Business Marketing Basics
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Transcript of Business Marketing Basics
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Business Marketing
Perspective
November 10, 2010
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Business Marketing
Business marketing is the marketing of goods
and services to individuals and organizations
for purposes other than personal
consumption.
For manufacture of products
Become part of other products
Aid in the operations of an organization
Acquired for resale without any substantial change
in form
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Business Markets
Local to Global
Bought by
Businesses
Government bodies
Institutions
For consumption
For use
For resale
Markets for products and services
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The Consumer Market (B2C) and the Business
Market (B2B) at Dell, Inc.
B2B
Customers
B2C
Individuals &
Households
Businesses
GlobalLarge corporations
Small & Medium
sized businesses
Institutions
HealthcareEducation
Government
FederalState
Local
Selected
Products
PCs
PrintersConsumer Electronics
Simple Service
Agreements
PCs
Enterprise StorageServers
Complex Service Offerings
Dell, Inc.
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A Market Driven Firm
demonstrates:
1. Customer Orientation
2. Ability to track customers and competitors
3. Co-ordinated use of interfunctional resources
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Marketings Cross Functional Relationship
Business marketing planning must be
coordinated and synchronized with
corresponding planning efforts.
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Major Categories of Business Customers
Producers
Resellers
Government Central Govt.
State, District, City Municipality
Institutions
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Business Market Characteristics
Demand is Derived Demand is Inelastic
Demand
Fluctuations
Buyers
Well Informed
Business
Customers
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An Example: Aircraft Purchase
Derived demand The demand for the planes is derivedfrom the demand for air travel in Asia. Singapore Airlinesspecified Trent engines made by Rolls-Royce. Thus, thedemand for the engines is derived from the demand for the
planes. [Spicejet orders 30 Boeing 737-800] Demand is widely fluctuating This is a large order that may
eventually amount to 77 planes and $12 billion. AirbusIndustry of Europe, the other major bidder, gets nothing
Buyers are well informed There were only two potentialsuppliers, Boeing and Airbus, and the negotiations went onfor nearly a year.
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Business Versus Consumer Markets
Business Derived demand
Purchase large volumes
Few customers
Geographically concentrated
buyers
More direct distribution
Professional buying
Multiple buying influences
More complex negotiations
Use reciprocity
Greater use of leasing
Personal selling
Consumer Individual demand
Purchase small volumes
Many customers
Dispersed buyers
More indirect distribution
Personal buying
Single buying influences
Simpler negotiations
No reciprocity Minimal use of leasing
Advertising
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Types of Business Products
Major equipment (installations)
Accessories
Raw materials Component parts
Processed materials
Supplies Business services
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Classifying industrial goods by the
following questions:
How does the good or service
enter the production process?
How does it enter the cost
structure of the firm?
Classifying
Goods for the
Business
Market
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Relationship Marketing
All marketing activities directed toward
establishing, developing, and maintaining
successful exchanges with customers
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Michael Porter and Victor Millar observed that to gain competitive advantage over
its rivals, a company must either perform these activities at a lower cost or perform
them in a way that leads to differentiation and a premium (more value).
The Supply Chain
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B2B Virtual space
Business marketing on the Internet holdstremendous opportunities/benefits:
Lower prices/costs
Greater selection of goods and services(numerous vendors)
Access to customer and product sales data(develop customer lists and most popular
products) Around the clock ordering and customer service
Customized products
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Strategic Alliances
Strategic Alliance (Partnership) is a
cooperative agreement between business
firms.
Licensing
Distribution agreements
Joint ventures
Research and development consortia
Partnerships
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Model of Business Buying Behavior
Session - II
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It is individuals, not organizations,
make purchasing decisions.
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Business Buying Terminology
Buying Centre
Buy Phases
Buy Classes
Buy Grid
The people involved in the buying decision
process.
The stages in the organisational buying
process
Variations in the application of the stages
Buy Phases x Buy Classes
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Business Buying Centres
Buying
Centre
Buyers
Users
Gatekeepers
Deciders
Influencers
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Roles in Business Buying Centres
Different roles can be performed
by the same person.
More than one person may
perform the same role.
Compare with family decision-
making?
Initiator
Influencer
Specifier
Approver
Decider
Buyer
User
Gatekeeper
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Buying Center Roles
Primary Roles Deciders: Those people who have formal or informal authority who
actually make the buying decision
Influencers: Those individuals inside or outside the organization whoinfluence the decision process (directly or indirectly) by providing
information on criteria for evaluating buying alternatives Secondary Roles
Users: Those organization members who use the products &services
Buyers: Buyers are organizational members who have formalauthority in the selection of suppliers
Gatekeepers: Those organizational members who control the flow ofinformation into the buying center
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Understanding the Buying Center
1. Which individuals are in the buying center for the product
or service?
2. What is the relative influence of each member of the group.3. What are the buying criteria of each member?
4. How does each member of the group perceive our firm, our
products and services, and our salespeople?
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Buy Grid Framework
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Major Types of Buying Situations
The buyer routinely reorderssomething without any
modifications.
Straight Re-buy
Modified Re-buy
New Task
The buyer wants to modifyproduct specifications,
prices, terms, or suppliers.
The buyer purchases aproduct or service for the
first time.
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Buy Classes
New Task Modified Re-buy Straight Re-buy
Low-involvementdecisions
Made by a single
person in the
organisation
Decision requires that buyerorganisation expends more
effort and includes more
people because of an
important modification to the
product, delivery, price or
terms and conditions
First time buy
Lots of individuals
influencing and
involved with
decision-making
process
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Buying Situations in Industrial
Market
Straight Re-buy Modified Re-buy New Task
Fewer
Low
Low
Several
High
High
Number of decisions taken
Degree of risk involved
Degree of complexity
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The Buy Grid Framework
Robinson, Faris and Wind (1967)
Based on in-depth observation of two large
companies over two years.
One of the most useful frameworks everdeveloped in Industrial Buying.
Tested by Anderson, Chu and Weitz, (Journal
of Marketing, July, 1987) and largely
supported.
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The Buy GridNew Task Modified Rebuy Straight Rebuy
Anticipation &recognition of problem
Always Always Never
Elaboration of desired
attributes of productAlways Sometimes Never
Determination of
quantity needed
Always Always Never
Search for potential
suppliersAlways Sometimes Never
Acquisition & initial
analysis of the offeringAlways Sometimes Never
Evaluations of offeringsand supplier selection Always Sometimes Never
Selection of an order
routineAlways Sometimes Never
Performance, feedback
& evaluationAlways Always Always
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Implications
The framework defines the target for the
marketers efforts - the steps through which
s/he must respond to the buyers needs for
information
But problems need not be solved through
purchasing.
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Implications
Communications Where to provide information?
What information to provide?
How to provide information?
Product What features matter?
Distribution
Narrow or broad
Price Extent to which
comparisons are made
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Buying Situations & Supplier Tactics
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Objectives in Industrial Buying
It is critical for suppliers to understand the various criteria thatindustrial buyers use in evaluating potential suppliers
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Major Influences on Business Buyer
Behavior
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ThankYou!