B2C and B2B Markets the Objective of Essay

Excerpt from Essay :

B2C and B2B Markets

The objective of this study is to examine that while marketers acknowledge that relationship marketing is important to both B2C and B2B markets, some believe it is more important in a B2B market and why it is that they feel this way and finally if they are correct. The concept of relationship marketing based on delivery of superior value is reported to place emphasis on the customer view as centric to marketing this study examines whether this is correct and if so then why. It is reported in another source that B2B and B2C"… are terms coined and popularized by the worldwide web for commerce and e-Business sales." (APEXTWO: CRM & Marketing Automation Experts, 2012)

While the marketing programs for B2B and B2C are the same the motivation for purchase is differentiated by the needs in terms of the information needed to motivate the purchase decision. (APEXTWO: CRM & Marketing Automation Experts, 2012, paraphrased) B2B is stated to be "…contemporary shorthand for a longtime sales practice called business-to-business while B2C represents business-to-consumer. In essence, B2B deals primarily with other businesses, not the general public…" (APEXTWO: CRM & Marketing Automation Experts, 2012) B2C however, makes provision of products and services "directly to the end user." (APEXTWO: CRM & Marketing Automation Experts, 2012)

The first step in the establishment of marketing strategies for both B2B and B2C are similar in nature in that the target customer must be identified as well as why it is that this specific customer needs to hear the marketing message however it is reported that from this point "the marketing activities diverge." (APEXTWO: CRM & Marketing Automation Experts, 2012)

Argument

It is the position of this study that B2B marketing is of greater import than B2C marketing and that B2B marketing is representative of much longer customer relationships than B2C marketing.

Literature Review

The work of Rauyruen, Miller and Barrett (nd) reports a study with the objective of providing an illustration of "how relationship quality can influence customer loyalty or loyalty in the business-to-business context" and builds on prior research while proposing relationship quality as a higher construct comprising trust, commitment, satisfaction and service quality and state that these specific dimensions of relationship quality "… can reasonably explain the influence of relationship quality on customer loyalty." (Rauyruen, Miller, and Barrett, nd)

Suppliers in the B2B environment need to have an understanding of both the "nature and circumstances of their customers because of the unique characteristics of the customers acting as an organization." (Rauyruen, Miller, and Barrett, nd) There is a generally held belief that customer loyalty results in profitability. (Rauyruen, Miller, and Barrett, nd, paraphrased)

In the endeavor to fulfill the needs of business customers "many supplying and selling firms engage in relationships with the business customers and see the importance of the strategic management of supplier and customer relationships. The quality of business-to-business relationship is viewed by many as being "…as a crucial factor in building success in the market." (Rauyruen, Miller, and Barrett, nd) Customers that are retained in the long-term are those that those who are satisfied. The development of loyalty however and how it can be applied in the business-to-business context is little explored. Three primary stream of research exist and those are reported as the following:

(1) Behavioral loyalty;

(2) Attitudinal loyalty; and (3) Composite loyalty. (Rauyruen, Miller, and Barrett, nd)

It was argued by Tucker (1964) that behavior (in terms of past purchases of the brand/product) "completely accounts for loyalty" and in 1978 Jacoby and Chestnut made the observation that behavioral loyalty studies focused on interpretation of patterns of repeat purchasing in primarily panel data as a manifestation of loyalty." (Rauyruen, Miller, and Barrett, nd) Loyalty is held to be stochastic rather than deterministic. (Rauyruen, Miller, and Barrett, nd)

Day (1968) is reported to have proposed that behavioral and attitudinal components of loyalty could be reconciled and he states "loyalty viewed in terms of purchase decisions may not distinguish between loyalty and spurious loyalty." (Rauyruen, Miller, and Barrett, nd) Baldinger and Robinson (1996) stated the need to "extend typical definitions and measurement approaches of loyalty" suggesting that a study should be undertaken of the "attitudinal components for additional understanding of the stochastic representation of behavioral loyalty." (Rauyruen, Miller, and Barrett, nd)

