developed by cool pictures and multimedia presentations copyright © 2007 by south-western, a...

Developed by Cool Pictures and MultiMedia Presentations Copyright © 2007 by South-Western, a division of Thomson Learning, Inc. All rights reserved.

Chapter One

A Business Marketing Perspective

1


What is Business-to-Business Marketing?

• The process of matching and combining the

capabilities of the supplier with the desired

outcomes of the customer to create value for the

“customer’s customer.”

2


Definition: Industrial Marketing

• Industrial marketing (or business to business

marketing) is the marketing of goods and services

by one business to another.

• Industrial goods are those an industry uses to

produce an end product from one or more raw

materials.3

http://en.wikipedia.org/wiki/Marketing


Can be technically complex

Customized to user preference

Service, delivery and availability very important

Purchased for other than personal use

Standardized

Service, delivery and

availability only

somewhat important

Purchased for

personal use

Products

Consumer

Business to

Business

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What Is a Product?Levels of Product and Services

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Total Offering

• The puzzle of the B2B Consumer needs

“Total Offering”

•Product

•Service

•Image

•Availability

•Quantity

•Evaluated Price

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Professionally trained

purchasing personnel

Functional involvement at

many levels

Task motives predominate

Individual purchasing

Family involvement,

influence

Social or psychological

motives predominate

Buyer Behavior

Consumer

Business to

Business

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Buyer/Seller Relationship Expectations

Technical expertise is an assetInterpersonal relationships

between buyers and sellersSignificant personal info

exchangedStable, long-term relationships

encourage loyalty

Less technical expertise Nonpersonal relationships Little personal information

exchanged Changing, short-term

relationships encourage

switching

ConsumerBusiness

to Business

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Channels

Shorter, more direct

Organization involvement as part of supply chain

Indirect, multiple relationships

Little or no customer supply chain involvement

Consumer Business to Business

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Promotion

Emphasis on personal selling,

dialogue

Most communications

invisible to the consumer

Consumer is seldom aware of

BtB brands and companies

Emphasis on advertising,

monologue

Companies compete for

visibility and awareness of

consumer market


10


Price

Complex purchasing

process or competitive

bidding, depending on

purchase type

Usually list or

predetermined prices


11


Demand

Direct

Elastic

Less volatile

Derived

Inelastic (short run)

Volatile (leveraged)

Discontinuous


12


Marketing Mix: Promotion

Emphasis is frequently on

advertising.

Communication with

customers is often a

monologue.

Relationship is often brief.

Emphasis is frequently on

personal selling.

Communication with

customers should be a

dialogue.

Relationship is often long-

lasting.

Consumer V.S. Business to Business

Business-to-business marketing requires a different emphasis on different parts of the promotional mix

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Business Markets

– Bought by

• Businesses

• Government bodies

• Institutions

– For consumption

– For use

– For resale

GE

Markets for products and services

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Figure 1.2 The Consumer Market (B2C) and the Business Market (B2B) at Dell.

B2B

Customers

B2C

Individuals & Households

BusinessesGlobalLarge corporationsSmall & Medium sized businesses

InstitutionsHealthcareEducation

GovernmentFederalStateLocal

SelectedProducts

PC’sPrintersConsumer ElectronicsSimple Service Agreements

PC’sEnterprise StorageServersComplex Service Offerings

Dell, Inc.

15


A Market Driven Firm

Market sensing capability…company’s ability to sense change and to anticipate customer responses.Customer linking…the ability to develop and manage close customer relationships

Has:

16


Business Market Characteristics

• Derived demand: Demand for a basic good (wanted

not for its own sake but for the goods derived from

it) such as textiles, that is due to its use in the

production of another good such as apparels.




• Fluctuating demand: The market interest for a product that

shows variations over time.

• Purchasing activity increases and decreases because of

direct and/or indirect influences.

• Factors that lead to fluctuating demand include

seasonality, taxation, product availability and pricing.

Opposite of stable demand.




• Stimulating demand: Stimulate demand means create

or enhance demand. Demand results in economic

activity, so you stimulate demand to stimulate the

economy.

For example, the government could cut VAT so that

products in shops become cheaper and therefore

more people want to buy them, which gets people

spending and the economy moving.




• Price sensitivity/demand elasticity: The degree to

which the price of a product affects consumers

purchasing behaviors. The degree of price

sensitivity varies from product to product and from

consumer to consumer. In economics, price

sensitivity is commonly measured using the price

elasticity of demand.




• While demand elasticity: is a measure used in

economics to show the responsiveness, or elasticity,

of the quantity demanded of a good or service to a

change in its price



Relationship Marketing

• All marketing activities directed toward establishing,

developing, and maintaining successful exchanges

with customers

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Michael Porter and Victor Millar observed that “to gain competitive advantage over its rivals, a company must either perform these activities at a lower cost or perform them in a way that leads to differentiation and a premium (more value).”

The Supply Chain

23


Business Market CustomerCommercial Enterprises

• Three categories:– Users– OEMs: Original equipment manufacturers

(OEM) is a term used when one company makes a part or subsystem that is used in another company's end product

– Dealers and distributors

24

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