Unit I - B2B 2020.pptx

Business to Business
Marketing
SE -IL -MKT- 07

Business to Business Marketing
Course Outcomes
CO#
COGNITIVE
ABILITIES
COURSE OUTCOMES
CO312 MKT.1 REMEMBERING
DEFINE the terms and concepts related to Business to Business
marketing
CO312MKT.2 UNDERSTANDING
EXPLAIN the terms and concepts used in business to business
marketing
CO312 MKT.3 APPLYING
IDENTIFY challenges and opportunities in Business-to-Business
Marketing.
CO312 MKT.4 ANALYSING
FORMULATE segmentation, targeting and positioning, consumer
buying behaviour and marketing mix in the context of Business to
Business marketing
CO312MKT.5 EVALUATING
DESIGN marketing mix elements considering business-to-business
sales and service situations.
CO312MKT.6 CREATING
DEVELOP marketing plan for business-to-business Marketing
situations.

Unit 1:
Overview of
Business-to-
Business
Marketing

Pre – Reading
Case from Business Marketing
Management by Hutt and Speh
Chapter 1: Cases (Especially in Capital in TOC)

Introduction to
Business-to-Business (B2B)
Marketing

What Is Marketing?
– the process of planning and executing
– the conception (product), pricing, promotion, and
distribution
– of ideas, goods, and services
– to create relationships
– that satisfy individual and organizational objectives.”

BUSINESS MARKETING
IS
– MARKETING OF GOODS AND SERVICES TO:
– Companies
– Government Bodies
– Institutions (i.e. hospitals)
– Non-Profit Organizations (i.e. American Red Cross)
FOR
– USE IN PRODUCING THEIR PRODUCTS
AND/OR TO FACILITATE THEIR
OPERATIONS

Organizational Markets Defined
– Organizational Markets are:
– Organizations that buy products and services
– for either their own use
– or to use in a product that they make;
– or to resell to individuals, or other organizations;
– or to provide a public good.

The Three Organizational
Markets (1)
– Industrial Markets
– These organizations buy the product and in some way
reprocess it before reselling it to the next buyer.
– E.g. Stelco sells rolled steel to GM, GM stamps it into a body part
for the Venture minivan, which is in-turn sold to you through
your GM dealer.

Markets (2)
– Reseller Markets
– The organization buys the product and then resells it relatively
unchanged. (no reprocessing)
– E.g. Sobey’s will buy milk from Central Dairies. Sobey’s resells the milk
to customers.

Markets (3)
– Government Markets
– Federal, Provincial and Municipal governments purchase products and
services and use them for their constituents.
– E.g. The town of Buchans buys a new Cat 930 loader. (The Town
taxpayers will be paying for this unit). That machine is fitted with a
snowblade and used to plough the towns roads (a public service).

Organizational
Buying Process
1. Problem
Recognition
2. General
Description
of Need
3. Product
Specifications
4. Supplier
Search
5. Acquisition
and Analysis
of Proposals
6. Supplier
Selection
7. Selection
of
Order Routine
8. Performance
Review

Typical transactions of business
markets
Figure 8.1 Business transactions involved in producing and distributing a pair of shoes

Characteristics of business markets
– Business markets differ from consumer markets by structure
and demand
– Geographically concentrated
– e.g. London for Financial services
– Derived demand
– Derived from the demand for consumer goods.
– Inelastic demand
– Total demand for a product that is not much affected by price changes,
especially in the short-term.
– Fluctuating demand
– Small change in consumer demand may result in large business demand.

– B2B: goods or services are sold for any
use other than personal consumption
– Note: It is not the nature of the
product; it is the reason for the
transaction.
What Distinguishes B2B from B2C?

You buy a gear to fix your mountain bike.
Ford buys the same gear to fix a machine.
Xerox buys soft drinks for its cafeterias.
You start a landscaping business and
purchase a lawnmower.
The U.S. government buys…anything.
Is it a B2C or a B2B Transaction?

