Table of Contents
Supply Chain, its Role and Effects to the B2B Marketing. 4
The Business to Business (B2B) Enterprise Concept 7
Marketing in the B2B Enterprises. 9
Introduction
Supply chain management (SCM) is a fundamental aspect in business. It is the crucial driver of the success that businesses have experienced. A wrong or inefficient supply chain or a poor application of the SCM can lead to poor performance or failure of a business philosophy or model. The SCM that an enterprise or business adopts has to appreciate both the internal core competencies of that particular business as well as the external environment dynamics and the constant changes that it experiences. An effective supply chain, therefore, is one that incorporates the business, the employees, suppliers as well as the customer. A connection of all these stakeholders in a business model will ensure a timely mobility of goods and services from their production to the consumer through the supply chain without hitches (Patton, 2004). The SCM also has to be sensitive and alive to the concepts and trends in society. A major trend that is causing remarkable changes to approaches of the SCM in the business sector is environment conservation and sustainability. Awareness of such trends allows the firm to adapt its supply chain to comply with such provisions as part of its core competency and also part of the firm’s CSR.
This paper is going to give an astute analysis of the concepts of supply chain and how this concept impacts on the marketing strategies and chances of success of the business-to-business (B2B) enterprises. The paper will also give an in-depth analysis of the issues that are affecting the supply chain management sector in various industries. The industries that the paper will focus on are the smartphone industry and the automobile industry as well. These industries have been chosen for this paper because they are relevant to most members of the society and, as a result, will have an interest in this paper. The supply chains and their success in these industries are crucial to the society. The paper will then finally offer a conclusion to the entire content of the paper.
Supply Chain, its Role and Effects of the B2B Marketing
Supply Chain
The supply chain concept refers to the movement of goods or services from their raw material forms to the final product that is delivered to the customer. The concept, therefore, includes all the activities and functions that are carried out to transform the raw materials into a product or service that is then consumed or used by the end user or customer. The management aspect of supply chain comprises the integration of all the activities and functions that are involved in this process (Sharma, 2004). It also includes the establishment of credible relationships between these activities and functions to form a purposeful unit that can enable production for business and meet the demand for a particular product or service in the market. The money flow within a business is also a crucial aspect of the supply chain the business. In this case, the business needs the flow of money from the consumer up the chain to the business. This allows the success of the business in terms of meeting its financial obligations to its human resources as well as business expansion (Brewton & Kingseed, 2001). The financial flow also allows the company to meet some of its corporate social responsibilities.
The implementation of SCM by businesses is mainly aimed at achieving a reduction in the investment in inventory for the business. It is also aimed at increasing the services offered to the customers.This is through an increment in the availability of stock and a reduction in the cycle time that the business undergoes before the products are ready for the end user. The SCM is also adopted by several businesses to establish a competitive advantage in the market. An effective supply chain can allow the business to cut costs of production and reduce the time of delivery of the goods and services to the end user. This can be achieved through innovation and adoption of modern means of supply chain and monitoring or the visibility of the supply chain to the business. An example of a company that is revolutionizing supply chain and logistics is Amazon and its Drones program (O’Cass & Ngo, 2012). This delivery system using drones is novel in the market, and it differentiates the Amazon Company from the rest of its business segment and other businesses that do not directly compete with Amazon.
An analysis of the business sector in the world reveals that there are a several model of SCM that have been adopted by businesses. The type of model that a business adopts is informed or influenced by the core competencies of the business, the external business and resource environment as well as the aims and targets of the particular business. A good example of an integrated supply chain model was given by Handfield & Nicholos (1999). This model is illustrated in figure 1 below. The bidirectional arrows in this model indicate the accommodation of the reverse materials as well as the information feedback flow.
Figure 1: The Illustration of the Integrated Model of a Supply Chain
Source: Handfield & Nicholos, 1995
The Marketing Concept
Marketing mix or strategy is crucial to the success of a firm or business. This is the medium through which a business communicates to the consumer market and passes information to this market. Goods and services in the market need to be visible. Visibility means that the consumer or the target market has to be aware of these products in the market before they make a decision to purchase these goods and services. This is the work of marketing. It sends information to the customer or the end user of a product’s existence (Stewart & Zhao, 2000). The business sector uses marketing not only for new products trying to make an entry into the market but for existing products as well. The existing brands or products need to consolidate the market share and strengthen their competitive market advantage. The new entries seek to use marketing to dislodge the existing goods. The main aim of marketing is to communicate the differentiating features or attributes of the goods and services on offer (Stewart & Zhao, 2000). This way, the consumer can make a decision on what to purchase based on credible information. In this aspect, marketing is not only crucial to the business but also to the end users as well.
