July 1st, 2009
Matthew Harrison, B2B International’s Director of International Operations, was featured in Marketing’s recent special issue on emerging markets.
Drawing upon his time spent working in our China office and using his extensive experience gained through managing research projects in such far-reaching geographies as Russia, Sri Lanka and Tanzania, Matthew offers invaluable advice to Western companies looking to establish or build a presence in any emerging B2B market. The full published article is as follows:
Some years ago, the chief justification for Western companies entering emerging markets was to establish low-cost manufacturing operations.
However, in the past five years there has been a revolution in strategy as the purchasing power of emerging economies has grown and these companies have now shifted their focus from supply to demand.
The casual observer watching a Muscovite sip a Starbucks cappuccino could be forgiven for thinking that customers in developing markets want Western products in Western packaging, promoted in a Western style at Western prices.
While many Western brands have developed a cachet across the developing world, the real picture is more complex, particularly in B2B markets. There are six factors that must distinguish B2B marketing in emerging markets.
The first is the importance of conveying higher product quality. In developing markets, companies’ product requirements often place less emphasis on product durability and quality of materials than in Western countries, putting greater importance on a lower cost. This is a huge challenge to Western companies seeking to enter the market, as they may find it hard to convey the value of the technical superiority of their product.
Second, when it comes to the services associated with a product offering, buyers in emerging markets are frequently as demanding, if not more so, than Westerners. For example, branches of Subway in China often take telephone orders for their sandwiches, and deliver these free of charge to customers’ homes or workplaces. A service such as this would be seen as extravagant in the West, but is often a basic requirement in Beijing and Shanghai, and no economic value is attached to it.
The third factor is the importance of local presence. Western companies entering developing markets often assume that the prestige of their brand excuses them from establishing a local presence. This is not the case. While customers in developing countries may be willing to pay more for the quality, prestige and technical know-how of an established Western company, all these advantages must be in addition to, not instead of, the basic requirements of spare-parts availability, access to technical support and face-to-face contact with local-language speakers.
Then there is promotion. If a Western brand can deliver on its promises, its name and values can prove a huge advantage and allow extremely large margins to be achieved. This is particularly true in consumer markets, where products such as luxury clothing and perfume brands frequently collect higher premiums than they do in the West.
In B2B markets, Western brands carry a particular weight if they can boast international accreditations such as ISO or a prestigious client list. These demonstrations of a company’s aptitude are often vital.
Fifth, relationships are key. As developing markets open up, buyers are only gradually becoming comfortable with dealing with people and companies they don’t know. Relationships are widely used as a substitute for brand when it comes to verifying provenance. Most B2B offerings also involve repeat purchases or after-sales support, and this makes attendance at events, face-to-face contact and local language capability essential.
Lastly, market research is vital. This is commonplace among Western companies, and the necessity of obtaining independent information is even more critical when it comes to operating in foreign markets. Not only do many Western companies lack insight into the developing markets, but cultural barriers and a lack of familiarity between managers in different locations can often mean that the exchange of information within international companies is wanting.
The most successful multinationals conduct frequent research across geographies, challenging their own thinking as well as the flow of information within their companies.
More of Matthew’s white papers on developing markets are available on our website:
Posted in
Market Entry, Emerging Markets, BRIC, Marketing, Market Intelligence, White Papers, Matt Harrison, Market Assesment |
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June 30th, 2009
The Association of National Advertisers (ANA) has found that two-thirds of marketers have, in response to the current economic environment, shifted their emphasis to more short-term strategies. These were some of the findings of a Brand-Building study of 129 marketers, which took the form of an online survey.
Yet in spite of the short-term tactics, marketers are already planning increased activities for when the recession ends. 68% will be increasing their media budgets, 41% increasing social networking/word-of-mouth, and 40% allocating more money to innovation and testing/learning. Almost three-quarters of respondents admitted that they would ideally like to implement these additional marketing activities three to six months before the recession ends.
