Transcript Business to Business (B2B) Marketing in YOUR WORLD For the

Chapter 6
Business-to-Business (B2B) Markets:
How and Why
Organizations Buy
Chapter Objectives
1. Explain each of the components of the business
market.
2. Describe the major approaches to segmenting
business-to-business (B2B) markets.
3. Identify the major ways the business market
differs from the consumer market.
4. Classify organizational buying situations.
5. Discuss the Pro’s and Con’s of making products
in-house versus Outsourcing
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B2B MARKETING
B2B Marketing - Marketing of products either
for use in producing a product or for usage
in conducting business to:
1. Companies (ex: Paper to Office Depot or
Winthrop University)
2. Government Organizations (ex: The Navy)
3. Institutions (ex: CMC Hospitals)
4. Non-Profit Organizations (ex: American Red
Cross)
5. Retailers and Wholesalers (ex: Polo shirts)
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 Firm specializing in the B2B market
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HOW BUSINESS TO BUSINESS (B2B) DIFFERS
FROM BUSINESS TO CONSUMER (B2C)
1. Customers are Other Businesses, rather than
consumers
2. A much smaller number of Larger customers
3. Stronger Buyer-seller Relationships (personal
selling)
 THE MOST important aspect of B2B Marketing
4. Stricter performance standards for products
demanded by businesses – the stakes are often
higher! (ex: Software for airplanes vs. software for
Madden 2010)
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HOW BUSINESS TO BUSINESS (B2B) DIFFERS
FROM BUSINESS TO CONSUMER (B2C)
5. More complicated purchasing decisions – large #
of buyers involved & longer time to make
decisions
6. Success is dependent upon other companies’
ability to market (ex: Lucky Brand Jeans)
7. The demand for a company’s products comes
from the demand for their customer’s products =
“Derived Demand”
Sony can’t sell Sony TV’s to Best Buy if
customers don’t want to buy their TV’s from
Best Buy!
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B2B Derived Demand
 Demand for certain
products is caused
by demand for other
products
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Advertising Aimed Mainly at
Business Buyers May Often
Appear to Be Consumer
Advertising
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TYPICAL BUSINESS TO BUSINESS
GOODS AND SERVICES INCLUDE:
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RAW MATERIALS
COMPONENT OR OEM PARTS (Part of a completed
product)
ACCESSORY EQUIPMENT (Tools)
CAPITAL EQUIPMENT (Machinery)
MRO ITEMS (Operating supplies)
FINISHED GOODS
Q. Provide an Example for each of these
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B2B and B2C….for Salt
Business marketing
Business Marketing
Consumer Marketing
McDonalds
Salt is added to
fries
You
Salt mine
Morton’s Salt
Salt is mined
Salt is processed into
food-grade or industrial
grade salt
Harris-Teeter
Salt is sold in
shakers
General Foods
Salt is added to
frozen dinners
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Business to Business (B2B) Marketing in
YOUR WORLD
For the last Fast Food restaurant you ate in….
Q1. Who was the Business to Consumer (B2C)
marketer?
Q2. Who was the B2C Consumer?
Q3. What Business to Business (B2B) marketing
may have taken place?
Q4. Who were the B2B customers?
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Business to Business (B2B) Marketing in
YOUR WORLD
For the shirt you are wearing today….
Q1. Who was the Business to Consumer (B2C)
marketer?
Q2. Who was the B2C Consumer?
Q3. What Business to Business (B2B) marketing
may have taken place?
Q4. Who were the B2B customers?
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Business to Business (B2B) Marketing in
YOUR WORLD
For the textbook you (hopefully) have sitting on
your desk….
Q1. Who was the Business to Consumer (B2C)
marketer?
Q2. Who was the B2C Consumer?
Q3. What Business to Business (B2B) marketing
may have taken place?
Q4. Who were the B2B customers?
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Business to Business (B2B) Marketing in
YOUR WORLD
For the car you or someone you know bought….
Q1. Who was the Business to Consumer (B2C)
marketer?
