Business-to-business refers to a model that sells products and services to other firms. It mainly acts as a supportive enterprise that offers services to help other companies succeed. The marketing purpose is the production of goods and general business operations (Batt and Purchase, 2003). For instance, Xerox, an American global corporation that provides paper and print services to other businesses. The primary customers in B2B marketing are government agencies, companies, and institutions (Christopher, 2011).
The most effective business-to-business marketing strategies focus on reducing costs, increasing sales and meeting government regulations (Blythe, 2005: 13). The most important part of business marketing success is to develop and maintain customer relationships (Blythe, 2005). A mutual exchange of promises and fulfillment (Gronroos, cited in Blythe, 2005) is a strategy to create productive business relationships and to gain benefits. A seller makes promises related to services, products, information, financing, and administration. The buyer, conversely, gives commitments on the product usage and payment (Blythe, 2005).
Supply chain management, on the other hand, is process management that controls the movement of products, finances, and knowledge from the supplier to the last consumer. It includes the integration of various activities and building relationships as well as the maintenance required to perform those operations (Batt and Purchase, 2003). Aspects of a supply chain are production, warehousing, distribution and management of information flows. It concentrates on maintenance, procurement, distribution and inventory management.
The main idea in B2B marketing and SCM is to create place and time utilities in products to maximize value in businesses. An efficient and effective system of logistics is required to reduce costs and improve services between organizations (Christopher, 2011). This structure sets a basis for trade while building profitable and long-term relationships with businesses. It also creates specialization and efficiently manages activities such as warehousing, transportation, information monitoring, and order processing and inventory control (Hutt and Speh, 2012).
Some of the challenges facing people working in supply chain management and B2B marketing include the impact of new technology, emerging and current competition, supply chain issues, resource issues or market changes and globalization (Hutt and Speh, 2012). Others are sustainability, new products and services, and legislative or political differences. The two main challenges and their impact on SCM and B2B marketing employees are:
Globalization refers to the integration of business markets, a process that results in closer international trade ties. Another definition is, as a conviction which brings interdependence and integration in the international community. The pillars of internationalization are civil and legal organizations that support business rights and open trade. These towers facilitate social and economic integration. The process of globalization strengthens and enhances global understanding and improves business effectiveness, interactions, and quality, and through unlimited access to global technology, goods, and market data (Hutt and Speh, 2012).
Reasons for globalization
As Jobber and Ellis (2013) tell us, “Despite the value accompanied with operating as well as managing a multinational business, organizations explore universal production for various reasons,” for example, the benefits offered, that is;
- Better resource access as certain world regions is endowed with different resources, for instance, minerals in South-American nations.
- Access to cheaper operation and labor costs. Since labor rates vary significantly among nations, it encourages firms to locate their production overseas. It is less expensive for companies to expand their production activities in other countries rather than in their home countries. For example, many internet based customer support and telephone centers are established in India to take advantage of the lower labor and operating cost.
- A means of obtaining the skills as well as knowledge of the employees in a specific nation, for instance in engineering, IT-based and financial functions. However, this does not necessarily mean access to lower operating costs. For instance, unlike in India, firms place their operations in Japan and Germany to acquire skilled labor, although at a higher price.
- Ability to acquire new market accessibility. Firms and organizations market their services and products to current customers by establishing business activities in other countries. It helps create growth opportunities in the foreign countries. For example, the various McDonald’s and Star buck outlets around the globe.
- For industry-specific and political reasons. For instance, a firm can locate production in a different country, participate in the community activities and provide employment. By doing this, the organization gains recognition as a local company instead of a foreign unit. A good instance is Holden Vehicles that have been regarded as a part of the Australian general motor family.
- A substantial reduction in distribution costs and logistics due to a strategic international location of a company’s facilities. An overseas place can suit as a hub that facilitates merchandise distribution to other fairs. For instance, electronic producers such as Sony and Apple operate warehousing and distribution facilities at strategic locations in Asia, Europe, and North America.