The survey found that few marketing initiatives had been postponed or cancelled outright, but many had suffered from reduced budgets. Those activities that are being maintained during the recession include:
- Research and development (47%)
- Public relations (42%)
- Innovation/test/learn budgets (33%)
- Promotion activities (33%).
A number of activities have been increased over recent months, including:
- Pricing deals (47%)
- Social networking/word-of-mouth (26%)
- Public relations efforts (23%)
When compared to the results of previous surveys, many traditional media channels have suffered:
- Television (down from 80% in February 2007 to 64% in April 2009)
- Magazines (down from 67% to 51%)
- Radio (down from 36% to 30%)
- Outdoor (down from 35% to 26%)
- Newspapers (down from 36% to 19%)
These results are fairly representative of current sentiment in the wider marketing community. Many organizations are shying away from traditional media and focusing on online opportunities. Indeed, a recent survey by B2B International showed around half of marketers planning to increase their e-marketing spend in 2009, with many stating that online marketing had already proven itself to be a successful strategy in the face of recessionary pressures. More than a quarter were planning increases in their PR activity. On the flip side, around half planned to cut expenditure in the more traditional areas of tradeshows/events and magazine advertising.
Click here to read our white paper on Marketing Strategies in a Recession.
Posted in
Business Decisions, Budgets, Commercials, Marketing, Recession, Advertising Research |
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June 26th, 2009
They say that the customer is always right. But how exactly do you define a customer? Recent protests by British university students about the quality of the education they’re ‘purchasing’ have caused Carol-Ann Morgan to reflect on the lessons we can all learn in a wider business context.
Who would have ever thought it? …Students protesting about not enough teaching classes? However, this is exactly what has recently been seen at a number of well known UK universities, and reported in the national press. Thinking back to the days of my education, most students breathed a sigh of relief at the cancellation of any classes and headed for the nearest place of recreation. The recent actions from some students raise questions about the shift in students’ attitudes and behaviours related to their educational experience.
Higher education has undergone significant changes in recent years. Many of these changes have impacted directly on the perceptions of students themselves; not insignificantly the requirement for them to pay fees. This has prompted discussions within the sector about the positioning of the student as a “customer” or a “consumer”. It can, and has been argued that the term “customer” is not appropriate for the field of education as the relationship is completely different to that of the conventional commercial buyer/seller experience. The successful attainment of an educational qualification requires mutual investment from both sides of the equation. This said, many academics have directly observed a shift in student attitudes and behaviours in favour of the “customer” positioning; most recently in the very public protestations by students about both the quality and the quantity of the educational “product” they feel they have purchased.
Whether or not we agree that an educational qualification can ever be thought of as a “purchased” product given the nature of the necessary relationship between the parties involved, the student protestations serve to remind us of two things. Firstly, the importance and power of the voice of the customer, consumer or service user (by whatever name we choose to use), and secondly, the perceived value for money of the product. The students’ action was an open demonstration that their expectations are not being met as far as the delivery of the course is concerned, and that they would like to place the issue on the management radar screen. Customers in commercial markets may simply switch to use competitor suppliers.
Reputations take time to build, and taking our eye off the mainstream product, from which these reputations have been built, can have disastrous effects. Customers are generally unconcerned about internal operational or financial issues which can impact on the quality or delivery of a product to them; their satisfaction is rooted in expectation and direct experience. Taking care of our customers not only enables us to respond with offers and services which meet current and future needs, it also serves to protect the reputation of the company by ensuring we have a loyal base of advocates willing to spread the word – a valuable source of free PR.
B2B International offers an innovative student satisfaction package. Click here to read more about it.
Posted in
Universities, Customer Insight, Student Satisfaction, Education Research, Customer Satisfaction |
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June 24th, 2009
Not every industry can boast strong growth this year. And within each industry sector, not every geography will have experienced a great 12 months. Yet we are pleased to report that the UK market research industry has this year grown by an impressive 6.2%.
According to the Market Research Society’s (MRS) annual survey, the UK market research industry – the second largest in the world – is now worth an estimated £2.16 billion (2008 figures), up from £1.8 billion in 2007. Meanwhile revenue generated from international research grew by a remarkable 12.5%.