Q2. Who was the B2C Consumer?
Q3. What Business to Business (B2B) marketing may
have taken place?
Q4. Who were the B2B customers?
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One More Big Reason to Care about B2B
Marketing
College students generally land jobs in B2C
marketing while….
College GRADUATES generally land jobs in B2B
marketing…
Greater skill requirements (marketing,
analytical, and people skills) + Greater
responsibility ($/sale and total sales) =
Greater challenge and Greater PAY!
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B2B Marketing
B2C Marketing
Product
Relatively technical in nature,
accompanying services very
important. Often is a product
eventually marketed B2C
Service important but less
than in B2B
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.
Most important aspect of B2B
Marketing
Important, but
comparatively less contact
& relationship generally
shorter
Decision-making Involvement of diverse group of
process
organization members in decision
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Individual or household
unit makes decision
Figure 6.1
Differences Between Organizational and
Consumer Markets
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North American Industry
Classification System
 Marketers use the North American Industry
Classification System (NAICS) to identify their
customers and to find new customers
NAICS is a numerical coding of industries
in the United States, Canada, and Mexico
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Figure 6.4
North American Industry Classification System
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Classifying Business Buying
Situations
1. Straight Rebuy - Recurring purchase decision in
which a customer repurchases a good or service
that has performed satisfactorily in the past
2. Modified Rebuy- purchase decision in which a
purchaser is willing to reevaluate available
options for repurchasing a good or service (the
competition is given another shot)  Bidding
3. New-Task Buying - first-time or unique purchase
situation that requires considerable effort by the
decision Makers  Bidding
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 OfficeMax.com
Promoting a
straight rebuy
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 Purchasing a
business jet: a
new task buy
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It’s Debatable
Class Discussion Question
Suppose that the price of a key component
used in your product has unexpectedly
tripled. Think about the pros and cons of
each of the following potential actions.
Where do you stand?
1) Pass the price increase onto the customer
2) Absorb the price increase
3) Change vendors and purchase a lowerpriced alternative part instead
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Figure
6.6
Steps in
the
Business
Buying
Process
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Business Buying Decision Process Step
1: Recognize the Problem
 Recognition often stems from
A need to replace outdated equipment
Changes in technology
Marketing communications spur action
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Business Buying Decision Process Step
2: Search for Information
 In this stage, buyers:
Search for information about products and
suppliers
Develop product specifications - Written
descriptions of the quality, size, weight, color of
the item to be purchased
Identify potential suppliers and obtain proposals
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Business Buying Decision Process Step
3: Evaluate the Alternatives
 Price is a primary consideration
Evaluations include discount policies,
returned-goods policies, cost of repair, terms
of maintenance, and cost of financing
 Other factors may be considered, such as extra
services or other perks
 Customer reference programs, product demos,
and presentations can help sell the marketer’s
products to firms
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Business Buying Decision Process
Step 4: Select the Product & Supplier
 Single sourcing: Business practice of buying a
particular product from only one supplier
 Multiple sourcing: Buying from several
different suppliers
 Reciprocity: Trading partnership in which two
firms agree to buy from one another
 Produce In-House or Outsource??
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In-House or Outsource?
Outsourcing: using outside vendors to produce
goods and services rather than produce them inhouse
Q. What are the Advantages and Disadvantages
of making products yourself vs. outsourcing?
Q. What are the Advantages and Disadvantages
of outsourcing?
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Advantages of Outsourcing
May be cost effective
Allows a firm to obtain specialized
technological expertise
Frees up the company to focus on its
core competencies
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Disadvantages of Outsourcing
Many companies discover their cost
savings to be less than half the figure
promised by vendors
Potential problems with suppliers who
fail to deliver goods properly or provide
required services
Risk of losing touch with customers
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Business Buying Decision Process Step
5: Evaluate Postpurchase
 Organizational buyers assess whether the
performance of the product and the supplier live
up to expectations
Users are surveyed to determine satisfaction
Producers may also research end-user
satisfaction with the final product
Changes in demand are analyzed
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