1. Copyright ©2009 by Cengage Learning Inc. All rights reserved 1 Designed by Eric Brengle B-books, Ltd. CHAPTER 7 Business Marketing Prepared by Amit Shah Frostburg State University Marketing Lamb, Hair, McDaniel 10

2. Copyright ©2009 by Cengage Learning Inc. All rights reserved What Is Business Marketing? 2 Business Marketing The marketing of goods and services to individuals and organizations for purposes other than personal consumption. LO I

3. Copyright ©2009 by Cengage Learning Inc. All rights reserved Business Products 3 LO I 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 The key is intended use.

4. Copyright ©2009 by Cengage Learning Inc. All rights reserved Business Marketing on the Internet 4 Describe the role of the Internet in business marketing LO 2

5. Copyright ©2009 by Cengage Learning Inc. All rights reserved Measuring Online Success 5 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

6. Copyright ©2009 by Cengage Learning Inc. All rights reserved Evolution of E-Business Initiatives 6 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 Time

7. Copyright ©2009 by Cengage Learning Inc. All rights reserved Strategic Alliances 7 LO 3 Strategic Alliance A cooperative agreement between business firms (strategic partnership).

8. Copyright ©2009 by Cengage Learning Inc. All rights reserved Relationships in Other Cultures 8 LO 3 Keiretsu A network of interlocking corporate affiliates.

9. Copyright ©2009 by Cengage Learning Inc. All rights reserved Major Categories of Business Customers 9 LO 4 Producers Resellers Governments Institutions OEMs Wholesalers Retailers Federal Municipal Local SchoolsHospitalsColleges ChurchesUnionsFraternal groups Civic ClubsFoundations Nonbusiness organizations

10. Copyright ©2009 by Cengage Learning Inc. All rights reserved Producers 10 LO 4 Original Equipment Manufacturers 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.

11. Copyright ©2009 by Cengage Learning Inc. All rights reserved NAICS 11 NAICS LO 5 A detailed numbering system developed by the United States, Canada, and Mexico to classify North American business establishments by their main production processes. North American Industry Classification System

12. Copyright ©2009 by Cengage Learning Inc. All rights reserved Example of NAICS Hierarchy NAICS Level SectorSubsectorIndustry Group U.S. Industry NAICS Code 31-333343346334611 Description ManufacturingComputer electronic product manufacturing Mfg. and reproduction of magnetic/ optical media Reproduction of software 12 LO 5

13. Copyright ©2009 by Cengage Learning Inc. All rights reserved NAICS 13 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

14. Copyright ©2009 by Cengage Learning Inc. All rights reserved Business versus Consumer Markets 14CharacteristicCharacteristic 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 LO 6

15. Copyright ©2009 by Cengage Learning Inc. All rights reserved Demand in Business Markets 15 LO 6 Demand is... DescriptionDescription Derived Demand for business products results from demand for consumer products. Inelastic A change in price will not significantly affect the demand for product. Joint Multiple items are used together in final product. Demand for one item affects all. Fluctuating Demand for business products is more volatile than for consumer products.

16. Copyright ©2009 by Cengage Learning Inc. All rights reserved Fluctuating Demand 16 Multiplier Effect (Accelerator Principle) LO 6 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.

17. Copyright ©2009 by Cengage Learning Inc. All rights reserved Types of Business Products 17 LO 7 Major Equipment Accessory Equipment Raw Materials Component Parts Processed Materials Supplies Business Services

18. Copyright ©2009 by Cengage Learning Inc. All rights reserved Business Buying Behavior 18 LO 8 Customer Service Business Ethics Buying Situations Evaluative Criteria Buying Centers Aspects of Business Buying Behavior Aspects of Business Buying Behavior

19. Copyright ©2009 by Cengage Learning Inc. All rights reserved Buying Centers 19 Buying Center LO 8 All those persons in an organization who become involved in the purchase decision.

20. Copyright ©2009 by Cengage Learning Inc. All rights reserved Roles in the Buying Center 20 LO 8 Initiator Influencers Gatekeepers Decider Purchaser Users

21. Copyright ©2009 by Cengage Learning Inc. All rights reserved Evaluative Criteria 1.Quality 2.Service 3.Price 21 LO 8

22. Copyright ©2009 by Cengage Learning Inc. All rights reserved Buying Situations 22 LO 8 New Buy A situation requiring the purchase of a product for the first time. Modified Rebuy Modified Rebuy A situation in which 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.

23. Copyright ©2009 by Cengage Learning Inc. All rights reserved Customer Service Divide customers into groups based on their value Create policies that govern how service will be allocated among groups 23 LO 8