Multistage Marketing

Chair

  • Dr. Michael Kleinaltenkamp, Freie Universitaet Berlin, Germany

Participants

  • Matthias Classen, Freie Universitaet Berlin, Germany
  • Andreas Fischer, Freie Universitaet Berlin, Germany
  • Anne-Maria Holma, University of Vaasa, Finland
  • Minna Rollins, University of West Georgia
  • Alejandro Schoenhoff, Henkel AG & Co KGaA – Industrial Adhesives, Germany

Background

Customers in business-to-business (b2b) markets are sellers of products and services of their own. The goods and services they buy are required – directly or indirectly – for the production and sale of other goods or services to their own customers. Consequently, all business transac-tions in a downstream value chain are undertaken in order to ultimately satisfy the final con-sumers’ needs. Because of this derived demand suppliers active in b2b markets in principal have an opportunity to influence their direct customers buying behavior by addressing mar-keting activities towards actors following these primary customers within the downstream supply chain. All such measures aiming at primary customers as well as at customers on sub-sequent market stages (‘customers of the customers’) in order to influence the buying behav-iour of the primary customers are summarized under the strategy of multistage marketing.

Despite the pivotal importance of derived demand for b2b marketing and although it is men-tioned in every b2b marketing textbook practitioners as well as academics do not focus very much on this phenomenon and on multistage marketing activities. The suppliers are hesitant either because they lack knowledge about the downstream value chain following their direct customers or they do not understand the methods and objectives of multistage marketing. Academics typically only analyze some few prominent examples of multistage marketing like Intel, Tetra Pak etc. which are mainly focusing on ingredient branding and are addressing end consumers. But much more examples of multistage marketing can be found in a ‘pure’ b2b context where the addressees of such measures are companies and not consumers.

Beyond this backdrop and in conjunction with IMP thinking the purpose of the special session is to advance marketing theory from a regular single-stage marketing point of view to a broader perspective which considers various stages along the downstream value chain. In-sights will be gathered by analyzing case studies from b2b-markets as well as by the results of large scale empirical studies.

Topics

Based on a – simplified – generic three stage value chain (supplier → primary customer → end-customer, see figure 1) three phenomena in conjunction with multi-stage marketing will be discussed in this special session:

Figure 1: Multi-stage marketing activities and phenomena to be discussed

Figure 1: Multi-stage marketing activities and phenomena to be discussed

  1. The first contribution addresses the necessary advances in understanding market orientation from the supplier’s point of view along the value chain extending to the end-customer. If the success of more than one stage in the value chain or the success of even the entire chain de-termines a supplier’s success then this supplier must develop a market orientation whose focus is much broader and extends to subsequent market stages and actors.

    However, market orientation as defined by the most important and impacting literature at this point in time focuses almost exclusively on the direct customers of a business. Therefore, it needs to be analyzed in how far suppliers actually look beyond their direct customers and take a broader approach to their market. Companies with such a broader market orientation would take subsequent market stages and also third parties into consideration when scanning their markets for business opportunities. Although third parties do not directly purchase goods or services from suppliers they often represent very important influencers on different stages of the value chain and need to be considered in a firm’s marketing activities. So, this contribution will discuss whether or not the focus on the customers of the customers and third party influencers constitute additional dimensions of the construct of market orientation.

    In order to add practical relevance to this topic, it needs to be examined which measures com-panies must take in accordance with the prevailing marketing concept, so they can better as-certain and meet the needs in their target markets. The research presented will be based on an expansion of this concept of target markets to subsequent yet highly success-relevant market stages.

  2. The overall objective of the second contribution is to analyze the impact of multistage mar-keting on the willingness to pay (WTP) of direct customers. WTP can be defined as “the max-imum price a buyer is willing to pay for a given quantity of a good or a service.” multistage marketing will be differentiated from similar concepts by conceptualizing three types of MSM, namely non-collaborative multi-stage marketing (measures directed at indirect cus-tomers while bypassing direct customers), collaborative multistage marketing (measures di-rected at indirect customers while including direct customers in the perspective), and multi-stage marketing in a wider sense (measures directed at direct customers while including indi-rect customers in the perspective). Based on the discussion of the value creating potential of these activities hypotheses are developed and tested how the various types of multistage mar-keting affect the direct customers’ WTP. A scenario-based experimental study using limit conjoint analysis provides the empirical basis for hypotheses testing. Furthermore, managerial implications will be given.

  3. Usually, studies in the b2b context are focusing on relationships between dyads, either be-tween suppliers and manufacturers as primary customers or between manufacturers and their end-customers (see Fig. 1). The broader perspective of multi-stage marketing proposes along with the IMP view that business relationships in a value chain should also integrate the “indi-rect” relationships occurring for example between suppliers and the end-customers. The pur-pose of the third and the forth contribution is to better understand the influences multistage marketing has on the relationship structure within a downstream supply chain on the one hand and how the supply chain itself influences the planning and execution of multistage marketing inversely on the other. Based on the different objectives multistage marketing is aiming at distinct types of this strategy are identified and a multiple case study research including actors from all relevant market stages is conducted to answer the research questions addressed. The analyses pose the following questions: How does suppliers’ direct marketing to end-customers impact on the buyer–supplier relationship? How does the suppliers’ direct market-ing to end-customers impact on the relationships between the buyer and the end-customers? How could suppliers’ direct marketing benefit purchasing management?