B2B Marketing - Session 1 &2

7/30/2019 B2B Marketing - Session 1 &2

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B2B Marketing

Prof. Rubina DMello


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B2B Marketing Organizational sales and purchases of goods

and services to support production of other

products, to facilitate daily companyoperations, or for resale.


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What are these? B2B markets

All organizations that purchase goods and

services to use in the creation of their owngoods and services.

B2B marketing The process of matching and combining the

capabilities of the supplier with the desiredoutcomes of the customer to create value forthe customers customer.


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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 otherbusinesses for use in their daily operations or

for making other products and services


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B2C versus B2B Marketing The B2B market is 5X as large as

the B2C market in the USA.


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Sectors of the B2B Market Producers

Middlemen

Government Units

Nonprofits


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Difference between B2B & B2CIndustrial Markets Consumer MarketsStructure Relatively fewer buyers Clustering

geographical concentration

Large number of customers

Mass markets

Products Complex, needing customization, alliedservices important

Standardised for mass markets

Buyer

Behaviour

Functional involvement, rational

motives, importance of relationships

Psychological motives, family

involvement

Decisions Distinct, observable stages Mental, not observable

Channels Shorter, more direct Indirect, multiple

Promotion Importance of personal selling Advertising important

Price Bidding and negotiations a norm; list

prices for standard products of low

value

List prices and standard discounts


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Difference between B2B & B2CB2B Marketing B2C Marketing

Relationship driven Product driven

Maximize the value of relationship Maximize the value of thetransaction

Small, focused target market Large target market

Multi-step buying process, longersales cycle

Single step buying process, shortersales cycle

Brand identity created on personalrelationship

Brand identity created throughrepetition and imagery

Education and awareness buildingactivities

Merchandising and point ofpurchase activities

Rationale buying decision based on

business value

Emotional buying decision based on

status, desire or price


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Sectors of the B2B Market Producers includes all manufacturers and

service providers; buy goods to use in makingother goods or services

Middlemen buy goods for resale; includesall retailers and wholesalers (distributors,vendors)

Government includes all federal, state, andlocal governments and govt. agencies

Nonprofit includes charities, schools anduniversities, museums, etc.


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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 thecustomer.

Specialized media such as tradejournals, sales brochures, web sites,trade shows are used rather than

traditional mass media.


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Three Kinds of

Organizational Purchases Straight rebuy

a routine repurchase that may have been mademany times before

Modified rebuy

the in-between process where some review ofthe buying situation is donethough not asmuch as in new-task buying

New-task buy

a firm has a new need and the buyer wants agreat deal of information


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The Buying Center Business purchases often involve multiple

influence

"Buying center"all people who participate inor influence a particular purchase

Buying center varies from purchase topurchase

Does not appear on the "organizational chart"

Structure may be formal or informal


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Multiple Roles in the

Buying Center

BuyingCenter

Users

Buyers

Gatekeepers Deciders

Influencers


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COMPONENTS OF THE BUSINESS

MARKET Commercial market Individuals and firms

that acquire products to support, directly or

indirectly, production of other goods andservices.

Trade industries Retailers or wholesalersthat purchase products for resale to others.

Government.

Public and Private Institutions


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Producer Types

Component Parts

and ManufacturedMaterials

Producers

CapitalGoods

Manufacturers

Accessory

Equipment

Suppliers

Raw

Materials

Producers


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Producer Types

More differentiated from direct

competition by the value added tothe customers product.

Usually retain identity even when

incorporated into the customers

product.

Parts retain their same form when

incorporated.

Component Partsand Manufactured

Materials

Producers


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Producer Types

Adherence to specificationsreduces

opportunities for differentiation.

Involves the development of

specifications to ensure that

organizational needs are met.

Capital goods involve large purchases

with considerable risk for the customer.

Customers expect an offering that

includes installation, equipment, and

accessories.

CapitalGoods

Manufacturers


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Producer Types

Accessory equipment is usually

produced by an independent

supplier.

Accessories can be added to a

bundled offering by a channelintermediary.

Accessory equipment is equipment that

works with some other offering.

The key to providing value is to be

compatible with industry standards for

the primary offering.

AccessoryEquipment

Suppliers


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Market Demand

JointDemand

DerivedDemand

VolatileDemand

InelasticDemand

InventoryAdjustment

Demand characteristics vary from market to market.


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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.


