B2B Marketing

Prof. Rubina DMello

B2B Marketing

Organizational sales and purchases of goods and services to support production of other products, to facilitate daily company operations, or for resale.

What are these?

B2B markets

All organizations that purchase goods and services to use in the creation of their own goods and services. The process of matching and combining the capabilities of the supplier with the desired outcomes of the customer to create value for the customers customer.

B2B marketing

B2B versus B2C Marketing

B2C=Business-to-Consumer Market= businesses sell products and services to consumers for household or personal use B2B=Business-to-Business Market= businesses sell products and services to other businesses for use in their daily operations or for making other products and services

B2C versus B2B Marketing

The B2B market is 5X as large as the B2C market in the USA.

Sectors of the B2B Market

Producers Middlemen Government Units Nonprofits

Difference between B2B & B2C

Industrial Markets Structure Relatively fewer buyers Clustering geographical concentration Complex, needing customization, allied services important Functional involvement, rational motives, importance of relationships Distinct, observable stages Shorter, more direct Importance of personal selling Bidding and negotiations a norm; list prices for standard products of low value Consumer Markets Large number of customers Mass markets Standardised for mass markets Psychological motives, family involvement Mental, not observable Indirect, multiple Advertising important List prices and standard discounts

Products Buyer Behaviour Decisions Channels Promotion Price

Difference between B2B & B2C

B2B Marketing
Relationship driven Maximize the value of relationship Small, focused target market

B2C Marketing
Product driven Maximize the value of the transaction Large target market

Multi-step buying process, longer sales cycle

Brand identity created on personal relationship Education and awareness building activities Rationale buying decision based on business value

Single step buying process, shorter sales cycle

Brand identity created through repetition and imagery Merchandising and point of purchase activities Emotional buying decision based on status, desire or price

Sectors of the B2B Market

Producers includes all manufacturers and service providers; buy goods to use in making other goods or services Middlemen buy goods for resale; includes all retailers and wholesalers (distributors, vendors) Government includes all federal, state, and local governments and govt. agencies Nonprofit includes charities, schools and universities, museums, etc.

B2B Marketing is Different!

There are fewer customers and they require dependable relationships and a high level of service. Marketing tends to be done by personal selling ( one-on-one) calls to the customer. Specialized media such as trade journals, sales brochures, web sites, trade shows are used rather than traditional mass media.

Emotional or Rational Buyers?

(Considerations of B2B Buyers)

Buyers must purchase according to a set of purchasing specifications Focus on Quality (including ISO 9000 certification) Total costs to purchase and use Reliability Value in use Savings possible via e-commerce

Three Kinds of Organizational Purchases

Straight rebuy a routine repurchase that may have been made many times before Modified rebuy the in-between process where some review of the buying situation is donethough not as much as in new-task buying New-task buy a firm has a new need and the buyer wants a great deal of information

The Buying Center

Business purchases often involve multiple

influence

"Buying center"all people who participate in or influence a particular purchase Buying center varies from purchase to purchase Does not appear on the "organizational chart" Structure may be formal or informal

Multiple Roles in the Buying Center

Buyers
Users Buying Center

Influencers

Gatekeepers

Deciders

COMPONENTS OF THE BUSINESS MARKET

Commercial market Individuals and firms that acquire products to support, directly or indirectly, production of other goods and services. Trade industries Retailers or wholesalers that purchase products for resale to others. Government. Public and Private Institutions

Types of Organizational Customers

Commercial Enterprises
Industrial Distributors Value-Added Resellers

Government Units 85,000 local, state, and federal government units

Nonprofit and Not-for-Profit Organizations Churches, hospitals, colleges, nursing homes, etc.

Original Equipment Manufacturers

Users or End Users

Producer Types
Raw Materials Producers Accessory Equipment Suppliers

Component Parts and Manufactured Materials Producers

Capital Goods Manufacturers

Producer Types
Parts retain their same form when incorporated.
Component Parts and Manufactured Materials Producers Usually retain identity even when incorporated into the customers product. More differentiated from direct competition by the value added to the customers product. Mico Fuel pumps are an example.

Producer Types
Capital goods involve large purchases with considerable risk for the customer.
Capital Goods Manufacturers Involves the development of specifications to ensure that organizational needs are met. Adherence to specifications reduces opportunities for differentiation. Customers expect an offering that includes installation, equipment, and accessories.

Producer Types
Accessory equipment is equipment that works with some other offering. Accessory Equipment Suppliers Accessories can be added to a bundled offering by a channel intermediary. Accessory equipment is usually produced by an independent supplier. The key to providing value is to be compatible with industry standards for the primary offering.

Market Demand
Demand characteristics vary from market to market.
Joint Demand Volatile Demand Inelastic Demand Derived Demand

Inventory Adjustment

DERIVED DEMAND The linkage between demand for a companys output and its purchases of resources such as machinery, components, supplies, and raw materials. VOLATILE DEMAND Derived demand creates volatility; for example, demand for gasoline pumps may be reduced if demand for gasoline slows.

JOINT DEMAND Demand for two products used in combination with each other.
INELASTIC DEMAND Demand not significantly influenced by price changes.

INVENTORY ADJUSTMENTS Just-in-time (JIT) inventory policies boost efficiency by cutting inventory and requiring vendors to deliver inputs as they are needed.

SEGMENTING B2B MARKETS

Segmentation helps marketers develop the most appropriate strategy.

SEGMENTATION BY DEMOGRAPHIC CHARACTERISTICS

Grouping by size based on sales revenues or number of employees.

SEGMENTATION BY CUSTOMER TYPE

Grouping in broad categories, such as by industry.

Customer-based segmentation Dividing a business-to-business market into homogeneous groups based on buyers product specifications.

SEGMENTATION BY END-USE APPLICATION

End-use application segmentation Segmenting a business-tobusiness market based on how industrial purchasers will use the product. Example: A supplier of industrial gases that sells hydrogen to some companies and carbon dioxide to others.

SEGMENTATION BY PURCHASE CATEGORIES

Segmenting according to organizational buyer characteristics. Example: Whether a company has a designated central purchasing department or each unit within the company handles its own purchasing.

THE BUSINESS BUYING PROCESS

More complex than the consumer decision process. Takes place within formal organizations budget, cost, and profit considerations.

INFLUENCES ON PURCHASE DECISIONS

Environmental factors Organizational factors Social Factors Personal Factors