Business to Business (B2B) marketing and its implications for vehicle purchase in the corporate client segment of Nigeria’s

The research knowledge on the marketplace has been largely dominated by business-to-consumer (B2C) marketing while business-to-business (B2B) marketing has received considerably less attention even as the B2B market significantly dwarfs the B2C market in sales. It is even more glaring in Nigeria with the literature on B2B marketing extensively scanty. Therefore, this paper sought to ascertain the value of B2B marketing and its implications for the corporate client segment of Nigeria’s automotive industry. Interpretivism epistemological standpoint was utilized with the aid of a focus group discussion made up of six key informants who are marketing experts. The paper focused on the potential challenges and benefits of implementing B2B marketing in the corporate client segment of Nigeria’s automotive industry and it concludes with recommendations.

Introduction

Nigeria’s automotive sector presents enormous business opportunities with considerable impact on job creation, foreign direct investments (FDIs) and more taxable revenues to the state among other essential benefits. However, with these opportunities come the challenges of intense competition and unstable macro-economic headwinds faced by corporate entities in Nigeria including vehicle manufacturers and dealerships (Deloitte, 2016). The need for companies and dealerships to outperform competitors and shape markets require more robust sales and marketing strategies (Zimmerman, & Blythe, 2013; Agnihotri, et al, 2016). The focus on reimagining management consensus, shared vision, skills and practices to create and nurture a culture of innovation in a company’s marketing regimen has become vital at this time of hyper-competition (Guo, & Wang, 2015; Driedonks, & Pawlowski, 2020). Companies are pressed to do away with disjointed selling models and to better improve on their marketing regimen to influence the customer purchasing decision-making journey (King, 2015). Companies want to be able to create multiple avenues to market and sell their products and services to a wide array of customers. It is pertinent that their marketing regimen can stimulate demands, track their various customers to identify their specific needs and respond effectively to them.

Therefore, companies’ ability to forge meaningful relationships and improve the success rate in the marketplace can help sustain long term growth and development (Wedel, & Kannan, 2016). As such, a company’s continued investment in predictive analytics to cultivate a 360-degree view of the customer to boost sales pipeline and ensure sustainable marketplace competitiveness brings into focus the need for segment targeted marketing strategy such as B2B. This paper, therefore, focuses on B2B marketing implications for vehicle purchase in the corporate client segment of Nigeria’s automobile industry. Accordingly, the paper sought to ascertain the potential challenges and benefits of B2B marketing in Nigeria’s automotive industry. To achieve the objective of this paper, primary data were derived from a focus group discussion of subject matter experts. The paper is divided as follows: introduction, a brief description of Nigeria’s automotive sector and corporate client segment, review of B2B marketing, methodology, discussion, conclusion and recommendations.

Nigeria’s Automotive Industry

Nigeria has a legacy of a thriving domestic automotive industry which created jobs and gave a boost to industrial development (PWC, 2016). The country had at the height of the oil boom in the 1970s set out an ambitious industrial plan which included the local assembly and production of passengers and commercial vehicles. This saw the emergence of brands such as Volkswagen Nigeria Limited, Peugeot Automobile Nigeria Ltd, Mercedes Benz-Anambra Motor Manufacturing Ltd, amongst others (Delloite, 2018). However, challenges such as weak electricity supply, grey imports, massively smuggling of vehicles, the dwindling value of the local currency, and the high cost of foreign exchange (Forex) led to the decline and liquidation of the automotive companies set up in the 1970s and early 1980s (PWC, 2016).

To revamp Nigeria’s local or domestic vehicle assembly and manufacturing industry, the country under its Nigerian Industrial Revolution Plan (NIRP), launched the National Automotive Industrial Development Plan (NAIDP) in 2014. With road transportation still the overwhelming mode for freight and movement of people, the cost of new vehicles is still unaffordable as Nigeria’s automotive industry has become hugely import-dependent compounded by low disposal income, dwindling value of the local currency and the exorbitant cost of accessing vehicle financing from commercial banks. Thus, the new vehicle market in Nigeria is largely concentrated in the corporate client segment that represents the business community (Deloitte, 2018). This highly competitive segment of Nigeria’s automotive industry is made up of customers from both private and public organizations such as Banks and other Financial Institutions, Telecommunication companies, Fast Moving Consumer Goods companies, Government Ministries, Departments and Agencies among other corporate concerns. According to the study conducted by Deloitte in 2018, “Corporate buyers account for approximately 70% of overall new vehicle purchases, indicating the suppressed demand from private buyers, arguably the market segment with the largest growth potential” (p.66).