- To benefit from the advantage of financial and tax incentives provided by the local government. Various emerging nations have set up “tax-free production zones” to encourage development. Firms operating within these zones get access to cheaper capital and significant tax rebates. For example, international software development firms situated in the Santacruz electronics export processing zone (SEEPZ) in India enjoy pleasing levy incentives.
B2B Marketing and Globalization
International business and B2B marketing go together, and there are real challenges which the marketers face. Having an understanding of the impact of globalization on B2B marketers is critical to know the benefits and challenges of internationalization of businesses. Some global macroeconomic effects of the process globalization are internet and technology improvements, the emergence of new markets, creation of free trade agreements and the rise of the European Community.
Benefits of Globalization on B2B Marketing
Benefits of globalization on companies include; superior speed to markets, increased sales through access to mass markets, better access to resources, reduced costs and economies of scale, unique worldwide brand identity and name and better access to tax savings and finance (Blythe, 2005). On the other hand, consumers benefit from a full product variety, lower prices, and improved quality. Countries also benefit from the high standards of living associated with globalization. As Blythe (2005) tells us. The benefits of globalization on marketing are as follows;
- To create a global brand identity and name for the worldwide firm. The significant effect of this advantage is the reduction of communication costs. The low prices are as a result targeting the same consumer segments in all markets using the same product concept.
- Access to new sources of financing and resources.
- There is a generation of weighty economies of scale. This process is possible by standardizing communication and packaging operational marketing.
- There is a possibility of market expansion. It further results in a significant sales volume increase.
The drawbacks of B2B marketing globalization are:
- Lower responsiveness and insensitivity to local markets mainly because the managers from firm headquarters have very few contacts with the local markets.
- Centralization causes an adverse effect that slows down marketing decisions, for instance, slow reaction to a definite local consumer problem.
- Development of a very standardized product that does not tailor to some of the consumer’s needs.
- High risks face the management because of the vulnerability of global brands.
Globalization and Supply Chain Management
Modernization and spread of transport infrastructure, competition intensification and changes in the trade have increased the significance of flow management (New and Westbrook, 2004). An example of an SCM is when a company develops a product in Australia, manufactures it in India and sells in Canada. Globalization forces businesses to regard other firms when considering the competitive strategy analysis to use, regardless of their market base or location.
Therefore, companies cannot ignore or isolate themselves from external factors, for example, competitive situations, technology innovations in different countries and economic trends (Christopher, 2011). These forces raise a need for companies to change management and logistics operations. A logistics framework designed in a way that integrates its activities helps meet the difficulties of a globally integrated economy.
Effects of an Integrated Economy on Global SCM Operations
- a) Functional integration
The responsibilities of a logistics and operations manager were compartmentalized and sequential, for example, coordinating the physical flow of production, distribution and after-sales activities (Christopher, 2011). With globalization, the managers are responsible for research, marketing, and development functions. This process is referred to as functional integration and achieves an improved flow management.
For example, automobile manufacturers like Renault in Europe, combine two teams when setting up a new model development project: one from the logistics department and another from research and development group. The two teams work together to simulate procurement and manufacturing flows following principles set up by the researchers unit. However, the supply line group, for example, can recommend alteration at the design stage in a bid to generate savings.
- b) Sector integration
In the traditional channels, manufacturers, distributors, and customers worked in isolation with the aim of individual logistics and operations optimization. The personal flow system concern created inefficiencies and problems for the other channel players that led to the hindrance of smooth channel flow and additional costs to the system. With globalization, firms cooperate with all the channel parties (cross-boundary cooperation) to achieve optimization on the entire supply chain system (Christopher, 2011).
- c) Geographical integration
This type of combination is established to help abolish geographic boundaries and enable companies to view their globalized channel network as a single entity. This process allows for businesses and organizations to obtain access to production and marketing globally. The critical features of geographical integration for corporations are selling in multiple countries, establishing production sites in different countries, and implementing worldwide sourcing (Christopher, 2011). These features imply the existence of a well-designed logistics and operations approach.
