b to b Marketing

8/6/2019 b to b Marketing

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B TO B MARKETINGB TO B MARKETING


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BusinessBusiness--toto--business (B2B) describes commercebusiness (B2B) describes commerce

transactions between businesses, such astransactions between businesses, such as

between abetween a manufacturermanufacturer and aand a wholesalerwholesaler, or, or

between a wholesaler and a retailer.between a wholesaler and a retailer.

The management process responsible for the

facilitation of exchange between producers of goods

and services and their organisational customers.


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Business-to-business (B2B) market is significantly larger

than the consumer market.

Example: U.S. companies spend more than $300

billion annually just for office and maintenance supplies.

Example: Department of Defensebudget in a recentyear was $500 billion.

Business-to-business (B2B) marketing Organizational

sales and purchases of goods and services to supportproduction of other products, to facilitate daily company

operations, or for resale.


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Business-to-Business Marketing Consumer-Goods

Marketing

Product Relatively technical in nature, exact

form often variable, accompanying

services very important

Standardized form, service

important but less than for

business products

Price Competitive bidding for unique items,

list prices for standard items

List prices

Promotion Emphasis on personal selling Emphasis on advertising

Distribution Relatively short, direct channels to

market

Product passes through a

number of intermediate links

en route to consumer

CustomerRelations

Relatively enduring and complex Comparatively infrequentcontact, relationship of

relatively short duration

Decision-

making process

Involvement of diverse group of

organization members in decision

Individual or household unit

makes decision


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COMPONENTS OF THE BUSINESS MARKETCOMPONENTS OF THE BUSINESS MARKET

Four main components:

Commercial market Individuals and firms that acquire

products to support, directly or indirectly, production

of other goods and services.

Largest segment of the business market.

Trade industries Retailers or wholesalers that purchase

products for resale to others.

Also called resellers, marketing intermediaries that

operate in the trade

sector.


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GovernmentGovernmentall domestic levels (federal, state, local)all domestic levels (federal, state, local)

and foreign governments; also act as sellersand foreign governments; also act as sellerse.g.,e.g.,

confiscated goods.confiscated goods.

Public and private institutionsPublic and private institutions,, such as hospitals,such as hospitals,

churches, colleges and universities, and museums.churches, colleges and universities, and museums.


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GEOGRAPHIC MARKET CONCENTRATION Business market more concentrated than consumer market.

Example: Companies that sell to the federal government

are often located near Washington, D.C.

Businesses becoming less geographically concentrated as Internet

technology improves.

Certain industries locate in particular areas to be close to their

customersFor example, suppliers of automobile components and

assemblies frequently build their plants close to their

customers

CHARACTERISTICS OF THE B2B MARKETCHARACTERISTICS OF THE B2B MARKET


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The Purchase Decision ProcessThe Purchase Decision Process

Businesses must understand the dynamics of the organizationalBusinesses must understand the dynamics of the organizational

purchasing process.purchasing process.

* B2B suppliers often must work with multiple buyers.* B2B suppliers often must work with multiple buyers.

* Decision* Decision--makers at several layers may influence final orders.makers at several layers may influence final orders.

* Process is more formal and professional than with consumers.* Process is more formal and professional than with consumers.

SIZES AND NUMBEROF BUYERS

Business market has smaller number of buyers than consumermarket.

Many buyers are large organizations, such as Boeing, which

buys jet engines.


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BuyerBuyer--Seller RelationshipsSeller Relationships

More intense than consumer relationshipsMore intense than consumer relationships

-- Require better communication among the organizationsRequire better communication among the organizationspersonnelpersonnel

-- Primary goal of B2B relationships is to provide advantagesPrimary goal of B2B relationships is to provide advantagesthat no other seller can, for instance:that no other seller can, for instance:

LowerLower--pricespricesQuicker deliveryQuicker delivery

Better quality and reliabilityBetter quality and reliabilityCustomized product featuresCustomized product features


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Evaluating International Business Markets

Evaluating International Business Markets

Business purchasing patterns often differ from one

country to the next

- Companies must weigh quantitative and

qualitative data

- Global sourcing: purchasing goods and servicesfrom suppliers worldwide


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Flows within a B2B market


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Unit production model of

buyer-seller contact in B2B markets

Source: Adapted from Johanson (1982), copyright 1982 John Wiley & Sons Limited. Reporoduced with permission.


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Mass production model of

buyer-seller contact in B2B markets

Source: Adapted from Johanson (1982), copyright 1982 John Wiley & Sons Limited. Reproduced with permission.


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BUSINESS MARKET DEMANDBUSINESS MARKET DEMAND

Demand characteristics vary from market to market.


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DERIVED DEMAND

y

The linkage between demand for a companys output andits purchases of resources such as machinery, components,

supplies, and raw materials.

y Example: Demand for computer microprocessor chips is

derived from demand for personal computers.

y Organizational buyers purchase two types of items:

y Capital itemslong-lived business aspects that

depreciate.

y Expense itemsitems consumed within short time

periods.


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VOLATILE DEMAND

y Derived demand creates volatility.

y Example: Demand for gasoline pumps may be

reduced if demand for gasoline slows.


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JOINT DEMAND

y Results when the demand for one business product is

related to the demand for another business product

used in combination with the first item.

y Example: If lumber supply falls, then decrease in

construction will affect concrete market.


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INELASTIC DEMAND

y Demand throughout an industry will not change

significantly due to a price change.

y Example: Construction firms will not necessarily

buy more lumber if prices fall unless overall housing

demand also increases.

b to b Marketing

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