Chapter 6Copyright ©2010 Cengage Learning Inc. All rights reserved 1 MKTG Designed by Amy McGuire, B-books, Ltd. Prepared by Dana Freeman, B-books, Ltd. Lamb, Hair, McDaniel Business Marketing 6 CHAPTER

Chapter 6Copyright ©2010 Cengage Learning Inc. All rights reserved 2 Learning Outcomes Describe business marketing Describe the role of the Internet in business marketing Discuss the role of relationship marketing and strategic alliances in business marketing Identify the four major categories of business market customers LO 1 LO 2 LO 3 LO 4

Chapter 6Copyright ©2010 Cengage Learning Inc. All rights reserved 3 Learning Outcomes Explain the North American Industry Classification System Explain the major differences between business and consumer markets Describe the seven types of business goods and services Discuss the unique aspects of business buying behavior LO 5 LO 6 LO 7 LO 8

Chapter 6Copyright ©2010 Cengage Learning Inc. All rights reserved 4 Describe business marketing What Is Business Marketing? What Is Business Marketing? LO 1

Chapter 6Copyright ©2010 Cengage Learning Inc. All rights reserved 5 LO 1 What Is Business Marketing? The marketing of goods and services to individuals and organizations for purposes other than personal consumption. Business Marketing

Chapter 6Copyright ©2010 Cengage Learning Inc. All rights reserved 6 LO 1 Business Products The key is intended use. Business Products:  Are used to manufacture other products  Become part of another product  Aid the normal operations of an organization  Are acquired for resale without change in form

Chapter 6Copyright ©2010 Cengage Learning Inc. All rights reserved 7 REVIEW LEARNING OUTCOME LO 1 Business Marketing cupboards oven folder and pen Teddy bear CONSUMER BUSINESS cupboards Coffee pot oven folder and pen photocopier

Chapter 6Copyright ©2010 Cengage Learning Inc. All rights reserved 8 Describe the role of the Internet in business marketing Business Marketing on the Internet LO 2

Chapter 6Copyright ©2010 Cengage Learning Inc. All rights reserved 9 Measuring Online Success LO 2 Stickiness A measure of a Web site’s effectiveness; calculated by multiplying the frequency of visits times the duration of a visit times the number of pages viewed during each visit. Stickiness = Frequency x Duration x Site Reach

Chapter 6Copyright ©2010 Cengage Learning Inc. All rights reserved 10  AllBusiness provides entrepreneurs with the knowledge and tools to start, manage, and grow their business. The site links to hundreds of how-to articles and provides expert answers to questions.  Microsoft bCentral offers small business solutions such as assistance in establishing an online business presence, enhancing sales or services, or managing business operations. The site also contains practical tips, advice, and links to how-to articles.  Office.com offers practical information on how to start or run a business and how to transform an existing company into an e-business. Users access over 500 databases for news that affects their companies or industries. Office.com is one of the ten most visited business Web sites on the Internet.  This site offers information on starting, running, and growing a small business. It also provides links to a variety of other Quicken sites that are useful to small-business owners and managers. Beyond the Book LO 2 Internet Sites for Small Businesses

Chapter 6Copyright ©2010 Cengage Learning Inc. All rights reserved 11 Evolution of E-Business Initiatives Time LO 2 Revenue generation Aggressive disintermediation initiatives Basic marketing communication strategies Reduce costs Build channel partnerships and trust Customer-focused technology and systems Brand building and development Integrate online and traditional media Past initiativesPresent initiatives

Chapter 6Copyright ©2010 Cengage Learning Inc. All rights reserved 12 REVIEW LEARNING OUTCOME LO 2 The Internet in Business Marketing THEN NOW Reduce costs Build partnerships and alliances Build and support branding Develop customer-focused technology and systems Integrate online and traditional media Revenue Generation Basic Marketing Communication Business Internet Uses and

Chapter 6Copyright ©2010 Cengage Learning Inc. All rights reserved 13 Discuss the role of relationship marketing and strategic alliances in business marketing Relationship Marketing and Strategic Alliances LO 3

Chapter 6Copyright ©2010 Cengage Learning Inc. All rights reserved 14 Strategic Alliances LO 3 A cooperative agreement between business firms (strategic partnership). Strategic Alliance

Chapter 6Copyright ©2010 Cengage Learning Inc. All rights reserved 15 Relationships in Other Cultures LO 3 A network of interlocking corporate affiliates. Keiretsu

Chapter 6Copyright ©2010 Cengage Learning Inc. All rights reserved 16 REVIEW LEARNING OUTCOME LO 3 Relationship Marketing and Strategic Alliances Supplier (like Intel) Supplier Company (like Dell) Company 1 (like Starbucks) Company 2 (like Jim Beam) Company (like UPS) Customer/ Distributor (like Ford)

Chapter 6Copyright ©2010 Cengage Learning Inc. All rights reserved 17 Identify the four major categories of business market customers Major Categories of Business Customers LO 4

Chapter 6Copyright ©2010 Cengage Learning Inc. All rights reserved 18 LO 4 Major Categories of Business Customers Producers Resellers Governments Institutions OEMs Wholesalers Retailers Federal Municipal Local SchoolsHospitalsColleges ChurchesUnionsFraternal groups Civic ClubsFoundations Nonbusiness organizations

Chapter 6Copyright ©2010 Cengage Learning Inc. All rights reserved 19 LO 4 Producers OEMs. Individuals and organizations that buy business goods and incorporate them into the products that they produce for eventual sale to other producers or to consumers. Original Equipment Manufacturers

