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OCR for page 27
chapter 2
Business-to-Business
Marketing Theory
Like customer-based marketing, business-to-business marketing begins with a
focus on the customer. A good business-to-business marketing program must
be based upon a good general marketing program, because most basic elements
are similar. TI,at said, there are still differences between business-to-business
marketing and consumer marketing that need to be considered.
Taxis chapter starts by summarizing some of the differences between business-to-
business marketing and consumer marketing, and the resulting implications for a
transit-to-business marketing program. Secondly, this chapter summarizes the
marketing process as geared to business-to-business marketing. Finally, this
chapter covers tile techniques and tools useful for business-to-business
marketing.
~. . . ~ _ ~_ . ~
~qll~,flnullr*~,~,~l`~.llll
Before describing business-to-business marketing methodologies, it is important
to understand what business-to-business marketing is, and how it is different
from traditional consumer marketing. A good definition is found in Rangan and
Isaacson's Har~'arci Business Review article on the scope of business-to-business
marketing
bu$~0~s-~busmss mark0uns is the marketing of
BOOM S80 S0rViC0S to GDmmerGial 0n~rprises,
governments, and over nonzeros insffa~ons for use on
the goods and services that they, in fern. produce for
resale to other. . . customers. 3
This definition implicitly defines both the type of customer involved and the use
of the goods that are being bought and sold. This definition encompasses a wide
Pal. 2-1
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-tons M~ksbolr_y
variety of products being marketed' since it includes anything that flee buying
organization requires to produce its products, whether or not the goods and
services being purchased are actually directly used in the production process.
This definition also makes the point that business-to-business products are
usually purchased for the enhancement that they provide to the organization, its
employees, and its products, whereas consumer goods are purchased for final
consumption. T],is difference in focus leads to differences between business-to-
business and consumer marketing. Following is a summary of some of those
11 133
differences. , ,
· lu8tnes$ Borers Wi ~ Be Mouvated by the Bombs Ens - Much consumer
buying consists of goods and services float are not absolutely necessary,
while businesses are usually purchasing goods and services that are required
for their continued operation. This makes the motivations of the two groups
quite different, requiring different marketing approaches.
· Business Buy~D Is Often a Mul~S~p Pass - Business buyers will put
extended time and effort into making a purchasing decision, because they
are usually complicated and expensive. This requires a series of contacts
and the building of a stable relationship between buyer and seller in order to
make a sale. Business marketing therefore relies more heavily on a sales
force than does consumer marketing, since the sales force can provide hand-
hol`ding during a long decision process.
· B'sbess Buying hNoh, - Mufflpb influences - Business buyers will consult
with many other people (executives, other managers, workers) before
making a final purchasing decision. As much as possible, business-to-
business marketing campaigns must respond to the needs of all these
stakeholders to be successful.
· Business Buyers Are Sophetioa~`- Business buyers will have an
understanding of the more technical, complicated aspects of the goods and
services they are purchasing. Marketing campaigns aimed at them will
therefore have a different tone and content than those aimed at consume
buyers.
· 5us~68s Products h-6 More Cempbx- Business products must be clearly
and carefully explained to the customer, because the customer may have no
previous knowledge of the product or its capabilities. This makes it
important to design an effective marketing campaign at the level of
complexity that properly describes the product being marketed.
Business Buyers We! Read a cot of copy - As long as they are concise,
interesting, and relevant to the job, business buyers are more likely than
regular consumers to accept more complicated marketing campaigns.
Page 2-2
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BB8~-to BB8l~nS88 MBl~k8~9 ~
Business Buyers Buy for Them company-and for Themselves - Although
business buyers represent the interests of their individual companies, they
cannot help but represent their own interests as weld. Therefore, an effective
marketing campaign must first appeal to the buyer personally, and then
appeal to the buyer as a company representative.
Busb~s-~Bus0es$ Products Are Customized - Business-to-business
producers tend to be producing goods and services that are aimed at a small,
concentrated number of customers. Because of this small customer base, a
relatively small number of buyers can represent a surprisingly large
percentage of that industry's buying power. Because their customer base is
so small, business-to-business producers will often customize products
based on the needs of individual customers. This results in better service to
their customers, and builds the commitment needed to maintain a long-term
relationship.
BUS~-\O-BUI~$ MlFI0~rS MU8! Perform D - rent Functions - Given
the small customer base and the complexity of the products being sold,
business-to-business marketing (and marketers) must be integrated into all
functional areas of the organization. This will allow them to fully
understand tile products they are marketing, and will give them the
opportunity to provide needed input into the design and production process.
This increased need for coordination and integration requires a different set
of skills for business-to-business marketers, and requires that they take a
different view of the marketing process.
While the above differences in business-to-business marketing and consumer
marketing are generic, they do have important implications for transit-to-
business marketing programs:
Transit-to-business marketing cannot be baser! upon a "one size fits all"
approach. There must be a tailored set of solutions to solve particular
business needs. The services provided and the communication approach
may differ by type of business.
