1. Business Marketing
Chapter 7 Business Marketing

2. Learning Outcomes Describe business marketing
Chapter 7 Business Marketing
Describe business marketing
Describe trends in B-to-B Internet marketing
Discuss the role of relationship marketing and strategic alliances in business marketing
Identify the four major categories of business market customers

3. Learning Outcomes (continued)
Chapter 7 Business Marketing
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

4. Business Marketing
Chapter 7 Business Marketing
LO 1
Marketing of goods and services to individuals and organizations for purposes other than personal consumption
Called industrial, business-to-business, B-to-B, or B2B marketing
Business products
Are used to manufacture other products
Consumer products
Are bought to satisfy an individual's personal wants or needs
Example - Sale of a PC to a college or university
A product that is purchased for personal or family consumption or as a gift is a consumer good. If the same product is purchased for use in a business, it is a business product.
The key characteristic distinguishing business products from consumer products is intended use and not physical form.
The size of the business market in the U.S. and most other countries substantially exceeds that of the consumer market.
Some large firms that produce goods such as steel, computer memory chips, or production equipment market exclusively to business customers.

5. Trends in B-to-B Internet Marketing
Chapter 7 Business Marketing
LO 2
Company websites used to facilitate communication and orders
Digital marketing used to increase brand awareness and to position businesses as thought leaders to generate sales leads
New applications provide additional information about customers
Technology is used to facilitate orders and enhance customer experiences
Use of social media to attract customers
B-to-B companies are increasingly leveraging the Internet as an effective sales and promotion platform (much like B-to-C companies have done for decades).
Use of social media in marketing requires vigilant adjustment to keep track of new applications and platforms and constant evaluation to determine whether these new avenues are beneficial to (or used by) customers.

6. Content Marketing
Chapter 7 Business Marketing
LO 2
Strategic marketing approach focused on creating and distributing valuable, relevant, and consistent content
Metrics that are useful for increasing the success of a social media campaign
Awareness
Engagement
Conversion
This strategy has played an important role for B-to-B marketers.
Other goals of the strategy include:
Product promotion
Traffic building
Search engine optimization (SEO)
Competitive intelligence and listening
Customer feedback and support
Product development

7. Relationship Marketing
Chapter 7 Business Marketing
LO 3
Importance
Customers have become more demanding
Competition has become more intense
Business suppliers use social networking sites to advertise themselves to businesses
Steady dialogue between the supplier and the customer needs to be maintained to gain repeat business
Relationship marketing is a strategy that entails seeking and establishing ongoing partnerships with customers.
Discussion/Team Activity
Go to FedEx’s Website at Review the different products available to meet varying customer needs, and discuss how these products/services can establish long-term relationships and customer loyalty for FedEx.

8. Cooperative agreement between business firms Types
Strategic Alliance
Chapter 7 Business Marketing
LO 3
Cooperative agreement between business firms
Types
Licensing or distribution agreements
Joint ventures
Research and development consortia
Partnerships
A strategic alliance is sometimes called a strategic partnership.
Sometimes alliance partners are fierce competitors.
For an alliance to succeed in the long term, it must be built on commitment and trust.
Relationship commitment means that a firm believes an ongoing relationship with some other firm is so important that it warrants maximum efforts at maintaining it indefinitely.
Trust exists when one party has confidence in an exchange partner’s reliability and integrity.

9. Major Categories of Business Customers
Chapter 7 Business Marketing
LO 4
Producers - Construction, manufacturing, transportation, finance, real estate, and food service firms
Resellers - Wholesalers and retailers
Governments - Federal, state, and local buying units
Institutions - Educational institutions, hospitals, churches, labor unions, fraternal organizations, civic clubs, foundations, and other nonbusiness organizations
Producers include profit-oriented organizations that use purchased goods and services to produce other products, to incorporate into other products, or to facilitate the daily operations of the organization.
Original equipment manufacturers (OEMs): Individuals and organizations that buy business goods and incorporate them into the products they produce for eventual sale to other producers or to consumers
The reseller market includes retail and wholesale businesses that buy finished goods to resell at a profit.
Government units account for the greatest volume of purchases of any customer category in the United States.
Institutions seek to achieve goals other than the standard business goals of profit, market share, and return on investment.
Discussion/Team Activity
Access the web site Discuss the information provided on this web site that helps organizations do business with the federal government.

10. North American Industry Classification System (NAICS)
Chapter 7 Business Marketing
LO 5
Detailed numbering system developed by the U.S., Canada, and Mexico
Classifies North American business firms by their main production processes
Number, size, and geographic dispersion of firms can be identified
Data can be converted to market potential and share estimates and sales forecasts
Can identify firms that may be prospective users of a supplier’s goods and services
NAICS is an extremely valuable tool for business marketers engaged in analyzing, segmenting, and targeting markets.
Discussion/Team Activity
Discuss how NAICS information can be used for other marketing applications.

