1. Chapter 6Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 1 MKTG Designed by Amy McGuire, B-books, Ltd. Prepared by Deborah Baker, Texas Christian University Lamb, Hair, McDaniel 2007-2008 Business Marketing 6 CHAPTER

2. Chapter 6Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 2 Learning Outcomes Describe business marketing Describe the role of the Internet in business marketing Discuss the role of relationship marketing and strategic alliances in business marketing Identify the four major categories of business market customers LO 1 LO 2 LO 3 LO 4

3. Chapter 6Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 3 Learning Outcomes Explain the North American Industry Classification System Explain the major differences between business and consumer markets Describe the seven types of business goods and services Discuss the unique aspects of business buying behavior LO 5 LO 6 LO 7 LO 8

4. Chapter 6Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 4 Describe business marketing What Is Business Marketing? What Is Business Marketing? LO 1

5. Chapter 6Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 5 LO 1 What Is Business Marketing? The marketing of goods and services to individuals and organizations for purposes other than personal consumption. Business Marketing

6. Chapter 6Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 6 LO 1 Business Products The key is intended use. Business Products:  Are used to manufacture other products  Become part of another product  Aid the normal operations of an organization  Are acquired for resale without change in form

7. Chapter 6Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 7 REVIEW LEARNING OUTCOME LO 1 Business Marketing cupboards oven folder and pen Teddy bear CONSUMER BUSINESS cupboards Coffee pot oven folder and pen photocopier

8. Chapter 6Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 8 Describe the role of the Internet in business marketing Business Marketing on the Internet LO 2

9. Chapter 6Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 9 Measuring Online Success LO 2 Stickiness A measure of a Web site’s effectiveness; calculated by multiplying the frequency of visits times the duration of a visit times the number of pages viewed during each visit. Stickiness = Frequency x Duration x Site Reach

10. Chapter 6Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 10 Evolution of E-Business Initiatives LO 2 Revenue generation Aggressive disintermediation initiatives Basic marketing communication strategies Reduce costs Build channel partnerships and trust Customer-focused technology and systems Brand building and development Integrate online and traditional media Past initiativesPresent initiatives Time

11. Chapter 6Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 11 REVIEW LEARNING OUTCOME LO 2 The Internet in Business Marketing THEN NOW Reduce costs Build partnerships and alliances Build and support branding Develop customer-focused technology and systems Integrate online and traditional media Revenue Generation Basic Marketing Communication Business Internet Uses and

12. Chapter 6Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 12 Discuss the role of relationship marketing and strategic alliances in business marketing Relationship Marketing and Strategic Alliances LO 3

13. Chapter 6Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 13 Strategic Alliances LO 3 A cooperative agreement between business firms (strategic partnership). Strategic Alliance

14. Chapter 6Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 14 Relationships in Other Cultures LO 3 A network of interlocking corporate affiliates. Keiretsu

15. Chapter 6Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 15 REVIEW LEARNING OUTCOME LO 3 Relationship Marketing and Strategic Alliances Supplier (like Intel) Supplier Company (like Dell) Company 1 (like Starbucks) Company 2 (like Jim Beam) Company (like UPS) Customer/ Distributor (like Ford)

16. Chapter 6Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 16 Identify the four major categories of business market customers Major Categories of Business Customers LO 4

17. Chapter 6Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 17 LO 4 Major Categories of Business Customers Producers Resellers Governments Institutions OEMs Wholesalers Retailers Federal Municipal Local SchoolsHospitalsColleges ChurchesUnionsFraternal groups Civic ClubsFoundations Nonbusiness organizations

18. Chapter 6Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 18 LO 4 Producers OEMs. Individuals and organizations that buy business goods and incorporate them into the products that they produce for eventual sale to other producers or to consumers. Original Equipment Manufacturers

19. Chapter 6Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 19 REVIEW LEARNING OUTCOME LO 4 Business Market Customers Business Marketing Institutions Resellers Wholesalers Retailers Producers OEMs Governments Federal State Municipal County Unions Civic Clubs Other Churches Foundations Nonprofits

20. Chapter 6Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 20 Explain the North American Industry Classification System North American Industry Classification System LO 5

