Are B2C and B2B marketing really that different? After all, most consumer products - from candy to motorcycles - rely heavily on B2B distribution deals to reach all those millions of individual customers. Can't a successful consumer products company just turn their distribution prowess into great B2B sales and marketing to enterprise clients?
Apple's March 6 announcement that the iPhone will be sold to the enterprise market with its Jun
e software release gives us a chance to deconstruct the relevant differences between a B2C distribution model and B2B direct sales. As we watch Apple's efforts to sell the iPhone into the corporate market we'll also observe whether Steve Jobs can lead his company into straddling the multi-headed target market beast as well as Michael Dell has. Like any good technology pitch man, Jobs seems to have the product issues under control, but his market-facing brand and distribution challenges are where we can expect to see the strategy succeed or fail. Right now, the jury's out.
Let's look at what Apple is doing to address the B2B market and evaluate their potential for success and challenge in a "Six P's + Branding" analysis framework.
As far as Target Market ('People' in the 6 P's) is concerned, the corporate market makes sense for Apple to target at the iPhone's price point ($400) as well as the raw computing power available on the phone itself, capable of supporting custom applications with its accompanying Software Developer's Kit (SDK). This price/feature Positioning puts it squarely in the productivity category that corporate IT departments already evaluate the Blackberry (RIM) and Treo (Palm and Windows Mobile) within. And in this category the Apple iPhone is well differentiated from the Blackberry and Treo in the sense that it's upscale and fashionable, traits that both of these competitors have been striving for in recent models. As Business Week points out, the enterprise smartphone segment "may well represent Apple's best chance in years to tap the corporate market."
But it will take more than solid product positioning to win over a market dominated by the Blackberry and its slick infrastructure for seamlessly integrating corporate IT systems with handheld client hardware and software. Significant Product changes will be required to bring the iPhone up to par with the incumbent competition, namely "server push" updates of email, address and calendar; corporate level security features and backend architectural integration into the corporate IT infrastructure and procedure. While these things are not trivial, Apple's announcement made clear that it understands the product upgrades needed, has listened to big corporate partners such as Disney, Genetech and Stanford University and built these new features into its June release. Bully for them. In my opinion, despite all the legitimately hard work this will take to pull off, the product upgrades are the easy part.
Two of the biggest challenges Apple will face in attacking the corporate market are Brand and Sales strategy ( 'Pl ace' in the 6 P's). Apple's brand means relatively little to the average enterprise CIO, in fact it often means a headache, since its MAC computing desktops typically require bigger budgets and "non-standard" support infrastructure. In addition the CIO and his or her staff is no doubt on a firs t name basis with the sales rep and account teams from Dell, IBM and Cisco - knowing exactly who to call at 2AM when things fall apart on a large scale - I expect that few know what to expect from an Apple iPhone enterprise sales and support team.
Watching their video announcement my impression was that Apple does not plan to adjust its corporate brand or market positioning in order to take on RIM/Blackberry for the business market. Jobs wore sober grey on top but didn't doff his trademark jeans for dockers that might have been one indication of such a shift. He led and closed his presentation with a product technology pitch about phone features. While these feature upgrades reposition the iPhone itself to increase the chances that the Apple sales rep can get into the CIO's office, they're likely to land time on the calendar more out of sheer curiosity than any overt shift in brand positioning air cover. Actually, based on the tech and demo-heavy announcement, Apple seems intent on riding into the enterprise market on their current brand promises of cool and proprietary handheld technology. This brand and product positioning was underscored by the fact that they reached out to Microsoft in the server market, integrating with Microsoft Exchange behind the firewall, but stopped short of porting Microsoft Outlook and the Pocket PC operating system over to the phone. While a solid product positioning strategy, these changes won't be enough to convince the enterprise market that a "cool" consumer technology is ready for enterprise prime time. So in this scenario, it will be up to the sales and support teams to build the brand in the enterprise market.
Cool technology often plays well in the executive suite, but the guys in charge of volume purchases, who Apple has to win over if they are going to be truly successful, are going to be much more impressed by technology that is reliable, adaptable and productive. Apple has account infrastructure for major distributors, and even if they have a direct sales and support team structure for their computer platform, broken out by region or industry (typical territory delineations for enterprise sales), it will have to grow and morph significantly to support a major push into the corporate telecommunications market.
If they haven't fully made the leap into direct sales, Apple has two choices for establishing a direct sales team: 1) set up a new direct sales organization or 2) try to expand their distribution account teams organization to handle direct sales. They are better off standing up a whole new direct sales team than trying to stretch account management infrastructure to take on this competitive and relatively mature market segment.
- Prospecting and selling is a different skill set, requiring a slightly different temperament in the successful sales rep, than relationship management and negotiation, at which first-class account reps excel.
- The compensation plan they use for the account reps won't translate to a direct sales team either, since sales reps will have to be productive over a larger number of prospects at a lower unit-per-deal and a higher price-per-unit.
- Product customization negotiating parameters for the sales reps will have to be pared back from what account reps are used to dealing with, too, so that the costs of product customization can be financially justified on deployments in the thousands instead of production runs in the millions.
There are many additional plans for the product marketing and sales management teams to line up to support this new corporate push, everything from new sales material and contracts to new SLA standards and support procedures. I'm guessing that Apple's sales and marketing divisions are running quite fast now. They've taken an intelligent approach to launching into this new market, lining up some big name beta customers, but they have a lot more work to do to convince the broader market to take them seriously.
This should be fun to watch.
Link to original post