Executive Summary
This report evaluates the problems experienced by firms in undertaking B2B marketing activities. In an effort to develop a better understanding of the B2B marketing challenges experienced by organizations in the real business environment, the report has taken into account the Saudi Telecommunication Company which is the leading firm within the Saudi Arabian telecommunication industry.
The report is organized in a number of sections. The first section gives background information with regard to the changes in B2B marketing and the challenges experienced by firms in their B2B marketing. Considering the fact that there are numerous B2B marketing challenges faced by firms, the report has focused on the challenge emanating from the large number of individuals who are involved in organizational buying process.
A comprehensive analysis of challenges arising from a large number of individuals in the buying process is evaluated in the second part. The third part entails an analysis of the organization’s customer, competitive and organizational environments. In the conclusion, a summary of the main points considered in the report is given. Additionally, a number of recommendations to deal with the challenge evaluated in the report are outlined.
Introduction
Background of the study
Marketing is one of the most important aspects that businesses have to incorporate in their operation in order to survive in the long run. Blythe and Zimmerman (17) assert that marketing incorporates a number of issues such as conception of product idea, formulating the pricing, promotion and distribution strategies and creating customer relationships in order to satisfy both individual and organizational objectives.
The concept of marketing has undergone significant changes over the past few years. One of these changes is related to increment in the intensity of competition. One of the factors that have stimulated growth in competition relates to the technological innovation. The emergence of different technologies has significantly impacted the concept of marketing.
In their operation, management teams appreciate the fact that attracting and retaining customers can significantly enhance their ability to attain their organizational goals such as increasing their sales revenue and profit levels. To achieve this, businesses appreciate the fact that it is important to attain an effective market position.
There are different aspects that businesses incorporate in an effort to achieve this. One of the market positioning methods that businesses incorporate relates to their target customer. For example, some businesses may position themselves to be selling to individual customers while others may position themselves to be selling to other businesses such as wholesalers and retailers. However, some businesses have integrated both B2B and B2C marketing in their effort to enhance their competitive advantage by improving their sales revenue.
In their operation, B2B firms are experiencing unique challenges. However, in an effort to attract and retain customers most businesses which have adopted the concept of B2B are integrating emerging marketing technologies. One of the technologies that have been widely utilized is the information communication technology.
Most businesses are increasingly automating their operations in an effort to enhance the level of customer engagement and optimize their sales. Additionally, automation of business processes is also aimed at minimizing the cost of operation. One of the ways through which organizations are achieving this is by incorporating new marketing software.
One of the factors that have stimulated businesses to increasingly consider minimizing the cost of their operation is associated with the effects of the 2008/2009 global economic recession. Companies are also considering automating their marketing processes due to growth in customer empowerment.
Over the past decade, customers have become very empowered as a result of growth in social media. In an effort to take advantage of this phenomenon, organizations are increasingly integrating social media in their marketing processes. Automating the marketing processes plays a significant role in enhancing the effectiveness which helps the firms’ management teams accomplish organizational goals.
For example, social media has enabled organizations to establish strong relationships with their customers. This is due to the fact that social media is creating room for a two-way conversation which enables organizations to push their brand message to the customers.
Therefore, social media has significantly transformed marketing into a two-way conversation. Integration of the social media platform into organization’s marketing activities has empowered customers by giving them an opportunity to share information regarding brands. For example, they have an opportunity to share information about their experiences with a certain brand. Through this process, consumers are able to influence others in their decision making process.
Despite their efforts in automating their marketing processes, most B2B firms are increasingly facing new challenges. For example, in their B2B marketing, firms’ management teams are not only being challenged to ensure high volume of leads but also ensure that the leads culminate in sales opportunities.
Additionally, firms are also facing a challenge which arises from lengthening of the sales cycle. Firms which have incorporated the concept of B2B marketing are also required to involve themselves in comprehensive buying processes which are adopted by different customers. Organizations are also expected to ensure that they deliver their products that results in attainment of the perceived value.
