1. Business-to-Business (B2B) Marketing
Chapter 6
Business-to-Business (B2B) Marketing

2. Chapter Objectives
Explain each of the components of the business-to-(B2B) market.
Describe the major approaches to segmenting business-to-business (B2B) markets.
Identify the major characteristics of the business market and its demand.
Discuss the decision to make, buy, or lease
Describe the major influences on business buying behavior.
Outline the steps in the organizational buying process.
Classify organizational buying situations.
Explain the buying center concept.
Discuss the challenges of and strategies for marketing to government, institutional, and international buyers.

3. Nature of the Business Market
Business-to-Business Marketing: organizational sales and purchase of goods and services to support production of other goods and services for daily company operations or for resale
B2B: a popular acronym for the business-to-business market

4. Business-to-Business Marketing Consumer-Goods Marketing
Product
Relatively technical in nature, exact form often variable, accompanying services very important
Standardized form, service important but less than for business products
Price
Competitive bidding for unique items, list prices for standard items
List prices
Promotion
Emphasis on personal selling
Emphasis on advertising
Distribution
Relatively short, direct channels to market
Product passes through a number of intermediate links en route to consumer
Customer Relations
Relatively enduring and complex
Comparatively infrequent contact, relationship of relatively short duration
Decision-making process
Involvement of diverse group of organization members in decision
Individual or household unit makes decision

5. Components of the Business Market
Commercial Market: Individuals and firms that acquire goods and services to support, directly or indirectly, production of other goods and services
Trade Industries: Retailers and wholesalers who purchase goods for resale to others.
Reseller: often used to describe the wholesalers and retailers that operate in the trade sector

6. Government Organizations Include domestic units of federal, state, local and foreign governments
Institutions Includes a wide variety of organizations, both public and private, such as hospitals, churches, universities, museums, and not-for-profit agencies.

7. B2B Market – The Internet Connection
Internet plays an important role in B2B marketing
90 percent of all Internet sales are B2B transactions
Differences in Foreign Business Markets
Must be willing to adapt to local customs and business practices

8. Segmenting B2B Markets
Demographic Segmentation: demographic characteristics define the useful segmentation criteria for business markets
Customer-Based Segmentation: dividing a B2B market into homogenous groups based on buyers’ product specifications
North American Industrial Classification System (NAICS)

9. Segmentation by End-Use Application: segmenting a business-to-business market based on how industrial purchasers will use the product
Segmentation by Purchase Categories
Centers on the purchasing situation
Organizations may use complicated purchasing procedures
Firms also structure their purchasing functions in specific ways (e.g. centralized purchasing departments)

10. Characteristics of the B2B Market
Geographic Market Concentration U.S. business market is more geographically concentrated than the consumer market
Manufacturers concentrate in certain regions of the country
Certain industries locate in particular areas to be close to their customers

11. Sizes and Numbers of Buyers Business market features a limited number of buyers
Use statistical information to estimate the size and characteristics of business markets is available
Federal government is largest single source of such statistics

12. The Purchase Decision Process Businesses must understand the dynamics of the organizational purchasing process
B2B suppliers often must work with multiple buyers
Decision-makers at several layers may influence final orders
Process is more formal and professional than with consumers

13. Buyer-Seller Relationships More intense than consumer relationships
Require better communication among the organizations’ personnel
Primary goal to provide advantages that no other seller can, for instance:
Lower-prices
Quicker delivery
Better quality and reliability
Customized product features
More favorable financing terms

14. Evaluating International Business Markets Business purchasing patterns often differ from one country to the next
Companies must weigh quantitative and qualitative data
Global sourcing: purchasing goods and services from suppliers worldwide

15. The Make, Buy, or Lease Decision
Three Basic Options:
Make the good or provide the service in-house
Purchase it from another organization
Lease it from another organization
The Rise of Outsourcing
Using outside vendors to produce goods and services formerly produced in-house

16. The Business Buying Process
Influences on Purchase Decisions:
Environmental Factors
Organizational Factors
Multiple Sourcing: purchasing from several vendors
Interpersonal Influences

17. The Role of the Professional Buyer
Professional buyer (merchandisers): technically qualified employees who are responsible for securing needed products at the best possible prices
Systems integration: Centralization of the procurement function within an internal division or as a service of an external supplier
Category Captain

18. Model of the Organizational Buying Process
Stage 1: Anticipate or recognize a problem/need/opportunity and a general solution
Stage 2: Determine the characteristics and quantity of a needed good or service
Stage 3: Describe characteristics and the quantity of a needed good or service
Stage 4: Search for and qualify potential sources
Stage 5: Acquire and analyze proposals
Stage 6: Evaluate proposals and select suppliers
Stage 7: Select an order routine
Stage 8: Obtain feedback and evaluate performance

19. Classifying Business Buying Situations
Straight rebuying
Modified rebuying
New-Task buying
Reciprocity
Analysis Tools
Value analysis
Vendor analysis

20. The Buying Center Concept
Participants in an organizational buying action
Buying center roles played by various participants in the purchase decision process include:
Users
Gatekeepers
Influencers
Decider
Buyer

21. International Buying Centers
Their members are often more difficult to identify
May include more participants than buying centers in U.S. firms
Team Selling Introducing other associates in addition to salespeople into selling situations to reach all members of a customer’s buying center

22. Developing Effective Business-To-Business Marketing Strategies
Challenges of Government Markets
Government purchasing procedures
Bids: written sales proposals from vendor
Specifications: written descriptions of needed goods or services
Online with the federal government

23. Challenges of Institutional Markets
Widely diverse buying practices
Multiple buying influences may affect decisions
Group purchasing is an important factor
Challenges of International Markets
Widely diverse attitudes and cultural patterns
Local industries, economic conditions, geographic characteristics and legal restrictions also must be considered
Remanufacturing