Business-To-Business Marketing Management: of Victorian Fine Furnishing - Case Study Example

Table of Contents Usiness-To-Business 1 1.0 EXECUTIVE SUMMARY 2 2.0 INTRODUCTION 3 3.0 NATURE OF THE PROBLEM 4 4.0 SOLUTION ANALYSIS 6 4.1 Value Horizon 6 4.2 Corporate brands 7 5.0 BUSINESS-TO-BUSINESS STRATEGY 8 5.1 Corporate strategy 8 6.0 RELEVANT EMOTIONAL ASSOCIATIONS 11 6.1 Management of wants 11 7.0 CONCLUSION AND RECOMMENDATIONS 12 7.1 Strategic perspectives 12 7.2 Market orientation 12 References: 13 Usiness-To-Business 1.0 EXECUTIVE SUMMARY Victorian Fine Furnishing is a company that produces crafted furniture and accessories. Recently, the company acquires a contract with Snoozarama to supply some goods. The commodities must be delivered after eight weeks. Victorian goes ahead to approach Ashley Timbers, their main supplier of raw materials. As the Victorian managers are discussing, a report comes that Ashley burnt up last night and would not be operational for the next one month. As a result, Victorian has to think a way out of the problem. This report deals with looking at the nature of the problem as well as providing several issues to consider when making decisions. The report mainly focuses on the business to business marketing theories and concepts to resolve the problem that Victorian is currently facing. The report ends with some recommendations that Victorian need to focus on in future to overcome such situations so as to reduce costs. 2.0 INTRODUCTION Victorian fine furnishings deals with hand crafted furniture as well as accessories. It was established in 1996 and since then it has been a furniture importer, wholesaler and retailer, and is specialized in Antique Reproduction Mahogany Furniture. The organization produces furniture that have a variety of styles like Victorian, Georgian, Chippendale and French provincial. The organization has a 12,000 sq. ft. store that is located in Windsor, Ontario Canada, which is always packed with a variety of high-quality hand-crafted furniture built from the best solid woods. Most of its goods are transported through ships on monthly basis from Indonesia thus making sure that there are new commodities to satisfy the customers’ needs. Since the organization is a direct importer, it is able to offer very competitive prices for both wholesale and retail markets. The sales manager of Victorian Fine Furnishing is Ken Lambert and works with other 34 employees who work together to produce classic Victorian style furniture. The sales manager has for the last seven months worked hard to open an account with Snoozarama, a nationally franchised company that has 41 specialized retail bedding stores around Australia. The general manager to the company is called Gerry Watts. The organization’s furniture is hand-crafted by skilled craftsmen who use fine solid woods like ebony, mahogany, beech and teak. They specialize in recreating historic architectural details, and create best furniture in the Victorian, gold oak as well as arts and crafts period styles. 3.0 NATURE OF THE PROBLEM Victorian Fine Furnishings is a big company and thus wins big contracts that involve a lot of money. As a matter of fact the current contract with Snoozarama is a huge contract and any miscalculation can cost the company heavily. The major contractor of unrefined supplies to the corporation is Ashley Timbers in Oakleigh. We find that since Snoozarama needs the goods urgently and Victorian has to maintain other customers, it has to make an urgent order in Ashley and reposition the worker so that they can meet the demand. Of course this will go hand in hand with sipping in some extra funds to compensate for the extra time that employees will work. Unfortunately, Ashley Timbers encounters a fire calamity that was not expected. This happens a day before the order for the raw material from Victorian is placed. Consequently Ashley will not meet the needs of Victorian and thus Victorian has to look for an alternative or loose the contract they have worked hard for seven months to acquire it. The main challenge is the period by which the commodities ought to be delivered. Victorian has to look for all alternatives bearing in mind the cost to meet to settle the deal with Snoozarama. There are various ideas that the management is looking into so that they can resolve the dilemma. The first idea that the management thinks about is working extra time which is an average of about 1000 to 1200 additional hours and this will call for $35,000 to about $40, 000 extra expenses in production. This would sky-rocket their cost of production and they have to look for other alternatives. There is no any other company in Melbourne that can supply the total amount of rosewood timber that is needed immediately. It is only 40% of the total that can be obtained from four other smaller merchants and this would take a few weeks. Furthermore, the prices would vary from $3,300 per M3 to $3,600 per M3. This is about 30% to 40% higher than Ashley’s price which is $2,550 per M3. This