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Chapter 13 Specificities of Business to Business communication

Chapter 13 Specificities of Business to Business communication


Objectives of the chapter

Understanding the main features of the communication for the companies which sell products or services to other companies or non-profit organisations. First, we need to get a good insight into the different types of Business to Business communication depending on whether we are dealing with entering goods (B to B to C) which are sold to a professional partner but which will be resold to individuals, or with foundation goods, facilitating goods or autonomous projects. Understanding the concept of derived demand which implies a strong dependence on the final market, but also the possibility of getting involved at various levels in the value chain. Realizing the importance of inter-individual relationships and thus, of personalized communications in the marketing strategy. Understanding that industrial purchase is not realized by the procurement department only, when it is a strategic purchase, but by all the members of the buying center. Being able to identify the members of the customer organisation who have an important role in the decision process, whether they are prescribers, users or deciders, in order to communicate better than competitors and to secure the contract.

If you want to get a better understanding of the Business to Business communication from a company to another one or to an organization (local authorities, administration, association), it is necessary to have a good overview of the concept of supply chain and derived demand. Then, a mini-case will give us the opportunity to appreciate the importance of inter-individual relations. They must be as personalized as possible because the men and women in the supplier company represent the most important media to communicate with the customer company. They underlie the Customer Relationship Management (CRM) which is to be defined. In the third part, we will examine specific media such as tradeshows and trade press, company brochures, catalogues and technical documentation. The pretext-studies represent a real communication tool, while maintenance turns out to be an excellent source of data of great use for the communication plan. Training the customer's employees along with quality management also helps to better develop Business to Business communication.

1. Supply Chain and Derived Demand


1.1. The different fields of Business to Business
Several classifications have been proposed, including those which distinguish: goods entering in the composition of the product or Entering Goods, goods entering in the production process or Foundation Goods, goods contributing to the running of the company which include Facilitating Goods. We can suggest a new classification established according to the final addressee: Entering goods intended for a product of high consumption correspond to BtoBtoC (Business to Business to Consumer). When Intel sells a microprocessor to Thomson for a DVD recorder, the last customer in the chain will be the final consumer. The same applies to the Tetra Pak packaging sold to Minute Maid company which will be finally consumed by a private individual.

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Chapter 13 Specificities of Business to Business communication


Business to Business goods, products and services, intended for the customer company production: it can be electricity or energy supply, but also machine-tools or foundation goods such as Caterpillar, Tetra Pak, Airbus A third category of goods are sold to the customer company, but intended for its employees. We can call it BtoBtoE (Employee): it includes in particular Individual Protection Goods such as Essilor Protection and MSA Safety Works safety glasses, Jallatte and Lehigh safety shoes, Kimberly-Clark protective clothing Projects or cases relating to the sale of a set of products and services of high financial value, involving a large number of people, likely to stretch over several years and whose purchase usually comes after a bid procedure for invitation to tender.

1.2. The notion of supply chain


The demand of companies downstream from the supply chain determines the level of activity of those upstream. This industrial chain corresponds to the notion of derived demand. The success of a finished product is closely linked to the success which will be realized by the customer. An electronics component or a textile fiber, for instance, only makes sense in relation to the anti-locking system of a vehicle wheels or to the type of underwear produced from them. Thus, the industrial product or service demand depends on the demand of the next product in which the first one will be: incorporated : ingredients, raw materials...; assembled : components, spare parts...; or for the production of which it must be: consumed (lubricants, energizing products...); used (bureautics, machine-tools, vehicles...). The term supply chain comes from the vertical presentation often used to symbolize the whole of the production chain, from raw material to finished product (cf. figure 13.1).
Exhibit 13.1 An example of supply chain

The supplier/customer chain presents two main consequences: dependence on activities located downstream from the supply chain and possibility of action at different levels.

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1.3. Dependence on derived demand


This feature of the Business to Business sector is unfavorable and often regarded as unfair. The concept can easily be expressed: every manufacturer, within the supply chain, depends on his customer who in turn depends on his customer. Thus, any drop in activity within a given sector will affect all involved suppliers. In the Car Industry, for instance, if the Europeans drive fewer miles and buy fewer new vehicles, all suppliers in the supply chain will suffer a drop in activity. Thus, the tyre manufacturer Michelin, despite its leading position in R&D and in marketing and commercial plans, has to put up with a fall in the sale of OEM tyres for new vehicles and of replacement tyres on vehicles already on the market. This dependence problem is even worse for medium size specialized suppliers who usually work only for a small number of customers. A very small clientele portfolio may mean strong partnership, strong commitment, from new product conception to delivery related services. However, at the same time, subcontractor status implies a very strong dependence on the customer. In fact, in crisis situations, the main customers are likely to bring back operations to their own companies to avoid or reduce lay-offs. Unlike the situation in consumer products markets, the supplier company is not in direct contact with the final buyer, which means it cant react fast by adjusting its offer. Its reactivity depends on that of actors downstream in the supply chain.

