“UNDERSTANDING THE AWARENESS AND ACCEPTANCE EPTANCE OF AN EE-PORTAL FOR INDUSTRIAL PRODUCTS”
Submitted by
Hoimee Dey Roll No: 12MMM437 Under the guidance of Prof. (Dr.) Kavita Laghate
IN PARTIAL FULFILMENT OF THE REQUIREMENTS FOR
MASTER’S IN MARKETING MANAGEMENT (MMM) 2013-2014 2014
JAMNALAL BAJAJ INSTITUTE OF MANAGEMENT STUDIES STUDIES, MUMBAI
ACKOWLEDGEMENT
I would like to take this opportunity to express my deepest and sincere gratitude towards Jamnalal Bajaj Institute of Management Studies for giving me an opportunity to show my capabilities and to carry out a project under the kind guidance of Dr Kavita Laghate.
I present my heartfelt gratitude towards my mentor, Dr Kavita Laghate, for her unstinted support and gregarious guidance throughout the project and all through my academic tenure in the institution. I acknowledge my sincere thanks for her valuable insights, encouragement and critical comments at every stage.
I am thankful to all the participants of the survey who have provided their time and views in adding value to the project. My special thanks to the team of The Shipping Corporation of India and my friend, Ms. Sunita Uikey, who have helped me with primary data collection.
I am thankful to all the professors of Jamnalal Bajaj Institute of Management studies who have helped me at various stages of this project.
I thankful my parents, friends, colleagues, and batch mates who backed my interest by giving suggestions and all possible help in sourcing research papers, reference materials etc.
Lastly I wish to thank the office and library staff of Jamnalal Bajaj Institute of Management Studies for their assistance and co-operation in completion of this assignment.
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TABLE OF CONTENTS ACKOWLEDGEMENT ................................................................................................................................. 1 LIST OF TABLES .......................................................................................................................................... 4 LIST OF FIGURES......................................................................................................................................... 4 1.0 EXECUTIVE SUMMARY ....................................................................................................................... 5 2.0 INTRODUCTION .................................................................................................................................... 6 2.1 IDENTIFYING THE NEED ................................................................................................................. 6 2.2 MANEGERIAL OBJECTIVES ............................................................................................................ 7 2.3 RESEARCH OBJECTIVES ................................................................................................................. 8 3.0 LITERATURE REVIEW .......................................................................................................................... 9 3.1 UNDERSTANDING THE INDUSTRIAL BUYING-DECISION PROCESS ..................................... 9 3.1.1 ROBINSON, FARIS AND WINDS’ EIGHT PHASES [3] ........................................................... 9 3.2 THE B2B BUYING CENTRE ............................................................................................................ 13 3.2.1 THE CORE OBJECTIVE OF SUCH B2B BUYING CENTRES ARE: ........................................................ 14 3.3 WHERE DOES AN INDUSTRIAL BUYING PORTAL FIT IN........................................................ 15 3.4 THE E- CHALLENGES ...................................................................................................................... 16 IN DIGITAL WORLD: ........................................................................................................................ 16 SUPPLIER’S DILEMMA: ................................................................................................................... 16 PROBLEMS WITH THE CURRENT PORTALS: .............................................................................. 17 3.5 THE CONFLICT OF CREATING A BRAND IN B2B MARKET [9] ............................................... 17 3.6 B2B VERSION OF KELLER’S BRAND EQUITY PYRAMID: [9].................................................. 19 3.7 THE BENEFITS OF BRANDING IN INDUSTRIAL MARKETS .................................................... 23 3.8 THE PROBLEMS WITH B2B BRANDING ...................................................................................... 24 3.7 BRANDING IN THE DECISION MAKING PROCESS ................................................................... 25 4.0 RESEARCH DESIGN ............................................................................................................................ 26 QUALITATIVE RESPONSES: REASONS TO REFRAIN FROM ONLINE PORTAL....................................... 34 BRANDING THROUGH KUHN’S MODIFIED CBBE.......................................................................... 36
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5.0 CONCLUSIONS ..................................................................................................................................... 38 BIBLIOGRAPHY .............................................................................................................................................. 39 APPENDIX: A: QUESTIONNAIRE .................................................................................................................. 40
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LIST OF TABLES Table 1: Frequency of Occurrence of Buying Situations .................................................................................... 27 Table 2: Parameters of Supplier Evaluation and their importance ...................................................................... 31
LIST OF FIGURES Figure 1: The Online and E-mail Campaign for our Survey ................................................................................. 8 Figure 2: Eight Stages of Buying Decission Process ............................................................................................ 9 Figure 3: A Buying Centre.................................................................................................................................. 14 Figure 4: Industrial Buying Portal Facilating Buying Process ............................................................................ 15 Figure 5: Keller’s Customer-Based Brand Equity Pyramid ................................................................................ 19 Figure 6: Kuhn’s Revised Customer Based Brand Equity Pyramid for B2B...................................................... 20 Figure 7: People involved in different roles........................................................................................................ 26 Figure 8: Problems faced during Vendor Searching ........................................................................................... 28 Figure 9: Drivers of Purchase Decision .............................................................................................................. 32 Figure 10: Perceived Components of a Good Online Portal ............................................................................... 33
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1.0 EXECUTIVE SUMMARY Presently there is a dearth of online shopping portals in India. Most of the portals available are just online directories or are not end to end solution providers. With a view to minimize inventory carrying cost, the process of supplier management has to be optimized. In our study we intend to understand the awareness among people who are involved in B2B buying process (i.e. a part of the Buying Centre). As we know the Purchase / Materials Management is defined as ‘buying the right quantity, at the right price, for delivery at the right time and place’. It is the Management’s job to define what is “right” for each dimension. Alongside different department contribute to purchase decision as a part of the organization’s buying centre. While some are involved in framing specs, some may be users of the product and others may have very small yet significant role. Departments like finance, admin, stores, manufacturing, operations, RnD labs, sales and HR would influence indirectly but significantly. The survey will elucidate the key features that are essential for sustainability of an online portal in the long run. It will enlighten any existing e-directory of shopping portal on what are the customer’s needs or expectations, their lacuna and how the present portals can be improvised upon. Alongside the survey also intends to explore reasons why an online portal will be beneficial for suppliers as an ultimate solution for their branding and image building exercise explaining through Kuhn and Alpert’s modified Customer-Based Brand Equity Pyramid.