The marketing strategy that a business chooses has to marry or to be in synch with the supply chain management of the particular business. A disjointed approach will lead to disparate decisions within the company that will lead to the disjointed operationalization of the company’s objectives. The business will consequently suffer in the market. The marketing strategy is aimed at augmenting an already effective and successful supply chain of business. This is because the supply chain takes care of the production of goods and services (Stewart & Zhao, 2000). The SCM does the quality of the goods, the differentiation from the existing goods in the market and the innovations that are carried out on the goods and services. The SCM also works with the branding as well as the delivery logistics of the goods to the consumer. The marketing strategy is therefore created to augment this system. The marketing strategy cannot work effectively without a massively successful and effective SCM backing it up. However, the SCM also needs an effective and decisive marketing mix. The business needs a bridge between the business and the consumer market or its customers. This bridge can be created through information sharing (Bendixen, Bukasa & Abratt, 2004). The Marketing strategies serve as an information conduit from the business to the consumer. This is because the marketing strategies do not only offer information about the existence of goods of goods and services, the offer promotional services as well. Here, the focus is communicating the strengths of the product and how it stands out from the rest. The aim is to offer differentiate the product as much as possible and tell the consumer or the potential customer why they should purchase the particular product and not the others in the market.
The Business to Business (B2B) Enterprise Concept
B2B businesses are the enterprises whose main focus is the selling their services or products to other companies or businesses. This is in contrast with the business-to-consumer (B2C) business models whose focus is to sell their goods and service to the consumer or the end users. The B3B businesses facilitate the movement of raw materials, component or parts of certain goods to other businesses (Coviello & Brodie, 2001). The organizations that receive these parts or components derive additional profits from these componets. This is through manufacturing of these parts or components into finished products that they can sell to other companies or they can make sales to the end users in their market segments.
B2B Supply Chain Management
Like other businesses, B2B enterprise needs a credible and effective supply chain to operate. The supply chain connects the B2B enterprise from its internal process of manufacturing the component and goods to the movement or the delivery of these goods to the customer business (Bahiniati, 2009). For example, the smartphone industry is a B2B industry. The parts of the smartphones that are manufactured by Apple in its major assembly plant in China are manufactured by different firms from across the region (The Body Shop, 2012). These are made in China, Vietnam, and India and even in Malaysia. Other components are manufactured in the Americas. However, at these components have to be moved to the assembly plant in China. These businesses and Apple Incorporate need an elaborate supply chain system to fulfill their obligations on the transport or the shipping of these components as well as the flow of finances to and from these businesses.
A good example of the B2B business in the market is the automobile industry. For instance, the constitutive parts of a vehicle are not manufactured by a single company. There are several businesses that manufacture these parts. Since the parts cannot be sold directly to the customer, these businesses adopt the B2B model and sell these parts to a manufacturer. The manufacturer purchases these components independently from these businesses in a B2B approach (Reese, 2004). These parts include hoses, batteries, tires, and electronics. These are manufactured separately by different companies and sold to the manufacturer. The manufacturer then proceeds to make the finished product. This is because these components of a car do not end up in the market for the consumer. Rather, the manufacturer assembles these parts to manufacture a finished product that is an automobile that is them put on the market for the end user to purchase. The B2B companies or enterprises are often high volumes (Voeth & Herbst, 2006). This is because there are many small transactions that lead to one big business-to-consumer sale or transaction.
The core functions of a B2B enterprise include procurement, supply, direct transactions as well as collaborations and partnerships (Ramsdens, 2013). The functions have a major bearing on the success of the business. In recent years, there has been a major shift in tactic among B2B firms to the use of the internet for the supply chain issues and activities. This shift has been informed by the reliability of the internet as well as the availability of information on the internet. Information is a crucial asset to the success of a B2B firm. They need to understand the market and, therefore, respond to the needs and changes in the market (Tarmac, 2012). They also need to monitor their customers and competitors to adapt their production approaches and make innovations to offer them a competitive advantage in the market.
One of the major impacts of the supply chain on the B2B model is the marketing strategy. The marketing strategies of the B2B model enterprises depend on the supply chain. As a result, the supply chain has a major impact on the marketing these businesses in the market (Simchi-Levi, 2003). An understanding of this concept requires an exploration of the marketing process in the B2B businesses in the market.
Marketing in the B2B Enterprises
B2B marketing is the establishment of marketing strategies for the products and services of a business, institution or the government for a local, national or international market level. The major techniques used in the B2B marketing are similar to the ones used in other businesses such as the B2C ones (Saunders, 1997). The marketing approaches range from methods such as the use of magazines and newspapers’ advertisement or commercials, catalogs, direct emails, radio, and television marketing. Other includes outdoor advertisement or marketing strategies, advertising media or public relations approaches as well as the sales promotions approaches. The internet or the WWW-world wide web has sparked a major revolution in the B2B marketing approaches and techniques. The internet use in the B2B marketing strategies by businesses in the market has already surpassed the conventional or the traditional methods used in the marketing of products and services for these B2B firms and companies (Stewart & Zhao, 2000). This has converted the B2B marketing to predominantly “electronic commerce”.
