ch01 silver bus mktg perspective

7/18/2019 Ch01 Silver Bus Mktg Perspective

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PowerPoint presentation byRay A. DeCormier, Ph.D.Central Connecticut State University

Chapter 1:

ABusinessMarketing

Perspective



Chapter Topics• By the end of this chapter you will understand:

1. The dynamic nature of the business marketingenvironment and the basic similarities and dierencesbetween consumer-goods and business marketing

2. The underlying factors that inuence the demand forproducts and services bought by business andorgani!ational customers

". The nature of buyer-seller relationships in a product#ssupply chain

$. The types of customers in B2B markets

%. The basic characteristics of industrial products andservices



Business Marketing

• &Business 'arketing( or &)ndustrial'arketing( are used interchangeably

• %*+ of all business school graduates

,oin rms that directly compete in thebusiness market

• Because of interest in high-techmarkets and the si!e of industrial

markets increased attention is beingpaid to business marketingmanagement



Business Markets

• Are markets for products and services fromlocal to internationalBought by:

• Businesses

• /overnment bodies

• )nstitutions

0or:

• )ncorporation

• onsumption

• se

• 3esale



What Are Business

Products?4 Used to manufactureother products

4 Become part of another product

4 Aid in the normal operations ofan organiation

4 Are ac!uired for resale"ithout change in form

4 A product purchased for personal useis considered a consumer good

Key isKey isthethe

product’ product’ss

intendedintended

useuse



Business to Business#B$B% Marketing is&uge1. Business marketers serve the largest

markets of all.

2. 5ollar volume of the business marketgreatly e6ceeds the consumer market.

". 7 single customer can account forenormous levels of purchasing activity.

80or e6ample /'#s 1"%* businessbuyers each purchase more than 9%*million annually.



The Consumer Market (B2C) and the Business Market (B2B) at

B2B

Customers:

B2C

Individuals &

Households

Businesses

GlobalLarge or!orations

"mall & Medium

si#ed businesses

Institutions

Healthare$duation

Government

%ederal"tate

Loal

"eleted

roduts:

Cs

rintersConsumer

$letronis

"im!le "ervie

'greements

Cs

$nter!rise "torage"ervers

Com!le "ervie **erings

+ell, In.

B$C and B$B



Categories of Business MarketCustomers

Commerial %irms

Governments

Institutions

$Ms

-holesalers

.etailers

%ederal "tate

Munii!al Count/

0nions Civi lubs Churhes

%oundations 1on!ro*its ther



Business Marketers vs'

Consumer()oodsMarketers;imilarly:

– Both marketers benet by employing amarket orientation i.e.:

– They need to understand and satisfycustomer needs

– They are both market driven



1. 7 set of values and beliefs that placescustomers# interests rst

2. 7n ability to generate disseminate andproductively use superior informationabout customers and competitors

". The coordinated use of interfunctionalresources 8e.g. research anddevelopment manufacturing

Market(*riven +irms

*emonstrate,



Market(*riven +irms

Market sensing capability: 7company#s ability to sense change

and to anticipate customer responses

Customer linking: The ability todevelop and manage close customer

relationships

<ave distinctivecapabilities:



Market(*riven Companies

=iew their customer as an asset thus:

1.'arketing e6penditures once

considered e6penses are nowconsidered investments.

2.Therefore marketers need to

measure performance such as 3>) ontheir investments.



Meeting Performance-tandards Means To:

5evelop and nurture customer relationshipmanagement 83' capabilities by:

a. )dentifyingb. )nitiating

c. 5eveloping

d. and 'aintaining protable customerrelationships.



Professional MarketingManagers ?mploy ustomer 3elations 'anagement 83'

tools for:

.dentif/ing and categoriing customer

segments*etermining customer0s present and

potential needs

isiting customers to learn a2outapplications of products

*eveloping and e3ecuting individualcomponents of marketing to include:

-ales4 advertising4 promotions4 serviceprograms4 etc'



ProfessionalMarketers:• 0ocus on @rotability

– nderstand forces that aect protability

– 7lign resource allocation to revenues andprots that will be secured by future business

• @artner with ustomers – 'arketers don#t ,ust sell to customersA they

develop a form of partnership for the purposeof serving and adding value for their consumer

– This strategy can result in becoming apreferred vendor



Market(*rivenCompanies

• *eliver alue Propositions

• reate programs that includeproducts services ideas andsolutions to problems that oervalue and provide opportunities for

their customers.