B2B versus B2C Marketing
Characteristic B2B Market B2C Market
Sales volume Greater Smaller
Purchase volume Greater Smaller
Number of buyers Fewer Many
Size of individual buyers Larger Smaller
Location of buyers Concentrated Diffuse
Buyer-seller relationship Closer More Impersonal
Nature of channel More direct Less direct
Buying influences Multiple Single/Multiple
Type of negotiations More complex Simpler
Use of reciprocity Yes No
Use of leasing Greater Less
Key promotion method Personal Selling Advertising

Major Uses of B2B Products
For additional production (e.g.,
components are combined into
subassemblies and become part of
the finished product)
For use in operations, but not part
of the finished product
For resale

Classifying Business Goods & Services
3 Main Categories of Products
 Entering Goods
 Become part of the finished product
 Cost assigned to the manufacturing process
 Foundation Goods
 Capital Items
 Typically depreciated over time
 Facilitating Products
 Support organizational operations
 Handled as overhead expenses

Entering Goods
 Raw Materials
 Farm products & natural products
 Only processed as necessary for handling & transport
 Require extensive processing
 Manufactured Materials & Parts
 Any product that has undergone extensive processing prior to
purchase
 Component Materials require additional processing
 Component Parts generally do not require additional processing

Foundation Goods
Installations
Major long-term investment items
Buildings, land, fixed equipment, etc.
Accessory Equipment
Less expensive & short-lived
Not considered part of fixed plant
Portable tools, PC’s, etc.

Facilitating Products
Supplies
Any supplies necessary to maintain the
organization’s operations
Services
Maintenance & Repair support
Advisory support
Logistical support

Business buyer behaviour
Figure 8.3 Three types of business buying situation
Source: Ben M. Enis, Marketing Principles, 3rd edn (1980). © 1980 Scott, Foresman & Co.

Main types of buying situation
– Straight re-buy
– Routinely reorders something without modification
– Modified re-buy
– Buyer needs to modify product specifications, prices, terms or suppliers
– New task
– Order product or service for the first time

– In 1967, the Canadian, American and Israeli marketing researchers,
Robinson, Faris and Wind, introduced the buygrid framework as a
generic conceptual model for buying processes of organisations.
– They saw industrial buying not as single events, but as organisational
decision-making processes where multiple individuals decide on a
purchase. Their framework consists of a matrix of buyclasses and
buyphases.

The BUYCLASSES are
– 1. New Tasks
– The first-time buyer seeks a wide variety of information to explore alternative
purchasing solutions to his organisational problem. The greater the cost or
perceived risks related to the purchase, the greater the need for information and the
larger the number of participants in the buying centre.
– 2. Modified Rebuy
– The buyer wants to replace a product the organisation uses. The decision making
may involve plans to modify the product specifications, prices, terms or suppliers as
when managers of the company believe that such a change will enhance quality or
reduce cost. In such circumstances, the buying centre proved to require fewer
participants and allow for a quicker decision process than in a new task buyclass.

– 3. Straight Rebuy
– The buyer routinely reorders a product with no modifications. The buyer
retains the supplier as long as the level of satisfaction with the delivery,
quality and price is maintained. New suppliers are considered only when
these conditions change. The challenge for the new supplier is to offer better
conditions or draw the buyer's attention to greater benefits than in the current
offering.

Buygrid Framework

The Buying Center
Initiators
Users
Influencers
Deciders
Approvers
Buyers
Gatekeepers

Concern to Business Marketers
– Who are the major decision participants?
– What decisions do they influence?
– What is their level of influence?
– What evaluation criteria do they use?

Sales Strategies
Small Sellers
Large Sellers
Key Buying
Influencers
Multilevel
In-depth
Selling

The Buying Center
–Consists of those individuals
– who participate in the purchasing
decision and
– who share the goals and risks arising
from the decision
–Average buying center includes
more than 4 persons per purchase

Roles of Buying Center Members
– User
– Will use product in question;
minimal - major influence
– Gatekeeper
– Tight controller of information
flow to other buying center
members; can open/close gate for
salespeople.
– Influencer
– Provides information to other
members for evaluating
alternative products or sets
purchasing specifications; can
operate within/outside buying
center.
– Decider
– Makes buying decision; often
difficult to ID.
– Buyer
– Assigned formal authority to
select vendors and complete
purchasing transaction.

