Business To Business Marketing - PDF

Running head: BUSINESS TO BUSINESS MARKETING
BUSINESS TO BUSINESS MARKETING
Name of the Student
Name of the University
Author note:

1BUSINESS TO BUSINESS MARKETING
Case Study and Discussion
Questions Reference: Hutt, M. & Speh, T. (2014), Business Marketing Management: B2B
(11th edition), South-Western Cengage Learning. Chapter 6 – Case Study page. 171-172
1. In recent days the United States of America has been facing the problem of excessive
out sourcing of jobs that is leading to job loss for the existing employees and potential
employees within the country (Schniederjans, Schniederjans & Schniederjans, 2015).
The country has been already facing the problem of job crunch after the financial
crisis during recession. Job crunch is one of the political issues of the country and the
new administration in the United States of America led by the President Donald
Trump came into power by promising retention of jobs within the United States and
reduction of outsourcing in such excessive numbers. It can be therefore understood
that the country is dealing with the problem of lesser number of job openings than
there are eligible number of candidates for those jobs.
The main reason behind the outsourcing of jobs, which mainly happen towards the
Asian countries like India and China is because of the presence of the large talent pool
in these countries but at a far lesser payment. In the USA the companies have to pay
the individual employees a staggering amount of monthly payment, because the
remuneration rates at the USA market is much higher (Jackson, 2013). However the
same jobs are performed by the Indian and Chinese employees at a far lesser cost.
Therefore it is natural that the labour intensive jobs are outsourced by the big
companies to these regions to get their work done in a far lesser price. Apple Inc. is
one of the largest companies in the country. It can be stated that Apple Inc which is
one of the largest companies in the globe in its field of technological gadgets is also
one of the largest employers and revenue generators in the United States. However

2BUSINESS TO BUSINESS MARKETING
Apple has outsourced all its manufacturing activities at China. The manufacturing and
Assembling of its various parts are done in China and the administrative works are
performed in the United States. Apple officially stated “further actions to improve the
flexibility and efficiency of its manufacturing operations by moving final assembly of
certain products to original equipment manufacturers.”
In the case of Schwinn “At its peak, Schwinn had more than 2000 U.S. employees,
produced hundreds of thousands of bicycles in five factories, and held 20 percent of
the market”, therefore it is very evident that there must have been some strategic
mistake that led to the closure of the companies US operations. The fact is the
company increased its dependency on the Chinese market both in terms of selling and
manufacturing. This has been done in order to reduce the cost of the products,
however which led to the loss of a huge portion of the employees. This is one of the
reason why the company started losing hold on the USA market. Soon the company
changed its focus towards the Chinese market leaving the USA market and this
diversification of the attention towards new regions has resulted in a situation where
the company initiated its end on the USA market. This mistake has been repeated by
many small and large companies, the primary reason of such a loss in the US market
is over dependency on other regions for production and changing of focus to new
markets.
2. The global strategy of outsourcing employed by a large number of companies around
the globe to decrease cost of production is applied by the company in order to
leverage the production of goods and keep the cost of the individual units of products
as les as possible. Many of the Information and Technology related companies are
also outsourcing their jobs to India. China, Brazil and other countries in other to
maintain a sustainable business scenario.

3BUSINESS TO BUSINESS MARKETING
There are various theories that can be used in order to understand the phenomenon of
outsourcing. The most used theory of outsourcing is Transaction Cost Economics
(Ketokivi & Mahoney, 2016). This theory is having the best tools in order to catalyse
the decision making process in outsourcing. The model by its characteristic features
allow the changes to be implemented at two levels of both decision making and
relationship management (Wacker, Yang & Sheu, 2016). “Transactional Cost
Economics” is the process of understanding the transactional value of the outsourcing
process and what is the level of profit gained for outsourcing the job in a particular
region, and whether it would be more profitable for the company if the same was
outsourced in another country or region (Lacity & Khan, 2016).
Another theory in this regard is the “Core Competency Theory”, this theory is used by
many management experts worldwide to understand the process and supplement the
decision making process (Drucker, 2017). This theory is actually sourced from the
“Theory of Resources”. This theory has been described by researchers as “collective
knowledge of an organisation, especially with regard to the ways of combining
different productive skills and the integration methods of various different
technologies” (Mihailidis & Thevenin, 2013).
Another theory that describes and explains the process of outsourcing is the
“Relational Theory” in which explanations are given about how the companies may
maintain a distinct “competitive advantage” over other organisations, by keeping the
cost low and the production high (Fast, 2013). This theory has different phases such
as “transition, relationship management and reconsideration.” This theory therefore
engages in investigating all the processes and stages of outsourcing.
There are various other theories and models that is used to understand, study and put
to application, the theory of the strategy of outsourcing.

