Re: Specialised B2B IT Marketing

From: Nick Wreden <nick_at_aspen1.com>
Date: Mon 16 Oct 2000 14:45:30 -0500

KEITH LACY <keithl_at_vistatec.ie> WROTE:
> Bearing in mind we offer a specialised B2B service to
> other IT companies, I am finding it difficult to
> increase/improve our marketing activites online, any
> ideas ? I'm not sure that something such as a banner
> campaign is the best route to take given the
> high-involvement specialised services that we provide.

Keith Lacy brings up an important point. Despite all
the attention paid to B2C branding, the bulk of the
world's business is B2B. How do you establish a
FusionBrand with other businesses? Most companies
choose a mix of three strategies: Sell by conventional
techniques (advertising in trade pubs, etc.), joining a
B2B exchange, or setting up their own B2B exchange with
themselves as the hub. Although conventional methods
will always be part of the mix, more attention will
have to be given to B2B exchanges.

The rise of the new economy has delivered a branding
challenge that marketers during the old era of branding
never faced the rise of B2B exchanges (also known as
Internet exchanges, electronic marketplaces,
independent trading exchanges, virtual trading networks
and net marketplaces). B2B exchanges are online
environments that use ebusiness technologies to enable
individuals and organizations in vertical and
horizontal marketplaces to do business electronically.

Exchanges are growing in importance in the B2B
marketplace, which is far larger than the B2C
marketplace. In 2000, about 20,000 companies will
spend $13 billion buying products over B2B exchanges.
In 2003, more than 7.5 million companies will spend
about $376 billion at these exchanges. Worldwide,
GartnerGroup projects that B2B ebusiness will reach $4
trillion by 2003. Compare that to less than $400
billion of online sales to consumers. Online B2B
commerce will increase from 3% to 42% of total B2B US
domestic trade over the next five years, according to
Jupiter.

For buyers and sellers, B2B exchanges represent a
dilemma. For buyers, it's hard to evaluate the service
and quality of companies that you have never done
business with before. For sellers, there's no easy way
of standing out other than price. No four-color
brochures come with a B2B exchange listing.

B2B exchanges raise four implications for
FusionBranding. First, they represents a significant
shift in sales channels. This creates the need to
extend an existing FusionBrand into a new channel. It
also creates the potential for conflict with existing
channels.

The ability to easily view and buy the offerings of
multiple sellers underscores the shift in power from
sellers to buyers. Third, B2B creates strong pricing
pressures, raising the need for FusionBranding
differentiation. Although B2B exchanges open the door
to one-time sales, long-term growth will come from
ensuring trust, loyalty and communications.

Finally, and most important, companies involved in
public and private B2B exchanges are going to have work
together to FusionBrand their products to consumers.
No longer can companies work independently, each
pitching some aspect of their product to consumers.
Every company with a supply chain should take a page
from the "Intel Inside" campaign, which offers the
once-unheard of success of a chip manufacturer branding
its products to consumers.

There are several implications and choices from
choosing this route:

Expect strong pricing pressures: B2B exchanges enable
easy comparison shopping. As a result, expect
increased downward pressure on pricing. According to
Boston Consulting Group 25% of sellers surveyed had
already decreased prices partly because their customers
had gone online. By 2004, another 50% expected to also
decrease their prices because of online alternatives.

This can lead to feared commodization of a market,
where FusionBrands don't matter. As a result, focus on
the value-add differentiators to distinguish yourself
from price-only competitors. Speed up delivery cycles.
Bundle services. Arrange financing alternatives. Fund
innovation with additional R&D spending. Partner with
carriers for logistics and enable electronic
order-status checking.

Smart companies are already doing this. The BCG study
indicates that roughly 60% of sellers have undertaken
differentiation efforts, primarily by increasing
service levels. More than 50% also plan to increase
product planning collaboration and online product
management.

Make collaboration a top priority: Collaboration is
usually discussed in terms of departments or teams
working together. It's just as important as companies
to work together. This means more than agreeing on
pricing and delivery. It also means aligning
processes, technologies and sharing information that
might have once been considered "company-confidential."
It also means paying attention to the soft side of
management. Issues that require leadership include
different work ethics, variations in office procedures,
language/time zone/cultural differences, etc.

Standardize on standards

To facilitate B2B exchanges and supply chain
efficiencies, look at multi-industry supply chain
standards now being introduced. Recognizing the
importance of interenterprise collaboration, the
Voluntary Interindustry Commerce Standards (VICS)
organization and the Uniform Code Council (UCC) have
introduced Collaborative Planning, Forecasting and
Replenishment (CPFR).

CPFR is essentially an ebusiness standard that seeks to
overcome the inability of trading partners to
synchronize their computer and other systems,
especially for replenishment. CPFR has the potential
to deliver increased sales, streamline supply chains
and improve cash flow. Using CPFR, participants can
minimize inventories and improve demand forecasting.
CPFR is the basis for RosettaNet, which sets standards
for various types of intercompany transactions in the
technology industry.

There are other strategies and tactics as well, but it
remains a tough issue, and one worthy of greater
discussion.

Nick Wreden
Author of "FusionBranding: New Branding Models for the
New Economy"
770-729-0914
nick_at_aspen1.com





Received on Mon Oct 16 2000 - 14:45:30 CDT