Introduction to Business Marketing

Objectives

• Know the framework of business marketing management

• Differentiate between business marketing and consumer marketing

• Identify the types of business customers• Know the characteristics of business products/

services and markets• Apply strategies on creating superior value for

business products/services

Assessments

• Quizzes• Assignments• Seat works• Case

Framework for Business Marketing Management

Source: Cengage Learning 2013

BUSINESS MARKETING

IS• MARKETING OF GOODS AND SERVICES TO:– Companies– Government Bodies– Institutions (i.e. hospitals)– Non-Profit Organizations (i.e. American Red Cross)

FOR• USE IN PRODUCING THEIR PRODUCTS AND/OR

TO FACILITATE THEIR OPERATIONS

Types of Business Market Customers

Commercial customers•Manufacturers•Construction companies•Service firms•Transportation companies•Selected professional groups•Wholesalers•Retailers

Types of Business Customers contd.

Institutional customers•Schools, colleges, universities•Health care organizations•Libraries•Foundations•Art galleries•Clinics

Types of Business Customers contd.

Governmental Customers•National•Local

BUSINESS TO BUSINESS IS NOT BUSINESS TO CONSUMER

• Do Not Serve Same Types of Customers

• Do Not Serve the Same Number of Customers

• Do Require Strong Buyer-seller Relationships

• Do Depend on Strong Buyer Demand for their

Customer’s Products

TYPICAL BUSINESS TO BUSINESS GOODS AND SERVICES INCLUDE:

• RAW MATERIALS

• MANUFACTURING MATERIALS(Transformed from raw materials)

• COMPONENT OR OEM PARTS(Part of a completed product)

• ACCESSORY EQUIPMENT (Tools)

• CAPITAL EQUIPMENT (Machinery)

• MRO ITEMS (Operating supplies)

BUSINESS TO BUSINESS:IT IS ALL ABOUT RELATIONSHIPS

BUSINESS TO BUSINESS DEPENDS ON:– Close Business and Personal Relationships

– Shorter Distribution Channels

– Emphasis on Personal Selling

– Dependence on WEB Integrationand

– Unique Promotional Strategies

Because of

Leads to

Through

Assignment

• Visit www.basf.com; identify the products and the markets it serves.

• Provide examples goods and services in business markets

Characteristics of Business Market Customers

Characteristic• Business market customers are

comprised of commercial enterprises, institutions, and government

• A single purchase by a single customer is far larger than that of an individual customer

• The demand for industrial products is derived from the ultimate demand from consumer products

• Buyer-seller relationships tend to be close and enduring

• Buying decisions from business customers often involve multiple buying influences, rather than a single decision maker

Example• Among Dell’s customers are Boeing,

Arizona State U & numerous state and local government units

• An individual may buy 1 unit of software package from Microsoft while Citigroup buys 1,000

• New home purchases stimulate the demand for carpeting, appliances, cabinets, lumber, etc.

• IBM’s relationship with some key customers spans decades

• A cross-functional team at P & G evaluates alternative laptop personal computers and selects HP

BUSINESS TO BUSINESSDERIVED DEMAND SIMPLIFIED

• YOU CAN MAKE HEADLAMP ASSEMBLIES FOR AUTOS

Consumers want more cars

Automobile manufacturers need more components and steel

Need more of your company’s headlamp assemblies

Consumers stop buying cars

Automobile manufacturers stop making cars

You can’t sell headlamp assemblies

REQUIREMENTS FOR HIGH PERFORMANCE RELATIONSHIPS

• BEYOND THE FINANCIAL CONSIDERATIONS:– INTEGRITY– FAIRNESS– LOYALTY– FLEXIBILITY– INPUT INTO YOUR PARTNER’S STRATEGY– PARTNER’S INPUT INTO YOUR STRATEGY– COMPLIANCE WITH PROCEDURES AND AGREEMENT– HONOR COMMITMENTS– STAND BEHIND YOUR PRODUCTS

SUGGESTIONS FOR MAKING B2B RELATIONSHIPS LAST

• Make on-site visits to your partner

• Trade personnel and offices

• Manage total dependence with an alternate supplier

• Make the pledge of continuous service

• Develop a relational contract

• Provide ownership by bringing functions or technology within boundaries of partner’s firm

Case analysis

• Middleby Corporation: A case on Value Proposition

Value Proposition: A Review

• Captures the particular sets of benefits that a supplier offers to advance the performance of customer organization.

• Value proposition must be based on the few elements that matter most to target customers

Value Proposition: A Review contd.

• Points of parity – the value elements with essentially the same performance characteristics as the next best alternative

• Points of difference – the value elements that render the supplier’s offering either superior or inferior to the next best alternative

Case discussion