The use of a sales force to sell to business will be more important than it is
in consumer marketing. The sales force must have the skills to explain to
business "what's in it for me."
· The need for networking and the development of personal relationships to
appeal to the various levels of decision-making within a business.
· The need for a coherent transit marketing campaign using written material,
promotions, presentations, sales, and networking in order to get across what
may be a complex message.
The need for close integration between transit marketing and the transit
service development and delivery process. The marketer needs to insure that
Pales
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Bush' - -it Mat - it
.
the product or service promised can be delivered and that the business
customer is, in fact, satisfied.
Despite the differences, the marketing process for business-to-business
marketing is very much like that for consumer marketing. The target business is
treated very much like the targeted consumer. The following section discusses
the general marketing process, with special emphasis on methodologies for
marketing transit. The term "customer" is used interchangeably to indicate
either a target business or the end user/consumer/passenger.
A=
Overview
The marketing process incorporates most of the activities in an organization.
The process includes the following:
Goal setting and understanding the business strategy
· Understanding the customer
Product or service development
Market analysis
Development of a marketing plan
Service or product delivery
Evaluation and refinement
These components may not always be present when an agency develops a
marketing program, and they may occur in different sequences. For example,
there may not always be time to do thorough market research and market
analysis. For some projects it may be quicker and more effective just to
implement the marketing program and see what happens. However, for larger
undertakings, there is no substitute for careful research and planning.
Figure 2-1 is one way to conceptualize the marketing process for a transit
agency. The process might start with an idea for a new service or for a different
way of promoting an existing service. The service could be a new route, longer
hours, a special request phone number, a new pass program, or perhaps an
existing service which merits more promotion. Ideas may come from customer
comments, learning from peers, from agency leadership, and/or from agency
goals and objectives, among other sources. The next step following the
conceptualization of a new idea is to gather some information on that idea to
Pads 2-4
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B''d~-~ M^0 - IVY
determine the likely market and tile competition. Information can cosine from
existing agency data on ridersI~ip, focus groups, customer surveys, or informal
sources. Part of tI,is step is to consider the market segments that this service will
appeal to, and to research that segment. Following data gathering, an analysis is
conducted to determine the feasibility of the idea.
The next step is the development of the marketing plan, which includes all the
components for the idea, including the goals, the overall strategy, the budget for
the plan, and the marketing mix. The marketing mix refers to marketing details
including the service or product definition, how the service is sold and
promoted, and how the service is supported. The next step is to implement the
plan, which might also mean undertaking a trial of the service before a full-scale
implementation is attempted. Then it is up to the customers to cI,oose the
service or not. The next step starts the data gathering process once again: (1)
tracking the customer and evaluating the service, (2) fine tuning the service; (3)
changing it drastically; or (4) ending implementation. Ideally, the steps are seen
as a continuing loop of service or product creation, data gathering, implementing
marketing strategy, and fine tuning.
The following sections describe the steps of the marketing process in more
detail.
goal Setting and Understanding the Business Strategy
Establishing a realistic set of goals is the first step in developing an effective
marketing program. Goals should extend across the organization, and may
incorporate targets for ridership and revenue, community and political standing,
and institutional change. The process for setting these goals may involve market
research, organizational review, strategic planning, and - for some operations -
considerable soul-searching. No matter what the process, a thoughtful} and
comprehensive set of organizational goals will establish a framework for an
effective marketing program.
The process of setting goals has two components:
Organizationaigoals are the big-picture goals: increase ridership, expand
revenue sources, build political support. These goals define the
organizational culture' and they should infuse virtually every decision made
throughout the agency, from the general manager to the bus operator. The
role that institutional goals play in organizational change cannot be
overstated; they can either inspire pursuit of new directions or foil such
efforts.
P8gB2
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Bus ~-~ Mail ~
.
Figure 2-~: The Marketing Process
~\\~ a///
Idea(new route, \
~ | fare, service'
marketing
\ approach) /
~ ' ~
Customer
Purchase
Decision
_ -
Implement
Plan (or Trial)
\
~ id/
Gather Data on Market
`(from customers,
available data, market
research)
Market Analysis
t~°r~ T;
Develop Am/
Marketing
Plan
Based upon the "Marketing Process Cycle" from Paul Sherlock, Rethinking
Business to Business Marketing, Maxwell McMilIan International, New York, ~ 99 I,
p S.
Page 2
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~8$-~
· Program goals are snore specific than organizational goals. They need to be
fully articulated, perhaps through research, and can include more detailed
action statements. Program goals may focus on particular markets; they may
have direct and indirect targets. and short- and lon~-term elements. Well
", , ~
defined goal statements can be action DIans that inspire an organization:
"7
1 1 ~- 1 1 1 1 ~ ,' '
poorly detlned goals may lead to apathy or, worse, cynicism.