greatly reduces the profit margin and Victorian has to think of another alternative. There are other two Sydney timber merchants who can supply the products but only after two weeks. Their prices are still higher the one offered by Ashley. Furthermore, they are aware that Ashley had a catastrophe and thus would like to capitalize on this. There is another company, the Ashley Timber’s major supplier in northern NSW, who are ready to supply the needed quantity of rosewood. The main problem is that the raw materials are not ready and it will be required an extra quantity to cater for wastages. This will call for the Victorian giving another company the work and also pay extra money for transportation from north. This is an immense setback that calls for making wise decisions to curb the situation. As a consultant to the Victorian company, I have to advise the management on the bets decision to make such that the expense costs do not elevate so much. The management requires that at the end of the day, a solution is reached without loosing the contract with Snoozarama. 4.0 SOLUTION ANALYSIS 4.1 Value Horizon Business to business (B2B) exchanges occurs between two or more companies. Victorian is now limited to some kind of extended value horizon, and may incorporate only partial value views. The main problem now is that of managerial coordination between the companies that are going to be involved in this deal. If now Victorian is going to involve other companies in the deal, there will be an interlocking of extended value horizons and this would create a business constellation and thus loose the achievement of the horizon individually. As a consultant, I find that Victorian can liaise with the other major supplier of Ashley Timbers that is in the north coast of NSW (North Coast Timber Co). This will extend the value horizon as they have already had business relation with the smaller company. This will help Victorian to achieve an interlocking value horizon. Furthermore, since there are other companies that are going to trim and cut-to-size the timbers, this will further enhance the interlocking value horizon. If Victorian achieves such an interlocking value perspective with the other companies, it will be able to manage the optimization of the overall value to Snoozarama in addition to optimizing the delivered value in the value-creating network (Woodside, Golfetto and Gibbert, 2008 p. 121). 4.2 Corporate brands Under any circumstance, Victorian cannot risk loosing the contract that it has worked for seven months as this may ruin the brand of the company. The offerings of the company depict its brand. Company brand serves as an umbrella that carries the company vision, individuality, standards, positioning as well as representation in the midst of various scopes. Victorian has a strong corporate branding strategy that adds its value by facilitating the accomplishment of the lasting vision and offers a distinctive position in the market. It is through this brand strategy that Victorian managed to win the contract from Snoozarama. Loosing the contract would destroy the representation of the corporation. As a consultant, I recommend that Victorian spend more money than it had anticipated supplying the goods to Snoozarama since this will prevent the company from loosing business in future. We know that a corporate brand firmly minimizes the risks involved in a complex buying as it increases a sense of continuity. The constructive image as well as good reputation linked with a corporate brand as well minimizes product complexity which is particularly vital for experience commodities that can only be thoroughly examined after their purchase. B2B companies can greatly benefit from the entrepreneurial competence and business capability a firm corporate brand produces on all features of the business. Furthermore, they are mainly related to the future of the business as they reflect the entire company, but individual brands fluctuate with time. This is the main reason as to why I strongly recommend that Victorian negotiates with North Coast Timber Co. and carry out business with it. This will strengthen the value that its competitors have on it. Furthermore, it will enhance the interlocking value horizon and increase the chances of overcoming such challenges in future. I view the nature of the problem as an opportunity for Victorian to expand its link to other companies that can be of great help in future. The image of the company is going to be sold to other companies thus boosting its credibility that may be significant in future as the business expand (Kotler, Pfoertsch and Michi, 2006 p. 81). 