business Networks and relationship variables

SPSL, a plumbing supplies business based in South London, has agreed to expand into a new sector in Manchester. Tiny to medium-sized dealers, suppliers, distributors, and insurance providers are among the current commodity customers in south London. It was built on the principle of providing dependable, effective, and friendly services to its customers. Because of its positive standing, its current method of marketing is word of mouth. The firm’s owners, Peter and Harvey, prove that word of mouth has brought in more than 90% of potential clients. The pricing mechanism used is such that it deepens on the size of the client and their frequency, the type of service required. The pricing scheme has however been found to be complex and needs to be changed, instead of using a fixed pricing policy, a negotiation policy can be implemented for the existing and the potential clients. Owing to the competition and its significant growth the introduction of a new firm in the same field but a different geographical location would be important. Therefore, after looking at the potential locations for the company, the Manchester location was selected which is in the north side of the city center. The introduction of the Manchester firm introduces different business strategies such as B2C. Previously, the company only operated using B2B since it had no personal contact with direct consumers. The introduction of such business strategies introduces advantages and disadvantages at the same time as discussed in the paper. These strategies tend to cater for both small scale consumer needs and the large scale consumer needs. There is also need to change the promotion strategy since word of mouth only would not be effective. An introduction of the sales work force to promote the brands is to be implemented, which also offers a number of advantages which in general contribute further to the growth of the business and an increased revenue due to increase in sales.

2.0 Promotion

The current mode of promotion in SPSL is by word of mouth communication. The company has a website, however, the website is not necessarily a promotional mode since it only provides for a ’shop only ’window and does not offer promotional services such as the company’s background, range of products sold or the testimonials by people. However, the other promotional methods implemented include newspaper advertisement and use of sales force to boost the market among other promotional services to be used.

2.1 Benefits of the Salesforce

Use of sales force operations offers the following benefits compared to the other methods of promotion that SPSL would use.

It creates differentiation. Just as word of mouth has continually increased the market size of the company, sales promotion operates in a similar manner however, the sales persons offer the differentiation of worlds brands out of the crowd of the other brands.

It also offers an opportunity for communication. Since the consumers will be able to communicate their personal concerns about the products to the sales people. Sales force have a platform that now enables them to focus on campaigning for their products

It also fosters word of mouth which is considered to be the most positive form of communication due to personal touch. Consumers tend to trust a reliable source of information which is only achieved by use of techniques such as word of mouth

The method also gives the consumers reasons to buy the products since they drive sales and help the consumers to make a decision concerning say particular brands.

It is also a mode for generation of higher revenue since increase of sales per person will result into increased collective revenue. However, specific brands should be able to calculate their revenue and costs to ensure of the promotional method is effective to them.

2.1.1 Information gathering and prospecting

Gathering of information is very important for the business decision making purposes and making of plans. Information is gathered to determine the method of promotion that will be effective in SPSL and the sales force apart from sales, they gather relative information from the consumers they interact with. The attendance of trade fairs also provides platform to gather information before coming up with possible firm prospects. When gathering information, it is important to identify one’s target and assess its value in terms of income, competitors, and carrying out a comparison to other recently acquire businesses. It is also important to look at the threats in terms of goal achievement when communicating.

2.1.2 Persuading prospects

The persuading prospects can be attributed to the repetition which makes emphasis and the ability to turn the shoppers into buyers. A strategy such as the sales force can be persuasive by drawing the attention of the least interested person to buy. The persuasion prospects of the promotion can also be attributed to an increase I trust by customers who were doubtful about the products. Building a specific or a variety of brand within SPSL owing to the promotion is an indication of persuasion. Persuasion prospects can also be drawn from use of test copies which in turn lure customers into buying the products.

2.1.3 Selling

The impact of promotional methods used on sales can be great. Selling however depends largely on the brand of the product, the marketing strategy used, the brand recognition, long term profitability of the brand and the short term profitability. Selling majorly affects the total revenue generated depending on the price of goods. Advertising is the key for building brand reputation.

2.1.4. Developing customer relationship

In order to develop customer relationships, it is important to consider one’s business network which may include business colleagues, suppliers, contractors, association members, prospective and existing customers. It is also important to develop a communication since communication is the only tool that can be used to build a relationship. Rewarding loyal customers also raises the level of one’s relationship with the customer as they will feel appreciated. A follow up on you customers and provision of after sales services is another tool that can be used to build relationships.

