Business-to-Business Marketing and Channel Strategy
Ning Li, Ph.D.
Learning Objectives
q Examine the relationship concept in B2B marketing and
variables affecting B2B relationships.
q Analyze the main issues associated with managing strategic
alliances.
q Analyze the forces that shape global advantage of a firm.
q Assess the significance of corporate social responsibility and
sustainability for B2B strategic decision-making.
Relationships, Alliances, and Global Markets
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As well as an understanding of the behavior of the buying company,
business marketers also have to understand the relationship between the
buying company and the selling company.
B2B Relationships
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4The Relationship Spectrum
Anonymous transactions/ Complete collaboration
Automated purchasing and integration of supplier
with customer or channel
partner
Transactional Value-added Collaborative
Exchanges Exchanges Exchanges
Indication of the Diversity of Ages in a Relationship Base
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Relationship Lifecycle Variables
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The experience of dealing with each other
The uncertainty associated with working with each other
The distance between the parties, incorporating social, geographical, time, cultural, and
technological manifestations
The commitment the parties make to each other
The specific adaptations they make to what they do and how they do it that brings them
closer to the counterpart
Ford’s (1980) Relationship Life Cycle Stages
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Strategy
q Strategy concerns decisions that have a major effect on the performance of the firm.
q The overall aim of business strategy in profit-seeking firms is to increase long-term
shareholder value.
q The key contribution that marketing strategy in business-to-business firms should make
is to understand, analyze, and deliver customer value.
q Customer value is defined as the trade-off between what a customer has to give up and
what the customer receives in a business transaction or relationship.
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q Strategic alliance – A relationship between partners involving commitment of capital, management and technical
resources.
q The objective is to enhance both parties’ competitive positions, such as sharing risk, and/or get into new markets.
q IBM, Microsoft, HP, GE, and Corning: formed hundreds of alliances.
q Stumbling blocks:
• Partners have different organizational structures/cultures. This can create problems for
Ø marketing and product design decision-making
Ø trust and coordination
• Partners that combine their best skill sets in one country may be poorly equipped to support partners in other
countries. This can lead to global implementation problems.
• Quick technological change often guarantees that most attractive partner today may not be the most attractive partner
tomorrow.
Strategic Alliances
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q The formation of alliances: causes of formation, partner selection
q The choice of governance structure (the formal contractual structures used to organize the partnerships): detailed
contract, trust
q The dynamic evolution of alliances: learning, evolution, changes in info flows
q The performance of alliances:
• challenges in measuring alliance performance per se
• mostly study alliance termination
• surveys (partners’ assessment)
• challenges in managing alliance portfolios
q The performance consequences for partner firms entering alliances:
• event study analysis on the stock market effects of alliance announcements
• patenting activities of partner firms
• likelihood of firm survival
“Alliances and Networks,” Gulati, R., SMJ 1998, Vol. 19
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Portfolio/Network Perspective
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Forces that Shape Global Advantage for the Firm –
The BCG Global Advantage Diamond
Source: BCG analysis. Figure located in “Competing for Advantage: How to Succeed in the New Global Reality,” January 2010,
by Arindam Bhattacharya, Jim Hemerling, and Bernd Waltermann, The Boston Consulting Group, Inc.,
(http://www.bcg.com/documents/file37656.pdf).
q The local growth team (LGT) model is based on five critical principles:
• Shift power to where the growth is.
• Build new offerings from the ground up.
• Build LGTs from the ground up, just like forming a new company.
• Customize objectives, targets, and metrics for the RDE environment.
• Provide senior executive support to the LGT, including a direct reporting link to senior management.
q Network coordination: Even while adapting to local conditions, the best managed global
firms leverage their global networks by sharing best practices, knowledge, technology, and
systems. Economies of scale and scope can be advanced through process standardization,
adoption of common technology, and rapid information sharing.
