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Ch 1 and 2 Dwyer and Tanner Business Marketing

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Ch 1 and 2 Dwyer and Tanner Business Marketing

  1. 1. Introduction to Business Marketing Part 1
  2. 2. What is Business Marketing? Products or services to other companies, government bodies, institutions, and other organizations  Also products and services that facilitate their operations Purchases in industrialized countries account for more than half of the economic activity  Makes business marketing extremely important
  3. 3. Key Differences Demand for industrial products driven by primary demand for consumer goods (derived demand) Nature of buyer-seller relationships (more personal) Shorter distribution channels (many direct) Emphasis on personal selling Greater web integration (communication backbone) More customization More complex buying process Smaller customer bases
  4. 4. Business Marketing vs. ConsumerMarketing Buyer-Seller Relationships  Consumer markets tend to have less personal relationships between buyers and sellers  Buyer relationships focus on Lifetime Value of the customer Emphasis on Personal Selling Greater Web Integration
  5. 5. Other Key Differences Demand for industrial products driven by primary demand for consumer goods (derived demand) Nature of buyer-seller relationships (more personal) Shorter distribution channels (many direct) More customization More complex buying process Smaller customer bases
  6. 6. Business Customers Users Original Equipment Manufacturers (OEMs) Industrial Distributors Government Institutions  Can you provide examples of each?
  7. 7. Business Markets Original Equipment Manufacturers (OEM)—When a company purchases a product or service to be included in its own final product  General Motors, Bosch, IBM, Thyssen-Krupp Elevator Users  The final consumer   Business can also be users
  8. 8. Classifying Goods forthe Business Market Entering Goods Foundation Products -Raw Materials - Accessory Equipment - Manufactured Materials -Capital Equipment or installations - Component Parts Facilitating or MRO Items Can you provide examples of each? - Facilitating Supplies - Business Services
  9. 9. Demand Business marketers must recognize derived demand:  Derived demand is the theory that demand for products and services is derived from the demand for their customers’ products and services – For example, the demand for wood floor treatment from Bill’s Floors and More is derived from the demand for new homes, which puts down hardwood floors  Derived demand can cause demand to swing wildly, called volatility.
  10. 10. Demand (cont’d) Demand elasticity—the percentage change in sales relative to the percentage change in price  As price goes up, consumers will look for alternatives, and sales will go down. Inelastic demand—sales is not greatly affected by price
  11. 11. Myths about Marketing More sales equals more profits Any customer is a good customer Build a better mousetrap and the world will buy it Macro markets are more profitable than niche markets
  12. 12. Marketing Management & Planning Marketing Management encompasses all the decisions involved in designing and executing marketing plans to implement the marketing concept. What is the marketing concept?
  13. 13. Marketing Management & Planning  Environmental Analysis a Competition - Customers a Channels - Controls a Company  Establish Objectives  Strategy  Tactics and Programs r Product - Price r Promotion - Place  Implement, Control & Evaluate  Feedback loops throughout the process
  14. 14. Think About It How would marketing telephone services to businesses (for example to University of Toledo) be similar and different than marketing them to consumers?
  15. 15. The Character of Business Marketing Chapter 2
  16. 16. Relationship MarketingCenters On:  Establishing,  Developing and  Maintaining successful exchanges with customers.
  17. 17. What is Relationship Marketing? Longer time horizon High switching costs Large investment (procedures & assets) Focus on technology or vendor as opposed to product or person Higher importance: strategic, operational & personal Collaborative exchange
  18. 18. Types of Relationships One time market transaction t market exchange with no expectation of future transactions with each other Functional relationships i series of one time market exchanges linked together over time Relational partners e long term business relationship in which a buyer and seller have a close/trusting interpersonal relationship Strategic partnerships r long term business relationships in which partners make significant investments to improve the profitability of both parties in the relationship
  19. 19. Type of Relationship Exercise Think about a specific relationship that you have with a professor, a friend, a cousin, and an older relative who is not a parent. For each relationship is it functional, relational or strategic? How did this relationship get to be this quality?
  20. 20. Relationships Transactional relationships (spot exchange) = one time exchange l i.e.: a freight service offering standard boxcars to any shipper Customer Relationship Management (CRM) n Systems that focus on collecting and storing data to evaluate customers and performance r Makes sales reps’ jobs easier! ’ Typically in software  http://www.netsuite.com/portal/home.shtml  http://www.act.com/
  21. 21. Phases ofRelationship Development
  22. 22. Awareness The buyer and seller consider the other as an exchange party No real interaction
  23. 23. Exploration The interaction between buyers and sellers occurs b Probing and testing Initial purchases may take place at this stage This is where the bargaining and communication take place
  24. 24. Expansion During this phase, one party has made a request to alter some aspect p Customization occurs c Expectations and norms are developed The buyer usually becomes committed to this particular seller
  25. 25. Commitment Contracts, agreements, or orders are signed The two organizations become business partners and resolve any conflicts that may occur
  26. 26. Dissolution Termination of the advanced relationship  
  27. 27. Safeguarding Relationships There are many ways to keep relationships healthy, safe, and profitable a Supplier verification—efforts to obtain evidence of supplier capabilities and commitment Dependence balancing—having relationships with other exchange partners, (just in case…) s Relational contracts—contracts that define continuous planning, adjusting and resolving conflicts s Vertical integration—bringing a function or technlology into the firm  i.e. buying out a supplier

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