1.4. A marketing strategy with several action levels


The interdependence of links within the supply chain has a favorable consequence: different action levels can be considered. The main idea in Business to Business marketing is to always think in relation to ones customer, but also: in relation to the customers customer or even in relation to the customers customers customer. In order to seduce a customer and secure his loyalty, the most efficient way is often to talk with him about his own customer, to bring him information and studies on the demand of his own products. This type of action with two customer levels must be considered with regard to both market research and means of promotion. Studying the customer's customer: Faurecia is becoming the reference in suppliers of automotive seats by developing studies on the final customer, drivers and ordinary passengers. These studies are twofold: medical studies, analysing lumbar and back problems of professional drivers who drive long distances such as taxi-drivers, sales representatives, etc; satisfaction and unsatisfaction studies of the same drivers towards the different seats proposed by the current models.
Exhibit 13.2 Studies carried out with the final customer, an asset for the supplier in his relationships with his industrial customer

This way can be analyzed reactions to: structures and specific shapes of seats lateral supports, bucket-type seats - more or less hard-wearing or soft seats textures;

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optional extras offered such as different modes of seat heating, possible adjustments (position of the back and bottom parts), possible memorisation of several front seats functions for the different users of the vehicle By developing such studies based on driver profile, the supplier will interest his vehicle designer-assemblermarketer customer by bringing him a precious help in the conception, the choice of extras, and thus the equipment of new models to come. By informing him of the reactions of final customers to products proposed by competitors, Faurecia contributes to his industrial customer's technological watch. By taking up a position upstream from the conception process, such a supplier gets an important lead over his competitors. He succeeded in changing his part from dominated subcontractor to acting partner of his strategy. Following this case, is it possible for Faurecia to influence his customers customer? Of course no, since the final driver of the vehicle usually doesn't know the seat manufacturer and even sometimes thinks that the seats are made by the car manufacturer. The reason is the absence of supplier brand policy. In the case of automotive equipment, this absence has several reasons: First of all the engineer culture which for long lessened the importance of the marketing department and its main tools, The second reason is the car manufacturers tendency to limit or ban brands. Thats because they may fear a lesser differentiation between models of competing brand in case the main equipment manufacturers signed their subsets: seats by Faurecia, cockpits by Delphi, electrics distribution by Valeo, braking electronics by Siemens Procurement departments of manufacturers attempt to oppose a branding of the subset, trying to keep a free hand for future negotiations and to be able to change suppliers easily. The counter-example of Recaro speaks for itself. Managing to sign its seats in large characters on Porsche models, it shows that a strong will of brand policy ends in a good visibility despite real obstacles. Thus, by developping a brand policy, a supplier can achieve his visibility on the final product of the supply chain. Industrial companies which made this choice can then manage to influence the customers customer. Influencing the customers customer: The example of Lycra fiber helps us to get deeper into the different marketing actions levels of a supplier upstream from the supply chain as far as promotion efforts are concerned.

2. The importance of personalized communications


2.1. Lycra / Dim case
Du Pont de Nemours has implemented a pull strategy for his brand Lycra. This strategy of different action levels implies a sharp analysis of the respective roles of the different actors within the supply chain.
Exhibit 13.3 The different marketing action levels of Du Pont de Nemours for his brand Lycra

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First target: the manufacturers The first action level remains the one intended for the direct customer, the reel producer and the stockings manufacturer (Dim, Well, Le Bourget, Rosy) in the stockings supply chain for example. In fact, if Dim doesn't choose Lycra, all other efforts by DuPont will be useless. Which targets are to be identified within Dim company? The Production Manager: In order to communicate efficiently with him, it is essential to analyze his main motivations. Defined by management, they are mainly the gain in productivity, the respect of the brief in terms of quality and the compatibility of the new fiber with the company machines. The Lycra salesman has to show him that the fiber can improve performances, especially productivity ones, and that it fits with existing equipment. A comparison demonstration is generally organized to compare the resistance of different fibers to stretching due to the rolling speed. Next, performances observed by the supplier at other industrial customers, who are Dim competitors in our example, have to be pointed out. Then, the customer has to be assured collected information will remain confidential: it is best done by working out the average performance obtained by four clearly identified customers/competitors. But only the average is shown, not the data of every competitor. The numbers of weekly machine stops and their average duration have to be taken into consideration among others. If the average performance of Dim competitors is higher, the Lycra marketing manager can then calculate the profit loss that this difference represents for Dim as long as this one has not achieved the average performance. This amount, estimated weekly, is then assessed on an annual basis taking into account the different production teams. It makes it possible to achieve a higher amount and to encourage the customer Dim to work with Lycra to catch up with the best technical performers. Thanks to this type of comparison, Lycra can thus be seen as a technical facilitator. When, in the comparison exercise, Dim obtains a higher score than the average of the chosen sample, it can not be argued that the company will catch up technically. However, the exercise has helped to develop good relationships, by showing that Lycra is a professional supplier, with a good technical knowledge of his customers, respectful of data confidentiality, unbiased and flattering. Finally, by handing a summary of the results to your technical interlocutor, you confer him value in the eyes of his executive committee. Then only will invitations be proposed, on the occasion of a tradeshow, PREMIERE VISION, EXPOFIL in Paris, MODA in Milano, or when the company wishes to show a renovated production tool or a research center. If these are geographically too far away, the invitation will be to the national head office: the only luxury will be the highly skilled level of the people in charge of the reception. The visit of a company with a similar activity,
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but not directly competing, will help Lycra to appear as a benchmark organizer : for instance, between Dim, underwear manufacturer, and Speedo, swimming costume manufacturer. The Marketing Department: The main motivation of the product manager is defending the interests of the end consumer. If she manages to offer a product more powerful than the previous one and the competitors, the consumers will buy again and their loyalty will contribute to the gross margin, which is the goal the marketing manager has to achieve. In order to be efficient, the marketing manager then needs market research which she usually organizes. However, the supplier can offer to give her for free an additional study focusing for instance on the specific expectations of colored women as far as stockings are concerned. As in the previously analyzed task, Lycra wants to show to Dim that it is a potential partner, from which relevant support and performance improvement opportunities can be expected. This product manager works particularly with the R&D manager who will be approached by another interlocutor from Lycra. The R&D Manager: His position towards the product manager who is his internal customer is that of a supplier. Her basis is the consumers dissatisfactions, expressed during the study interviews. Basically, we can consider that women have essentially two types of expectations, expectations of Cartesian type in terms of solidity, comfort and more affective expectations in terms of esthetics, seduction, sexiness. These two types of expectations are rather contradictory, hence the difficulty of the marketer's work: the thinner the product, the more fragile it generally is and the stronger the product, the less sexy it is. The product manager's job consists in looking for a compromise between these two types of qualities, but a compromise more powerful than the one chosen by the competitors and by Dim the previous year. A pre-brief is thus passed on by marketing to R&D. The R&D manager is approached by another interlocutor from Lycra with a technical or even scientific profile. During his meeting with the R&D manager of the customer, he tries to ask him on which types of projects he is working, in order to understand how he could make himself useful. Beyond the Cartesian arguments, the suppliers employee can then try to develop a certain connivance with his technical interlocutor, to the expense of the marketing manager. Are the marketing managers demands realistic? . A discussion follows to insist on the fact that most marketing managers technical skills are lower than R&D peoples. At the end of the meeting, the Lycra R&D person makes it clear that, when a contract has been signed between the two companies, he will be glad to reduce the time to market , that is to say the time needed to develop the product required by marketing. The Sales Manager: He works in close collaboration with the product manager too. They also have a customersupplier relation, marketing being the supplier and sales being marketings first customer. It may seem daring for a supplier to meet a sales manager, especially without the marketing manager's knowledge. She can actually consider herself by-passed by the supplier who creates a direct relation to the sales people. He is then doing his own marketing job, proposing to sales people the type of innovations that they will be expecting from marketing. In some cases, the supplier will however undertake this move, meeting the sales manager. Again the idea is to communicate with him using the same language, i.e. merchandising. It is indeed important to remind that if the marketing managers customer is the final consumer, the sales managers customer is the distributor. The Lycra sales manager presents then a summary of merchandising studies recently realized in super and hyper markets. Yield figures and figures of consumer selling price for all stockings, for stockings with Lycra and for stockings without Lycra are then compared.
Table 13.1: Type of merchandising arguments used to appear as a facilitator of sales performance Yield in K / month Average selling price in All stockings Stockings with Lycra Stockings without Lycra 530 710 430 3,2 4,0 2,6