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2.0 INTRODUCTION An organization buying process involves decision-making by which formal organizations establish the need for purchasing products and services followed by identifying, evaluating and choosing among alternative brands and suppliers. (Bhasin). There are eight phases (or stages) in the buying decision process, indicating the logical sequence of activities •
Recognition of a problem or need.
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Determination of the application or characteristics and quantity of needed product.
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Development of specifications or description of needed product.
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Search for and qualifications of potential suppliers.
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Obtaining and analyzing supplier proposals.
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Evaluation of proposals and selection of suppliers.
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Selection of an order routine.
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Performance feedback and post-purchase evaluation.
2.1 IDENTIFYING THE NEED To assess the need and manager’s dilemma, we carried out unstructured telephonic interviews with the managers of two online portals that are in operation today. We found that the four constrains in business are trust, payment options, delivery period and competition from existing e-commerce portals that have started diversifying. This led us to believe that there was a nessicity to understand the awareness and acceptance at the consumer level to strengthen and establish a sustainable framework for an online portal for industrial products.
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2.2 MANEGERIAL OBJECTIVES In industrial marketing, the 20% of the sales force that sells 80% of the volume owes much of its success to building trust-based relationships with clients. To preserve trust and confidence in the relationship, a smart salesperson will even recommend a competitor’s product if it better serves the customer’s needs. (Glen L. Urban) or go for aggressive pitching of his own products when he knows he has a differentiation that stands outs from competitors. In recent years, the Internet has established itself as a new medium for marketing consumer and industrial goods and services (Glen L. Urban). The challenge with online portals is that the business model is aimed at bridging the gap between industrial and consumer marketing and hence a sound understanding of both is necessary in weaving the right marketing strategy. Understanding the parameters that influence the decision making process will facilitate managers in designing a robust and sustainable business plan. The focus of our study was in understanding the “UNDERSTANDING THE AWARENESS AND ACCEPTANCE OF AN E-PORTAL FOR INDUSTRIAL PRODUCTS” amongst the customers of such goods. Though the organizational buying process is similar to the final consumer buying process, the organizational buying process may involve autonomous or joint decision making (Bhasin) by the group of individuals who form the buying centre of the organization.
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2.3 RESEARCH OBJECTIVES 1. Our objective was to understand the awareness and acceptance of an online portal for industrial products amongst professionals working in Indian organizations. 2. To list out the various constrains of those individuals who are a part of the B2B buying centre during: searching and qualifications of potential suppliers, obtaining and analyzing supplier proposals, evaluation of proposals and selection of suppliers and selection of an order routine (Faris) 3. To enlist the components that could form a robust model for online shopping portal. 4. To explore reasons why an online portal will be beneficial for suppliers as an ultimate solution for their branding and image building exercise explaining through Kuhn and Alpert’s modified Customer-Based Brand Equity Pyramid
Figure 1: The Online and E-mail Campaign for our Survey
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3.0 LITERATURE REVIEW REVIE Business-to-business business markets are characterized in a number of ways that makes them very different to theirr consumer cousins. The number of customers supplied by a chemical company is likely to number in the hundreds or small number of thousands in contrast to consumer companies that ultimately address markets of many thousands or millions. 3.1 UNDERSTANDING THE INDUSTRIAL BUYING-DECISION DECISION PROCESS 3.1.1 ROBINSON, FARIS AND WINDS’ EIGHT PHASES (FARIS) RECOGNITION OF A PROBLEM OR NEED.
DETERMINATION OF THE APPLICATION OR CHARACTERISTICS AND QUANTITY OF NEEDED PRODUCT.
DEVELOPMENT OF SPECIFICATIONS OR DESCRIPTION OF NEEDED PRODUCT.
SEARCH FOR AND QUALIFICATIONS OF POTENTIAL SUPPLIERS.
