1. Chapter 1 Copyright ©2012 by Cengage Learning Inc. All rights reserved 1 Lamb, Hair, McDaniel CHAPTER 7 Business Marketing 2012-2013 © Sean Gallup/Getty Images © 2013 by Cengage Learning Inc. All Rights Reserved. 1

2. What Is Business Marketing? The marketing of goods and services to individuals and organizations for purposes other than personal consumption. Business Marketing © 2013 by Cengage Learning Inc. All Rights Reserved. 2 1

3. 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 © 2013 by Cengage Learning Inc. All Rights Reserved. 3 1 …The key is intended use Business Products…

4. the use of the Internet to facilitate the exchange of goods, services, and information between organizations. Business-to-business electronic commerce is… © 2013 by Cengage Learning Inc. All Rights Reserved. 4 2

5. Measuring Online Success Stickiness A measure of a Web site’s effectiveness; calculated by multiplying the frequency of visits by the duration of a visit by the number of pages viewed during each visit. Stickiness = Frequency x Duration x Site Reach © 2013 by Cengage Learning Inc. All Rights Reserved. 5 2

6. Exhibit 7.2 Evolution of E-Business Initiatives 6

7. Relationship Marketing  Loyal customers are more profitable than price-sensitive customers with little brand loyalty  Long-term relationships build competitive advantage © 2013 by Cengage Learning Inc. All Rights Reserved. 7 3

8. Strategic Alliances Licensing or distribution agreements Joint ventures Research and development consortia Partnerships © 2013 by Cengage Learning Inc. All Rights Reserved. 8 3 Alliances succeed with commitment and trust.

9. Relationships in Other Cultures Keiretsu relationships are highly integrated: Companies have executives sitting on each others’ boards Maintain dedicated trade efforts Joint development, finance, and marketing © 2013 by Cengage Learning Inc. All Rights Reserved. 9 3

10. 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 © 2013 by Cengage Learning Inc. All Rights Reserved. 10 4

11. NAICS A detailed numbering system developed by the U.S., Canada, and Mexico to classify North American business establishments by their main production processes. NAICS (North American Industry Classification System) NAICS (North American Industry Classification System) © 2013 by Cengage Learning Inc. All Rights Reserved. 11 5

12. Example of NAICS Hierarchy NAICS Level SectorSubsector Industry Group IndustryIndustry Subdivision NAICS Code 51513513351332513321 Descrip tion InformationBroadcasting and telecoms TelecomsWireless telecoms carriers, except satellite Paging © 2013 by Cengage Learning Inc. All Rights Reserved. 12 5

13. 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 © 2013 by Cengage Learning Inc. All Rights Reserved. 13 5

14. Business versus Consumer Markets © 2013 by Cengage Learning Inc. All Rights Reserved. 14 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

15. 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. © 2013 by Cengage Learning Inc. All Rights Reserved. 15 6

16. Fluctuating Demand 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. © 2013 by Cengage Learning Inc. All Rights Reserved. 16 6

17. Major Equipment Accessory Equipment Raw Materials Component Parts Processed Materials Supplies Business Services Types of Business Products © 2013 by Cengage Learning Inc. All Rights Reserved. 17 7

18. Types of Business Goods and Services © 2013 by Cengage Learning Inc. All Rights Reserved. 18

19. Customer Service Business Ethics Buying Situations Evaluative Criteria Buying Centers Aspects of Business Buying Behavior Aspects of Business Buying Behavior Business Buying Behavior © 2013 by Cengage Learning Inc. All Rights Reserved. 19 8

20. All those people in an organization who become involved in the purchase decision. Number of people involved varies with each purchase decision Buying Centers © 2013 by Cengage Learning Inc. All Rights Reserved. 20 8 Buying centers do not appear on formal organization charts

21. Initiator Influencers Gatekeepers Decider Purchaser Users Roles in Buying Centers © 2013 by Cengage Learning Inc. All Rights Reserved. 21 8

22. Evaluative Criteria  Quality  Service  Price © 2013 by Cengage Learning Inc. All Rights Reserved. 22 8

23. 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. Buying Situations © 2013 by Cengage Learning Inc. All Rights Reserved. 23 8

24. Customer Service  Divide customers into groups based on their value  Create policies that govern how service will be allocated among groups © 2013 by Cengage Learning Inc. All Rights Reserved. 24 8