Whether selling an existing or brand new service or product, the marketing
strategy of an organization should fit into its overall organizational goals as well
as the goals that apply to the particular program under consideration. That is, a
marketing strategy needs to support broader organizational goals and should be
in keening with the overall image of the organization. An organization that is
. . . . . - . . . . . .
promoting itself as offering top quality service, for example, probably should not
undertake a marketing campaign focused on low prices.
Goal setting requires more than a vision or an idea - it requires quantifying
target markets, the expected impacts and the costs of getting there. Without this,
it is impossible to verify if the expected returns from any product proposal are
large enough to justify the costs involved. Setting targets during the planning
process can facilitate program evaluation after implementation.
Of course, not all transit goals can be presented in quantifiable terms. While it
may be possible to estimate ridership impacts, and to calculate costs for some
programs, other transit benefits may be difficult, or impossible, to quantify. In
these cases it may be possible to estimate the number of new riders that would
need to be generated to cover the programs costs. To do this, one must assume
not only the number of new users, but also their riding frequency and the
duration of that new ridership. This can allow comparisons between programs in
order to assess how they relate to both organizational and program goals. For
example, an agency might compare the value of advertising to encourage new
passengers to take the bus to the mall on the day after Thanksgiving with a
program that promotes new commuter trips. While each program might
generate a similar number of riders, the commuter-oriented program might
attract recurring work trips, while the shopping promotion may attract one-time
trips. This comparison can help illuminate the level of investment a new
program can justify, whether through advertising, promotional materials, or staff
time.
Produet or Service Development
Figure 2-2 illustrates the influences that need to be considered in the
development of a product or service. These influences start with customer
needs, but also take into consideration organizational goals, organizational
capacities and capabilities, competitors' and potential partnerships.
An 0ffect~v0
marketing
campaign requir0$
more than good
research and the
optimum market
mix; SUCC0$S also
is 10~0rm~nell by
the cigar
identification of a
transit system's
goals and
obJ0ctIves. 4
Page 2-7
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B68il'eS8-~ ME Icy
Figure 2-2: Produe! or S0rvies D0v010pm~n!
Agency
Goals &
Objectives
Agency
Capabilities
Potential
Competition
\
Peers,
Government
,' Policies
\
Product or
Service
,' Concept
1
Potential
Partners
,~
Customer
Needs
No matter what the product or service, it must solve a problem for the customer.
Customers do not buy to solve a problem they do not recognize, nor do they buy
to solve someone else's problem. In his book, Relationship Marketing, Regis
McKenna argues that the focus of modern marketing should be to work with
customers to help them solve strategic problems. McKenna also says that an
organization must be aware of its own capabilities, plans, and ways of doing
business to insure that solutions developed with and for customers can actually
be implemented.
Another implication of working closely with the customer to meet his or her
strategic needs, is that the product or service will be customized for the
customer. Customization is dealing with a customer in a unique way, matching
meeting his or her specific needs and requirements with a particular product. As
noted above, business-to-business marketing will require more customization
than does consumer-based marketing. Finally, in developing a product or
service, an organization needs to be aware of the external environment,
including potential laws or regulatory changes, partnerships which can assist
with a product or service, and the existence and capability of competitors. 8
Pagers
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BusIlless-lo abler Marks-~
-
Alt],ough the term 'Cproduct" and "service" has been used interchangeably to this
point, there are some key distinctions. Many items marketed in the popular
anemia are products: Gillette@) razors, L'eggo WafflesO, Black & Decker
Dustbuster@), etc. In the global economy, however, more and more services are
being marketed to both consumers and businesses. Since transit is a service
offered to the public, issues in service design will be key.
There are four key distinctions between marketing services and marketing
Droducts:
1
· Marketing communication for a service must do more than promote a
product. Since a service is blangble, marketing communication must help
make the service more tangible and real. if a transit service is of excellent
quality, evidence needs to be provided and communicated. Visual clues
such as clean buses and professional looking drivers can I,elp. Service
industries benefit by associating a human face with a company, such as
Colonel Sanders or Charles Schwab. A related concept is that customers are
less interested in purchasing the very best service; instead, they want a
service with which they fee] comfortable. 5
· The perl$habRib of services means they cannot be stored for future sale. If a
transit agency does not operate on a Tuesday, they cannot make up for the
lost day on Wednesday. An associated issue is that with a service,
customers expect service will be satisfactory. Customer relationships built
up after a long period of service can be quickly lost with one bad experience.
As Harry Beckwith said, "It is much easier to fad! in a service than to
succeed." 5 Means of handling complaints and customer problems are
therefore extremely important in service industries.
· The bseparabeity of services means a service provider and his or her
services may be inseparable. When this occurs, the service provider is
virtually indispensable, and customer contact is often considered an integral
part of the service experience. In transit, customers may become attached to
particular drivers. This happens more often with paratransit services, where
the relationship is often one-on-one, but this can also happen on fixed routes
when drivers have time to get to know the passengers. To the extent that a
service can be given ~ human face, that should help with its appeal.
