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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
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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
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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.
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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
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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”
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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.
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Place is about getting the product to the customer in order to maximize economic utility.
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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
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Geographically Concentrated
Relatively Few Buyers
Oligopolistic Competition
Geographically Dispersed
Mass Market; Many Buyers
Monopolistic Competition
ConsumerBusiness
to Business
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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
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Professionally trained purchasing personnel
Functional involvement at many levels
Task motives predominate
Individual purchasingFamily involvement, influenceSocial or psychological motives predominate
Consumer
Business to
Business
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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
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Shorter, more direct
Organization involvement as part of supply chain
Indirect, multiple relationships
Little or no customer supply chain involvement
ConsumerBusiness
to Business
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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
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Complex purchasing process or competitive bidding, depending on purchase type
Usually list or predetermined prices
ConsumerBusiness
to Business
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Direct Elastic Less volatile
Derived Inelastic (short run) Volatile (leveraged) Discontinuous
ConsumerBusiness
to Business
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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”
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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
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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”
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The puzzle of the B2B Consumer needs
“Total Offering”
•Product•Service•Image•Availability•Quantity•Evaluated Price
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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
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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
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Hyper-competition Formation of partner networks Adoption of technology and the internet Supply Chain Management Time Compression
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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?
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