OBTAINING AND ANALYZING SUPPLIER PROPOSALS.
EVALUATION OF PROPOSALS AND SELECTION OF SUPPLIERS.
SELECTION OF AN ORDER ROUTINE.
PERFORMANCE FEEDBACK AND POST POST-PURCHASE PURCHASE EVALUATION.
Figure 2:: Eight Stages of Buying Decission Process
The recognition of a problem or need may originate within the buying firm or many may also be recognized by a smart marketer. When the quality quality of material supplied by the existing supplier is not satisfactory, or the material is not available when required, or the
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machine supplied by the Existing Supplier breaks down too often, the buying organization recognizes the problem. If an Industrial Marketer identifies a problem in the buying organization and suggests how the problem could be solved, there will be a better possibility of it being selected as a supplier. Once the problem is recognized within or outside the buying organization, the next phase is to resolve the problem. The buying firm will try to answer questions such as: what type of product or services to be considered? What quantity of product needed & so on. For technical products, the Technical Department, (R& D, Industrial Egg, Production or Quality Control) will suggest general solutions of the needed product. For non technical goods or services, either the User Dept or Purchase Dept may suggest product or services, based on experience and also quantity required to solve the problem. Sometimes advice is taken from experts from outside. Phases-2 & 3, are closely related. After general solution to the problem is determined in the 2nd phase, the buying organization, in the 3rd stage, develops precise statement of the specifications or characteristic of the product or service required. During this stage the purchase dept takes the help of their technical people, or if required, outside sources such as suppliers or consultants. Industrial Marketers have a great opportunity to get involved at this stage by helping the buyer organization to develop products specification and characteristic. This will give a definite advantage to the marketer to incorporate his product’s specification & characteristics.
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The search for potential suppliers is based on various sources like trade journals, sales calls, word of mouth, catalogues, trade shows, industrial directories, yellow pages etc. generally the factors such as quality of product or service, reliability in delivery & service are considered. Once the qualified suppliers are decided, the buying organization obtains proposals by sending enquiries to the qualified suppliers. The supplier’s offer should include the product specification, price, delivery period, payment terms, taxes and duties applicable transportation cost (or fright), cost of transit insurance and any other relevant cost or free services provided. For purchases of routine products or services, the phases 4 & 5 may occur simultaneously, as the buyer may contact qualified suppliers to get the latest information on prices and delivery periods. For technically complex products and services a lot of time is spent in analyzing proposals in terms of comparison on products, services, deliveries & landed costs. The buying organization evaluates the proposals of competing suppliers and selects one or more suppliers. Further negotiations may continue with selected suppliers on price, payment terms, deliveries etc. The decision makers may evaluate each supplier on a set of agreed – upon attributes or factors. In Selection of Order Routine the mechanics of exchange of goods and services between a buyer and a seller is worked out. The activities include placement of purchase orders with selected suppliers, the quantity to be purchased from each supplier, frequency of order placement by buyers and delivery schedules to be adhered to by the supplier, levels of
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inventory needed, follow up of actual delivery to ensure it to be as per delivery schedule, and the payment terms to be adhered by the buyer. In this final phase a formal or informal review about the performance of each supplier (or vendor) takes place. The user dept gives a feed back on whether the purchased item solved the problem or not. If not, the members of the decision making unit review the earlier decision and decide to give a chance to a previously rejected supplier. For developing effective marketing strategy, a marketers need to understand not only the nature of business buying but also the buying behavior. Business-to-business customers range wide in their consumption of products. A few customers dominate followed by a long tail of customers with a comparative miniscule consumption (Hague, Paul (B2B International Ltd)). Selecting a supplier is one of the most nerve wracking, but crucial activities an organization must undertake. Suppliers will be delivering purchases, those that
the organization uses to produce the products they sell, and their indirect purchases, those that keep the business running effectively. When managers of organizations select a potential supplier, they are selecting a partner in business and hence will trust them to work in a professional and profitable manner. (Wakeham) The selection of a supplier in business-to-business markets is more complicated. Since people are buying on behalf of their organization rather than themselves, there is (at face value) a greater pressure to be objective and rational about their decision. In business-to business markets the buyers and specifiers may well know as much about the products purchased as the companies that supply them (Hague, Paul (B2B International Ltd)) and
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there is a limited scope of perceived benefits and emotional benefits being a part of product differentiation. In a business-to-business situation it is unlikely that just one person will make the buying decision. A specifier may test and approve the product; a production manager may run it through trials; a board of directors may impose an overriding structure on the source of supply; a buyer will almost certainly negotiate the price. (Hague, Paul (B2B International Ltd)) The organizational buying process may involve autonomous or joint decision making (Bhasin) by the group of individuals who form the buying centre of the organization and hence the marketing for business-to-business situations has a few challenges. 3.2 THE B2B BUYING CENTRE Is defined as a body of all the individuals or groups participating in the buying decision process and who have interdependent objectives and share common risks. Weber and Wind in 1972 mentioned that the buying center consists of five roles:
1. Users - those members of the organization who use the purchased products and services, 2. Buyers - those with formal responsibility and authority for contracting with suppliers, 3. Influencers - those who influence the decision process directly or indirectly by providing information and criteria for evaluating alternative buying actions, 4. Deciders - those with authority to choose among alternative buying actions, 5. Gatekeepers - those who control the flow of information (and materials) into the buying center. (Youram Wind and Frederik E Webster)
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Presently Initiators or the ones who identify the need and Approvers of purchases are considered in buying centre. (Hanson)
3.2.1 THE CORE OBJECTIVE OBJEC OF SUCH B2B BUYING ING CENTRES ARE:
Figure 3: A Buying Centre
3.2.1.1 NEGOTIATION
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Setting the terms of a contracts
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Persuasive skills blended with strong managerial and leadership acumen.
