HuttSpeh10e Pp Ch01 Bus Mktg Perspective_silver

8/8/2019 HuttSpeh10e Pp Ch01 Bus Mktg Perspective_silver

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PowerPoint presentation byRay A. DeCormier, Ph.D.Central Connecticut State University

Chapter 1:

ABusinessMarketingPerspective

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Chapter Topics By the end of this chapter you will understand:

1. The dynamic nature of the business marketing environmentand the basic similarities and differences between consumer-goods and business marketing

2. The underlying factors that influence the demand for products

and services bought by business and organizational customers3. The nature of buyer-seller relationships in a products supply

chain4. The types of customers in B2B markets5. The basic characteristics of industrial products and services

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Business Marketing

Business Marketing or IndustrialMarketing are used interchangeably

50% of all business school graduates joinfirms that directly compete in the businessmarket

Because of interest in high-tech marketsand the size of industrial markets,

increased attention is being paid tobusiness marketing management

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Business Markets Are markets for products and services from local to

internationalBought by:

Businesses

Government bodies InstitutionsFor:

Incorporation Consumption Use Resale

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What Are BusinessProducts?

Used to manufactureother products

Become part of another product

Aid in the normal operations of an organization

Are acquired for resalewithout change in form

A product purchased for personal useis considered a consumer good

Key isKey isthethe

product productss

intended intended

useuse

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Business to Business(B2B) Marketing is

Huge1. Business marketers serve the largest marketsof all.

2. Dollar volume of the business market greatlyexceeds the consumer market.

3. A single customer can account for enormouslevels of purchasing activity. (For example,GMs 1,350 business buyers each purchasemore than $50 million annually.)

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The Consumer Market (B2C) and the Business Market (B2B) at

B2B

Customers:

B2C

Individuals &

HouseholdsBusinessesGlobalLarge corporationsSmall & Mediumsized businesses

Institutions

HealthcareEducation

Government

FederalStateLocal

Selected

Products:

PCs

PrintersConsumer ElectronicsSimple ServiceAgreements

PCs

Enterprise StorageServersComplex Service Offerings

Dell, Inc .

B2C and B2B0


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Categories of Business MarketCustomers

Producers

Resellers

Governments

Institutions

OEMs

WholesalersRetailers

Federal StateMunicipal County

Unions Civic clubs ChurchesFoundations Nonprofits Other

Commercial

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Business Marketers vs.Consumer-GoodsMarketers

Similarly:

Both marketers benefit by employing amarket orientation , i.e.:

They need to understand and satisfycustomer needs

They are both market driven

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1. A set of values and beliefs that placescustomers interests first

2. An ability to generate, disseminate, andproductively use superior informationabout customers and competitors

3. The coordinated use of interfunctionalresources (e.g., research anddevelopment, manufacturing)

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Market-Driven Firms

Demonstrate


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Market-Driven Firms

Market sensing capability: Acompanys ability to sense change

and to anticipate customer responsesCustomer linking: The ability todevelop and manage close customer

relationships

Have distinctivecapabilities:

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Market-Driven Companies

View their customer as an asset, thus:

1.Marketing expenditures, onceconsidered expenses, are nowconsidered investments.

2.Therefore, marketers need to

measure performance such as ROI ontheir investments.

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Meeting PerformanceStandards Means To:Develop and nurture customer relationship

management (CRM) capabilities by:

a. Identifying,b. Initiating,c. Developing,d. and Maintaining profitable customer relationships.

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ProfessionalMarketers: Focus on Profitability Understand forces that affect profitability

Align resource allocation to revenues and profitsthat will be secured by future business

Partner with Customers Marketers dont just sell to customers; they

develop a form of partnership for the purpose of serving and adding value for their consumer

This strategy can result in becoming a preferredvendor

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Market-DrivenCompanies

Deliver Value Propositions

Create programs that includeproducts, services, ideas andsolutions to problems that offervalue and provide opportunities fortheir customers.

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Marketings Cross FunctionalRelationship

Business marketing planning mustbe coordinated and synchronizedwith corresponding planning efforts.

Developed by Cool Pictures and MultiMedia Presentations

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Business and ConsumerMarketing Differs In:1. Nature of their markets2. Market demand3. Buyer behavior4. Buyer-seller relationship5. Environmental influences

(competition, political, legal) and6. Market strategy

Due to these differences, businessmarketers need to understand howdemand for industrial products andservices differs from consumerdemand.

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Business Market DemandCharacteristics

Derived demand

Fluctuating demand Stimulating demand Price sensitivity / demand elasticity

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Derived Demand

The demand for business products iscalled derived demand because thedemand for industrial products is

derived from the ultimate demandfor consumer products.

