- Email: [email protected]
Designing a Dual Marketing Program
Pergamon
PII:
European Management Journal Vol. 19, No. 6, pp. 670–677, 2001 2001 Elsevier Science Ltd. All rights reserved 0263-2373/01 $20.00 S0263-2373(01)00092-5
Designing a Dual Marketing Program WIM BIEMANS, University of Groningen While the marketing literature treats consumer marketing and business marketing as two distinct marketing disciplines, many firms combine them by selling the same product both to consumers and business customers. This practice of dual marketing is quite common, but fraught with pitfalls and surprisingly neglected in the marketing literature. In this article we describe the growing prevalence of dual marketing, its major benefits and pitfalls and the most common dual marketing strategies. Next, we combine all these elements in a blueprint for designing an effective dual marketing program. 2001 Elsevier Science Ltd. All rights reserved. Keywords: Marketing, Strategy, Implementation
Introduction While the marketing literature treats consumer marketing and business marketing as two distinct marketing disciplines, many firms combine them by selling the same product both to consumers and business customers. This practice of dual marketing is quite common, but fraught with pitfalls and surprisingly neglected in the marketing literature. In this article we describe the growing prevalence of dual marketing, its major benefits and pitfalls and the most common dual marketing strategies. Next, we combine all these elements in a blueprint for designing an effective dual marketing program.
Dual Marketing The marketing literature traditionally distinguishes between two kinds of customers: consumers and organizations. Consumer marketing studies consumer behavior and translates the acquired knowledge into effective marketing actions aimed at creating satisfied and loyal consumers (Peter et al., 1999). Inspired by the success of consumer marketing, business marketers applied the same basic marketing principles in an attempt to influence organizational 670
buying behavior. During the last two decades, business marketing has grown into a specialized body of theory and empirical research with its own marketing concepts, such as buyer – supplier relationships, decision-making units and macro/micro segmentation (Hutt and Speh, 2001). Thus, the current marketing literature consists of two broad, coexisting streams of literature, that overlap at the level of shared concepts and theories. In practice, however, many firms sell products both to consumers and business customers and thus apply both consumer and business marketing. For instance, General Electric (GE) sells household appliances such as dishwashers and gas ranges to consumers and engineered plastics and jet engines to business customers. Such a combination of consumer marketing and business marketing generally does not create many problems. Typically, each market is handled by a different part of the organization (e.g. different business units or divisions), using its own marketing strategy. For instance, while GE’s appliance division emphasizes operational excellence, its engineered plastics division pursues customer intimacy (Kotler, 1999). In other cases, however, consumer marketing and business marketing are related because both types of customers buy the same product. This practice of selling the same product both to consumers and business customers is referred to as dual marketing (Quelch, 1987). Thus, GE engages in dual marketing, not because it sells both to consumers and business customers, but because it sells the same products — such as refrigerators and room air conditioners — to both types of customers. Dual marketing can be considered to be a special case of market segmentation, where the firm targets both business users and consumers. Since most dual marketers do not start from scratch and already sell products in either the consumer or business market, the implementation of dual marketing typically implies the addition of a whole new market for one or more products. Because both markets frequently vary widely in buying behavior and market structure, the effective implementation of dual marketing involves an intri-
European Management Journal Vol. 19, No. 6, pp. 670–677, December 2001
DESIGNING A DUAL MARKETING PROGRAM
cate set of external and internal marketing issues that complicate the typical problems of market segmentation: ❖ external marketing issues: to what extent do we need to adapt our marketing efforts (such as the application of marketing instruments and market research) to the characteristics of the new market? ❖ internal marketing issues: how should we organize our marketing efforts directed at both markets to simultaneously exploit the idiosyncrasies of both markets and stimulate synergy between the marketing efforts for both markets?
❖ manufacturers of food products sell their products to consumers, institutional customers (hospitals, schools, prisons) and firms; ❖ caterers provide their services both to private individuals and corporations.
The list of products that may be sold both to consumers and business customers is almost endless, varying from paint, insurance, carpets, and toilet paper to furniture, shampoo, financial services and energy. In addition, several changes in the marketplace contribute to an increased application of dual marketing. For instance, technological developments expedite the advent of new product generations, thus The complexity of dual marketing largely depends making simpler and cheaper versions of business on the differences between the business and conproducts available to consumers (Solomon, 1985). In sumer market, the nature of the addition, in several industries, interaction between them, the reduced market growth causes Professional chefs in experience the firm has with marketers to look for new cusdual marketing and the extent tomers. Dutch organizations hospitals and other to which it is familiar with both that traditionally rented cabins markets. For instance, for families nowadays target institutions want the same to Imation (the spin-off of 3M’s corporate customers with data storage and imaging incentive programs to escape businesses) it is relatively convenience as consumers and the pressures of a saturated straightforward to sell comconsumer market. Finally, puter disks both to consumers increasingly demand products changes in buying behavior and business customers. The may cause product crossovers like instant soups product has to be exactly the to new markets. For example, same; Imation cannot e.g. offer during the 1990s trendsetting lower quality disks to consumers. Thus, Imation only consumers were attracted by the professional image slightly changes the packaging (more disks per stanof many business products, such as professional tools dard package) and price. In other cases, large differand kitchen appliances. Similarly, professional chefs ences and/or overlap between business customers in hospitals and other institutions want the same conand consumers may complicate the dual marketing venience as consumers and increasingly demand prosegmentation task. For instance, in selling mobile ducts like instant soups. phones, faxes and audio equipment, Philips Electronics is confronted with a lot of similarities and The use of dual marketing is also stimulated by a overlap between both markets. For instance, small convergence of consumer marketing and business business owners also shop in consumer outlets and marketing. For instance, business marketers have focus on price differences, while ignoring differences come to realize that ‘a business person is simply a in product functionality offered on both markets. consumer at work’ (Newell, 2000) and discovered the Therefore, Philips uses different product versions, power of emotional appeals in advertising, thus shiftsales channels, prices and communication efforts in ing their spending from trade magazines to traan effort to tailor its offerings to both groups of cusditional consumer media (Freeman, 1997). At the tomers. In addition, it is faced with a continuous same time, consumers have become increasingly struggle of adapting the internal organization of the knowledgeable about products and product funcmarketing function to the dynamics of the markettions, such as personal computers and the health place. implications of food ingredients, making them more susceptible to rational selling arguments. Finally, new interactive technologies allow firms to build one-to-one relationships with customers, whether Growth in Dual Marketing they are large firms or individual consumers (Peppers and Rogers, 1993). The resulting converAlthough at first glance dual marketing appears to gence of consumer marketing and business marketbe an exceptional application of marketing, a closer ing facilitates and stimulates the application of dual look shows that its practice is actually widespread. marketing. Consider the following examples: ❖ car manufacturers sell their cars to individuals and fleet owners; ❖ airlines sell seats and hotels rent rooms both to tourists and business people;
Despite the growing application of dual marketing, it is surprisingly all but ignored in the marketing literature and the road to successful implementation is littered with casualties. Philips Electronics’ experi-
European Management Journal Vol. 19, No. 6, pp. 670–677, December 2001
671
DESIGNING A DUAL MARKETING PROGRAM
ment with CD-I failed to live up to its potential in the consumer market and even a small, nimble supplier like Marimba was forced to let go of the consumer market in 1997 and focus on corporate customers instead. In addition, numerous persistent dual marketers are locked in a constant struggle and continuously change their approach in search of the holy grail of effective dual marketing. This article fills the gap by presenting the benefits and pitfalls of dual marketing, describing different dual marketing strategies and presenting marketers with guidelines to design an effective dual marketing program. The discussion is based on both a literature review and in-depth interviews with marketers from fifteen Dutch and international firms, supplying products that varied from telecommunications equipment, food products and application software to catering services, salt and shampoo.
