Business to business (B2B) marketing refers to the techniques and best practices used by many different type of company with producing their own products and services then sold to other businesses (brafton, n.d.). The main purpose of the business to business marketing is to meet the needs of other companies and businesses, although ultimately consumers drive the products these businesses offer (opening doors, n.d.).
Dell is a largest direct-sale computer vendor in the whole world. Dell Computer Corporation sells desktop personal computers, notebook computers, network servers, and a variety of computer peripherals and software (reference for business, 2016). The main selling product for Dell Company in business is selling server to other company. Selling server is the main direction for Dell to get more profit and more customers.
They are four tasks to complete in this assignment. For the first task is about comparing the differences between business to business (B2B) marketing and business to consumer (B2C) marketing. The second task was asked to explanation of the marketing mix of server produced by Dell Company and the key unique features in each element of the marketing mix of their server. The third task consists of the illustration of the organizational buying decision process for Dell Company. The final task is about the explanation of the market segmentation strategies used by the Dell Company for their server.
2.0 Business to Business Marketing (B2B) and Business to Consumer Marketing (B2C)
There are two types of marketing, Business to Business (B2B) Marketing and Business to Consumer (B2C) Marketing. Business to Business (B2B) Marketing definition is product marketing companies or other organizations for the production and use of goods in general use in business operations, such as office supplies, or resold to other users, such as wholesalers sell to retailers. Business to Consumer (B2C) Marketing definition is a common term for all the company to use when searching for the type of business that going to run. Besides that, Business-to-consumer companies are more focused on selling their products to individuals and marketing for personal use. Other than that, they also offer packaging options that are appropriate for individual consumption (study, 2016).
2.1 Differences between Business-to-Consumer (B2C) Marketing and Business-to-Business (B2B) Marketing
Nowadays, most of the organizations would operate their businesses by selling most of their products into two types of markets, which is the consumer market and the business market. Yet, the characteristics for these two kinds of markets are totally different.
Business-to-Consumer (B2C) Marketing Business-to-Business (B2B) Marketing
Market Structure and Demand – contain more but smaller buyers
– more elastic demand – affected more by price changes – contain fewer but larger buyers
– more inelastic demand – not affected as much by price changes
Types of Decisions and the Decision Process – buying decision process is more simple – buying decision process is more complex
Table 1: Summary of Differences between B2C and B2B Marketing
The table above shows that there are three differences between business-to-consumer (B2C) marketing and business-to-business (B2B) marketing. Below are the following comparisons of the few differences between these two types of markets.
2.1.1 Market Structure and Demand
For business to business marketing, even though it just few buyers from it but all of them are purchasing a large amount of product from the companies. Besides that, compare with business to business (B2B) marketing, business-to-consumer (B2C) marketing are totally different because there are a lot of buyers in the business-to-consumer (B2C) marketing, but all of them would just purchase a small amount of products from the companies.
For example, other big companies will purchase a large amount of server from Dell Company in business to business markets. Dell Company will produce an amount of server only just for the company that order from them. It was because big companies are the main customer for dell because they are the one that will purchase a large amount of server from Dell Company and they can earn more profit. Besides that, business to consumer (B2B) marketing is customer will only purchase one or two server from Dell retailer and it earn little profit from it.
In the other hand, demand in business-to-consumer (B2C) marketing is more elastic, whereas the business-to-business (B2B) marketing has inelastic demand. It represents the quantity of a good that a single consumer would buy at a specific price point at a specific point in time and in the same time purchase decisions in business market are so critical on their organizations’ marketing efforts (know this, 2016). Furthermore, the total amount of server demand in business market will not make a big impact on the price because nowadays quality is more important.
For example, Dell Company won’t decrease their price on their server that demanded on other company in business market but only they will increase or maintain the price as well as giving the best quality of it. Meanwhile, in business market other company will continue purchase server from Dell no matter the price increased or decreased because they know that Dell has the quality assurance.
2.1.2 Types of Decisions and the Decision Process
The difference buying decision process between business to business (B2B) marketing and business to consumer (B2C) marketing is business to business (B2B) marketing are more complex and complicated compared to the business to consumer (B2B) marketing. For business to business (B2B) marketing buying decision, these come after a long process and probably discussion with committee and only make the final decision.
In the other hand for business to consumer (B2B) buying decision are opposite with the business to business buying decision, because consumer might discuss major purchases with partners or friends, but ultimately it is usually one person making the decision. Consumers are more liable to make impulse purchases than businesses (chron, 2016). Business customers often look for specific product attributes such as economy in cost and use, productivity, and quality. Additionally, B2B purchasers generally spend more money, as the buying process tends to be more complex and lengthy (bundless, 2016).
