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Case Study : Business and Marketing Strategy of IBM
International Business Machines Corporation, abbreviated as, IBM is an America based technology company, which has its headquarters in Armonk, New York. IBM deals in computer related machinery or technology which includes both software and hardware. IBM offers consulting too. With all the success this company has bagged, one would wonder what marketing strategies this company uses. While the entire marketing strategy is a vast affair and cannot be covered in a mere article, this piece would struggle to highlight the core of it all.

Initially, the marketing strategy of IBM based on third parties (distribution channel). These third parties ultimately started being called as agents after they began introducing new clients to IBM. All of this was happening in 1970. However, later during the 1980ís, when personal computers started becoming more common IBM became more involved with these third parties such as Independent Software Vendors (ISVís) and resellers.

Ultimately, with the increasing demand of personal computers and consequently increasing use of them, 1990 has dawned with outrageous success for technology companies. In addition, IBM was not left behind. By this time, IBM had been reinvented. Now it surfaced as a unit composed of various different channels. It had become a combination of many small businesses and all of these lines or channels were being governed by their own initiators and were yearning to make a mark for themselves in their own separate niches.

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Then, by 2001, the market changed. People were no longer buying things just for the sake to buy that new thing. They were now buying things and technology because they saw some sort of benefit in it. They would not invest without benefit in sight. Therefore, things became harder now. The demand was different and so a different strategy had to be adopted. IBM had to change its entire marketing system and its way of working.

The new strategy involved marketing more than selling. Previously, IBM had been busier in selling. The various different channels had been seeing to it. Now all the emphasis lay on marketing strategies. The client behavior was under deep consideration now that it had abruptly changed. All the masterminds behind this company were now looking for the cause of this change. In addition, the question was, in what ways could these changes be responded to? Because of this, the new strategy that was established held on the following principles:

The company should be more concerned about the clients and should be driven by them rather than technology.

Marketing, being the prime goal, should be judged only on the basis of the business that the company was doing and not by the communication and advertising.

With this new goal in mind the company should become more focused on its clients through the channels in the form of segments, which it was embodying.

And then there was technology downturn which implied that there would have to be a new strategy to decrease costs.

With IBM resolved to understand and analyze the behavior of its clients, many keen observations were made. The most important of them all was the fact that the clients tend to act differently under different situations.

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For this reason, it was concluded that one segment or one channel is not enough to deal with the clientís demands. To understand this whole thing better and to make their marketing more effective IBM divided all of it transactions into three groups.

The first transaction consisted of the type which involved the kind of buyer (already the owner of one or more PCs) aiming to buy more of them and hence would have some knowledge about the device. The second type of transaction involved buyers who would be more of an expert, a technology expert. Finally, the third type of transaction was the most complicated one consisting of people carrying out complex business changes etc, and consisting of both expert and non-expert buyers.

Then all three of these transactions, specifically, were drawn on a chart.

Having done this, IBM longed to find the right ways to market. And so, some routes were introduced. These routes also called Routes To Market (RTM) were seven in number. These routes are not governed or being run by one particular channel but their names imply as such because that channel acts as the leading channel.

The first one which is being used to address and deal with the most complex matters (the third type of transaction) is being controlled by Global Service ( it has been now renamed and the new name is ĎBusiness consulting Servicesí).

The second route is being governed by the Independent Software Vendors (ISVs).

Major SIs was majorly controlling the third route. It consisted of both Hardware (HW) and software (SW).

Fourth being controlled by the ISVs and regional SIs. Fifth being controlled by FTF specialists.Sixth route was through the solution providers. They were also the core business partners for IBM. Finally, the seventh route was being controlled directly through the TeleWeb.

The next step involved the analysis and comparison of the profit expected out of the clients and the cost of the spent money on providing them with the required services. This was done in order to decide about allocating or putting up sources such as the direct telephone services or direct teams for clients. The step followed made IBM look at the abilities of the different channels.

In order to maintain the good quality, the channels had to be judged based on what they had to offer. The different routes to public/market being governed by different channels had to be potentially weighed.

For instance, the trend toward consultancy and business solutions was increasing in comparison with the sale of technology products. In this way, IBM was aided in setting its priority right in accordance with its potential. With the help of the thus formed structure IBM formed its marketing strategy.

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