Business to Business Marketing

What is the business market? All organizations that acquire good & services uses to produce other products or services that are sold, rented or supplied to others

Major Industries B-B:  Agriculture  Forestry  Fisheries  Mining  Manufacturing  Construction  Transportation  Communication  Public utilities  Banking  Finance  Insurance  Distribution  Services

Fewer, Larger Buyers o Goodyear Tires needs contracts from major automakers Ford, GM, Chrysler o Suppliers for defense (Lockheed, Boeing) Trend —Big business selling to smaller businesses

Close Supplier-Customer Relationship  Customize because of the power of larger customers  Reciprocal Relationship EX. Paper manufacturer buys chemicals from chemical company that buys their paper

Professional Purchasing Trained purchasing agents RFQ’s, RFP’s and purchase contracts  marketers have to provide more technical data and formal proposals  specific differentiation on product & price What do RFQ and RFP mean?

 Well-trained, very knowledgeable salespeople  More people influence buying decisions/committees Several Buying Influences

Multiple Sales Calls  More sales calls—EVEN YEARS for a sale calls to close an average industrial sale  Large capital projects—quote to completed project can take years

Derived Demand  Steel for big 3 auto makers depends on consumer demand for SUV’s and trucks (more steel req’d)  If recession, demand lower, can’t increase market

Inelastic demand PRICE DOES NOT AFFECT DEMAND Example: shoe leather for shoes—regardless of price shoe manufacturers will pay for the necessary leather

Direct Purchasing  Business buyers often buy directly from manufacturers rather than intermediaries—especially complex items such as aircraft

BUYING CENTER  Initiators  Users  Influencers  Deciders  Approvers  Buyers  Gatekeepers Minimum of 5 or 6 members: including government, technical advisors, etc.

Kodak Sold X-ray film to hospital lab technicians Realized professional making purchasing decisions Advertising must reach NEW decision makers

Four Types of Business Customers  Price-oriented (transactional)  Solution oriented (consultative)  Gold-standard (quality)  Strategic-value (long-term/sole supplier)