Developed by Cool Pictures and MultiMedia Presentations Copyright © 2007 by South-Western, a division of Thomson Learning, Inc. All rights reserved. Chapter One A Business Marketing Perspective 1

Developed by Cool Pictures and MultiMedia Presentations Copyright © 2007 by South-Western, a division of Thomson Learning, Inc. All rights reserved. What is Business-to-Business Marketing? 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.” 2

Developed by Cool Pictures and MultiMedia Presentations Copyright © 2007 by South-Western, a division of Thomson Learning, Inc. All rights reserved. Definition: Industrial Marketing Industrial marketing (or business to business marketing) is the marketing of goods and services by one business to another.marketing Industrial goods are those an industry uses to produce an end product from one or more raw materials. 3

Developed by Cool Pictures and MultiMedia Presentations Copyright © 2007 by South-Western, a division of Thomson Learning, Inc. All rights reserved.  Can be technically complex  Customized to user preference  Service, delivery and availability very important  Purchased for other than personal use  Standardized  Service, delivery and availability only somewhat important  Purchased for personal use Products Consumer Business to Business 4

What Is a Product? Levels of Product and Services Copyright ©2014 by Pearson Education

Developed by Cool Pictures and MultiMedia Presentations Copyright © 2007 by South-Western, a division of Thomson Learning, Inc. All rights reserved. Total Offering The puzzle of the B2B Consumer needs “Total Offering” Product Service Image Availability Quantity Evaluated Price 6

Developed by Cool Pictures and MultiMedia Presentations Copyright © 2007 by South-Western, a division of Thomson Learning, Inc. All rights reserved.  Professionally trained purchasing personnel  Functional involvement at many levels  Task motives predominate  Individual purchasing  Family involvement, influence  Social or psychological motives predominate Buyer Behavior Consumer Business to Business 7

Developed by Cool Pictures and MultiMedia Presentations Copyright © 2007 by South-Western, a division of Thomson Learning, Inc. All rights reserved. Buyer/Seller Relationship Expectations  Technical expertise is an asset  Interpersonal relationships between buyers and sellers  Significant personal info exchanged  Stable, long-term relationships encourage loyalty  Less technical expertise  Nonpersonal relationships  Little personal information exchanged  Changing, short-term relationships encourage switching Consumer Business to Business 8

Developed by Cool Pictures and MultiMedia Presentations Copyright © 2007 by South-Western, a division of Thomson Learning, Inc. All rights reserved. Channels  Shorter, more direct  Organization involvement as part of supply chain  Indirect, multiple relationships  Little or no customer supply chain involvement Consumer Business to Business 9

Developed by Cool Pictures and MultiMedia Presentations Copyright © 2007 by South-Western, a division of Thomson Learning, Inc. All rights reserved. Promotion  Emphasis on personal selling, dialogue  Most communications invisible to the consumer  Consumer is seldom aware of BtB brands and companies  Emphasis on advertising, monologue  Companies compete for visibility and awareness of consumer market Consumer Business to Business 10

Developed by Cool Pictures and MultiMedia Presentations Copyright © 2007 by South-Western, a division of Thomson Learning, Inc. All rights reserved. Price  Complex purchasing process or competitive bidding, depending on purchase type  Usually list or predetermined prices Consumer Business to Business 11

Developed by Cool Pictures and MultiMedia Presentations Copyright © 2007 by South-Western, a division of Thomson Learning, Inc. All rights reserved. Demand  Direct  Elastic  Less volatile  Derived  Inelastic (short run)  Volatile (leveraged)  Discontinuous Consumer Business to Business 12

Developed by Cool Pictures and MultiMedia Presentations Copyright © 2007 by South-Western, a division of Thomson Learning, Inc. All rights reserved. Marketing Mix: Promotion  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 13

Developed by Cool Pictures and MultiMedia Presentations Copyright © 2007 by South-Western, a division of Thomson Learning, Inc. All rights reserved. Business Markets –Bought by Businesses Government bodies Institutions –For consumption –For use –For resale GE Markets for products and services Developed by Cool Pictures and MultiMedia Presentations Copyright © 2007 by South-Western, a division of Thomson Learning, Inc. All rights reserved. 14