Local Adaptation and Network Coordination
Corporate Social Responsibility (CSR)
qA concept whereby companies integrate ESG concerns in their business
operations and in their interactions with stakeholders on a voluntary
basis
qThe responsibility of enterprises for their impacts on society
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q E, environmental criteria consider the energy a company uses and the waste it discharges,
the resources it requires, and the consequences for society that result.
q S, social criteria address the relationships that a company has with its employees, supply
chain partners and the reputation it fosters with institutions in the communities where
business is conducted.
q G, governance is the internal system of procedures, control, and transparent practices a
company applies to make effective decisions, comply with the law, and meet the needs of
external stakeholders.
q Stakeholders care about ESG.
The Key Components of a Firm’s ESG Profile
Sustainability: Strategic Imperative
q Development that meets the needs of the present without compromising the ability
of future generations to meet their own needs
q Consuming resources at a rate that allows them to be replaced, and only producing
pollution at a rate that the environment can assimilate.
q Sustainability is an emerging megatrend that is transforming the competitive
landscape, forcing companies to change the way they think about products,
processes, and business models.
q Involves the integration of economic, environmental, and societal considerations
into business decision making
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qSustainability is a “mother lode” of organizational and technological innovations that
yield both bottom-line and top-line returns.
• Becoming environmentally friendly lowers costs because companies reduce the inputs they use. Do
“old things in new ways”: environment-related cost management.
• The process also generates additional revenue from better products or from new businesses. Do
“new things in new ways” such as redesigning products, processes, and whole systems to optimize
natural resource efficiencies across their value chains.
• Sustainability innovations transform core businesses and even lead to the creation of new businesses
and new sources of differentiation.
Sustainability: Mother Lode
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How Sustainability Affects Value Creation
Source: Adapted from Maurice Berns, Andrew Townend, Zayna Khayat, Balu Balagopal, Martin Reeves, Michael S. Hopkins,
and Nina Kruschwitz, “Sustainability and Competitive Advantage,” MIT Sloan Management Review 51 (Fall 2009): 19–26 and
Witold Henisz, Tim Koller, and Robin Nuttall, “Five Ways that ESG Creates Value,” McKinsey Quarterly (November 2019): 4.
American Marketing Association Ethical Norms
As Marketers, we must:
q Do no harm. This means not only consciously avoiding harmful actions or omissions but also
striving to benefit all stakeholders and society at large. We must embody high ethical
standards and, at a minimum, adhere to all applicable laws and regulations in the choices
we make.
q Foster and maintain integrity. This means striving for transparency and fairness in all
aspects of the marketing ecosystem.
q Embrace ethical values. This means building relationships and enhancing stakeholder
confidence by affirming these core values: honesty, responsibility, equity, transparency, and
citizenship.
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Source: https://www.ama.org/ama-statement-of-ethics/
Ethical Business Marketing – The Issue of Gift Giving
q Gift / bribe in some countries
q If your relationship is based on extravagant gifts, entertainment, and other perks, you’re likely to lose the
business when a bigger bribe comes along anyway.
q Heavy fines, reputation loss
• http://www.theguardian.com/business/2014/apr/09/hewlett-packard-108m-corruption-government-it-us-bribery
• https://www.reuters.com/article/us-brazil-corruption-usa/brazilian-firms-to-pay-record-3-5-billion-penalty-in-corruption-case-
idUSKBN14A1QE
• https://www.theguardian.com/business/2017/jan/17/rolls-royce-apologises-bribery-671m-uk-us-brazil
q My research of GAM
• Global brands prefer suppliers of high quality
• Local suppliers prefer globally known brands
q Work on quality/brand
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Quality and Consumer/Investor Trust
q The Kobe Steel scandal (http://money.cnn.com/2017/10/16/news/companies/kobe-
steel-scandal-what-we-know/index.html)
q Takata Airbag Recall (6/26/2017 filed for bankruptcy):
• The largest and most complex safety recall in U.S. history.
• Vehicles made by 19 different automakers have been recalled (model year 2002 through 2015).
• It is expected that the inflator recall will impact more than 42 million vehicles in the U.S.
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22Source: Kottasova, I. (2014). World’s most corrupt industries. CNN Money.
http://money.cnn.com/2014/12/02/news/bribery-foreign-corruption/index.html