Business Markets and Business Marketing Chapter1.PP

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Chapter 1

Business Markets

and

Business Marketing

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BASF: http://www2.basf.us/stories/index.htm 

A B2B company that:

• Creates value for its customers

• Builds brand recognition

• Communicates a unified message

• Targets decisions makers

• Supports salespeople with variety of communication tools

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Exhibit 1-1

ConAgra

Salt is added to

frozen dinners

Salt is processed into

food-grade or 

industrial grade salt

Salt is mined

Kroger

Salt is sold in

shakers

Morton’s

Salt

Salt mine

YOU!

McDonalds

Salt is added to

fries

Consumer MarketingBusiness MarketingBusiness Marketing

MARKETING SALT

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BUSINESS MARKETING

The marketing of goods and services to:

• Companies that consume

•Government agencies

• Institutions

• Resellers

to:• produce their products, and/or

• facilitate or support operations.

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WHY BUSINESS MARKETING IS UNIQUEWHY BUSINESS MARKETING IS UNIQUE

• Buyer-seller relationshipsBuyer-seller relationships

• Shorter distribution channelsShorter distribution channels

• Emphasis on personal sellingEmphasis on personal selling

• Greater Web integrationGreater Web integration

• Unique promotional strategiesUnique promotional strategies• Consumption (OEM v. end user)Consumption (OEM v. end user)

• Knowledge of customer’s customersKnowledge of customer’s customers

• Marketing researchMarketing research

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TYPICAL BUSINESS TO BUSINESS

GOODS AND SERVICES INCLUDE:

• Raw materials

• Manufactured materials

(transformed from raw materials)

• Component or OEM parts

(part of a completed product)

• Accessory equipment (tools)

• Capital equipment (machinery)

• MRO items (maintenance, repair and operation) 1-6

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BUSINESS TO BUSINESS CHALLENGES

• Size and location of customers

• Performance standard expectations

• Complicatedpurchasing decisions

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DERIVED DEMAND

• Demand comes from the customer’s customer.

• Most demand originates

with consumers.

• Volatility?

• Elasticity? 1-8

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DERIVED DEMAND SIMPLIFIED

YOU MAKE HEADLAMP ASSEMBLIES:

Consumers

want more carsCar manufacturers

produce more carsYou sell more

headlamp assemblies

Consumers stop

buying cars Car manufacturers

stop making carsYou sell fewer

headlamp assemblies

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THE FLOW OF GOODS AND SERVICES

Amount and type of car determined by

research facilitating service

Purchase order printed facilitating product

Finishedcar

  Componentparts

Assembly  Sub-assembly

Manufacturedmaterials

RawMaterials

Transported via facilitating services

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CREATING VALUE

VALUE – The perception of product’s benefit

beyond price or function.

Value is received:

1. From the product

2. From seller’s services

3. From relationship with seller

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1. Who are our customers?

2. What do our customers want?

3. How do our customers makebuying decisions?

SUCCESSFUL B2B COMPANIES ASK:

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