To attract and retain a large number of clients, B2B firms are required to ensure that they generate a public relations buzz. Considering a high rate at which firms are adopting emerging media in undertaking their marketing activities, B2B firms are required to ensure that they develop an edge across the multiple marketing mediums. These are some of the major marketing problems that B2B firms are experiencing.
Saudi Telecommunication Company is the largest provider of telecommunication products in the Saudi Arabian Wireless Communication industry. In its operation, STC specializes in the provision of fixed and mobile telecommunication products to residential and institutional customers. STC’s two main brands include inVOICE which entails provision of bundle of voice and QUICKnet which specializes in the provision of mobile internet services.
Additionally, STC also offers data and internet services to its customers. In an effort to attain its profit maximization objective, STC has ventured into the international market through global collaboration. The firm has attained this by establishing an undersea communication cable system which connects more than 35 countries most of which are located in North America, South East Asia, Middle East Asia, Europe and North Africa (Yahoo Finance para. 1).
In its operation, STC’s main clients include the government, non-governmental organizations and other business institutions. In an effort to align itself with the prevailing market trend, STC has incorporated the concept of B2B marketing. The firm has attained this by automating some of its marketing processes.
Aim
The objective of this report is to evaluate a B2 marketing issue faced by the Saudi Telecommunication Company in its operation. Considering the fact that there are a wide range of problems that firms are facing in undertaking B2B marketing activities, the report specifically focuses on the buying process.
Scope
The report is organized in a number of sections; the first section entails an analysis of the B2B marketing problem facing STC in its operation and its importance. The second section entails an evaluation of the customer, competitive and organizational environments.
Finally, a conclusion and a set of recommendations are outlined. Despite the fact that there are numerous challenges associated with B2B marketing, the report only takes into account the challenge emanating from dealing with a large number of individuals in the decision making process.
Analysis of the problem faced by STC in its B2B marketing: Marketing to an large number of individuals involved in the decision making process
STC is ranked as one of the most advanced telecommunication companies within the Gulf region. In an effort to attain its profit maximization objective, the company’s management team has been committed towards ensuring that its services are accessed by a large number of customers within Saudi Arabia.
As a result, STC has established its operations in all corners of Saudi Arabia (Ayed & Al-Allak 78). Since its inception, STC has been committed towards increasing its customer base.
In its operation, the firm deals with a wide range of clients. Some of its major clients include both local and regional wholesalers who deal with provision of telecommunication services, Internet Service Providers, regional enterprises, and other content providers. STC also provides telecommunication services to different institutions such as hospitals, government agencies and educational institutions.
Business buying is one of the most important aspects that organizations should consider. This arises from the fact that their volume of purchase is relatively high compared to individual customers. Therefore, business customers can enable an organization to attain its profit maximization goals through increased sales.
In their buying process, consumers have to undertake a comprehensive decision making process. One of the issues that STC’s management team is concerned with relates to developing of a strong relationship with its organizational customers.
In an effort to understand how STC markets its products to institutional/ organizational customers, I talked to the company’s Chief Marketing Officer [hereafter referred to as the CMO] who revealed a number of issues that are taken into account in its B2B marketing process.
The CMO asserted that the B2B marketing process is increasingly becoming very challenging. When asked why, he was of the opinion that there were numerous formal steps which were involved in the company’s industrial marketing process. Additionally, the CMO asserted that the firm was required to influence a large number of individuals before it could close a sales contract.
According to Blythe and Zimmerman (16), organizational buying process is more intensive compared to individual buying process. Additionally, institutional buying process is more rational compared to consumer buying process which is sometimes characterized by a high degree of emotions.
According to the CMO, organizational buying decisions are undertaken by the Decision Making Unit (DMU). The DMU is composed of different individuals from different departments. However, members of the DMU share responsibilities. One of the major challenges that STC’s marketing department faces in its industrial marketing process arises from the fact that it is difficult to identify the DMU within a particular organizational customer.
