CISCO Case Study
Building a brand in a B2B market is different from doing so in the consumer market mainly due to the differences in goods sold and the consumer being targeted. In a B2B market, the consumers are organizations while in a consumer market; the goods are sold to households. Consumers in a B2B market purchase goods and services to aid them in furthering their own manufacturing processes. Thus, in a B2B market, the organizational consumers purchase semi-finished goods, capital equipment, goods for resale, or products used in further production or operations. However, in a consumer market, the consumer will purchase the goods to be used for personal and household activities.
Another difference between the two markets is the type of product that the consumer purchases. Organizational consumers will purchase goods that have the exact product specifications they require. They want goods that meet a certain specification as these goods will be used for further operations. On the other hand, the households in the consumer market will purchase goods based on color, style, utility, and description. The individuals in this market do not have exact product specifications (Collins, 2010).
Organizational consumers are less sensitive to price fluctuations compared to their counterparts in consumer markets. In the B2B markets, derived demand occurs for the consumers because the quantity of items they purchase is dependent on the anticipated demand of their consumers for specific products and services. The view is that as long as the final consumers are willing to pay increased prices for the goods and services, organizational consumers will not react to any price increment (Kotler & Keller, 2012).
Other subtle differences between the two markets include the fact that there are more final consumers than there are business consumers. Additionally, the distribution channels in a B2B market are shorter than in the consumer market. Lastly, there is volatile demand in the B2B market whereby the demand of the final consumer affects many levels of organizational consumers. The premise here is the volatility in demand in the B2B market is caused by the accelerator principle (Collins, 2010).
Viability of CISCO’s Marketing Approach
CISCO’s marketing approach is viable because the consumer market is huge and if successful, the approach can help CISCO gain an increased global market share. An increase in market share will infinitely increase the company’s revenues and its market value. Traditionally, CISCO mainly operated in the B2B market where it sold network capabilities such as routers and switches to other companies. The organizational consumers of its products would then sell networks to the final consumer or provide networking services (Taylor, Young & Noronha, 2012).
In order to grow, CISCO needed to delve into the consumer market aside from having a steady grip on the B2B market. The need to expand led the company to come up with initiatives that could endear the company to the final consumers. Several promotional strategies such as advertising on television and print were aimed at communicating to the final consumer about the company and its products. Before this shift, most consumers viewed the company as solely a provider of routes and switches. The company wanted to change this perception into a mindset that CISCO products were also for final consumers. The company bought Linksys that provides network gear to home and small offices. In addition, the company developed the CISCO Connected Sports, an interactive platform that turns a sports stadium into a digitally interconnected venue.
With such initiatives, the company’s revenue had reached $39.5 billion by the end of 2008. In addition, it was ranked number 18 in the biggest global brand. The results demonstrate that its soft-sell approach and endearment to final consumers was indeed viable.
Collins, M. (2010, July 30). Manufacturer’s Corner: The Difference between Industrial and Consumer Marketing. Sales and Marketing Management.com. Retrieved on 5/3/2016 from https://salesandmarketing.com/article/manufacturers-corner-difference-between-industrial-and-consumer-marketing
Kotler, P. & Keller, K.L. (2012). Marketing Management (14th ed). Retrieved from https://online.vitalsource.com/#/books/9780133468984
Taylor, S., Young, A. & Noronha, A. (2012). What do consumers want from Wi-Fi? Insights from CISCO IBSG Consumer Research. CISCO Internet Business Solutions Group.