The IOI Group: Business to Business Marketing in Action

1. Organizational customers are those manufacturers, wholesalers, retailers and government agents
that buy goods and services for their own use or for resale. They include all buyers except ultimate
consumers; and tend to purchase and lease large volumes of capital equipment, raw materials,
manufactured parts, supplies and business services. On the other hand, end consumers and
households refer to the people who ultimately purchase or obtain the final product and use it.
IOIs customers consist of manufacturers and marketers of soap, detergents, skin care products,
confectionary, snack food and cooking oil. Examples of IOIs customers include Unilever, Nestle and
Procter & Gamble (P&G). Hence, IOI employs more Business-to-Business (B2B) marketing strategies
than Business-to-Consumer (B2C) tools. The difference in IOIs marketing strategies between B2B
and B2C depends on the difference between characteristics of organizational buying and consumer
buying.
Firstly, market characteristics. The demand for IOIs products is derived from the demand of the
ultimate consumer. For example, if there is a strong demand for Unilevers cosmetics, the demand for
IOIs palm oil is expected to rise as well. Hence IOI is often required to help with the application of
materials in the manufacturing process to adjust the outcomes in terms of taste and textures. For B2C,
the demand for the businesss products is the demand by the consumers. Also, the number of IOIs
customers is small, they make large purchase orders, in order to capitalise on economies of scale for
lower prices. Hence IOIs customers purchase based on short or long term contracts, as compared to
end consumers, who just purchase the good itself.
Secondly, product characteristics. For B2B, the products sold to manufacturers are mainly semifinished or components of a finished product; are technical and involve detailed specifications like
soap noodles used to produce soaps and snack ingredients for snacks. . IOI needs to work closely
with manufacturers to identify trends in consumer markets, so that new raw materials can be
developed in ways that capture changing consumers taste. For B2C, only the end product is sold to
consumers and businesses attempt to take advantage of changing consumers taste and preferences.
IOIs B2B marketing places a heavy emphasis on price, quality, delivery processes, technical support
assistance, post-sale services and financing assistance. Since B2B relationships run on large orders
which affects operations supply, businesses will want to work with reliable suppliers (IOI) who can
deliver punctually, have technical expertise in the field of production, provide post-purchase services,
and those that request for reasonable mode of payment, where businesses tend to operate on credit,
rather than lump sum payment. For example, on 9 May 2011, P&G visited Pan Century and Pamol
Estate to get first-hand knowledge of Pan Century and IOIs estate operations. At the end of it, the
inspectors gave full assurance of P&Gs full support via a close collaboration and enhanced ways to
maximise synergy. For B2C, the emphasis is placed heavily on the end product on its function, design,
brand prestige etc.
Thirdly, buying process characteristics. B2B transactions involve professional buyers with technical
expertise who have purchase policies and procedures to follow. Buyers choose their suppliers based
on factors like price, ability of supplier to meet quality specifications for the product and required
delivery schedules, technical capability, warranties and claim policies, past performance on previous
contracts and production facilities and capacity. IOI, being a large supplier1, can bank on its reputation,
certifications and accreditation2 it has to market itself as a responsible and credible supplier to buyers.
These accreditations are essential to IOI, as customers are being increasing concerned about
sustainable production methods. For instance, the RSPO imposed a sanction against IOI on
1
2

Asias largest vegetable oil-based oleo-chemical manufacturer, 2nd largest palm oil producer in Malaysia by market capitalisation

The Roundtable on Sustainable Palm Oil (RSPO) Supply Chain Certification Systems IOI Oleochemical Industries Bhd, Prai and IOI
Oleochemical Industries Bhd, Pasir Gudang, ISO 9001, ISO 9002, Good Manufacturing Practices (GMP), Hazard Analysis and Critical
Control Points (HACCP), ISO 14000, ISO 14001