1. Chapter 1 Copyright ©2012 by Cengage Learning Inc. All rights reserved 1 Lamb, Hair, McDaniel CHAPTER 7 Business Marketing 2012-2013 © Sean Gallup/Getty Images © 2013 by Cengage Learning Inc. All Rights Reserved. 1

2. Describe business marketing Describe the role of the Internet in business marketing Discuss the role of relationship marketing and strategic alliances in business marketing Identify the four major categories of business market customers Learning Outcomes 1234 © 2013 by Cengage Learning Inc. All Rights Reserved. 2

3. Explain the North American Industry Classification System Explain the major differences between business and consumer markets Describe the seven types of business goods and services Discuss the unique aspects of business buying behavior Learning Outcomes 5678 © 2013 by Cengage Learning Inc. All Rights Reserved. 3

4. Describe business marketing 1 What Is Business Marketing? © 2013 by Cengage Learning Inc. All Rights Reserved. 4

5. What Is Business Marketing? The marketing of goods and services to individuals and organizations for purposes other than personal consumption. Business Marketing © 2013 by Cengage Learning Inc. All Rights Reserved. 5 1

6. 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 © 2013 by Cengage Learning Inc. All Rights Reserved. 6 1 …The key is intended use Business Products…

7. Describe the role of the Internet in business marketing 2 Business Marketing on the Internet © 2013 by Cengage Learning Inc. All Rights Reserved. 7

8. the use of the Internet to facilitate the exchange of goods, services, and information between organizations. Business-to-business electronic commerce is… © 2013 by Cengage Learning Inc. All Rights Reserved. 8 2

9. Measuring Online Success Stickiness A measure of a Web site’s effectiveness; calculated by multiplying the frequency of visits by the duration of a visit by the number of pages viewed during each visit. Stickiness = Frequency x Duration x Site Reach © 2013 by Cengage Learning Inc. All Rights Reserved. 9 2

10.  http://www.allbusiness.com AllBusiness provides entrepreneurs with the knowledge and tools to start, manage, and grow their business. The site links to hundreds of how-to articles and provides expert answers to questions.  http://www.microsoft.com/business Microsoft Business offers small business solutions from security to enterprise content management to cloud services. The site also contains practical tips, advice, and links to how-to articles.  http://www.quicken.com/small_business This site offers information on starting, running, and growing a small business. It also provides links to a variety of other Quicken sites that are useful to small-business owners and managers. Internet Sites for Small Businesses © 2013 by Cengage Learning Inc. All Rights Reserved. 10

11. Exhibit 7.2 Evolution of E-Business Initiatives 11

12. Discuss the role of relationship marketing and strategic alliances in business marketing 3 Relationship Marketing and Strategic Alliances © 2013 by Cengage Learning Inc. All Rights Reserved. 12

13. Relationship Marketing  Loyal customers are more profitable than price-sensitive customers with little brand loyalty  Long-term relationships build competitive advantage © 2013 by Cengage Learning Inc. All Rights Reserved. 13 3

14. Strategic Alliances Licensing or distribution agreements Joint ventures Research and development consortia Partnerships © 2013 by Cengage Learning Inc. All Rights Reserved. 14 3 Alliances succeed with commitment and trust.

15. Relationships in Other Cultures Keiretsu relationships are highly integrated: Companies have executives sitting on each others’ boards Maintain dedicated trade efforts Joint development, finance, and marketing © 2013 by Cengage Learning Inc. All Rights Reserved. 15 3

16. Identify the four major categories of business market customers 4 Major Categories of Business Customers © 2013 by Cengage Learning Inc. All Rights Reserved. 16

17. Major Categories of Business Customers Producers Resellers Governments Institutions OEMs Wholesalers Retailers Federal State Local Schools Hospitals Colleges Churches Unions Fraternal Civic Clubs Foundations groups Nonbusiness organizations © 2013 by Cengage Learning Inc. All Rights Reserved. 17 4

18. Explain the North American Industry Classification System © 2013 by Cengage Learning Inc. All Rights Reserved. 18 5 North American Industry Classification System

19. NAICS A detailed numbering system developed by the U.S., Canada, and Mexico to classify North American business establishments by their main production processes. NAICS (North American Industry Classification System) NAICS (North American Industry Classification System) © 2013 by Cengage Learning Inc. All Rights Reserved. 19 5

