The evolution of branding, the impact of commoditisation and the relationship between marketing and sales were the predominant themes to emerge from the first B2B Marketing Industry Roundtable event in collaboration with Wilson Harvey.
The event was organised to gauge the views of senior marketing decision makers in the IT sector of current trends and themes in technology marketing, and providing an insight of how the future may evolve. This is meant to provide readers with a snapshot of broad discussions.
The panel agreed that the importance of branding had actually increased due to commodisation of products, particularly in the hardware sector.
Differentiating ourselves from competitors no longer has anything to do with performance. Every vendor’s hardware performance is essentially the same.
IT buying is like walking into a pub and buying a pint of lager: to all intents and purposes the lagers are very similar, but there is still a lot of loyalty to particular brands.
There are so many products in the marketplace, how do we differentiate between them? Something has to trigger in your mind to make you go to this vendor or that vendor, and a name that you’re familiar with is certainly an example of this.
The brand is more than just the offering; it is the relationship with the customer. This is where the value lies. But branding doesn’t directly help you sell anything. What it does do is help people invite you to the table so they can consider your products.
Before the IT industry started advertising, everyone had brands, but no-one was working at developing them. IBM got where it is by growing organically, and ultimately becoming all-powerful. This was nothing to do with the branding department. But as things have been commoditised, the relative importance of the product has declined as the competition has caught up.
Whilst there are significant differences between business and consumer marketing, the panel acknowledged that there is much which IT companies could learn from the B2C sector.
These days companies have to convey what their company is about. At the other end of the spectrum is Nike: it doesn’t manufacture its products, it just manages the brand. That’s the direction which IT may ultimately go, though we’re a long way off from this.
In B2C, it is the marketing which delivers, whist the sales people stack the shelves. In B2B, marketing is the support function, it’s the sales people who shift the units.
There is a blurring between B2B and B2C: Dell has a big presence in the B2B market, but I daresay it’s largely as a result of advertising to the consumer market.
Dell’s marketing gets into business buyers’ heads in an insidious way. I’d say that 20 per cent of their business is consumer, and 80 per cent is corporate. It spends most of its B2B budget on the sales force and on websites. Most of Dell’s advertising is aimed at consumers, but the ads look very corporate.
The essence of marketing is understanding your customer. There was a phase in marketing where everyone tried to be Xerox but cheaper. Surprisingly Dell isn’t cheaper, but it worked out that people will pay a premium to get their product faster.
The panellists suggested that there is little to indicate that the traditionally fractious relationship between the marketing department and the sales function is easing. At best mild distrust, and at worst an active animosity, appears to be entrenched.
I view sales and marketing as diametrically opposite they have a very different focus, and work best as separate disciplines. So why do many companies have separate directors of sales and marketing?
Marketing departments tend to like looking long term, but should spend more time looking short term. Sales departments tend to like looking short term, but should spend more time looking long term. I’ve worked in several companies where marketing reports into a sales director and it doesn’t work. You generally see marketing people talking to sales people, but not sales people talking to the marketing team the marketing department then evolves into a pseudo sales support. This means you lose the ability for marketing to act as the rudder for the business. It’s generally better to have a peer-to-peer relationship between marketing and sales.
We have two types of sales person in Computacentre: hunters and farmers. The farmers have no interest in marketing proactively, only in milking productive accounts. The hunters see the relevance of marketing strategies for winning new business. We are tying to marginalise the farmers and promote the hunting team in terms of salary rewards.
There was a strong sense of cynicism regarding the level of appreciation for and understanding of marketing amongst board-level staff.
Only the marketing department is ever asked, ‘What have you done for the business?’ In many companies, the board looks on marketing as a necessary evil and tolerates it. But in many companies marketing isn’t delivering the value which it should be.
It depends on the CEO as to whether they believe in brands. Some don’t: my last CEO was essentially an accountant.
The marketing budget is under more pressure now you have to justify your spend at the end of each month. Companies are going for more easy wins rather than focusing on brand building.
Budgets have increased but so have responsibilities we’re being asked to do more with more, eg. managing the website and emarketing.
The panel believed that strong creative ideas in terms of communication can be effective and make up for lack of strategic emphasis in the short term, but the suggestion was that sooner or later a failure to address long term marketing direction would come back to haunt the organisation. The panel also pointed out that real creativity can be used by companies as a way to reach their market.
Success of a campaign is not only dependent on the ad or communication the proposition and product or service has to work also. It all goes together there has to be substance to the message.
We are finding that the focus of marketing is shifting to focus on benefits, and this is creativity. Some software vendors are leaving the product message behind. But this throws up the danger of the potential customer thinking: wow, what a cracking advert, but what is it for?
Creativity in B2B is about trying to reach the market in different ways. We need to reach out in a more cost-effective way than through advertising. And there is little point doing trade shows because all you do is spend your time speaking to other people in the industry. But there is still a place for advertising, if it allows you to reach your target market.
IT companies have to adopt a broad approach to their marketing, targeting a variety of stakeholders within the organisation such as the CEO, the IT director and middle management, according to the panel.
You need different messages to target the different levels within an organisation. You must sell the brand to the CEO, but the people you actually need to work with are at the middle level. It’s about multi-tier messaging. The bigger the sale, the higher up the tree you must go.
There has been a shift in emphasis at my company previously we targeted middle management, but now it’s the people at the top. But it’s hard to get sales people to focus on senior personnel, because they don’t think they’ll be able to contact them. As a result, traditionally they haven’t even tried.
The roundtable paints a picture of an industry that is conscious of its rapid rate of change, and that of its clients’ demands, and anxious to ensure marketing evolves to reflect them. The emphasis on branding was particularly significant and continually referred to, with panellists acknowledging that this is likely to become an ever more critical as more and more companies become service providers, rather than product manufacturers.
Perhaps what is worrying from this discussion, however, is the apparent failure of most organisations to understand the importance of marketing, particularly in its relations with the sales functions. As long as organisations continue to misunderstand and under-appreciate marketing, they will fail to maximise its potential or reap the rewards.
Tim Moyle, distribution arm: vendor commercials and marketing, CCD Gary Owen, head of product marketing, Fujitsu Siemens David Millican, marketing and corporate communications, Xerox UK Robert Gibb, corporate communications manager, Systems Union Jonathan Himoff, CEO, Magenta Technology.
