business marketing overview mkgt 550 dr. dawne martin august 25, 2011
TRANSCRIPT
Learning Objectives Review differences from consumer
marketing Understand the differences in
customer types and product types Understanding other unique issues
in business marketing
What Is Business Marketing?
Those activities that facilitate exchanges involving products and customers in business markets
A business transaction between a professional seller (representing a selling company) and a professional buyer (representing a buying company)
Activities in which goods or services are sold for any use other than personal consumption
Note: It is not the nature of the product; it’s the nature of the transaction.
Good employment opportunities Growing importance of high-tech
business products Success of foreign competition Significance of international
interdependence of firms Importance of the service sector Dramatic changes in the B2B
environment
Why Study Business Marketing?
Overview of B2BRalph Oliva, Overview of Business-to-Business Marketing, www.marketingpower.com.
B2B requires a value-based approach to marketing
Transactions are among & within value chains Value primarily determined by business economic
use Small numbers of customers, requiring personalized
marketing and customized products and services Large customer with formidable market power Large unit transactions Complex, lengthy selling process involving many
players Deeper partnerships with members of the value
chain Channel management oriented up and down the
supply chain Sales focused on key accounts and multiply
purchasing influence (who may not be users) How do these differences effect marketing
planning, strategy formulation and implementation.
How the Business Market Differs from the Consumer Market
Characteristic
Sales volumePurchase volumeNumber of buyersSize of individual
buyersLocation of BuyersBuyer-seller
relationshipNature of channelNature of buyingNature of buying
influencesType of negotiationsUse of reciprocityUse of leasingPrimary promotion
method
Business Market
GreaterGreaterFewerLargerGeographically
concentratedCloserMore directMore professionalMultiple (buying center)More complexYesGreaterPersonal selling
Consumer Market
SmallerSmallerManySmallerDiffuseMore impersonalLess directMore personalSingleSimplerNoSmallerAdvertising
Exhibit 1-1
Derived Demand Inelastic Demand Fluctuating Demand – Acceleration
Principle Joint Demand -- two products used
together Value Creation
Competitive Advantage Value Chain
Characteristics of Business Demand
The Nature of Business Buying Behavior
Questions Asked by Typical Ultimate
ConsumersProduct
Questions Asked by Typical
Business UsersPersonal computers Will it increase office
efficiency?
What is its capital investment value?
Does it have special features that will help improve our company image?
Will it help my child learn?
Will it improve my correspondence?
Is a laptop worth the extra cost?
Exhibit 1-3 Evaluating Products
The Nature of Business Buying Behavior
Questions Asked by Typical Ultimate
ConsumersProduct
Questions Asked by Typical
Business Users
Automobiles How efficient is the vehicle to operate?
Would it be more economical to lease it or purchase it?
What is the expected working life span of the car?
How does it enhance my status?
What is its potential trade-in value?
Will I get reasonable gas mileage?
Exhibit 1-3 Evaluating Products
The Nature of Business Buying Behavior
Questions Asked by Typical Ultimate
ConsumersProduct
Questions Asked by Typical
Business Users
Telephones
Will expanded service lower the cost of communicating with our customers?
Should our intercom system be separate from or connected to the telephone system?
How long will it take to have one installed?
Can I get three jacks and two telephones?
Exhibit 1-3 Evaluating Products
Major Equipment
Exhibit 1-4
A Classification of Business Goods and Services
Type CharacteristicsOften referred to as “installations” Exhibit inelastic demand curve Usually involves direct distribution Requires close cooperation between buyers and sellers
ExamplesMachinery, machine tools, stamping machines, robots
Accessory Equipment
Used to facilitate production, administrative, clerical, or marketing activities Exhibits elastic demand curve Distribution channels often longer Standardized and less costly than major equipment
Office equipment, personal computers, desktop printers, hand tools, fire extinguishers
Process Materials
Generally bought per specifications prepared by the customer (user) Cannot be identified or regrouped in the finished product Most marketed to OEMs or to distributors who sell to the OEM market Considerable emphasis on price and service in the sales process
Chemicals, plastics, cement, asphalt
Why would marketing be different for each?
MRO Supplies
Exhibit 1-4
A Classification of Business Goods and Services
Type CharacteristicsFacilitate the production operation Short life and less expensive Usually standardized specifications Longer channels of distribution
ExamplesBrooms, paint, cleaning supplies, bearings, gears, filters, pens, greases, lubricating oils
Business Services Support organizational operations
Spectacular growth Specialized providers Cost effective
Banking, insurance, financial, advertising, marketing research, employment services, consulting
Fabricated and Component Parts
Become part of other product Identified and distinguished easily Consistent quality required Delivery schedules critical
Spark plugs, timing devices, switches
Raw Materials
Basic lifeblood of industry Become part of manufactured product Exhibit inelastic demand curve Usually bought in large quantities Long or short channels of distribution
Farm products, lumber, iron ore, resins
Matching Exercise Factory building A business buying toilet paper Banking and currency exchange Grain for bread production Intel pentium chips Computer printer
Capital equipment Accessory equipment MRO Supplies Services Raw materials Manufactured material OEM parts
Scope and Importance of Customers
350,000 manufacturers 300,000 business service providers 400,000 wholesalers, distributors,
agents 2.5 million retailers 80,000 government agencies
(federal, state, local) Plus nonprofits—hospitals, museums,
parks, universities, political parties
Business Customers Commercial Enterprises
Industrial Distributors & Indirect channel members and facilitators (VARS)
OEMs (original equipment manufacturers) User-customers
Governmental Organizations Federal State Local
Institutions Education Hospitals Non-Profits
Products Purchased
Conveyer Conveyer replacement
and maintenance materials
Components going down conveyer
Raw material and components of components
Assembly station magnifier
Power tool with blue cord
Assembly fixture Table and chair Trucks with
components on them
Floor cleaning systems
Lighting systems Heating/AC
systems Uniform vest Health insurance
Business Marketing Planning and Strategy Formulation
Includes: Analysis of changing environments Assessment of organization’s strengths
and weaknesses, opportunities and threats
Marketing planning Takes the best information it can get Analyzes it Generates alternatives Proposes a plan that best suits the firm,
now.
Friar Casing, LLC Friar casing makes steel cases to house
products used in difficult environments Situation:
Tiffany has 5 years of experience with Coca-Cola in event planning
Friar has had flat sales for 5 years, but pay for sales reps has gone up
Tiffany suggests moving small customers to the web and asking sales reps to bring in new customers
Her father believes that the relationship between customer and sales rep is too important
What should Friar do?
Summary Business Marketing is marketing
products to other businesses, government or institutions.
Types of Customers Types of Products