3.2.1.2 VENDOR IDENTIFICATIO IDENTIFICATION
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Obtaining g quality products at competitive prices
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Vendor selection using a set of criteria used in determining which suppliers the company will use is within the department's span of control.
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Consistent ongoing supplier evaluation.
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Building and maintaining good vvendor relationships.
3.2.1.3 DELIVERY RECIEPT REC
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Ensuring timely order execution at suppliers end.
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Optimizing the order routine.
3.2.1.4 COMPLIANCE
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With government and state laws that affect the procuring of goods and services.
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Internal policies of the organization.
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Adhering to budget guidelines and procedures.
3.2.1.5 PARTICIPATIVE DECISSION MAKING
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As it involves individuals across departments and hierarchical level.
Figure: 3 Elucidates the role of each entity of the buying centre in a pictorial fashion. 3.3 WHERE DOES AN INDUSTRIAL BUYING PORTAL FIT IN
Figure 4: Industrial Buying Portal Facilating Buying Process
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The existing portals are all targeted to being facilitators in final five stages of the buying stages which initiates with supplier search culminate into a purchase decision and also a post-purchase feedback. 3.4 THE E- CHALLENGES IN DIGITAL WORLD: Business buyers do not contact suppliers directly until 57 percent of the purchase process is complete. That means for nearly two thirds of the buying process, your customers are out in the ether: Forming opinions, learning technical specifications, building requirements lists, and narrowing down their options, all on their own, with minimal influence from you (Think Newsletter). Once a customer gets hit by these aimless arrows the healing process is even more difficult. In the digitals space today there is a huge possibility of miss-information and hoax. Regulating the companies information flow through proper and channelized portals is thus a prerogative. SUPPLIER’S DILEMMA: Now a day’s customers engage in this self-directed learning via the internet; thereby learning about products and solutions themselves is a function of increased budget pressure amid a stagnant economy (Think Newsletter). The ill informed customers have hardened expectations about what they want out of a supplier – and thus price becomes a dominating factor and there remains no room to teach them. This is one of the sole reasons that industrial-suppliers are skeptical towards e-commerce and stick to traditional ways. The challenge furthers with the fact that industrial goods manufacturers do not have proper details on the Internet. Although they are blindfolded to that idea that their absence on online media is a huge opportunity loss in terms of customer engagement and expanding businesses.
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PROBLEMS WITH THE CURRENT PORTALS: Most sites on the Internet today do not focus on building trust as part of an ongoing relationship with their customers (Hague, Paul (B2B International Ltd)) may it be Indian portals like industrybuying.com, or big pockets who are venturing into the business to business domain, like alibaba.com. Many Web sites or online directories like industrialproductfinder.com act merely as information directories and information is either not updated or incomplete. Sites like Shop3M act as self-service catalogs: If you know what you’re looking for, you can find and order the product or service. Such sites are commonly characterized by their crowded format, flashing banner ads and off-price promotions (Hague, Paul (B2B International Ltd)). The information on all these sites is a one way communication and do not give customers much information or help in making buying decisions. Some of these sites have help lines but those do not simulate a face to face interaction that is available in traditional mode of supplier selection. The few portals that are operational today, have limited awareness amongst the buyers. Not surprisingly, they have very few of their visitors and then again convert still fewer of them to purchasers. They suffer low customer retention and generate meager profits. Many companies have failed with such an approach to marketing on the Internet, primarily because they have failed to build trust (Hague, Paul (B2B International Ltd)). 3.5 THE CONFLICT OF CREATING A BRAND IN B2B MARKET (KUHN) The earliest signs of branding in Europe were the medieval guilds’ requirement that craftspeople put trademarks on their products to protect themselves and their customers against inferior quality. In the fine arts, branding began with artists signing their works. Brands today play a number of important roles that improve consumers’ lives and enhance
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the financial value of firms (P. a. Kotler). Powerful brands create meaningful images in the minds of consumers (Keller, Strategic Brand Management: Building, Measuring and Managing Brand Equity) with brand image and reputation enhancing differentiation and thus potentially having a positive influence on buying behavior (Gordon). Branding in consumer markets has been shown to increase a company’s financial performance and long term competitive position (S. Mudambi) . Much business-to-business (B2B) marketing strategists have claimed that brand-building belongs in the consumer realm (Lorge) . Collins argued that industrial products do not need branding as did Saunders and Watt who claimed that branding was confusing and added little value to undifferentiated industrial products (Thompson). It has also been claimed that the sales-dominated nature of the industrial marketing environment is so important that brands have no place in a B2B setting (Rosenbroijer) Others have claimed that the importance of branding in industrial contexts has increased (Rosenbroijer) and that brands can indeed provide a great deal of value in such an environment (Gordon), (S. D. Mudambi) In deciding between industrial purchase alternatives, the decisive factor can in fact be what a brand means to the buyer (S. Mudambi). In our study we have used Kuhn and Alpert’s modified Customer-Based Brand Equity Pyramid the small suppliers who cannot create individually create an image can come under
the umbrella online portal brand and create awareness and catapult their products to wider audiences.
