B2B versus B2C Marketing - Major Differences Along the Supply Chain of Fast Moving Consumer Goods (FMCG)

  Business to Business Marketing 0309414 /  1

Contents

1.  Introduction  2

2.  Fast moving consumer goods (FMCG)  2

3.  The supply chain and B2 B marketing  2

4.  PEST-Environment  3

4.1.  Political / legal influences on B2 B and B2 C markets  4

4.2.  Economic influences on B2 B and B2 C markets  4

4.3.  Social influences on B2 B and B2 C markets  4

4.4.  Technological influences on B2 B and B2 C markets  5

5.  The marketing mix  5

5.1.  Pricing strategies  5

5.2.  Promotion  5

5.3.  Place  6

5.4.  Product policy  8

5.4.1.  Branding strategies  8

5.4.2.  Goods on B2 B and B2 C markets along the FMCG value chain  9

5.4.3.  Packaging  9

6.  Competition on B2 B and B2 C markets  10

6.1.  Competition on B2 B markets (SCHWARTAU example)  10

6.2.  Competition on B2 C markets (SCHWARTAU example)  10

7.  Conclusion  10

  Bibliography  12

  Appendices  14

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1. Introduction

This work identifies, analyses and evaluates major differences along the supply chain between business-to-business (B2B) marketing and consumer marketing (B2C) in terms of companies involved in the production and trade of fast moving consumer goods (FMCG). This work focuses on the marketing-mix concept, external aspects of marketing and examines aspects concerning the competitive environment.

This work mainly focuses on marketing activities along the supply chain of the brand SCHWARTAU. SCHWARTAU is a brand of food products (marmalade) by the company SCHWARTAUER WERKE GmbH. The company is located in Bad Schwartau, Germany and sells its products all over Europe with focus on Germany and mainly other Western European countries.

2. Fast moving consumer goods (FMCG)

FMCG is the term c ommonly used for products that are sold in high volume. FMCG are frequently purchased by customers. Examples would be food, hygiene products or cleaning supplies (http://www.inventoryops.com/dictionary.htm).

In terms of B2B marketing, marketing activities concerning FMCG would be mostly industrial marketing. An overview over industrial marketing and investment goods marketing as areas within B2B marketing is provided in the appendix (Figure 1).

3. The supply chain and B2B marketing

In order to carry out a comparative analysis it is important to determine where in the supply chain B2B marketing ends and B2C marketing begins. The simplest approach would define B2C marketing as all activities accomplished by the organisation selling goods or services to the consumer. A more sophisticated approach would make the separation earlier. When the product is already manufactured marketing activities would be defined as B2C marketing. Along the supply chain of FMCG B2B and B2C markets would be as follows:

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Wright 2003 p. 2

Especially looking at supply chain management, which has experienced a renaissance during the previous years (Piontek 2003 p. 3), this separation appears more appropriate. A collaborative planning, forecasting and replenishment CPFR is more and more adopted along the B2C part of the supply chain. Therefore it is appropriate to regard manufacturers’, wholesalers’ and retailers’ marketing activities as an entity.

4. PEST-Environment

The external business environment on B2B markets differs from the environmental conditions on B2C markets in terms of FMCG. This chapter highlights major differences regarding the PEST factors. Furthermore a brief overview of SCHWARTAUER WERKE’s main country of operations (Germany) is provided in the appendix (Figure 4).

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4.1. Political / legal influences on B2B and B2C markets

As SCHWARTAUER WERKE operates on the European market legal constraints along the supply chain are distinctive. On the B2C market consumer protection is very i mportant. Legislation in European Union emphasises the consumers’ protection; especially when food is sold. On B2B markets legislation generally treats both sides of the contracts equally.

4.2 Economic influences on B2B and B2C markets

On B2C markets c onsumers’ purchasing power is an important determinant of success. A reduction of the consumers’ disposable income could encourage buyers of SCHWARTAU products to switch to no-frills products. As the demand on B2B markets in a derived one changes in consumer behaviour also affect the B2B market. But further determinants are currency issues, inflation, interest rates etc.

4.3. Social influences on B2B and B2C markets

Generally culture in areas SCHWARTAUER WERKE is operating in can be defined as a low context culture. But inter-organisational (inter-personal) behaviour between B2B and B2C is different regarding the decision making process of buying. FMCG are often bought spontaneously by consumers whereas in B2B relationships often Decision Making Units (DMU) are acting that encompass a variety of roles (Figure 5). A DMU is the entity of all organisational members that influence the process of purchasing (Huettner et al. 1994 p. 391). Hence the social interaction in B2B marketing is more complex.

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4.4 Technological influences on B2B and B2C markets

Generally there are rather similarities than differences concerning technological factors. Most important technological factors along the whole value chain of FMCG are traffic networks for the distribution of goods and Electronic Data Interchange (EDI) facilities. Hence technological requirements for companies in B2B and B2C relationships are rather similar.

5. The marketing mix

5.1. Pricing strategies

Along the supply chain of FMCG pricing strategies can be different. On the B2B side of the supply chain the main pricing strategy would mainly be a penetration strategy. A penetration strategy would mean that the respective company attempts to conquer large markets with low prices (Huettner et. al 1994 p. 203). For instance, SCHWARTAUER WERKE purchases ingredients for their marmalade pricing would be important for the suppliers as products (ingredients) are mostly identical. The fact that products (ingredients) are identical makes it necessary to follow a penetration strategy because it is difficult to enhance the perceived added value of the product.

Regarding the B2C side of the supply chain pricing strategy could differ. For instance, SCHWARTAUER WERKE follows rather a skimming strategy. Utilising skimming pricing a company attempts to absorb the consumer surplus in a systematic way (Huettner et al. 1994 p. 206): But definitely pricing strategies in B2C marketing of FMCG could be also a penetration strategy. For instance, discount supermarkets sell FMCG for low prices even if products are identical with more expensive goods. They just carry different labels.

5.2. Promotion

In terms of promotion policy B2B marketing and B2C marketing differ. In the field of FMCG promotion in the B2C marketing is mainly a ccomplished by advertisement campaign. Especially products with a higher perceived value are advertised with the use television

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