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THE BUSINESS BUYINGPROCESS

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


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SEGMENTING B2BMARKETS

Segmentation helps marketers develop the most appropriatestrategy.

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-businessmarket into homogeneous groups based on buyers productspecifications.


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SEGMENTATION BY END-USE APPLICATION

End-use application segmentation Segmenting a business-to-business 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 ownpurchasing.


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Segmentation Benefits

First, the marketer to become moreattuned to the unique needs of customer

segments. Second, focus product development

efforts, develop profitable pricingstrategies, select appropriate channels of

distribution.

Third, provides guidelines that are ofsignificant value in allocating marketing

resources.


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Selecting awell-definedgroup ofpotentiallyprofitablecustomers.

High-Growth

CompaniesSucceed By

Focusingmarketingresources onacquiring,developing,and retaining

profitablecustomers.

Developing a

distinctivevalueproposition.


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Five Criteria for EvaluatingPotential Market Segments

1.Measurability

2.Accessibility

3.Substantiality

4.Compatibility

5.Responsiveness


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Common

Bases forSegmentation

By productoffered

By industry in

which the customer

participates

By size of

the customers

company

By buying

behavior

By technology

used by the

customer

By size

of account

By geographicregion


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MeasureabilityCan we understand thesize and needs of the

market segment?

AccessibilityCan we communicate withthe segment so that servingthe segment is possible?

SubstantialityDoes the segment desirethat values that an offeringpresents?

Actionability

Can we create a competitiveadvantage with respect to theneeds of the segment?


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Analytic Approach to Segmentation

Analytic approaches need twosets of data:

1) Information about segment size and

growth2) Information about each targeted segments

needs and buying behavior.


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Technological EnvironmentAssessment

1. Product technologythe set of ideas embodied inthe product or service.

2. Process technologythe set of ideas or stepsinvolved in the production of a product or service.

3. Management technologythe managementprocedures associated with selling the product.


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Bases for Segmenting BusinessMarkets

Macro Segmentation.

Micro Segmentation.


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Macrolevel bases of segmentation are concernedwith general characteristics of the buyingorganization, the nature of the product

application, and the characteristics of the buyingsituation.

Selected Macrolevel Bases of Segmentation

Copyright 2004 by South-Western, a division of Thomson Learning, Inc. All rights reserved.Developed by Cool Pictures and MultiMedia Presentations


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The marketer often finds it useful todivide each macro segment into smallermicro segments on the basis of thesimilarities and differences between

decision-making units.

Selected Microlevel Bases of Segmentation

Copyright 2004 by South-Western, a division of Thomson Learning, Inc. All rights reserved.Developed by Cool Pictures and MultiMedia Presentations


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Purchasing Strategies Classifications

1. Satisficers approach a given purchasingrequirement by contacting familiar suppliers

and placing the order with the first supplier tosatisfy product and delivery requirements.

2. Optimizers consider numerous suppliers,familiar and unfamiliar, solicit bids, and

examine all alternative proposals carefullybefore selecting a supplier.


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Attractiveness of SegmentsMarket

Attractiveness

Competitive

Attractiveness

Channel

Attractiveness

Internal

Attractiveness

Attractiveness Other

Considerations


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Market Attractiveness

MarketAttractiveness

Large and fast growing segmentsare more attractive than smallerand slow-growing segments

This necessitates accuratelypredicting future growth.Other issues include

Adaptability of marketsegments,Existing relationships with thebuying center members, andAvailable customers budget


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Competitive Attractiveness

Competitive

Attractiveness

What is the likely existence oremergence of competition inthe market segment?Are there barriers to entryfacing competitors?Does being first to marketprovide an advantage?


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Channel Attractiveness

ChannelAttractiveness

It is preferable to targetcustomers already served bywell-established marketing

channels, or if an existingchannel can be adapted, it mayserve the segment.When there is no suitableexisting channel, a market viewof competition may benecessary.

How is the existing needbeing met?

Will customers switch?


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Internal Attractiveness

InternalAttractiveness

A segment is more attractivewhen the segments needs can

be met by the firms core

competencies.This is identified throughenvironmental analysis.

O h


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Attractiveness OtherConsiderations

Attractiveness OtherConsiderations

Other factors that might causea segment to rated higher orlower include:

Public policy (excessivegovernment regulation cancause a segment to bedowngraded)

Organizational goals(market share goals maymake firms moreaggressive in targeting)

B2B Marketing - Session 1 &2

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