©2002 South-Western Chapter 6 Version 6e1 chapter Business Marketing 6 6 Prepared by Deborah Baker Texas Christian University

©2002 South-Western Chapter 6 Version 6e2 chapter Learning Objectives Describe business marketing. 2. Describe the role of the Internet in business marketing. 3. Discuss the role of relationship marketing and strategic alliances in business marketing.

©2002 South-Western Chapter 6 Version 6e3 chapter Learning Objectives (continued) Identify the four major categories of business market customers. 5. Explain the North American Industry Classification System. 6. Explain the major differences between business and consumer markets.

©2002 South-Western Chapter 6 Version 6e4 chapter Learning Objectives (continued) Describe the seven types of business goods and services. 8.Discuss the unique aspects of business buying behavior.

©2002 South-Western Chapter 6 Version 6e5 Learning Objective 1 1 Describe business marketing.

©2002 South-Western Chapter 6 Version 6e6 Business Marketing The marketing of goods and services to individuals and organizations for purposes other than personal consumption. 1 1

©2002 South-Western Chapter 6 Version 6e7 What is Business Marketing?  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 Business Products Key is intended use 1 1

©2002 South-Western Chapter 6 Version 6e8 Learning Objective 2 2 Describe the role of the Internet in business marketing.

©2002 South-Western Chapter 6 Version 6e9 E-Commerce 2 2 E-Commerce Business E-Commerce Consumer E-Commerce The process of selling goods and services on the Internet Electronic transactions between companies Electronic transactions between business and individuals that purchase for individual consumption

©2002 South-Western Chapter 6 Version 6e10 Benefits of Internet’s Interactivity 2 2  Convenience and increased efficiency  Better customer service  Lower transaction costs  New relationship-building opportunities

©2002 South-Western Chapter 6 Version 6e11 Extranet A private network that uses Internet technology and a browser interface. 2 2

©2002 South-Western Chapter 6 Version 6e12 Business E-Commerce Benefits Lower costs 4. Around-the-clock ordering & customer service 3. Access to customer and product sales data 2. Greater selection of products and vendors 1. Lower prices 6. Customized products

©2002 South-Western Chapter 6 Version 6e13 Learning Objective Discuss the role of relationship marketing and strategic alliances in business marketing. 3 3

©2002 South-Western Chapter 6 Version 6e14 Strategic Alliance A cooperative agreement between business firms. (strategic partnership) 3 3

©2002 South-Western Chapter 6 Version 6e15 Benefits of Strategic Alliances  Access to markets or to technology  Economies of scale by combining activities  Faster market entry for new products  Sharing of risk 3 3

©2002 South-Western Chapter 6 Version 6e16 Tips for Successful Alliances 3 3  Trust one another  Share a common interest  Bring different skills to the table  Share gains  Decide who has direct customer contact  Understand the importance of customer satisfaction  Trust one another  Share a common interest  Bring different skills to the table  Share gains  Decide who has direct customer contact  Understand the importance of customer satisfaction

©2002 South-Western Chapter 6 Version 6e17 Keiretsu A network of interlocking corporate affiliates. 3 3

©2002 South-Western Chapter 6 Version 6e18 Learning Objective Identify the four major categories of business market customers.. 4 4

©2002 South-Western Chapter 6 Version 6e19 Categories of Business Customers Producers Resellers Governments Institutions 4 4

©2002 South-Western Chapter 6 Version 6e20 Learning Objective Explain the North American Industry Classification System. 5 5

©2002 South-Western Chapter 6 Version 6e21 NAICS A detailed numbering system developed by the U.S., Canada, and Mexico to classify North American business establishments by their main production processes. 5 5 North American IndustryClassificationSystem

©2002 South-Western Chapter 6 Version 6e22 NAICS  Provides 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 5 5

©2002 South-Western Chapter 6 Version 6e23 Learning Objective 6 6 Explain the major differences between business and consumer markets. Explain the major differences between business and consumer markets.

©2002 South-Western Chapter 6 Version 6e24 Business vs. Consumer Markets CharacteristicCharacteristic 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 6 6

©2002 South-Western Chapter 6 Version 6e25 Demand is... DescriptionDescription Demand in Business Markets DerivedDerived Demand for business products results from demand for consumer products InelasticInelastic A change in price will not significantly affect the demand for product JointJoint Multiple items are used together in final product. Demand for one item affects all FluctuatingFluctuating Demand for business products is more volatile than for consumer products 6 6

©2002 South-Western Chapter 6 Version 6e26 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. 6 6

©2002 South-Western Chapter 6 Version 6e27 Learning Objective Describe the seven types of business goods and services. 7 7

©2002 South-Western Chapter 6 Version 6e28 Types of Business Products Major Equipment Accessory Equipment Raw Materials Component Parts Processed Materials Supplies Business Services Major Categories of Business ProductsMajor Products 7 7

©2002 South-Western Chapter 6 Version 6e29 Learning Objective Discuss the unique aspects of business buying behavior. 8 8

©2002 South-Western Chapter 6 Version 6e30 Business Buying Behavior Customer Service Purchasing Ethics Buying Situations Evaluation Criteria Buying Centers Aspects of Business Buying Behavior Behavior 8 8

©2002 South-Western Chapter 6 Version 6e31 Buying Center 8 8 All those persons in an organization who become involved in the purchase decision.

©2002 South-Western Chapter 6 Version 6e32 Roles in the Buying Center 8 8DeciderDeciderInitiatorInitiatorInfluencersInfluencersGatekeepersGatekeepersPurchaserPurchaserUsersUsers

©2002 South-Western Chapter 6 Version 6e33 Evaluative Criteria for Business Buyers 8 8

©2002 South-Western Chapter 6 Version 6e34 Buying Situations New Buy Modified Rebuy Straight Rebuy 8 8

©2002 South-Western Chapter 6 Version 6e35 Buying Situations New Buy Modified Rebuy Modified Rebuy Straight Rebuy Straight Rebuy A situation requiring the purchase of a product for the first time. A situation requiring the purchase of a product for the first time. A situation where the purchaser wants some change in the original good or service. A situation in which the purchaser reorders the same goods or services without looking for new information or investigating other suppliers. 8 8

©2002 South-Western Chapter 6 Version 6e36 Customer Service Online Services CD-ROMs World Wide Web Customer Service is enhanced through technology 8 8