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 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 Copyright © 2011 Pearson Education, Inc., publishing as Prentice Hall

Marketing Mix Promotion Place Price Product 3 Copyright © 2011 Pearson Education, Inc., publishing as Prentice Hall

 The total offering is created by a partnership between the buying organization and the marketing organization.  The process creates an augmented product that is specific to the buying unit’s needs and maximizes the value creation capabilities of the marketer. Core Product + Financing Terms + Delivery Options = “Total Offering” 4 Copyright © 2011 Pearson Education, Inc., publishing as Prentice Hall

 The mutually agreed-upon amount that satisfies both sides in an exchange.  Often varies from fixed price, with more special discounts and allowances (in comparison to consumer markets.)  May involve things other than a one-time price payment (such as commissions.) Price is the measure of value exchanged and is determined by the market—not by costs. 5 Copyright © 2011 Pearson Education, Inc., publishing as Prentice Hall

 Place is about getting the product to the customer in order to maximize economic utility. Economic Utility Form Time Place Possession 6 Copyright © 2011 Pearson Education, Inc., publishing as Prentice Hall

 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 7 Copyright © 2011 Pearson Education, Inc., publishing as Prentice Hall

 Geographically Concentrated  Relatively Few Buyers  Oligopolistic Competition  Geographically Dispersed  Mass Market; Many Buyers  Monopolistic Competition Consumer Business to Business 8 Copyright © 2011 Pearson Education, Inc., publishing as Prentice Hall

 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 Consumer Business to Business 9 Copyright © 2011 Pearson Education, Inc., publishing as Prentice Hall

 Professionally trained purchasing personnel  Functional involvement at many levels  Task motives predominate  Individual purchasing  Family involvement, influence  Social or psychological motives predominate Consumer Business to Business 10 Copyright © 2011 Pearson Education, Inc., publishing as Prentice Hall

 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 11 Copyright © 2011 Pearson Education, Inc., publishing as Prentice Hall

 Shorter, more direct  Organization involvement as part of supply chain  Indirect, multiple relationships  Little or no customer supply chain involvement Consumer Business to Business 12 Copyright © 2011 Pearson Education, Inc., publishing as Prentice Hall

 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 13 Copyright © 2011 Pearson Education, Inc., publishing as Prentice Hall

 Complex purchasing process or competitive bidding, depending on purchase type  Usually list or predetermined prices Consumer Business to Business 14 Copyright © 2011 Pearson Education, Inc., publishing as Prentice Hall

 Direct  Elastic  Less volatile  Derived  Inelastic (short run)  Volatile (leveraged)  Discontinuous Consumer Business to Business 15 Copyright © 2011 Pearson Education, Inc., publishing as Prentice Hall

 Nothing happens unless consumer buys something Suppliers forecast production on existing order rates. 2. If consumer demand drops, the order rate also drops. 3. Supply chain members are then likely to overcompensate the difference between the old and new forecasts, because: A.Inventory levels can decline to fit new order rate B.Customers change orders frequently C.Minimum order quantities may exist D.Trade promotions may influence buying patterns Acceleration Principle: “Bullwhip Effect” Copyright © 2011 Pearson Education, Inc., publishing as Prentice Hall

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International Standards Organizations (ISO)  Define technical performance for manufacturing and quality systems  Compliance of suppliers to these standards is required by global firms  Industries that are targeted: › Steel, Plastic, Pulp and Paper Products, Chemicals and Electronics 18 Copyright © 2011 Pearson Education, Inc., publishing as Prentice Hall

 Total cost of owning or using a product › Transportation, carrying costs, financing costs, potential obsolescence, cost of failure, installation, flexibility to upgrade, etc.  Consumers have same considerations but are attracted to “Deals” 19 Copyright © 2011 Pearson Education, Inc., publishing as Prentice Hall

 The puzzle of the B2B Consumer needs “Total Offering” Product Service Image Availability Quantity Evaluated Price 20 Copyright © 2011 Pearson Education, Inc., publishing as Prentice Hall

Value Chain: The chain of activities that creates something of value for targeted customers. Direct Activities: Contribute directly to the offering. Support Activities: Make it possible to perform the direct activities. 21 Copyright © 2011 Pearson Education, Inc., publishing as Prentice Hall

Value Chain: Suppliers From Exhibit 1-5: Value Enabling activities include infrastructure, human resources, procurement and technology/technology development. Value Creating activities include inbound and outbound logistics, operations, marketing and sales and customer service. Value Activities Value Enabling Value Creating Value Activities Value Enabling Value Creating Value Activities Value Enabling Value Creating 22 Copyright © 2011 Pearson Education, Inc., publishing as Prentice Hall

Target Customers Target Customers Added value Infrastructure Human resources Procurement Technology & technology development Support activities Margin through value Direct activities Customer service Marketing & sales Outbound logistics Operations Inbound logistics Offering: Product Service Image Availability Quantity Evaluated Price Creates Perceives Margin through value 23 Copyright © 2011 Pearson Education, Inc., publishing as Prentice Hall

 Hyper-competition  Formation of partner networks  Adoption of technology and the internet  Supply Chain Management  Time Compression 24 Copyright © 2011 Pearson Education, Inc., publishing as Prentice Hall

Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall1-25 Copyright © 2009 Pearson Education, Inc. Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of the publisher. Printed in the United States of America.