1. 1 What Is Business Marketing? The marketing of goods and services to individuals and organizations for purposes other than personal consumption. Business Products Are used to manufacture other products Facilitate an organization’s operations Are resold to other customers The key is intended use.

2. 2 Relationship Marketing Loyal customers are more profitable than price-sensitive customers with little brand loyalty. Long-term relationships build competitive advantage.

3. 3 Relationships in Other Cultures Keiretsu relationships are highly integrated. Companies: Originated in Japan Have executives sitting on each others’ boards Maintain dedicated trade efforts Utilize joint development, finance, and marketing

4. Example: Toyota Keiretsu

5. 5 Major Categories of Business Customers Producers Resellers Governments Institutions OEMs Wholesalers Retailers Federal State Local Schools Hospitals Colleges Churches Unions Fraternal Civic Clubs Foundations groups Nonbusiness organizations

6. Business Markets Business markets are distinguished from consumer markets by: – Nature of the customer Commercial enterprises, government organizations and institutions –Use of product or service by customer Consumption, incorporation, use, or resale

7. 7 NAICS Level SectorSubsector Industry Group IndustryIndustry Subdivision NAICS Code 51513513351332513321 Descript ion InformationBroadcasting and telecoms TelecomsWireless telecoms carriers, except satellite Paging North American Industry Classification System (NAICS) A detailed numbering system developed by the U.S., Canada, and Mexico to classify North American business establishments by their main production processes.

8. NAICS 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 8

9. Business versus Consumer Markets 9 Characteristic Demand Volume # of Customers Location Distribution Nature of Buying 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

10. 10 Demand in Business Markets 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.

11. Types of Business Products 11 Major Equipment Capital goods such as large or expensive machines, mainframe computers, airplanes, and buildings. Depreciated over time, often custom-designed. Accessory Equipment Less expensive and shorter-lived than major equipment, includes fax machines, personal computers, power tools. Often standardized and purchased by more customers Component Parts Finished items ready for assembly or that need very little processing. Two important markets for component parts: original equipment manufacturer (OEM) and replacement market. Raw Materials Unprocessed products, such as minerals, timber, wheat, corn, fish. Become part of finished products.

12. 12 Business Services Expense items that do not become part of the final product. This includes janitorial, advertising, legal, management consulting, marketing research, and maintenance services. Supplies Consumable items that do not become part of the final product. Short lives and inexpensive. Generally fall into categories of maintenance, repair, or operating supplies (MRO). Processed Materials Used directly in manufacturing other products. Sheet metals, chemicals, and lumber. Do not retain their identity in final products. Types of Business Products

13. Customer Service Business Ethics Buying Situations Evaluative Criteria Buying Centers Aspects of Business Buying Behavior Aspects of Business Buying Behavior Business Buying Behavior 13

14. All those people in an organization who become involved in the purchase decision. Number of people involved varies with each purchase decision Buying Centers 14 Buying centers do not appear on formal organization charts

15. Initiator Roles in Buying Centers 15 The person who suggests the purchase. Influencers Help define specifications and provide information for evaluating options. Gatekeepers Group members who regulate the flow of information, often the purchasing agent.

16. Decider 16 Roles in Buying Centers The person with the power to choose or approve the selection. Purchaser The person who negotiates the purchase. Users Members of the organization who actually use the product.

17. 17 Quality Quality refers to technical suitability Service Service includes prepurchase as well as postpurchase service, along with dependability of supply. Price Business buyers want to buy at low prices. However, a buyer who pressures a supplier to cut prices to the point of money loss may force shortcuts on quality. Evaluative Criteria

18. 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. 18 Buying Situations

19. 19 Divide customers into groups based on their value. Create policies that govern how service will be allocated among groups. Customer Service

20. 7-1 7-1 Describe business marketing 7-2 7-2 Describe the role of the Internet in business marketing 7-3 7-3 Discuss the role of relationship marketing and strategic alliances in business marketing 20 LEARNING OUTCOMES

21. 7-4 7-4 Identify the four major categories of business market customers 7-5 7-5 Explain the North American Industry Classification System 7-6 7-6 Explain the major differences between business and consumer markets 21 LEARNING OUTCOMES

22. 7-7 7-7 Describe the seven types of business goods and services 7-8 7-8 Discuss the unique aspects of business buying behavior 7-9 7-9 Define the key terms listed in chapter prep 22 LEARNING OUTCOMES