Buying Center Dimensions
– Time
– Time fragmentation: length of time people are in the buying center.
– Limits members’ influence
– Can lengthen decision making time due to inexperience
– Vertical
– Layers of management involved
– Horizontal
– Number of departments involved

Webster and Wind Model of
Organisational Buying Behaviour
Environmental Variables
Organisational Variables
Buying Centre Variables
Individual Variables
Organisational Buying
Decisions

– Environmental Variables
– Technological
– Economic
– Political and Legal
– Labour Unions
– Cultural
– Customer demands
– Competitive practices and pressures
– Supplier information

– Organisational Variables:
– Objectives/goals
– Organisation structures
– Purchasing policies and
procedures
– Evaluation and reward systems
– Degree of decentralisation in
purchasing
– Individual Variables
– Personal goals
– Education, experience and
expertise
– Job position
– Values and lifestyle
– Income

– Buying Centre
Variables:
– Authority
– Size
– Key influencers
– Interpersonal relationship
– Communication
– Organisational
Buying Decisions
– Choice of suppliers
– Delay decisions and search
for more information
– Make or lease or buy
– Do not buy

– This model is comprehensive and identifiies key
variables
– Model is weak in explaining specific influence of
the key variables

The Sheth Model of Organisational
Buying Behaviour
– Emphasises the joint decision making process in
an organisation
– Recognises psychological aspects of the decision
making individuals in organisational buying
behaviour

The Sheth Model of
Organisational Buying
Behaviour
Component 1 Component 2 Component 3
Differences among
individual buyers
caused by factors:
• Background of
individuals
• Their information
sources
• Active search
• Perceptual
distortion
• Satisfaction with
past purchases
Variables that
determine if the
buying decision is
autonomous or
joint:
(A) Product specific
factors, including:
• Time pressure
• Perceived risk
• Type of purchase
(B) Company specific
factors, including:
• Company size
•Company orientations
• Degree of
centralisation
Methods used for
conflict resolution
in joint decision
making process:
• Problem solving
• Persuation
• Bargaining
• Politicking
Situational
Factor
Supplier or
brand choice

Understanding
the Macro and
Micro
Environment

The Macro
Marketing
Environment

1. The Competitive Environment
 Competitive Environment:
competitive products, substitute
products for one another, companies
competing for your consumer’s
purchasing power.
 Monopoly
 Deregulation movement
 Oligopoly

– Direct Competitive
Products
Which would
you buy?

– Indirectly Competitive Products
– products than can be substituted for one another
– Plastic Containers vs. Glass vs. Tin vs. Aluminum
– Sugar vs. Artificial Sweeteners
– Typewriter vs. PC
– Ocean Liner Vs. Air Travel

• Developing a Competitive Strategy
– Should we compete?
– If so, in what markets should we compete?
– How should we compete?
• Involves:
– Researching the market
– Identifying current &potential competitors
– Anticipating competitive actions

2. Political-Legal Environment
 Component of the marketing
environment consisting of laws and
interpretations of laws that require
firms to operate under competitive
conditions and to protect consumer
rights.

