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1. Chapter Objectives
Business-to-Business (B2B)
Marketing
CHAPTER
6
1
2
4 7
8
Explain each of the
components of the
business-to-business
(B2B) market.
Describe the major
approaches to segmenting
B2B markets.
Identify the major
characteristics of the
business market and its
demand.
Discuss the decision to
make, lease, or buy.
Describe the major
influences on business
buying behavior.
Outline the steps in the
organizational buying
process.
Classify organizational
buying situations.
Explain the buying center
concept.
Discuss the challenges
and strategies for
marketing to government,
institutional, and
international buyers.
5
3
6 9

2. CHAPTER 6 Business-to-Business (B2B) Marketing
• Business-to-business (B2B) market is significantly larger than the consumer
market.
• Business-to-business (B2B) marketing Organizational sales and purchases
of goods and services to support production of other products, to facilitate
daily company operations, or for resale.
BUSINESS-TO-BUSINESS (B2B) MARKETING

3. CHAPTER 6 Business-to-Business (B2B) Marketing
NATURE OF THE BUSINESS MARKET
• Companies also buy services, such as legal, accounting, office-cleaning,
and other services.
• Some firms focus entirely on business markets.
• Example: Caterpillar, which makes construction and mining
equipment.
COMPONENTS OF THE BUSINESS MARKET
• Commercial market Individuals and firms that acquire products to
support, directly or indirectly, production of other goods and services.
• Trade industries Retailers or wholesalers that purchase products for resale
to others.
• Government.
• Public and private institutions.

4. CHAPTER 6 Business-to-Business (B2B) Marketing
B2B MARKETS: THE INTERNET CONNECTION
• More than 94 percent of all Internet sales are B2B transactions.
• Opens up foreign markets to sellers.
• Largest segment of the business market.
DIFFERENCES IN FOREIGN BUSINESS MARKETS
• May differ due to variations in regulations and cultural practices.
• Businesses must be willing to adapt to local customs and business practices
and research cultural preferences.

5. CHAPTER 6 Business-to-Business (B2B) Marketing
SEGMENTING B2B MARKETS
• Segmentation helps marketers develop the most appropriate strategy.
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-business market
into homogeneous groups based on buyers’ product specifications.
• North American Industry Classification System Classification used by
NAFTA countries to categorize the business marketplace into detailed
market segments.

6. CHAPTER 6 Business-to-Business (B2B) Marketing
SEGMENTATION BY END-USE APPLICATION
• End-use application segmentation Segmenting a business-to-business
market based on how industrial purchasers will use the product.
SEGMENTATION BY PURCHASE CATEGORIES
• Segmenting according to organizational buyer characteristics.

7. CHAPTER 6 Business-to-Business (B2B) Marketing
CHARACTERISTICS OF THE B2B MARKET
GEOGRAPHIC MARKET CONCENTRATION
• Business market more concentrated than consumer market.
• Geographic concentration decreasing as Internet technology improves.
SIZES AND NUMBER OF BUYERS
• Business market has smaller number of buyers than consumer market.
• Many buyers are large organizations, such as Boeing, which buys jet
engines.

8. CHAPTER 6 Business-to-Business (B2B) Marketing
THE PURCHASE DECISION PROCESS
• Often involves multiple decision makers, is more formal, and may require
bidding and negotiations.
BUYER-SELLER RELATIONSHIPS
• Often more complex than in consumer market with a greater reliance on
relationship marketing.
EVALUATING INTERNATIONAL BUSINESS MARKETS
• Business purchasing patterns differ from country to country.
• Global sourcing Purchasing goods and services from suppliers worldwide.

9. CHAPTER 6 Business-to-Business (B2B) Marketing
BUSINESS MARKET DEMAND
• Demand characteristics vary from market to market.
DERIVED DEMAND
• The linkage between demand for a company’s 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.

10. CHAPTER 6 Business-to-Business (B2B) Marketing
THE MAKE, BUY, OR LEASE DECISION
• Firms acquiring needed products can get them in one of three ways:
• Make the good or provide the service in-house.
• Purchase it from another organization.
• Lease it from another organization.
• Producing the item may be cheapest route, but most firms cannot make all
of the products they need.
• Many companies purchase many of the goods they need.
• Companies can spread out costs through leasing.