The business that B2B firms carry out is significantly different from the B2C transactions. For example, the average B2B buyer is massively knowledgeable in the goods and services that they are going to purchase. They have an in-depth knowledge of the merits of the goods price, ability to meet targeted business needs as well as the value. The business buyers are also under the influence of the buying policy of their businesses and their behavioral conduct in the market. On the other hand, consumer buyers have limited knowledge of the goods and services they purchase and if they do, it is not to the level of the business buyers. This indicates that the business buyer audiences has or have different criteria in which they judge and analyze the goods they purchase (Saunders, 1997). In this regard, it means that the B2B firms need a different approach in their marketing to the one adopted by the B2C firms in the market. The supply chain here plays a major role in enhancing the marketing strategies adopted by the B2B firms in the market. This can be elaborated by the two industries that are covered below.
The Automobile Industry
The automobile industry has revolutionized the supply chains of businesses for decades now. The major role that the automobile industry has played is the easing transport of human resources and the goods and services into the marketplaces. This mobility is crucial for the sustainability of the business sector (Besant et al., 1994). The industry itself is a B2B business. Toyota is a Japanese firm that deals in the automobile industry. It has manufacturing plants in China. It is one of the major players in the global automobile sector. In today’s market that is scale-drive and intensive in terms of technology, partnerships are crucial to the businesses’ survival. To this end, Toyota has an array of suppliers to supply components and services. This sets several B2B business relationships that Toyota has in its supply chain (Hyun-Soo & Philip, 2005). The marketing strategic plans within the automobile industry are highly dependent on the supply chain of the individual firms. The firms are doing business with Toyota, for example, have to have a similar business outlook and see eye to eye on several or a majority of the policies of production and sustainability. Today, sustainability of the supply chains is crucial (Bowersox et al., 2002). Toyota, like many of the firms in the automobile industry, has taken the sustainability and eco-friendly provisions seriously. The firm is working towards compliance. This major issue here is the conservation of the environment.
Issue in SCM: Environmental Conservation
There is a massive campaign throughout the world to get down or reduce the carbon emissions and the emissions of the rest of the greenhouse gasses into the atmosphere. This is a concerted effort that has been adopted by several countries including Japan and China. This means that Toyota has adopted these measures (Cooper, 2004). The supply chain and logistics of the Toyota Company are aimed at fulfilling this company policy. Environmental sustainability is no longer a corporate social responsibility issue but a core competency and major policy within the company (Lancioni, with & Oliva, 2000). This means that the marketing among the B2B businesses has to be ensured that the supply chain is compliant and is in the shape of the companies whose businesses they want to obtain. Sustainability is, therefore, a major issue in the international and local markets for the company. As a result, it has to be incorporated into the core competencies and the policies and the supply chains of the B2B companies that are designing their marketing strategies.
The Smartphone Industry
The smartphone business operates in a similar B2B model like the one in the automobile industry. Here, a good example I Apple Incorporate. Apple is an America-based electronics giant that has the biggest market share in the Smartphone and electronics market segment. The company has surged in recent years to edge out of the major market players like the Korean electronics giant Samsung. The company’s growth was based on innovation in its product line as well as in its supply chain system (CashForYourGold, 2012). The company has partnerships with several suppliers that make the components for its products. These products are sold to the company and are shipped to China where Apple runs a major assembly plant.
The criteria for choosing these suppliers or partnerships are massively based on the supply chain of these B2B businesses that work with Apple. The businesses have to demonstrate an effective, sustainable and reliable supply chain to Apple for the company to consider doing business (Stewart & Zhao, 2000). The marketing strategy of these companies, as a result, has to focus on their supply chains and how to make them effective and reliable as well as compliant with the sustainability provisions.
Other issues in the SCM policies of businesses include the pricing policy. Customers or consumers require a value for money. As a result, businesses need to establish a supply chain that will allow them to offer competitive prices in the market. This is the major driver of the massive outsourcing strategy by businesses into China, East Asia, India, Brazil, and Mexico. The other issue is globalization (Anderson & Narus, 2004). B2B businesses have to compete with not only the local firms but the global firms as well. This is as a result of the ever-intensifying globalization across the world.
Conclusion
Supply chain management is crucial to the management of the B2B business models. It allows or determines the mobility or movement of goods from the production of the business to the business buyer. The marketing approach for the B2B firms is different from the B2C firms. Here, the buyer is informed and is specific in the product quality and quantity they want. The marketing concept is the same with the B2B companies although the approach differs due to the target. This is the major reason for the increase in the use of the internet for marketing by B2B businesses. The supply chain as a fundamental effect on the marketing of the B2B businesses since it informs the quality and quantity of the products. It also determines the reliability and the speed of delivery logistics of the B2B enterprise in the market.
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