In Marketing, most of the research understanding has occurred in a B2C environment. While some research has been undertaken over the last 20 years in the B2B environment also, very little is documented about the use of marketing inputs to generating higher profits. One of the major changes that have occurred in the marketplace is the fact that many businesses are cutting costs to show higher profits.

Specifically, the challenge for managers in business to business markets is the need to make decisions regarding the allocation of limited marketing contact resources across various customers/accounts. Typically, these decisions pertain to which account to contact and when. Clearly, making these allocation decisions requires a good understanding of (a) how marketing contacts affect a buyer’s purchase behavior and (b) the relative effectiveness of the different modes of contacting customers compared to their cost. The ultimate goal here is to optimize the allocation of resources to maximize profits.
The objective of this study is twofold. First, we seek to understand the different ways in which contacts made by the supplier firm can affect an account’s buying behavior over time. We use a Hidden Markov Model (HMM) to capture the changes in the unobserved strength of the buyer-seller relationship based on the observed frequency and quantity of purchases made by the buyer. Our second objective is to understand how the different modes of contacting customers differ in terms of their effectiveness in altering the different aspects of buyer behavior such as frequency and quantity of purchases. Our research is likely to make significant contributions to the academic literature as well as the practice of B2B marketing.