This segment of the market represents a value chain that vehicle assemblers, manufacturers and importers in Nigeria may need to effectively engage to achieve market gains. This, in turn, requires a tactical and strategic approach to marketing and sales aimed at customer-specific pricing and offerings that can continue to stimulate the continued patronage of corporate clients. In this regard, the B2B marketing strategy is reviewed vis a vis its potential benefits and challenges.

B2B Marketing

Marketing is a ubiquitous feature of modern consumerism as competition becomes intense and the need for businesses to build significant value and improved selling processes continue to resonate with sales leaders in the boardroom (Driedonks, & Pawlowski, 2020). The customer landscape continues to evolve with the endless disruption in digital technology and consumer-centricity vital to optimising marketing strategies. However, marketing and sales opportunities are not confined to only the B2C, the business to business (B2B) market is also critical to performance and return on investment (Cater, & Carter, 2010). The B2B market is huge as businesses become increasingly interdependent in delivering their products or services to the final consumer. For example, the production of a Toyota or Ford vehicle,  a Boeing or Airbus jumbo jet, an Apple or Samsung smartphone, consists of different companies working as suppliers to ensure the product come out as intended by these corporations. Thus, it is not uncommon to see multiple original equipment manufacturers (OEMs) engaging in a B2B relationship. B2B engagement also encompasses services rendered between businesses and this is aimed at delivering value to the final consumer, reducing the cost of production and boosting sales (Zimmerman, & Blythe, 2013). An example would be businesses domiciled in places such as the US or UK engaging companies in India or Malaysia to render call centre services on their behalf. Other examples include but not limited to businesses providing other businesses with services such as internet or cloud computing, banking/insurance, logistics, and janitorial.

Thus, B2B focuses on the needs of an organization as the customer. Accordingly, B2B marketing refers to “businesses selling at scale to buyers in other companies” (King, 2015:7). Also, Zimmerman & Blythe (2013) asserts that B2B marketing is “substantially larger and very different from consumer marketing. The business market includes all businesses, institutions and governments who buy virtually every product and service to help them, in turn, provide products and services to other businesses and consumers” (p.15).

B2B market has grown with the advent of e-commerce to exceedingly surpass B2C; according to Statista, global B2B e-Commerce reached $12.2 trillion and this is six times the size of B2C (Statista, 2019). Even more optimistic is the forecast of Research and Markets (2020) which suggests that the global B2B market will surpass $20 trillion in 2027.  However, the huge B2B market is not an all-comers affair; businesses eager to explore its benefits cannot be complacent with their customer services and marketing offerings. B2B customers are continually seeking better customer services, pricing and the most value from a transaction.

Therefore, B2B marketing requires strong customer insights and a dynamic pricing approach that can help sustain customer relationship and also give a boost to sales productivity (Wedel, & Kannan, 2016). In turn, this requires customer journey optimisation and this can be accomplished by having in place cross-functional agile teams leveraging advanced analytics solutions to respond to B2B customers (Driedonks & Paulowsky, 2020). The considerable growth in the volume of the B2B market especially within the e-commerce space indicates that businesses aiming to explore growth opportunities may have to evolve a multichannel customer-specific value marketing and sales strategy.

Materials and Methods

A purposive sampling technique was utilized to derive a sample size of 6 participants in a virtual focus group discussion via Zoom. These six participants (4 males and two females) are marketing experts drawn from diverse industries. Two of them held a senior marketing position in the banking and financial services sector, three held a sales and marketing position in the automotive industry, while one of the six participants works in the academia where she teaches marketing communication. As requested by the participants for confidentiality, the participants are listed as A, B, C, D, E & F. There exists scanty literature on B2B marketing in Nigeria’s automotive sector. Thus, this study is exploratory in its context; as such, the choice of a constructivist approach such as a focus group discussion gives it the leverage to derive helpful outputs on the subject matter (Babbie, 2010; Saunders, et al, 2016).