The regional economic integration exploits the integration with an excellent example of the European Union. The start of the integration process revoked customs duty between the EEC (European Economic Community) nations. The deduction act saw firms rethink the material flow channels. Geographical integration is made possible by the improved global transport, communication and data processing technologies.
Impact of Globalization on SCM
For companies, globalization has created both risks, for example, increased number of competitors and opportunities such as new markets. Complexity in managing supply chain increases as organizations shift to globalization (Håkansson et al., 1982). Some of the challenges that face SCM practitioners are:
The volatility of supply and demand– the global market has made demand and supply hard to forecast and more volatile because of the higher reliance created on different firms spread over vast distances, hence the term, global network. The increased number of customers and suppliers globally has caused the supply chain to become more involved. This volatility makes it hard for the managers to maintain control of the chain operations (New & Westbrook, 2004).
Inadequate information– low data sources, limited knowledge and sophisticated data collection methods weaken the supply chain. With the significant number of channel partners, chain decisions are hard to make without full information, the result of which brings risks to the success of a supply chain (New & Westbrook, 2004).
Increased competition for low-cost products– expanded markets translates to more competitors regarding labor, supplies and products access. Firms need to explore lower costs, more efficient technologies, faster delivery services and strategies to provide customers with better quality products to maintain a comparative advantage over their competitors (New & Westbrook, 2004).
More significant risks involved– having supply chain operations worldwide increases risks, such as to political uprisings and from natural disasters. It could result in loss of materials, customers or the business premises. Globalization requires the supply chain managers to have risk management plans (New & Westbrook, 2004).
- New Technology/Internet
B2B marketing and SCM have partially shifted to the internet. Online and Internet-based markets reduce both the supply chain functions and management costs. One key to the reduced costs is the availability of adequate information that results in increased speed and transparency of transactions. All partners in supply chains and channels can access the specific information they require, faster and reliably, to complete business transactions, such as the exchange of goods and services and to receive fast payment.
Role of the Internet in SCM and B2B Marketing
- a) Procurement
The internet gives supply-chain partners a rapid access to all information about sources, their availability, technical data, and pricing. The quick access to information reduces purchases costs. Supply chain partners play the role of ensuring data is available online. They, therefore, must cooperate to achieve successful delivery of online information, possibly in secure folders that are only accessible to the account holders or the channel partners (Batt & Purchase, 2003).
Procurement facilitation is possible once information to make a purchase is readily available from several sources online. It is more efficient as the best source to make a purchase is identified more quickly (Batt & Purchase, 2003). The internet, therefore, reduces procurement transactions costs without necessarily diminishing the actual prices to be paid.
- b) Direct Transactions
The primary and significant role of the internet is to minimize intermediaries’ power (disintermediation) in the supply chains, a process that enables strength of direct transactions. For instance, purchases obtain what they require directly from the producers and suppliers offer products and services directly to their customers. The supply disintermediation simplifies management of supply chains by making real data changes in market supply and demand (Batt & Purchase, 2003). This trend is articulated more in B2B marketing transactions. Intermediaries, however, remain significant in retail operations.
- c) Supply
The most critical role of the internet in supply is to increase the size of open markets significantly. Suppliers, using the internet to market their products and services gain global market access. With the high transparency of the internet regarding pricing, most suppliers have lost the strategic levers to cultivate greater margin accounts.
The ability to achieve massive sales volume through competitive suppliers balances the transparency disadvantage. Once a supplier finds a customer or market, they benefit from reduced transaction costs similar to those of purchases (Batt & Purchase, 2003). This advantage is as a result of efficient and speedy transactions.
- d) Collaboration
There is a possible existence of a closer integration of procurement and supply functions through the internet. Purchase aim to find low-cost and reliable source while suppliers seek to achieve high and predictable sales volume. Companies and firms can satisfy these goals by providing enhanced data on procurement needs and production under long-term relationships (Ford, 2002). The result of which is high and steady volumes that enable suppliers to offer their products at lower costs. On the other hand, purchasers receive a reliable supply and benefit from cost reduction.
