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How is B2B different from B2C marketing? The New Task opportunity

Organizations face B2B buying challenges that are very different from what a consumer grapples with when buying something for personal consumption. Thus, when you get replacement tires for your car you consider factors like brand name, price, installation service, free rotations/balancing, warranty etc.. For those consumers who have the expertise and tools to replace tires, a whole new set of options like buying tires online can open up. On the other hand a car manufacturer wanting to buy the same brand of tires for OEM (Original Equipment Manufacturer) will have considerations that are different than an individual customer.

While the auto manufacturer will look for some evidence of consumer awareness of the tire brand, it will not be the overwhelming decider. So long as the car buyers don't react with “never heard of this tire brand," the consumer brand power is not as useful in B2B markets. Instead things like: what safety record does the tire have? Will the tire supplier be willing to provide tires on a Just-In-Time (JIT) basis to the assembly line? Will the tire supplier be willing to take payments in 90-180 days? Will the supplier be willing to develop innovative new tires for the new SUV the automaker is planning and which has specific tire requirements? Will there be an assurance of quality and supply time?

Once the tire supplier gets to be an OEM to an auto company and does a good job... the chances of getting fired is low. This because over time the auto maker, its distributors and even final customers develop relationships, processes, routines and preferences for a particular tire brand.  Somewhat like the "Intel" chip which seems to be an important consideration in deciding which computer to buy despite tech expert assurances that the "AMD" chip is as good and AMD chip computers are less expensive than comparable Intel chip ones. 

This lock in process in B2B markets makes it hard for new suppliers to enter these markets. Unless the marketer is able to frame the “buy task” of the buying organization as a "new task." If for example a new SUV is being planned and a new tire supplier gets a chance to come up with ideas ... it the best chance of getting in to be a supplier. Contact StratoServe.

Super Bowl Advertising for brand awareness and Search Advertising for conversion

Just as the 2013 Super Bowl gets underway Digiday has the intriguing possibilities of spending the $4 million for a 30 second Super Bowl spot  on different types of display advertising. An interesting possibility is to plaster YouTube with a banner for 8 days ( each day estimated at $ 0.5 Million X 8= $ 4 million).  The question arises - so why do so many marketers prefer to advertise on the Super Bowl? Here are some thoughts:

• The Super Bowl is a major American festival. Many feel that the Super Bowl compares well with the major Holidays and festivals  like Thanksgiving and Christmas.  The Super Bowl is a huge part of American life and culture and right from the customary chicken wings and beer food retailers are busy selling all kinds of chips,dip,pizza etc. Watching the game with family and friends is necessary and this is one evening in the year that the men control the TV remote ... well at least during the game and maybe not during the Ads, half time show etc.  From a marketing viewpoint the 100+ million TV audience for the game is accustomed to see the best in American TV advertising on this one evening. This "priming" to check out great TV advertising is huge and which cannot be said for most other TV advertising which are seen as "interuptions" by the consumer. The Ad agencies and Brand Marketers want to make the most of the Advertising and release Ads on YouTube much earlier.
• Internet Display advertising including Internet Banners are seen as "interruptions". So we have the interesting situation ahead of the game that the Volkswagen Ad has already got 7 million + views. Volkswagen is also advertising the clip on YouTube after you search for "Super Bowl 2013" commercials.  This after a whole lot of PR and outreach at TV talk shows.
• Search Advertising on the other hand is trying to show you Ads that are relevant to your search terms. So if you searched for "Super Bowl 2013 commercials" on You Tube you see a banner Ad for Cadillac (GM) and next for Honda CRV. The Cadillac Ad has buttons to "request a quote"  or "locate adealer.Try searching again and you see banners for "Honda CRV", "Lexus" and so on.  What do these Ads cost ? Nothing till you click on them ! And once you click the Advertiser has  to pay a few dollars for that click. The chances that you would actually locate a dealer and see the car is much higher. This given that you are aware of the brands and are already considering.

If you see the Super Bowl car ads on TV - and vaguely remember them then the next time you see an Internet search Ad you are quite likely to bring the Brand to your "consideration set" and that is what the Super Bowl Advertisers are betting on. Enjoy  the 2013 Superbowl  ! Contact StratoServe.

The Sales Funnel is not a one way funnel -web analytics data now confirms

The Sales Funnel is the holy grail of marketing and ultimately sales and business itself. And now it turns out that the sales funnel is not a one way funnel like funnels are. A funnel has a wide mouth where the liquid is poured in and it comes out from the stem of the funnel safely into a bottle or container like a gas tank with a narrow mouth. Gravity is central to the idea of the sales funnel. If you have lots of leads and have great qualifying mechanisms, you keep whittling down those leads to prospects, warm prospects and that wonderful "closed" sale leading to lifetime customer value and satisfaction.  Along with gravity, a central assumption of the sales funnel is that the liquid (customer)has no mind of its own and just flows downwards if you follow the right sales techniques and principles.  Well, the idea of the one way sales funnel might be wrong. Web analytics data as discussed in an earlier post now seems to open up a perennial question. There is a lot of back and forth between customer and selling firm and the funnel may not be one way, after all. 

