DMA study shows ‘hybrids’ increase

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Fearful of painting themselves into a corner as new markets emerge, a growing number of companies are starting to define themselves as hybrids, or enterprises that target both the b-to-b and business-to-consumer sectors, according to a recent survey by the Direct Marketing Association.

The New York-based trade group surveyed more than 700 of its members for its "State of the E-Commerce Industry Report 2002," which is being released this month.

Respondents were pretty evenly divided among b-to-b, b-to-c and hybrid marketing executives. Ann Zeller, VP-information and special projects for the DMA, said there was a 15% increase from the 2001 study in the number of companies calling themselves hybrids.

B-to-c branches out

Indeed, more companies are branching out. For example, consumer cataloger L.L. Bean Inc. is developing more products tailored for b-to-b companies, such as the embroidered shirts featuring corporate logos that are ubiquitous at trade shows. Meanwhile, b-to-b companies such as Dell Computer Corp., Edmund Industrial Optics, IBM Corp. and Microsoft Corp. are increasingly targeting people who work at home with computer products and home office supplies.

"Companies are trying to capitalize on whatever markets are available to extend the bottom line," Zeller said.

A recent study, sponsored by the Online Publishers Association, found that 91% of at-work Internet users also log on from home.

The report found differences in the marketing approaches of hybrids and strictly b-to-b companies. For instance, 72% of the hybrid companies target online buyers offline, while 56% of b-to-b companies reported doing so. Asked what methods they use to target online buyers offline, 65% of the hybrids said they used catalogs, while just 37% of b-to-b companies use catalogs to push product sales.

Net gain

The report found that b-to-b companies cut their Web expenditures last year because of the recession. But, to a degree, they’re in better shape than during the 1991-92 recession. Ten years ago, companies had no substitute for direct marketing campaigns and had to incur the double whammy of rising postage costs and a soft economy. Now, despite the dot-com debacle, the Web is helping companies stay afloat.

Brian Cavoli, VP-innovations for Carat Interactive, said he was surprised that more b-to-b companies are not capitalizing on the Web. "It presents a compelling opportunity when you think about how the Web dominates the workday," he said. "But there’s a lot of skepticism from companies that got burned by the Web the first time."

The survey found widespread use of the Web to handle customer service functions. Seventy-four percent of b-to-b companies and 75% of hybrids said such functions were fully integrated on the Web. In addition, 65% of hybrids include product information on the Web, while 61% of b-to-b companies include that type of information online.

But the figures virtually flip when it comes to back-end operations. For example, just 14% of hybrids and 18% of b-to-b companies have systems for handling exchanges and returns for credit fully integrated on the Web. A paltry 6% of hybrids and 15% of b-to-b companies have real-time inventory status patched into the Web.

"People rush to the front end and forget about the back end," said Geoffrey Ramsey, CEO of eMarketer Inc., which provides e-business statistics. "Your operations and marketing plans need to work together."

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