Impact of Technology on Supply Chain Management (SCM)
For many organizations in SCM, new technology is noted as a significant transformation tool in business. As the chain becomes more deviated in its activities, supervisors seek better methods to reduce costs, better their services and raise investment returns. The efficiency of processes and activities in the supply chain, reliability and flexibility, and emergence of new technologies defines an efficient supply chain (New & Westbrook, 2004).
Technology implemented in the transportation and logistics sectors includes the wireless and mobile technology. Technological innovation is vital in SCM to enable real tracking and accuracy in delivery systems within the chains. Leveraging the new technologies, especially for large companies with deep older technology investment, is important in the modern competitive industry. Examples of situations where the internet has an impact on supply chains are risk management, transparency and visibility, manufacturing flow management, improved fleet management and operational efficiency (New & Westbrook, 2004). Ways in which technology is transforming SCM are as follows:
Focus on individual employees: Traditionally, companies believed in different tools for different jobs, but recently, employees are paired with ruggedized devices, tablets, and smartphones to facilitate useful daily work. Companies strive to match a position with its right gadget as mobile devices become varied and more diverse (Hutt & Speh, 2012).
Firms put employees in charge of their specific job devices to reduce damages and encourage care. While the smartphones are gaining priority in the supply chain operations, they are prone to fast damage in high impact environments. To create a technology stimulated workforce which is efficient requires an organization to consider the necessary activities of each employee (Hutt & Speh, 2012).
To achieve transparency and greater efficiency: Companies aim at reducing supply chain costs to obtain more significant cost-saving initiatives. Supply partners require better clarity and more services from the supply chain managers. To meet these expectations, supply chain and logistics managers turn to cloud computing and wireless technologies to improve accuracy and automate supply systems (Hutt & Speh, 2012).
The automated systems are more efficient, faster and provide for better information capture that is kept and examined for advancement. For instance, mobile gadgets can transport wireless experience of real transportation surveillance that helps supervisors to expose any operational anomalies and resolve them (Hutt & Speh, 2012).
Technology, for example, RFID (radio-frequency identification) is one popular method of automatic data-capture and identification. RFID tags are attached to inventory and items such as clothing. These tags enable great tracing possibilities, and they apply to many supply chain aspects. This technology reduces costs of labor by reducing error-prone manual operations and streamlining data-capture (Jobber & Ellis, 2013).
Other companies adopt new technical knowledge to modernize client supply activities and better the relationships. The application of CRM automation provides an executive-stage appearance of chain activities that can help supervisors establish inefficiencies in trade activities.
Enabling a direction for small carriers: The advantages associated with automation, for instance, RFID and cloud computing is compelling, but for larger companies these technological transformations are difficult. The large firms have connections to complicated wired technology systems, and change to new technology comes slowly due to the associated substantial investments in their technology (Jobber & Ellis, 2013).
Small firms with fewer investments in their current system find it easier to integrate new technologies successfully. For the small companies, operations take place with relatively affordable technology, such as mobile devices. This flexibility provides an edge for the small carriers, and it makes them more flexible and agile in the competitive environment (Jobber & Ellis, 2013).
Building tighter communication: Frequent and smooth contact makes business operations faster. Real-time communicating and mobile technologies creates greater developments and sense of unity to the supply chain managers. Managers are frequently on the move, but access to operational information and improved communication provides them with knowledge on daily activities in all stages of the supply chain (Hutt & Speh, 2012).
Understaffed companies or those having difficulty filling the required capacity should have a strategic workforce management. Availability of flexible communication channels in all aspects of the supply chain is critical to boost morale and increase employee productivity. More excellent communication and collaboration translates into better customer services. Effective communication aids in product delivery and tracking, hence, high customer satisfaction with the chain process. When there is a connection through the supply chain stages, employees feel more fulfilled, and supply chain operations run smoothly (Jobber & Ellis, 2013).
Government Mandates: Some departments of the government, for example, Department of Transport, may push companies to opt for and shift to wireless technology solutions. Supply chain transportation sectors, for example, fleet management, are faced with stringent government regulations. Companies need to embrace wireless technology and turn to better logistics technology and software that can reduce costs and save time. As the government adopts new technological solutions, supply chain managers have to comply as well (Jobber & Ellis, 2013).