Benefits and Pitfalls The application of dual marketing is inspired by the potential benefits that may be gained. These benefits fall into four categories: Increased sales The most important and obvious benefit of dual marketing is increased sales that are realized by selling the product to a group of new buyers who have never bought the product before. For instance, in the beginning of the 1990s Motorola had much success with selling its traditional semaphones as trendy fashion items to teenagers. Dual marketers may also enjoy increased sales because of positive spin-off sales based on experience. Consumers often buy a particular brand of product because they have positive experiences with using that brand at work. Economies of scale Firms with high fixed costs (such as in the automobile and chemical industries) may use the increased sales of dual marketing to profit from economies of scale. The higher level of sales helps them to quickly recoup their investments in R&D and amortize the costs of production over a larger number of units. For some products this is absolutely necessary. For instance, some complex hair products can only be profitably sold to professional hairstylists because of large sales in the consumer market. Creating synergy Selling both to consumer and business markets offers numerous opportunities for synergy. For instance, dual marketers may build brand equity and use a strong brand to stimulate spin-off sales in another market, use ideas from both markets to generate innovative new product ideas, reach small business customers through traditional consumer channels and use the experiences gained in 672
one market to improve the effectiveness of marketing efforts in the other market. Better market information Direct access both to the consumer and business market results in better and more complete market information. For instance, if in one market the product is used more extensively than in the other one, the dual marketer gets early information about long-term product performance. Unfortunately, the attractive potential benefits of dual marketing are accompanied by a number of potential pitfalls. Numerous novice dual marketers have experienced the following pitfalls: Imperfectly separated markets Frequently, the consumer and business market for the same product are closely related and dual marketers need to make explicit trade-offs. For instance, the space assigned by an airline to its business class section directly reduces the available space for economy class. Sometimes, overlapping distribution channels result in confused and irritated customers. Small business customers may wonder why a consumer fax is so much cheaper than a similar fax in a business outlet and feel cheated as a result. Ambiguous positioning Effective dual marketing requires a clear positioning on both markets. In practice, however, dual marketers frequently use ambiguous positionings that result in confusion among customers. In launching a first-generation mobile phone system in The Netherlands, PTT Telecom targeted both business people and consumers with the same design. However, business customers were put off by the cheap green phones named Kermit and featuring the picture of a frog. At the same time, consumers had to get used to the idea of using a phone on the street and were put off by the complex advertising messages. Negative image transfer Since every business customer is also a consumer, there will always be a transfer of image. For some customers this is a problem. L’Ore´ al discovered that some hairstylists consider themselves professional artists and refuse to use products that are also available to consumers in the supermarket. In the fall of 1997 Daimler Benz was confronted with widely publicized stability problems with its new A-Class car, which may have had a negative effect on the perceived quality of other Mercedes cars with some corporate buyers. Stereotypical thinking Dual marketers that think of consumer and business markets in stereotypical terms frequently miss opportunities that exist at the interface between both markets. While the trend of supermarkets selling hot meals in their shops presents a clear opportunity, several dual marketers failed to act on it because their business division considered it to be a consumer market trend and their consumer division considered it a business market opportunity.
European Management Journal Vol. 19, No. 6, pp. 670–677, December 2001
DESIGNING A DUAL MARKETING PROGRAM
Inappropriate internal organization In addition to tailoring their marketing strategies to the characteristics of both markets, dual marketers also need to design an appropriate marketing organization. Using separate divisions enhances market understanding and the design of tailored marketing strategies but hinders the search for synergy between the marketing efforts directed at both markets.
Dual Marketing Strategies In implementing dual marketing, one of the major decisions management has to make is whether it wants to emphasize the differences between both markets or build on existing similarities (Biemans, 1998).
Stressing the Differences When businesses and consumers value distinctly different product attributes, dual marketers are frequently encouraged to undertake a set of external and internal actions that reflect the basic differences between both markets. Some of these dual marketing strategies are described below: Different communication messages The most straightforward way to exploit the differences between consumers and business customers is to target them with different communication messages. Even when the product is identical, the promotional messages may emphasize different selling points. A supplier of mobile telephones might appeal to consumers by emphasizing the product’s fashionable design, ease of use and low prices. Business users, on the other hand, might be lured by pointing out the broad geographical coverage, special tariff structures, the product’s security level and available service arrangements. Dual brands Creating separate brands is a common strategy to help customers distinguish between the products offered on both markets. Generally, it preserves or creates a professional image for the business product. When Black & Decker wanted to launch a line of professional power tools, it feared that professional users would associate the Black & Decker brand name with the well-known, do-it-yourself power tools. So it made the products bright yellow (instead of the familiar green) and introduced them under the new DeWalt brand to provide professionals with their ‘own’ high-quality tools. Of course, such a dual branding strategy requires substantial resources and investments in product development and communication. Separate distribution channels Although it is often impossible to completely separate the channels used for both markets, a supplier can enhance the differences between both channels by offering different ver-
sions of the same product and charge different prices. The success of this strategy depends on the extent to which both distribution channels can actually be separated. Separate marketing organization Some firms are dealing with such extensive differences between the nature of the consumer and business demand for their products that they feel compelled to create two different marketing organizations. Whereas some may choose to create two separate marketing departments and locate them on different floors of the same building or even in different cities, others may create a kind of subgroup within the larger marketing department serving the original market. Whatever option is chosen, the idea is to separate the people serving both markets so they can focus on one particular kind of customer. Firms that have established two separate marketing organizations should not ignore opportunities to create synergy and actively search for ways to stimulate efficient and effective interaction and coordination between both marketing groups.
