2014). Here is a discussion on the challenges faced by the B2B marketing of General Electrics or GE as a conglomerate.
History of B2B marketing
In the present times businesses ought to be dynamic and up-to-date with the requisite information and up gradation on the new innovations in the field of science and technology. Prioritizing the need to manage and develop new products, technologies, solutions and services gives a company an edge over its competitors making it a name worth reckoning. GE offers a myriad of products and services to its client base ranging from supplying from highly reliable and fuel-efficient power plant for the Boeing777 family to software solutions and healthcare solutions. It is therefore very important for the company to plan and operate in a manner that all the tangible and intellectual property of the company are effectively utilized to offer quality products to the businesses the company is catering to. For this reason the legal implications, the third-party rights and the licensing issues are to be taken utmost care of in the different countries of their operations (Annual Report of GE 2016). Moreover, the countries where the brand is less operational strategies should be built in to enhance and explore potential client base not ignoring the existent competitive environment. The patenting rules and research innovations must also be protected from the evils of copyright infringement and cyber attack (Leeflang et al. 2014).
GE produces highly sophisticated products and services for their customers who are the businesses and third parties. GE uses world class and most advanced technology in manufacturing these products both in the form of hardware and software. Majority of the conglomerates production includes complex machineries of industrial or infrastructural products ranging from power generation and oil drills to jet engines. Such products always carry with them the possibilities of disastrous failures too.
The company has developed extensive operational functioning of adhering to strict quality check parameters so that there is no possibility of it getting compromised at any level of production, distribution or sale. The standards are also different from products to products as well as from products to services. An efficient and proper monitoring of the entire supply chain management functions through a well built communication network will help manage these variations and diverse activities (Annual Report of GE 2016).
Maintaining a profitable pricing policy is a must for any business. The pricing strategy helps businesses to evaluate price, perceived value and volume in order to make a well-perceived pricing decision. In order to develop a profitable pricing strategy GE has to understand the dynamic relationships between price, perceived value, and volume, or quantity in a market and increasingly so when its market base is spread across different nations with different economic conditions. It is a usual tendency to pay high for products which have higher perceived values than for products which have a relatively low perceived value. Moreover, perceived value also differs from products to services. Additionally goods and services that are produced in bulk have low prices in comparison to products and services which are produced on a limited scale. The prevailing economic conditions of countries and territories of operation also determine the price. The mergers, acquisitions, credit ratings, conditions of the financial and liquidity markets also challenge the price level from time to time (Füreder 2014).
Examples of B2B businesses
In order to overcome the challenges that seems to disturb the operations of a B2B marketing businesses like GE need to focus more on the following points:
Identifying possible risks: The possible factors of risk of a business can be understood through a proper understanding of the external and internal environment. 57% of the revenue earned by the company in 2016 was gathered from the activities of the company outside the US (Ge.com 2016). The early and time to time detection of threats like cyber security, copyright infringement, legal implications, volatile market conditions, prevalent economic instabilities, political conflicts and environmental concerns should be enumerated meticulously. GE has its operation on a global scale hence it should take all the mentioned factors into account which will be different from country to country and market to market. The Company must adopt the policy of value-based pricing which will also help the brand get rid of the risk of competitive pricing (Imd.org. 2015). This will also help in building strong customer relation.
Effective Communication: A clear, effective and regular communication between the businesses and its client businesses and within the business itself shall bridge all barriers of communication bottlenecks (Ulaga and Loveland 2014). GE has different subsidiary business offering various products and services. Therefore, it becomes all the more important to evaluate, revise and integrate all the marketing policies so that it gives a time to time understanding of the company’s position in the market as a brand. The effective communication will also help in the clear monitoring of the supply chain management functions and the cost issues. A well researched communication plan will help identify and prioritize the objectives (Simula, Töllmen and Karjaluoto 2015). It has also been observed that most b2b marketing businesses rely on indirect communication channels like digital communication modes through videos of third party, social media and reviews send by consumers to gather information on whether their products are meeting the customer’s needs or not (Jussila, Kärkkäinen and Aramo-Immonen 2014).