Dell is as an example, dell supply their server to the retailers and companies in business to business markets when the order has been make. Dell will supply their servers when the total payment and order has been received. When send the order it mean that already make the right decision on purchasing which server from dell and it was the buying decision process. The companies need to pay to the Dell Company before they start to make the purchase and order so that it won’t have the misunderstanding on payment between each other. Business to consumers (B2C) marketing are totally different from business to business (B2B) marketing. Business to Consumers (B2C) marketing is consumer take a time to think on the product weather is it worth to buy, the product quality good enough for the price and should need this product.
In summary, it is very important for all of the organizations to know and understand about the few differences between business to consumer (B2C) marketing and business to business (B2B) marketing that are mentioned above so that they can use some suitable marketing strategies to provide and sell a lot of their products more effectively and efficiently in both consumer markets and business markets.
3.0 Marketing Mix
The diagram above show the marketing mix of 4Ps they are product, price, place and promotion.
Marketing Mix meaning is some of the ideas and plans followed by sales representatives to promote a particular brand or product mixture known as the marketing mix. Some of the concepts and ideas that are combined together to draft a final strategy helps in creating a brand that is popular among many of the marketing mix (management study guide, 2016).
The marketing mix refers to a standard strategic tool used by a lot of companies to promote and sell their products in the market. This kind of tool consists of four basic elements that are commonly termed as the 4Ps of marketing mix, which is product, price, place, and promotion. A complete set of marketing mix not just only about these 4Ps, but also includes another three elements, they are process, people and physical evidence.
3.1 Marketing Mix of Dell
Each and every product would be provided and sold by implement different types of marketing mix respectively. So Dell company does the same, Dell company will also implement their own marketing mix on their own servers and products to promote and sell to other company in business market. Below will explain the 4Ps of marketing mix of Dell server, they are product, price, place and promotion.
For this element in marketing mix, server is one of the products made by Dell Company. Besides that, Dell Company also believes that, marketing is not only about just providing products or services but it is also essentially about providing changing benefits into the changing needs and demands of the customer (marketing 91, n.d.). Furthermore, Dell should show different type of design, color, models, specification and feature to impress the customer in business market. It will increase Dell sales in business market because of giving customer more choices to choose for their server and they will purchase a large amount of server for their company.
Price is the other element in marketing mix; the Dell Company use the competition-based pricing strategy to set the price for their server on the basis of the competition that is existed in the business market. Therefore, pricing strategies usually change as the product passes through its life cycle, because there is constrains on the company’s freedom to price a product at different stage (marketing 91, n.d.). The main objective of Dell is to produce the low price comparing to other competitor, affordable, and profitable PC for the customers. In this pricing strategy, Dell Company will have the competitive advantage over their competitor such as Lenovo, HP, Asus and other more.
For this component in marketing mix, place is also known as channel, distribution, or intermediary. It is the mechanism through which goods or services are moved from the manufacturer or service provider to the company that make the order in business market (marketing 91, n.d.). Therefore, Dell has been able to influence the positioning of their marketing campaign strategy.
The last element for marketing mix is promotion, Dell Company should promote their servers or products by advertising on television and the Internet, advertising in a variety of print media, and mailing or emailing a broad range of direct marketing publications, such as promotional materials, catalogues, and customer newsletters (marketing 91, n.d.). Besides that, Dell also needs to show the display on their company so that customer can have a look before making any purchase. This will help Dell Company increase their customer and sales in business market because promotion will attract more consumers to buy their server and product to gain a large amount of profits.
In summary, for Dell Company can improve their sales on server and product more successfully by using the appropriate marketing mix that consists of four main elements that have been termed as the 4Ps of marketing mix, which is product, price, place, and promotion.
4.0 Organization Buying Decision Process
Organizational buying decision processes define as a process in which the organizations recognize the need of a product or service and search for the best available brand or supplier among all the alternatives. Every organization needs to go through the eight stages of organizational buying decision process. Below is a diagram show that the organizational buying decision process.
Diagram above show the eight stages of organizational buying decision process
(Slide share, 2016)
From the diagram showing in above, there are eight steps of organizational buying decision process; there are problem recognition, general need description, product specification, supplier search, proposal solicitation, supplier selection, order-routine specification, and performance review. The following are the illustration of the organizational buying decision process conducted by the Dell Company for their servers.
4.1 Problem Recognition
First step in the organizational buying decision process is purchasing process begins when someone in the company recognises a problem that can be solved by acquiring goods from the suppliers (your article library, 2015) Dell Company, they do the research in many different countries and found that most of the company that make the purchase of server from their company are demanding to have a better processor and higher ram so that it won’t lack when running more application and doing works. This happen is because most of the company use server to do their work and open many files to run so they hope to have a better processor of servers that it won’t affect and delay their works.