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3.6 B2B VERSION OF KELLER’S BRAND EQUITY PYRAMID: (KUHN)
Figure 5: Keller’s Customer-Based Brand Equity Pyramid
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Figure 6: Kuhn’s Revised Customer Based Brand Equity Pyramid for B2B
Brand equity, according to Keller, is the effect that brand knowledge has on consumer response to the marketing of a brand, with the effect occurring when the brand is known and when the consumer possesses favorable, strong and unique brand associations (Keller, Conceptualising, Measuring and Managing Customer-Based Brand). The Customer-Based Brand Equity (CBBE) model identifies four steps which denote questions asked by customers, and represent a ‘branding ladder’, with each step dependent on achieving the previous one (Keller, Building Customer-Based Brand Equity). These steps consist of six brand building blocks, with a number of sub-dimensions (Keller, Conceptualising, Measuring and Managing Customer-Based Brand). To build a strong brand, the aim is to reach the pinnacle of the pyramid where a harmonious relationship exists with customers. Briefly overviewed, the first step of the CBBE model is to ensure the correct ‘brand identity’. Answering the first question customers ask about brands - Who are you? - The purpose is to create an identification of the brand, and an association with a specific product
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class or need (Keller, Strategic Brand Management: Building, Measuring and Managing Brand Equity). The initial step consists of the brand building block, ‘salience’. The second step answers the customer question - What are you? - by establishing ‘brand meaning’ in their minds, and linking brand associations with certain properties (Keller, Building Customer-Based Brand Equity). Two brand building blocks make up this step ‘performance’ and ‘imagery’. The next step is ‘brand response’ whereby the proper customer responses to the brand identification and meaning are elicited (Keller, Strategic Brand Management: Building, Measuring and Managing Brand Equity). This step is achieved with the ‘judgments’ and ‘feelings’ building blocks, and answers the question What about you? ‘Brand relationships’ constitutes the final step in the CBBE pyramid where brand response is converted to an intense, active loyalty relationship between customers and the brand (Keller, Building Customer-Based Brand Equity). Addressing the customer question of - What about you and me? - the final brand -building block and the pinnacle of the pyramid is ‘resonance’. Keller’s conceptual framework provides guidance in building, measuring and managing brand equity. While Keller claims that the model can be applied in a B2B context and a consumer environment (Keller, Strategic Brand Management: Building, Measuring and Managing Brand Equity) it does not appear to have been tested for industrial brands. The similarities and differences between business and consumer markets have long been debated with organisational buyers found to differ in many ways (Hutt) (P. Kotler) (S. Mudambi) (Thompson) (Wilson), suggesting that the application of such a model in a B2B setting will pose challenges.
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But the Keller’s model fails to take into consideration the equity of manufacturers’ brand names in contrast to individual product brands. Keller claims that brand elements can enhance brand awareness and facilitate the formation of brand associations (Keller, Strategic Brand Management: Building, Measuring and Managing Brand Equity) thus they perform an important role in the CBBE model. Typically however more research is conducted in a B2B market, as the purchase involvement is greater. The implications for branding appear to be that organizational buyers care little about product slogans or brand names, but more about the company and its product offering. Kuhn also points out the importance of customer referrals and the experience of other users in a B2B environment, an indicate that monitoring other councils could be a mechanism for decreasing risk. Under his imagery brand building block, Keller identifies user profiles and purchase and usage situations as important categories, which was confirmed by these Kuhn as well. (Kuhn). In Kuhn replaced the credibility sub-dimension of the brand judgments by the sales force, as it is a major brand-building tool in a B2B context. Sales representatives are product ambassadors who have the opportunity to form relationships with industrial buyers, as direct selling is ongoing (Lorge). Purchase choice therefore can depend not only on an assessment of the product’s functional benefits, but also the company’s people (Gordon) (Michell P., Industrial Marketing Management). These perceptions play an important role particularly in high value purchases, where the differentiating factor can be the partnership capabilities of the firm preand post-purchase (Lorge) (Thompson). In the organizational purchasing environment investigated, respondents identified with the manufacturer brands and spoke about relationships with company representatives rather than products, indicating some revisions of the Keller model are required.
