Chap001

McGraw-Hill/Irwin Copyright © 2009 by the McGraw-Hill Companies, Inc. All rights reserved.

Business Markets and

Business Marketing

Part One

Part One

Business Markets and Business Marketing• Chapter 1

• Introduction to Business Marketing

• Chapter 2• The Character of Business Marketing

• Chapter 3• The Purchasing Function

• Chapter 4• Organizational Buyer Behavior

Chapter 1

Business Marketsand

Business Marketing

BASF EXAMPLE

A TYPICAL BUSINESS-TO-BUSINESS COMPANY THAT:

• Creates value for its customers

• Builds brand recognition

• Communicates a unified message

• Targets decisions makers

• Supports salespeople with variety of communication tools

1-5

Exhibit 1-1

General Foods

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 SaltSalt mine

You

McDonalds

Salt is added to fries

Consumer MarketingBusiness MarketingBusiness marketing

MARKETING SALT

1-6

BUSINESS MARKETING

• THE MARKETING OF GOODS AND SERVICES TO:• Companies that consume

• Government Agencies

• Resellers (i.e. wholesalers)

• Institutions (i.e. hospitals)

• Non-Profit Organizations (i.e. American Red Cross)

FOR USE IN PRODUCING THEIR PRODUCTSAND/OR TO FACILITATE OPERATIONS

1-7

BUSINESS MARKETING IS UNIQUE

• VARYING INVOLVEMENT LEVELS IN BUYER-SELLER RELATIONSHIPS

• SHORTER DISTRIBUTION CHANNELS

• EMPHASIZES PERSONAL SELLING AND NEGOTIATION

• GREATER WEB INTEGRATION IN COMMUNICATION

• UNIQUE PROMOTIONAL STRATEGIES

• CONSUMPTION

• KNOWLEDGE OF CUSTOMER’S CUSTOMER

• MARKETING RESEARCH

1-8

MARKET DRIVEN MEANS:

• ALL EMPLOYEES FOCUS ON CUSTOMER SATISFACTION

• CONSTANTLY SEEKING OPERATIONAL EFFICIENCY

• BUILDING EFFECTIVE EMPLOYEE TERMS

• CONSTANTLY IMPROVING SERVICE/SUPPORT TO CUSTOMERS

• BEING INNOVATIVE

• DEVELOPING APPROACHES TO OPEN NEW MARKETS

1-9

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 products)

1-10

BUSINESS TO BUSINESS:IT IS ALL ABOUT RELATIONSHIPS

BUSINESS TO BUSINESS DEPENDS ON:

• Close Business and Personal Relationships

• Shorter Distribution Channels

• Emphasis on Personal Selling

• Dependence on WEB Integration

and

• Unique Promotional Strategies

Because of . . . .

Leads to . . . .

Through . . . .

1-11

BUSINESS TO BUSINESS CHALLENGES

• The size and location of customers – bigger, fewer, and concentrated

• Strict performance standards for products by customers

• Complicated purchasing decisions – Involvement and time

1-12

BUSINESS TO BUSINESS: IT IS ALL ABOUT DEMAND

• DERIVED DEMAND• The demand for a company’s products comes from

(derived) the demand for their customer’s products.

• Most demand originates with consumers.

• JOINT DEMAND• Two products are used together and demanded

together

• Both products are consumed at the same time

1-13

BUSINESS TO BUSINESSDERIVED DEMAND SIMPLIFIED

YOU MAKE HEADLAMP ASSEMBLIES FOR GMConsumers want more cars

Automobile manufacturers produce more cars

You sell more of your company’s headlamp assembliesConsumers

stop buying cars

Automobile manufacturers stop making cars

You sell fewer headlamp assemblies

1-14

THE FLOW OF GOODS AND SERVICES

Exhibit 1-6

Amount and type of car determined by

research facilitating service

Purchase order printed facilitating product

Finished car

Component parts

Assembly Sub- assembly

Manufactured materials

Raw Materials

Transported via facilitating services

1-15

CREATING VALUE

VALUE IS THE PERCEPTIONOF A PRODUCT’S BENEFIT

BEYOND ITS PRICE

VALUE HAS THREE PARTS:

1. VALUE RECEIVED FROM THE PRODUCT

2. VALUE RECEIVED FROM SELLER’S SERVICES

3. VALUE RECEIVED FROM RELATIONSHIP WITH SELLER

1-16

A BUSINESS MUST DETERMINE:

1. WHO ARE ITS CUSTOMERS?

2. WHAT DO ITS CUSTOMERS WANT?

3. HOW DO ITS BUYERS MAKE THEIR BUYING DECISIONS?

BUSINESS TO BUSINESS: THREECRITICAL QUESTIONS FOR A SUCCESSFUL

BUSINESS-TO-BUSINESS PROGRAM

1-17