Put the comm(unications) in e-commerce
Published on 04/10/2000 under Ad Strategy
It’s hard to pick up a newspaper or business magazine these days without finding articles on how electronic commerce is changing the world, especially the world of business-to-business marketing. Ford, General Motors and DaimlerChrysler have
announced a joint effort tolaunch an electronic market-place for auto parts. DuPont is teaming with Chemdex to create an e-commerce site for process plant equipment. Marketplace sites already are functioning successfully in the steel, paper and aerospace industries, to name a few. The petroleum industry has a dozen groups rushing to establish domi-nance for oil and gas trading, and I recently discovered seven full-page or spread ads in a single issue of a plastics industry trade book promoting sites where you can buy and sell bulk chemicals and plastics.
It’s mind-boggling. There are sites sponsored by individual companies, multiple companies, industry associations and groups trying to sound like industry associations. There are new electronic marketplaces that cut horizontally across industry segments, and others focusing on the needs of a particular vertical industry.
Where all this madness will end up is anyone’s guess, and it’s not clear to me what the effect will be on traditional catalog powerhouses such as Thomas Register, Sweets and The Composite Catalog (serving the oil industry). In fact, these organizations are working feverishly on their own e-commerce sites to take advantage of the content leadership position they’ve occupied for many years.
But one thing should be clear to all of us in the marketing communications field: The industry will never be the same. For all you marcom people whose eyes glaze over when discussions turn to sales quotas and product pricing strategies, you might want to sit up and pay attention, because when buyers and sellers can find each other in an aggregated, online marketplace, what happens to the business communicator’s influence?
Our first clue was last December, when television viewers were bombarded by dozens of well-funded new dot-com startups hoping to attract buyers to their Web sites. They obviously thought communications was vitally important, even if they did it poorly. (For more on this issue, see page 16.)
Being first to establish a “robust” (one of their favorite words) buyer and seller community is critical to e-commerce survival, not to mention success; second place won’t cut it in this mad scramble. But what happens after the dust clears, when these marketplace sites are functioning according to plan, allowing buyers to enter their requirements and, within hours, receive qualified supplier bids? More specifically, what will be the business marketing communicator’s influence when competitive suppliers are reduced to line-item status on a buyer’s computer screen?
That’s when you’d better hope buyers can associate something positive with your brand name that will tip the decision scales in your favor; no longer will you be able to fall back on the assumption that buyer relationships with your sales reps will influence the decisions. With these rapidly developing marketplace technologies, companies will be able to push purchasing responsibilities down to operating levels where products are actually used. Authority limits will be predetermined (as well as automatic procedures for getting approval to exceed those limits), and purchase orders will be issued by more people than you ever imagined.
And the great majority of these people will be ones your company has never even called on. Mull that one over for a second.
In my opinion, the most effective way for b-to-b marketers to differentiate themselves from competitors will be by building a strong brand image for your company and products. (If this sounds familiar, go straight to the head of the class.) Companies that have done a good job of building solid, consistent brand images will get that nod at the moment of truth. In many cases, they will get the order even though they’re not the low bidders. When purchasing decisions are left up to thousands of buyers using e-commerce systems—as opposed to a handful of easily identifiable corporate purchasing managers—the decisions more closely resemble consumer product models than traditional b-to-b business. Sure, they’re spending company money, and they will be expected to use contract agreements negotiated with certain suppliers, but what happens when that supplier can’t deliver in the necessary timeframe? Won’t buyers have other options staring them in the face on their monitors? What happens when another supplier, perhaps one for which they have strong, positive perceptions, actually underbids the contract supplier? Will the buyers have the option to take advantage of the savings?
The coming age of e-commerce is going to force b-to-b companies to market their products more like our consumer brethren. Marketing departments will grow in size and importance as this responsibility is fully realized. Distributors will shift their focus from finding orders to streamlining logistics. Procurement professionals will rise above purchase orders and paperwork to become sourcing optimizers.
But make no mistake—marketing will be king, and marketing communications will be the king’s main weapon in the market share supremacy battle. Or, to
paraphrase the words of Jack Trout, the battle for the customer’s mind is raging, and communicators are the keys to winning that battle. Marketers that do
the best job of associating their products with believable, memorable selling propositions will see the greatest returns on their investments. The rest will be lost in an electronic sea of bits and bytes.