B2B

B2BMarketing of those goods and services that business and organizational customers need to produce other goods and services for resale or to support their operations

Classification of Goods for the Business Markets1. Entering goods Raw material * Mfd. Materials & Parts2. Foundation goods Capital itemsInstallations * Accessory equipment3. Facilitating goodsSupplies * ServicesCharacteristics of Business MarketsFewer buyersLarger buyersClose supplier customer relationshipGeographically concentrated buyersDerived demandInelastic demandProfessional purchasingSeveral buying influencesDirect purchasingMultiple sales calls3Derived demand : Demand for education derived demand for textbooks derived demand for paper derived demand for pulp derived demand for forestry products.

Acceleration principle (multiplier effect) a marketing phenomenon in which a small percentage change in consumer demand can create a large percentage change in business to business demand.

In B2B marketing, a more focused marketing strategy with an emphasis on personal selling is used, as opposed to consumer marketing where trade channels and mass communication become important pillars of marketing strategy.Company Purchasing OrientationPrice oriented customers short term and tactical; buying oriented buying orientedSolution oriented customers look for low prices within bounds of quality and delivery procurement orientedRelationship orientation look for a long term relationship4Price oriented customers buying orientedSolution oriented customers procurement oriented

Participants in the Business Buying Process1. Initiators5. Buyers2. Influencers6. Users3. Deciders7. Gatekeepers4. Approvers

The business marketer will have to identify the key buying influences5Buying Center : the group of people in an organization who participate in a purchasing decision.Initiator : for marketers it is important to make sure individuals who might initiate a purchase are aware of improved products they offer.User : the marketers need to inform users of their products benefits, especially if the benefits outweigh competitors.Gatekeeper : for salespeople, developing and maintaining strong personal relationships with gatekeepers is critical to being able to offer their products to the buying center.Influencer : marketers need to identify key influencers in the buying center and work to persuade them of their products superiority.Decider : the decider is the key to the marketers success and deserves a lot of attention in the selling process.Buyer : successful marketers are well aware that providing exemplary service in this stage of the purchase can be key to future sales.Who are the major decision participants?What decisions do they influence?What is their level of influence?What evaluation criteria do they use?

BUYING CENTER INFLUENCECase ContextDMC has acquired over 50% of the available market for oil well pumping actionBy 1984, there were approximately 5,500 producing wells, of which 850 were started in operation in 1984According to industry estimates, an average of 1000 new wells would enter production each year for the next five years.However, it was believed that this estimate might prove lowDuring 1984, power companies serving the oil fields made two announcements that could affect the specifications of oil well pumping motors :

The former flat rate, charged regardless of the HP of motors on a pumping installation, was replaced with a graduated schedule based on connected hp of an installationPower companies demanded that their customers stop over motoring and improve the power factor of their installations

Impact on DMCDecision ProblemImpact on DMCProfitability of a businessAttractiveness of a business opportunityLoss of market leadershipExclusion from other businessesImpact on position in other marketsIssues in the CaseFactors affecting the needs and wants of buyersThe buying roles in industrial purchasing The influence of lead buyersThe fall-out of any action initiated The importance of the business

AlternativesReduce the price of DMCs 10hp motor to that of the 7 hp motorReengineer DMCs present 7 motor to make its starting torque at least equal to that of the Spartan 7 hp unitUndertake design of a definite-purpose motor for the oil well pumping marketAttempt to persuade Bridges and Hamilton execs that the conclusions reached from their test results unduly emphasized obtaining the maximum starting torque availableHow important is customer orientation?Difference from selling orientation?Applicability in B2B context?Applicability in DMC case?Should DMC even bother about Oil Well Pumping Market??? Perhaps DMC should do nothing at all about these recent happenings.OROil well pumping motors represent a profitable and fast-growing market in which DMC is the major factor. What the company does or fails to do here may affect its position in other markets.Main ConcernsHamilton's action may be the start of a number of demands for special-purpose motors. A loss of product and market leadership here may hurt the company's reputation in other fieldsDMC action could affect relations with the utilities.