· Varsity in service quality - differing service performance from one
purchase occasion to another- open occurs even if services are completed
by the same person. This may be due to a service firm's difficulty in
problem diagnosis (for repairs), a customer's inability to verbalize service
~ . ~ ~ ~ ~ . ~ ~ . . ~ ~
needs' and the lack ot stanclarolzatlon and mass production for many
services.5'6'7 The challenge for transit is to remove as much variability in
service as possible, and to have excellent methods for handling problems
and caring for customers when problems arise.
Customers are
lass Interest0d
In purchasing the
very best
service; ~nst0ad,
they want a
service with
which they fee!
comfortable.
Plg. 2~
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Bu8ine8$-t.olb~d.~ Mal k8-~
The key to developing an effective marketing strategy for a service lies in
understanding customer's perceptions of tacit of these four components, and
tailoring marketing efforts accordingly. It is, however, generally more
challenging to conduct market research for services than for actual products
because customers find it more difficult to put themselves into the role of using a
prospective service than of using a product they can hold and see.
Many service-oriented businesses have been slow to transition to more
sophisticated marketing strategies. Several factors have contributed to the slow
pace of change, including the fact that many service firms are so small that
marketing specialists cannot be afforded, or are staffed by people with technical
expertise in their field but only limited marketing experience. This generic
description appropriately describes many transit agencies.
Understanding the [ustomer/Gather Data
Marketing any product successfully relies on one fundamental principle:
"Understand the Customer." The business community recognizes that there is no
substitute for knowing what the customer wants; all subsequent decisions about
product development and marketing should follow from this knowledge.
Knowing the customer means knowing existing customers as well as potential
customers. It means knowing the needs of particular market segments that are
being targeted, and being able to offer the customization required to meet these
needs. Knowing the customer may require a great deal of personal attention in
some cases, as well as tools for tracking existing customers and potential
customers, and original market research.
Market Research and Analysis
Market research should be used to help define who the customers are and what
their particular needs may be. Market research can be informal (discussions
with staff in contact with customers, informal conversations with customers, or
analysis of customer complaints), or it can consist of focus groups and formal
survey efforts. Occasionally, entrepreneurs develop services or products before
customers really perceive a need. Even then, :rAarket research is useful to help
refine the idea and to determine how to communicate its benefits to customers.
In fast moving markets, there is often little time for formal market research. In
such cases, close contact with the customer becomes the mechanism for
discovering what products and services are needed in the marketplace.8 The use
of marketing research in transit was documented in a recent TCRP study, and
therefore will not be described further here.9
Page 2-10
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1~8-to~s Mark8 - ~
-
Market S0'mentatIon
A transit agency can choose to market to the public in general ("mass" market),
or to undertake market segmentation. "Mass" markets are appropriate when a
company or agency realizes that various customers may have different wants and
needs, but a sufficient number are similar enough to be treated as a homogenous
group.
The far more effective market selection technique, however, is segmented
marketing. Segmented marketing does not assume one market, but instead
concludes that several markets are appropriate for the sate of a company's goods
or services. Market segmentation Night be considered for new services, special
promotions, advertising, and direct mad! campaigns.~° In practice, market
segmentation divides the market into different groups that square common
characteristics; these commonalties increase the likelihood that the group will
p nd to the same type of marketing campaign 11942~43 M k t
is as useful for transit-to-business marketing as it is for consumer marketing. A
recent TCRP project investigated the benefits of market segmentation in the
transit industry, and summarized them as follows:
"Designing respon$iv0 products to mw' the needs of ~e marketplaoe. By
thoroughly researching customer preferences an essential component of
segmentation analysis-your agency will move toward an essential element
of a market orientation-achieving a customer focus. The agency places
the customer first and designs and refines its product and service mix to
satisfy the need of the market.
Dev~opbg sff0e~ve and Best eflichnt promos only strategies. As a planning
tool, segmentation identification and analysis is extremely valuable in
developing the agency's communication mix. Advertising campaigns can be
designed with a message that touches the hearts and minds of the market.
This message can be targeted to the right media vehicles. This marketing
investment can be supplemented by public relations initiatives and sales
promotion methods.
ProvN.g alight on present marketing sb at09bs. It is important to
periodically reevaluate your present marinating strategies to try- to capitalize
on new opportunities and circumvent potential threats. Market segmentation
research is useful in exploring new markets-perhaps secondary or fringe
markets such as infrequent or occasional riders that might have otherwise
been neglected -- by concentrating on primary markets such as commuters
and/or frequent riders. Moreover, effective segmentation provides a
systematic approach for controlled market coverage, as opposed to the hit-
or-miss effectiveness of mass marketing strategies.
Ingot 9 consumer anaNss and market segmentaldn protidB8 important data
on winch beg~ange plannb~for market growth or prodw! development
Pa'02-n
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Bu8ioss8-~ M^0-Icy
Another common strategy is to use one or more measures of cost-effectiveness
to evaluate the success of a marketing effort. These may include marketing
costs per new rider, cost per response to a marketing campaign, or tile ratio of
marketing costs to revenues. Measuring marketing cost per new customer dollar
of sales filters out recurring sales and avoids valuing a new large account the
same as a small one, which would happen by tracking only the number of
enrollments.