In a realistic way, figures speak for themselves: the best turnover rate is obtained by Lycra stockings over those which do not contain any. The sales man then insists on the fact that this very high performance is obtained despite a clearly higher (4 instead of 2,6 ) consumer selling price. Doing things this way, the sales manager positions Lycra as a facilitator of commercial performance. The customers sales manager is then prone to ask the marketing manager: what are the features of the future range of product? does it contain Lycra, so much demanded by customers?
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The marketing manager can be annoyed by this pressure exerted by sales people, through a supplier. However, at the same time, she realizes that, by following the sales managers suggestion, she pre-sells the future collection which will get better chances of being well-received. We can stop here this exercise which could however be continued with other managers, Quality, Logistics, Methods then Control Accounting and Financial Manager. Unanimity is never achieved from all of these different managers. It is highly likely that the Purchases Manager, or even the Control Accounter, remain favorable to the competitor Dorlastan who develops a more unobtrusive marketing strategy but who proposes a 15% lower price. This is not important. The main thing is to succeed in swinging the favorable decision of the buying center. Such a strategy of explanation and seduction can span over two years, which emphasizes the fact that a Business to Business communication may take time.
Exhibit 13.4 First target: manufacturers, from the reel producer to the confectionner, or to the stockings manufacturer

We can guess that the arguments put forward will vary according to the different interlocutors. Technical documentations thus present the range of Lycra with its variety of fiber thickness and assembly possibilities (cf. figure 13.5). Besides, it will be necessary to select internally managers with different backgrounds, matching as well as possible the profile of people to be convinced at the customers.
Exhibit 13.5 An adapted argumentation

To be translated

Second target: the distributors The second action level is the distribution, mainly with:

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Some operations aimed at the main deciders, i.e. buyers and managers of work teams in the Buying Centers, as well as at a selection of operational managers of the Textile Department, marked as opinion leaders or working in the main selling points of the company: supply of documented files including studies on consumers' behaviour and on evolution tendencies with references to comparable situations in other countries; supply of detailed Action Plans on the final target: media-planning, copy of TV messages, magazines... Some more classical communication operations with trade press: summarizing operations intended for the general public from the Lycra media-planning and showing different finished products made with Lycra fiber Some operations targeting deciders as far as label brands are concerned: in order to get them to demand that their producers include Lycra and the possibility to announce it to the final consumer on the packaging, which will result in legitimating even more the label brand, putting it on a par with the national brands. To this purpose, a two day seminar can be offered, including visits of three different industrial sites within the textile supply chain. A good level, but pragmatic, technical training is thus given to some fifteen invited managers from a company. By also inviting the key-account manager of this company at Dims, in our example, Lycra appears as the driving force of the supply chain, organizing relationships and furthering business between producers and distributors. A practical guide is circulated to answer questions that people can have about elasthans in general and about Lycra in particular.
Exhibit 13.6 Second target: distributors, supporting the differentiation policy of Lycra