11. CHAPTER 6 Business-to-Business (B2B) Marketing
THE RISE OF OFFSHORING AND OUTSOURCING
• Offshoring Movement of high-wage jobs from one country to lower-cost
overseas locations.
• Nearshoring Moving jobs to vendors in countries close to the business’s
home country.
• Outshoring Using outside vendors to provide goods and services formerly
produced in-house.
PROBLEMS WITH OFFSHORING AND OUTSOURCING
• Cost savings may be less than expected.
• Can raise security concerns over proprietary technology or customer data.
• Can reduce flexibility, create conflicts with unions, or negatively affect
employee morale and loyalty.

12. CHAPTER 6 Business-to-Business (B2B) Marketing
THE BUSINESS BUYING PROCESS
• More complex than the consumer decision process.
• Takes place within formal organization’s budget, cost, and profit
considerations.
INFLUENCES ON PURCHASE DECISIONS
• Environmental factors—economic, political, regulatory, competitive, and
technological considerations influence business buying decisions.
• Organizational factors—structures, policies, and purchasing systems,
which may be centralized in one office or delegated to units throughout the
organization.
• Interpersonal Influences of all organizational members involved in the
buying decision.
• Concerns and procedures of professional buyers who implement systematic
buying procedures.

13. CHAPTER 6 Business-to-Business (B2B) Marketing
CLASSIFYING BUSINESS BUYING SITUATIONS
• Business buying behavior involves degree of effort involved in the decision
and the levels within the organization in which these decisions are made.
• Straight rebuying—recurring purchase decision in which a customer
reorders a product that has satisfied needs in the past.
• Modified rebuying—purchaser willing to reevaluate available options.
• New-Task Buying—first-time or unique purchase situations that require
considerable effort by the decision makers.
• Reciprocity—practice of buying from suppliers that are also customers.
ANALYSIS TOOLS
• Value analysis—examines each component of a purchase in an attempt to
either delete the item or replace it with a more cost-effective substitute.
• Vendor analysis—ongoing evaluation of a supplier’s performance in a
variety of areas.

14. CHAPTER 6 Business-to-Business (B2B) Marketing
THE BUYING CENTER CONCEPT
• Buying center Participants in an organizational buying action.
BUYING CENTER ROLES
Decider
Buyer
Users
Gatekeeper
Influencer

15. CHAPTER 6 Business-to-Business (B2B) Marketing
INTERNATIONAL BUYING CENTERS
• Marketers may have difficulty identifying members of foreign buying
centers.
• Marketers who can quickly identify decision makers have an advantage
over competition.
TEAM SELLING
• Combining several sales associates or other staff to help the lead account
representative reach all those who influence the purchase decision.
• May include members of the seller firm’s own supply network in the sales
situation.

16. CHAPTER 6 Business-to-Business (B2B) Marketing
DEVELOPING EFFECTIVE BUSINESS-TO-
BUSINESS MARKETING STRATEGIES
• Marketer must develop strategy based on particular organization’s buying
behavior and on the buying situation.
CHALLENGES OF GOVERNMENT MARKETS
• Purchases typically involve dozens of interested parties and may be
influenced by social goals.
• Most federal government purchases must go through a complex bidding
process governed by the Federal Acquisition Regulation.
• GSAAdvantage allows government buyers to make purchases online at
preferred government prices.

17. CHAPTER 6 Business-to-Business (B2B) Marketing
CHALLENGES OF INSTITUTIONAL MARKETS
• Include schools, hospitals, libraries, foundations, and others.
• Multiple buying influences can affect buying decisions, such as conflicts
between professional staff and purchasing departments.
CHALLENGES OF INTERNATIONAL MARKETS
• Marketers must consider buyers’ attitudes and cultural patterns.
• Local industries, economic conditions, geographic characteristics, and legal
restrictions must all be considered.
• Foreign governments are also an important market.