The Marketing Science Institute's research priorities for 2012-14 points to this huge shift in its "Priority 2:  Rethinking the Journey to Purchase and Beyond, Whether Conceptualized as a Funnel or a More Iterative Process." 

The iteration was not easy to see  in collected data earlier. If someone bought a car brand and you did a survey, you might learn that that an important role model preferred the car brand, the customer had a bad experience with the previous brand, there was a great deal offered.... and so on. But all this if a) you surveyed b) the survey was well designed and c) the customer actually participated. In fact, the last one about participation could be most challenging.

No longer is actual customer data so hard to gather. As explained in a previous post, every visit to the website before the visitor places an order or fills up a contact form can be tracked. So you know things like how many times the individual visited the website, through direct visits or through organic search, AdWords, social media or banners before "converting." And this does not count any offline interactions like visiting the retail store, talking with a co-worker at the water cooler or any discussions with visiting family over the Columbus Day week end today. It also excludes anyone who decides to call in their order and does not use the web ordering system.

Given that the Sales Funnel has ruled our thinking for so long, it is ironic that the one way nature of the sales funnel is being challenged by the mere availability of data via free sources like Google Analytics. People do go back and forth on the funnel, one more way that the Internet is changing business. Contact StratoServe.

Sustainable Innovations : the Pressure-State-Response (PSR) approach of OECD

It's hard to wrap your mind around the concept of sustainable innovation and the Pressure-State-Response (PSR) of the OECD is a nice way to think about it. 

So what is sustainability? Well, it is how you use the earth's resources and what you will leave your grand and great grandchildren! Sounds simple and rhetorical but is pretty powerful  if you think  going by the Did you know section on page 1 of this OECD Document:

• 2400 liters or 634 gallons of water are used to make one hamburger
• A billion cell phones are sold every year and we change cell phones every 18-24 months

Just thinking about the water in all the hamburgers that we eat and thinking about re-cycling a billion cell phones every two years at the entire world level is overwhelming and you would feel that something should be done.  And that feeling of wanting to do something is the "Response" in the Pressure-State-Response (PSR) of the OECD .

The "State" is the current situation of so many cell phones and their rapid replacement by consumers as better and better phones become cheaper. However, unless there is public protest, awakening of  Corporate Social Responsibility (CSR) on the part of cell phone makers you can't expect the "Pressure" to happen.

But if you look around in the US you find that for auto tires and car batteries the old ones are taken back for recycling, sometimes with a small fee when you buy new tires or batteries. It is not entirely clear in the messaging by tire companies and auto battery makers, whether they are improving the composition of their products via their supply chain  to reduce environmental damage in disposal.

This improvement of sustainability of existing products at the organizational level is sustainable innovation that is the "Response" motivated by the Pressure-State-Response (PSR) framework. Contact StratoServe.

The Changing Buying Center: marketing disposable catheters to wheelchair patients

Understanding the changing buying center is a challenge for both B2B marketers and scholars. Spekman and Thomas (2011) page 16, offer the  example of  disposable catheter marketing to wheelchair patients who might have a very large lifetime purchase amount and several thousand dollars worth buy every year. In the past,marketers defined doctors,nurses, the urology department, hospital administrators and the hospital supply/purchasing department as the members of the buying center.

Today there are potentially many more members of the buying center that influence the catheter brand choice and repeat buys. These include:

• Medical  websites and discussion groups of patients
• Facebook groups of wheelchair patients
• Family and care givers who might have strong input
• Insurance reimbursements might weigh heavily on brand choice
• Web marketers of disposable catheters could influence the decision

In other words, the old mantra of the auto part replacement marketer trying to convince only the garage mechanic to recommend your replacement auto part, is no longer a sure-fire way of getting ahead in the auto replacement market. You need to consider virtual and social members of the buying center, who might influence not only the after market individual customer, but also B2B buy decisions at garage chains. For example, you will find a whole lot of discussion boards on every auto replacement part where your brand must truly appear to provide value and at least acceptable customer feedback. And all these virtual members of a buying center might be a mix of customers,users, competitors and rating agencies (think Yelp.com  for restaurants). Never before have forces outside the B2B buyer and seller relationship become so dominant in business buy decisions. And this one more way that the Internet is changing business. Contact StratoServe.

