To survive in a highly competitive environment, B2B (business to business) companies must spend a lot of time and money on the process of building marketing strategies.
Experts in this field all know a classic model widely applied in marketing: “4P” (product, price, promotion and place). However, in reality, this is a model that is not entirely suitable for companies. B2B.
Before introducing a new model for companies B2B Let's review the traditional model.
Model 4P traditional
Model 4P The marketing mix model, which includes product, price, place and promotion, appeared in the 1960s. Since its appearance, it has been applied in the process of building marketing strategies for businesses and is called the marketing mix model. 4PAnd to effectively execute a marketing strategy requires the smooth coordination of all four elements in this model, specifically:
– New products must be carefully researched and then detailed production plans drawn up.
– Price is the main concern because it is often the trump card to compete and encourage consumers to decide to choose your product/service.
– Building and maintaining a distribution system is always considered a top priority. If you cannot build a distribution system, no matter how perfect your product/service is or how competitive the price is, it will not reach consumers.
– The sales promotion process includes programs to introduce products/services to consumers; encourage them to try your products/services; programs to create and strengthen customer loyalty….
In fact, the model has many shortcomings but is still widely used today. To limit its shortcomings, many researchers and practitioners have proposed extended models such as the 5P, 8P models... or even proposed to completely eliminate this model and propose new models.
The reason why many people do not want to apply the model 4P more because it is so simple, not to mention it is built on the subjective assumption that customers are always able to recognize and express all their needs in a way that benefits the marketer. The model 4P reduce the complexity for marketers by simplifying the challenges they face, so that marketing professionals can more easily influence and control the results of their marketing initiatives. However, the four factors above for B2B companies are much more complex than for B2C companies, so a simple model is unlikely to be appropriate. Why are the four factors above for B2B companies more complex, and where does this complexity come from? That is what we will analyze in the next section.
Many people ask the question “What is Marketing?” and receive the answer “Marketing is… marketing”. Is that answer correct? No… wrong but it does not contain any information. It is like the way many people say “physics and physics”. How can we easily understand such familiar concepts? When you want to go to the moon, you need a different understanding, approach, methods, processes and tools than if you want to go to Mars. That is also the correct understanding of marketing, if applied to different types of companies.
Heinz consumer products are available all over the world, and their products are not all in one line. Heinz will apply 4P How? As you can see, pricing strategies for products change daily in Brazil, the UK or the US. Distribution management is a continuous task, and sales promotion activities are highly complex – because they are carried out in completely different countries and different from the country where Heinz was born, it is very easy to lead to breakdowns, and even to violate the laws or regulations of that country due to cultural differences.
As for an architectural office, does it need to change its products/services often? The answer is: “Not very often”. They provide architectural services to construction companies to build schools, religious places, hospitals. Their products are pre-ordered and require high expertise. Likewise, the prices of their services depend on each different project and are based on total costs, inflation and profit targets, so they cannot change too quickly. The distribution method here is direct sales and is carried out on the company’s own principles. As for promotional activities, promotions (sales promotion), it can be seen that many companies of this type do not need to do it, but they focus more on building their brand.
Through the above examples, we see the marketing challenges for companies. B2B completely different from other companies B2C, leading to the model 4P is a bad method if not very bad if applied to companies. B2B. And this difference comes from the specific business characteristics of these companies.
There are many differences between B2C and B2B, the most fundamental difference is that the customers of B2B are companies, not individuals, and therefore, for customers to make a decision to buy a product or use a service from you, it requires the consensus of many people in different departments. Therefore, the time needed to contact customers before each purchase transaction is usually from several months to several years.
Based on the above analysis, the author of the article has given a new perspective on the concept. 4P more suitable for companies B2B. That is:
1. Prospect – You must identify future business opportunities based on customer needs. You must know what they want even if they don’t know it themselves, and then plan to produce a product or organize a service to meet that need. Business owners who are quick to grasp and satisfy customer needs will attract a large number of customers, build long-term cooperative relationships with customers and become more widely known.
2. Promise – You must gather valid arguments to explain why you are the highest quality supplier among suppliers of the same product/service type and the optimal choice of customers. This is a big difference in marketing campaigns compared to other companies. B2C, because for B2B Buyers can approach and select to eliminate unsuitable suppliers and negotiate directly with the remaining suppliers to achieve the most favorable purchasing conditions.
3. Product – Create products that meet customer needs and distribute products in accordance with previous agreements and promises to customers.
4. Position – Summarize all the advantages you have created to overcome your competitors and once again optimize the above three steps.
If change is needed to achieve high business efficiency, it is obviously worth doing. With such awareness, we can move forward easily.
BWP translated from CEO Refresher