Third target: the consumers The third conceivable action level is the final consumer. How to reach him to explain him the qualities of Lycra and to help him to distinguish this fiber from the other fibers proposed by competitors? Means to be used: The first vector of information remains the product itself with its packaging. The Marketing Department will try to obtain the presence of Lycra logotype on the packaging, next to the brand logo of the manufacturer, Dim in the example. This presence, the size of characters, their color and the relative space in comparison to other information printed by Dim will be negotiated with Dims Product Manager. The other vectors of information for the consumer remain the classical media, mainly womens magazines, posting and television for Lycra. Possible reactions of the customer-producers marketing department: Desire to use an allied Marketing. Regardless of the technical qualities of Lycra fiber, the customerproducer will first try to benefit from the different promotional actions of the Lycra brand, which can support his own brand-producer actions. Fear of a loss of identity for his own product. The producer can fear consumers might fail to differentiate Dims own qualities from those of the incorporated Lycra fiber. The stockings market
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being a very competitive one, it doesnt seem possible to grant exclusive rights. Consequently, isn't there a real danger that the Dim image might be taken over by the Lycra image? The consumer will find Dim-Lycra, Well-Lycra, Chesterfield-Lycra stockings in the same shops She might then think that the main thing is to choose a stocking with Lycra and that there is no difference between the various brands since they all contain the same fiber, Lycra. The risk is a loss of inter-brand differentiation and of distinctiveness for different products which look too much the same. One of the difficulties of B to B Marketing can be analysed through this example. The suppliers Marketing has to find how far it can go in the promotion of Lycra without incurring a risk of identity loss for his customers products. The action plans of suppliers must take into account this risk and propose enough advantages and innovations to make up for it. The strategy the supplier can adopt: In order to continue to put forward his industrial brand, the suppliers range of actions is wide. Here are a few, some of which do not apply to the Lycra case but can be observed on similar markets. Action 1: The first advantage a supplier can offer when launching a new product is a priority for an upstream innovation. The industrial customer is the first one to choose the suppliers process or material in Europe. So he will play a part in its adoption by other producers, hence in its development. In return, the supplier can grant exclusive rights, usually for six months or one year. So the customer-producer will have the privilege of being the first one to use the process and, depending on his talent, the final customer will be able to credit him with the new advantage, thus enhancing the value of his brand. The other brands will then be regarded as mere followers, or even as imitations. Action 2: The second advantage lies in the convergence of the contents of advertising messages. Let's assume that, in its advertising campain, Lycra puts forward: - Better resistance to wrinkling and sagging, - Better fitting to avoid tearing - Long-lasting resilience, - Comfort and performance, - Freedom of movement, - Easier to unwrinkle ready-to-wear. Nothing prevents the customer-producer, namely Dim, from taking up one or several of those arguments. Both campaign link up, increasing the coverage and frequency of the brand of the final product, hence boosting its awareness. Action 3: The third advantage that can be used by the customer-producer lies in the media-planning of Lycra, that is to say: - Choice of medias (women 's magazines) and supports (Elle, Biba...), - Schedule of advertisements or commercials. Thus, a producer, more alert and more flexible than the others in the implementation of his own media-planning, will be able to strengthen his own launching plan by having his campaign side by side with the Lycra fiber supplier's.
Exhibit 13.7 Third target: consumers, Lycra: a medley of ideas

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Example from a women's magazine: Lycra presents nine creations by labels from various fields: from furniture to jewellery, including footwear; boosting a selection of its customers, but at the same time urging them to be more creative.

Action 4: There is a fourth way for the customer-producer to collaborate with the supplier Lycra, with the customer's product present in the supplier's advertising. The supplier will choose a product with a good image, in other words outstanding because of its high degree of innovation or its esthetic value, but above all produced with the material or the process that he wants to put forward in his own campaign. Through this choice the supplier can boost some of his customers; but at the same time, it is an incentive for the others to be more creative.
Exhibit 13.8 Visual supports of Lycra's press campaign

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As a summary, presentation of the Consumers campaign to demonstrate the pull effect of Lycra to different professional actors, producers and distributors.

Action 5: The fifth advantage proposed by the supplier does not directly apply to Marketing. In fact, a technical support can be offered to technical, functionnal and production services to realize the first production involving the new material or process. Depending on the case, a medium-sized customerproducer will mainly expect a technical support, especially when getting to achieve a new know-how. Action 6: The sixth collaborative mode is a consequence of the supply contract. When the agreement concerns a supply of material and equipment, negotiations may give way to a financial participation in common actions: it is sometimes the case for promotion actions such as events at the distributor's.
Exhibit 13.9 Presentation document of the new Lycra tag to industrial customers

Dealing with the customers' customers, Lycra contributes in the commercial performance of its industrial customer by trying to trigger an even stronger derived demand. In order to be able to offer such a commercial partnership, Lycra first develops a technical partnership, mainly at the conception stage. This example illustrates the many possibilities of action, in B to B Marketing, over the different actors within a supply chain and an elaborate brand strategy perceived as a performance facilitator by its industrial customers.
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This supplier thus implements the same strategy on other products, for instance with Cordura or Thermastat brands for sportswear, but Tetra-Pak and Gore-Tex provide other examples among entering goods (BtoBtoC).