Building on Similarities In most applications of dual marketing, consumers and business customers cannot be separated clearly, since both groups of customers are looking for similar product characteristics. In these situations, dual marketers will focus on initiating synergistic actions that capitalize on the similarities between both markets. Some examples of effective strategies follow: Limited target markets Synergy in dual marketing is easier to attain when the markets served closely resemble one another. Thus, a dual marketer may limit the complexity of dual marketing by limiting the target customers in the business market to those firms that resemble consumers in their buying behavior. One Dutch supplier of personal finance software follows the strategy of designing and selling user-friendly programs that incorporate only a limited number of basic product functions. Easy to install, understand, and use, they appeal both to consumers and to small business owners who ‘act like consumers’. The consistent focus on product development and target marketing makes it possible to apply the knowledge and experiences gained in serving consumers to the business market. Integrated communications Probably the most obvious strategy for creating synergy is to integrate the communications directed at both markets. Some dual marketers stimulate spin-off sales through their advertising and other promotional material. In its product catalogs aimed at consumers, IKEA includes a separate section called ‘IKEA at Work,’ which showcases a number of products for small business customers. The strategy is mirrored by the physical layout of most of the company’s outlets, where part of the shop is dedicated to products for small busi-
European Management Journal Vol. 19, No. 6, pp. 670–677, December 2001
673
DESIGNING A DUAL MARKETING PROGRAM
ness owners. The Dutch importer of Land Rover ran a series of newspaper ads in 1996–1997 demonstrating how the Land Rover Discovery can easily be transformed from a business car to a family car or recreational vehicle and back again. One brand A strategy that might go hand in hand with the previous two strategies is to employ one brand in both the consumer and business markets. This enhances brand awareness and allows for a common focus in promoting the brand and its characteristics. However, not all customers appreciate the use of one brand for both markets. Some chefs consider themselves to be creative artists and refuse to use brands that are also available to consumers. Linked marketing organization Synergy in marketing may also be achieved by stimulating communication and the exchange of ideas between both marketing departments without actually merging them. The possibilities of creating such an interconnected marketing organization — by holding regular joint meetings, rotating jobs, establishing a joint supervisory board, stimulating informal gatherings and so on — are limited only by the creativity of the managers involved. A marketing manager at a worldwide paint manufacturer hired several marketers with a background in consumer marketing and put them to work in the business marketing department to stimulate new ideas and create a virtual link between both marketing departments. One marketing organization The ultimate synergistic action involves integrating all marketing activities and merging both departments into one. Locating all marketing personnel in one department stimulates discussion, coordination, and exchange of ideas and allows the firm to profit from potential economies of scale. A free flow of communication and ideas stimulates joint activities, such as sales promotions aimed at both markets, and helps identify future opportunities for dual marketing. For example, by being close to business customers, the marketers responsible for consumers may have a clear view of the products that only need a little more development to make them interesting to individuals. Scanning for opportunities Alert dual marketers preempt competitors by actively searching for future opportunities. Such a search entails: ❖ scanning market changes (noting broad shifts in buying behavior, identifying specific developments in related markets that might lead to dual marketing opportunities); ❖ scanning technological developments (identifying business products on the brink of being suitable for consumers); and ❖ monitoring actual buying behavior. Software maker Intuit discovered that many of the 674
people buying its Quicken personal finance management software were actually using it to keep the books of their small businesses. Although Intuit had not anticipated this, it reacted quickly by adapting the product more closely to small business needs. Quickbooks went on to capture more than 70 per cent of the small business accounting software market within two years.
Implementing a Dual Marketing Program Based on the description of potential dual marketing benefits and pitfalls and range of dual marketing strategies, an aspiring dual marketer can design his own implementation effort. In order to increase the chances of success, a novice dual marketer needs to design a dual marketing program that is: ❖ holistic, in the sense of taking into account all relevant aspects such as branding strategy, internal and external communication, market targeting, the internal organization of the marketing function, opportunities for synergy and the requirements for human resources; ❖ long term, which assures that management envisions the long-term objectives of dual marketing and the most likely approaches to achieve them; ❖ incremental, which allows management to start with a minor pilot project and use the initial experiences to gradually expand the dual marketing effort; ❖ experimental, focusing management’s attention on a continuous search for new approaches and quickly eliminating unsuccessful experiments. While every firm needs to design its own dual marketing program that best fits the characteristics of both the firm and the markets on which it operates, the following seven-step blueprint offers a useful starting-point. Please note that the steps need not be followed sequentially. For instance, one may switch steps 3 and 4 or go through several iterations of steps 3 and 4, before moving on to step 5 (see Figure 1).
Step 1. Investigate the Logic of Dual Marketing for Your Firm While many aspiring dual marketers are lured by the prospect of increasing their sales substantially by entering a new market, they frequently fail to carefully analyze the true potential of dual marketing and the possible pitfalls that may be encountered. For instance, when corporate sales of PC’s started to flag in the early 1990s, many suppliers enthusiastically embraced the huge potential of the home market, but underestimated the differences between both mar-
European Management Journal Vol. 19, No. 6, pp. 670–677, December 2001
DESIGNING A DUAL MARKETING PROGRAM
Figure 1 Blueprint for Designing a Dual Marketing Program
kets and the accompanying need for consumer marketing skills. In the years that followed, several PC suppliers, such as Digital Equipment, subsequently abandoned the consumer market. Therefore, every dual marketing effort needs to start with an explicit analysis of the underlying logic governing the application of dual marketing. This first step consists of answering questions such as: ❖ How does a dual marketing strategy fit with our marketing and corporate objectives and strategy? ❖ Which of the products that we currently offer are suitable for dual marketing? ❖ What is the market potential on both markets for these products? ❖ What are the major differences between both markets and what are the consequences of these differences in terms of requirements and skills? ❖ Which resources (production capacity, R&D investments, personnel, marketing knowledge and capabilities) are available to add a whole new customer group to our target markets? ❖ What dual marketing efforts do our competitors undertake for these products or on these markets and to what extent are they successful?
of products that are closely related or a geographical area. Alternatively, one may decide to only differentiate (some of) the marketing instruments for both markets (the external component of dual marketing) and leave the original marketing organization intact (the internal component of dual marketing). For instance, one may decide to start by adapting the product’s price, distribution channels and marketing communications to the requirements of the new market, but postpone making changes to the product’s characteristics. Relevant questions at this stage are: ❖ Which product (group) has the largest market potential on both markets, taking into account the current and anticipated activities of competitors? ❖ Which product (group) offers the largest opportunities to create synergy between the marketing efforts directed at both markets? ❖ Which geographical area is most suitable for dual marketing? ❖ Which marketing instruments need to be modified for even a limited dual marketing effort? ❖ To what extent do we need to adapt the internal marketing organization to make the initial dual marketing effort work?