Most new products will need some level of refinement and revision over time.
Users may need more information than was initially provided, or the benefits
that actually appeal to the market may be different from those that were
highlighted. More sales support or an enhanced image may be needed.
Feedback frown clients or customers can I,elp provide transit providers with the
information they need to adapt the product or marketing program.
Without agency support and follow-through on the results of this feedback -
modifying tile product to better satisfy its market or adjusting the
communications plan so that the market expands - long-term success may be
limited. Given the large role that customer and business satisfaction plays in
determining success with transit-to-business marketing efforts, it is I,ard to
overstate the overall importance of the evaluation and follow-through functions.
Overview
Marketers employ a number of different techniques to promote a product,
including the use of paid advertising, personal selling and direct sales, sales
promotions, publicity and public relations, and partnership. Together, these
elements encompass the diverse activities that producers undertake to promote
their products and customers. The first two, advertising and selling, are by far
the most widely used, while the use of sales promotions, publicity, and public
relations are still common but generally regarded as not as effective as tile first
two. The use of partnerships can be integrated with each of the other techniques.
This section discusses the communications (or promotion) strategies associated
with marketing services to business. The range of applicable techniques will
vary widely with the specific product and available budget. Major
communications methods for business-to-business marketing are also listed in
Table 2-1.
Key factors that have determined the choice of marketing strategy and
techniques include available staff end budget resources, the level and type of
support from the organization and other key stakeholders, and the overall
priority assigned to making the program grow. In general, though, most transit
r - - of - =
Pa~l 2-20
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B~ss-~_r~ Market 1_y
organizations contacted during this project (which covered tile full range of
business-to-business marketing strategies) reported that they have used direct
mad! and telemarketing to snake initial contact and to provide clients with snore
follow-up information, while the use of business databases to segment the
market and to target potential customers has been particularly effective.
Organizations also use newsletters, informational pamphlets, and special
promotional activities first to service companies, then to keep participating
companies informed. Also, a number of organizations stated that networking
and word-of-mouth were the two most successful marketing techniques they had
employed.
Most organizations agreed that personal contact is snore effective at generating a
response than is direct snail or telemarketing, although tile cost of face-to-face
sales is considerably higher. This is particularly true if sales staff snake personal
visits and/or provide on-site services to plan and implement promotional
programs for transportation services.
A well-structured communications approach is necessary (and is part of a
comprehensive marketing plan), and may have both general market and target
market elements. It would integrate all of the resources available, which likely
includes some no-cost actions (like press releases), as well as paid marketing
efforts and maybe cooperative/leverage/sponsor efforts. The communications
fable 2-'
Primary Communications Methods for Transit-Business Marketing
.
Strategy Communications Methods
Persona/ Sales Sales staff visit to key sites, transportation fairs, employee
transportation coordinators
D;reef Sales Direct mai'to businesses in target areas or business categories,
telemarketing, electronic communications
Site-Based Posters for employee bulletin boards, flyers for employee stores or
paycheck stuffers, company newsletters
Bider-Based Bus and train posters with tear-off slips, posters in stations,
displays at customer service centers, driver hand-outs fin some
cities, driver incentives are used)
Partnerships Media or corporate sponsorship of programs or services
Pub/icit, News stories, press conferences, articles in newsletters of allied
organizations
Advertising Paid ads for radio, television, newspapers, newsletters
Page 2-71
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Bu8InBs8-WPu8in~s8 Markets ~
plan should detail printed requirements, anemia services, phases, out-bound
marketing efforts, response activities, and other elements necessary for the
specific product or program. While it is surely subject to change and updating, a
written communications plan brings a focus to the various marketing
requirements and schedules, and helps to ensure effective program
implementation.
Direct Sales
in a direct marketing approach, the buyer and seller do not make contact face-to-
face, but rather indirectly through the telephone, mail, fax, Internet, or another
technology. The customer is then given some method by which to reply, to
provide feedback to the seller about his or her interest in the product or to
receive more information. One key feature of direct marketing is the degree of
early evaluation that is possible, which helps to ensure that the marketing
strategy is working as planned. Direct marketing can be done reasonably
cheaply (on a per lead generated basis), but it is more difficult to develop the
buyer-seller relationship that often exists with field sales. Worse, the percentage
of sales made to people contacted is quite low (usually under 5 percent) because
it is difficult to effectively target the most likely buying customers.
Direct marketing is sometimes used to support a sales force. Direct marketing
can be used to develop contacts into qualified sales leads, which can then be
pursued by the field sales staff. The direct marketing sales effort provides
general information and direction to potential customers, while the field sales
personnel give more in-depth information and demonstrations, and actually
complete the sale.
Following are typical direct marketing techniques.
Direct Mall
Direct mail can be an effective way of marketing to a targeted group. Potential
customers are mailed information about a product and are given a means of
asking for more information, contacting a salesperson, or placing an order.
