1 Copyright © 2011 Pearson Education, Inc., publishing as Prentice Hall Dr. Dawne Martin Business Marketing: MKTG 550 August 23, 2012.

1Copyright © 2011 Pearson Education, Inc., publishing as Prentice Hall

Dr. Dawne MartinBusiness Marketing: MKTG 550August 23, 2012

Gain an appreciation of the differences between consumer marketing and business-to-business marketing

Understanding the marketing concept and its implications for B2B marketing

Understand the meaning of value in B2B markets and how that affects B2B offerings

Obtain a sense of the changing nature of B2B environments and markets

1-2Copyright © 2011 Pearson Education, Inc., publishing as Prentice Hall

Groups formed on Tuesday Assignment:

› Read chapters 1 & 2 of text› Be prepared to discuss the questions 1, 2, 3, 9 &

10 from “Questions for Review & Discussion” at the end of chapter 2

1-3Copyright © 2011 Pearson Education, Inc., publishing as Prentice Hall

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.”

Entrepreneurial Marketing: Conducted in a way that involves innovation, acting proactively and taking calculated risks.

4Copyright © 2011 Pearson Education, Inc., publishing as Prentice Hall

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

When is a customer considered a business?

When a consumer?

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

Greater

Greater

Fewer

Larger

Geographically concentrated

Closer

More direct

More professional

Multiple (buying center)

More complex

Yes

Greater

Personal selling

Consumer Market

Smaller

Smaller

Many

Smaller

Diffuse

More impersonal

Less direct

More personal

Single

Simpler

No

Smaller

Advertising

The Marketing ConceptUnderstand customer needsMeet those needs with a coordinated set of activitiesIn a way that meets organizational goals

8

Product

9Copyright © 2011 Pearson Education, Inc., publishing as Prentice Hall

The total offering is created by a partnership between the buying organization and the marketing organization.

The process creates an augmented product that is specific to the buying unit’s needs and maximizes the value creation capabilities of the marketer.

Core Product+ Financing Terms+ Delivery Options= “Total Offering”

10Copyright © 2011 Pearson Education, Inc., publishing as Prentice Hall

The mutually agreed-upon amount that satisfies both sides in an exchange.

Often varies from fixed price, with more special discounts and allowances (in comparison to consumer markets.)

May involve things other than a one-time price payment (such as commissions.)

Price is the measure of value exchanged and is determined by the market—not by costs.

11Copyright © 2011 Pearson Education, Inc., publishing as Prentice Hall

Place is about getting the product to the customer in order to maximize economic utility.

12Copyright © 2011 Pearson Education, Inc., publishing as Prentice Hall

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

13Copyright © 2011 Pearson Education, Inc., publishing as Prentice Hall

Geographically Concentrated

Relatively Few Buyers

Oligopolistic Competition

Geographically Dispersed

Mass Market; Many Buyers

Monopolistic Competition

ConsumerBusiness

to Business

14Copyright © 2011 Pearson Education, Inc., publishing as Prentice Hall

Can be technically complex

Customized to user preference

Service, delivery and availability very important

Purchased for other than personal use

StandardizedService, delivery and availability only somewhat importantPurchased for personal use

ConsumerBusiness

to Business

15Copyright © 2011 Pearson Education, Inc., publishing as Prentice Hall

Professionally trained purchasing personnel

Functional involvement at many levels

Task motives predominate

Individual purchasingFamily involvement, influenceSocial or psychological motives predominate

Consumer

Business to

Business

16Copyright © 2011 Pearson Education, Inc., publishing as Prentice Hall

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

17Copyright © 2011 Pearson Education, Inc., publishing as Prentice Hall

Shorter, more direct

Organization involvement as part of supply chain

Indirect, multiple relationships

Little or no customer supply chain involvement

ConsumerBusiness

to Business

18Copyright © 2011 Pearson Education, Inc., publishing as Prentice Hall

Emphasis on personal selling, dialogueMost communications invisible to the consumerConsumer is seldom aware of B2B brands and companies

Emphasis on advertising, monologueCompanies compete for visibility and awareness of consumer market

ConsumerBusiness

to Business

19Copyright © 2011 Pearson Education, Inc., publishing as Prentice Hall

Complex purchasing process or competitive bidding, depending on purchase type

Usually list or predetermined prices

ConsumerBusiness

to Business

20Copyright © 2011 Pearson Education, Inc., publishing as Prentice Hall

Direct Elastic Less volatile

Derived Inelastic (short run) Volatile (leveraged) Discontinuous

ConsumerBusiness

to Business

21Copyright © 2011 Pearson Education, Inc., publishing as Prentice Hall

Nothing happens unless consumer buys something

16

1. Suppliers forecast production on existing order rates.

2. If consumer demand drops, the order rate also drops.

3. Supply chain members are then likely to overcompensate the difference between the old and new forecasts, because:

A. Inventory levels can decline to fit new order rateB. Customers change orders frequentlyC. Minimum order quantities may existD. Trade promotions may influence buying patterns

Acceleration Principle: “Bullwhip Effect”

Copyright © 2011 Pearson Education, Inc., publishing as Prentice Hall

International Standards Organizations (ISO) Define technical performance for

manufacturing and quality systems Compliance of suppliers to these standards

is required by global firms Industries that are targeted:

› Steel, Plastic, Pulp and Paper Products, Chemicals and Electronics

23Copyright © 2011 Pearson Education, Inc., publishing as Prentice Hall

Total cost of owning or using a product› Transportation, carrying costs, financing

costs, potential obsolescence, cost of failure, installation, flexibility to upgrade, etc.

Consumers have same considerations but are attracted to “Deals”

24Copyright © 2011 Pearson Education, Inc., publishing as Prentice Hall

The puzzle of the B2B Consumer needs

“Total Offering”

•Product•Service•Image•Availability•Quantity•Evaluated Price

25Copyright © 2011 Pearson Education, Inc., publishing as Prentice Hall

26Copyright © 2011 Pearson Education, Inc., publishing as Prentice Hall

Value Chain: Suppliers

From Exhibit 1-5: Value Enabling activities include infrastructure, human resources, procurement and technology/technology development. Value Creating activities include inbound and outbound logistics, operations, marketing and sales and customer service.

From Exhibit 1-5: Value Enabling activities include infrastructure, human resources, procurement and technology/technology development. Value Creating activities include inbound and outbound logistics, operations, marketing and sales and customer service.

Value Activities

ValueEnabling

ValueCreating

Value Activities

ValueEnabling

ValueCreating

Value Activities

ValueEnabling

ValueCreating

27Copyright © 2011 Pearson Education, Inc., publishing as Prentice Hall

Target Customers

Target CustomersAdded value

Infrastructure

Human resources

ProcurementTechnology & technology development

Support activities

Mar

gin th

rough v

alue

Direct activities

Custom

er s

ervi

ce

Mar

ketin

g & s

ales

Outbound lo

gistic

s

Operat

ions

Inbound lo

gistic

s

Offering:

ProductServiceImage

AvailabilityQuantity

Evaluated Price

Creates

Perceives

Margin through value

28Copyright © 2011 Pearson Education, Inc., publishing as Prentice Hall

Hyper-competition Formation of partner networks Adoption of technology and the internet Supply Chain Management Time Compression

29Copyright © 2011 Pearson Education, Inc., publishing as Prentice Hall

Given all of the differences between consumer and business to business marketing, what would you say is the key reason why customer relationships are so important in B2B market?

Why would a customer remain with a particular supplier even though low cost substitutes may be available?

1-30Copyright © 2011 Pearson Education, Inc., publishing as Prentice Hall