How the Internet affects business: top of the sales funnel and an instant reference- “value” check

Most organizations that are not pure-play internet (like Amazon.com) do not seem fully understand how the Internet affects their business. The  top of the sales funnel and an instant reference- “value” check are two ways the internet affects your business:

• Internet can fill top of the sales funnel: And this can be huge. Between search marketing (also Search Engine Optimization – SEO) and pay per click (PPC) advertising like Google AdWords you can bump up the traffic to your business website and to your business. At a fraction of the cost of traditional media including direct mail, print or broadcast media the Internet can drive traffic to your website and business.  In case you have e-commerce, you can also expect the visitor to buy. For first time buyers if you see your Google Analytics data (see under conversionsà multi-channel funnels) you’ll be surprised to see that folks might visit your website  ten or more times over a few days  before starting on your online shopping cart. They might have come directly, via Facebook, through search and so on. Can you go to any physical store ten times before picking up a physical shopping basket?  Not really, unless you want to be declared “suspicious” by the store-owner!

• Internet is an instant reference and “value” check: There are previous posts on this aspect and is one of the least addressed issues by organizations-large and small- whether they are for profit, non-profits or government. Consumers do compare prices in things like airfares and hotels as do businesses in B2B situations. In B2B and high value consumer decisions (like cars) it’s really important to go beyond the print brochures material. For example, there is no point in mentioning the mileage of an hybrid version  of an auto but remaining silent about the gas version's mileage. A serious buyer can and should be expected to Google it and get what best they can from a discussion board or auto website. Think of your business category and you can expect serious B2B customers to do the same thing. In other words, its probably far better to clearly explain FAQ’s on the official website rather than allowing unofficial versions to take the lead, by default.

Thinking about how the top of your  web funnel is working and what can you add to your website is a good way to capitalize on the opportunities the Internet offers your business.  Contact StratoServe.

Kraljic Model: Reducing risk perceptions and the 2009 Hyundai Assurance Program

The 2009 Hyundai Assurance Program  is a great illustration of reducing risk perceptions even in B2C (Business to Consumer) situations. Keep in mind that the Kraljic model was originally developed to understand B2B (Business to Business) buying behavior. Kind of like relationship marketing that B2B marketers always practiced and B2C marketers have enthusiastically adopted - more as  technology allowed easy availability of CRM (Customer Relationship Management) and SFA (Sales Force Automation).

So let us understand the 2009 Hyundai Assurance Program that made Joel Ewanick famous. If you think about it the Hyundai campaign addressed the deep job loss risk  anxiety of 2009 without really giving much away. Here is how:

You must have a job to get the car: This is sort of subtly put - but very clear. The customer thus has the ability to pay - at the time of taking the car. Initial payments, for the marketer, are assured.

What if you leave your job? - the 3 month assurance: In 2009, Americans felt a huge sense of risk of losing their jobs and here is where Hyundai offered to waive upto 3 months of payments. If you think from the organization's risk taking ability- this is a real cool one. You give out the lease or installment sale knowing that the customer has a job and will be able to make the payments. Just in case the customer loses her/his job the 3 month promise puts a cap on the company's liability. This would be the worst situation- something that both CFO's and CEO's are eager to know.

What happens if you can't find a job in 3 months- just return the car. This again is a brilliant idea in recessionary times. People are feeling the risk but the company must nail down what the exact risk is that the company has to bear. If every buyer/lessee returned the car from the 4th month if every  customer lost their job- then you are probably looking at a far higher unemployment rate than the max 25% in the great depression.  Very unlikely - even if you go back to 2009.

By providing a risk assurance, Hyundai did pretty well with its assurance  program and unequivocally added CSR  to its company resume. Contact StratoServe.

Product Innovation Charters must define market by needs and value and not your product

Product Innovation Charters (PIC's), still tend to  be defined around whatever industry or product the organization operates in. Thus, if you make cars and are trying to innovate to the next model your entire focus on building up the PIC is based on the existing car and its technical specs like mileage,technology, space,speed and so on. By just staying with this "internal" focus innovators make a big mistake.Here is why:

1. Ties your team down: When you define markets in terms of products and product categories - you have already tied down your team. If you say "mid size sedan" market - you have just put boundaries on how your NPD team thinks. Instead, it is far better to pin-point some needs that are being unfilled in that market segment ( let's say more leg room in the back seat) and emphasizing those needs.
2. The market is outside the organization: sounds obvious, but it is quite amazing how most organizations are caught up so much in their own drama, that they are simply not able to look and observe what exactly their current customers and potential target customers are looking for. And this is after their marketing research and analytics suppliers tell them, some of their braver advertising agencies tell them because these folks are suppliers and live outside the company and therefore have a better sense of the world outside.
3. Internet and social media  does not help: if you are not willing to look to the market and consumer the huge insights from the Internet and social media is just not useful. Because you are not willing to look primarily at your market and consumer- you are unlikely to even Google stuff !
4. Products proliferate while needs are unmet: Think of Apple iPhones and many of its competitors. Some troubled competitors got into trouble because of product proliferation. Too many products and too little focus since each product had a Product Manager who needed a budget, advertising,branding and distribution in part to prove that "work was being done." Numerous examples exist from the auto industry, foods and consumer products etc.
5. Avoid the Better Mousetrap Problem: By avoiding a product focus, in contrast to customer needs and value focus, you can avoid the "better mousetrap" problem made famous in the marketing myopia concept, discussed in an earlier post.

In summary, try to define your markets and consumers by looking at them and what they do. Do not define markets in terms of existing products in your PIC. And it doesn't matter if you think in term of your own products or other competitor  products. Contact StratoServe.

NASA Curiosity lands on Mars and creates high tech US jobs

NASA's Curiosity Mars Rover landed on Mars today and started sending back photos to great celebration at NASA, the US and across the world. Particularly encouraging is the news that much of the leading technology was developed and supplied by US suppliers.  Here are some innovators that need congratulations apart from the NASA team and their prime contractors like Boeing and Lockheed Martin:

• Lithium Batteries come from Yardney Technical Products of Connecticut who were able to deliver these high tech batteries with far extended life while maintaining low weight.
• Parachutes cames from Pioneer Aerospace Connecticut. 
• Metal Legs for the Curiosity rover  were made by the American Bicycle Group at Tennessee, the makers of Litespeed bikes. They settled on an aluminum,titanium, vanadium allow to make sure that the legs of the rover will work in the extreme condition of the journey and landing at Mars.
• Mars soil collecting robots are made by Honey Bee Robotics of New York. 

While this list is preliminary and is likely to grow, it is a cause for celebration because many of these are small businesses and operate at the high knowledge end with highly qualified personnel. They specialize in what they do and being in highly specialized B2B markets probably don't realize the huge applications all these technologies can have in other markets. The local media is doing a good job of highlighting the contribution of these businesses.The ability of these businesses to scale their products and services in other markets will greatly help in growing the high knowledge/high skill /high paid segments of American enterprise. Contact StratoServe.

Lessons learnt: Internal Organizational Culture and the CMO- Joel Ewanick ousted at GM

The Chief Marketing Officer (CMO) is outwardly focused always looking at the market and customers- right? Wrong if you see the recent ouster of Joel Ewanick the CMO at GM. This blog had noted some of  the  game changing moves at GM by Ewanick like not advertising on Facebook and Superbowl. It now turns out that as CMO, Joel Ewanick made radical changes in the Ad Agency relationships that GM had. He replaced legacy GM advertising agencies and for Chevvy cobbled together an unusual 50:50 alliance between mega agencies Interpublic and Omnicom.The latter to deploy maximum creativity into the Chevvy brand.

One can speculate that all these changes in GM's B2B relationships i.e. old ad agencies out, distributors asked to do different stuff must have affected the GM internal old timers. And this is an important idea... if you make changes in external B2B relationships there are internal relationships that get altered. For example, a change in the the way dealers  run promotions means training your field sales force. And parts of the sales force may not have time to understand and therefore buy-in to the advertising and promotion changes  that need to happen at the dealers'.

Also old timers did not like it when Ewanick questioned  the need for the GMC brand as a separate brand for high end trucks.

From news reports available so far, it was details of the penalty clauses in the Manchester United and GM sponsorship deal that seems to have forced  Joel Ewanick's resignation.

But it is the underlying internal organizational culture at GM that probably caused Ewanick's abrupt departure given that just two weeks ago he was being praised by all.

So if you are a CMO trying to change stuff here are some lessons learnt from the Joel Ewanick and GM story:

1. Do not assume that all folks want change.
2. Carefully track your internal supporters.
3. Do not assume that just because your actions are "external" like B2B changes among ad agencies and dealers internal folks won't mind.
4. Spend 60-80% of your time making sure that you understand the internal organization dynamics. Sounds strange but true because while GM regained the title of the world's largest automaker in 2011, the mid 2012 difference in sales between Toyota ( 4.97 million) and GM ( 4.67 million) is not that much. Particularly when Toyota had to contend with the Japan earthquake in 2011.
5. As any high value (more than $1 Million)  B2B marketer will tell you the above point of only spending 20-40% of your time in "external marketing" and 60-80% time in "internal marketing" is what works.

The good part of the episode is that people like  Joel Ewanick will be in demand, anyway. Contact StratoServe.