Word Count: 2554 BUSINESS-TO-BUSINESS MARKETING Analysing Marketing Issues for Hewitt Associates INTRODUCTION Business-to-Business (B2B) marketing is a discipline in its own right and one of the fastest developing fields of marketing. A business-to-business marketing organisation focuses on relationship building and communication through marketing activities. Nowadays, focus of marketing has shifted from tangible things to intangibles things like skills, information and knowledge. Business-to-business marketers are emphasising on ongoing relationships and connectivity with the clients but some gaps can still be found.
B2B organisations are drifting away from their main theme, quality that can be achieved with the help of value creation and proposition. Lack of internal marketing would cause lack of commitment within the employees which can be harmful to the organisation and may result in poor performance arising from inferior service offerings and higher costs. REASON FOR THE COMPANY AND ITS CHARACTERISTICS I have chosen my previous company, Hewitt Associates Pvt. Ltd. to study the marketing frameworks as I have worked in the company for three years and am familiar with the operations of the company.
Hewitt is one of the world’s leading HR consulting and outsourcing companies and has a simple mission – “Making the world a better place to work”. Hewitt has its branches in more than 30 countries with more than 23000 employees having a clear focus of delivering excellent customer service and measurable business results. Hewitt values its people, excellence, teamwork and integrity. Its main focuses are to keep clients first, create a rewarding experience, growth with intention and get lean. Hewitt helps its clients to create and manage their retirement programs, design and deliver health plans, find ways to reduce their HR costs.
Hewitt has maintained very good client relationships which are based on innovation, reliability and results. Hewitt provides consultancy to its clients in the three main areas: * Benefits – Control the risks associated with benefit programs and their potential impact on business performance and financial results. * Financial – Balance the potential and risks of benefit program investments and increase the speed and return on the complex transactions of clients. * Talent – Manage the potential of critical talent, executives, and next generation leaders, while minimising the retention and compliance risk of a global workforce.
In addition, it provides solution to the clients in the following areas: * Benefits – Providing solutions for defined benefit, defined contribution, and health and welfare services. * HR BPO – Managing client’s employee data and administering benefits, payroll, and other HR processes as well as many talent and workforce management solutions. * Point solutions – Increasing employees’ productivity, containing health care costs, staying abreast and in sync with regulations, and enhancing the engagement of clients’ workforce.
KEY MARKETING ISSUE AND ITS IMPORTANCE TO HEWITT ASSOCIATES Hewitt has maintained its brand since years and has been rewarded for providing better service from its clients, but now it has started compromising on the value and the quality of its products in order to get the work done faster and before delivery dates. The focus is now shifting towards costs savings and product delivery rather than value creation. The brand image and the relationship with the clients can be affected sooner or later if the after effects are not taken into consideration at an early stage.
Quality of the products is also getting affected due to lack of organizational learning like importance of the clients to the organisation, clients’ feedback for a particular product and the commitment of the organisation towards its clients. This leads to various issues within the organisation which are also hindering the effective implementation of the Internal Marketing. Importance: Maintaining the value throughout the product development and delivery stage is very important to every organisation as it reduces the buyers’ level of perceived risk and helps in maintaining consistency throughout the relationship with the client.
In order to maintain this image, Hewitt would consistently need to provide the quality driven products to its clients and therefore should focus on capturing value. Hewitt operates in a competitive market that helps it to concentrate on its core competencies which in turn would help in enhancing the value proposition within the company. If implemented properly, internal marketing would help Hewitt in coordination and cooperation among various departments. It would also help in encouraging employees to offer superb services to the clients and help them able to perform their tasks in marketing-like manner. VALUE CREATION WITHIN THE ORGANISATION
Johnson and Peters (2010) define marketing as the dynamic process in which value is realised for both the firm and the customer and resources are acquired and competencies are developed. Core competencies of the firm generally include the coordination of cross-functional, inter and intra organizational network partners to gain competitive advantage by performing specialized marketing functions. According to Vargo and Lusch (2008b), Service-Dominant logic also illustrates the value creation in business-to-business networks where time, trust and service offering are three important converters in maintaining the relationships with the clients.
The S-D logic sees value as always co-created and treats service as the application of competences for the benefit of other entity. It leverages the strength of the firm to satisfy customer needs and achieve organisational and societal objectives. The unique matching of the firm capabilities with customer needs, guided by an ongoing conversation between them generates long term customer loyalty and competitive advantage. Analysing Hewitt on the basis of S-D logic, it seems to be ignoring the basics that were in place initially. There is a lack of proper research of the competitors’ product.
Some of the products are not updated or enhanced as per the market’s requirement. Hewitt’s major competitors like Accenture and Mercer are offering much enhanced applications, but Hewitt is still using the same mundane products. There is no proper feedback from the client whether they are satisfied with the technology or service provided to them for the product. To give an example, I was working on Hewitt’s major product, a huge website; Your Benefit Resource (YBR) designed basically for benefits transactions, decision support, and content surrounding those decisions.