Step 2. Determine the Most Logical Start for the Initial Dual Marketing Effort
Step 3. Adapt the Marketing Efforts to the Characteristics of Both Markets
To manage the complexity and risks of dual marketing, the aspiring dual marketer needs to limit the scope of his initial dual marketing effort. There are several ways of doing this. For instance, one may limit the initial dual marketing effort to just one product, a product group consisting of a limited number
The next step, after having determined the scope of the initial dual marketing effort, consists of tailoring the marketing efforts to the characteristics of both markets. In most cases, the dual marketer doesn’t start from scratch and already sells the product(s) to consumers or business customers. For instance,
European Management Journal Vol. 19, No. 6, pp. 670–677, December 2001
675
DESIGNING A DUAL MARKETING PROGRAM
designer telephones were already successful in the consumer market when they were introduced in the corporate market as well. Thus, the novice dual marketer must determine the extent to which the existing marketing efforts need to be adapted to the characteristics of the new market that will be entered by applying dual marketing. For instance, an Internet service provider initially targeted consumers and business customers with undifferentiated marketing efforts. Both groups of customers were looking for access to the Internet and acquired through ads with toll-free numbers. But as the ISP started to grow, management realized that both groups of customers evolved in different ways. Consumers were still satisfied with access, but business customers started clamoring for additional services, such as assistance with the design of websites. The ISP responded by offering consulting services, technical support, training for employees and creating special interest sites, where customers in a specific industry gather to reach their consumers. Relevant questions include: ❖ Do we need to modify the characteristics of our product (including such intangible aspects as brand name and warranty)? ❖ How can we obtain synergy between the distribution channels used for both markets without creating confusion for our customers and trade partners? ❖ Under which conditions is it possible to charge different prices in both markets? ❖ What are the most appropriate selling arguments for both groups of customers? ❖ Which mix of communication media is most suitable for the new market? ❖ Do we need new segmentation criteria and/or methods to segment the new market? ❖ Should we use different techniques to gather market information about the customers in the new market?
Step 4. Eliminate Organizational Barriers to the Initial Dual Marketing Effort Frequently, firms will discover that the successful implementation of even a limited dual marketing effort requires some organizational changes, such as changes in human resources, information systems, relationships with business partners and available skills. Organizational barriers to dual marketing need to be eliminated without requiring a complete overhaul of the organization. For instance, to facilitate their push into the home-pc market, both IBM and Compaq hired marketing managers with experience in consumer marketing. In preparing for the battle for the consumer, Hewlett-Packard realized that, in addition to consumer marketing skills, it also needed a good system for complaint handling and good relationships with distributors (for instance, by accepting returned products). Some of the relevant questions at this stage are: 676
❖ Which organizational barriers exist that may hinder the successful application of dual marketing (e.g. lack of specific skills or market contacts) ❖ To what extent can we circumvent these organizational barriers in the short term? ❖ Which organizational changes need to be dealt with in the long term? ❖ What do we need to change in the short term and what do we need to plan for the long term? ❖ How can we mobilize our organization to support the initial dual marketing effort?
Step 5. Investigate the Opportunities for Creating Synergy Firms will only be able to reap the full benefits of dual marketing when they actively and continuously search for opportunities for synergy in selling the product(s) both to consumers and business customers. Successful dual marketing consists of more than just adapting your marketing efforts to a new market and requires a constant creative search for synergy and areas of improvement. For instance, the international coffee and tea producer Douwe Egberts/Sara Lee tried to stimulate spin-off sales for its Fresh Tea drink by using the following pay-off in TV advertising: ‘Ask for it in cafe´ and restaurant!’ Questions that need to be addressed include: ❖ To what extent do our consumer and business markets overlap? ❖ How can we use the overlap between both markets to our advantage and what opportunities exist to create additional overlap? ❖ Do we currently use marketing concepts or techniques in our original market that we may successfully apply in the new market? ❖ Can successful approaches of other dual marketers (even ones that sell to totally different markets!) be applied to our situation? ❖ Do suggested approaches to create synergy offset the costs of implementation? ❖ Which order and timing are most appropriate for the implementation of selected initiatives to create synergy?
Step 6. Expand the Dual Marketing Efforts The results of the initial dual marketing effort need to be carefully evaluated in the context of the existing situation and future plans. If the evaluation results in a positive outcome, the firm may decide to expand its dual marketing efforts, for instance, by adding products or broadening the geographical area. The experiences from the initial dual marketing effort can be used to design the most appropriate dual marketing strategy. Some of the questions to consider are: ❖ Which related products are most suitable to include in the dual marketing approach?
European Management Journal Vol. 19, No. 6, pp. 670–677, December 2001
DESIGNING A DUAL MARKETING PROGRAM
❖ Which new geographical area might be used to expand the dual marketing efforts? ❖ Which criteria should be used to rank products or geographical areas in order of suitability for dual marketing? ❖ To which extent do we (considering our strategy and resources) want to implement dual marketing?
Step 7. Optimize the Marketing Organization for Dual Marketing Dual marketers that want to fully explore the potential of dual marketing need to pay attention to the internal marketing organization as well. Organizational changes may be implemented both to fine-tune the dual marketing effort and to respond to changing market conditions. For instance, the Dutch PTT Telecom discovered that their existing system for allocating costs among business units was unsuitable for dual marketing because it made it very unattractive for the Business Market division to adapt products to the requirements of the consumer market. Sometimes, changing market conditions cause firms to reverse previous decisions. In June 1999, Philips Electronics decided to fold its Business Electronics division since it felt that products like faxes and television sets with projection screens better fit with its Consumer Electronics division. According to Philips’ manager of Business Electronics both divisions use the same suppliers, while products that were originally meant for business customers have become consumer products. Relevant questions include: ❖ Which characteristics of the marketing organization hinder the effective implementation of dual marketing? ❖ What kind of marketing organization is most conducive to the effective implementation of dual marketing? ❖ How can we make sure that our marketing organization evolves in tandem with the dynamics of the marketplace?
Conclusion Despite the increasing opportunities for dual marketing and the many ways to create synergy in serving both business users and consumers, most companies have just begun to realize some of the benefits. Dual marketers who are conscious of the potential rewards still struggle to integrate communications and fail to anticipate opportunities. In addition, they have problems in designing the appropriate marketing organization that reflects the characteristics and dynamics of the marketplace. Experience is gained piecemeal, mostly by trial and error and not easily transferred to other situations. This article contributes to a better understanding of dual marketing and provides aspiring dual marketers with a seven-step blueprint to design their own effective dual marketing approach.
References Biemans, W.G. (1998) Marketing in the twilight zone. Business Horizons 41(6), 69–76. Freeman, L. (1997) The top 10 trends to watch in 1998. Business Marketing 82(12), 1. Hutt, M.D. and Speh, T.W. (2001) Business Marketing Management: A Strategic View of Industrial and Organizational Markets. The Dryden Press, Fort Worth. Kotler, P. (1999) Kotler on Marketing, How to Create, Win and Dominate Markets. The Free Press, New York. Newell, F. (2000) Loyalty.com — Customer Relationship Management in the New Era of Internet Marketing. McGraw-Hill, New York. Peppers, D. and Rogers, M. (1993) The One to One Future — Building Relationships One Customer at a Time. Currency/Doubleday, New York. Peter, J.P., Olson, J.C. and Grunert, K.G. (1999) Consumer Behaviour and Marketing Strategy (European edition). McGraw-Hill, London. Quelch, J.A. (1987) Why not exploit dual marketing? Business Horizons 30(1), 52–60. Solomon, B.D. (1985) An alternative to new product development — business products for consumer markets. Journal of Consumer Marketing 2(1), 56–60.
WIM BIEMANS, Faculty of Management and Business, University of Groningen, P.O. Box 800, 9700 AV Groningen, The Netherlands. E-mail: [email protected]. Wim Biemans is Associate Professor of Marketing at the University of Groningen. His research focuses on business marketing, product development, market orientation and relationship marketing.
