B2B versus B2C Marketing B2C=Business-to-Consumer Market= businesses sell products and services to consumers for household or personal use B2B=Business-to-Business Market= businesses sell products and services to other businesses for use in their daily operations or for making other products and services

B2C versus B2B Marketing The B2B market is 5X as large as the B2C market in the USA.

Sectors of the B2B Market Producers Middlemen Government Units Nonprofits

Sectors of the B2B Market Producers – includes all manufacturers and service providers; buy goods to use in making other goods or services Middlemen – buy goods for resale; includes all retailers and wholesalers (distributors, vendors) Government – includes all federal, state, and local governments and govt. agencies Nonprofit – includes charities, schools and universities, museums, etc.

B2B Marketing is Different! There are fewer customers and they require dependable relationships and a high level of service. Marketing tends to be done by personal selling ( one-on-one) calls to the customer. Specialized media such as trade journals, sales brochures, web sites, trade shows are used rather than traditional mass media.

Emotional or Rational Buyers? (Considerations of B2B Buyers) Buyers must purchase according to a set of purchasing specifications Focus on Quality (including ISO 9000 certification) Total costs to purchase and use Reliability Value in use Savings possible via e-commerce

What is ISO 9000? A very detailed process for documenting quality according to internationally recognized standards. Some international companies won’t buy from you if you aren’t ISO 9000 compliant.

Three Kinds of Organizational Purchases Straight rebuy a routine repurchase that may have been made many times before Modified rebuy the in-between process where some review of the buying situation is done—though not as much as in new-task buying New-task buy a firm has a new need and the buyer wants a great deal of information

Purchasing Climbing Gear

The “Buying Center” Business purchases often involve multiple influence "Buying center"—all people who participate in or influence a particular purchase Buying center varies from purchase to purchase Does not appear on the "organizational chart" Structure may be formal or informal

Multiple Roles in the Buying Center Buyers Users Influencers Buying Center Gatekeepers Deciders

Alcoa Aluminum—Three Products

U.S. Manufacturing There are about 366,000 factories in the U.S. Over half (51.3%) have fewer than 10 workers. Only 4% of plants have more than 250 workers; they produce 61% of the value-added by manufacturing

North American Industry Classification System (NAICS) NAICS—a system of number codes that groups firms in similar lines of business Most government data is now organized by NAICS codes Replacing the older Standard Industrial Classification (SIC) codes SIC codes are still prominent in most published government reports because of lag times in publication Much detail is available Two digit codes are the most general Additional digits add more details (i.e., six digit codes are the most detailed)

NAICS Code Breakdown for Apparel Manufacturers

The Government Market Government units Federal government State governments Local governments Foreign countries

Government Purchasing Usually done by using a bidding process Many layers of approval are required (bureaucratic “red tape”) Specifications are developed prior to releasing the request for bids Many govt. agencies must accept the low bid Routine purchases can be made from an “approved suppliers” list.

Foreign Corrupt Practices Act Passed in 1977 – prohibits U.S. firms from paying bribes to foreign officials Amended in 1988 – allows small “grease money” payments if they are customary in a local culture Does this act put U.S. businesses at a disadvantage against foreign competitors not governed by our laws?

Retailers and wholesalers buy for their customers Buyers Watch Computer Output Closely Resident Buyers May Help Reorders Are Straight Rebuys

Types of E-Commerce Sites Bot Search Tool Sites Collaboration Hubs Exchanges Communities Procurement Hubs Seller’s Sites (provide info and take orders) Catalog Sites

What is a search “bot?” A special software package that looks at all the sights on the Internet and finds where a specific product is mentioned The bot may compile information and prices or do comparisons between products. Gives buyers a better understanding of what alternatives exist.