SEGMENTATION, TARGETING AND POSITIONING OF THE SUPPLIERS. BASIS ELEMENT IN STRATEGIC PLANNING ON BUSINESS TO BUSINESS MARKET IN ROMANIA

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1 SEGMENTATION, TARGETING AND POSITIONING OF THE SUPPLIERS. BASIS ELEMENT IN STRATEGIC PLANNING ON BUSINESS TO BUSINESS MARKET IN ROMANIA C escu tefan Claudiu The Academy of Economic Studies, Marketing Faculty, Mihai Eminescu Str., Nr.13-15, District 1, Bucure ti, stefancaescu@mk.ase.ro, Tel.: Dumitru Ionel The Academy of Economic Studies, Marketing Faculty, Mihai Eminescu Str., Nr.13-15, District 1, Bucure ti, ionel.dumitru@gmail.com, Tel.: Ionescu Florin Tudor The Academy of Economic Studies, Marketing Faculty, Mihai Eminescu Str., Nr.13-15, District 1, Bucure ti, florinionescu@mk.ase.ro, Tel.: Abstract: In Romania the use of the strategic marketing as a basic element in the relationship to the suppliers by the companies from the B2b market is at an incipient level, sometimes even at the level of the subconscious. In order to be able to develop the practice it is necessary to have a theory well organized and adapted to the nowadays requirements of the field of the suppliers relationship marketing on the B2b market. Therefore a need of information about the present degree of implementing the strategic marketing by the companies on the B2b market in their relationship with the suppliers in Romania and especially the identification of the ways in which the organizations use these methods and techniques of segmentation, targeting and positioning in order to develop the relationships with their suppliers appear as necessary. Starting from this premise the following research has as its goal the analysis of the way in which the organizations which are active on the Romanian B2b market use the strategic marketing in the segmentation, targeting and positioning of the suppliers. Key words: supply chain management, segmentation of the suppliers, targeting of the suppliers, positioning of the suppliers Segmentation, Targeting, and Positioning of the Suppliers In order to integrate the economical and commercial activities at the level of the supply delivery chain the development of some close partnerships between the client and suppliers is necessary. The development of the supply delivery chain implies that all the companies are involved in the process to share information about clients, the real level of demand, the level of the transactions at the selling points and strategic corporate plans. In order to develop a good supply-delivery chain is very important the way in which the company from business to business market uses strategic marketing instruments in segmenting, targeting and positioning of the suppliers Market segmentation represents the process of division of a collectivity into homogenous groups according to one or more criteria. Through segmentation a fragmentation of the relevant market into homogenous units, respectively partial markets is targeted with a view to its differentiated processing of this. Also for the organizations on the B2b market, considering the importance of the process of supply and the complexity of the supply delivery chain, the acquire of an appropriate segmentation of the deliverers is very important. In the use of the segmentation as a strategic marketing method for the identification of the segments the use of the following criteria is recommended: 1. criteria regarding the supplying company which contain variables like: general coordinates of the company, staff and management of the company, experience of the supplying company, production facilities which it has. 790

2 2. criteria regarding the long term vision of the company with the following variables: financial aspects, economical performance and financial stability, organizational strategy and culture, technological aspects, safety of the supplier, business references; 3. criteria regarding the business behavior of the supplier with the following variables: attitude of the selling staff, production and selling equipments which it has, quality and availability of the offered products, behavior of the technical staff, competence of the management Targeting of the suppliers implies the development of the marketing mix for one or more segments of suppliers identified following the segmentation. Two very important factors must be considered when a segment of suppliers is chosen for being targeted by a company or another. 1. attractiveness of the respective segment of suppliers. 2. compatibility between the respective segment and the acquisition goals, the strategies and the resources of the company. The attractiveness of the segment of suppliers can be assessed through one of the following aspects: the dimension of the respective segment (number of potential suppliers), growth rate of the respective segment, existent competition in the respective segment, respectively the bigger the competition is the more appropriate it is to target the possibility of the company to obtain better conditions of acquisition being bigger the loyalty towards the company manifested by the respective segment of suppliers, expected levels of profit. Compatibility is given by the measure in which the suppliers from the respective segment can satisfy the expectations of the company on the B2b market regarding: the availability of the product, the price of the product, the offered services, the possibility of a partnership. In accordance with the assessment of the two elements the following strategic alternatives of targeting a segment of suppliers