The discussion guide focused on five specific questions: 1) Participants’ Knowledge of B2B marketing; 2) Potential benefits of B2B marketing to Nigeria’s automotive market; 3) Possible challenges to the implementation of B2B marketing in Nigeria’s automotive market; 4) Needed strategies for effective implementation; 5) The implications for vehicle purchase in the corporate client segment of Nigeria’s automobile industry. The data generated were analysed using qualitative content analysis to identify themes and patterns consistent in the participants’ responses such as representative quotations.

Results & Discussion

1) Participants’ Knowledge of B2B marketing

The thrust of B2B marketing is corporate entities and unlike B2C marketing audience, its target audience requires a more rational appeal that can help them fulfil better return on investment (ROI) (Doma, 2013; Gummesson, 2014). Therefore, it was necessary in this segment to ascertain the participants’ knowledge of B2B marketing.

Participant A: “…it is at the core of capitalism; for example, a car dealership requires a bank to process its customers’ payment, the bank requires the car dealership to supply it with vehicles to meet the logistical challenges of responding to its customers’ needs. Thus, a car dealership can market its vehicles to a bank; likewise, a bank can market its services to a dealership”.

Participant C: “…B2B marketing is critical to a business or organisational development…a business is a system and for it to function effectively it has to sell to or purchase the products or services of other organisations. A car dealership needs real-time customer engagement; this has to be provided by another company specializing in internet services…”

Participant F: …this is a deliberate strategy by businesses aimed at attracting the patronage of other businesses and this can significantly add value to corporate wellbeing… a car dealership can open an account with a bank and also offer good deals on its vehicles to motivate the bank to respond with a large order from the car dealership”.

The theme consistent in the submissions of all the participants is that B2B marketing seeks the patronage of the corporate buyer and not of the individual retail customer. The same theme was evident in the submissions of the other three participants. This theme equally resonates in the extant literature of the subject matter which suggests that B2B marketing represents strategies deployed by businesses to sell their products and services to other businesses (King, 2015; Pantouvakis, & Patsiouras, 2016; Driedonks, & Pawlowski, 2020).

2) Potential benefits of B2B marketing to Nigeria’s automotive market

Participant E:”…There exist a sizeable B2B in Nigeria’s automotive market…I have had to deal with multiple car dealerships and my bank happens to be the biggest customer of one of them purchasing more than 350 vehicles from the dealership in the last two years”.

Participant D: “Corporate clients are the largest purchaser of new vehicles in Nigeria; thus, the effective use of B2B will lead to more deals and higher sales”.

Participant B: “…it will help attract more foreign investors into the market, B2B marketing is vital to the growth of the market and when investors know they can sell plenty of new vehicles they would be less reluctant to enter into the market”.

It is apparent from the participants’ submissions that the use of B2B marketing can offer valuable benefits to Nigeria’s automotive market. To boost sales prominently resonates in their submissions and this may not be misplaced as the B2B market is far bigger than its B2C counterpart (Agnihotri, et al, 2016; Statista, 2019). It is equally projected to grow even bigger as businesses continually seek a better and more agile approach to product and service delivery (Research and Market, 2020)

3) Possible challenges to the implementation of B2B marketing in Nigeria’s automotive market

Participant F:”…the difficult business climate in Nigeria presents the biggest challenge…electricity is outrageously expensive, extreme cost-cutting is taking place in many organizations, foreign exchange is expensive and keeps fluctuating, these are issues that can undermine the impact of B2B marketing”.

Participant A:”…as you know our business environment posed the most severe challenge to any marketing strategy and you must not forget that the underlying focus of B2B marketing is good ROI…if it is very expensive running a business, your B2B marketing has to be more intense even when the ROI you are offering is very moderate”.

Participant D:”…just like others have opined, a significant impediment is our harsh business environment and this is what has precipitated the slow growth of Nigeria’s automotive industry when compared with say South Africa and Egypt. We should be competing with Brazil and India but look at where we are”.

Nigeria ranks low in the ease of doing business (Ekpo, & Bassey, 2016) and the government continue to flip flop on policies aimed at accelerating the growth of the country’s automotive industry (Deloitte, 2018). Thus, it makes it more challenging for B2B interactions to accomplish an even greater volume of sales in Nigeria’s automotive industry.