European Management Journal Vol. 19, No. 6, pp. 670–677, December 2001
677
PII:
European Management Journal Vol. 19, No. 6, pp. 670–677, 2001 2001 Elsevier Science Ltd. All rights reserved 0263-2373/01 $20.00 S0263-2373(01)00092-5
Designing a Dual Marketing Program WIM BIEMANS, University of Groningen While the marketing literature treats consumer marketing and business marketing as two distinct marketing disciplines, many firms combine them by selling the same product both to consumers and business customers. This practice of dual marketing is quite common, but fraught with pitfalls and surprisingly neglected in the marketing literature. In this article we describe the growing prevalence of dual marketing, its major benefits and pitfalls and the most common dual marketing strategies. Next, we combine all these elements in a blueprint for designing an effective dual marketing program. 2001 Elsevier Science Ltd. All rights reserved. Keywords: Marketing, Strategy, Implementation
Introduction While the marketing literature treats consumer marketing and business marketing as two distinct marketing disciplines, many firms combine them by selling the same product both to consumers and business customers. This practice of dual marketing is quite common, but fraught with pitfalls and surprisingly neglected in the marketing literature. In this article we describe the growing prevalence of dual marketing, its major benefits and pitfalls and the most common dual marketing strategies. Next, we combine all these elements in a blueprint for designing an effective dual marketing program.
Dual Marketing The marketing literature traditionally distinguishes between two kinds of customers: consumers and organizations. Consumer marketing studies consumer behavior and translates the acquired knowledge into effective marketing actions aimed at creating satisfied and loyal consumers (Peter et al., 1999). Inspired by the success of consumer marketing, business marketers applied the same basic marketing principles in an attempt to influence organizational 670
buying behavior. During the last two decades, business marketing has grown into a specialized body of theory and empirical research with its own marketing concepts, such as buyer – supplier relationships, decision-making units and macro/micro segmentation (Hutt and Speh, 2001). Thus, the current marketing literature consists of two broad, coexisting streams of literature, that overlap at the level of shared concepts and theories. In practice, however, many firms sell products both to consumers and business customers and thus apply both consumer and business marketing. For instance, General Electric (GE) sells household appliances such as dishwashers and gas ranges to consumers and engineered plastics and jet engines to business customers. Such a combination of consumer marketing and business marketing generally does not create many problems. Typically, each market is handled by a different part of the organization (e.g. different business units or divisions), using its own marketing strategy. For instance, while GE’s appliance division emphasizes operational excellence, its engineered plastics division pursues customer intimacy (Kotler, 1999). In other cases, however, consumer marketing and business marketing are related because both types of customers buy the same product. This practice of selling the same product both to consumers and business customers is referred to as dual marketing (Quelch, 1987). Thus, GE engages in dual marketing, not because it sells both to consumers and business customers, but because it sells the same products — such as refrigerators and room air conditioners — to both types of customers. Dual marketing can be considered to be a special case of market segmentation, where the firm targets both business users and consumers. Since most dual marketers do not start from scratch and already sell products in either the consumer or business market, the implementation of dual marketing typically implies the addition of a whole new market for one or more products. Because both markets frequently vary widely in buying behavior and market structure, the effective implementation of dual marketing involves an intri-
European Management Journal Vol. 19, No. 6, pp. 670–677, December 2001
DESIGNING A DUAL MARKETING PROGRAM
cate set of external and internal marketing issues that complicate the typical problems of market segmentation: ❖ external marketing issues: to what extent do we need to adapt our marketing efforts (such as the application of marketing instruments and market research) to the characteristics of the new market? ❖ internal marketing issues: how should we organize our marketing efforts directed at both markets to simultaneously exploit the idiosyncrasies of both markets and stimulate synergy between the marketing efforts for both markets?
❖ manufacturers of food products sell their products to consumers, institutional customers (hospitals, schools, prisons) and firms; ❖ caterers provide their services both to private individuals and corporations.
The list of products that may be sold both to consumers and business customers is almost endless, varying from paint, insurance, carpets, and toilet paper to furniture, shampoo, financial services and energy. In addition, several changes in the marketplace contribute to an increased application of dual marketing. For instance, technological developments expedite the advent of new product generations, thus The complexity of dual marketing largely depends making simpler and cheaper versions of business on the differences between the business and conproducts available to consumers (Solomon, 1985). In sumer market, the nature of the addition, in several industries, interaction between them, the reduced market growth causes Professional chefs in experience the firm has with marketers to look for new cusdual marketing and the extent tomers. Dutch organizations hospitals and other to which it is familiar with both that traditionally rented cabins markets. For instance, for families nowadays target institutions want the same to Imation (the spin-off of 3M’s corporate customers with data storage and imaging incentive programs to escape businesses) it is relatively convenience as consumers and the pressures of a saturated straightforward to sell comconsumer market. Finally, puter disks both to consumers increasingly demand products changes in buying behavior and business customers. The may cause product crossovers like instant soups product has to be exactly the to new markets. For example, same; Imation cannot e.g. offer during the 1990s trendsetting lower quality disks to consumers. Thus, Imation only consumers were attracted by the professional image slightly changes the packaging (more disks per stanof many business products, such as professional tools dard package) and price. In other cases, large differand kitchen appliances. Similarly, professional chefs ences and/or overlap between business customers in hospitals and other institutions want the same conand consumers may complicate the dual marketing venience as consumers and increasingly demand prosegmentation task. For instance, in selling mobile ducts like instant soups. phones, faxes and audio equipment, Philips Electronics is confronted with a lot of similarities and The use of dual marketing is also stimulated by a overlap between both markets. For instance, small convergence of consumer marketing and business business owners also shop in consumer outlets and marketing. For instance, business marketers have focus on price differences, while ignoring differences come to realize that ‘a business person is simply a in product functionality offered on both markets. consumer at work’ (Newell, 2000) and discovered the Therefore, Philips uses different product versions, power of emotional appeals in advertising, thus shiftsales channels, prices and communication efforts in ing their spending from trade magazines to traan effort to tailor its offerings to both groups of cusditional consumer media (Freeman, 1997). At the tomers. In addition, it is faced with a continuous same time, consumers have become increasingly struggle of adapting the internal organization of the knowledgeable about products and product funcmarketing function to the dynamics of the markettions, such as personal computers and the health place. implications of food ingredients, making them more susceptible to rational selling arguments. Finally, new interactive technologies allow firms to build one-to-one relationships with customers, whether Growth in Dual Marketing they are large firms or individual consumers (Peppers and Rogers, 1993). The resulting converAlthough at first glance dual marketing appears to gence of consumer marketing and business marketbe an exceptional application of marketing, a closer ing facilitates and stimulates the application of dual look shows that its practice is actually widespread. marketing. Consider the following examples: ❖ car manufacturers sell their cars to individuals and fleet owners; ❖ airlines sell seats and hotels rent rooms both to tourists and business people;
Despite the growing application of dual marketing, it is surprisingly all but ignored in the marketing literature and the road to successful implementation is littered with casualties. Philips Electronics’ experi-
European Management Journal Vol. 19, No. 6, pp. 670–677, December 2001
671
DESIGNING A DUAL MARKETING PROGRAM
ment with CD-I failed to live up to its potential in the consumer market and even a small, nimble supplier like Marimba was forced to let go of the consumer market in 1997 and focus on corporate customers instead. In addition, numerous persistent dual marketers are locked in a constant struggle and continuously change their approach in search of the holy grail of effective dual marketing. This article fills the gap by presenting the benefits and pitfalls of dual marketing, describing different dual marketing strategies and presenting marketers with guidelines to design an effective dual marketing program. The discussion is based on both a literature review and in-depth interviews with marketers from fifteen Dutch and international firms, supplying products that varied from telecommunications equipment, food products and application software to catering services, salt and shampoo.