can be chosen: Non-differentiated strategy of targeting all the segments of potential suppliers; Differentiated strategy when it focuses on two or more segments. The optimum variant would be two segments with a division of share between the two of 60/40. Concentrated strategy when the company on the B2b market is focused on one single segment of suppliers. The segmentation strategy offers the totality of the segments that are active on a market as well as the presentation of every type of segment, the presentation of the methods of selection for them to the company. Once the segment is defined the next objective of strategic marketing is the positioning of the company within the chosen segment. The term positioning means the way the marketing program of a company is perceived by the buyer regarding the applied marketing strategies by the main competitors, that is the way in which the products are positioned in relation to the competitors in what concerns the marketing mix. Essentially the positioning is defined as the placing of the objects to be sold (products, services, organizations, personalities) in a multidimensional market model with the goal to insure a well defined place in the psychology of the consumer. One of the most used methods for positioning products on the market is the perception map of the consumers. This identifies the differences between the characteristics of the products through the use of multidimensional staging of the perception and preferences. The localization of the characteristics on such a map is performed usually through taking into account of two criteria, such as accessibility of the offer and the relation quality price. The company will choose from the variants so obtained the group of characteristics which insure the best position for it. Regarding the positioning of the product, there are two theories which lie at the base of the positioning methods in practice: the theory of the maximization of the position, which is the attempt to reduce the existent distance between the position of the product and the expectations of the consumer without considering the products of the competitors; the theory of the maximization of the plurality, which is the positioning of the product considering the products of the competitors and the distance between them and the expectations of the consumers. The same basic concepts can be used also in the theory of the positioning of the suppliers by the company on the B2b market but also in the way this is positioned in relation to the other potential suppliers. The positioning of the suppliers towards the company using the perception map implies following successively two stages: 791

3 a) Which are the main characteristics required by the company from the potential suppliers. These can be: the availability of the product, the quality of the product, the price, the offered services etc. b) The intensity of each of these characteristics for each individual supplier. c) On the basis of these two variables a map of perceptions can be realized for each individual supplier which will lie at the base of the acquisition decision. The positioning of the company towards the potential suppliers also implies two stages: a) The identification by the company of the main advantages looked for by the supplier within a partnership and the importance of each one of these; b) The maximization of the position, which is the attempt to reduce the existent distance between the company position and the expectations of the supplier; Quantitative research regarding the relationship of the companies in the field business to business in Romania with the suppliers In Romania the use of the strategic marketing as a basic element in the suppliers relationship marketing by the companies from the B2b market is at an incipient level, sometimes even at the level of the subconscious. In order to be able to develop the practice it is necessary to have a theory well organized and adapted to the nowadays requirements of the field of suppliers relationship marketing on the B2b market. So that a need of information about the present degree of implementing the strategic marketing by the companies on the B2b market in the relationship to the suppliers in Romania and especially the identification of the ways the organizations use these methods and techniques of segmentation, targeting and positioning in order to develop the relationships with the suppliers appear as necessary. Starting from the exposed problem the presented research has as its goal the analysis of the way in which the organizations which are active on the Romanian B2b market use the strategic marketing in the segmentation, targeting and positioning of the suppliers. The research has also a secondary goal, and that is to see if the usage of elements from relationship marketing in the development of the relationships with the suppliers by the companies on the B2b market can be identified. The researched collectivity is represented by the companies which are active on the territory of Romania, in the B2b field in urban spaces (towns of over 50,000 inhabitants), whether they are local or foreign, of any field of activity. In the case of this research the personal face to face interview was used as a way to gather information and the questionnaire as an instrument. In order to determine the test sample on which this research was performed, no random method of sampling was used because the researched problem represents a new element in the research studies of marketing in Romania, that is why it was