As a result, business marketers mustcarefully monitor fluctuating trendsand patterns in consumer markets.

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Fluctuating DemandBecause demand is derived, an increase or

decrease in consumer demand can create afluctuating demand for many industrial products.

Example:An increase in mortgage rates can quickly stifle

new home sales. This slows down the need fornew household products. Businesses react bydecreasing their inventory of materials or puttingoff buying new machinery. This action explains why the demand for manyindustrial products tends to fluctuate more thanthe demand for consumer products.A decrease in interest rates has the oppositeinfluence.

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Stimulating Demand Sometimes, business marketers need to

stimulate demand for consumer goods whicheither incorporate their products or are used tomake consumer products.

Pharmaceutical manufacturers advertise on televisionby presenting various ailments followed by offeringtheir products as solution to the ultimate consumer.(Ask your doctor if XYZ is right for you!)

Sometimes manufacturers offer deep price discountsthat influence members of the supply chain to lowertheir prices, in the hope of influencing the ultimateconsumer to buy their product.

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Inelastic Demand

Inelastic demand is demand withoutregard to price. An increase ordecrease in the product price will not

significantly affect the demand for theproduct.

Example: Price for gasoline

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Elasticity of DemandElastic Demand CurveElastic Demand Curve

D

D

Quantity

P r

i c e

D

D

Quantity

P r

i c e

Inelastic Demand CurveInelastic Demand Curve

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Consumer Product orBusiness Product? Mentioned earlier, the intended use

determines whether or not a product

is a consumer product or a businessproduct

If Mr. Clean is used by the ultimate consumer to

clean his/her house, it is a consumer product.

If Mr. Clean is being used to clean a hospital ora university, it is a business product.

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ome onsumer ro uc sBecome IndustrialProducts J.M. Smucker Company sells their

jellies and jams to ultimateconsumers as household foodproducts but also markets them asfillings and yogurt additives for othercompanys products.

Many companies successfully sell toboth consumer and business markets.

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Relationship Marketing cont

Building one-to-one relationshipswith customers is the heart of business marketing

Figure 1.4 provides a recap of key

characteristics of business marketcustomers

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The Supply Chain

Business Marketing is an importantinfluence in the supply chain.

When reviewing Figure 1-5, notice theimportance of the business marketersinfluence in each step of the supply

chain.

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Michael Porter and Victor Millar observed that to gaincompetitive advantage over its rivals, a company musteither perform these activities at a lower cost or performthem in a way that leads to differentiation and a premium(more value).

The Supply ChainFigure 1.5

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Supply Chain Management

This is a technique of linking amanufacturers operation with suppliers,key intermediaries and customers toenhance efficiencies and effectiveness.

The Internet is playing an extensive roleby allowing joint planning and executionin real time.

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Managing Relationships inthe Supply Chain

As important as it is to gain customers, itis just as important for manufacturers to

develop strong relationships withsuppliers.

Companies such as IBM and Toyotadevelop strategies to create supplierswho provide new ideas and who areloyal.

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Categories of Business MarketCustomers

Producers

Resellers

Governments

Institutions

OEMs

WholesalersRetailers

Federal StateMunicipal County

Unions Civic clubs ChurchesFoundations Nonprofits Other

Commercial

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Business Market CustomerCommercial Enterprises

Three categories of CommercialCustomers:

Users OEMs Dealers and distributors

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Users

Users purchase industrial products orservices to produce other goods orservices that are, in turn, sold in thebusiness or consumer markets.

Example: Toyota buys machines to

produce cars that are sold to consumersand businesses. Toyota is a user.

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Producers

Profit oriented companies

Produce products - OEMs andSubcontractors

3M in USA

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Governments

Municipal, State and FederalGovernment

Generally use the bidding approachto purchase goods and services

Purchase up to 1/3 Gross DomesticProduct (GDP)

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Institutions This is the nonprofit segment of the

market that does not seek to achievenormal business goals such as ROI,%share of market or profit

Market includes universities, hospitals,schools, churches, civic clubs,

foundations, etc.

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A Framework for Business Marketing Management

Business marketing strategyis formulated within the

boundaries establishedby the corporatemission andobjectives .

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Overview of Text

1. Part 1 considers differences betweenconsumer and commercial markets anddiscusses the various types of commercialenterprises.

2. Part 2 examines the organization buyingprocess and the forces that affect decisionmakers.

3. Part 3 investigates selecting targetsegments and measuring their responses.4. Part 4 focuses on designing market driven

strategies.

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HuttSpeh10e Pp Ch01 Bus Mktg Perspective_silver

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