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3.7 THE BENEFITS OF BRANDING IN INDUSTRIAL MARKETS Branding in an industrial market must be perceived to convey the benefits to various stakeholders for companies to financially invest in it. With regard to the company investing in branding a number of benefits have been identified. (R.J) Found branding had a positive impact on the perceived quality of the product or service. It was also perceived as providing a product with an identity, a consistent image and as conferring uniqueness (Michell P., Brand Values Related to Industrial Products). A strong brand will be demanded and allow companies to demand a premium price (K.), (L.). Due to the demand of the branded products, competitive products will be rejected (K.), (L.). However, the assumption that competitive products will be rejected suggests that there is only one strong brand in the market or the cost of purchasing the other brands is significantly higher which may not necessarily be true. It is suggested that when products or services are branded, communications will be accepted more readily (Michell P., Industrial Marketing Management), (K.), (L.) Once a strong brand has been developed it can be built upon and developed (K.) found that positive evaluations for one branded product category were transferred to another product category of the same brand. A strong brand may increase the company’s power in the distribution network and open up opportunities for licensing (K.); (L.). When a company has a strong brand the company itself may be worth more if sold (K.). The marketers of an industrial brand may perceive their customers to have an increased level of satisfaction (K.) and to be more loyal (McQuiston D.H.).
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With regard to industrial buyers research has found brands to convey a number of largely intangible benefits. As a brand is essentially a summary of associated values it can increase the buyer’s confidence in their choice (K.) (Michell P., Industrial Marketing Management). It increases the level of satisfaction the buyer feels with regard to the purchase (K.) and provides comfort and the “feel good” factor (S. Mudambi). Brands are useful for reducing the level of perceived risk and uncertainty in buying situations (S. Mudambi). The buying company’s product may gain legitimacy through the incorporation of a branded product and being associated with a prestigious company. 3.8 THE PROBLEMS WITH B2B BRANDING Despite the number of benefits a strong brand can convey to both the seller and the buyer it is surprising that more industrial companies are not utilizing it. There are a number of factors which may be contributing to B2B companies having reluctance to brand. 1) Lack of Academic Research - Whilst there has been a vast amount of research into branding in a business-to-consumer context. There has been little research into branding in the business-to-business context (L), (L.). The fact that there is little academic research means that the research in B2B branding has dubious theoretical underpinnings (L.). As a result companies will find it difficult to implement any information they do obtain on B2B branding. 2) Perception of Branding by B2B Buyers - Branding in the B2B context is perceived as being gimmicky (K.), B2C brands which have an emotional aspect are perceived as irrational in the context of rational decision making in a B2B context (Rosenbroijer).
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3) Impracticality of B2B Branding - It has been suggested that the practice of branding industrial products is impractical due to companies having thousands of products (Bendixen M.). 4) Financial - Building brand equity involves a long term financial investment that not all companies are prepared to make. In the current economic climate making a long term commitment often at the expense of short term business profitability is not a sacrifice that many B2B marketers would readily make. This would potentially lead to financial problems for the company (J.M.T) Academic research needs to develop knowledge about branding in a B2B context in a cohesive coherent manner in order to eliminate these problems and enable B2B marketers to make informed decisions about their brand strategy. 3.9 BRANDING IN THE DECISION MAKING PROCESS Branding is essentially used to convey a set of values to potential buyers which may be considered at various stages of the organizational decision making process including the determination of the characteristics of the product or service, the search for potential suppliers and the evaluation of proposals (B) In addition to understanding the process of the decision making (L) state that it is also necessary to understand the structure of the decision making unit and the evaluative criteria used to make purchase decisions. It is also necessary to understand the characteristics of the purchase situation and the nature of the organizational buyers. An understanding of these aspects of organization buying will enable marketers to determine how branding can be successfully implemented.
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4.0 RESEARCH DESIGN & INFERENCE To answer research questions we conducted a survey. Convenience sampling technique was used to get responses from 63 respondents. The instrument (questionnaire) was administered face to face as well as sent through an electronic medium. Participants from various sectors took part in the survey. They were involved in various roles in the buying centre of respective prganisations. The responses were traced to be in the following pattern.
PARTICIPANTS FROM Manufacturing, Equipment and Appliances, Transport, Education, Consultancy, Media, Oil and Gas, Engineering, Power, Service, Defense Manufacturing, Banking and Finance, Public Utility, Electronics Telecom, Event Management, Shipping Industry, Healthcare, Information Technology, Nutrition and Health, Insurance & Marketing, Commodity Exchange, Engineering & Construction, Retail Industry
Figure 7: People involved in different roles
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We received sufficient responses from each group of decision makers who are are pars of buying centres of various organisations (Youram Wind and Frederik E Webster) like: 1. Users 2. Buyers 3. Influencers 4. Deciders 5. Gatekeepers 6. Initiators, and 7. Approvers While making an industrial purchase, the process begins with recognizing the need for buying a product (Faris) and ideally this is where the industrial buying portals can be of good use. We asked our participants on frequency of buying situations. While NewPurchases and Repeat Buys were much frequent, Modified Re-buys occurred sometimes or once on a while. This indicates that industries seek newer vendor and supplier loyalty is not that common. This is often due to the reason that in industrial purchases decisions are rational than emotional. Thus as Kuhn’s Revised Customer Based Brand Equity Pyramid for B2B suggest it is the partnership solution which stays at the apex of the pyramid than the brand-resonance which is in the consumer centric original model of Keller. Table 1: Frequency of Occurrence of Buying Situations
New Purchase Modified Re-Buy Repeat Buy
Almost always 13 2 12
Frequency of Occurrence Once in a Sometimes Rarely while 14 6 4 18 11 6 12 9 4
Never 0 0 0
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A per respondents, in the process of searching vendors, the time involved in the entire process of buying was found to be the biggest constrain that arise among different parameters that effects the choice of vendor. Followed by this is delivery of goods and credibility of suppliers. This portrays the essentiality of time in planning exercise. Further all the points that are elucidated here are the gaps in the existing system of traditional path of supplier selection and by providing a solution that will facilitate in making them easy will be the differentiation or USP for online portals.
