1. Insert Chapter Picture Here Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved Chapter 6 1 Designed by Eric Brengle B-books, Ltd. CHAPTER 6 Business Marketing Prepared by Deborah Baker Texas Christian University Marketing Lamb, Hair, McDaniel 9

2. Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved Chapter 2 2 Learning Outcomes Describe business marketing Describe the role of the Internet in business marketing Discuss the role of relationship marketing and strategic alliances in business marketing Identify the four major categories of business market customers LO I LO 2 LO 3 LO 4

3. Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved Chapter 2 3 Learning Outcomes 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 LO 5 LO 6 LO 7 LO 8

4. Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved Chapter 6 4 Describe business marketing What Is Business Marketing? LO I

5. Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved Chapter 6 5 Business Marketing The marketing of goods and services to individuals and organizations for purposes other than personal consumption. LO I What Is Business Marketing?

6. Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved Chapter 6 6 LO I Business Products:  Are used to manufacture other products  Become part of another product  Aid the normal operations of an organization  Are acquired for resale without change in form Business Products The key is intended use.

7. Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved Chapter 6 7 REVIEW LEARNING OUTCOME Business Marketing LO I cupboards oven folder and pen Teddy bear CONSUMER BUSINESS cupboards Coffee pot oven folder and pen photocopier

8. Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved Chapter 6 8 Describe the role of the Internet in business marketing Business Marketing on the Internet LO 2

9. Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved Chapter 6 9 LO 2 Stickiness A measure of a Web site’s effectiveness; calculated by multiplying the frequency of visits times the duration of a visit times the number of pages viewed during each visit. Measuring Online Success Stickiness = Frequency x Duration x Site Reach

10. Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved Chapter 6 10 LO 2 Evolution of E-Business Initiatives Revenue generation Aggressive disintermediation initiatives Basic marketing communication strategies Reduce costs Build channel partnerships and trust Customer-focused technology and systems Brand building and development Integrate online and traditional media Past initiativesPresent initiatives Time

11. Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved Chapter 6 11 REVIEW LEARNING OUTCOME The Internet in Business Marketing LO 2 THEN NOW Reduce costs Build partnerships and alliances Build and support branding Develop customer-focused technology and systems Integrate online and traditional media Revenue Generation Basic Marketing Communication Business Internet Uses and

12. Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved Chapter 6 12 Discuss the role of relationship marketing and strategic alliances in business marketing Relationship Marketing and Strategic Alliances LO 3

13. Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved Chapter 6 13 LO 3 Strategic Alliance Strategic Alliances A cooperative agreement between business firms (strategic partnership).

14. Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved Chapter 6 14 LO 3 Keiretsu Relationships in Other Cultures A network of interlocking corporate affiliates.

15. Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved Chapter 6 15 REVIEW LEARNING OUTCOME Relationship Marketing and Strategic Alliances LO 3 Supplier (like Intel) Supplier Company (like Dell) Company 1 (like Starbucks) Company 2 (like Jim Beam) Company (like UPS) Customer/ Distributor (like Ford)

16. Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved Chapter 6 16 Identify the four major categories of business market customers Major Categories of Business Customers LO 4

17. Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved Chapter 6 17 LO 4 Major Categories of Business Customers Producers Resellers Governments Institutions OEMs Wholesalers Retailers Federal Municipal Local SchoolsHospitalsColleges ChurchesUnionsFraternal groups Civic ClubsFoundations Nonbusiness organizations

18. Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved Chapter 6 18 LO 4 Original Equipment Manufacturers Producers OEMs. Individuals and organizations that buy business goods and incorporate them into the products that they produce for eventual sale to other producers or to consumers.

19. Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved Chapter 6 19 REVIEW LEARNING OUTCOME Business Market Customers LO 4 Business Marketing Institutions Resellers Wholesalers Retailers Producers OEMs Governments Federal State Municipal County Unions Civic Clubs Other Churches Foundations Nonprofits

20. Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved Chapter 6 20 Explain the North American Industry Classification System North American Industry Classification System LO 5

21. Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved Chapter 6 21 NAICS LO 5 NAICS A detailed numbering system developed by the U.S., Canada, and Mexico to classify North American business establishments by their main production processes. North American Industry Classification System

22. Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved Chapter 6 22 LO 5 NAICS Level SectorSubsectorIndustry Group U.S. Industry NAICS Code 31-333343346334611 Description ManufacturingComputer electronic product manufacturing Mfg. and reproduction of magnetic/ optical media Reproduction of software Example of NAICS Hierarchy

23. Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved Chapter 6 23 LO 5  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 NAICS

24. Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved Chapter 6 24 Explain the major differences between business and consumer markets Business versus Consumer Markets LO 6

25. Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved Chapter 6 25CharacteristicCharacteristic Demand Volume # of Customers Location Distribution Nature of Buy 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 LO 6 Business versus Consumer Markets

26. Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved Chapter 6 26 LO 6 Demand is... DescriptionDescription Derived Demand for business products results from demand for consumer products. Inelastic A change in price will not significantly affect the demand for product. Joint Multiple items are used together in final product. Demand for one item affects all. Fluctuating Demand for business products is more volatile than for consumer products. Demand in Business Markets

27. Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved Chapter 6 27 Multiplier Effect (Accelerator Principle) LO 6 Fluctuating Demand 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.

28. Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved Chapter 6 28 Describe the seven types of business goods and services Types of Business Products LO 7

29. Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved Chapter 6 29 LO 7 Major Equipment Accessory Equipment Raw Materials Component Parts Processed Materials Supplies Business Services Types of Business Products Online http://www.sysco.com

30. Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved Chapter 6 30 REVIEW LEARNING OUTCOME Types of Business Goods and Services LO 7 Aluminum ore: raw material Extruded metal: processed material Propeller blade: component part Extruding machine: major equipment Tool cart: accessory equipment Uniforms: contracted service Paper: supply

31. Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved Chapter 6 31 Discuss the unique aspects of business buying behavior Business Buying Behavior LO 8

32. Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved Chapter 6 32 LO 8 Customer Service Business Ethics Buying Situations Evaluative Criteria Buying Centers Aspects of Business Buying Behavior Aspects of Business Buying Behavior Business Buying Behavior

33. Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved Chapter 6 33 Buying Center LO 8 Buying Centers All those persons in an organization who become involved in the purchase decision.

34. Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved Chapter 6 34 LO 8 Initiator Influencers Gatekeepers Decider Purchaser Users Roles in the Buying Center Online http://www.loctite.com

35. Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved Chapter 6 35 LO 8 Evaluative Criteria 1.Quality 2.Service 3.Price

36. Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved Chapter 6 36 LO 8 New Buy 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. 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. Buying Situations

37. Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved Chapter 6 Biz Flix Bowfinger 37 LO 8

38. Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved Chapter 6 38 Customer Service LO 8  Divide customers into groups based on their value  Create policies that govern how service will be allocated among groups

39. Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved Chapter 6 39 REVIEW LEARNING OUTCOME Business Buying Behavior LO 8 Customer service Initiator Influencer Decider Gatekeeper Purchaser User Buying Center  Quality  Service  Price Evaluative Criteria Buying Situations New buy Straight rebuy Modified rebuy