4) Needed strategies for effective implementation

Participant A: “…the government has to be steady with its policies…B2B sales reps have to be creative and focus on building longer relationship…the financial gain from B2B marketing may be moderate, however, it represents the best avenue for car dealerships to sell new vehicles in a market dominated by used car sales”.

Participant C:“…the automotive industry leaders have to continue to engage the government, they need access to Forex at discounted rates, grey imports has to be stopped and so also multiple taxations. Again, employ marketers who are tech-savvy and with deep knowledge of the peculiarities of the market”.

Participant F:“…you need a combination of strategies…first, get your internal process right with effective customer engagement and be creative…second, continue to press for stronger government support to curb policy issues that undermines the market”.

There exists a common consensus in the submissions of the participants as it concerns the need for policy changes to boost confidence in the industry. This cannot be taken for granted since current policy initiatives have not adequately addressed issues such as multiple taxations, smuggling, and high forex cost that continue to make the purchase of new vehicles expensive for both individual and corporate customers. Another recurring theme was the need for businesses to be steadily creative with their B2B marketing strategies. This is vital as nimbler customer-centric offerings will be required in a greater amount to accomplish steady growth in such a challenging market environment.

5) The implications for vehicle purchase in the corporate client segment of Nigeria’s automobile industry.

Participant B:“…B2B marketing offers the best prospects for vehicle purchase in that segment…new vehicles are too pricey for the average individual customer in this country…if you cannot do effective B2B marketing, you will not survive the market”.

Participant E:”…your ability to sell to corporate clients determines how far you can go in this market. Get the right team that can navigate the challenges to deliver a motivated B2B marketing to boost customer appeal”.

Participant C:“…dealerships aiming for success need to pursue a robust B2B marketing strategy…that segment of the market are most lucrative for new vehicle sales; you cannot afford to be a laggard…”

The submissions of the participants further cemented the assertion that B2B marketing holds enormous benefits for businesses that can effectively deliver it. Therefore, it is incumbent on such businesses to create agile teams that can leverage digital analytics to deliver personalised offerings with significant rational and emotional appeals.

Conclusion

B2B marketing is a global phenomenon with a far-reaching impact on trade and commerce. B2B sales far outweigh that of B2C and it has a considerable influence on the growth and development of businesses (Peters, et al, 2013; Driedonks, & Pawlowski, 2020). The potential benefits of B2B marketing for vehicle purchase in the corporate client segment of Nigeria’s automotive industry were addressed in this paper using a focus group discussion. Like any other research tool, a focus group discussion has its limitations such as the small sample size and likely biases of participants that can lead to weak generalisation of findings. To reduce and maybe eradicate these limitations, efforts were put into engaging only key subject matter experts, not a single participant dominated the discussion and the analysis was done without compromising data integrity. Outcomes derived from the primary data align with the findings from extant literature which suggest that B2B marketing has merit in the purchase decisions of corporate customers (Hadjikhani, & LaPlaca, 2013; Guo, & Wang, 2015; Agnihotri, et al, 2016). However, B2B marketers have to embrace agile, creative and data analytics approach to create personalized offerings and long term customer loyalty (Driedonks, & Pawlowski, 2020). Thus, the following are recommended for sales organisations in the corporate client segment of Nigeria’s automotive market:

• B2B sale people focusing on the corporate client segment of Nigeria’s automotive industry will need to intensify efforts on marketing strategies by leveraging technology to boost both digital and human interactions. Thus, the buying journey of the B2B customer should encompass both human and digital interaction for a much stronger impression.
• An omnichannel approach to B2B customer engagement has to be promoted across the entire marketing and sales strategies.
•  Offer both competitive pricing and business opportunities to the B2B customers. For example, a car dealership that sells vehicles to an insurance company or a hotel chain can also patronise some of its products and services.
• The Nigerian government as part of its NAIDP should work effectively to tackle the problems of multiple taxations, grey import, foreign exchange scarcity and massive smuggling of use vehicles that continue to undermine the country’s automotive market.

Author: EGUAIKHIDE OLORUNFEMI

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