4.2 General Need Descriptions
After identifying the problem having, the organization will start doing the general need description process of the total quantity and characteristics of the product that can be purchased from the supplier (marketing mix, n.d.). For Dell Company, they need more good quality materials and processor to build a large amount of server and sell it to their customers in business market. Furthermore, they have to make the decisions about the total amount of the processor and materials that should be purchased from the suppliers before they manufacture servers and send it to their customers.
4.3 Product Specification
After obtaining the general need description, the organization will start to express the specification of the server (uk essay, 2016). For Dell Company, they need to specify and find out about what kind of materials and processor that should be used to making a large amount of servers in order to make sure that all their servers are in good quality and condition. Therefore, Dell can start to make purchase from the supplier.
4.4 Supplier Search
In the fourth stage, an organization will start to do the research for the supplier of the goods needed. Therefore, this can be done by reviewing trade directories, compare few of the suppliers that are convenience or by doing computer search. Finally, there will be the one who has good reputation, convenience and offers best deals (uk essay, 2016). For Dell Company, they should have to conduct some researches on suppliers so that they can compare and look for the good quality with a reasonable price. Besides that, Dell also need to find out which suppliers have provide the necessary materials, and processor that will be used by them to produce a large quantity of servers.
4.5 Proposal Solicitation
Once the supplier search is complete the next stage for the organizational buying decision process is proposal solicitation. In this stage proposal solicitation is about an organization will invite these qualified suppliers to submit their proposal (uk essay, 2016). In addition, the proposal must include product specification, price, delivery period, payment terms, taxes of experts and duties applicable, transportation cost, cost of transit insurance and any other relevant cost or free service provided (your article library, 2015) For Dell Company, they must also request for the detailed written proposals or the formal presentations from each of the qualified supplier so that they can analyse all of the proposals and choose one or two suppliers that are the most suitable to them for the produce their servers.
4.6 Supplier Selection
In this step, organization will finalize the supplier by choosing one or two of the best supplier. There are few factors such as competitive prices, honest communication, quality products and services. Those are the great importance in this regard (uk essay, 2016). For Dell Company, they have to determine and choose one or two most appropriate suppliers that can provide and deliver the good quality of materials and processor on time with the reasonable price so that they can produce and sell a large quantity of server that are high quality and good performance to their customers in business market.
4.7 Order-Routine Specification
At this stage the organization management will start to prepare an order-routine specification. It mean sending the final order with selected supplier and a list of other elements technical services after sales required, date of delivery return polices and warranties (uk essay, 2016). For Dell Company, they should also start to prepare and send the final order to their selected suppliers about what kind of materials and processor that are requested by them as well as the quantity of these few things that are needed and wanted by them before they manufacture those servers and sell it to their consumers in business market.
4.8 Performance Review
After order routine specification, the next step organization will evaluate the performance of the supplier’s product or service provided. After that, the organization will review back the chosen supplier’s whether they need to continue, change, and drop the arrangement with the supplier (uk essay, 2016) For Dell Company, they must also evaluate the performance of their selected suppliers by asking their customers to rate the level of satisfaction on the quality. If a large number of their consumers are more satisfied on the high quality and great performance of their servers, then this situation means that the materials and processor that is offered by their chosen suppliers and used in the manufacture of servers are also have good quality as well. Therefore, Dell Company would decide whether continue purchase the same amount of materials and processor from the same suppliers in order to maintain the high quality and good performance of servers as well as retain their customers and increase more customer satisfaction.
In summary, those eight steps of organizational buying decision process that are mentioned in above can help the Dell Company to avoid from making the wrong decisions by purchasing the low quality of materials and processor from the suppliers that are not suitable to them.
5.0 Marketing Segmentation Strategy
The purpose of marketing is to satisfy the needs and wants of people and yet to making profit. Market segmentation in B2B is necessary as organizations in the market have different needs and wants. Therefore, marketers need to use different approaches to reach and fulfil organization need.
Dell vision is “it’s the way we interpret the world around us—our customers needs, the future of technology, and the global business climate.” The definition of Dell vision means ‘an image of the future we seek to create (slide share, 2016).’
Dell’s mission is “to be the most successful computer company in the world at delivering the best customer experience in market we serve.” The definition of Dell mission is ‘who we are and what we do (slide share, 2016).’
5.3 Porter’s generic
Competitive advantage can be described in two ways in terms of a Firm’s performance, which is low cost of differentiation. A firm’s position in the market will be determines whether a firm’s profitability is low or high or just average by its performance. The generic competitive strategies are further divided into three other parts which is called Cost leadership, differentiation and focus. The focus strategy has two variant, cost focus and differentiation focus.