Chapter 6Copyright ©2010 Cengage Learning Inc. All rights reserved 20 REVIEW LEARNING OUTCOME LO 4 Business Market Customers Business Marketing Institutions Resellers Wholesalers Retailers Producers OEMs Governments Federal State Municipal County Unions Civic Clubs Other Churches Foundations Nonprofits

Chapter 6Copyright ©2010 Cengage Learning Inc. All rights reserved 21 Explain the North American Industry Classification System North American Industry Classification System LO 5

Chapter 6Copyright ©2010 Cengage Learning Inc. All rights reserved 22 NAICS LO 5 NAICS A detailed numbering system developed by the U.S., Canada, and Mexico to classify North American business establishments by their main production processes. North American Industry Classification System

Chapter 6Copyright ©2010 Cengage Learning Inc. All rights reserved 23 Example of NAICS Hierarchy LO 5 NAICS Level SectorSubsectorIndustry Group U.S. Industry NAICS Code Description ManufacturingComputer electronic product manufacturing Mfg. and reproduction of magnetic/ optical media Reproduction of software

Chapter 6Copyright ©2010 Cengage Learning Inc. All rights reserved 24 NAICS LO 5 Provides a common industry classification system Valuable tool for marketers in analyzing, segmenting, and targeting markets Data can be used to determine: Number, size, and geographic dispersion of firms Market potential / market share estimates Sales forecasts New customer identification

Chapter 6Copyright ©2010 Cengage Learning Inc. All rights reserved 25 Explain the major differences between business and consumer markets Business versus Consumer Markets LO 6

Chapter 6Copyright ©2010 Cengage Learning Inc. All rights reserved 26 Business versus Consumer Markets LO 6CharacteristicCharacteristic Demand Volume # of Customers Location Distribution Nature of Buy Buy Influence Negotiations Reciprocity Leasing Promotion Business Market Organizational Larger Fewer Concentrated More Direct More Professional Multiple More Complex Yes Greater Personal Selling Consumer Market Individual Smaller Many Dispersed More Indirect More Personal Single Simpler No Lesser Advertising

Chapter 6Copyright ©2010 Cengage Learning Inc. All rights reserved 27 Demand in Business Markets LO 6 Demand is... DescriptionDescription Derived Inelastic Joint Fluctuating Demand for business products results from demand for consumer products. A change in price will not significantly affect the demand for product. Multiple items are used together in final product. Demand for one item affects all. Demand for business products is more volatile than for consumer products.

Chapter 6Copyright ©2010 Cengage Learning Inc. All rights reserved 28 Fluctuating Demand LO 6 Multiplier Effect (Accelerator Principle) Phenomenon in which a small increase or decrease in consumer demand can produce a much larger change in demand for the facilities and equipment needed to make the consumer product.

Chapter 6Copyright ©2010 Cengage Learning Inc. All rights reserved 29 Describe the seven types of business goods and services Types of Business Products Types of Business Products LO 7

Chapter 6Copyright ©2010 Cengage Learning Inc. All rights reserved 30 Types of Business Products LO 7 Major Equipment Accessory Equipment Raw Materials Component Parts Processed Materials Supplies Business Services Online

Chapter 6Copyright ©2010 Cengage Learning Inc. All rights reserved 31 REVIEW LEARNING OUTCOME LO 7 Types of Business Goods and Services Aluminum ore: raw material Extruded metal: processed material Propeller blade: component part Extruding machine: major equipment Tool cart: accessory equipment Uniforms: contracted service Paper: supply

Chapter 6Copyright ©2010 Cengage Learning Inc. All rights reserved 32 Discuss the unique aspects of business buying behavior Business Buying Behavior Business Buying Behavior LO 8

Chapter 6Copyright ©2010 Cengage Learning Inc. All rights reserved 33 Business Buying Behavior LO 8 Customer Service Business Ethics Buying Situations Evaluative Criteria Buying Centers Aspects of Business Buying Behavior Aspects of Business Buying Behavior

Chapter 6Copyright ©2010 Cengage Learning Inc. All rights reserved 34 Buying Centers LO 8 Buying Center All those persons in an organization who become involved in the purchase decision.

Chapter 6Copyright ©2010 Cengage Learning Inc. All rights reserved 35 Roles in the Buying Center LO 8 Initiator Influencers Gatekeepers Decider Purchaser Users Online

Chapter 6Copyright ©2010 Cengage Learning Inc. All rights reserved 36 Evaluative Criteria LO 8  Quality  Service  Price

Chapter 6Copyright ©2010 Cengage Learning Inc. All rights reserved 37 Buying Situations LO 8 New Buy A situation requiring the purchase of a product for the first time. A situation requiring the purchase of a product for the first time. Modified Rebuy Modified Rebuy A situation where the purchaser wants some change in the original good or service. A situation where the purchaser wants some change in the original good or service. Straight Rebuy Straight Rebuy A situation in which the purchaser reorders the same goods or services without looking for new information or investigating other suppliers. A situation in which the purchaser reorders the same goods or services without looking for new information or investigating other suppliers.

Chapter 6Copyright ©2010 Cengage Learning Inc. All rights reserved 38 Customer Service LO 8  Divide customers into groups based on their value  Create policies that govern how service will be allocated among groups

Chapter 6Copyright ©2010 Cengage Learning Inc. All rights reserved 39 REVIEW LEARNING OUTCOME LO 8 Business Buying Behavior Customer service Initiator Influencer Decider Gatekeeper Purchaser User Buying Center  Quality  Service  Price Evaluative Criteria Buying Situations New buy Straight rebuy Modified rebuy