Marketing0s Cross(+unctional 5elationships

• @rofessional business marketers actas an integrator between variousfunctional areas within the company

• 0unctional areas include: – 'anufacturing

– 3esearch 5evelopment 835

– ustomer ;ervice

– 7ccounting – Cogistics

– @rocurement

M k ti 0 C + ti l



Marketing0s Cross +unctional5elationship

Business marketing !lanning must

be oordinated and s/nhroni#ed

ith orres!onding !lanning e**orts3

Developed by Cool Pictures and MultiMedia Presentations



Business Market

Characteristics• Business marketing and consumer-goodsmarketing are dierent

• ?ven though both markets share:

ommon body of knowledge principles andtheory

• They vary in that:

Business buyers and markets function verydierently from consumer markets



Business and ConsumerMarketing *i6ers .n:1. Dature of their markets2. 'arket demand

". Buyer behavior

$. Buyer-seller relationship

%. ?nvironmental inuences 8competitionpolitical legal and

E. 'arket strategy

• 5ue to these dierences businessmarketers need to understand howdemand for industrial products andservices diers from consumerdemand.



Business Market *emand

Characteristics

• 5erived demand

• 0luctuating demand

• ;timulating demand

• @rice sensitivity F demand elasticity



*erived *emand

• The demand for business products iscalled derived demand because thedemand for industrial products is

derived from the ultimate demandfor consumer products.

• 7s a result business marketers mustcarefully monitor uctuating trendsand patterns in consumer markets.



+luctuating *emandBecause demand is derived an increase or

decrease in consumer demand can create auctuating demand for many industrialproducts.

?6ample:

•7n increase in mortgage rates can Guicklystie new home sales. This slows down theneed for new household products. Businessesreact by decreasing their inventory of

materials or putting o buying new machinery.• This action e6plains why the demand for manyindustrial products tends to uctuate morethan the demand for consumer products.

•7 decrease in interest rates has the opposite

inuence.



-timulating *emand• ;ometimes business marketers need to

stimulate demand for consumer goods whicheither incorporate their products or are usedto make consumer products.

• @harmaceutical manufacturers advertise ontelevision by presenting various ailments followedby oering their products as solution to the ultimateconsumer. 8&7sk your doctor if HIJ is right for youK(

• ;ometimes manufacturers oer deep price discountsthat inuence members of the supply chain to lowertheir prices in the hope of inuencing the ultimateconsumer to buy their product.



.nelastic *emand

• )nelastic demand is demand withoutregard to price. 7n increase ordecrease in the product price will

not signicantly aect the demandfor the product.

• ?6ample: @rice for gasoline



7lasticit/ of *emand

Elastic Demand CurveElastic Demand Curve

+

+

4uantit/

& r i e

+

+

4uantit/

& r i e

Inelastic Demand CurveInelastic Demand Curve



)lo2al MarketPerspective'arketers must have a global perspective:

• They need to look beyond .;. borders

• The demand for industrial products incountries such as /ermany Lapan andMorea is growing more rapidly than in the.;.

•?normous growth in developing countriessuch as Bra!il hina 3ussia and )ndiaoer huge opportunities for both large andsmall businesses



Consumer Product orBusiness Product?

• 'entioned earlier the intended usedetermines whether or not a product

is a consumer product or a businessproduct

– )f 'r. lean is used by the ultimate consumer to

clean hisFher house it is a consumer product.

– )f 'r. lean is being used to clean a hospital ora university it is a business product.



-ome Consumer ProductsBecome .ndustrial

Products• L.'. ;mucker ompany sells their ,ellies and ,ams to ultimateconsumers as household food

products but also markets them asllings and yogurt additives for othercompany#s products.

• 'any companies successfully sell toboth consumer and business markets.



5elationshipMarketing

• 7ll marketing activities directed towardestablishing developing and maintainingsuccessful e6changes with customers



5elationship Marketing 8con0t

• Building one-to-one relationshipswith customers is the heart ofbusiness marketing

• 0igure 1.$ provides a recap of key

characteristics of business marketcustomers



+igure 1'9 Characteristics of BusinessMarket Customers

Characteristic Example

4Business market customers are comprised of commercial enterprises institutions and governments.