treated as an exploratory research, which offers the information necessary for a subsequent planning of a research on a representative sample. A number of 80 companies in the B2b field in Romania were interviewed. The analysis and the interpretation of the results of the research showed the following aspects regarding the relationship with the suppliers of the Romanian companies. In what concerns the main criteria used in the assessment of the suppliers taken into account in the management of the suppliers portfolio by the company on the B2b market, these are in the order of importance: quality of the supplied products, price of the products, facilities of payment obtained from the suppliers and the obtained discounts. These results prove that although the most important thing taken into account is quality, the others have as base the price which means that, although the Romanian companies need quality products, they do not afford them and wish to buy at the best prices and with payment on term. It is observable that although worldwide for the companies on the B2b market the most important characteristic taken into account in the assessment of a supplier from the point of view of an acquisition center is the availability of the product, for the companies in Romania this characteristic is only on the 5th place as importance. This fact proves that the supply delivery chain is not very well organized and the companies use big raw materials stocks and not systems of JIT type which may allow them to solve more efficiently the other problems which they have in relation to the availability of liquidities (big stocks of raw materials - > financial immobilizations - > low liquidity- > need advantages related to the price, payment ways). It is also remarkable the fact that in the analysis of the questionnaires for the most important four criteria, the response which was selected most frequently was totally agree. 792

4 Criteria use in the assessment of the suppliers quality of the supplied product price of the supplied product paym ent facilities obtained from the supplier discounts offered by the supplier availability of the supplied product long term relationships with the supplier services offered by the supplier degree of novelty of the offered product way of prom otion of the offered product The low result obtained by the supplementary services offered by the supplier presents the availability of the companies to give up some supplementary services only to get a better price for the basic product. Still this claim reflects a simplistic way of thinking from the companies on the B2b market in Romania which regard the cost of the supply only through the price of the basic supplied product and not through the integrated logistic cost which contains also the offered services but can generate on the whole savings of scale in the activity of the company. It is also noticeable the low importance in the degree of novelty of the purchased product, thing that can be understood considering that generally a new product is associated with a high price and maybe with a low quality but especially a low safety in exploitation. It is also noticed that the most unimportant criterion used in the assessment of the suppliers is the modality to promote the offered product which confirms strongly once again the minor role between the promoting techniques for advertising or sell promotion on the B2b market. In what concerns the most important elements taken into account in the selection of the suppliers the safety of the supplier is on the first place, business references which reveal the wish of the companies on the B2b market to have durable relationships with their suppliers. Anyway correlating this characteristic with the importance of long term relationships in the assessment of the suppliers which received mediocre points in the first section of the questionnaire we can say that the leaning towards assessing the suppliers first of all according to their safety rather leads to a kind of an idea of comfort in supplying It is also noticed the fact that the production facilities of the supplying company are the lest important in the selection of the suppliers which proves that although they consider quality as the most important characteristic in the assessment of a supplier this is not assessed on the basis of objective criteria. In support of this affirmation there is also the fact that the production and selling equipments received an inferior score. Analyzing the results from this section we notice that generally the companies do not stress the importance on the human resource of the supplying company as a consequence of low notes obtained by the staff and the management of the company and even by the competence of the technical staff. Analyzing the third section of the questionnaire, the one through which the opinions of the company are expressed on the B2b market in relation to their main suppliers we notice that generally these consider their relationship to the main suppliers as being one of partnership. Generally they consider that the staff from the supplying company are serious people, they try to fulfill their tasks, in the majority of the cases they negotiate correctly, say the truth, represent a real counterpart, do not try to cheat. 793