20. Example of NAICS Hierarchy NAICS Level SectorSubsector Industry Group IndustryIndustry Subdivision NAICS Code 51513513351332513321 Descrip tion InformationBroadcasting and telecoms TelecomsWireless telecoms carriers, except satellite Paging © 2013 by Cengage Learning Inc. All Rights Reserved. 20 5

21. NAICS 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 © 2013 by Cengage Learning Inc. All Rights Reserved. 21 5

22. Explain the major differences between business and consumer markets 6 Business versus Consumer Markets © 2013 by Cengage Learning Inc. All Rights Reserved. 22

23. Business versus Consumer Markets © 2013 by Cengage Learning Inc. All Rights Reserved. 23 Characteristic Demand Volume # of Customers Location Distribution Nature of Buying 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

24. Demand in Business Markets Demand is... DescriptionDescription Derived Inelastic Joint Fluctuating Demand for business products results from demand for consumer products. A change in price will not significantly affect the demand for product. Multiple items are used together in final product. Demand for one item affects all. Demand for business products is more volatile than for consumer products. © 2013 by Cengage Learning Inc. All Rights Reserved. 24 6

25. Fluctuating Demand 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. © 2013 by Cengage Learning Inc. All Rights Reserved. 25 6

26. Describe the seven types of business goods and services 7 Types of Business Products © 2013 by Cengage Learning Inc. All Rights Reserved. 26

27. Major Equipment Accessory Equipment Raw Materials Component Parts Processed Materials Supplies Business Services Types of Business Products © 2013 by Cengage Learning Inc. All Rights Reserved. 27 7

28. Types of Business Goods and Services © 2013 by Cengage Learning Inc. All Rights Reserved. 28

29. Intel Buys McAfee Intel creates nearly 80 percent of the microprocessors used in PCs and server systems. Intel’s purchase of security software maker McAfee will allow it to produce chips that are directly integrated with McAfee’s security products. What kinds of business products were Intel and McAfee producing, and what kinds of products will they be producing together? Source: Thomas Catan, Nathan Becker and Jerry A. DiColo, "Intel Bets Its Chips on McAfee: Tech Giant Strikes $7.68 Billion Deal for Security- Software Maker, Drawing Mixed Reaction," Wall Street Journal Online. August 19, 2010, http://online.wsj.com/article/SB10001424052748704476104575439180665843938.html. © 2013 by Cengage Learning Inc. All Rights Reserved. 29

30. Discuss the unique aspects of business buying behavior 8 Business Buying Behavior © 2013 by Cengage Learning Inc. All Rights Reserved. 30

31. Customer Service Business Ethics Buying Situations Evaluative Criteria Buying Centers Aspects of Business Buying Behavior Aspects of Business Buying Behavior Business Buying Behavior © 2013 by Cengage Learning Inc. All Rights Reserved. 31 8

32. All those people in an organization who become involved in the purchase decision. Number of people involved varies with each purchase decision Buying Centers © 2013 by Cengage Learning Inc. All Rights Reserved. 32 8 Buying centers do not appear on formal organization charts

33. Initiator Influencers Gatekeepers Decider Purchaser Users Roles in Buying Centers © 2013 by Cengage Learning Inc. All Rights Reserved. 33 8

34. Evaluative Criteria  Quality  Service  Price © 2013 by Cengage Learning Inc. All Rights Reserved. 34 8

35. New Buy A situation requiring the purchase of a product for the first time. A situation requiring the purchase of a product for the first time. Modified Rebuy Modified Rebuy A situation where the purchaser wants some change in the original good or service. A situation where 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. A situation in which the purchaser reorders the same goods or services without looking for new information or investigating other suppliers. Buying Situations © 2013 by Cengage Learning Inc. All Rights Reserved. 35 8

36. Customer Service  Divide customers into groups based on their value  Create policies that govern how service will be allocated among groups © 2013 by Cengage Learning Inc. All Rights Reserved. 36 8

37. Chapter 7 Videos Flight 001 Brad John, co-founder of Flight 001, discusses how Flight 001 transitioned to a B2B company. Because Flight 001 sells travel friendly products, businesses, airlines, and travel agencies are ideal customers who make large, repeated purchases. © 2013 by Cengage Learning Inc. All Rights Reserved. 37