Benefits and Pitfalls The application of dual marketing is inspired by the potential benefits that may be gained. These benefits fall into four categories: Increased sales The most important and obvious benefit of dual marketing is increased sales that are realized by selling the product to a group of new buyers who have never bought the product before. For instance, in the beginning of the 1990s Motorola had much success with selling its traditional semaphones as trendy fashion items to teenagers. Dual marketers may also enjoy increased sales because of positive spin-off sales based on experience. Consumers often buy a particular brand of product because they have positive experiences with using that brand at work. Economies of scale Firms with high fixed costs (such as in the automobile and chemical industries) may use the increased sales of dual marketing to profit from economies of scale. The higher level of sales helps them to quickly recoup their investments in R&D and amortize the costs of production over a larger number of units. For some products this is absolutely necessary. For instance, some complex hair products can only be profitably sold to professional hairstylists because of large sales in the consumer market. Creating synergy Selling both to consumer and business markets offers numerous opportunities for synergy. For instance, dual marketers may build brand equity and use a strong brand to stimulate spin-off sales in another market, use ideas from both markets to generate innovative new product ideas, reach small business customers through traditional consumer channels and use the experiences gained in 672
one market to improve the effectiveness of marketing efforts in the other market. Better market information Direct access both to the consumer and business market results in better and more complete market information. For instance, if in one market the product is used more extensively than in the other one, the dual marketer gets early information about long-term product performance. Unfortunately, the attractive potential benefits of dual marketing are accompanied by a number of potential pitfalls. Numerous novice dual marketers have experienced the following pitfalls: Imperfectly separated markets Frequently, the consumer and business market for the same product are closely related and dual marketers need to make explicit trade-offs. For instance, the space assigned by an airline to its business class section directly reduces the available space for economy class. Sometimes, overlapping distribution channels result in confused and irritated customers. Small business customers may wonder why a consumer fax is so much cheaper than a similar fax in a business outlet and feel cheated as a result. Ambiguous positioning Effective dual marketing requires a clear positioning on both markets. In practice, however, dual marketers frequently use ambiguous positionings that result in confusion among customers. In launching a first-generation mobile phone system in The Netherlands, PTT Telecom targeted both business people and consumers with the same design. However, business customers were put off by the cheap green phones named Kermit and featuring the picture of a frog. At the same time, consumers had to get used to the idea of using a phone on the street and were put off by the complex advertising messages. Negative image transfer Since every business customer is also a consumer, there will always be a transfer of image. For some customers this is a problem. L’Ore´ al discovered that some hairstylists consider themselves professional artists and refuse to use products that are also available to consumers in the supermarket. In the fall of 1997 Daimler Benz was confronted with widely publicized stability problems with its new A-Class car, which may have had a negative effect on the perceived quality of other Mercedes cars with some corporate buyers. Stereotypical thinking Dual marketers that think of consumer and business markets in stereotypical terms frequently miss opportunities that exist at the interface between both markets. While the trend of supermarkets selling hot meals in their shops presents a clear opportunity, several dual marketers failed to act on it because their business division considered it to be a consumer market trend and their consumer division considered it a business market opportunity.
European Management Journal Vol. 19, No. 6, pp. 670–677, December 2001
DESIGNING A DUAL MARKETING PROGRAM
Inappropriate internal organization In addition to tailoring their marketing strategies to the characteristics of both markets, dual marketers also need to design an appropriate marketing organization. Using separate divisions enhances market understanding and the design of tailored marketing strategies but hinders the search for synergy between the marketing efforts directed at both markets.
Dual Marketing Strategies In implementing dual marketing, one of the major decisions management has to make is whether it wants to emphasize the differences between both markets or build on existing similarities (Biemans, 1998).
Stressing the Differences When businesses and consumers value distinctly different product attributes, dual marketers are frequently encouraged to undertake a set of external and internal actions that reflect the basic differences between both markets. Some of these dual marketing strategies are described below: Different communication messages The most straightforward way to exploit the differences between consumers and business customers is to target them with different communication messages. Even when the product is identical, the promotional messages may emphasize different selling points. A supplier of mobile telephones might appeal to consumers by emphasizing the product’s fashionable design, ease of use and low prices. Business users, on the other hand, might be lured by pointing out the broad geographical coverage, special tariff structures, the product’s security level and available service arrangements. Dual brands Creating separate brands is a common strategy to help customers distinguish between the products offered on both markets. Generally, it preserves or creates a professional image for the business product. When Black & Decker wanted to launch a line of professional power tools, it feared that professional users would associate the Black & Decker brand name with the well-known, do-it-yourself power tools. So it made the products bright yellow (instead of the familiar green) and introduced them under the new DeWalt brand to provide professionals with their ‘own’ high-quality tools. Of course, such a dual branding strategy requires substantial resources and investments in product development and communication. Separate distribution channels Although it is often impossible to completely separate the channels used for both markets, a supplier can enhance the differences between both channels by offering different ver-
sions of the same product and charge different prices. The success of this strategy depends on the extent to which both distribution channels can actually be separated. Separate marketing organization Some firms are dealing with such extensive differences between the nature of the consumer and business demand for their products that they feel compelled to create two different marketing organizations. Whereas some may choose to create two separate marketing departments and locate them on different floors of the same building or even in different cities, others may create a kind of subgroup within the larger marketing department serving the original market. Whatever option is chosen, the idea is to separate the people serving both markets so they can focus on one particular kind of customer. Firms that have established two separate marketing organizations should not ignore opportunities to create synergy and actively search for ways to stimulate efficient and effective interaction and coordination between both marketing groups.