Blythe and Zimmerman (17) assert that it is difficult to identify the DMU or the buying center within an organization’s organizational chart. In order to close a sale contract with a particular institutional customer, STC’s marketing department has to ensure that it influences the various parties within the DMU. This is one of the major problems that STC experiences in its B2B marketing. According to the CMO, Organizations’ decision making units are composed of different categories of individuals. Some of these categories include;
- Initiators
- Gatekeepers
- Buyers
- Deciders
- Users
- Influencers
The initiators include individuals who are the 1st to identify a particular problem that a particular organization is facing. On the other hand, the gatekeepers control the flow of information within the organization. For example, the gatekeepers can be proactive in collecting or filtering information that can be utilized by an organization.
An example of gatekeepers within an organization may include the junior staff members who are given the opportunity to attend trade fairs and exhibitions, or personal assistants who may perceive their main role within an organization to include preventing sales personnel from interrupting the operation of the organization’s decision makers.
The buyers include the individuals who are charged with the responsibility of seeking and negotiating with potential suppliers. In most cases, buyers mainly include the purchasing agents who are charged with various administrative tasks which are critical in the buying process.
Despite the fact that buyers have a limited autonomy in the decision making unit, they may be the only link that a particular organization may have in closing a sales contract. The deciders include individuals who have the final mandate regarding the purchase decision. According to Blythe and Zimmerman (17), deciders mainly include the organization’s senior managers.
One of the issues that make B2B marketing to be challenging arises from the fact the deciders may not give the suppliers’ markets an opportunity to meet in order to explain the product or service that the firm intends to supply. However, deciders mainly rely on advice from other company representatives within the decision making unit.
Users include the individuals who will be utilizing the product or service being supplied. In most cases, users include various work groups, for example, the technicians, accountants and engineers within the organization. The influencers mainly include the advisers who have the ability to influence the decision made by the deciders (Ayed & Al-Allak 78).
According to STC’s CMO, it is very difficult to identify influencers within an organization’s DMU. The Chief Marketing Officer further asserted that in some situations, an organization’s influencers may include the various categories of consultants such as the engineers. Alternatively, the influencers may include the deciders’ friends or golf partners.
Despite the above categorization, members of the DMU are mutually exclusive. For example, the user may also play the role of an influencer while the gatekeeper may also act as the initiator. Considering the fact that members of the DMU are mainly organizational employees, they are more risk averse compared to individual customers.
The risk-averse characteristic of the DMU members arises from the fact that they may lose their job if they make a wrong purchase decision. For example, the purchase decision may result in financial loss of the company. Additionally, making a wrong purchase decision may adversely affect the employees’ promotional opportunities (Blythe & Zimmerman18).
The company’s CMO asserted that STC is facing a challenge in its B2B marketing due to the complicated sales process. The firm’s sales personnel are required to convince a large number of individuals to close a deal. The large number of individuals involved in the purchasing process results in creation of obstacles which are hard to deal with. This is due to the fact that the sales personnel have to ensure that they connect and convert the various members within the DMU.
One of the most important aspects associated with B2B marketing entails ensuring that the organization has an ability to influence their customers’ DMU. This arises from the fact that influencing the organizational DMU’s can contribute to development of a strong long-term relationship with organizational buyers.
According to Blythe and Zimmerman (17), influencing the DMU can enable a firm to nurture repeat purchase behavior amongst the organizational customers. One of the ways through which an organization can influence its institutional customer relationship is by developing a personal relationship with members of the DMU.
The customer environment
In its operation, STC deals with different categories of business customers. Blythe and Zimmerman (21) define business customer as the individual who purchases products or services on behalf of a particular organization. The large number of business customers has played a critical role in the success of STC.
The company’s customers can be categorized into four main groups. These include business and commercial customers, institutional organizations and reseller organizations. The business and commercial customers mainly include the users and aftermarket customers.