Developed by Cool Pictures and MultiMedia Presentations Copyright © 2007 by South-Western, a division of Thomson Learning, Inc. All rights reserved. Figure 1.2 The Consumer Market (B2C) and the Business Market (B2B) at Dell. B2B Customers B2C Individuals & Households Businesses Global Large corporations Small & Medium sized businesses Institutions Healthcare Education Government Federal State Local Selected Products PC’s Printers Consumer Electronics Simple Service Agreements PC’s Enterprise Storage Servers Complex Service Offerings Dell, Inc. 15

Developed by Cool Pictures and MultiMedia Presentations Copyright © 2007 by South-Western, a division of Thomson Learning, Inc. All rights reserved. A Market Driven Firm Market sensing capability…company’s ability to sense change and to anticipate customer responses. Customer linking…the ability to develop and manage close customer relationships Has: 16

Developed by Cool Pictures and MultiMedia Presentations Copyright © 2007 by South-Western, a division of Thomson Learning, Inc. All rights reserved. Business Market Characteristics Derived demand: Demand for a basic good (wanted not for its own sake but for the goods derived from it) such as textiles, that is due to its use in the production of another good such as apparels. Demandbasic goodgoodstextilesdue production Developed by Cool Pictures and MultiMedia Presentations Copyright © 2007 by South-Western, a division of Thomson Learning, Inc. All rights reserved. 17

Developed by Cool Pictures and MultiMedia Presentations Copyright © 2007 by South-Western, a division of Thomson Learning, Inc. All rights reserved. Business Market Characteristics Fluctuating demand: The market interest for a product that shows variations over time.marketinterestproductvariationsover time Purchasing activity increases and decreases because of direct and/or indirect influences.activityinfluences Factors that lead to fluctuating demand include seasonality, taxation, product availability and pricing. Opposite of stable demand.Factorsleaddemand seasonalitytaxationavailabilitystable Developed by Cool Pictures and MultiMedia Presentations Copyright © 2007 by South-Western, a division of Thomson Learning, Inc. All rights reserved. 18

Developed by Cool Pictures and MultiMedia Presentations Copyright © 2007 by South-Western, a division of Thomson Learning, Inc. All rights reserved. Business Market Characteristics Stimulating demand: Stimulate demand means create or enhance demand. Demand results in economic activity, so you stimulate demand to stimulate the economy. For example, the government could cut VAT so that products in shops become cheaper and therefore more people want to buy them, which gets people spending and the economy moving. Developed by Cool Pictures and MultiMedia Presentations Copyright © 2007 by South-Western, a division of Thomson Learning, Inc. All rights reserved. 19

Developed by Cool Pictures and MultiMedia Presentations Copyright © 2007 by South-Western, a division of Thomson Learning, Inc. All rights reserved. Business Market Characteristics Price sensitivity/demand elasticity: The degree to which the price of a product affects consumers purchasing behaviors. The degree of price sensitivity varies from product to product and from consumer to consumer. In economics, price sensitivity is commonly measured using the price elasticity of demand. Developed by Cool Pictures and MultiMedia Presentations Copyright © 2007 by South-Western, a division of Thomson Learning, Inc. All rights reserved. 20

Developed by Cool Pictures and MultiMedia Presentations Copyright © 2007 by South-Western, a division of Thomson Learning, Inc. All rights reserved. Business Market Characteristics While demand elasticity: is a measure used in economics to show the responsiveness, or elasticity, of the quantity demanded of a good or service to a change in its priceelasticity Developed by Cool Pictures and MultiMedia Presentations Copyright © 2007 by South-Western, a division of Thomson Learning, Inc. All rights reserved. 21

Developed by Cool Pictures and MultiMedia Presentations Copyright © 2007 by South-Western, a division of Thomson Learning, Inc. All rights reserved. Relationship Marketing All marketing activities directed toward establishing, developing, and maintaining successful exchanges with customers 22

Developed by Cool Pictures and MultiMedia Presentations Copyright © 2007 by South-Western, a division of Thomson Learning, Inc. All rights reserved. Michael Porter and Victor Millar observed that “to gain competitive advantage over its rivals, a company must either perform these activities at a lower cost or perform them in a way that leads to differentiation and a premium (more value).” The Supply Chain 23

Developed by Cool Pictures and MultiMedia Presentations Copyright © 2007 by South-Western, a division of Thomson Learning, Inc. All rights reserved. Business Market Customer Commercial Enterprises Three categories: –Users –OEMs: Original equipment manufacturers (OEM) is a term used when one company makes a part or subsystem that is used in another company's end product –Dealers and distributors 24