5 Criteria used in the selection of the suppliers safety of the supplier, business references attitude of the selling personnel experience of the supplying company economical and financial stability of the supplying company technological capacity of the supplying company behavior of the technical staff production and selling equipments of the supplying company staff and management of the supplying company management skills production facilities of the supplying company general coordinates of the supplying company Going to the last section of the questionnaire we notice that the biggest score is granted to an affirmation which also reveals the partnership between the two companies, more exactly the fact that there is an information and assistance change between the two entities. Anyway it has to be noticed that although there is some opening to the change of information between the parties, this does not apply when we talk about confidential information or access to the patents or inventions although they could be useful in the supply delivery chain. By connecting the variable long-term relationships mentioned in the first section with the variable we provide confidential information to the supplier and by comparing the calculated value of hi square it can be noticed that there is a correlation between the two variables. Taking into account the statement according to which we supply confidential information, this is a negative statement (one total disagreement, 7 total agreements) and we may assert that although the companies operating in the B2b field tend to lean towards the development of long-term relationships with their main suppliers, they are not willing to provide them confidential information. Also, by comparing the calculated value of hi square (it can be noticed that there is a correlation between the variables quality of supplied product and our supplier is the holder of quality certificates. Taking into account that generally interviewed companies mentioned the quality of the product as being the most important criterion in assessing the suppliers, the latter maintain their position on account of the fact that most of the main suppliers benefit from quality certificates for supplied products. This correlation may suggest the fact that as far as the product policy adopted by the B2b market with respect to their suppliers a very important element is represented by the implementation of a quality stability strategy, thus one may conclude that the supply of high quality and constant quality products is sought after. It is common knowledge that a quality certificates reasserts the maintaining over time of a constant character of quality corresponding to the products or services provided by a company. In conclusion, the most important criteria used by the companies operating on the Romanian B2b market in Romania are: quality of the product, price of the product, credit facilities granted, discounts granted, availability of provided supplied, long-term relationships and services provided by the supplier. By making a comparison to the theory that puts emphasis on availability of the product, then on quality, price, provided services and the possibility of developing long-term relationships, thus we may state that as far as Romanian companies are concerned, the decision of the purchasing department is made based on arguments regarding quality and price. The surprising fact is that although price and the other features thereof are very important, companies do not seem to deem as important the availability of the product that generally is equivalent to the liquidity generation. As far as for the elements taken into consideration in the selection, segmentation and targeting of the suppliers are concerned, the security of the supplier company occupies the first place, then the attitude of the sales staff, the experience of the supplier and his economical stability. Generally it was opted for criteria related to the security of the relationship with the suppliers which emphasizes the interest in the development of partnership. As far as for the opinion of the companies on the B2B market is concerned towards the main supplier as well as their reflected attitude towards them a dual relationship can be seen meaning that they consider that the supplier is serious about the business relationship this also being the company` attitude. At the same time there is a note of 794

6 skepticism in the relationship with the supplier, the contract being considered very important, the confidential data exchange is absent, generally the supplier is not helped with issues of quality although these might affect the company. Bibliography 1. Anghel Luarentiu-Dan, Petrescu Eva Cristina, Business to Business Marketing, Uranus PH, Bucharest, Bowersox J. Donald, Closs J. David, Cooper M. Bixby, Supply chain logistics management, McGrawHill PH, New York, Bruhn, M., Marketing no iuni de baz pentru studiu i practic, Economic PH, Bucharest, Dumitru, Ionel, Marketing Strategic o abordare in perspectiva globalizarii - Uranus PH, Bucharest, Eckles, Robert W. Business marketing management : marketing of business products and services, Prentice Hall PH, Keegan, W. J., Green, M. C., Global Marketing fourth edition, Pearson Prentice Hall, New Jersey, Pop, N. Al., (coord), Marketing Strategic, Economic Publishing House, Bucharest, Managing Business-to-Business Customer Relationships Following Key Contact Employee Turnover in a Vendor Firm, by Bendapudi, Neeli and Robert P. Leone (2002), Journal of Marketing, 66, Strategy-driven B2B promotions, by Karl Hellman The Journal of Business & Industrial Marketing; 2005; 10. Toward greater integration of insights from organization theory and supply chain management, David J. Ketchen Jr., G Thomas M. Hult, Journal of Operations Management, No.25,