Building on Similarities In most applications of dual marketing, consumers and business customers cannot be separated clearly, since both groups of customers are looking for similar product characteristics. In these situations, dual marketers will focus on initiating synergistic actions that capitalize on the similarities between both markets. Some examples of effective strategies follow: Limited target markets Synergy in dual marketing is easier to attain when the markets served closely resemble one another. Thus, a dual marketer may limit the complexity of dual marketing by limiting the target customers in the business market to those firms that resemble consumers in their buying behavior. One Dutch supplier of personal finance software follows the strategy of designing and selling user-friendly programs that incorporate only a limited number of basic product functions. Easy to install, understand, and use, they appeal both to consumers and to small business owners who ‘act like consumers’. The consistent focus on product development and target marketing makes it possible to apply the knowledge and experiences gained in serving consumers to the business market. Integrated communications Probably the most obvious strategy for creating synergy is to integrate the communications directed at both markets. Some dual marketers stimulate spin-off sales through their advertising and other promotional material. In its product catalogs aimed at consumers, IKEA includes a separate section called ‘IKEA at Work,’ which showcases a number of products for small business customers. The strategy is mirrored by the physical layout of most of the company’s outlets, where part of the shop is dedicated to products for small busi-
European Management Journal Vol. 19, No. 6, pp. 670–677, December 2001
673
DESIGNING A DUAL MARKETING PROGRAM
ness owners. The Dutch importer of Land Rover ran a series of newspaper ads in 1996–1997 demonstrating how the Land Rover Discovery can easily be transformed from a business car to a family car or recreational vehicle and back again. One brand A strategy that might go hand in hand with the previous two strategies is to employ one brand in both the consumer and business markets. This enhances brand awareness and allows for a common focus in promoting the brand and its characteristics. However, not all customers appreciate the use of one brand for both markets. Some chefs consider themselves to be creative artists and refuse to use brands that are also available to consumers. Linked marketing organization Synergy in marketing may also be achieved by stimulating communication and the exchange of ideas between both marketing departments without actually merging them. The possibilities of creating such an interconnected marketing organization — by holding regular joint meetings, rotating jobs, establishing a joint supervisory board, stimulating informal gatherings and so on — are limited only by the creativity of the managers involved. A marketing manager at a worldwide paint manufacturer hired several marketers with a background in consumer marketing and put them to work in the business marketing department to stimulate new ideas and create a virtual link between both marketing departments. One marketing organization The ultimate synergistic action involves integrating all marketing activities and merging both departments into one. Locating all marketing personnel in one department stimulates discussion, coordination, and exchange of ideas and allows the firm to profit from potential economies of scale. A free flow of communication and ideas stimulates joint activities, such as sales promotions aimed at both markets, and helps identify future opportunities for dual marketing. For example, by being close to business customers, the marketers responsible for consumers may have a clear view of the products that only need a little more development to make them interesting to individuals. Scanning for opportunities Alert dual marketers preempt competitors by actively searching for future opportunities. Such a search entails: ❖ scanning market changes (noting broad shifts in buying behavior, identifying specific developments in related markets that might lead to dual marketing opportunities); ❖ scanning technological developments (identifying business products on the brink of being suitable for consumers); and ❖ monitoring actual buying behavior. Software maker Intuit discovered that many of the 674
people buying its Quicken personal finance management software were actually using it to keep the books of their small businesses. Although Intuit had not anticipated this, it reacted quickly by adapting the product more closely to small business needs. Quickbooks went on to capture more than 70 per cent of the small business accounting software market within two years.
Implementing a Dual Marketing Program Based on the description of potential dual marketing benefits and pitfalls and range of dual marketing strategies, an aspiring dual marketer can design his own implementation effort. In order to increase the chances of success, a novice dual marketer needs to design a dual marketing program that is: ❖ holistic, in the sense of taking into account all relevant aspects such as branding strategy, internal and external communication, market targeting, the internal organization of the marketing function, opportunities for synergy and the requirements for human resources; ❖ long term, which assures that management envisions the long-term objectives of dual marketing and the most likely approaches to achieve them; ❖ incremental, which allows management to start with a minor pilot project and use the initial experiences to gradually expand the dual marketing effort; ❖ experimental, focusing management’s attention on a continuous search for new approaches and quickly eliminating unsuccessful experiments. While every firm needs to design its own dual marketing program that best fits the characteristics of both the firm and the markets on which it operates, the following seven-step blueprint offers a useful starting-point. Please note that the steps need not be followed sequentially. For instance, one may switch steps 3 and 4 or go through several iterations of steps 3 and 4, before moving on to step 5 (see Figure 1).
Step 1. Investigate the Logic of Dual Marketing for Your Firm While many aspiring dual marketers are lured by the prospect of increasing their sales substantially by entering a new market, they frequently fail to carefully analyze the true potential of dual marketing and the possible pitfalls that may be encountered. For instance, when corporate sales of PC’s started to flag in the early 1990s, many suppliers enthusiastically embraced the huge potential of the home market, but underestimated the differences between both mar-
European Management Journal Vol. 19, No. 6, pp. 670–677, December 2001
DESIGNING A DUAL MARKETING PROGRAM
Figure 1 Blueprint for Designing a Dual Marketing Program
kets and the accompanying need for consumer marketing skills. In the years that followed, several PC suppliers, such as Digital Equipment, subsequently abandoned the consumer market. Therefore, every dual marketing effort needs to start with an explicit analysis of the underlying logic governing the application of dual marketing. This first step consists of answering questions such as: ❖ How does a dual marketing strategy fit with our marketing and corporate objectives and strategy? ❖ Which of the products that we currently offer are suitable for dual marketing? ❖ What is the market potential on both markets for these products? ❖ What are the major differences between both markets and what are the consequences of these differences in terms of requirements and skills? ❖ Which resources (production capacity, R&D investments, personnel, marketing knowledge and capabilities) are available to add a whole new customer group to our target markets? ❖ What dual marketing efforts do our competitors undertake for these products or on these markets and to what extent are they successful?
of products that are closely related or a geographical area. Alternatively, one may decide to only differentiate (some of) the marketing instruments for both markets (the external component of dual marketing) and leave the original marketing organization intact (the internal component of dual marketing). For instance, one may decide to start by adapting the product’s price, distribution channels and marketing communications to the requirements of the new market, but postpone making changes to the product’s characteristics. Relevant questions at this stage are: ❖ Which product (group) has the largest market potential on both markets, taking into account the current and anticipated activities of competitors? ❖ Which product (group) offers the largest opportunities to create synergy between the marketing efforts directed at both markets? ❖ Which geographical area is most suitable for dual marketing? ❖ Which marketing instruments need to be modified for even a limited dual marketing effort? ❖ To what extent do we need to adapt the internal marketing organization to make the initial dual marketing effort work?
Step 2. Determine the Most Logical Start for the Initial Dual Marketing Effort
Step 3. Adapt the Marketing Efforts to the Characteristics of Both Markets
To manage the complexity and risks of dual marketing, the aspiring dual marketer needs to limit the scope of his initial dual marketing effort. There are several ways of doing this. For instance, one may limit the initial dual marketing effort to just one product, a product group consisting of a limited number
The next step, after having determined the scope of the initial dual marketing effort, consists of tailoring the marketing efforts to the characteristics of both markets. In most cases, the dual marketer doesn’t start from scratch and already sells the product(s) to consumers or business customers. For instance,
European Management Journal Vol. 19, No. 6, pp. 670–677, December 2001
675
DESIGNING A DUAL MARKETING PROGRAM
designer telephones were already successful in the consumer market when they were introduced in the corporate market as well. Thus, the novice dual marketer must determine the extent to which the existing marketing efforts need to be adapted to the characteristics of the new market that will be entered by applying dual marketing. For instance, an Internet service provider initially targeted consumers and business customers with undifferentiated marketing efforts. Both groups of customers were looking for access to the Internet and acquired through ads with toll-free numbers. But as the ISP started to grow, management realized that both groups of customers evolved in different ways. Consumers were still satisfied with access, but business customers started clamoring for additional services, such as assistance with the design of websites. The ISP responded by offering consulting services, technical support, training for employees and creating special interest sites, where customers in a specific industry gather to reach their consumers. Relevant questions include: ❖ Do we need to modify the characteristics of our product (including such intangible aspects as brand name and warranty)? ❖ How can we obtain synergy between the distribution channels used for both markets without creating confusion for our customers and trade partners? ❖ Under which conditions is it possible to charge different prices in both markets? ❖ What are the most appropriate selling arguments for both groups of customers? ❖ Which mix of communication media is most suitable for the new market? ❖ Do we need new segmentation criteria and/or methods to segment the new market? ❖ Should we use different techniques to gather market information about the customers in the new market?
