B2B Marketing, the 4 P’s and Social Media

A series of blogs that focus on today’s B2B marketing environment, in which the traditional 4 P’s (Product, Place, Promotion and Price) are being influenced by social (digital) media and activities.

Product

Today’s B2B buyer (or committee) purchases from a vendor based on a combination or mix of factors: lowest price, proven supplier, quality product, only source, etc. In many industries the market structure of the suppliers is oligopolistic, that is there are 3-5 main suppliers which narrows the buyer’s choices to those firms.

Frequently these oligopolistic suppliers can be identified as: the low price supplier who is perceived as having lower quality and fewer features, the high priced supplier who has the most features and highest quality, and the intermediate supplier, who falls in-between the two extremes in features and quality.

The marketing departments in these suppliers know their products and customers and have historically differentiated their products to fit the target market. Using a combination of direct mail, trade shows, and training of sales people (direct and distributors), these companies fight for growth and market share by emphasizing strengths and minimizing weaknesses, i.e., highlighting their value proposition.

While the social media revolution has not changed the performance of the products or the structure of the competitors, it has enabled the marketing departments to directly reach the buyer and to influence him/her more dramatically than in the past. Specifically the marketing departments can now:

• Conduct nurturing campaigns using email and marketing automation tools, allowing them to pass along leads at the appropriate times to their direct and distribution channel sales people..

• Illustrate the significant differentiators and value proposition of their products by using short video clips and/or customer applications

• Gain share-of-mind and become a trusted source on industry trends through corporate and guest blogging.

• “Listen” to their customers (and the industry) by monitoring user groups and tweets, including those related to their customer service function.

Since anywhere between 30% to 60% of the buying decision is now done before any direct contact is made with the seller, the use of social media to help define the product and the company that stands behind is critical.

In an oligopolistic market one should assume that all suppliers will be equally competitive, resulting in the status quo being realized in fairly short order. Where one competitor fails to embrace social media, they will no longer be a player, with their share going to the other competitors. This whole process also raises the barrier to entry for outside competitors who may be thinking of entering the market.

Bottom line, social media doesn’t change the differentiated product aimed at the targeted market segment. It can, however, influence the buyer’s perception of the product and company, thereby accellerating the selling process. Traditional direct mail, trade shows and sales training are still required, but with a different emphasis, recognizing that the buyer has done his own research and has formed perceptions and opinions due the company’s social media efforts.

RHM 2/13/2014

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