The concept of relationship quality is reported to have arisen from theory and research in the field of relationship marketing in which the ultimate goal is to strengthen already strong relationships and to convert indifferent customers into loyal ones." (Rauyruen, Miller, and Barrett, nd) Previous research on relationship quality has considered and applied testing to the concept of relationship quality in varying research contexts and "the definition and operationalization of relationship quality differs from research project to research project." (Rauyruen, Miller, and Barrett, nd) It is agreed however, "the concept of relationship quality is a higher-order construct consisting of several distinct but related components or dimensions. These components are reported as:

(1) Opportunism;

(2) Customer orientation;

(3) Conflict;

(4) Trust in salesperson;

(5) Trust;

(6) Commitment; and (7) Perceived quality. (Rauyruen, Miller, and Barrett, nd)

There are four different but related dimensions stated to comprise relationship quality in the work of Rauyruen, Miller, and Barrett (nd) and those are stated as:

(1) Trust;

(2) Commitment;

(3) Quality; and (4) Satisfaction. (Kotler, 1994 cited in Rauyruen, Miller and Barrett, nd)

According to Aaker (1991) and Heskett, Sasser and Schlesinger (1997) "satisfaction is a key determinant to every level of brand loyalty. (cited in Rauyruen, Miller, and Barrett, nd) B2B markets are smaller markets that are vertical such as niche size in which there are only thousands of sales prospects whereas the B2C markets are larger and broader markets with tens of thousands up to millions of sales prospects. (Back Office Business Solutions: My Marketing Department, Inc., 2012, paraphrased) The B2B sales are generally accomplished through a purchasing process that is "defined in months" and as well the sale is complex in nature and takes months to reach completion. However B2C sales are short periods lasting from a few minutes to a few days. The B2B sales require consultative selling or selling that has the client's needs as its basis as well as a relationship of trust developing and sometimes "from a two-step level sales organization including the sellers sales force and a distribution sales force." ((Back Office Business Solutions: My Marketing Department, Inc., 2012)

B2C sales however, are generally direct to the consumer or may involve a retailer with the sales approach being one of "a traditional product sells of convincing the consumer they need the product or serving being sold." (Back Office Business Solutions: My Marketing Department, Inc., 2012) B2B sales are reported as "higher ticket" type purchases ranging from a few thousand to tens of millions of dollars however B2C sales may range from one dollar to a few thousand dollars with cars and homes being the exception. ((Back Office Business Solutions: My Marketing Department, Inc., 2012, paraphrased)

The choice to purchase in B2B sales is driven by the need and budgets and tends to be a decision based on a rational base while B2C decisions to purchase are made upon the basis of want more so than need or budgeting concerns and are more emotionally triggered decisions. (paraphrased) Brand identity in B2B markets is created "through personal relationships and consultative selling" while brand identity in B2C markets is crated through use of advertising and social media. (Back Office Business Solutions: My Marketing Department, Inc., 2012, paraphrased) The lifetime value of a B2B customer is reported as much higher due to the higher cost of sales and the likelihood of repeat or add-on sales to the same customer." (Back Office Business Solutions: My Marketing Department, Inc., 2012) The lifetime value of a B2C customer is reported as being "lower than B2B because of the lower cost of an individual sale and repeat sales are generally fewer." (Back Office Business Solutions: My Marketing Department, Inc., 2012)

The bottom line is reported to be that B2B sales prospects are differentiated from B2C in the B2B sales prospects are located in small and vertical markets requiring "consultative selling and taking longer to sell" and as well that B2B sales are "higher ticket sales driven by a rationale sales approach that required developing personal relationships. The payoff for B2B sales prospects is a high lifetime customer value." ((Back Office Business Solutions: My Marketing Department, Inc., 2012)

Hennessey (2012) states that B2B customers "do not want to buy based on what you have to sell no matter what your features, benefits, or because it's on sale now. Fooling them into buying something they don't want or need may result in a onetime sale, but does not create a loyal customer." Hennessey states that loyal and long-term B2B customers make purchases based on "…the power of a relationship you forget or don't forge with them. Things like creditability, trust, integrity, and putting your client first are essential. The best…

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