B2B Marketing - Session 1 (Intro)

7/30/2019 B2B Marketing - Session 1 (Intro)

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B2B Marketing

Prof. Rubina D’Mello



B2B Marketing Organizational sales and purchases of goods

and services to support production of other

products, to facilitate daily companyoperations, or for resale.



What are these? B2B markets

All organizations that purchase goods and

services to use in the creation of their owngoods and services.

B2B marketing The process of matching and combining the

capabilities of the supplier with the desiredoutcomes of the customer to create value forthe ―customer’s customer.‖



B2B versus B2C Marketing B2C=Business-to-Consumer Market=

businesses sell products and services to

consumers for household or personal use B2B=Business-to-Business Market=

businesses sell products and services to otherbusinesses for use in their daily operations or

for making other products and services



B2C versus B2B Marketing The B2B market is 5X as large as

the B2C market in the USA.



Sectors of the B2B Market Producers

Middlemen

Government Units

Nonprofits



Difference between B2B & B2CIndustrial Markets Consumer Markets

Structure Relatively fewer buyers Clustering

geographical concentration

Large number of customers

Mass markets

Products Complex, needing customization, alliedservices important

Standardised for mass markets

Buyer

Behaviour

Functional involvement, rational

motives, importance of relationships

Psychological motives, family

involvement

Decisions Distinct, observable stages Mental, not observable

Channels Shorter, more direct Indirect, multiple

Promotion Importance of personal selling Advertising important

Price Bidding and negotiations a norm; list

prices for standard products of low

value

List prices and standard discounts



Difference between B2B & B2CB2B Marketing B2C Marketing

Relationship driven Product driven

Maximize the value of relationship Maximize the value of thetransaction

Small, focused target market Large target market

Multi-step buying process, longersales cycle

Single step buying process, shortersales cycle

Brand identity created on personalrelationship

Brand identity created throughrepetition and imagery

Education and awareness buildingactivities

Merchandising and point of purchase activities

Rationale buying decision based on

business value

Emotional buying decision based on

status, desire or price



Sectors of the B2B Market Producers – includes all manufacturers and

service providers; buy goods to use in makingother goods or services

Middlemen – buy goods for resale; includesall retailers and wholesalers (distributors,vendors)

Government – includes all federal, state, andlocal governments and govt. agencies

Nonprofit – includes charities, schools anduniversities, museums, etc.



B2B Marketing is Different! There are fewer customers and they

require dependable relationships and a

high level of service. Marketing tends to be done by personal

selling ( one-on-one) calls to thecustomer.

Specialized media such as trade journals, sales brochures, web sites,trade shows are used rather than

traditional mass media.



Emotional or Rational Buyers?

(Considerations of B2B Buyers)

Buyers must purchase according to aset of purchasing specifications

Focus on Quality (including ISO 9000certification)

Total costs to purchase and use

Reliability Value in use

Savings possible via e-commerce



Three Kinds of

Organizational Purchases Straight rebuy

a routine repurchase that may have been mademany times before

Modified rebuy

the in-between process where some review of the buying situation is done —though not asmuch as in new-task buying

New-task buy

a firm has a new need and the buyer wants agreat deal of information



The ―Buying Center‖ Business purchases often involve multiple

influence

"Buying center" —all people who participate inor influence a particular purchase

Buying center varies from purchase topurchase

Does not appear on the "organizational chart"

Structure may be formal or informal



Multiple Roles in the

Buying Center

BuyingCenter

Users

Buyers

Gatekeepers Deciders

Influencers



COMPONENTS OF THE BUSINESS

MARKET Commercial market Individuals and firms

that acquire products to support, directly or

indirectly, production of other goods andservices.

Trade industries Retailers or wholesalersthat purchase products for resale to others.

Government.

Public and Private Institutions



Types of Organizational Customers

Government

Units

Nonprofit and

Not-for-Profit

Organizations

Commercial

Enterprises

IndustrialDistributors

Value-AddedResellers

OriginalEquipmentManufacturers

Users or End Users

85,000 local,state, and federalgovernment units

Churches,hospitals,colleges,nursing homes,

etc.



Producer Types

Component Parts

and ManufacturedMaterials

Producers

CapitalGoods

Manufacturers

Accessory

Equipment

Suppliers

Raw

Materials

Producers



Producer Types

More differentiated from direct

competition by the value added tothe customer’s product.

Usually retain identity even when

incorporated into the customer’s

product.

Parts retain their same form when

incorporated.

Mico Fuel pumps are an example.

Component Partsand Manufactured

Materials

Producers



Producer Types

Adherence to specifications reduces

opportunities for differentiation.

Involves the development of

specifications to ensure that

organizational needs are met.

Capital goods involve large purchases

with considerable risk for the customer.

Customers expect an offering that

includes installation, equipment, and

accessories.

CapitalGoods

Manufacturers



Producer Types

Accessory equipment is usually

produced by an independent

supplier.

Accessories can be added to a

bundled offering by a channelintermediary.

Accessory equipment is equipment that

works with some other offering.

The key to providing value is to be

compatible with industry standards for

the primary offering.

AccessoryEquipment

Suppliers



Market Demand

JointDemand

DerivedDemand

VolatileDemand

InelasticDemand

Inventory Adjustment

• Demand characteristics vary from market to market.



DERIVED DEMAND The linkage between demand for a company’s output and its purchases of

resources such as machinery, components, supplies, and raw materials.

VOLATILE DEMAND Derived demand creates volatility; for example, demand for gasoline pumps may

be reduced if demand for gasoline slows.

JOINT DEMAND Demand for two products used in combination with each other.

INELASTIC DEMAND Demand not significantly influenced by price changes.

INVENTORY ADJUSTMENTS Just-in-time (JIT) inventory policies boost efficiency by cutting inventory and

requiring vendors to deliver inputs as they are needed.



SEGMENTING B2BMARKETS

Segmentation helps marketers develop the most appropriatestrategy.

SEGMENTATION BY DEMOGRAPHIC CHARACTERISTICS Grouping by size based on sales revenues or number of

employees.

SEGMENTATION BY CUSTOMER TYPE

Grouping in broad categories, such as by industry.

Customer-based segmentation Dividing a business-to-businessmarket into homogeneous groups based on buyers’ productspecifications.



SEGMENTATION BY END-USE APPLICATION

End-use application segmentation Segmenting a business-to-business market based on how industrial purchasers will use the

product. Example: A supplier of industrial gases that sells hydrogen to some

companies and carbon dioxide to others.

SEGMENTATION BY PURCHASE CATEGORIES

Segmenting according to organizational buyer characteristics. Example: Whether a company has a designated central purchasing

department or each unit within the company handles its ownpurchasing.



THE BUSINESS BUYINGPROCESS

More complex than the consumer decision process.

Takes place within formal organization’s budget, cost,and profit considerations.

INFLUENCES ON PURCHASE DECISIONS

Environmental factors

Organizational factors Social Factors

Personal Factors

B2B Marketing - Session 1 (Intro)

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