Introduction to Business-to-Business (B2B) Marketing

What Is Marketing? the process of planning and executing the conception (product), pricing, promotion, and distribution of ideas, goods, and services to create relationships that satisfy individual and organizational objectives.”

BUSINESS MARKETING MARKETING OF GOODS AND SERVICES TO: IS MARKETING OF GOODS AND SERVICES TO: Companies Government Bodies Institutions (i.e. hospitals) Non-Profit Organizations (i.e. American Red Cross) FOR USE IN PRODUCING THEIR PRODUCTS AND/OR TO FACILITATE THEIR OPERATIONS

What Distinguishes B2B from B2C? B2B: goods or services are sold for any use other than personal consumption Note: It is not the nature of the product; it is the reason for the transaction.

B2B versus B2C Marketing Characteristic B2B Market B2C Market Sales volume Greater Smaller Purchase volume Number of buyers Fewer Many Size of individual buyers Larger Location of buyers Concentrated Diffuse Buyer-seller relationship Closer More Impersonal Nature of channel More direct Less direct Buying influences Multiple Single/Multiple Type of negotiations More complex Simpler Use of reciprocity Yes No Use of leasing Less Key promotion method Personal Selling Advertising

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 comes from consumers. JOINT DEMAND Two products are used together and demanded together – Both products are consumed at the same time

Other Characteristics of Business Demand Inelastic Demand Fluctuating Demand

Major Uses of B2B Products For additional production (e.g., components are combined into subassemblies and become part of the finished product) For use in operations, but not part of the finished product For resale

Classifying Business Goods & Services 3 Main Categories of Products Entering Goods Become part of the finished product Cost assigned to the manufacturing process Foundation Goods Capital Items Typically depreciated over time Facilitating Products Support organizational operations Handled as overhead expenses

Classifying Business Goods & Services Entering Goods Raw Materials Farm products & natural products Only processed as necessary for handling & transport Require extensive processing Manufactured Materials & Parts Any product that has undergone extensive processing prior to purchase Component Materials require additional processing Component Parts generally do not require additional processing

Classifying Business Goods & Services Foundation Goods Installations Major long-term investment items Buildings, land, fixed equipment, etc. Accessory Equipment Less expensive & short-lived Not considered part of fixed plant Portable tools, PC’s, etc.

Classifying Business Goods & Services Facilitating Products Supplies Any supplies necessary to maintain the organization’s operations Services Maintenance & Repair support Advisory support Logistical support

Categories of B2B Customers Commercial enterprises Indirect channel members and facilitators OEMs (original equipment manufacturers) Users = customers Governmental organizations Institutions