B2B Marketing Excellence Blog

What is B2G Marketing?

As we note in “What is B2B Marketing?” selling to an organization such as a business or government agency presents the marketer with challenges which are distinct from the consumer sale (Business-to-consumer, B2C); however, marketing to a government agency (Business-to-Government, B2G) is also different than selling to a business customer.
               
Unlike a government agency, a business is tasked with making a profit for the benefit of its shareholders. Private companies may have more flexibility in how they prioritize profit against other objectives, but in the end, making money is their top priority.  Government agencies have fiscal constraints and requirements also, of course, but making money is not why they exist.  They exist to serve their constituents and to achieve specific missions. These objectives, and how they are to be met, are set out in a complicated combination of laws, regulations, policies, and operating directives which are influenced heavily by shifting political environments.
 
These dynamics are just as true at the local level as they are at the state, federal and international levels and the businesses that sell to these agencies must understand the unique political, legal/procedural and practical factors at play around each government department they serve. They must also understand the “business ecosystem” of companies which commonly partner to win large government contracts in any specific government market. This article is a brief look at how the “Six Ps + Branding” marketing mix apply in the unique circumstances of the B2G market.

B2G Branding: As we pointed out in our discussion of B2B branding it is people, not robots, that evaluate proposals throughout the procurement process and when the decision makers sit down to review multiple proposals that meet the RFP’s requirements, brand and reputation matter. By design, government procurements select winning proposals during the multi-stage evaluation process; sometimes through single awards and sometimes multiple awards. We contend, in the end, that this process is less likely to be successfully challenged if the winner(s)’ brand names are strong with the multitude of decision makers and influencers involved in the evaluation process. And because many of the decision makers oversee so many programs, and the contractors provide so many disparate products and services, corporate branding as opposed to product or division-level branding is often the most cost effective.

Just like in B2B markets, social media is becoming a disruptive force in B2G marketing as well, with the added challenge of navigating more stringent security requirements. Companies selling to government entities must be careful in establishing employee social media policies to accommodate these security issues, but more opportunities to use social media channels in promoting your brand to government decision makers are opening up and should be leveraged as appropriate to your business and market segment.

B2G Product (or Service): Many government procurements spell out their requirements to amazing levels of detail to comply with a variety of regulatory and procedural requirements ranging from national security to political objectives. The required customization, coupled with the large cost of sale of the procurement process itself, makes creating products and services for government agencies expensive.  However, the contracts are often for large volumes over long periods of time and so the economics work out in your favor when all these factors are accounted for appropriately.

B2G People (target market): A solid understanding of your target market is so crucial to B2G and B2B success that we break it out of the traditional “four P’s” of marketing. Quite often, the target audience in the government market is as narrow as a single component within a single department. This audience may seem “small” until you realize that for some large agencies at the federal and state levels; even one program in one component in one department can be budgeted in the billions. Because the target market in terms of actual decision-makers is often small, it becomes important that you know the contracting officers, in addition to the individual program, budget, technical, and management personnel.  Understanding their motivations, their values and aspirations, their career goals, and where they seek information is essential to communicating your brand to them.  Establishing personal relationships that far exceed the intimacy of knowledge over a typical target market analysis is essential. From these relationships, which can be difficult to establish and maintain around the myriad of procedural and logistical barriers erected to instill fairness, a true understanding of the relevant government target market can be established.

Another unique aspect of the government sale, and an added complication, is that many large procurements are won by multiple companies acting in partnership to assemble the specific solution for each contract. One company acts as the “lead prime” contractor with the government while subcontracting out pieces to other companies. Thus, the “target market” for most government contractors includes these prime contractors, who broker which companies are included in the largest proposals. To the extent that you as a government contractor have strong brand recognition and experience with the government end customer, this approach can help you earn invitations to larger bids through the primes, but does not necessarily secure a place at the table without good relationships with the primes directly.

B2G Positioning: Positioning is such an important part of the marketing mix that we give it its own “P”. Positioning is just as important for government buyers as it is in any form of marketing, but in the government market it plays a crucial role in helping you communicate clearly to cut through the massive amounts of data contracting officers and program managers must navigate during each procurement. Clear positioning backed up by effective promotion supports your proposal before you’ve even decided to bid because it helps your prospective customers understand what your company’s strengths are and when to include you in Step One of the process, which is often informal and by invitation-only.