Regulatory Forces
– Government : Consumer
Safety Commission, IFSRA,
Environmental Protection
Agency, Health and Safety
etc
– Consumer interest groups
– PETA
– Special-interest groups
– ISME
– Self-regulatory groups
– Advertising
– Companies fight unjust
regulations
– Regulations can present new
opportunities
– Political lobbying
– Boycotts
– Political action committees
Controlling the PL
Environment

3. The Economic Environment
 Factors influencing consumer buying power and
strategies (stage of the business cycle, inflation,
unemployment, resources, income etc)

The figures on the map show the level of
average new car prices in each market
compared to the average for all euro currency
markets. Index 100 represents the European
average
Source: Fact
Finders 2006
Fastest Growing Market for
New Car – Eastern Europe
(Latvia 49% increase on 2005)
During prosperous times car
manufacturers will add luxury
extras
The Wealth
Effect

 Inflation and Deflation
 Inflation: The devaluation of money by
reducing what it can buy through
continued price increases. (Ireland)
 Deflation: Falling prices
* Lowest annual EU rates: Netherlands
(3.0%/1.9%), Portugal (3.1%/-1.2%), Ireland
(3%/-2.4%). Highest rates: Latvia (15.6%/7.7%),
Lithuania (12.2%/6.9%).

• Unemployment
– The proportion of
people in the
economy who do
not have jobs and
are actively
looking for work.

• Income
– Discretionary income: the amount of money people have
to spend after paying bills and necessities.
• Resource Availability
– Demarketing: reducing consumer demand for a good or
service to a level that the firm can supply.

4. The Technological Environment
 The technological
environment:
application of
knowledge in
science,
inventions, and
innovations to
solve problems

Toyota Prius
Heating
Technologies
Technology Advances Consumer Needs

 Technology increases exponentially
 New technology as a key to long-term
competitive advantage
 create more efficient operation or better
products
 may render existing products obsolete
6

5. The Social-Cultural Environment
 The relationship
between marketing
and society and its
culture
Issues:
– Obesity in Children
– Negative Body
Images
– Video Games
– UnHealthy Eating
etc ..

Cultural Environment: Elements of Culture
1. Language
2. Manners & Customs
3. Technology & Material Culture
4. Social Institutions – business, family, political- Latin
America
5. Education –transmitting values, skills, attitudes etc
6. Aesthetics – attitude toward beauty, art, music etc
7. Religion

World’s Religions
– Christianity - 2.0 billion followers
– Islam - 1.2 billion followers
– Hinduism - 860 million followers
– Buddhism - 360 million followers
– Confucianism - 150 million followers
Religion can affect marketing strategy

Social Environment: Role of Families and
Working Women
 Working women has had a greater effect
on marketing than any other social change
 Increases in females in the workforce
 Purchasing power from dual-career
families is rising
 Cost is more important to women.
Quality is more important to men.
2

Population Considerations
Concerned with the study of the quantifiable
aspects of population structures,e.g., age,
gender, size, race, occupation and location.
Some factors to consider:
 falling birth-rates
 the rise of the “mature” market segment
 the “household of one”

Demographic Factors
– Generation Y: Born between 1979 and 1994, size = marketing
impact, fickle and skeptical group, techno’s
– Generation X: Born between 1965 and 1978, time premium,
majority have children and houses, savvy and cynical
consumers
– Baby Boomers: Born between 1946 and 1964
Younger Boomers (ages 41 to 49)
– Home is the castle, spend on kids
Older Boomers (ages 50 to 59)
– Spend on home upgrades & Holidays

Growing Ethnic and Community Markets
 population is becoming multicultural
society and workforce
 Growth in spending power in:
 Eastern European Populations
 African Populations
 Asian Populations
4

6. Natural Forces
– Conserve natural habitats, resources, endangered species
– Minimise environmental impact
– Sustainable resource use
– Recycle
– Energy efficient products
– ‘The Polluter Pays Principle’

The Micro Environment
 Customers: needs, wants and providing benefits for their customers.
Failure = failed business strategy.
 Employees: correct and motivated staff is essential to strategic planning.
Training and development, service sector, competitive edge. (Cereality)
 Suppliers: Price of raw material affect the marketing mix. Closer supplier
relationships benefit strategy.
 Shareholders: inward investment for growth. Satisfying shareholder
needs can cause a change in strategy. (Sharwoods+internet companies,
Birds Eye)
 Media: Positive or adverse attention. Consumer programs

Thank You

Unit I - B2B 2020.pptx

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Unit I - B2B 2020.pptx