2.2. The buying center composition


As the above case shows, the purchasing department is but one of the four components of the buying center. This one, often informal, includes all managers and members of the company likely to influence the purchase decision. They are traditionally divided up into four categories: prescribers, users, buyers and deciders. Prescribers The prescribers are in fact the group of interlocutors who most vary from a company to another, according to the different sectors considered and the different types of company culture. Precribers can be either influencers or gatekeepers. Influencers have the part of favourable prescribers. Lets take the example of the town of Strasbourg that organises a contest for the conception and construction of a new Culture Center. Among the six competing architects, M. X recommends a glass roof in the shape of a circular dome made up of a single piece: no welding, no partitioning that may ultimately cause dirtying and require tricky cleanup. It so happens that only Saint-Gobain has the necessary know-how and patents to perform the service. Likewise, only Alcan can supply the structure to support the dome. If Mr X wins the architects contest, both Saint-Gobain and Alcan will automatically win the invitation to tender. They can then be very pleased with their upstream cooperation (cf. the approach of the marketing project) with the architect laureate and remind him that he managed to win thanks to the originality of their technical solutions. Bringing the architect a new business will be the only relevant way of thanking him. He will then benefit from the information network set up by both companies. Gatekeepers have the part of unfavourable prescribers. It can be the quality manager who gets the agreement of the executive committee for example to demand ISO 9000 certification from the future supplier for a given service. Hence, a company applying without ISO 9000 standard will automatically be ruled out. A gatekeeper can also be a secretary, who takes upon herself not to forward a phone message to the targeted manager. The trouble with this categorization is the subjectivity of prescriptions. Favorable for A, it is unfavorable for B. That is why it is better to make a greater distinction between internal and external prescribers. Internal prescribers: They are functional managers who favorably or unfavorably influence the other members of the buying center in relation to a given offer from the suppliers. The main internal prescribers are: quality department; maintenance department; R&D department; marketing department; sales department. In the case of Lycra, they were the R&D, Maintenance, Quality, Marketing department managers but also the Sales department manager as he had the part of prescriber over Marketing. External prescribers: Through their recommendations, external prescribers also influence the members of the buying center. Among them, are priorily customers, professional experts (engineering consultancies, design offices, architects) and journalists. In the case of Lycra, they were mainly: fashion-designer Jean-Paul Gaulthier who agreed to cooperate with Lycra to organize fashion shows (supply of original materials). It will have a snowball effect on the ready-to-wear industry which follows the trends of well-known fashion-designers. women's magazines from Biba to Cosmopolitan, through regular advertising, advertising co-financed by Lycra, but also articles written by the journalists. marketing managers of mass marketing companies from Harrod's and Marks and Spencer, to Sainsbury: they will gradually add to their requirements the technical features of Lycra in the brief of their label brand products. As with the other intellectual professions (teachers, doctors, journalists), cooperation is not easy especially in continental Europe because of an unfavorable view of the business culture. These professions are quite keen on
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their intellectual independence and are hostile to being influenced. An example of cooperation can be found at Technal's which has been acquired by Hydro (the global leader in building systems based on aluminum extrusions) with two types of architects: a well-known star architect on the company payroll. In return, he helps improving the design of products and accessories and designing the booth for the main tradeshows such as Batimat (the French Building and Construction tradeshow). Besides, he is involved in the company PR through his presence at events organized by marketing such as debates, dinners, conferences junior architects are offered a contribution to their travel expenses to take part in a contest. If they win a prize, the company gives them a bonus. In return for it, their names can be mentioned in the company brochures along with their achievements. Customers can also play a major part in the prescription. Thus, a previous customer may accept to give a tour of his premises to new prospects either during or after construction. This is common practice in the building industry. The cooperation of a reference customer is secured through a price cut, as happens in aeronautics with launching companies . Let's assume that town A plans to build an underground car park in the town center, the prospective supplier will offer to invite the technical management team of town A to visit their counterparts in town B where a similar construction has been made. The people in charge in the prospect town are almost compelled to accept the offer. Otherwise, it might reveal a lack of caution as it is so difficult to make decisions regarding technological solutions to smoke extraction in the case of fire, to the security gates closing system, to the installation of surveillance systems. The people in charge in the previous customer town are bound to accept: personally, the technical manager will have the opportunity to prove to top management that his previous choices were relevant and that the construction has become a reference. More generally, the town and possibly the city council will be able to communicate with the inhabitants and show them decisions were relevant and public funds well used. In order to improve the efficiency of this prescription strategy, it is advisable to find a reference as similar as possible to the targeted prospect. Other external prescribers can be used, mainly industrial engineering consultancies when customer companies have decided to externalize their decision making, including about strategic investments! Users Users are granted a variable importance according to: the user's prestige: a surgeon gets more consideration than nurses; engineers more than technicians; aircraft pilots more than coach drivers national culture: Scandinavia and Japan have long been used to taking into account the views of the prospective users of machine-tools or vehicles This is far less frequent in Southern countries and even in the USA (with the exception of complex goods users). In Europe, users' views are more and more taken into account as it is supposed to improve the company spirit based on a better consideration for employees who are the true final customers of industrial foundation goods. company size: statistically, large companies develop more tools to involve users in the decision process. Buyers They are mainly the purchasing departments who have lost some of their power to the benefit of different prescribers for the purchase of complex goods and services. Their main functions are: collecting information on the various solutions the company can find on the market, taking into account the internal constraints of technical know-how as well as the financial constraints; listing the various national, European or non-European suppliers likely to be called upon and able to provide a relevant answer to the needs of the company. This double function implies surveying the market widely and carefully, including suppliers the company does not know and has not yet worked with. The other main function consists in taking care of the pre-selection (setting up the short-list) and taking part in the final selection of the competing suppliers. After finding out the possible and acceptable solutions, the one which seems the best for the company must be retained and advocated. However the buying center as a whole must be involved in choosing the selected supplier.