2.2 Options for organizing sales people

Sales force can be categorized as follows:

Organization Advantages Disadvantages

Customer based Increased knowledge of customers and builds customer relationship

Management control is easier due to strategic locations Higher costs

Increased geographical duplication

Product based Sales representatives are able to develop product expertise

The management is in a position to guide selling efforts Increased costs due to duplication within geographical areas and by customer accounts

There will be need for sales representatives within the same location to coordinate

Territory based Low cost incurred

Low geographical duplication cases

Low duplication incurred with customers Complex market specialization requirements and market development strategies

Uneven marketing opportunities/ claim on market share on some territories may be hard

National/ customer based Low cost Increased customer duplication

Inside / outside based Efficient selling activities Customer duplication cases

Geographical area duplication

2.3 An appropriate option for SPSL

Inside/ outside based method would be the best option for SPSL since it provides clarity to the customers, the sale representatives also know the responsibility they have to their specific work stations which also creates an increased coordination in the team and with the customer. It also results into transparency and sharing of ideas among the sales representatives. This mode also reduces the channel of conflict and increases engagement that works in line with the goals of the company. Other methods such as the customer, product, national, and territory would cause an increase in either operational costs since they would require relocation, losses would be incurred due to geographic duplication, and geographic duplication. There would also be need for increased coordination.

3.0 Relationship marketing

It is important to have successful links so as to establish effective customer relationship management which in turn creates long term customer engagement successful customer links also contribute to solid relationships that one can use to understand their specific needs.

3.1 Importance of relationship building and business networks

Key benefits of relationship building and business networks include, confidentiality levels with business partners and customers, it results in increased connections and control of ones’ involvement in the business, it also results into time saving since innovation can be generated through brainstorming and operational knowledge can be easily acquired, learning acquisition and fast advice development (Woodside, 2010).

3.1.1 Relationship variables

The IMP model in the appendix shows the relationship variables that can be used in the SPSL. The interaction process is between the two parties and the events of exchange (Shenoy, Srivastava & Sharma, 1988). The interaction Parties determine the episodes and the events that will contribute positively to their relationship and deal with factors that may contribute negatively to their relationship. The atmosphere determines the attitudes, trade regulations and the exchange rates of the relationship. The environment caters for the environmental issues such as the factors that may affect the manufacturing channel, the language, the cultural differences or even the political context of operation.

3.1.2 Business Network

The business network can be defined using the ARA model as below

Layer Operation

Activity links Technical, administrative, commercial, other activities that connect internal activities between two parties

Resource ties They connect resource elements such as technical, material, skills, and other resources to two companies

Actor bonds These bonds determine how actors view and treat each other.

This model can be important to SPSL in linking activities that can generate high production and sales at the same time by linking the activities to specific resources for maximum production and revenue generation. With proper bond, proper relationships can be generated and as a result increase business networks.

3.1.3 Developing customer loyalty

Some of the important variables that should be drawn in B2B Relationships include: commitment, trust, cooperation, Mutual goals, adaptation, social bonds, Performance satisfaction, shared technology. Some of the actors that are required to form the network that would be used to achieve goals in the Manchester launch include: the internal actors such as the Peter and Harvey who are in charge of the project, the finance manager who is responsible for financial analysis, the business operations manager, the customer service manager and the operations manager who will determine the customer operation that will yield success of the launch of the project and determine business operations respectively. The External actors include complimentary industries that SPSL can work with, the potential clients such as retailers, manufacturers and retailers. The long term intention of the business relationship goal is to form a partnership that can be used to increase the business network, connection and performance, build trust, consumer satisfaction and customer retention. The customer relationship model is as shown in the Appendix.

4.0 Marketing strategy

The table below shows the advantages and the disadvantages of B2B and B2C marketing strategies.

Advantages Disadvantages

They forcus on limited resources on the targeted promotion There exist variance in response rates

Marketing message can be personalized Campaigns can be inefficient though still expensive

Measurement of success and response is simple Junk mail and other related emails such as spam may create negative image

Marketing messages can be tested easily It is expensive to maintain and keep accurate databases

These methods are cost effective especially if the customer database is well managed

The marketing strategy offers a wide variety of advantages and disadvantages. SPSL as accompany may be faced by the same advantages such that they will need to invest limited resources on the advertising and promotional activities. Personalization of messages on plumbing works can also give SPSL an advantage in terms of bridging customer relations which would in turn result into better customer relations and a resulting success in the business. Some of the disadvantages it is going to incur however include increased expenses in keeping of databases that are used for ecommerce activities, increased campaign to lay a claim on the market share.

4.1 A comparison of B2B and B2C marketing

marketing B2B B2C

Strategy Product positioning is based on functions or features Product positioning is based on psychological attributes

RELATIONSHIP The relationships are majorly based on trust Relationships are product driven

BUYER BEHVIOUR Involves a multi-step buying process and long sales cycles involves single step buying process with short sales cycles.