5.0 BUSINESS-TO-BUSINESS STRATEGY 5.1 Corporate strategy Corporate strategy is related to the decisions that are made in a company comprising multiple businesses – commonly referred to as strategic business units (SBUs). Issues of company strategy relate to the overall shape of the company, which SBUs is part of the overall portfolio as well as the way through which main resources like investment capital ought to be divided between them. Various departments of Victorian Fine Furnishings constitute the SBUs and need to be considered when the company will be making decision on what next to do in this situation. This is because more funds are going to be used which would have otherwise be distributed to the various departments. The decisions the Victorian make in this situation will influence the future performance of the company either positively or negatively. I suggest that the company goes ahead and strikes a deal with North Coast Timber Co. as this will increase the chances of survival in future if such situations do arise again (Brennan, Canning and McDowell, 2007 p. 90). Strategy is all about strategic decision-making and these strategic decisions have various major features. The main feature is that their key concern is the long-term orientation of the company rather than the daily managerial matters. Secondly, strategic decisions define the range of the company’s activities, choosing what to carry out and what not to. The other feature relates to the matching of the corporation’s activities. They have to be matched to the exterior environment as well as to its resource capacity. It is not intelligent for an association to follow strategies that would not be implemented utilizing the available resources. There are other features of strategic marketing: Emphasis on long-term implications. Strategic marketing decisions have a long-term perspective and thus any alterations in the external business environment may influence such decisions. This is the reason as to why strategic marketing planning makes all efforts to monitor the business environment. Victorian has to carefully monitor its business environment especially at this point where it is faced with a challenge of delivering huge amount of goods at a limited time frame. Corporate inputs. Daily premeditated marketing decisions may frequently be made devoid of referring to the larger actions of the organization. Strategic marketing decisions can experience much far-reaching challenges and it is important to take care of the whole firm perspective. For an organization to make strategic marketing decisions, its managers require to take into consideration the company culture, the company stakeholders as well as company resources. This is the main area that Victorian needs to consider when making decision on what to do in the current situation. The management has to make decisions that will not affect it operations negatively in the future. Varying roles for different products/ markets. Strategic marketing refers to investigating the entire of a firm’s portfolio of products as well as markets, in addition to running the portfolio to achieve the firm’s entire goals. Consequently, decisions could be made not to utilize money in producing certain commodities in order top use that money to be used elsewhere in the portfolio, where the opportunities seem to be of greater value. Through this feature, Victoria may decide to hold at a standstill the projects that are not urgent so as to release some funds to be used in meeting the extra costs due to the calamity. The aim of strategic marketing is to spearhead the organization towards eye-catching economic opportunities that are in line with its resources as well as its expertise in addition to offering a chance for growth and profitability. On the contrary, operational marketing is an action-oriented process that is extensive over a short to medium term planning horizon and aims at the prevailing markets as well as segments’. Victorian needs to look at its operational marketing so that it can overcome the dire situation. It requires doing some drastic changes in its operations so as to meet the demand and supply the goods to Snoozarama (Brennan, Canning and McDowell, 2007 p. 91). 6.0 RELEVANT EMOTIONAL ASSOCIATIONS B2B decisions frequently are accompanied by a certain percentage of risk as they impact the financial performance of an organization as well as the career prospects of those making decisions. The aspect of reducing risk so as to improve consumers’ sense of security is a strong emotion hat may propel numerous decisions and hence be a significant source of brand equity. The decision to be made by both the sales manager and general manager of Victorian will highly influence the trust that customers will have in the firm in future. Furthermore, the rest of employees’ performance would be influenced by the judgments pronounced by their executives. It is very important now that Snoozarama is a new customer and their order is very huge, Victorian should do all it can to win trust from Snoozarama (Donaldson and O'Toole, 2007 p. 23). As Victorian moves ahead in making decision, the management should put in mind the emotions of the employees who will be required to work extra hours to accomplish the task. Individuals are motivated by their own needs as well as perceptions in an attempt to maximize the rewards offered by the company. Individual desires stimulate the behavior of persons, but company desires legitimate the purchasing-decision process as well as its results. B2B buying decisions are both rational as well as emotional since they serve both the firm’s along with individual’s desires (Glynn, 2009 p. 26). 