The 6.2% increase over the past year compares extremely favourably with revenue growth of 2.3%, 2.4% and 2.5% in 2007, 2006 and 2005 respectively.
Of course, there can be no guarantees about the sector’s growth for 2009. Yet market research – which is arguably even more vital to ensuring the survival and growth of companies, across all industries, when times are hard – has, unsurprisingly, proved itself to be “relatively resilient compared with other disciplines in the marketing services sector,” during previous downturns, according to The MRS Director General.
The news that international research is experiencing such an upsurge is pleasing for us at B2B International, yet presents no real surprises. Having conducted b-to-b research across the world for many years now, we have experienced first-hand the increasing desire of many clients to compete on a global scale. With a growing presence in Asia and the Americas over the past few years, B2B International is now even better placed to serve UK clients looking to research international markets.
To find out a bit more about our international market research services, click here.
Posted in
Market Research UK, UK, Global Research, International Market Research |
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June 23rd, 2009
Received wisdom has always suggested that strong brands will withstand a recession. The argument goes that in a recession there is a flight to safety and strong brands represent safety.
An interesting study carried out amongst consumers in the US suggests exactly the opposite. A half of all the people who had previously been loyal to a brand appear to have reduced their loyalty or defected during 2008. They are switching to the value brands offered by major supermarkets.
This raises the question, “will the same thing happen in business to business markets?”.
There is a possibility that it will not – at least not in quite the same way. Supermarket brands have now become some of the most trusted in their own right. For a number of years there has been a general migration to supermarket brands as people have recognised that the products in the supermarket packaging are quite probably made by the same companies that make premium brand products that cost 30% more.
Things are slightly different in industrial markets. The closest you get to the “supermarket brand” in industrial markets is usually referred to as a generic brand, a Chinese brand, an Eastern European brand etc. In fact, the word “reputation” is used just as often as brand.
However, it would be foolish and naive to think that business to business buyers and specifiers are slavishly buying products from their favoured suppliers at any price, without looking around. In the heady days before the recession it was not untypical to research a market and find that only 20% of companies were “price buyers”. Today it would be unusual to find less than 30% price buyers in any business to business market. The shift to value is occurring everywhere.
Brands left to ponder price of loyalty
By Andrew Edgecliffe-Johnson in New York
Published: June 22 2009 03:00
Big brands’ best customers have been defecting in droves since the beginning of the US recession, according to a study. By this year, more than half of a typical US brand’s most loyal shoppers in 2007 had switched to rival products.
A two-year analysis of 685 grocery and pharmacy-stocked brands, using data from 32m consumers’ supermarket loyalty cards, found that in 2008 the average brand lost a third of its formerly highly loyal customers.
The study will alarm packaged goods groups, as the most loyal customers - those choosing one brand for more than 70 per cent of their purchases in a category - should also be their most lucrative.
"Defection is top of mind for brand managers now because they’re the most profitable customers," said Eric Anderson, associate professor of marketing at Kellogg School of Management, Northwestern University.
"Price and promotion have become so salient at retail, that what we thought was the loyal customer can be moved with discounts," he added.
Past recessions have seen similar defections from top-tier national brands to stores’ private-label goods, Mr Anderson said. Academic research showed that customers could be quickly persuaded to switch by a cheaper price but took far longer to switch back.
The study was conducted by the CMO Council, which represents chief marketing officers, and Catalina Marketing’s Pointer Media Network, which has equipment in 25,000 stores analysing buying behaviour.
Catalina can provide a two-year anonymous purchasing history on individual customers. Brand managers and retailers who had seen the data had been startled by it, said Todd Morris, senior vice-president at Catalina.
"They’ve always known there was churn but could never put their finger on how big the issue is."
The study comes as marketers are leaning more heavily on research and on targeted advertising, as they seek to improve on the "spray and pray" approach of mass media marketing formats, such as 30-second television advertisements.
The Financial Times Limited 2009
Posted in
B2B Marketing, Business To Business, Value, Customer Retention, Economic Downturn, Branding |
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