Harnessing Big Data to Understand Customer Needs
By Ralph Olivia, Emeritus Professor of Marketing
Many of the essentials of B2B marketing identified by Smeal’s Institute for the Study of Business Markets (ISBM) in the past 25 years still hold as principles and frameworks by which decisions can be made in today’s rapidly changing business environment.
One element of continued research will be the mobilization of insight from the flood of data coming from the Internet of Things: people, machines, ingredients, experiences. A key role for B2B marketers will be mobilizing data from the world of digital to create new value in multiple ways:
- Insight to enable better understanding of customers’ changing needs
- Better decisions on customer selection in business markets
- Utilizing data as a component of new B2B offerings themselves
- Marketing curated data as an offering in and of itself
- Other applications yet to be conjured
Beyond these and other roles is the role of B2B academics and practitioners “stepping up” to champion the role of the customer as the source of value creation. Through the last decade, we’ve seen a shift in focus to short-term shareholder results, rather than longer-term profitable focus on customers. This is creating a fundamental imbalance in capitalism itself, which in turn is creating tears in the fabric of our American democracy.
The gulf between the rich and the poor, and the deep divisions we see across our nation, have underpinnings in this imbalance. A future challenge for B2B marketers will be to refocus their firms on why they came into existence in the first place — to champion better understanding of the role of all stakeholders in a successful firm, more balanced capitalism, and a healthier democracy.
Digital Transformation and Marketing Ecosystems
By Stefan Wuyts , ISBM Director and Professor of Marketing
Managing interorganizational relations is at the heart of B2B marketing. Traditionally, these B2B relationships have been conceptualized as a “value chain,” which suggests a linear sequence of vertical relationships.
A newer term, the “value network,” captures horizontal, collaborative partnerships at the same level. These developments coincided with managers’ and scholars’ increased focus on developing close, long-term, trust-based B2B relationships.
The explosion of digital technologies puts much of this received wisdom in question.
In many B2B markets, firms have started to digitally transform their business models, with profound implications for value creation and delivery.
Many large companies use a variety of technologies to connect machines, agents, and data. The resulting business solutions cross firm boundaries, involve third-party system providers and device manufacturers, and often connect to customers’ other solutions-in-use.
Value creation and delivery for such digitalized business solutions occur in a “marketing ecosystem,” built around the business offering and the materialization of its value proposition. Marketing ecosystems also involve more distal and loose relationships. For example, John Deere’s Mixed-Fleet Data Solutions for integrating telematic data of a customer’s entire construction fleet offers a single portal based on open data sharing, connecting various manufacturers, logistics portal providers, and software suppliers.
In these complex systems, it will be critically important for B2B marketers to manage not just value creation and delivery, but also value capture. How to monetize customer value that is created in such a complex web of connections? How to avoid free riders? Contracts are notoriously difficult to draft in technology environments. Building close relationships with all participants is equally unfeasible, as it would quickly exhaust a firm’s resources and might make them less rather than more agile.
The solution will be found, in part, in smart marketing ecosystem design. In a hub-and-spoke marketing ecosystem, the B2B firm takes the lead as the central hub and can work to ensure a fair distribution of value among participants. A firm can also work to increase the ecosystem’s modularity, e.g., by standardizing interfaces between components, which facilitates the identification and eventual replacement of free riders.
The connectivity between participants in marketing ecosystems provides an opportunity to align the different stakeholders: connectivity increases the effectiveness of reputation systems, participant rating and ranking systems, and behavioral norms. In sum, the digital transformation trend will also require a transformation of the B2B marketer’s thought world, and of the marketing scholar’s research agenda.
Going Digital in B2B Trade Shows
By Gary L. Lilien, ISBM Director Emeritus and Distinguished Research Professor of Management Science
Trade shows have long been used as a forum for promoting sales of a variety of products. They are the second-largest marketing activity for many B2B firms after personal selling. An important difference is they bring current and prospective customers to the seller rather than vice versa.
Research indicates that more than 80 percent of the attendees at a typical show have some influence on the eventual purchase decision, and over 50 percent have specific plans to buy one or more products exhibited there within the next year. Such a high concentration of interested buyers and sellers in a setting that lasts several days, combined with the opportunity for meaningful face-to-face contact, creates a powerful forum for marketing effectiveness.
Even before COVID, research revealed that digital technologies were changing the nature of the trade show landscape.
Recent years have seen a dramatic increase in B2B usage of social media, the development of elaborate interactive event websites, the promotion of creative digital ways to measure attendee movements both on and offline and, most dramatically, the emergence of virtual trade shows designed to complement or replace traditional trade shows. The pandemic shut down the traditional show option, forcing many show organizers to go completely virtual.
The results to date have been mixed. Surveys of both sellers/exhibitors and buyers/attendees cite a number of positives, such as reduced travel time and expense, more efficient transfer of information, and greater personal safety. But strong negatives have also been noted, including the inability in a virtual environment to develop or renew important personal relationships, central to much B2B buying, and the lack of high-quality leads, a key trade show performance metric.
Trade shows are under stress to adapt. I envision a drastically changed post-COVID trade show environment, with many aspects of traditional trade shows, like educational sessions, performed digitally. But I have yet to see a digital way to replace the personal interactions that lead to the trust and relationship-building that are central to what traditional trade shows provide.
Trade shows are here to stay. However, firms will increasingly demand that the high costs associated with trade shows be justified, calling for improved success metrics. The good news is that the digital revolution has spawned many cost-effective and unobtrusive customer measurement methods. These new data sources are providing better tools to measure the effectiveness of trade shows for practitioners and exciting new research opportunities for B2B academics.
About the Penn State Smeal Institute for the Study of Business Markets
ISBM’s mission is to play a leadership role in advancing the theory and practice of business-to-business (B2B) marketing, and to advance business marketing as a specialized field within the broader marketing discipline.
ISBM was founded in 1983 “to become the leading academic center for research and education concerning business (as opposed to consumer) markets and marketing.”
Today, ISBM is the world’s leading research institute for B2B markets. Its mission resonates more than ever.
For more information, visit www.isbm.org (academic) or www.isbm.com (corporate).