BUSINESS TO BUSINESS MARKETING AND

SUPPLY CHAIN MANAGEMENT

ASSESSMENT

B2B Marketing & SCM Assignment 2010-11

Case study: Managing the trade marketing relationships of ‘Texfin’

The importance of B2B marketing by manufacturers to channel intermediaries is

often discussed in relation to the FMCG arena where powerful supplier brands
abound. This case looks at a rather different situation: that of decorating supplies,
where the influence of product branding on channel relations may not be so great.
The case illustrates some of the choices facing suppliers trying to facilitate closer
relationships with downstream organizations in the marketing channel. (Remember:
the meaning of ‘trade marketing’ here is that carried out by manufacturers to channel
intermediaries, or ‘the trade’.)

The focal firm of this study, hereafter known as ‘Texfin’, sells a range of gypsum-
based products including textured finishes for walls and ceilings. (Gypsum is a soft
white or yellowish mineral used in the manufacture of plaster products.) The firm
distributes its goods across the UK to over 3,500 organizational customers within
‘the trade’. Texfin has a projected annual turnover of £30 million and over 200
employees.

The firm’s customer base comprises three sectors: retailers, builders’ merchants and
decorators’ merchants. While the largest number of customers is to be found in the
builders’ merchant segment, the increasing size and buying power of the retail
multiples has resulted in a ‘Pareto’ situation with 80% of Texfin’s turnover generated
by approximately 20% of their customer base. One particular retailer, known as
‘Alphastore’, now accounts for 36% of annual turnover. Although brand awareness
amongst end user consumers for Texfin’s core product is high (thanks to decades of
support from the construction sector), textured finishes are perceived as rather old
fashioned. In fact, they were described as ‘commodity items’ by a buyer at
Alphastore. To make matters worse, senior management at Texfin had become
aware of two large European manufacturers’ plans to enter the UK market. They
were thus keen to add value to their market offering.

So how might Texfin do this? The firm’s managers consulted staff at a local
university who pointed out that academic research into trade marketing and supply
chains suggests customer service is becoming crucial, especially when linked to the
idea of ‘availability’. This means that if the desired brand is not present on the
intermediaries’ shelves, the end user customer will simply purchase the nearest
alternative: thus logistics management is an important issue for manufacturers.
Indeed, it is thought that efficient logistics systems can produce good service levels,

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which in turn affect the manufacturer’s leverage with the customer (trade) and the
consumer (end user) stakeholders. A further area that the university recommended
Texfin to consider was that of partnership development via relationship marketing
(RM) in order to build organizational customer loyalty through activities like
exchanging data. Moreover, Texfin wanted to know if branding and promotion had a
role to play in the effectiveness of their channel management strategies.

Market research was therefore commissioned by Texfin’s marketing team. This

included an initial phase of interviews to establish the relevance of some of the
above theoretical issues to the context (this revealed an extra issue, that of the role
of sales representatives). The second phase of the study involved a questionnaire
being sent to 1,200 organizations. This contained a series of ratings scales to
measure respondents’ attitudes to the importance of a number of different trade
marketing issues. Although the response rate was rather low (76 usable replies),
this is not uncommon in industrial marketing surveys. The key results are listed
below in descending order of importance. Issues were classified by Texfin’s
marketing manager according to which area of trade marketing effectiveness they
seemed to refer:

Rank Issue Classification

1 order completeness logistics service
2 on time delivery logistics service
3 sales rep’s product knowledge sales management
4 ease of placing orders logistics service
5 frequency of sales rep’s visits sales management
6 marketing brands to end users branding
7 training of trade staff by supplier RM
8 sharing of market data RM
9 offer of customised promotions RM
10 innovative packaging branding
11 product quality product
12 rate of NPD product

Although these scores were fairly uniform across the sample, there were also some
differences between customer segments. For instance, merchants seemed to
identify with a historical need to see their sales representatives on a weekly basis.
As one builders’ merchant said, ‘We rely on good manufacturer sales support to
keep our staff abreast of what’s happening in their specific sector’. Moreover, RM
was much more important to retailers: one of Texfin’s own account managers
admitted, ‘It’s almost becoming embarrassing. The multiples (i.e. retail groups) know
more about market movements and the performance of my products than I do’.