5.4 Cost Leadership
In this strategies, a firm set out it main focus on cost by reducing it cost and becoming a low cost company in the market. This all depends on the structure of the company. This may include the scale of economic, technology management, preferential access to raw materials and many other factors. The company have to take advantage or even exploit all the different resources which will lead them to become a low cost producer. If they have achieve this then there will be above the average performer in the industry. Hence they can command prices closer or to an average range.
In this strategy, Dell Company need to tries to come out with a product which is totally unique. The company try to come out with wider dimension which will be valued by the customers. The company will put one more or more attributes in their product which will be very important from the buyer point of view. Hence, positioning it very uniquely to meet the demands and satisfaction of the buyer, this will be rewarded for its uniqueness with a premium price.
In Cost Focus the marketer seek for cost advantages in its target segment. Where as in differentiation focus a firm seek differentiation in its market seek. The both focus strategy relies on different segments of the market or targeting new segment. The target segment must have an unusual need of the buyer where as they must be able to deliver system which served best to the target segment. The different between the cost and the differentiation focus are that cost focus aims at the differences in the cost behaviour of a consumer where as the differentiation focus aims at the special need of the consumer in the market.
After analysing the Porter Generic Advantage Strategies, it can be seem that Dell business model was similar to the Porter Generic Advantage Strategies because Dell came up with the cost leadership strategies, where removing all the intermediaries and keeping the cost at minimal and taking advantage of the market as well as exploiting the technology system of their production line, etc. Hence, becoming the Low Cost Producer in the market, this has leaded them to be more than an average performer in the market and allowing them to control the prices.
5.7.1 Geographic Segmentation
When the market is divided into different geographical units such as region, nation, counties, state, cities or neighbourhoods, this method is called as a geographical segmentation. One enterprise might be determining to run its business within one or a few specific areas or to carry out its business all over the country and even the world but in terms of consumer demand will undoubtedly noticed regional differences. In the case of Dell, it has become a global famous company with its products and servers sold around every country of the world. However, due to the geographical differences, it is very important and significance to segment the global servers market geographically. Besides that, with some of the emerging and developing potential markets, such as China, it would be better to market into smaller segments (uk essay, 2016).
5.7.2 Age and Life Cycle Segmentation
In age and life cycle segmentation it refers to divide a market into different age and life cycle group. Rational divide the market on the basis of age is on the demands of the people and wants to change with age. Therefore, it makes sense for Dell to provide different products or take advantage of the marketing tools changed to life and the life cycle of various groups. For example, when advertising their products by advertising on TV or via the Internet, advertising theme to teenagers and young people should be full of adventure, fashion, beat-up music and cut quickly from scene to scene, and content for adults can be more mature, more gently (uk essay, 2016).
5.7.3 Behavioural Segmentation
When it comes to behavioural segmentation, it refers to segmenting a market into groups based on customers’ knowledge, use, attitude, or response to a product In this market segmentation, Dell does offer a wide range of services or products, from desktop to notebook computers, hardware products in the form of software to do a great job. To make the best use of behavioural segmentation, companies can use different people on the basis of development for business people, students, or home using servers (uk essay, 2016).
5.8 Target Market
The target marketing strategies used will be differentiated marketing. The target group is main focus on company; those companies will continuously purchase servers from Dell Company. It is because they have the confidence on the quality of Dell servers so that they will purchase a large amount from Dell. Besides that, Dell Company will also target on hotel and shopping mall it is because Dell know that they need a good performance and good quality servers to do their work and good quality processor to run their system.
In summary, the appropriate market segmentation strategies can help Dell Company to segment the market properly, choose the correct target market, and sell their server to a large number of their customers in the selected target market.
6.0 Conclusions and Recommendations
The characteristics of business-to-consumer (B2C) marketing and business-to-business (B2B) marketing are definitely not the same at all times. Therefore, every organization must use some appropriate marketing strategies based on the differences between consumer markets and business markets in order to sell all of their products more successfully in these two markets.
The marketing mix is always helpful and useful to the products that are sold to a large number of the customers. Hence, the Dell Company should use the most suitable marketing mix to distribute and promote their servers more efficiently so that they can increase the sales of their servers and gain more profit from it
The organizational buying decision process consists of eight important stages that need to be conducted by the companies when they decide to purchase some specific products, materials and processor from the suppliers that have been chosen. Dell Company have to make sure that the decisions made by them are through all the eight steps of organizational buying decision process are correct at all times so that they can buy the good quality of materials, and processors from the qualified suppliers for the production of Dell servers
Those effective market segmentation strategies will help the companies to compete with all of their competitors. Lastly, Dell Company need to segment and target the market correctly by implement the most appropriate market segmentation strategies in order to sell a large amount of their servers more to their consumers and survive in the competitive world.