7 Business Marketing Professor Close

Business Marketing Organization market is larger than consumer market (B2B marketing/industrial marketing) Easy to define need: do not have the “less rational” needs of consumers (fewer customers) Organizations purchase for: 1.Resale 2.Use in business 3.Or to produce other items B2B internet marketing is huge (disintermediation)

Internet B2B Trends

Relationship Marketing Decrease in costs: changes in traditional relationship (long-term interaction, not just 1 transaction) –Cooperation (strategic alliances): Mutual goals (still difficult; why Japanese experience during troubled times) –Info. Sharing: Provide data to enhance decisions (web – Dell) Potential for abuse (GM sends specs to others) –Keiretsu

Relationship Commitment Adaptations: –Make changes for one customer (NUMMI; McDonald’s & China potatoes) –May hedge bets with multiple suppliers Operational linkages (outsourcing: train other jobs; IBM) –Ties with internal processes (place people in plants) –Allows better coordination VSU, windshields, Rubbermaid)

McDonald’s in Saudi Arabia

Legal Bonds Firestone-Ford, Maytag-Hoover, B2C, over $150, 2 round trip tickets 200,000) –Formalized? But locked in –“Hand shake” allows flexibility (other risks) +

Business Customers Producers Resellers Governments Institutions

NAICS North American Industry Classification System Utility maximization: –Personal selling: customized, large orders –Purchasing specs: precise description of what firm wants Demand: derived, inelastic, or joint More volume B2B = geographically concentrated

Buying Center Roles – auto parts –Users: work with product, often generate specs (line workers) –Influencers: can modify outcome; dev. Specs, evaluate alternatives (engineers) –Buyers: complete transaction, negotiate (purchasing manager) –Deciders: select or approve (upper/middle management; may be same as buyer) –Gatekeepers: control info. Within buying center (secretary)

Buying Situations (1) Buying process: 3 types (goes with individual as well) 1.Straight rebuy –Small, recurring items like office supplies –Little buyer’s time, little info needed –Reminder ads, automate process –Purchasing manager and no one else

Buying Situations (2) 2.Modified rebuy (contract with dining hall ends) Some review Dissatisfy: look for opportunity Comparison ads: your product Your client: protect, attention to changing needs 3.New task buying (plant overseas) Unique situation Lots of information, effort, and time Develop product and vendor specs Many influences

Dell Commercial

Summary Types of business products, negotiations B2B and the internet Buying situations Multiple influences – roles Relationship marketing NAICS Buying center Any questions?