Integrated solutions keeping in mind ‘human experience’: B2B marketing approaches should develop integrated approach in find out the challenges faced during its functioning. This refers to an approach where solutions are tailored in a manner that it fulfills the needs of different segments (Porter and Heppelmann 2014). For example if GE plans to change its pricing policy for its healthcare services it must integrate the aspects of reorganizing its sales and service force, launch a new approach to sell to its target hospitals and integrate the diagnostics with information services. GE has also struggled a lot in achieving the aspect of ‘human experience’ in its marketing approach. The company through its series of commercials on the concept of making human experience is trying to make this concept take the center stage of its marketing. This is a paradigm shift in the company which is attempting to make the customer experience more rewarding to guarantee its profitability (Holliman and Rowley 2014).
Introduction to General Electrics (GE)
Conclusion
B2B Marketing reflects the relationship of business that exists between two businesses. A B2B marketing businesses can effectively offer their product or service into the right hands by understanding the customer’s needs and requirements, positioning their products and services in an alluring manner and also offering the appropriate and correct solutions to balance the two. Such businesses can develop and decide how to employ their respective marketing plan by identifying and understanding the importance of the fact that it is ultimately the consumers to whom they are catering to. The businesses with which they have their transactional activities are derived by the demands of the customers of those businesses. Moreover the challenges that arise in a B2B marketing approach also need to be addressed to achieve maximum profitability for the firms. In order to mitigate the challenges of managing new innovations and product development GE must adopt a strategic planning and then implement the production and launch. The pricing strategy should be value based and the management of the businesses should be done keeping in mind the fact that all are the products of the same brand and hence the quality and profitability of one is likely to affect the other.
References
Füreder, R., Maier, Y. and Yaramova, A., 2014. Value-based pricing in Austrian médium-sized companies. Strategic Management, 19(10), pp.13-19.
GE.com 2016. LEADING A DIGITAL INDUSTRIAL ERA. [online] www.ge.com. Available at: https://www.ge.com/ar2016/assets/pdf/GE_AR16.pdf [Accessed 9 Jul. 2017].
Groza, M.D. and Ragland, C.B. eds., 2015. Marketing Challenges in a Turbulent Business Environment: Proceedings of the 2014 Academy of Marketing Science (AMS) World Marketing Congress. Springer.
Gummesson, E., 2014. The theory/practice gap in B2B marketing: reflections and search for solutions. Journal of Business & Industrial Marketing, 29(7/8), pp.619-625.
Holliman, G. and Rowley, J., 2014. Business to business digital content marketing: marketers’ perceptions of best practice. Journal of research in interactive marketing, 8(4), pp.269-293.
Imd.org. 2015. B2B Pricing Strategy. [online] Available at: https://www.imd.org/business-school/online/b2b-pricing-strategy.html [Accessed 8 Jul. 2017].
Jussila, J.J., Kärkkäinen, H. and Aramo-Immonen, H., 2014. Social media utilization in business-to-business relationships of technology industry firms. Computers in Human Behavior, 30, pp.606-613.
Leeflang, P., Verhoef, P., Dahlström, P. and Freundt, T. 2014. Challenges and solutions for marketing in a digital era. European Management Journal, [online] Volume 32(1). Available at: https://doi.org/10.1016/j.emj.2013.12.001 [Accessed 6 Jul. 2017].
Möller, K. and Parvinen, P., 2015. An impact-oriented implementation approach in business marketing research: Introduction to the Special Issue on “Implementing Strategies and Theories of B2B Marketing and Sales Management”. Industrial Marketing Management, 45, pp.3-11.
Porter, P. and Heppelmann, J. 2014. How Smart, Connected Products Are Transforming Competition. Harvard Business Review. [online] Available at: https://hbr.org/2014/11/how-smart-connected-products-are-transforming-competition [Accessed 8 Jul. 2017].
Simula, H., Töllmen, A. and Karjaluoto, H., 2015. Facilitating innovations and value co-creation in industrial B2B firms by combining digital marketing, social media and crowdsourcing. In Marketing Dynamism & Sustainability: Things Change, Things Stay the Same… (pp. 254-263). Springer, Cham.
Ulaga, W. and Loveland, J.M., 2014. Transitioning from product to service-led growth in manufacturing firms: Emergent challenges in selecting and managing the industrial sales force. Industrial Marketing Management, 43(1), pp.113-125.
Wiersema, F., 2013. The B2B agenda: The current state of B2B marketing and a look ahead.
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