4BUSINESS TO BUSINESS MARKETING
In this particular case study the strategy of outsourcing is applied and the theory that
can be utilise to explain the case study is “Transactional Cost Economics”. The
company has judged the level of transactional benefit and leverage that it will gain by
establishing the company’s production process in China. The company decided that
the Chinese market is also ideal for selling the products. Therefore the strategy of
expansion is also used by the company in order to increase its revenue and sales. The
company at one hand uses the strategy of outsourcing and on the other hand uses the
strategy of expansion. Expansion, outsourcing and merger is some of the important
practices that are used and utilised by businesses world over in order to increase
“brand value” and revenue. Most of the multinational companies are engaged in
expanding their businesses world over and outsourcing the labour intensive jobs in
order to gain “competitive advantage”.
Reference: Hutt, M. & Speh, T. (2013), Business Marketing Management: B2B (11th
edition), South-Western Cengage Learning. Chapter 7 – Case Study page. 198
1. International Flavours and Fragrances is already established in the market, and this
can be understood by the fact that the company supplies its goods to leading MNC’s
(Multi National Companies) and brands like “Pepsi, Procter & Gamble, Estee Lauder
and Unilever”. All these brands are highly established in their fields and they give a
lot of importance to goodwill therefore the companies mentioned would buy products
from only very reputed company. In this case International Flavours and Fragrances is
having the opportunity to brandish these reputed brands as its customer base which in
itself is a competitive advantage for the company. The official statement of the
company about the range of products and the innovations included in the process is as

5BUSINESS TO BUSINESS MARKETING
follows “That passion for exploration drives our people to co-create unique scents,
tastes, and tactile experiences. We never forget that we contribute to products that
touch and enhance the lives of millions around the world at the fundamental level of
sensation and emotion. Our new Diversity & Inclusion program recognizes and
accelerates our journey to full inclusiveness and inspires us to lead transformational
change from within. Every day is an opportunity to make a difference. For more than
129 years, we've been pioneers of the senses - and we never stop looking to the future.
We create sense-sparking offerings in 13 subcategories, ranging from perfume,
fragrance ingredients, and cosmetic actives to dairy, beverages, sweet, and savoury
flavours — co-creating 46,000 products annually. We're built on collective
imagination, chemistry, consumer insights, and food technology - and the drive to
push boundaries. Our mission: to deliver innovative "firsts", year after year” (Iff.com.,
2018). Therefore the company strategically positions itself in a situation where the
customers perceive the products as innovatively produced taking care of the consumer
needs in the best standards and quality. “Collective imagination, chemistry, consumer
insights, and food technology” all these keywords emphasize the fact that the
company uses innovation (collective imagination), technology (chemistry, food
technology) and people’s feedback (consumer insights) to design their products and
maintain the quality of the products.
The competitors of the company include “Givaudan, Danisco, and Firmenich.” All
these companies are large companies that are engaged in similar business activities.
All these companies including International Flavours and Fragrances supplies their
products to the other big companies and not directly to the consumers. Therefore the
consumer base for all these suppliers are limited. These companies engage in fierce

