Download MBA 860 - Adv. Mkt. Strategy

1
Introduction to the
Business Marketing
Environment
McGraw-Hill/Irwin
Copyright © 2005 by The McGraw-Hill Companies, Inc. All rights reserved.
Agenda








Business Marketing: An Overview
Why Study Business Marketing?
How the Business Market Differs from the
Consumer Market
Characteristics of Business Demand
The Nature of Business Buying Behavior
A Classification of Business Goods and
Services
Business Customers
Business Marketing Planning and Strategy
1-2
Business Marketing: An Overview

What is Business Marketing?
• What Is Marketing?

One Definition: “The process of
planning and executing the conception
(product), pricing, promotion, and
distribution of want-satisfying ideas,
goods, and services to individuals and
organizations.”
1-3
Business Marketing: An Overview

What Is Business Marketing?
• Those activities that facilitate exchanges involving
products and customers in business markets
• A business transaction between a professional seller
(representing a selling company) and a professional
buyer (representing a buying company)
• Activities in which goods or services are sold for any
use other than personal consumption
• Note: It is not the nature of the product; it’s the nature
of the transaction.
1-4
Business Marketing: An Overview

Which of the Following is Business
Marketing?
•
•
•
•
You buy a gear to fix your mountain bike.
Ford buys the same gear to fix a machine.
Xerox buys soft drinks for its cafeterias.
You start a landscaping business and
purchase a lawnmower.
• Coke buys TV ad time or sugar.
• The U.S. government buys…anything.
1-5
Why Study Business Marketing?






Good employment opportunities
Growing importance of high-tech business
products
Success of foreign competition
Significance of international
interdependence of firms
Importance of the service sector
Dramatic changes in the B2B environment
1-6
How the Business Market Differs
from the Consumer Market
Exhibit 1-1
Characteristic
Business Market
Consumer Market
Sales volume
Purchase volume
Number of buyers
Size of individual buyers
Location of Buyers
Buyer-seller relationship
Nature of channel
Nature of buying
Nature of buying influences
Type of negotiations
Use of reciprocity
Use of leasing
Primary promotion method
1-7
Characteristics of Business Demand

Derived Demand
“Derived demand” says that demand for a business product is
linked to demand for a consumer good. This means consumer
demand affects business marketing up a vast network of
channels.
For example, when OfficeMax experiences increased demand
for paper clips, the effect is felt by its suppliers, paper clip
manufacturers, and their suppliers.

Inelastic Demand

Fluctuating Demand

Joint Demand
1-9
The Nature of Business
Buying Behavior
Exhibit 1-3
Evaluating Products
Product
Personal
computers
Questions Asked
by Typical
Business Users
Questions Asked by
Typical Ultimate
Consumers
Will it increase office
efficiency?
Will it help my child
learn?
What is its capital
investment value?
Will it improve my
correspondence?
Does it have special
features that will help
improve our company
image?
Is a laptop worth the
extra cost?
1-10
The Nature of Business
Buying Behavior
Exhibit 1-3
Evaluating Products
Product
Automobiles
Questions Asked
by Typical
Business Users
Questions Asked by
Typical Ultimate
Consumers
How efficient is the vehicle
to operate?
How does it enhance my
status?
Would it be more
economical to lease it or
purchase it?
What is its potential tradein value?
What is the expected
working life span of the
car?
Will I get reasonable gas
mileage?
1-11
The Nature of Business
Buying Behavior
Exhibit 1-3
Evaluating Products
Product
Telephones
Questions Asked
by Typical
Business Users
Will expanded service
lower the cost of
communicating with our
customers?
Questions Asked by
Typical Ultimate
Consumers
How long will it take to
have one installed?
Can I get three jacks and
two telephones?
Should our intercom
system be separate from
or connected to the
telephone system?
1-12
A Classification of Business
Goods and Services







Major Equipment
Accessory Equipment
Process Materials
MRO (maintenance, repair,
operating) supplies
Business Services
Fabricated and Component Parts
Raw Materials
1-13
Business Customers

Commercial Enterprises
• Indirect channel members and facilitators
• OEMs (original equipment manufacturers)
• User-customers


Governmental Organizations
Institutions
1-14
Business Marketing Planning
and Strategy Formulation

Includes:
• Analysis of changing environments
• Assessment of organization’s strengths and
weaknesses, opportunities and threats
• Understanding of customer needs
(“positioning”)

Marketing planning
•
•
•
•
Takes the best information it can get
Analyzes it
Generates alternatives
Proposes a plan that works within constraints
of the firm, now.
1-15
Business Marketing View
of a Consumer Product
What did purchasing buy?
1-16
The picture suggests quantities
of the following were purchased:






Conveyer
Conveyer replacement and
maintenance materials
Components going down
conveyer
Raw material and
components of components
Assembly station magnifier
Power tool with blue cord








Assembly fixture
Table and chair
Trucks with
components on them
Floor cleaning
systems
Lighting systems
Heating/AC systems
Uniform vest
Health insurance
1-17
How Do They Buy It?

Items made from:
•
•
•
•
•
•
•
Steel
Wood
Plastic
Chemicals
Printed forms
Transportation
Electronics


How do you pick
one supplier from
the thousands out
there?
How do you get
them to purchase
products from your
company?
1-18
Remember What
Business Marketers Do







Identify customers.
Identify customer needs and sell benefits.
Communicate with customers (contact personally,
reach through media, build relationships, sell benefits).
Communicate internally, build relationships, sell
benefits.
Analyze buyer behavior, identify key buying center
influencers and their roles.
Develop products and services (complete packages of
attributes).
Study the market and competitive environment
(economic, legal, technological).
1-19
Remember What
Business Marketers Do

Set prices and terms, negotiate, sell benefits.

Make products available at the right time, in the right
place, in the right quantity, in the right condition.

Allocate resources across products.

Create, implement, monitor, control, and continuously
evaluate the marketing mix and strategic program to
optimize customer satisfaction and meet profit
objectives.

Be a solution to customer problems, sell benefits.

Be challenged—Use business judgment—Make
decisions—Make decisions—Make decisions.
1-20