With regard to users, STC supplies its telecommunication products and services to these customers so that they can improve their operational efficiency. For example, the firm provides telecommunication services such as Data Services, Landline Services and Mobile Services to organizational customers so as to ensure that they have an effective communication network. Additionally, the products and services provided to this customer’s category are not for resale purposes.
On the other hand, aftermarket customers include customers who are involved in activities associated with overhauling, repairing and maintaining of the products developed by another organization. This means that these customers are not directly involved in the original development of the product.
In most cases, aftermarket customers include contractors who operate within the same industry as the main company. In its operation, STC markets its products and services to various contractors within the Saudi telecommunication industry. The telecommunication contractors within the Saudi Telecommunication industry are well established organizations.
As a result, their purchase decision making is undertaken through a DMU. The objective of targeting this customer category is to influence them so that they can purchase the various components and supplies necessary for their operation from the organization. To achieve this, STC has to ensure that it influences the DMU.
On the other hand, reseller organizations include the retailers and wholesalers. Wholesalers and retailers are some of the major reseller organizations that STC markets its products to. According to Ayed and Al-Allak (83), STC has different categories of wholesale customers. Some of these customers include Internet Service Providers, wireless service providers, content providers, regional carriers and operators and regional enterprises.
In most cases, reseller customers stock products if they are sure that they will have a ready market. Reseller customers are not concerned with the technical characteristics of the product being supplied. However, to ensure that reseller organizations hold a particular company’s products, it is critical for the supplier to ensure that the reseller firms are confident that the final consumer will demand the product.
Another category of STC’s customers includes the government. In most cases, STC is awarded contracts to provide telecommunication services to various government agencies and institutions. According to Blythe and Zimmerman (23), the decision making process and the government purchasing process are very strict.
The purchasing process within government involves the tendering system. Product and service providers are required to bid for contracts. The lowest bidder is usually awarded the contract. Additionally, different parties are involved in the process of making a purchase decision. As a result, it is very important for suppliers to take into account special measures in order to successfully negotiate a deal.
Considering the fact that the core objective of establishing business entities is to maximize profits, most suppliers consider the tendering system to be counterproductive. To influence the outcome of the tendering system, Blythe and Zimmerman (23) assert that it is important for organizations to proactively involve themselves in the tendering process before the winner is announced.
One of the ways through which an organization can achieve this is by ensuring that the competing firms do not bid or place a bid that is too high. This arises from the fact that the probability of influencing the outcome of the tendering process is increased.
Competitive and organizational environment
According to Ayed and Al-Allak (80), there is a high growth potential for companies within the Saudi Arabian telecommunication industry. In an effort to exploit the presented market opportunity, firms within the industry are constantly improving their operational strategies.
For example, telecommunication companies in Saudi Arabia are increasingly incorporating different expansion strategies in an effort to attain a high market share. Additionally, the firms are also reformulating their marketing strategies in an effort to enhance their competitive advantage (Ayed & Al-Allak 82).
In its operation, STC is facing a threat arising from an increment in the intensity of competition. Currently, the firm faces intense competition from three main companies which include Emirates Telecommunication Corporation, Orascom Telecom Holding and Qatar Telecom (Yahoo Finance para. 1).
The firm is also facing threat of competition emanating from an increment in the number of new entrants. The new companies which might venture into the Saudi telecommunication industry may either be domestically or foreign based. Entry of new firms into the industry may result in reduction of STC’s market share. New entrants may also result in reduction in the company’s level of profitability.
The intensity of competition within the Saudi telecommunication industry is also associated with the increment in the number of substitute products which have arisen from the high rate of technological innovation. The high rate of technological innovation has resulted in availability of a wide range of options for business consumers to select from.
This presents a threat to STC with regard to its sales revenue. For example, if business consumers switch to mobile phone communication technology, STC’s sales revenue would be adversely affected. This is due to the fact that the company generates a significant proportion of its sales revenue from landline phones (Ayed & Al-Allak 83). The Saudi telecommunication industry is characterized by moderate supplier bargaining power.