More than 200 clients of Hewitt are using YBR, but it is still not upgraded as per the market demand and clients’ requirements. So, if I analyse Hewitt from a broader perspective, I can say that it has the framework for value driven strategy in place but not adhering to that for achieving the organisational goals. Hewitt needs to concentrate more on the value creation process in order to derive the value based strategies which can otherwise lead to market failure. This framework is explained below in relation with the company: MANAGEMENT DECISION PROCESS
The management decision process of Hewitt is in place as it is very much customer oriented and focuses on the specific group of customers only, for example, major number of clients is from the US market only. Hewitt is associated with the diversity of clients and has better information about them. But Hewitt should also expand its business paradigm outside of US as well and concentrate on medium and small potential customers. For example, targeting the profitable customers in Asia Pacific region can be beneficial to Hewitt and would help in getting more diverse clients at the global level.
Hewitt offers the differentiated products based upon clients’ requirements. TECHNOLOGY DELIVERY PROCESS The technology delivery process is the sequence of tasks performed from research & development stage to the product development stage. A good resource orientation is necessary in order to implement the value based technology delivery process. The human resources of the organisation should be well aware of the clients’ needs to make the delivery process very well service oriented. Value is enhanced when Employees’ learning and efficiency is managed properly across the organisation.
There should be full engagement of the employees in the project they are working on and necessary motivation should be given to them to enhance the productivity. In Hewitt, there is less push on the employee motivation as the middle management of Hewitt is more interested in fulfilling self interests and consequently resulting in the lack of synergy at the junior level. PRODUCT DELIVERY PROCESS Through product delivery process it can be made sure that the products are developed as per the client requirements and meet internal commitments on quality, costs, delivery and speed-to-market.
Hewitt has customized its products and services in order to meet the needs of individual clients while developing stronger relationship. But in order to deliver the product on time Hewitt is also compromising on quality which may incur higher costs in future and would be an excuse for the clients for not extending the contract after a certain time on the Hewitt’s proposed cost to them. Client would have all rights for negotiating the costs with the company and may also ask them to extend the level of services provided.
Source: Sharma A. , Krishnan R. , Grewal D. , (2001) “Value Creation in Markets pp 391-402. CUSTOMER DELIVERY PROCESS Customer delivery process in Hewitt is to generate value through the efficient service of products to the clients. In order to provide the efficient services, Hewitt should take into account the services provided by the competitors after proper market research. Hewitt should try to concentrate more on maintaining the quality of product that will help in building the trust of its clients.
This would help Hewitt to minimise the risk factor compared to its competitors and will improve the visibility of the business as well. VALUE BASED STRATEGIES For successful implementation of the value driven project, it is important to have the value creation process in place. Creating value through careful resource allocation and proper motivation and engagement of the employees is the vital way to proceed. Management should understand the technology delivery process, product delivery process and customer delivery process effectively.
Hewitt should set the quality benchmark on the products and should also take the approval of the clients on those benchmarks as customers vary in the value they place on a product and this value may change over time. The value based strategy framework concentrates more on the manufacturing and the supply chain processes. This framework should also be extended to include the value creation in other areas like service industry (IT or HealthCare). Hewitt’s clients usually have the four things in their choice criteria: Quality, cost, life-cycle costs and perceived risk.
As mentioned above, Hewitt is compromising on its quality only to get the product delivered before time. This usually happens at the first stage of the development where developers develop the product (but product quality is not on first priority) before time and hand it over to the testing team that tests the product (for example, the website) by creating different scenarios. But as the product quality is already compromised at the development stage, the testing team has to put lot of effort as they create defects and send them back to the development team to rework on the particular part.
This to and fro between testing team and the development team becomes very frequent due to quality issues. This can also cause delays in the delivery of the end product and in turn affects the brand image and the life-cycle costs of the organisation. The implication of this is that the choice criteria of clients may change over time depending upon the circumstances and Hewitt may need to change their offerings and communications as a result. At the time of renewal of the contract with Hewitt, client can put forward all these issues and egotiates on the costs for the next contractual cycle and in this case Hewitt has to offer extra services or minimise the costs to a certain level in order to reduce the perceived risks. View of service can be expanded by the connectivity between individuals and organisations through the co-creation of value and relationships (Lusch, Vargo and O’Brien 2007). They argued that the collection of unique benefits of the organisation promises to deliver to the customer (termed value propositions) stem not only from the knowledge and mental competencies of the firm but also market-oriented feedback and organisational learning.
Organisational learning focuses on customer knowledge, competitive strategy, and market and industry value propositions. Hewitt should take into account the importance of the customer feedback for the products it is offering and should not just assume that the client is satisfied with whatever technology it is providing to them. Hewitt should address the changing needs of the market through its integration and transformation process in relation to the product it is offering to the client.
There is a market-oriented approach given by market researchers (Slater and Narver, 1995 and Glazer, 1991) in which an organisation’s knowledge of the customer provides the ability to create value for the market as well as developing an on-going learning process within the organisation. INTERNAL MARKETING IN THE ORGANISATION The basic premise of the internal marketing is ‘to have satisfied customers, the firm must also have satisfies employees’. This can be achieved by treating employees as customers by applying the principles of marketing for employee satisfaction.
