1. Marketing Instructor Abdel Fatah Afifi MA&T, MBA, PCT, ACPA 2 nd Semester 2009/2010

2. Afifi, Marketing, 2nd Semester 2009/20102 Chapter 6 Business-to-Business (B2B) Marketing

3. Afifi, Marketing, 2nd Semester 2009/20103 Nature of the Business Market  Business-to-Business Marketing  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 B2B: a popular acronym for the business-to-business market

4. Afifi, Marketing, 2nd Semester 2009/20104 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 sellingEmphasis 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 complexComparatively 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. Afifi, Marketing, 2nd Semester 2009/20105  Commercial Market  Commercial Market: Individuals and firms that acquire goods and services to support, directly or indirectly, production of other goods and services. Trade Industries Trade Industries: Retailers and wholesalers who purchase goods for resale to others.  Reseller  Reseller: often used to describe the wholesalers and retailers that operate in the trade sector Components of the Business Market

6. Afifi, Marketing, 2nd Semester 2009/20106  Government Organizations  Government Organizations Include domestic units of federal, state, local and foreign governments  Institutions  Institutions Includes a wide variety of organizations, both public and private, such as hospitals, churches, universities, museums, and not- for-profit agencies. Components of the Business Market

7. Afifi, Marketing, 2nd Semester 2009/20107  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 Components of the Business Market

8. Afifi, Marketing, 2nd Semester 2009/20108 Segmenting B2B Markets  Demographic Segmentation  Demographic Segmentation: demographic characteristics define the useful segmentation criteria for business markets  Customer-Based Segmentation  Customer-Based Segmentation: dividing a B2B market into homogenous groups based on buyers ’ product specifications North American Industrial Classification System (NAICS)

9. Afifi, Marketing, 2nd Semester 2009/20109  Segmentation by End-Use Application  Segmentation by End-Use Application: segmenting a business-to-business market based on how industrial purchasers will use the product. Segmenting B2B Markets

10. Afifi, Marketing, 2nd Semester 2009/201010  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) Segmenting B2B Markets

11. Afifi, Marketing, 2nd Semester 2009/201011 Characteristics of the B2B Market  Geographic Market Concentration  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

12. Afifi, Marketing, 2nd Semester 2009/201012  Sizes and Numbers of Buyers  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 Sizes and Numbers of Buyers

13. Afifi, Marketing, 2nd Semester 2009/201013  The Purchase Decision Process  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 The Purchase Decision Process

14. Afifi, Marketing, 2nd Semester 2009/201014  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 Buyer-Seller Relationships

15. Afifi, Marketing, 2nd Semester 2009/201015  Evaluating International Business Markets  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 Evaluating International Business Markets

16. Afifi, Marketing, 2nd Semester 2009/201016 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

17. Afifi, Marketing, 2nd Semester 2009/201017 The Business Buying Process  Influences on Purchase Decisions: Environmental Factors Organizational Factors  Multiple Sourcing: purchasing from several vendors Interpersonal Influences

18. Afifi, Marketing, 2nd Semester 2009/201018 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 The Role of the Professional Buyer

19. Afifi, Marketing, 2nd Semester 2009/201019  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 Model of the Organizational Buying Process

20. Afifi, Marketing, 2nd Semester 2009/201020  Classifying Business Buying Situations Straight re-buying Modified re-buying New-Task buying Reciprocity  Analysis Tools Value analysis Vendor analysis

21. Afifi, Marketing, 2nd Semester 2009/201021 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

22. Afifi, Marketing, 2nd Semester 2009/201022  International Buying Centers Their members are often more difficult to identify May include more participants than buying centers in U.S. firms  Team Selling I  Team Selling Introducing other associates in addition to salespeople into selling situations to reach all members of a customer ’ s buying center

23. Afifi, Marketing, 2nd Semester 2009/201023 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

24. Afifi, Marketing, 2nd Semester 2009/201024  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