21. Chapter 6Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 21 NAICS LO 5 NAICS A detailed numbering system developed by the U.S., Canada, and Mexico to classify North American business establishments by their main production processes. North American Industry Classification System

22. Chapter 6Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 22 Example of NAICS Hierarchy LO 5 NAICS Level SectorSubsectorIndustry Group U.S. Industry NAICS Code 31-333343346334611 Description ManufacturingComputer electronic product manufacturing Mfg. and reproduction of magnetic/ optical media Reproduction of software

23. Chapter 6Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 23 NAICS LO 5 Provides a common industry classification system Valuable tool for marketers in analyzing, segmenting, and targeting markets Data can be used to determine: Number, size, and geographic dispersion of firms Market potential / market share estimates Sales forecasts New customer identification

24. Chapter 6Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 24 Explain the major differences between business and consumer markets Business versus Consumer Markets LO 6

25. Chapter 6Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 25 Business versus Consumer Markets LO 6CharacteristicCharacteristic Demand Volume # of Customers Location Distribution Nature of Buy Buy Influence Negotiations Reciprocity Leasing Promotion Business Market Organizational Larger Fewer Concentrated More Direct More Professional Multiple More Complex Yes Greater Personal Selling Consumer Market Individual Smaller Many Dispersed More Indirect More Personal Single Simpler No Lesser Advertising

26. Chapter 6Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 26 Demand in Business Markets LO 6 Demand is... DescriptionDescription Derived Inelastic Joint Fluctuating Demand for business products results from demand for consumer products. A change in price will not significantly affect the demand for product. Multiple items are used together in final product. Demand for one item affects all. Demand for business products is more volatile than for consumer products.

27. Chapter 6Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 27 Fluctuating Demand LO 6 Multiplier Effect (Accelerator Principle) Phenomenon in which a small increase or decrease in consumer demand can produce a much larger change in demand for the facilities and equipment needed to make the consumer product.

28. Chapter 6Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 28 Describe the seven types of business goods and services Types of Business Products Types of Business Products LO 7

29. Chapter 6Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 29 Types of Business Products LO 7 Major Equipment Accessory Equipment Raw Materials Component Parts Processed Materials Supplies Business Services Online http://www.sysco.com

30. Chapter 6Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 30 REVIEW LEARNING OUTCOME LO 7 Types of Business Goods and Services Aluminum ore: raw material Extruded metal: processed material Propeller blade: component part Extruding machine: major equipment Tool cart: accessory equipment Uniforms: contracted service Paper: supply

31. Chapter 6Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 31 Discuss the unique aspects of business buying behavior Business Buying Behavior Business Buying Behavior LO 8

32. Chapter 6Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 32 Business Buying Behavior LO 8 Customer Service Business Ethics Buying Situations Evaluative Criteria Buying Centers Aspects of Business Buying Behavior Aspects of Business Buying Behavior

33. Chapter 6Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 33 Buying Centers LO 8 Buying Center All those persons in an organization who become involved in the purchase decision.

34. Chapter 6Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 34 Roles in the Buying Center LO 8 Initiator Influencers Gatekeepers Decider Purchaser Users Online http://www.loctite.com

35. Chapter 6Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 35 Evaluative Criteria LO 8  Quality  Service  Price

36. Chapter 6Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 36 Buying Situations LO 8 New Buy A situation requiring the purchase of a product for the first time. A situation requiring the purchase of a product for the first time. Modified Rebuy Modified Rebuy A situation where the purchaser wants some change in the original good or service. A situation where the purchaser wants some change in the original good or service. Straight Rebuy Straight Rebuy A situation in which the purchaser reorders the same goods or services without looking for new information or investigating other suppliers. A situation in which the purchaser reorders the same goods or services without looking for new information or investigating other suppliers.

37. Chapter 6Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 37 Biz Flix LO 8 Bowfinger

38. Chapter 6Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 38 Customer Service LO 8  Divide customers into groups based on their value  Create policies that govern how service will be allocated among groups

39. Chapter 6Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 39 REVIEW LEARNING OUTCOME LO 8 Business Buying Behavior Customer service Initiator Influencer Decider Gatekeeper Purchaser User Buying Center  Quality  Service  Price Evaluative Criteria Buying Situations New buy Straight rebuy Modified rebuy