1. Business Marketing Overview
MKGT 550
Dr. Dawne Martin
August 25, 2011

2. Learning Objectives Review differences from consumer marketing
Understand the differences in customer types and product types
Understanding other unique issues in business marketing

3. What Is Business Marketing?
Those activities that facilitate exchanges involving products and customers in business markets
A business transaction between a professional seller (representing a selling company) and a professional buyer (representing a buying company)
Activities in which goods or services are sold for any use other than personal consumption
Note: It is not the nature of the product; it’s the nature of the transaction.
Business marketing can be defined as those activities that facilitate exchanges involving business products and customers in business marketing.
A business marketing transaction takes place whenever a good or service is sold for any use other than personal consumption. A

4. Business Vs Consumer Customers
When is a customer considered a business?
When a consumer?
What are the major distingushing characteristics between business and consumer marketing?
Intended use of the product
Intended customer

5. Why Study Business Marketing?
Good employment opportunities
Growing importance of high-tech business products
Success of foreign competition
Significance of international interdependence of firms
Importance of the service sector
Dramatic changes in the B2B environment
Concept Review

6. Overview of B2B Ralph Oliva, Overview of Business-to-Business Marketing, www.marketingpower.com.
B2B requires a value-based approach to marketing
Transactions are among & within value chains
Value primarily determined by business economic use
Small numbers of customers, requiring personalized marketing and customized products and services
Large customer with formidable market power
Large unit transactions
Complex, lengthy selling process involving many players
Deeper partnerships with members of the value chain
Channel management oriented up and down the supply chain
Sales focused on key accounts and multiply purchasing influence (who may not be users)
How do these differences effect marketing planning, strategy formulation and implementation.
Business-to-Business Marketing Features:
Transactions among and within value chains
Value primarily determined by business economic use
Small numbers of customers, requiring many personalized marketing, including customized products and services
Large customers with formidable market power. Widely varying customer types and needs
Large unit transactions
Complex and lengthy selling process involving many players creating a demand decision chain.
Deeper partnerships with members of the value chain, including customers
Channel management oriented up and down supply chain
Sales focused on key account management and multiple purchasing influencers ( many of who are not likely to be end users themselves)
Implications of value-based marketing
Requires a better understanding of the customers and their business
Focused on products and services that create extraordinary customer value
Value often includes the service components of the product mix.

7. How the Business Market Differs from the Consumer Market
Exhibit 1-1
Consumer Market
Smaller
Many
Diffuse
More impersonal
Less direct
More personal
Single
Simpler No
Advertising
Business Market
Greater
Fewer
Larger
Geographically concentrated
Closer
More direct
More professional
Multiple (buying center)
More complex
Yes
Personal selling
Characteristic
Sales volume
Purchase volume
Number of buyers
Size of individual buyers
Location of Buyers
Buyer-seller relationship
Nature of channel
Nature of buying
Nature of buying influences
Type of negotiations
Use of reciprocity
Use of leasing
Primary promotion method
Differences between business and consumer marketing are many and varied.
Exhibit 1-1

8. Characteristics of Business Demand
Derived Demand
Inelastic Demand
Fluctuating Demand – Acceleration Principle
Joint Demand -- two products used together
Value Creation
Competitive Advantage
Value Chain

9. The Nature of Business Buying Behavior
Exhibit Evaluating Products
Questions Asked
by Typical
Business Users
Questions Asked by Typical Ultimate Consumers
Product
Personal computers
Will it increase office efficiency?
What is its capital investment value?
Does it have special features that will help improve our company image?
Will it help my child learn?
Will it improve my correspondence?
Is a laptop worth the extra cost?

10. The Nature of Business Buying Behavior
Exhibit Evaluating Products
Questions Asked
by Typical
Business Users
Questions Asked by Typical Ultimate Consumers
Product
Automobiles
How does it enhance my status?
What is its potential trade-in value?
Will I get reasonable gas mileage?
How efficient is the vehicle to operate?
Would it be more economical to lease it or purchase it?
What is the expected working life span of the car?