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Deciders In theory they are those who take the final decision. It is commonly observed in important companies that the major mode of decision is currently a collective one, which means that even a CEO who is deeply involved in technical decisions will prefer getting the Executive Committee to take a collective decision to imposing one personally. The final decision will only be taken after studying the various proposals and above all after analyzing the different internal and external opinions. In fact, regarding complex purchases, the importance of deciders has strongly decreased in cases where a consensus is easily reached within the buying center. Conversely their weight remains predominant when there is no consensus. They can influence the final choice, force the members of the buying center to reach a consensus or split the purchase among two suppliers. This choice usually generates extra training and maintenance costs but it has the advantage of maintaining a strong commercial pressure over both selected suppliers. On the other hand in small or medium-sized enterprises, the CEO will often take a decision relying on a trusted manager with a competence level high enough for the case being dealt with. The industrial purchase thus results from a collective decision taken by a varying number of people who can be more or less involved in the purchase and who show little consistency (in terms of experience, training, responsibility and confidence level in the company). In order to communicate and negotiate better, supplying companies should know as well as possible their various interlocutors within the customer company (exact role, motivations, present job, previous job, training, other personal information). They must also find out at which stage of the buying process the customer company is.
Table 13.2: targeted messages aimed at the involved managers of the buying center FUNCTION Production Manager Quality Manager R&D Manager Marketing Manager Sales Manager Maintenance Manager Purchase Manager Financial Manager MAIN ARGUMENT TO USE - compatibility with in-plant machine tools - productivity - operating conditions - final product - production process - can be profitably integrated into new projects - helps him to innovate and find new applications - product advantages he will be able to put forward - influencer on production - influencer on marketing - facilitator for final product sales - the new supply is easy to master and his task will not be made any harder - helps him to anticipate new tendencies: materials, processes (Purchase Marketing) - better profit, in spite of higher purchase price, thanks to the possible level of the final selling price and/or to the sold quantities

If you want to communicate efficiently in Business to Business, choosing messages suited to the respective motivations of each targeted manager is a priority. On top of that, you must speak the same language, that is to say use a system of reference as similar as possible and get the calculations to fit with the customers choices: for example weekly and monthly performances according to the customers practice.

2.3. A necessary Customer Relationship Management (CRM)


To enter into negotiations with the best luck on your side, it is necessary to have a good knowledge of your various interlocutors, the buying phase in which the company is and also the circumstances of the current negotiation. The various interlocutors What is their exact part in the process? It can be obvious but a high-ranking manager might take part in the negociation under an evasive title such as director . It is then necessary to clarify his role. What are their motivations? It is important to know your main interlocutors in their private life to know if they are after over-performance and if they are ready to take the risk; or if, for personal reasons, they are looking for functional and geographical stability, which might bring them to favour security among the proposed solutions. Thanks to this information, the supplier company will not communicate using the same arguments.
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Their current functions being known, what was their previous job, their background in the company? and before? Lets suppose two current members of the purchasing department come one from control accounting, the other from the commercial department. It is obvious that the same arguments will not be used to convince them. With the first one, you will need to justify price differences, to get deeper into the details of the financial proposal. The second one will be more responsive to the advantage to the users of an option in your offer. What is their training? It is important to know the level reached by the interlocutor and his type of training. This can turn out to be as important to acknowledge the quality of a self-taught person (and show that you are aware of it) as to show someone else that you know how prestigious is the school or college he went from. In countries such as the United States, Great Britain or France, solidarity is high among the members of the most prestigious schools or campuses. Integration seminars, annual events, very operational yearbooks keep the team spirit alive. This is why, when an important transaction comes up, a big-sized supplier will choose as a leader of the project team a manager with a profile similar to that of the interlocutor from the customer company. Let us not be mistaken: it is not because these two people went to the same school that this supplier will win. The link is not so direct: it is because they come from the same school that a certain informal climate can be created after the main rational subjects have been dealt with. Taking advantage of the relative intimacy thus developed, the interlocutor from the supplier can legally get access to extra information not stated in the brief. For example, you can learn that the mayor has liked the transparent outdoor lifts of a known building. Then it will be possible to add an amendment to the proposal. Beside the rational solution integrating the two traditional lift shafts into the planned building, an option will be proposed to replace them with outdoor lifts including of course the technical additional cost, but also giving justification arguments, such as the number of square meters made available without indoor lifts, and their value calculated from the current price of office space. Which personal information can be known? It might be all kinds of personal information collected through observation or talks with the customers interlocutors. It should be reminded that the legislative context is far from being harmonized between the different European countries. To get round a law such as Informatique et libert (a specific law for the protection of private life related of the use of databases) which exists only in France and Germany, you just have to get your databases hosted in another EU country, the United Kingdom in particular. Among personal information, the main family details are collected, from family status to way of life, ownership of ones accommodation, main sparetime activities and hobbies. In a leisure-oriented society such as ours, it is important to make a distinction between a football fan who watches games on television and someone who plays in a team, even a local one. It is essential to have all this information to avoid communication blunders. Lets consider the case of a company which had decided to sponsor a golf tournament and to invite the main managers of its customer companies. During an audit, the interview of an industrial director in the customer company led to strong criticism of the type of communication used. When asked, the customer bluntly declared that he did not like golf. It is possible to make fun of executives or engineers who seem so spoilt that they complain about a wrongly targeted invitation but it is obvious that no communication is better than bad communication. Inviting someone to an event in order to entertain him is pure masochism if that person is not at all keen on it. It is then important to know what people do not like, starting with presents, which over a third of professional interlocutors turn down nowadays. It should be pointed out that in other contexts information such as ethnic or religious background are much more important in the communication process. By choosing an interlocutor with the same background, sharing the same faith, a supplier takes no risks with a negotiation in a multicultural context. The buying stage in which you are An inter-company buying process is made up of the six following stages: anticipating and identifying a need defining the brief and the quantitative demand researching and qualifying potential sources collecting and analysing proposals choosing suppliers and a procurement process following up information and assessing performances The most important is to enter as soon as possible in the buying process of the customer company. The supplying company that will intervene in the anticipating and identifying a need phase will be able to influence the

