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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. Page 2-Z!

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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 Page 2-23

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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. Page 2-24 l

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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 Page 2-25

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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. Page 2-26

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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 Page2-27

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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. Pale 2-28

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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 Pqle2-28

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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