11. The Nature of Business Buying Behavior
Exhibit Evaluating Products
Questions Asked
by Typical
Business Users
Questions Asked by Typical Ultimate Consumers
Product
Telephones
Will expanded service lower the cost of communicating with our customers?
Should our intercom system be separate from or connected to the telephone system?
How long will it take to have one installed?
Can I get three jacks and two telephones?

12. A Classification of Business Goods and Services
Exhibit 1-4
Type
Characteristics
Examples
Major Equipment
Often referred to as “installations”  Exhibit inelastic demand curve  Usually involves direct distribution  Requires close cooperation between buyers and sellers
Machinery, machine tools, stamping machines, robots
Accessory Equipment
Used to facilitate production, administrative, clerical, or marketing activities  Exhibits elastic demand curve  Distribution channels often longer  Standardized and less costly than major equipment
Office equipment, personal computers, desktop printers, hand tools, fire extinguishers
Process Materials
Generally bought per specifications prepared by the customer (user)  Cannot be identified or regrouped in the finished product  Most marketed to OEMs or to distributors who sell to the OEM market  Considerable emphasis on price and service in the sales process
Chemicals, plastics, cement, asphalt
Why would marketing be different for each?

13. A Classification of Business Goods and Services
Exhibit 1-4
Type
Characteristics
Examples
MRO Supplies
Facilitate the production operation  Short life and less expensive  Usually standardized specifications  Longer channels of distribution
Brooms, paint, cleaning supplies, bearings, gears, filters, pens, greases, lubricating oils
Business Services
Support organizational operations  Spectacular growth  Specialized providers  Cost effective
Banking, insurance, financial, advertising, marketing research, employment services, consulting
Fabricated and Component Parts
Become part of other product  Identified and distinguished easily  Consistent quality required  Delivery schedules critical
Spark plugs, timing devices, switches
Farm products, lumber, iron ore, resins
Raw Materials
Basic lifeblood of industry  Become part of manufactured product  Exhibit inelastic demand curve  Usually bought in large quantities  Long or short channels of distribution

14. Matching Exercise Factory building A business buying toilet paper
Banking and currency exchange
Grain for bread production
Intel pentium chips
Computer printer
Capital equipment
Accessory equipment
MRO Supplies
Services
Raw materials
Manufactured material
OEM parts

15. Scope and Importance of Customers
350,000 manufacturers
300,000 business service providers
400,000 wholesalers, distributors, agents
2.5 million retailers
80,000 government agencies (federal, state, local)
Plus nonprofits—hospitals, museums, parks, universities, political parties
This material, for the most part, is not covered in the text and may be omitted.

16. Business Customers Commercial Enterprises Governmental Organizations
Industrial Distributors & Indirect channel members and facilitators (VARS)
OEMs (original equipment manufacturers)
User-customers
Governmental Organizations
Federal
State
Local
Institutions
Education
Hospitals
Non-Profits

17. Products Purchased Assembly fixture Table and chair
Trucks with components on them
Floor cleaning systems
Lighting systems
Heating/AC systems
Uniform vest
Health insurance
Conveyer
Conveyer replacement and maintenance materials
Components going down conveyer
Raw material and components of components
Assembly station magnifier
Power tool with blue cord

18. Business Marketing Planning and Strategy Formulation
Includes:
Analysis of changing environments
Assessment of organization’s strengths and weaknesses, opportunities and threats
Marketing planning
Takes the best information it can get
Analyzes it
Generates alternatives
Proposes a plan that best suits the firm, now.

19. Friar Casing, LLC
Friar casing makes steel cases to house products used in difficult environments
Situation:
Tiffany has 5 years of experience with Coca-Cola in event planning
Friar has had flat sales for 5 years, but pay for sales reps has gone up
Tiffany suggests moving small customers to the web and asking sales reps to bring in new customers
Her father believes that the relationship between customer and sales rep is too important
What should Friar do?

20. Summary
Business Marketing is marketing products to other businesses, government or institutions.
Types of Customers
Types of Products

21. For Next Time Read Chapter 2 of text
Prepare to address Case 2-1 (Market Failure or Management Breakdown?)