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customer company when working-out the brief, either on the content of technical specificities itself, or on the way of sharing the different batches of the negotiation. Conversely if the supplier company only intervenes in phase 2 or 3, instead of being able to influence, it will be under the influence exercised upstream by its main competitors. This is why large corporations insist that their commercial managers do not have to participate in a competition by invitation to bid, if they have not been able to spot the business way upstream and then to intervene as soon as phase 1. The buying situation or negotiation scenario There are three situations: straight rebuy, or direct rebuy, when the customer company must procure supplies already acquired previously. In this context, the interlocutors, usually the most important in the buying decision, are users and buyers: the former, users, especially when dealing with very sophisticated goods: for example the surgeon for a hospital scanner or the pilot for an aircraft. The latter, buyers, are even more important when dealing with more commonly used products. modified rebuy, when there is a modification in the brief, or when new competing suppliers are added to the list. In this context the four categories of members of the buying centre are present, prescribers being the most important ones when dealing with complex products or services. new task, when the company has never purchased this type of good before. In this scenario, prescribers should be given preference as interlocutors. Among them, first come the external prescribers who have already experienced this buying situation in another company. Then, the internal prescribers are concerned to integrate internal specificities as far as they can. Finally deciders take on their responsibility, in particular in this type of decision with high uncertainty. In conclusion, the main difficulty for supplier companies lies in the ability to manage information they have collected on the different interlocutors of the customer companies, from a business to another, in time, sometimes on very extensive geographical areas. This is mainly true for large companies. This is why an offer of services under the common name of CRM for Customer Relationship Management has been developped. The observation of current companies reveals a harmful drift of these tools: when big consulting actors come from the computer sector, they manage to sell very sophisticated systems which are theoretically perfect. But experience shows that, after the purchase of such systems of data storage, the managers of the supplier company gradually become self-censored. They avoid exchanging qualitative confidential information and they just provide quantitative data. One can thus reach the opposite of the objective one is after, resulting in a lessening of the information collected on the customers. It is then necessary to maintain a steady rhythm of meetings with customers, organized by key-account, or even by project in the case of far-reaching operations, as can be found in sectors as different as Aerospace, Building and Civil Engineering or Consulting.
Summary

After presenting the various fields of business to business, the notion of supply chain is analyzed to show the two main specificities: - Dependence on the final market when you are at the beginning or in the middle of the value chain, - Ability to communicate at the different levels of the value chain, whether in a market research outlook or in an influence communication one. Studying your customers customer is generally a good way of approaching your customer favorably. On the other hand influencing your customers customer belongs to a costly type of communication which chiefly requires a brand policy, not yet really widespread in business to business. The detailed analysis of the Lycra/Dim case helps to understand the various entrances you must take to break into the fortress defended by the competitor. For each of the customers targeted managers, it is necessary to develop a fully personalized tailor-made communication, trying to match his professional motivation, his expectations and above all his difficulties. Besides, this case illustrates how a buying centre works. For a strategic purchase, buyers are not the only ones concerned, you need to take into account the expectations of users, of internal prescribers, of external prescribers and sometimes of some deciders. Customer Relationship Management (CRM) is more and more essential in companies: it enables the various members of the supplier to exchange, uncover and exploit useful information. Before any negotiation, CRM makes it possible to find out: the current buying stage, the buying scenario and personal and professional information about the main interlocutors. Use of the main tools of CRM can be hindered by the fact that some commercial engineers are reluctant to provide personal information they obtained through almost friendly relationships.

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ACTIVITIES Questions and exercises

1. 2. 3. 4.

5.

6. 7. 8.

What are the specificities of communication of companies which sell their services to other companies or organizations? What are the main differences in terms of targets? When goods are sold to an intermediate integrator who will resell the whole to an individual as final customer, which are the possible communication strategies? Why is it not sufficient to know the Purchasing department to develop an effective communication with the customer company? How can you develop an inter-personal communication with the main members of the buying centre in the case of the sale of a strategic product such as a machine-tool or an ingredient which is indispensable and significant in the cost price? Your company sells fully integrated software. As a commercial engineer, you are in charge of the negotiation with the customer company which is going to extend an invitation to bid. Which are your priority targets among the buyers, the users and the internal prescribers? Can you use the information collected with previous customers to try and convince your interlocutors that your offer is the most appropriate in the present case? Which conditions are then to be respected? Which types of communication should you favor with users of the customer company? Why does Customer Relationship Management turn out to be an indispensable tool in the communication strategy with key-account customers?