Figure 8: Problems faced during Vendor Searching
The basic information about suppliers, past alliances, reviews by buying companies, offerings, product line can be mentioned in the micropage created foe every supplier. Typically once the quality suppliers are decided, the buying organisation obtains the proposals by sending enquiries to the qualified suppliers. Online buying portals can themselves facilitate the process by making it quicker. Mainly for low value items where
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installation and commissioning is not required. The
process of getting the suppliers
proposal can be through a standard online form. Technical drawings and elaborated specifications can be uploaded on the portals from the suppliers end and visibility can be restricted through supplier approval. Hence when a buying company places its interest and uploads its specification, the supplier can decide to make the documents visible to them along with submission of the Supplier Proposal Form. Also the system can be integrated with SMS and mail alerts to ease make the process swift. A supplier`s proposal submitted by the supplier to the buying organization includes the following. a) The product specification (supplier’s deliverables) b) Price c) Delivery period d) Payment terms e) Taxes and duties applicable f) Transportation cost g) Cost of transit insurance h) Any other relevant cost of free service provided. For purchase of routine products or services, phases 4 and 5 may occur simultaneously, as the buyer may contact the qualified suppliers to get the latest information on price and delivery periods. Thus a purchase decision can be made quick and easy.
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For technically complex products and services, a lot of time is spent on analyzing proposal in terms of comparisons on products, services, deliveries, and the landed costs (which includes the price after discount plus excise duty, sales tax, freight, and insurance). For such products, since the proposal form is electronically entered and the format document is standard, the portals can provide an interface for the buying company for analysis and comparison of all proposals received. The tabulations and comparative data of proposals will reduce the internal delays that are caused in organizations of data collation and preparation of an MIS report. We had our buying centre representatives -How do you judge that the price supplier is offering is the right price? To which we received the following responses
1. Comparison with other quotes received
45%
2. Specifications requirements, other terms and conditions are met
32%
3. Check for websites / directories which show price
24%
Thus we know that comparison of quotations is a must have to build a sustainable competitive advantage. This analytics sheet can be printed, discussed analyzed. At this stage the buying companies could call for Skype demo and video-conferencing with the technical team of the supplier’s side and this will give the face to face interaction that many need to build the trust factor. In the next step of supplier evaluation Quality is a determining factor much over and above price. Reliability here has been mentioned to be second important parameter. Delivery and
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Transparency in operations are of similar significance. Quality is what the supplier offers and the portals may have no role in individual product quality. But it can suggest alternate vendors who have similar products based on the location (captured through PIN code matching) of the supplier and buying company. This will add to reliability and transparency that the portals is offering to both side. To ensure quality we asked our respondents: How do you determine if the vendor is selling fake goods? We ask for samples and take trial tests Compliance to regulatory standards are mandatory Both the above We believe in what our suppliers say
8% 24% 57% 11%
Thus the portals need to have an additional service in the supplier’s micro-page or store where they can upload the certificates for regulatory approvals, registrations with authorized bodies and accreditations received to ensure the quality of suppliers on their page and elimination of any fake manufacturers. Also the online portals should have a regulation on the suppliers that are parternering with them. Table 2: Parameters of Supplier Evaluation and their importance
Quality Reliability Delivery Transparency Price Availability Flexibility Order Routine
Very Important
Somewhat Important
Neutral
Not Much Important
Not At All Important
35 27 24 24 22 18 9 7
1 8 10 7 10 11 16 16
1 2 3 6 5 8 10 10
0 0 0 0 0 0 2 4
0 0 0 0 0 0 0 0
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The portals also need to integrate the option of sample testing or trial testing that a buying organization can request and the history of trials and samplings requested by different buyers can be maintained in the portal. The buying companies could write reviews of the products in this area which would be available to the next organization that is interested in buying. Alos the contact details of the previous alliances can be made available to the buyer with an approval from suppliers. While making a purchase decision, Price and meeting Product Specifications were the most important criteria. Some of the organizations mentioned about giving to the lowest bidder that met the product specifications, while others needed aggressive negotiation with the supplier.
Figure 9: Drivers of Purchase Decision
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Finally we aked our participants what they seek from an online buying portals here again the Quick access to quotations for comparison was the most popular answer followed by Multiple payment options and User friendly and easy to search. The online portals should hence have an option of searching the suppliers by Product, Location, Payment Options to make the process swift and hence sustain in the new venture.