6BUSINESS TO BUSINESS MARKETING
competition in order to ensure that their products are chosen and therefore they
engage in luring the consumer brands with best quality products in lowest price.
The further strategies that can be followed by the company in order to win
customer trust is establishing itself as a leading supplier to big brands by internet
branding and social media engagement. The company may be engaged in greater CSR
(Corporate Social Responsibility) activities so that the company gains better goodwill.
This will make the company a familiar name in the field resulting in brand awareness
and customer faith. In order to establish its hold with the consumer companies it may
emerge as the biggest brand in the above method ways and in addition offer best
quality products.
2. Marketing communication is the process in which various communication devices and
tools in order to brand and project itself as one of the best brands in its segment. The
communication tools include the traditional mediums such as the newspaper,
television and hoardings, and new mediums such as the digital media, social sites and
the internet. PR (Public Relations) is also a communication tool that can be used by
the company in order to enhance its image. The company that is discussed in this case
study deals with supplying of products to other companies that sell these products to
consumers. Hence the company in question has to target and focus on other
businesses rather than focusing on target consumers. Therefore the traditional TV or
newspaper advertisement would not work for this company. International Flavours
and Fragrances needs to focus its communications on the consumer brands. However
on the other hand today’s customers are educated about their rights and they engage in
researching about the products they buy. If International Flavours and Fragrances’
image is harmed in the international market, and they do not enjoy ordinary
consumer’s faith, the ordinary consumers will stop buying from the companies who

7BUSINESS TO BUSINESS MARKETING
source their product from International Flavours and Fragrances, this will lead those
consumer companies to change their supplier. Therefore it is imperative for
International Flavours and Fragrances to communicate with the end customers and
maintain a positive image.
As International Flavours and Fragrances is not a consumer brand and it is not selling
its products directly to the consumers the company cannot engage in direct
advertisement targeted at the customers. Also it cannot directly advertise about the
companies to which it supplies products. Rather the company has the scope to engage
in indirect marketing to leverage its own brand image by using the internet and social
media where there is a possibility of direct engagement with the customers. When the
company will engage directly with the consumers automatically it will enjoy better
brand awareness. One of the best methods of increasing goodwill of the company is to
engage in CSR activities. The company in the official website states “We have
proactively addressed climate change and are currently working towards a science-
based GHG target. We also support climate-related initiatives, such as the RE100
renewable energy initiative and the climate change agreement at the UN Climate
Change Conference (COP21) in Paris, and were awarded a place on the CDP Climate
“A” List for the third year in a row, placing us in the top 4 percent of companies
participating in CDP’s program” (Iff.com., 2018). This will make the educated
consumer more loyal and believer to the brand. Climate change is one of the most
debated issue I recent times and all the countries unitedly are engaging in deferring
climate change, therefore any company which is actively investing and thinking fro
that cause will automatically enjoy people’s faith.
International Flavours and Fragrances is a company with diversified products
including eatables, drinkables, and daily use products. Therefore all ages, all genders,

8BUSINESS TO BUSINESS MARKETING
all nationalities and all kinds of people are included in its target customer. The
company must engage in a holistic business communication program to engage
consumers from all age groups and communities.

9BUSINESS TO BUSINESS MARKETING
References:
Drucker, P. F. (2017). The Theory of the Business (Harvard Business Review Classics).
Harvard Business Press.
Fast, I. (2013). Selving: A relational theory of self organization. Routledge.
Iff.com. (2018). Pioneering sensorial experiences that move the world. Retrieved from
http://www.iff.com/en
Iff.com. (2018). Sustainability Accomplishments. Retrieved from
http://www.iff.com/en/sustain
Jackson, J. K. (2013). Outsourcing and insourcing jobs in the US economy: Evidence based
on foreign investment data.
Ketokivi, M., & Mahoney, J. T. (2016). Transaction cost economics as a constructive
stakeholder theory. Academy of Management Learning & Education, 15(1), 123-138.
Lacity, M. C., & Khan, S. A. (2016). Transaction cost economics on trial again. The Journal
of Strategic Information Systems, 25(1), 49-56.
Mihailidis, P., & Thevenin, B. (2013). Media literacy as a core competency for engaged
citizenship in participatory democracy. American Behavioral Scientist, 57(11), 1611-
1622.
Möller, K. (2013). Theory map of business marketing: Relationships and networks
perspectives. Industrial Marketing Management, 42(3), 324-335.
Schniederjans, M. J., Schniederjans, A. M., & Schniederjans, D. G. (2015). Outsourcing and
insourcing in an international context. Routledge.

10BUSINESS TO BUSINESS MARKETING
Wacker, J. G., Yang, C., & Sheu, C. (2016). A transaction cost economics model for
estimating performance effectiveness of relational and contractual governance: theory
and statistical results. International Journal of Operations & Production
Management, 36(11), 1551-1575.