ABSTRACT
The study was conducted to evaluate some B2B marketing strategies that are appropriate for the Automobile Industry. A brand loyalty conceptual framework developed for the Fast Moving Consumer Goods industry by Moolla (2010) was used to test if it also applies in a business-to-business setting. The framework was adapted to suit the above industry and used to measure brand loyalty levels of Nigeria Automobile manufacturers.
From the results it can be concluded that the model can be applied with some adaptations. Factor analysis was utilised to validate the influences. Factor analysis results were viewed with caution as sample adequacy was found to be marginal in some cases, possibly due to a small data set. Although two of the influences could not be validated, they were still found to be important.
All the influences are found to be reliable as evaluated using Cronbach’s alpha. The measured brand loyalty values show that customers in the Nigeria Automobile Industry are quite loyal, with some influences scoring very high. Culture in particular was found to be not very important. This is likely due to the fact that individual culture instead of company culture was measured. More work is required to adapt the questionnaire to measure company culture when assessing brand loyalty in a business-to business setting.
Clear brand loyalty differences were identified along with age, company size and the position the respondent holds with the company. Owners/directors, procurement personnel, technical personnel and general managers view different brand loyalty influences as important.
Key terms: Brand loyalty, branding, purchasing behaviour, B2B, business-to- business.
CHAPTER ONE
1.1 INTRODUCTION
Strategy implementation has been seen as an art rather than a science in contrast to strategy formulation, which is the reason behind the significantly fewer articles written within the former (Li, et al., 2008). Yet, 83 percent of companies fail to implement their strategy smoothly, and only 17 percent feel that they have a consistent strategy implementation process. This shows that strategy implementation is a key challenge for today’s organizations. (Li, et al., 2008) Ramaseshan (2013) stresses the fact that effective implementation of business level strategy depends on the extent to which different functional groups of the organization are able to work in partnership with each other. Even so, few studies have examined the inter-relationships of functional and business strategies (Li, et al., 2008). In light of these findings, we have chosen to investigate the main factors to consider when implementing a business-to-business (B2B) market entry strategy within the automotive industry.
Traditionally brand interest research focused strongly on consumer markets while the branding of Business-to-Business (B2B) markets or products are largely neglected (Napoli & Lindgreen as cited by Leek & Christodoulides, 2011:1060). However, numerous studies that have been done identified various industrial branding benefits to organisations. These benefits include improved perceptions of quality (Cretu & Brodie, 2007:237), conferring uniqueness (Mitchell et al., 2001:424), enabling a premium to be charged (Ohnemus, 2009:165), and raising barriers to entry (Mitchell et al., 2001:424). B2B (business-to-business) branding increases buyer confidence and satisfaction with their purchase decision (Mitchell et al., 2001:424) and reduces their level of perceived risk and uncertainty (Ohnemus, 2009:165).
Despite these apparent benefits of branding, business branding is not widely used across B2B companies, possibly due to a lack of extensive academic theory. B2B branding is an area that is in need of further research (Leek & Christodoulides, 2011:1060). This study intends to evaluate B2B marketing strategies that are appropriate for the Automobile Industry with specific focus on Auto mobile binders used as the main ingredient in the manufacture of water based coatings (paints).
In a B2B environment functional values including quality, technology and after sales service were found to be of importance to buyers. Innovation, a functional factor, was also found to be of importance. Functional values were found to be the primary factors considered by buyers in the decision-making process (Leek & Christodoulides, 2012:112). The emotional qualities of risk reduction, providing reassurance and trust were also highlighted as significant in brand development. (Leek & Christodoulides, 2012:112). Persson (2010:1274) suggests that corporate brand image determinants of price premium can be conventionalised into six dimensions. These dimensions are brand familiarity, product solution, service distribution, relationship and company associations. Pan et al. (2012:156) found that the effects of customer satisfaction and trust on loyalty are not as important when products are purchased on a regular and short purchase cycle. Factors that largely relate to product performance do not seem to have such a large impact on loyalty in a B2B environment than in a B2C environment. Čater and Čater’s (2010:1331) found that customer loyalty depends more on emotional motivation than on rational motivation to stay loyal to a brand. Rauyruen and Miller (2007:28) explored the influence of relationship quality on customer loyalty in a B2B context. They found that only satisfaction and perceived service quality influenced purchase intentions. They also found that only the overall organisational level of relationship quality influences customer loyalty and that employee level relationship quality does not play a significant role in influencing B2B customer loyalty. Shi and Chen (2011:140) studied several effects moderating the relationship between customer satisfaction and loyalty. They found that financial switching costs, affection bind and trust have significant moderating effects.
1.2 PROBLEM STATEMENT
This study focuses on assessing B2B marketing strategies that are appropriate for the Automobile Industry and more specifically, the highly competitive water based binder industry. The research measures the tendency of Automobile manufacturers to stay with their current binder suppliers as well as which factors may prevent them from defecting. The research also attempts to determine why Automobile manufacturers become loyal to a certain binder manufacturer brand and also to determine if there are moderating factors that cause a customer to defect even if he is completely satisfied with his current supplier.
1.3 OBJECTIVES
1.3.1 Primary objective
The primary objective of this study is to analyse B2B marketing strategies that are appropriate for the Automobile Industry in the Nigeria Automobile Industry. .
1.3.2 Secondary objectives
In order to achieve the above, the secondary objectives are as follows:
· Identify key elements of B2B marketing strategies that are appropriate for the Automobile Industry;
· Determine whether a significant relationship exist between brand loyalty and repurchasing behaviour;
· Determine up to what value difference customers will stay with their current supplier. In other words to determine what the minimum value difference is at which a customer would defect.
1.4 Research questions
1. How to sell a new innovative product in a B2B market?
2. How to segment a B2B market?
3. What value-based selling offers when selling a new innovative product?
1.5 Significance of study
It is not always clear whether brand loyalty exists in a B2B environment as business customers are considered rational decision-makers when evaluating value propositions. According to Gale (cited by Williams et al., 2011:806) they will evaluate the expected product benefits against proposed prices when assessing expected value. In B2B markets customers are more sensitive to value due to the complexity of the products and the large size of the accounts (Bendapudi & Leone, 2002:97). If it can be established that brand loyalty exists in this market, brand loyalty can be evaluated and the influences contributing the most to brand loyalty in this environment can be established. This would enable marketers in B2B environments to better understand which factors to focus on when marketing and branding their products. It would also help them to position their brands more specifically in this environment.
The coatings (paint) market in Nigeria is a very big market consisting of many manufacturers with total industry revenue of more than N6.4 billion annually (Nigeria.info:2006). Of this, by far the most prevalent is Auto mobiles, mainly for use as architectural paints. The most critical ingredient in paint is the binder. For water based systems, the binder is a polymer that is added as a colloid dispersion in water. Water based binders are also commonly known as emulsions or as latex (technically more correct). Due to the size of the paint market and the criticality and amount of binder used in paint, there is a lot of competition between binder suppliers. Apart from directly imported binders, there are eleven local manufacturers of water based binders in Nigeria. Five of these are multinationals with manufacturing facilities across the world. It has been observed that some Automobile manufacturers seem to stay with their binder suppliers beyond the rational reasons of quality and price. As mentioned, customers in a B2B environment are typically rational decision-makers, seemingly basing their buying behaviour purely on value. This would imply that no real brand loyalty should exist in such an environment. It is clear that the supply of binder to Automobile manufacturers, who sell on to consumers, is a typical B2B market.
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