6.1 Management of wants Unlike consumer marketers, B2B buyers start the process of buying whenever a need arises. The foundation of B2B marketing discipline is both to comprehend the theory of value (in tangible, numeric terms) as well as implementing a systemic process for creating, managing and harvesting a fair share of value. Value understanding and management is the core issue of all marketing practices, particularly in business marketing (Bidgoli, 2010 p. 318). 7.0 CONCLUSION AND RECOMMENDATIONS 7.1 Strategic perspectives We found that some of the nearby companies that learnt of the calamity that had fallen on Ashley wanted to capitalize on the situation by raising the prices of their goods. The main reason behind this could have been that Victorian and the other companies have not built their brands well or they do not utilize e-commerce to facilitate global reach. Victorian needs to advance in information technology and e-commerce as this will open opportunities for improving supply chain communication as well as coordination. It will also allow products to be marketed across borders, creating a business environment that has no boundaries. Furthermore, it will provide another support tool for building customer relations as teams can conference across borders and exchange information without time constraints in secure sites. E-commerce as well serves as an extension to the B2B distribution channel. Integration of ordering and supply logistics would permit both the client and contractor to reduce transaction costs (Wankel, 2009 p. 205). 7.2 Market orientation It has been found that in B2b marketing, corporate reputation follows price in influencing perceptions of value in business markets. Victorian, by virtual of supplying the ordered goods to Snoozarama despite the current challenges, will boost its brand value even within its contestants. It is found that whenever brand equity is high, consumers are more ready to pay a price premium for the product and most likely to involve themselves in favourable word-of-mouth communications concerning the firm as well as its brands. This is also a chance for Victorian to develop its brand orientation. Brand orientation is the process by which an organization can create, develop and protect brand identity in an ongoing interaction with customers, focusing to achieve long-term competitive advantages in the form of a brand. So as much as Victorian is facing a dire situation, it has a great opportunity to build its brand orientation (Lindgreen, et al. 2010 p. 70). References: Bidgoli, H. 2010.The Handbook of Technology Management: Supply Chain Management, Marketing and Advertising, and Global Management. New Jersey, John Wiley and Sons. From http://books.google.com/books?id=EKNoKQ1L4CoC&pg=PA318&dq=Business+Market+Management:+Understanding,+Creating,+and+Delivering+Value&as_brr=3&client=firefox-a&cd=6#v=onepage&q=Business%20Market%20Management%3A%20Understanding%2C%20Creating%2C%20and%20Delivering%20Value&f=false (accessed July28, 2010). Brennan, R., Canning, L. and McDowell, R. 2007. Business-to-business marketing. California, SAGE. 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From http://books.google.com/books?id=YaPIKPhAe_QC&pg=PA198&dq=Business+Market+Management:+Understanding,+Creating,+and+Delivering+Value&as_brr=3&client=firefox-a&cd=3#v=onepage&q=Business%20Market%20Management%3A%20Understanding%2C%20Creating%2C%20and%20Delivering%20Value&f=false (accessed July28, 2010). Lindgreen, A., et al. 2010 Market Orientation: Transforming Food and Agribusiness Around the Customer. Surrey, Gower Publishing, Ltd. From http://books.google.com/books?id=m3fTI0IIMzcC&pg=PA150&dq=Business+Market+Management:+Understanding,+Creating,+and+Delivering+Value&as_brr=3&client=firefox-a&cd=10#v=onepage&q=Business%20Market%20Management%3A%20Understanding%2C%20Creating%2C%20and%20Delivering%20Value&f=false (accessed July28, 2010). Wankel, C. 2009. Encyclopedia of Business in Today's World, Volume 1. California, SAGE. From http://books.google.com/books?id=tG589fsj1gC&pg=PA205&dq=Business+Market+Management:+Understanding,+Creating,+and+Delivering+Value&as_brr=3&client=firefox-a&cd=4#v=onepage&q=Business%20Market%20Management%3A%20Understanding%2C%20Creating%2C%20and%20Delivering%20Value&f=false (accessed July28, 2010). Woodside, A. G., Golfetto, F. and Gibbert, M. 2008. Creating and Managing Superior Customer Value. UK, Emerald Group Publishing. From http://books.google.com/books?id=g9ZGzv7A6zoC&pg=PA123&dq=Business+Market+Management:+Understanding,+Creating,+and+Delivering+Value&as_brr=3&client=firefox-a&cd=5#v=onepage&q=Business%20Market%20Management%3A%20Understanding%2C%20Creating%2C%20and%20Delivering%20Value&f=false (accessed July28, 2010). Read More