Figure 10: Perceived Components of a Good Online Portal
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QUALITATIVE RESPONSES: Reasons to Refrain From Online Portal In our survey we asked people for reasons why they refrain from online shopping and suggestions to better. We came up with the following unique answers: 1) Generally, either part / full payment of material / service is done after delivery; commissioning and satisfactory tests are performed. Online portals need to integrate the payment process with delivery importantly for machineries and equipments. 2) Building trust: The material must be warranted as per standards. Guarantee of certain high value materials should be provided. 3) Face to face negotiations are preferred due to the high cost of material / service. A well informed help-line service or call back service could help in establishing trust and relationship with users. Speaking to vendors instills confidence and helps in negotiation. This is not available in any online portal and needs to be built. 4) The technical discussions, drawings, etc are mandatory to reach at an understanding. These should be made available through video-conferencing and Skype demos on the sites with technical team to make the model robust and sustainable alternative, else there stands no differentiation from yellow page/ directory. 5) Online portals are essential in case of low density material and more of such products should be made available. High density products are hard to be evaluated over online. Portals need to integrate and provide an interface through their systems to sustain. Else these industries would prefer to go conventional way.
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6) The online portals ease the process of finding the right suppliers but there would be suppliers that you have never met or dealt with in past hence the credibility of the portals needs to be built first. Just like ordering consumer products from Amazon or Flipkart, one does not consider the dealer/ supplier but rather trusts the commodity commerce brand of Amazon or Flipkart, here also the brand has to be built by promotions in trade shows and advertising in related magazines. 7) Sometimes the local vendors give extra discounts due to the goodwill and to kill competition. Also it is better in terms of flexibility wherein one can change the order or get quick service as per requirement. 8) Lack of government regulation is the main reason for the people to refrain using the online portal sites. As there is no structured regulation, it's very easy for the manufacturer/supplier to dupe the end user 9) Some of these products are of vital importance; they all need to conform to Indian/International Standards. This is nonnegotiable and in such situation it may become futile to compare products which are designed based upon same guidelines. The portal may not add any value to the buyers in such cases. 10) The Indian mindset still believes in checking (touch and feel of things) the products they want to buy physically & personally. The approach will change but that will take time. 11) Lack of awareness about such portals.
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12) Fair purchasing practices that some companies follow, government companies have their rules for procurement giving every vendor chance to participate etc. 13) Un-reliable internet connection is a major setback. 14) Inadequate stocks or sudden stock-outs occur even in consumer goods. In industrial products this would not be acceptable. 14) Unacceptable for government, military, public sector organization due policies, procedures and standard protocols that need to be followed. 14) Providing reward points or frequent purchaser benefits could add value and differentiate the portals. 15) Choices of brands and alternatives need to be provided. IMPLEMENTATION OF KUHN’S MODIFIED CBBE Kuhn et al. (Kuhn) examined the applicability of Keller’s (Keller, Strategic Brand Management: Building, Measuring and Managing Brand Equity) CBBE pyramid to a B2B context. Based on Kuhn’s findings we provided the benefits that online portals can offer in the brand building exercise. 1. Evaluating the equity of the corporate/manufacturer brand is more relevant than measuring the equity of individual products or product lines.
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BENEFITS OF ONLINE PORTAL: Some of the suppliers of industrial products are not large brand / brand players yet they provide quality and premium service. Such suppliers will be able to do their branding in the micropage that the portals provides. 2. Relationships with B2B representatives are more important than with product brands BENEFITS OF ONLINE PORTAL: Implementation of Skype demo and video conferencing with suppliers, technical helpline, comaparative analytics of quotations, information sharing will create a reliable and transparent model of operation. 3. Brand associations are mostly about product performance features. BENEFITS OF ONLINE PORTAL: The reviews and sharing of ppartnership deatsls or uploading regulatory accreditations will ensure performance. 4. The purchase process is more rational than emotive and therefore feelings are not so relevant BENEFITS OF ONLINE PORTAL: The price being a key factor in purchase decision, the portals will have suggestions on suppliers to the buying company facilitating and ensuring that the purchase is value for money.
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5.0 CONCLUSIONS While the concern of working with unknown vendors was an issue from user’s side, the brand equity of the online portal was also questionable. Further we understood the buying behavior, needs and awareness of the customers or the purchase departments of large and small organizations. While 89% of participants said that it will be convenient to have a online portal for indistrial products. Only 37% had used the existing portals or were aware of them. Thus as much as the online portals need to modify their operations as per our research, they also need to be present in trade shows and advertise in the B2B magazines. Once the number of clicks on the portals will increase, there will be an indiacation of traffic on the portals. But this traffic will be converted to partners and leads with effective functioning of the system. Thus operations and advertising needs to go hand in hand. Our study elucidates the different concerns and objectives at each stages of the buying cycle that will ensure them provide a differentiation over the traditional way of functioning. If a robust and sustainable model is built, the portals will be able to replicate the ecommerce model. The model will ensure revenue as the value of a ticket is a thusand times lower in the commercial purchase than the value of one order business to business market.
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APPENDIX: A: QUESTIONNAIRE
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