Leonard Berry (1981) defined internal marketing as viewing employees as internal customers, viewing jobs as internal products that satisfy the needs and wants of these internal customers while addressing the objectives of the organisation. In order to get the effective service from the employees, they should be customer conscious, motivated and sales minded. Effective service also requires the better coordination between different channels in the organisation. Piercy and Morgan showed that the tools and techniques of the external marketing channel could also be applied internally.
Their model links the internal and external marketing programmes together as shown below: If Hewitt needs to implement the value based strategies in the effective way, then it would need to overcome the vertical conflicts (middle management and their subordinates) in order to achieve better internal communication. Hewitt should treat its employees as customers and recognize those who are consistently delivering the quality work for the organisation and also initiate the loyalty programmes for the employees who are serving Hewitt for a long time.
This would lead to change in attitude of the employees, help in building healthy relationships between management and employees and in serving the clients in a better way. The process of gaining competitive advantage by treating employees as customers can be shown with the help of Berry’s Model of Internal Marketing: Employees need to be informed of any changes in the company’s strategy before they are communicated to the clients. Employees should be given more control over their work which will make them more motivated and customer-conscious.
This shows that internal marketing can be considered as the pathway to a successful implementation of value based strategy in the organisation. CONCLUSION AND RECOMMENDATION FOR PRACTICE Value can be easily migrated from quality to cycle time reductions, cost savings, and customer service. It should be priced appropriately and communicated effectively. Hewitt should concentrate more on employee motivation and satisfaction in order to achieve the customer orientation and satisfaction.
Hewitt should make employees customer conscious so that they can take better advantage of interactive marketing opportunities within the organisation. For providing effective services to clients, Hewitt should try to maintain the consistency of the product, reduce perceived risk from the client’s side, and offer a range of functional and emotional attributes that are of value to clients. Hewitt also needs to identify the similarities/dissimilarities of its products with that of a competitor and make it unique in order to get competitive advantage. REFERENCES
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APPENDICES APPENDIX 1 – PEST ANALYSIS POLITICAL FACTORS 1. As Hewitt has outsourced its work in more than 30 countries, it can be affected by elections and change in employment law in those countries. 2. Taxes and government structure may affect the operations of the company in the respective company. 3. Some terrorism activities can also affect the operations of the organisations as due to these activities, company may have to close its operation for some time. ECONOMIC FACTORS 1. Rise or fall in inflation due to the change in government can affect the organisation. 2.
Unemployment and cost cuts due to recession can have a major affect. 3. Economic growth of the respective country where company operates or has outsourced its operations. SOCIAL FACTORS 1. Level of education and training of the employees depending upon the specific country. 2. Relevant experience of the people to be recruited. 3. Cultural and shared values of the society in different countries. TECHNOLOGICAL FACTORS 1. New versions of the software tools may arrive in the market after a regular interval of time. 2. Technology replacements/solutions available in the market. 3.
Need of upgrading the technology from time to time in order to sustain in the market. 4. Clients’ awareness and demand for the updated technology. APPENDIX 2 – PORTER’S FIVE FORCES INDUSTRY ANALYSIS THREAT OF NEW ENTRANTS Threat of new entrants is low in this industry as some major players already exist like Accenture, Hewitt and Mercer, KPMG etc. The employers usually target the experienced consultancy firms for the solution of their problem rather than a novice. It will take lot of efforts for a beginner to lure any employer for providing them consultancy. POWER OF SUPPLIERS
The consultancy firms act as supplier of services to their clients and there is a cutthroat competition between various firms in the US market. Consultancy firms are in race with each other in providing superior solutions to their clients. So, power of suppliers is high in this industry. POWER OF BUYERS The negotiating power of buyers is high in this industry as if the quality of the service or the product is compromised from the supplier side, then buyers can ask for lowering the costs or providing more services or extra benefits in return of extending the contracts. AVAILABILITY OF SUBSTITUTES
The availability of substitutes is also high as the client will not hesitate in switching to some other consultancy firm if it doesn’t like the services provided by the firm. In that case, firms need to be well aware of the competitors’ products and will have to modify its services as per the market requirements. COMPETITIVE RIVALRY High competitive industries generally earn low returns because the cost of competition is high. This can spell disaster when times get tough in the economy. APPENDIX 3 – SWOT ANALYSIS OF HEWITT ASSOCIATES Location of Factor| Type of Factors| | Favourable| Unfavourable|
Internal| Strengths * Broad offering to clients * Strong Financials * ISO certified * Strong player in US market * Provides best surveys in the industry| Weaknesses * Lack of proper market research * Focused on US market only * Not targeting medium and small potential employers| External| Opportunities * Steady growth in IT outsourcing * Growing demand for new media technologies * Positive outlook for healthcare IT spending| Threats * Economic slowdown * Increasing regulation in government contractors * Problems with subcontractors * Strong market players like Accenture and Mercer * Loss of key staff due to lack of empowerment|