Direct mad! is the primary means that direct marketers use to reach current and
potential customers. This is a very cost-effective means of reaching potential
customers, particularly by using lower-cost services offered by the post office,
such as 3r~ and 4th class mail, ZTP+4 codes, and pre-sorting. However, it is
only more recently that direct mail has been used in the business-to-business
marketing area, mainly because business-to-business marketing has a smaller
customer base. As it has become possible to more narrowly target mailings, the
use of direct mail in business-to-business contact 1las increased and become an
important part of the marketing mix. Different approaches to direct mail include
the use of business-to-business catalogs, sales brochures, and postcard decks.
These are briefly described below.
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Ib~-tO Bu8ina88 Marks - BY
Business-to-Busines~ labllog~ - A modified form of direct mad! is tile
business-to-business catalog, in which a number of different products are
advertised together. These range widely in terms of sophistication and
length, and can include products from a single company or from multiple
sources. Catalogs are less focused than solo direct mail, because they contain
a range of different products. This makes it more difficult to target them at
specific market segments, but they do provide a good overview of the
different types of products that are available. 47 Business-to-business
catalogs give smaller companies the opportunity to advertise together, and
allow larger companies to simultaneously market a number of different
items. Companies will sometimes issue one large catalog containing all of
their products, as a reference to their regular buyers. A transit agency might
band together witI, other agencies offering employee benefits, for example.
· Sew BEAU - - Sales brochures are very common, and are usually
included as part of direct mad! packages sent to customers. Brochures
provide an overview of products offered by a producer, but are often short
enough to allow for very targeted marketing. In fact, many companies
change the content of their sales brochures depending on the mailing list or
target industry and the context in which the sales brochures are being
distributed. For example, a brochure that works at a trade show where high-
volume customers are present may be inappropriate and/or completely
ineffective in a direct mad! package to low-volume customers.
· PBliBl~ D~k$ - Postcard decks are mailed packages made up of
promotional postcards for a number of products distributed by one or more
companies. These provide exposure for a company's product at a lower cost
than solo direct mail, because the mailing costs are shared between a number
of different parties.43 Postcard decks can be particularly effective when the
different products being promoted are related in some way. Postcard decks
are not very widely used in direct marketing, but they can be used
effectively by producers who are attempting to keep promotional costs
relatively low. TransitCheck, for example, participated in a recent postcard
deck mailing to accountants.
TsIemark.~Ing
Telemarketing is particularly suited for business-to-business marketing because
business buyers can be contacted during regular business hours and are more
likely to listen to a marketing campaign than are consumers at home. Recent
developments in automated dialing and quality assurance have improved the
effectiveness and quality of telemarketing operations. 47
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BU$~$S-~ M - ~ - ~
Electronic lommuntcatton
Some organizations have begun to take advantage of the Tnternet and facsimile
(fax) communications to market their services. Most companies now maintain
home pages on the Internet to present information about services, fares,
schedules, and special events. While some sites simply present information,
others are interactive and allow customers to search databases, "chat" with an
expert, or submit questions to be answered by a transit agency representative via
email.
Personal Selling
Personal selling includes any direct contact between a business and another
business. Contact may include meetings to present product information, on-site
events like health or transportation fairs, or participation in community or civic
organizations. By speaking to a number of businesses at the same time, the
agency can justify more frequent interaction with employers, leading to an
improved working relationship.
Sales Force
Perhaps the greatest difference between consumer marketing and business-to-
business marketing is in the area of sales. Private businesses routinely use sales
staff to sell their products or services to other businesses. In particular, a
dedicated sales force can be very helpful for fostering interest in a service and
for explaining the finer and more complex points of a program.
There are numerous approaches for organizing a sales force. One is an "account
executive" approach, with which marketing staff develop ongoing personal
relationships with their clients and customers. A geography-based approach
may be appropriate, enabling a manager to work with businesses within a
defined geographic area. Another approach may be to organize sales staff
according to type of business. The business community is quite broad, and what
works for one segment may not succeed with another; this makes industry
segmentation entirely appropriate. For example, to maximize effectiveness, one
staff member may work with accounting firms, another with educational
institutions, still another with hospitals. Figure 2-4 shows training
considerations for tan effective sales force.
An attractive concept for businesses is for a sales force member to provide a
single point of contact, often described as "one-stop shopping." Many local
government agencies have introduced this concept to help eliminate red tape
with their development review and permitting functions.
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Bu8~-to~s Mal~k8fflI! BY
Figure 2-4
Euid0lines for Sales Staff Training and D0~010pm0nt
Choosing the right people for sales positions is critical, as is providing them with the training and
tools they need to do their job.
Demeanor and Approach. Despite evidence to the contrary, some businesses may harbor
negative stereotypes of transit providers or government agencies in general. It is critical for the
sales force to dispel these stereotypes through clear guidelines on appearance and approach.
Listening to Customer Needs. Listening to customer needs can help the transit agency
develop customized products that respond to specific identified needs and problems.