Step 4. Eliminate Organizational Barriers to the Initial Dual Marketing Effort Frequently, firms will discover that the successful implementation of even a limited dual marketing effort requires some organizational changes, such as changes in human resources, information systems, relationships with business partners and available skills. Organizational barriers to dual marketing need to be eliminated without requiring a complete overhaul of the organization. For instance, to facilitate their push into the home-pc market, both IBM and Compaq hired marketing managers with experience in consumer marketing. In preparing for the battle for the consumer, Hewlett-Packard realized that, in addition to consumer marketing skills, it also needed a good system for complaint handling and good relationships with distributors (for instance, by accepting returned products). Some of the relevant questions at this stage are: 676
❖ Which organizational barriers exist that may hinder the successful application of dual marketing (e.g. lack of specific skills or market contacts) ❖ To what extent can we circumvent these organizational barriers in the short term? ❖ Which organizational changes need to be dealt with in the long term? ❖ What do we need to change in the short term and what do we need to plan for the long term? ❖ How can we mobilize our organization to support the initial dual marketing effort?
Step 5. Investigate the Opportunities for Creating Synergy Firms will only be able to reap the full benefits of dual marketing when they actively and continuously search for opportunities for synergy in selling the product(s) both to consumers and business customers. Successful dual marketing consists of more than just adapting your marketing efforts to a new market and requires a constant creative search for synergy and areas of improvement. For instance, the international coffee and tea producer Douwe Egberts/Sara Lee tried to stimulate spin-off sales for its Fresh Tea drink by using the following pay-off in TV advertising: ‘Ask for it in cafe´ and restaurant!’ Questions that need to be addressed include: ❖ To what extent do our consumer and business markets overlap? ❖ How can we use the overlap between both markets to our advantage and what opportunities exist to create additional overlap? ❖ Do we currently use marketing concepts or techniques in our original market that we may successfully apply in the new market? ❖ Can successful approaches of other dual marketers (even ones that sell to totally different markets!) be applied to our situation? ❖ Do suggested approaches to create synergy offset the costs of implementation? ❖ Which order and timing are most appropriate for the implementation of selected initiatives to create synergy?
Step 6. Expand the Dual Marketing Efforts The results of the initial dual marketing effort need to be carefully evaluated in the context of the existing situation and future plans. If the evaluation results in a positive outcome, the firm may decide to expand its dual marketing efforts, for instance, by adding products or broadening the geographical area. The experiences from the initial dual marketing effort can be used to design the most appropriate dual marketing strategy. Some of the questions to consider are: ❖ Which related products are most suitable to include in the dual marketing approach?
European Management Journal Vol. 19, No. 6, pp. 670–677, December 2001
DESIGNING A DUAL MARKETING PROGRAM
❖ Which new geographical area might be used to expand the dual marketing efforts? ❖ Which criteria should be used to rank products or geographical areas in order of suitability for dual marketing? ❖ To which extent do we (considering our strategy and resources) want to implement dual marketing?
Step 7. Optimize the Marketing Organization for Dual Marketing Dual marketers that want to fully explore the potential of dual marketing need to pay attention to the internal marketing organization as well. Organizational changes may be implemented both to fine-tune the dual marketing effort and to respond to changing market conditions. For instance, the Dutch PTT Telecom discovered that their existing system for allocating costs among business units was unsuitable for dual marketing because it made it very unattractive for the Business Market division to adapt products to the requirements of the consumer market. Sometimes, changing market conditions cause firms to reverse previous decisions. In June 1999, Philips Electronics decided to fold its Business Electronics division since it felt that products like faxes and television sets with projection screens better fit with its Consumer Electronics division. According to Philips’ manager of Business Electronics both divisions use the same suppliers, while products that were originally meant for business customers have become consumer products. Relevant questions include: ❖ Which characteristics of the marketing organization hinder the effective implementation of dual marketing? ❖ What kind of marketing organization is most conducive to the effective implementation of dual marketing? ❖ How can we make sure that our marketing organization evolves in tandem with the dynamics of the marketplace?
Conclusion Despite the increasing opportunities for dual marketing and the many ways to create synergy in serving both business users and consumers, most companies have just begun to realize some of the benefits. Dual marketers who are conscious of the potential rewards still struggle to integrate communications and fail to anticipate opportunities. In addition, they have problems in designing the appropriate marketing organization that reflects the characteristics and dynamics of the marketplace. Experience is gained piecemeal, mostly by trial and error and not easily transferred to other situations. This article contributes to a better understanding of dual marketing and provides aspiring dual marketers with a seven-step blueprint to design their own effective dual marketing approach.
References Biemans, W.G. (1998) Marketing in the twilight zone. Business Horizons 41(6), 69–76. Freeman, L. (1997) The top 10 trends to watch in 1998. Business Marketing 82(12), 1. Hutt, M.D. and Speh, T.W. (2001) Business Marketing Management: A Strategic View of Industrial and Organizational Markets. The Dryden Press, Fort Worth. Kotler, P. (1999) Kotler on Marketing, How to Create, Win and Dominate Markets. The Free Press, New York. Newell, F. (2000) Loyalty.com — Customer Relationship Management in the New Era of Internet Marketing. McGraw-Hill, New York. Peppers, D. and Rogers, M. (1993) The One to One Future — Building Relationships One Customer at a Time. Currency/Doubleday, New York. Peter, J.P., Olson, J.C. and Grunert, K.G. (1999) Consumer Behaviour and Marketing Strategy (European edition). McGraw-Hill, London. Quelch, J.A. (1987) Why not exploit dual marketing? Business Horizons 30(1), 52–60. Solomon, B.D. (1985) An alternative to new product development — business products for consumer markets. Journal of Consumer Marketing 2(1), 56–60.
WIM BIEMANS, Faculty of Management and Business, University of Groningen, P.O. Box 800, 9700 AV Groningen, The Netherlands. E-mail: [email protected]. Wim Biemans is Associate Professor of Marketing at the University of Groningen. His research focuses on business marketing, product development, market orientation and relationship marketing.
European Management Journal Vol. 19, No. 6, pp. 670–677, December 2001
677