B2G Pricing: Many government procurements  result in  “schedules” where qualified government contractors make their price lists available as a means to make the buying process more streamlined.  In addition to publishing your prices in publically available schedules, as a government contractor you must make your lowest prices available on this list. This approach provides you with relatively little price flexibility when preparing specific bids and means that profitability must be found in ways other than a high unit price.  In addition to schedules, major government programs require pricing strategies that are specific to the solution being offered, the volume, scope, and contract term, and the competitive landscape. Government regulations apply to pricing and should be studied carefully for your product or service area before entering this market.

B2G Promotion: Promotion in B2G marketing is just like promotion in B2B or B2C marketing in that your messages must appear when decision makers and influencers are seeking information about your product or service. In the government market, the ultimate information vehicle is the proposal itself and its vocabulary, tone and specific references can be critical factors in communicating value. There are certainly publications, trade shows, and events which can be leveraged to let your target market know about your company and offerings as well, and like the business market they are very specific to the department and/or product area, requiring specificity of message and placement needed to make sure your communications are successful. Even though the audience of “buyers” is often relatively small, the audience of “influencers” on any particular procurement can be quite large and diverse, including political figures and staffs who have oversight responsibility. Their information needs are equally diverse which makes reaching them each with the right message sometimes challenging. These unique challenges make public affairs and public relations critical pieces of the government marketing function. Planning communications strategies around major procurements and programs enhance positioning at these critical business times when any other form of communications is limited.

B2G Place (Sales & Distribution): As in large B2B sales, a skilled and knowledgeable direct sales force is critical to your success in the government market. Government sales people are most successful when they are perceived by their government clients as substantive experts and information resources who add value to the complex discussions that take place before procurement. Valued government sales teams know their companies’ products and services inside and out; know their clients procurement processes and mission requirements thoroughly and are trusted by their customers. The marketing department helps these highly skilled sales teams by providing effective promotional and branding “air cover” so that the sales people can focus on the details of specific procurements.

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Updated: April, 2009

What Is B2B Marketing?

Marketing to a business trying to make a profit (Business-to-Business marketing) as opposed to an individual for personal use (Business-to-Consumer, or B2C marketing) is similar in terms of the fundamental principles of marketing. In B2C, B2B and B2G (Business-to-Government) marketing situations, the professional marketer must always:

• successfully match the product/service strengths with the needs of a definable target market;  
• position and price to align the product/service with its market, often an intricate balance; and  
• communicate and sell it in the fashion that demonstrates its value effectively to the target market.

Voila! Easy? Well, no. If it were that easy, we wouldn’t have dedicated our careers to understanding the nuances of marketing. So what are the meaningful differences between B2B and B2C marketing?

A B2C sale is to an individual. That individual may be influenced by other factors such as family members or friends, but ultimately it’s an individual who pulls out their wallet. By comparison a B2B sale is to an organization, comprised of a group of individuals. In that simple distinction lies a web of complications that vary widely by firmographic (i.e., “demographic” for segmenting businesses) such as business size, location, industry, and revenue base. This article is a brief look at how the “Six Ps + Branding” marketing mix apply in the unique circumstances of the B2B sale.

B2B Branding: Branding is often considered an “irrational” element of the buying process, thought by many to make it most effective on individual consumers, as opposed to organizations which have relatively structured procurement processes. By contrast procurement processes are considered “rational,” as though every proposal will be evaluated on its merits alone. This understanding essentially assumes that robots are in charge of your prospect’s procurement process and that your reputation makes no difference to a robot. Of course, these are weak presumptions. B2B Branding is a highly profitable investment when done well because it provides incentive to your buyers to select you during the procurement process. A strong brand standing behind a strong proposal gives your customer confidence that in choosing you as their business partner they will be dealing with a known quantity that they can rely on as they build their own business.

B2B branding differs from B2C in some crucial ways, including the need to closely align your corporate brand, divisional brands, and product/service brands and to apply your brand standards to material often considered “informal” such as email and other electronic correspondence. In doing this, you respond to the reality that every contact creates an impression that either builds or devalues your brand. The introduction of social media has added even more complication because in a world where your employees, customers and critics talk about your company (often now called "the brand") throughout cyberspace on blogs, forums, and social network sites, the individuals your brand touches now actively shape your public image - for years to come through search results. As a result, your marketing and public affairs departments affect your public perception less directly than ever before. Although you can and should implement employee social media participation policies, this approach is a defensive measure that doesn’t by itself further your brand. In addition, more proactive brand-diffusion strategies must be deployed internally and externally to take advantage of your employees and "fans" that are predisposed to help shape your public image in a positive manner.