CASE STUDIES Airbus case / Singapore Airlines

Source: www.airbus.com In his product portfolio, Airbus has gradually brought in product answers to all the needs of airlines in terms of range or seating and freight capacity. The market segment above 440 passengers is the only one which hasnt been dealt with in its first twenty-five years by Airbus, leaving Boeing in a monopoly situation on the verylarge-airliner segment. Airbus has logically decided to enter this segment by developing a new family of aircraft A380 which will come in passengers versions with 4 models from 550 to 800 passengers (and different ranges), a combined model (400 passengers + freight) and a specific cargo version. Launching a new program is always tricky: besides technical problems, customers, i.e. airlines, have to be convinced to place orders for an aircraft which only exists on computer screens. Since 2002, Airbus has been evenly matched with Boeing, the historical leader, for delivered aircraft, airline orders, manufactured aircraft and even for value for year 2004. Airbus credibility has grown with every new product: the A320, more economically efficient than its direct rival and, more recently, the tandem A330 (twin-engine jet) and A340 (four-engine jet) which enables to optimize costs for a given airline and destination, in accordance with the number of passengers to carry and of the covered distance. One of the key factors of Airbus success, curiously not copied by Boeing, is the commonality, i.e. the family spirit : its practical translation is the percentage of parts common to the different aircrafts of the range. This feature reduces maintenance costs (storage costs of spare parts, training costs for ground technicians) but also training costs for pilots and their operational flexibility. For instance, relatively speaking, the A380 cockpit has the same layout as the A340 and A320. In comparison with the 747-400, one of the competitors best-selling aircraft, Airbus claims a reduction of the operational cost of 20% per seat for the Airbus A380: the recent conception of the aircraft has made it possible to integrate more composite materials and less wiring. On the ground, the A380 fits in an 80 by 80 meters square, in accordance with the layout of the 25 main airports. Besides, thanks to its central 20 wheels landing gear the weight by load-bearing wheel is the same as a 747. The introduction of this new aircraft only entails the reinforcement of certain ground installations (runway over a highway for instance) but most of the ground installations can remain as they are. However double-level gangways will have to be introduced to allow passengers to get in or out in less than fifteen minutes. This is how the supply chain can be schematically represented in an overall way:
Exhibit 13.10 Simplified example of supply chain in the aeronautics sector

To be translated

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Chapter 13 Specificities of Business to Business communication

Source: from Malaval, Ph. et Bnaroya, Ch., (2001), Marketing Aronautique et Spatial, Paris, Pearson Education. A. How can you summarize the main communication operations towards the different interlocutors of the customer airline? Take Singapore Airlines (SIA) as an example: its marketing mix is, among others, based on the fact that its fleet is one of the most modern in the world, either through the chosen aircraft or through the selected optional equipments on the different Airbus or Boeing. The diagram below shows the main members of the buying centre likely to influence SIAs final choice. Which arguments can Airbus put forward, particularly with the airlines Operations Director, Marketing Director and Maintenance Director?
Exhibit 13.11 The Buying Centre of the airline

To be translated

Source: from Malaval, Ph. and Bnaroya, Ch., Op. Cit. B. Do you advise using a CRM tool to facilitate information exchange between the different interlocutors of the Airbus teams? Why? C. Which communication actions do you recommend towards regulation bodies? Is lobbying suitable to the target? (cf. Chapter 8)? If so, how will you work out its structure in relation to local or international authorities? D. Is it necessary to develop a communication plan towards airport authorities? Which arguments should be put forward for Singapore airport as it was recently designed and built?
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E. Do you think Airbus should communicate towards the final customer: passengers and companies which export or import goods by aircraft? Which media do you recommend? Which events can be used to promote the new aircraft? You can use the information supplied on line on www.airbus.com. F. To overcome the ultimate reservations regarding such a costly investment, which socioeconomic arguments can be used to secure important supports in the customer country? What type of compensation or partnership can Airbus offer to Singapore and its sphere of influence?

References

Coe, J.M., (2003), The fundamentals of business-to-business sales & marketing, Mc Graw Hill. Corey, E.R., (1988), Industrial Marketing : Cases and Concepts, Englewood Cliffs, N.J., Prentice-Hall. Cova, B. et Salle, R. (1999), Le marketing daffaires, Paris, Dunod. Dayan, A., (2002), Marketing B to B - Le marketing appliqu aux biens et services industriels et professionnels, Vuibert. Ford, D., (1997), Understanding Business Markets: Interactions, Relationships and Networks, 2me dition, The International Marketing and Purchasing Group (IMP), Londres, The Dryden Press. Goldberg, B. et Emerick, T., (1999), Business to business direct marketing, Yardley, PA: Direct Marketing Publishers. Howard, J-A. et Sheth, J.N., (1969), The Theory of Buyer Behavior, New York, John Wiley. Hutt, M. D. et Speh, T.W., (2001), Business Marketing Management : A Strategic View of Industrial and Organizational Markets, The Dryden Press IMP Group, (1982), International Marketing and Purchasing of Industrial Goods : An Interaction Approach, New York, Editor Hakan. Mahin, P.W., (1991), Business-to-Business Marketing, Needham Heights, Boston, Allyn and Bacon. Malaval, Ph., (1998), Stratgie et gestion de la marque industrielle, Paris, Publi-Union. Malaval, Ph., (2001), Marketing Business to Business, Pearson Education. Michel, D., Salle, R., Valla, J.P., (2000), Marketing industriel - Stratgies et mise en uvre, Economica. Minett, S., (2001), B2B Marketing, Prentice Hall. Morris, M.H., (2001), Business-To-Business Marketing : A Strategic Approach, Sage Publications Perrotin, R., (2001), Le marketing achats - Stratgies et tactiques, Editions d'Organisation. Pras, B. et Tarondeau, J-C., (1981), Comportement de lacheteur, Paris, Sirey, Collection Administration des Entreprises. Reeder, R. R., Brierty, E. G. et Reeder, B. H., (1991), Industrial Marketing, Analysis, Planning and Control, 2me dition, Englewood Cliffs, N.J, Prentice Hall. Szapiro, G., (1998), Communication business to business ; Les 7 pyramides de la russite en publicit, Editions dOrganisation. Woodside, A. et Vyas, N. (1987), Industrial Purchasing Strategies, New York, Lexington Books. Wright, R., (2003), Business-to-Business Marketing: A Step-by-Step Guide, Pearson Education.

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