47 single purchase by a business customer is

far larger than that of an individual consumer.

4 The demand for industrial products is derived from the ultimate demand for consumer products.

43elationships between business marketers tend to be close and enduring.

4Buying decisions by business customers often involve multiple buying inuences rather than a single decision maker.

4Nhile serving dierent types of customers business marketers and consumer-goods marketers share the same ,ob titles.

47mong 5ell#s customers are Boeing7ri!ona ;tate niversity and numerous

state and local government units.

47n individual may buy one unit of asoftware package upgrade from 'icrosoft while

itigroup purchases 1****.

4Dew home purchases stimulate thedemand for carpeting appliances cabinets lumberand awealth of other products.

4)B'#s relationship with some keycustomers spans decades.

47 cross-functional team at @rocter /amble 8@/ evaluates alternative laptop @sand selects <ewlett-@ackard.

4



The -uppl/ Chain

• Business 'arketing is an importantinuence in the supply chain.

• Nhen reviewing 0igure 1-% noticethe importance of the businessmarketer#s inuence in each step ofthe supply chain.

The -uppl/ Chain



'ichael @orter and =ictor 'illar observed that &to gaincompetitive advantage over its rivals a company musteither perform these activities at a lower cost or performthem in a way that leads to dierentiation and a premium8more value.(

The -uppl/ Chain+igure 1'



-uppl/ Chain Management

• This is a techniGue of linking amanufacturer#s operation with supplierskey intermediaries and customers toenhance eOciencies and eectiveness.

• The )nternet is playing an e6tensive roleby allowing ,oint planning and e6ecutionin real time.



Managing 5elationships inthe -uppl/ Chain

• 7s important as it is to gain customers itis ,ust as important for manufacturers to

develop strong relationships withsuppliers.

• ompanies such as )B' and Toyota

develop strategies to create supplierswho provide new ideas and who areloyal.



Categories of Business MarketCustomers

Commerial %irms

Governments

Institutions

$Ms

-holesalers

.etailers

%ederal "tate

Munii!al Count/

0nions Civi lubs Churhes

%oundations 1on!ro*its ther



Business Market CustomerCommercial 7nterprises

Three categories of ommercialustomers:

– sers

– >?'s

– 5ealers and distributors



Users

• sers purchase industrial products orservices to produce other goods orservices that are in turn sold in the

business or consumer markets.

• ?6ample: Toyota buys machines to

produce cars that are sold to consumersand businesses. Toyota is a user.



Producers

• @rot oriented companies

• @roduce products - >?'#s and;ubcontractors

• "' in ;7



;7Ms

>riginal ?Guipment

'anufacturers

)ndividuals and organi!ations that

buy business goods and incorporate

them into the products that they

produce for eventual sale to other

producers or to consumers.



)overnments

• 'unicipal ;tate and 0ederal/overnment

• /enerally use the bidding approachto purchase goods and services

• @urchase up to 1F" /ross 5omestic@roduct 8/5@



.nstitutions

• This is the nonprot segment of themarket that does not seek to achievenormal business goals such as 3>)+share of market or prot

• 'arket includes universities hospitalsschools churches civic clubs

foundations etc.



Classify industrial goods by

asking the following:

How does the good or

service enter theproduction process?

How does it enter the cost

structure of the firm?

Classi*/ing Goods *or the Business Market

ource: Adapted from !hilip

"otler# Marketing Management:

Analysis, Planning, and Control,

$th ed. %&nglewood Cliffs# '.(.:

!rentice)Hall# *+,-# p. */0#

with permission of !rentice)

Hall# 1nc.

' % k * B i M k ti M t



' %rameork *or Business Marketing Management

2usiness marketing strategy

is formulated within the

boundaries establishedby the corporate

mission and

ob5etives.



;vervie" of Te3t

1. @art 1 considers dierences betweenconsumer and commercial markets anddiscusses the various types of commercialenterprises.

2. @art 2 e6amines the organi!ation buyingprocess and the forces that aect decisionmakers.

". @art " investigates selecting targetsegments and measuring their responses.

$. @art $ focuses on designing market drivenstrategies.

ch01 silver bus mktg perspective

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