Texfin’s senior management pondered the research that their marketing department
had commissioned. It struck them that, while the findings of the survey suggested
that superior levels of logistics service may offer Texfin the opportunity to gain
competitive advantage, if other manufacturers also ‘raised their game’ in this area,
then this would cease to be a determining factor in the trade’s evaluation of
manufacturers. It was also likely that the sector would see a growth in RM practices,
especially if retail multiples were to exert their influence as ‘market drivers’. This
could mean a decline in the importance of local sales reps and an increased use of

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centralised head office buying by the trade. Careful decisions were clearly going to
have to be made about where to invest the firm’s B2B marketing budget in the
coming years.

Assignment brief:
You are required to write a structured essay (i.e. with subheadings, and fully
supported by references) of 3,000 words (+/- 10%) that addresses the following
questions.
NB essays that exceed the word limit may be penalised at the discretion of the
marker - this will typically involve a 5 mark reduction for essays over 3,300 words,
and a 10 mark reduction for those over 3,600.
1. What were the key findings of the market research in terms of the
overall relative importance of the issues affecting B2B trade marketing
in Texfin’s sector? (20% of the total marks)
2. Drawing upon the case findings, as well as your own knowledge of B2B
marketing and SCM, what actions would you recommend to Texfin’s
senior management? (60% of the marks)
3. What are the implications of this study for how we understand
manufacturer/retailer IORs in general? (For instance, think of how
Texfin’s sector compares to other sectors where the balance of power
between supplier and distributor might be different). (20% of the marks)

Notes & Advice

1. You will be expected to relate marketing and supply chain management theory
from the module to the case material, and make appropriate recommendations,
thus showing an understanding of B2B marketing principles and practice.

2. As you can see, although the question topics are reasonably discrete, each of
them can draw upon theoretical material from more than one session – so think
carefully about which sessions you will need to return to and research in greater
depth in order to be able to provide a good answer.

3. If you read and prepare answers for all the end-of-chapter case studies before
each lecture session, you should be able to apply some of the analytical
processes and strategic thinking that you go through for these cases to your
assignment question too. Don’t forget to check Blackboard to see if your
approach to the case questions corresponds to the suggestions that I put there
after each session.

4. Although it makes sense to look for concepts and authors discussed in your core
module text that you can apply to the assignment, you will be expected to draw

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 upon library readings (e.g. academic and trade journals) beyond your main
textbook (i.e. Ellis 2011) to support your answer.

5. This means that if you make a point about something that the case firm should
consider, it should be backed up with a citation from a good reference that shows
how prior research suggests that your point is valid one.

6. Students who do this intelligently, and from a broad a range of (ideally academic)
sources as possible, will have the opportunity to gain a high mark, rather than just
passing the module with a C grade.

7. The submission date will be Monday 9th May 2011 (for full details of how to
submit, please wait to hear from the FT Office).

8. By ‘structured essay’ we mean a discursive essay rather than a report, but one
that is divided into a few key sections. For example: an Introduction and
intervening sections of Discussion or Analysis that correspond to the assignment
question, and which have separate sub-sections or paragraphs devoted to key
topics, perhaps with supporting diagrams or data where relevant.

9. In the Introduction, you should set out your main themes and intentions: describe
the issue you are addressing, identify its main components, and indicate what
you are going to do in the body of your essay.

10. Break down your arguments into smaller parts - use this as a basis for the main
Discussion part of your essay that will then be divided up into several sections or
paragraphs (you may want to have a sub-heading title for each section of the
question).

11. Summarise your arguments briefly in a Conclusion. What is the main significance
and implications of what you have been saying?

12. Make sure you read your Programme Handbook carefully on issues of
submission, deadlines, essay writing, referencing and plagiarism.

13. ALL material that you use should be referenced appropriately. This includes any
material borrowed from websites or corporate brochures. Information on
referencing is available in your Programme Handbook.