Available Products. As the principal point of contact between the business community and
the transit agency, the sales agencies must be familiar with the range of transit products
available to the business community - from service hours to fare media.
Product Benefits. Knowing how transit products can help a customer can help seal the deal.
Knowing the impact on the customer's bottom line is even better. For example, the sales staff
should be familiar with the tax benefits of a voucher program as well as the potential increase in
ridership.
Good Materialse Clear and attractive brochures, flyers, audiovisual presentations, and similar
materials designed to give the impression of a serious and professional organization are crucial.
Close the Deal. It is critical to give the sales staff the flexibility and support they need to work
with colleagues in all parts of the transit organization in order to close the deal.
Providing Feedback From the Field. Feedback from the field can help fine-tune a product. For
example, is a bus route too crowded? Does it run late enough or early enough to meet employer
shifts?
Incentives. Finally, a successful sales program likely includes incentives for successful
employees. This may include recognition, advancement, awards, or bonuses for especially
productive employees.
Note that a field sales force is not necessarily required for face-to-face selling.
Many smaller companies rely on their technical staffs to fulfill this function.
Other approaches to face-to-face selling include the use of networking through
professional organizations and affinity groups. For example, one fast-growing
services company became the national expert in the area of employee assistance
programs without a formal sales force. They obtained considerable publicity
due to their exposure in the professional arena by attending conferences, giving
papers, and using existing client businesses to sponsor workshops for peer
businesses. The use of trade shows and peer-to-peer sponsorship are excellent
networking techniques that can be used by a sales force or by other staff
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Bw~l~18-~ Mat-IVY
.
involved in selling a service or product. These techniques are covered in more
detail below.
N0tworkIns
Networking with business leaders is another marketing technique used by
business-to-business marketing organizations. In some cases, this takes the form
of directly contacting business leaders (sometimes using political or community
leaders as an initial contact to reach the business leader). In other cases,
marketing organizations will coordinate meetings, seminars, and workshops
where potential participants can I,ear about the positive experiences of current
participants, as well as general information about particular services. This type
of personal contact at higher levels of management gives information to
individuals with the power to make the decisions necessary to involve their
respective businesses.
Personal Meetings with Decision-Makers
Personal meetings with decision-makers at an employment site are an extremely
important aspect of a marketing campaign, because tI,is is often where
employers will make final decisions about program participation. Different
organizations use different techniques for making direct contact with employers,
depending in large part on agency size and funding. Small or poorly fi~nded
organizations may rely on technical staff to make initial presentations on various
services. As described earlier, organizations with greater resources tend to have
a dedicated sales staff, usually known as "account representatives" or "account
executives." This type of staff is usually in charge of all sales contact with
potential customers, ranging from the initial mailing or phone call through to the
decision to participate. Once an employer has agreed to participate in the
program, the sales force will act as a general resource, answering questions,
organizing events, and keeping employers aware of new developments through
regular mailings and phone calls.
Paer-to-Peer Sale'
Peer-to-peer sales encourage business customers to share experiences and to
offer advice to their peers. These groupings are effective because they place
experienced users in the position of selling products or services to other
business. Many businesses are reluctant to participate until they know that
others are also involved in a program; peer-to-peer sales eliminate this anxiety at
the outset.
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Bits- ME
Employee-Based Marketing
Even when the target of a marketing campaign in business, this type of
consumer-based marketing can play a role. Although most business-to-business
marketing is targeted at the internal decision-makers in a business, there are
times when an appeal aimed at employees can be helpful. The travel industry,
for example, often aims advertising and promotions at business travelers, who
may then help persuade their employers to use particular companies. For
example, employee-members in particular rental car clubs may encourage their
employers to have a corporate relationship with that club. Health insurers and
HMOs also sponsor advertising aimed at interesting employees in their services
- who in turn push their respective employers for the service.
Promotions
Sales promotions are elements such as store displays, trade show appearances,
samples, and discount coupons that increase awareness and encourage the
purchase of a service or product. A transit promotion could include things such
as a free day pass provided as part of a "try transit" program or participation in
employer benefit fairs or transportation fairs. The following are considerations
in developing a sales promotion effort:
Design of ~e Offer In doing a promotion, the objective is to get potential
customers to respond to an offer of some kind. Often insufficient attention
is paid to the design of the offer, and a badly designed offer will lead to poor
customer response. There are a number of different types of offers: a soft
over is one that does not require any serious commitment from a respondent
(such as an offer to send more information on a transit pass program), while
a hard odder forces the respondent to submit money or make some other
strong commitment to the seller. All types of offers must invite people to
respond, and give them a quick, easy, and cost-free way of doing so. They
must make it clear what is being sold, and demonstrate clear benefits to the
potential respondent. This will encourage greater response levels and turn
more prospects into leads. At the same time, there is a danger of making the
offer too appealing or easy to respond to, which will lead to an unacceptable
number of frivolous responses. It is important to think about how prospects
will respond to the offer, since there are a wide variety of options available.
