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Business Markets and Business Marketing 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 Markets and 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 PRODUCTS AND/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

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 BUSINESS DERIVED DEMAND SIMPLIFIED YOU MAKE HEADLAMP ASSEMBLIES FOR GM Consumers want more cars Automobile manufacturers produce more cars You sell more of your company’s headlamp assemblies Consumers 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 PERCEPTION OF 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: THREE CRITICAL QUESTIONS FOR A SUCCESSFUL BUSINESS-TO-BUSINESS PROGRAM 1-17