Business Marketing

Learning Objectives
1. Describe business marketing 2. Describe the role of the Internet in business marketing 3. Discuss the role of relationship marketing and strategic alliances in business marketing

Learning Objectives (continued)

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

Learning Objectives (continued)

7. Describe the seven types of business goods and services 8. Discuss the unique aspects of business buying behavior

Learning Objective

Describe business marketing

On Line http://www.grainger.com

Business Marketing
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 Become part of another product Aid the normal operations of an organization Are acquired for resale without change in form

Key is intended use

Learning Objective

Describe the role of the Internet in business marketing

Business Marketing on the Internet

2

Conveying information Conducting transactions Delivering innovative services Building customer and supplier relationships Gathering marketing research data Reducing costs and prices Integrating the entire supply On Line chain http://www.gepolymerland.com
http://www.jama.ama-assn.org

The Role of the Internet in Business Marketing

Business Internet Uses

THEN AND NOW

Revenue Generation Basic Marketing Communication

Reduce costs Build partnerships and alliances Build and support branding

Learning Objective

Discuss the role of relationship marketing and strategic alliances in business marketing

Strategic Alliance
Strategic Alliance
A cooperative agreement between business firms (strategic partnership).

Keiretsu

Keiretsu
A network of interlocking corporate affiliates.

Learning Objective

Identify the four major categories of business market customers

Categories of Business Market Customers

Producers
OEMs Wholesalers Retailers Federal Municipal State County

On Line http://www.cbdnet.gpo.gov http://www.governmentbids.com

Resellers

Governments

Institutions
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Unions Civic clubs Foundations Nonprofits

Churches Other

OEMs
Original Equipment Manufacturers
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.

Learning Objective

Explain the North American Industry Classification System

NAICS
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.

Examples of NAICS
NAICS Level NAICS Code Descript. Sector 31-33
Manufacturing (mfg)

Sub-sector Industry Group 334

Computer electronic product mfg.

U.S. Industry 334611

3346

Mfg. and Reproduction reproduction of software of magnetic/optic al media

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 Sales prospects

Learning Objective

Explain the major differences between business and consumer markets

Characteristic Characteristic Demand Demand Volume Volume # of Customers # of Customers Location Location Distribution Distribution Nature of Buy Nature of Buy Buy Influence Buy Influence Negotiations Negotiations Reciprocity Reciprocity Leasing Leasing Promotion Promotion
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Business vs. Consumer Markets

Business Market Business Market Organizational Organizational Larger Larger Fewer Fewer Concentrated Concentrated More Direct More Direct More Professional More Professional Multiple Multiple More Complex More Complex Yes Yes Greater Greater Personal Selling Personal Selling

Consumer Market Consumer Market Individual Individual Smaller Smaller Many Many Dispersed Dispersed More Indirect More Indirect More Personal More Personal Single Single Simpler Simpler No No Lesser Lesser Advertising Advertising

Demand in Business Markets

Demand is... Demand is...
Derived Derived Inelastic Inelastic Joint Joint Fluctuating Fluctuating
6

Description Description
Demand for business products results Demand for business products results from demand for consumer products from demand for consumer products A change in price will not significantly A change in price will not significantly affect the demand for product affect the demand for product Multiple items are used together in final Multiple items are used together in final product. Demand for one item affects all product. Demand for one item affects all Demand for business products is more Demand for business products is more volatile than for consumer products volatile than for consumer products

Multiplier Effect (Accelerator Principle)

Multiplier Effect
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.

Learning Objective

Describe the seven types of business goods and services

On Line http://www.sysco.com

Types of Business Products

Major Equipment Major Equipment Accessory Equipment Accessory Equipment Raw Materials Raw Materials Component Parts Component Parts Processed Materials Processed Materials Supplies Supplies Business Services Business Services
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Learning Objective

Discuss the unique aspects of business buying behavior

Business Buying Behavior

Buying Centers Buying Centers Evaluative Criteria Evaluative Criteria Aspects of Aspects of Business Business Buying Buying Behavior Behavior Buying Situations Buying Situations Business Ethics Business Ethics Customer Service Customer Service
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Buying Center
Buying Center
All those persons in an organization who become involved in the purchase decision.

On Line http://www.loctite.com http://www.napm.org

Roles in the Buying Center

Initiator Initiator Decider Decider Influencers Influencers Purchaser Purchaser Gatekeepers Gatekeepers Users Users

Roles in the Buying Center

Evaluative Criteria for Business Buyers

Price

Service

Quality

Buying Situations
New Buy New Buy A situation requiring the purchase A situation requiring the purchase of a product for the first time. of a product for the first time. A situation where the purchaser wants A situation where the purchaser wants some change in the original good or some change in the original good or service. service. A situation in which the purchaser A situation in which the purchaser reorders the same goods or services reorders the same goods or services without looking for new information or without looking for new information or investigating other suppliers. investigating other suppliers.

Modified Modified Rebuy Rebuy

Straight Straight Rebuy Rebuy

8

Review Learning Objective 8

Buying Center Evaluative Criteria
New Buy Straight Rebuy Modified Rebuy

Customer service