B2B Product (or Service): The business customer is typically demanding, and their needs more specialized, than the consumer’s. As in consumer marketing, this is true for larger sales, but even when buying commodities, the business customer will generally require a more customized sales process, product capability, configuration capacity and delivery process. Additionally, because business customers are focused on creating shareholder value, the cost-saving or revenue-producing benefits of products and services are an important factor in the product development and marketing cycles.

B2B People (target market): A solid understanding of your target market is so crucial to B2B success that we break it out of the traditional “four Ps” of marketing. Quite often, the target market for a business product or service is smaller and has more specialized needs reflective of a specific industry or niche. Regardless of the size of the target market, the business customer is making an organizational purchase decision and the dynamics of this, both procedurally and in terms of how they value what they are buying from you, differ dramatically from the consumer market.  Moreover, characteristic of the organizational sale, the final decision is rarely made by one person. Typically, the decision-making is based on a defined set of criteria and involves people in numerous departments throughout the organization. Understanding what motivates these individuals and how they stay informed about your market niche becomes important to how the brand is communicated to them.  

B2B Positioning: Positioning is such an important part of the marketing mix that we give it its own “P.” Positioning is just as important for business customers as it is for consumers so that they can tell quickly when viewing your materials why you offer them greater value than the competition. Because the business customer is generally more knowledgeable and competitive intelligence is readily available through the internet and word-of-mouth, the B2B marketer’s positioning challenge is a matter of both art and science

B2B Pricing: As a critical component of Positioning, and a key variable in your financial returns, pricing is an art and a science, but for the business customer the price of your product or service is often being calculated into their cost of goods, which factors into their overall profitability and shareholder value. Business buyers rarely act on impulse, but the extra scrutiny they give to your proposal does not necessarily imply that they always go for the low price. Quality, service and contractual protection, as well as business relationships, matter quite a bit since they know their own customer satisfaction often succeeds or fails based on their customer's experience with your offering. In addition, your price structure impacts their profitability depending on how it is capitalized or expensed on their books. The result is that the business market can be convinced to pay premium prices more often than the consumer market if you convey value through pricing and terms.  

B2B Promotion: Promotion planning is relatively easy when you know the media habits of your customer base, not to mention the messaging vocabulary unique to their segment. However, in the B2B sale, when so many individuals are involved in the recommendation and purchase process, with so many different needs, biases, personality types and media habits it’s also important to know what motivates them, how they make their decisions, and where they turn for decisive information. While there are many creative approaches in putting together a promotion plan for a B2B sale, there are usually ‘things that work’ in each industry for each type of product. Specific trade shows, analysts, publications, blogs and retail/wholesale outlets tend to be fairly common to each industry/product area. Developing a communications strategy to address these industry-specific information outlets and reach the target audience is the first step to success.  

In the area of promotion, new social media technologies and channels offer new promotional vehicles. For these new channels, however, there is not yet much "standard" activity in most industries. However, business buyers are becoming more active in social media and it is important to research your industry segment to be present where social media activity is already taking place at a level appropriate to your budget and target market. Such a presence allows you to "listen" to what is being said about your company, respond when necessary and to be ready for greater investments in these channels when and if they begin to mature for your segment.

B2B Place (Sales and Distribution): The importance of a knowledgeable, experienced and effective direct (inside or outside) sales force is critical in the business market. If you sell through distribution channels, the number and type of sales forces can vary tremendously; and your success as a marketer is highly dependent on their success. To complicate an already complicated situation, it’s no secret that marketing and sales people differ in personality types and motivations. The successful B2B marketer understands these differences and knows how to turn them into strengths so that marketing can support sales effectively and form a solid team taking your company’s products and services to market.

What about selling to other kinds of organizations? Governments? Educational institutions? Non Profits? International organizations? Each of these markets is more like the B2B market than B2C, but like the business market they each have many specialized requirements and sub-segments. We look at B2G marketing specifically in a similar article.

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