These options range from toll-free information numbers and business reply
mad! to automated fax services and Internet response mechanisms.
Scent Many marketers offer prospects different incentives to entice
customers to request more information, contact a salesperson, or actually
make a purchase. There are a wide range of incentives available, including
informational booklets, gifts, promotional offers, and demonstration
software. Some marketers even hold prize drawers from among those who
requested information or purchased a product. These incentives vary in
1
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BU8~11088-~ Mat-~
terms of their cost and attractiveness, and it is important to ensure that they
do not make the recipient fee! unethical. Incentives can be very successful
in increasing responses (particularly to soft offers), but marketers should
investigate whether tile expected return frown an incentive outweighs the cost
of providing it.
· aqua Fulfalment Packages - Another important area that is often
overlooked by business-to-business marketers is the order-fulfilIment
package, which is what is sent to businesses that respond to the offer. Even
the most wonderful offer will not lead to a successful sale if it is backed up
by a poorly designed fulfillment package. A well-designed fulfillment
package should provide a strong sell for the product, and provide an easy
reply mechanism for prospects who need further information or wish to start
the process of making a purchase. To support and maintain interest in the
product being marketed, the inquiry fulfillment package must also be sent
out quickly after a request is received. The process of going from prospect
to lead to purchasing customer is delicate but also crucial to the success of
the marketing effort. Because of this, the inquiry fulfillment package must
be carefully designed to entice the recipient to place an order.
Partnerships
In business-to-business marketing, partnerships within the business community
can provide mutual benefits. Opportunities include sponsorship, co-marketing
(also called co-branding), coordinated promotions, and endorsements. (These
will be discussed in greater detail in Chapter 4.)
Advertisino and Publicity
While advertising and publicity campaigns are primarily directed at consumers,
they also have business-to-business applications. Most general advertising is
aimed at employees in hopes that they will convince their respective companies
to enroll in a program. While print and broadcast media advertisements are by
far the most common, other techniques include newsletters, videotapes
promoting products and services, and special promotional efforts such as prize
giveaways and letters aimed at employees.
Media Adverti$ing
Advertising is any impersonal form of communication about ideas, goods, or
services that are paid for by an identified sponsor. Mass media advertising in
newspapers, magazines, television, radio, direct mail, outdoor billboards, and
transit cards are the most popular locations for advertising. In the case of
business-to-business products, the trade press also can be an attractive venue.
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Bus~sg-to~ss Marks - llary
For products or services witi, a larger customer base, television or radio
broadcast advertising can be effective, particularly if the promotion is targeted
during specific types of programming. New electronic advertising methods such
as faxes and the Internet are also increasing in popularity.
Press Conferences and Press Recasts
A well-organized press conference, combined with a well-written press release,
can provide invaluable free publicity to a marketing program. By getting the
press interested in a service or product, particularly if they can be made to cover
it as new and innovative or of general interest to a large number of people, then a
positive image can be created without major expenditures.
Publicity and Public R0IatI0n~
Publicity describes promotional venues such as news stories, editorials, and
word-of-mouth, while public relations are press releases and news conferences
planned to influence customers' attitudes or opinions towards the product and its
producer. Both of these promotional activities help develop awareness of the
product, and make potential customers more receptive to other marketing
information that they will receive. In the same vein as press conferences and
press releases, it is possible to generate a positive image for a new product
through feature articles and editorials, or even radio and television coverage.
This might seem to be of greater utility for customer products, but it can work
for business-to-business as well, particularly if the coverage is targeted in media
outlets that are directed towards the businesses that are trying to be reached.
Working with the press to present stories about new products or services can be
an effective way to publicize a new program. In addition to working with local
newspapers, businesses can submit articles to organizational newsletters and
publications, including chambers of commerce, employer groups, and civic
associations. Finally, some businesses publish periodic newsletters that provide
updates on programs and services.
E~sa=
While financial and time constraints can deter companies and agencies from
developing comprehensive marketing plans, there is a great deal of value in
taking the time to define the product, pinpoint the target market, and develop a
promotional campaign to reach the customer. In many situations the "customer"
can be either an individual or a company, and the campaign can still be similar
for both. There are, however, distinct differences between targeting businesses
and targeting individuals, and these differences should be addressed in order for
a business-to-business marketing effort to be successful. Some of these
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"iness-to~ Marketing Bay
differences include the need to tailor the message and product or service, the
increased importance of a sales force, and the need to foster personal
relationships through networking and/or peer-to-peer contact. In either business-
to-business or business-to-consumer marketing, though, it is crucial that the
marketing process reflects the goals and values of the company selling the
product or service.
Even though transit is relatively new to business marketing, a number of transit
agencies have utilized the basics of marketing theory to generate effective
marketing plans for services like ridesharing, employee passes, and transit
vouchers. The following chapter extends the discussion of marketing theory into
transit marketing specifically, anti offers examples of the types of approaches
and techniques most often used to target tile business customer ire this
environment.
Pag0240
Representative terms from entire chapter:
marketing plan