11. Nature of Demand in Business
Chapter 7 Business Marketing
LO 6
Demand for business products results from demand for consumer products
Derived
Demand for product not significantly affected by change in price
Inelastic
Demand for multiple items used together in final product
Joint
The demand for business products is derived demand, meaning that organizations buy products to be used in producing customer products. As a result, business marketers must carefully monitor trends and patterns in final consumer markets, as well as customers’ forecasts.
Inelastic demand is demand without regard to price. An increase or decrease in the product price will not significantly affect the demand for the product.
In joint demand, sales of the two products are directly linked.
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
Discussion/Team Activity
Discuss examples of products that describe each of the demand differences in business markets.
Demand for business products is more volatile than for consumer products
Fluctuating

12. Business versus Consumer Markets
Chapter 7 Business Marketing
LO 6
Characteristic
Business market
Consumer market
Demand
Organizational
Individual
Volume
Larger
Smaller
No. of customers
Fewer
Many
Location
Concentrated
Dispersed
Distribution
Direct
Indirect
Nature of buying
Formal
Informal
Buying influence
Multiple
Single
Negotiation
Common
Rare
Reciprocity
Yes No
Leasing
Greater
Lesser
Promotion
Personal selling
Advertising
The basic philosophy and practice of marketing are the same whether the customer is a business organization or a consumer. Business markets do, however, have characteristics different from consumer markets.
Business marketers have fewer customers than consumer marketers. An advantage is that it is easier to identify buyers, monitor customer needs and levels of satisfaction, and personally attend to existing customers. A disadvantage is that each customer becomes crucial, especially for those manufacturers who have only one customer.
Business customers are more geographically concentrated than consumers.
Business products typically have shorter channels of distribution, and direct channels are common. On the other hand, consumer products pass through a distribution system that may include the producer, the wholesaler(s), and the retailers.
Businesses use professionally trained purchasing agents or buyers who spend their entire career purchasing a limited number of items.
More people are involved in a single business purchase decision than in a consumer purchase.
Negotiation is more common in business marketing decisions and may take months to work out the final contracts.
Business purchasers choose to buy from their own customers. It is not unethical or illegal unless the exchange is coerced.
Businesses commonly lease expensive equipment to reduce capital outflow, keep state-of-the-art products, and gain tax advantages.
Business marketers emphasize personal selling, especially for expensive, custom-designed products.

13. Types of Business Products
Chapter 7 Business Marketing
LO 7
Major equipment
Accessory equipment
Raw materials
Component parts
Processed materials
Supplies
Business services
Major equipment: Capital goods such as large or expensive machines, mainframe computers, airplanes, and buildings
Depreciates over time and often custom-designed
Personal selling is an important marketing strategy.
Accessory equipment: Less expensive and shorter-lived than major equipment
Portable drills, power tools, microcomputers, and computer software
Advertising is an important promotional tool.
Raw materials: Unprocessed extractive or agricultural products, such as mineral ore, lumber, wheat, corn, fruits, vegetables, and fish
Promotion is almost always via personal selling, and distribution channels are usually direct from producer to business user.
Component parts: Either finished items ready for assembly or that need very little processing
There are two important markets for many component parts: the OEM market and the replacement market.
Processed materials: Used directly in manufacturing other products and do not retain their identity in final products
Sheet metals, chemicals, and lumber
Supplies: Consumable items that do not become part of the final product
Fall into categories of maintenance, repair, or operating supplies (MRO)
Business services: Expense items that do not become part of the final product
Includes janitorial, advertising, legal, management consulting, marketing research, maintenance, and other services

14. Aspects of Business Buying Behavior
Chapter 7 Business Marketing
LO 8
Buying centers
Evaluative criteria
Buying situations
Business ethics
Customer service
Understanding how purchase decisions are made in organizations is a first step in developing a business selling strategy.

15. Key Terms
Business marketing (industrial, business- to-business, B-to-B, or B2B marketing)
Business product (industrial product)
Consumer product
Content marketing
Strategic alliance (strategic partnership)
Relationship commitment
Trust
Keiretsu
Original equipment manufacturers (OEMs)
North American Industry Classification System (NAICS)
Derived demand
Joint demand

16. Key Terms (continued) Multiplier effect (accelerator principle)
Business-to-business online exchange
Reciprocity
Major equipment (installations)
Accessory equipment
Raw materials
Component parts
Processed materials
Supplies
Business services
Buying center
New buy
Modified rebuy
Straight rebuy

17. Summary
Business marketing is marketing of goods and services for purposes other than personal consumption
The Internet acts as an effective sales and promotion platform
Strategic alliance is a cooperative agreement between business firms
Business market consists of producers, resellers, governments, and institutions

18. Summary (continued)
NAICS is an industry classification system introduced in 1997
Business markets have characteristics different from consumer markets
Business products fall under seven categories
Business selling strategy requires understanding how purchase decisions are made in organizations