Organisational Marketing Defined: Any marketing activity that occurs between two organisations can be termed as organisational marketing. Another terminology gaining, popularity for organisational marketing since the 1980s is called business-to-business marketing (Gross et at. , 1993), which essentially means the same. These activities differ from consumer marketing mainly due to the fact that in consumer marketing, the interaction is between organisations and individual consumers.
However, the term organisation is in itself very vague, where a definition by Turnbull in The Marketing Book, (edited by Baker, M. , 1994), p217, terms it as “a group of people pursuing a common aim through coordinated activities”. Also it is acknowledged that organisational marketing, as compared to consumer marketing, is a more elaborate activity “characterised by complex interaction processes both within the marketing and purchasing companies and between these companies” (ibid, p235).
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The origins of organisational marketing lie in industrial marketing, which was primarily concerned with industrial goods, which are used in the production of final consumer goods. Later, it was realised that not all organisations were engaged in manufacturing. Hence, to encompass other organisations like services, government bodies, institutions that operate for purposes other than profits, and many other organisation need marketing, the term of organisational marketing has slowly replaced industrial marketing (Wilson, D.
F. , 1994). The organisational market is composed of diverse firms that often require a unique blend of goods and services to attain their own organisational goals. To operate successfully in such an environment, marketers have to isolate factors that stimulate demand and identify a target segment that needs to be served through a comprehensive marketing program. Next, marketers in organisational markets also have to deal with complex buying processes, where often more than one-decision makers are involved.
Also, often an organisational marketer may find that there are two specific dimensions to his or her task. The more obvious is the planning of the marketing effort via segmentation, products and services development, promotions, pricing and distribution. The other task is to understand the dynamics of the buying processes, especially in the context of the customers buying centre (Chisnall, 1985). The individual and group decision-making factors and the external environmental forces that affect industrial buying are key concepts that every organisational marketer has to understand.
This leads to a brief explanation of derived demand, which forms the basis of most organisational marketing. Raw materials, components and assemblies often become part of the customers final product. Also, numerous services are required by customers in order to accomplish the final production of their output. All these activities of supplying goods and services to achieve the production of the customer’s final good are due to derived demand of industrial goods. This refers to the fact that demand for these goods and services is related to the demand for the customer’s product or service (Webster, 1979).
However, the further away the organisational market is from the final consumer good, the less influence final consumer demand will have on the demand for the organisational offering. Equally true is the fact for capital goods, where strength of demand for the final output does not have a major impact on the sales of capital goods (Littler, 1994). Because demand for industrial products is derived from the demand of their customer’s output (who may be intermediaries themselves), organisational marketers sometimes try to stimulate their sales by stimulating the demand for their customer’s products (Hutt & Speh, 1981).
However, the level of success in pursuing this policy depends on how closely linked are the supplier sales volume to the customer’s success. Hence, it can be seen that the scope of organisational marketing is vast, and covers much more commercial activity in value terms in any economy, as compared to consumer marketing. It is apt to mention that due to the widening scope of organisational marketing, concepts such as “profit maximisation” and “shareholder asset growth” are no longer its major concerns only (Wilson, D.
F 1994). Governments, charities, cultural organisations, universities and a host of other organisations with other overriding objectives are also important players in the realm of organisational marketing. Not only do these organisations need marketing plans to achieve their particular objectives, but also have to be marketed to, to get their purchase orders. Thus, the scope of organisational marketing objectives has become multi-faceted, lending much more variety to the marketing. function.
Lastly, the nature of relationships in organisational marketing is becoming more and more important, where it is seen that competitiveness and rivalry are now not the only answers to operating in an industry. Concepts like co-existence, collaboration, cooperation and collusion are gaining popularity, (Dion & Banting, 1988) and alliances and mergers are more frequently negotiated to make the best of organisational marketing opportunities. Thus, “purchasing relationship exchange” (Wilson, D. F. , 1994), instead of exchange of goods and services, is being seen as the ultimate form of organisational marketing by many experts.