The moderate supplier bargaining power arises from the fact that there are a large number of suppliers who supply various telecommunication products such as hardware, infrastructure parts and other supplies to customers. To attain a competitive advantage, suppliers within the Saudi telecommunication industry are committed to ensuring that the products are of a high quality (Ayed & Al-Allak 78).
The large number of suppliers within the Saudi telecommunication industry has culminated into an increment in the consumers’ bargaining power. The switching cost for firms within the telecommunication industry varies across customer segments. For example, residential customers have a relatively low switching cost. However, the switching cost is high for organizational/business customers. This is due to the fact that costly telecommunication infrastructure may be implemented (Ayed & Al-Allak 82).
To survive in the long term in such an environment, it is critical for firms within the Saudi telecommunication industry to ensure that they influence the consumers in their decision making process.
This can only be possible if the firm has formulated comprehensive B2B marketing strategies which will enable the firm to have an influence on the various individuals within the organizations’ buying process. In its operation, STC management has ensured that its organizational environment is stable. The firm has attained this by integrating an effective organizational structure.
Conclusion
In their operation, businesses deal with a large number of customers. Some of these customers include the individual and institutional customers. To be successful in their operation, businesses are required to ensure that they incorporate effective operational strategies. One of the most important elements that businesses take into account relates to ensuring that effective marketing is undertaken.
To improve their competitive edge with regard to marketing, most B2B firms have incorporated the concept of e-commerce. One of the ways through which these firms are attaining this is by automating their marketing activities, for example, by incorporating emerging marketing software.
Additionally, B2B firms are also integrating the concept of social marketing in an effort to attract and retain a large number of customers. Despite this, the analysis provided above has made it evident that B2B firms experience numerous challenges in their marketing activities.
In order to develop a comprehensive understanding of the problems associated with B2B marketing within the Gulf region, the report has taken into account the Saudi Telecommunication Company. Additionally, the report has focused on one of the major B2B marketing problems which are associated with the organizational buying process.
In their operation, buying decisions within businesses or organizations are made by the decision making unit which is composed of different individuals. To close as sales contract, B2B marketers are required to ensure that they influence the DMU. This is a challenging task because most of the members within the DMU are risk averse. Additionally, it is not easy to identify the DMU within a particular organization.
The report also indicates that STC has diverse customer categories. To increase its sales revenue, it is imperative for STC to influence the decision making process of these customer groups. An analysis of the business environment reveals that the Saudi telecommunication industry is increasingly becoming competitive.
Recommendation
In its operation, STC should take into account the following recommendations. The firm’s management team should formulate effective B2B marketing strategies. The marketing strategies should enable the firm to survive in a business environment that is increasingly being characterized by intense competition.
- In the process of formulating its B2B marketing strategies, it is critical for STC to take into account the various B2B marketing challenges that the firms face today. This means that the firm should not only focus on the challenges associated with the buying process.
- To deal with the challenge arising from the growing number of individuals involved in the organization buying process, it is important for STC to identify the various parties involved in the decision making process. One of the ways through which the firm can attain this is by integrating the concept of direct marketing. Direct marketing will enable STC to develop a strong relationship with the various customer groups.
- The firm should also ensure that its relationship with the various customer groups is continuous. This will play a critical role in developing a high competitive edge with regard to influencing business customers in their decision making process.
Works Cited
Ayed, Shafi and Basheer Al-Allak. Saudi Telecommunication Company: Strategy for sustainable competitive advantage. Tenaga: University of Malaysia, 2011. Print.
Blythe, Jim and Alan Zimmerman. Business to business marketing management: A global perspective, London: Thomson Learning, 2005. Print.
Yahoo Finance. Industry center: Wireless communications. 2012. Web. <https://finance.yahoo.com/>