SEGMENTATION Segments are along demographic variables such as size or industry Segmentation is based on lifestyle or personality

PROMOTION Is rare but some manufacturers use it to convey product information Is used extensively for brand differentiation and marketing

PRICE The price is geared towards customer needs and the market competition Price is standard and there exists promotional discounts & allowances

PLACE-DISTRIBUTION CHANNELS Is extensive and uses direct sales force to reach customers Is dominated by whole-sellers and retailers who reach consumers

The comparison between the B2B and B2C is as shown. From the tabulated differences, we can conclude that the location of the SPSL firm in Manchester will contribute positively to the development and the growth of the firm since the features of the firm are in line with the requirements of the city. Most plumbing works are required for most city operations and therefore the location is strategic. The only promotional tool that can be used here is word of mouth due to its position and therefore word of mouth would provide for band differentiation. The sales force will ensure there is extensive distribution to consumers and pricing skills will depend on the ability of the consumers to negotiate, however, since it is venturing into a new market, the pricing mechanism may be such that it favors the consumer so as to build a relationship with the consumers before adjusting to the normal operations.

4.1.1 Operation in both sectors

The operations of B2B and B2C differ in the following aspects: Purchasing process- in B2C, consumers only purchase goods that they require for their personal use while in B2B buyers buy products for sale in their companies (Meyer, 2007). The buying in this sector is complicated and requires critical decision making before making any purchase. They are responsible for the technical, business, financial operations and large amounts of capital may be required in making purchases. Purchase- the B2C customers buy products at the same price as any other consumer and they have to pay on order. In B2B, there exists negotiations depending on the size of the order, price differences to the consumers and the transaction process may be long and tedious and depends on the terms of payment. E-Commerce operations of the two also differ. In B2C, products can be sold directly to consumers through websites and there exists provision for online payment either by using debit, credit card or any other payment mode supported before checking out, however, B2B online platform only displays the products and the prices of the products on the website and a record of the customer details are required before checking out. Infrastructure of the two businesses also differ (IMP Project Group, 1982). The B2B infrastructure is more developed and can offer personalized services to different consumers, the B2C on the other hand has less developed infrastructure.

4.1.2 Advantages of operating in both sectors

The advantages of operations in both sectors can be represented in the table below

B2B B2C

Initiates reciprocal buying Reduces transaction costs and time flexible

it initiates product specificity No location constraint

it provides business Buyer Logic Provides ecommerce benefits

Initiates advanced sales elements It is advanced on the basis of navigation and

The advantages of these operations can be attributed to the operations of SPSL especially in the new established firm in Manchester. The B2B advantages easily apply to the SPSL marketing strategy since its major customers are small scale retailers, wholesalers, and manufacturers (Meyer, 2007). Owing to the position of the Manchester firm that is to be established, it is likely to experience the above advantaged such that the buyers will tend to be logical in their purchasing decisions by using predictable criteria, product specificity will enable SPSL to demonstrate its ability to make products according to the requirements and the specifications of the consumer. Reciprocal buying in SPSL will also ensure the company exercises money saving opportunities since the byers are buying for the business use.

4.1.3 Disadvantages of operating in both sectors

B2B B2C

Often needs legacy interpretation Security threats

Maximum transaction limits More competition

Long complicated transactions Low conversion rates

Technical glitches an failures

Some of the disadvantages that SPSL may encounter as a B2B firm include legacy interpretations and sometimes it may have to incur maximum transactions.

5.0 Conclusion

The discussion in the paper presents the marketing functions and operations of SPSL company. The company which is based in south London on majors on plumbing works and its reputation is such that they offer efficient, effective and friendly services to the consumers and owing to this, they have been able to promote their products by word of mouth, however, when they introduce a new market in Manchester, they have to apply a new promotional strategy which is the use of sales persons to promote the goods, create brand differentiation and create awareness of the product. Use of sales force for promotional activities offer a number of advantages such as differentiation creation, fosters and increases communication, it also establishes word of mouth which gives the customers a personal touch thus increasing potential of their interest, it also turns the shoppers into buyers due to persuasions skills and also contributes to an increase in sales due to the number of sales per person which when combined results into large sales (Blattberg & Neslin, 1990). The use of workforce also contributes positively to the B2C marketing strategy since the personal touch with the consumers result into possible increase in sales which is rare in the B2B marketing strategy used.

6.0 References

Blattberg, R. C., & Neslin, S. A. (1990). Sales promotion: Concepts, methods, and strategies. Englewood Cliffs, N.J: Prentice Hall.

IMP Project Group. (1982). International Marketing and Purchasing of Industrial Goods. John wiley & sons

Meyer, S. (2007). Major differences along the supply chain between b2b and b2c marketing with. Place of publication not identified: Grin Verlag Ohg.

Shenoy, G. V., Srivastava, U. K., & Sharma, S. C. (1988). Business statistics. New Delhi: Wiley Eastern Ltd.

Woodside, A. G. (2010). Organizational culture, business-to-business relationships, and interfirm networks. Bingley, UK: Emerald.

Appendix I

Appendix 2