Although there is a significant impact of technology on SCM, implementation of the technological changes is slow. Companies need to understand the role of cloud and mobile technologies while striving with an integration of the new technologies in their current systems.
Impact of Technology/Internet on B2B Marketing
Telecommunications influence B2B sales investments, business channels, allocation of resources, the firm, and mgt. New emerging technologies such as cloud computing and ‘Sales 2.0’ transform and improve traditional functions of personal selling and B2B sales agents (Blythe, 2005). The internet disrupts many classical models of the business-to-business sales organization and resource allocation. The impacts of internet technologies on different B2B marketing stages are;
Sales channels mix: The internet, as a distribution channel has a profound effect on buying, selling, and communication. Various companies are increasingly establishing their online direct sales channels to overcome reliance on traditional intermediaries. Both offline and online multiple distribution channel strategies are adopted. Firms with the combined web and physical channels have the advantage of hybrid e-commerce and cyber-enhanced retailing. However, the addition of an internet sales channel to the distribution mix creates significant challenges such as ‘channel conflict’ to the channel managers (Gummesson, 1999). Market differentiation and communication helps to resolve these conflicts.
Some of the factors that encourage manufacturers to develop internet sales channels are: launching new products, customer information management, as a secondary channel and for retailer management issues. The rapidly changing technology will continue to impact aspects of marketing and sales investment mix. Technology is changing the sales executive’s job in instances such as the collaboration of CRM, increased outsourcing sales and marketing functions and migration of direct sales role to better aligned value-added direct sales (New & Westbrook, 2004).
Selling process: Technology has an impact on the four marketing mix and therefore a change in the marketing process. The internet allows firms to develop new products by providing integrated services, for example, financial services. Using extranets offers individual clients with a firm’s internal system access and helps to create and value in the business relationship (Gummesson, 1999).
The internet technology enables customers to obtain more information about a company easily. It creates fair price competition because customers can easily compare prices. Computer systems are used to lower the effort and time involved in production and distribution of goods and services, and thus, suppliers increase their margins or offer services at a lower cost.
Place- Developments in databases allows new market segments that are profitable and easily identified (Gummesson, 1999). Promotion- websites, interactivity, and the personalization make promotion efficient. In summary, technology changes marketing interactivity, integration, intelligence, independence of location individualization and industry restructuring.
Salesforce size and structure (sales force management): The internet is one revolutionary force that affects the size of a sales force in B2B markets (539). It presents the single most current important technology for companies to improve services, cut costs, to deal with customers efficiently and expand their markets such as Web 2.0 and cloud computing. This technique helps organizations to save on costs by reducing costs of sales and marketing and human resources.
Salesforce productivity: The internet, wireless and mobile technologies and electronic commerce (e-commerce) have a significant impact on management and productivity of the sales workforce. Data, analytics, and other internet tools improve organizations’ sales force. Internet adoption restructures the sales workforce and cuts down on resources enhancing productivity (Jobber & Ellis, 2013). It has become a powerful tool that transforms fundamental dynamics behind business interactions growing companies in aspects of popularity and profitability.
It is essential to understand that globalization and new technology are here to stay. Supply chain managers and B2B marketers should create systems and frameworks to take advantage of the opportunities offered by the internet/new technology and globalization. They should also develop strategies to confront all the parallel challenges that come with globalization and technological developments (Christopher, 2011).
For instance, companies can reconfigure their supply chains and management operations due to global rivalry and advancements in ICT. Managers can develop better price, product, promotion and distribution strategies to cope with the effects of globalization and technology advancements.
To cope with globalization, for example, global companies can manage their operations and activities in numerous diverse markets spread across the world. To have a successful management of all markets, managers can implement a local marketing strategy such as the establishment of a regional headquarter (Jobber & Ellis, 2013). This type of control enables the marketing mix of many companies to be local and global at the same time.
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