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Business Marketing
environment
Module 1
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B2B Market
• Is a sales market in which businesses sell to other businesses.
• Includes both retail and wholesale businesses.
• With a business-to-business (b2b) transaction, the buyer company
purchases products from a seller company, then uses those products to aid
in the production of other goods or resells the purchased products directly
to the consumer.
• The main types of business markets:
• Industrial markets that focus on the sale of industrial products or services
• Government markets in which government entities comprise the majority of buyers
• Institutions and Financial service markets for things like banking and commercial
credit
What Are Business Products?
The Main purpose of buying • Used to manufacture
• Incorporation other products
• Consumption
• Become part of another
• Use product
• Resale
• Aid in the normal operations
Key is the of
product’s
intended
an organization
use • Are acquired for resale
without change in form
• A product purchased for
personal use is
considered a consumer good
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B2C and B2B
The Consumer Market (B2C) and the Business Market (B2B) at
Wipro
Infotech
B2C B2B
Customers: Individuals & Businesses Institutions Government
Households Global Healthcare State
Large corporations Education Central
Small & Medium sized
businesses
Selected PCs PCs
Products: Printers Enterprise Storage
Laptops Servers
Simple Service Complex Service Offerings
Agreements
Business Markets versus Consumer Goods
Market
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Market-Driven Firms
Have distinctive capabilities:
Market sensing capability: A company’s ability
to sense change and to anticipate customer
responses
Customer linking: The ability to develop and
manage close customer relationships
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Market-Driven Companies
View their customer as an asset, thus:
1.Marketing expenditures, once considered expenses, are
now considered investments.
2.Therefore, marketers need to measure performance
such as ROI on their investments.
3.Emphasizing a profit focus
4.Partnering for increased value
Meeting Performance Standards means to:
Develop and nurture customer relationship
management (CRM) capabilities by:
a. Identifying,
b. Initiating,
c. Developing,
d. and Maintaining profitable customer relationships.
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Business Market
Demand Characteristics
• Derived demand
• Fluctuating demand
• Stimulating demand
• Price sensitivity / demand elasticity
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Derived Demand
• The demand for business products is called derived
demand because the demand for industrial products
is derived from the ultimate demand for consumer
products.
• As a result, business marketers must carefully monitor
fluctuating trends and patterns in consumer markets.
Fluctuating Demand
Because demand is derived, an increase or decrease in
consumer demand can create a fluctuating demand for
many industrial products.
Example:
• An increase in mortgage rates can quickly stifle new
home sales. This slows down the need for new
household products. Businesses react by decreasing
their inventory of materials or putting off buying new
machinery.
• This action explains why the demand for many
industrial products tends to fluctuate more than the
demand for consumer products.
• A decrease in interest rates has the opposite influence.
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Stimulating Demand
• Sometimes, business marketers need to stimulate
demand for consumer goods which either
incorporate their products or are used to make
consumer products.
• Pharmaceutical manufacturers advertise on television by
presenting various ailments followed by offering their
products as solution to the ultimate consumer. (“Ask your
doctor if XYZ is right for you!”)
• Sometimes manufacturers offer deep price discounts that
influence members of the supply chain to lower their
prices, in the hope of influencing the ultimate consumer to
buy their product.
Inelastic Demand
• 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.
• Example: Price for petrol
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Elasticity of Demand
Elastic Demand Curve Inelastic Demand Curve
D
D
Price
Price
D
D
Quantity Quantity
Supply Chain Management
• https://www.youtube.com/watch?v=HxXJ8Q2GCs4
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Classifying Goods for the Business Market
Classify industrial goods by
asking the following:
How does the good or
service enter the
production process?
How does it enter the cost
structure of the firm?
A Framework for Business Marketing Management
Business marketing strategy
is formulated within the
boundaries established
by the corporate
mission and
objectives.
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Trends and changes in B2B Marketing : case
study
Understanding the Dynamics of Organizational
Buying
Market-driven firms sense market trends and work closely with
their customers and vendors. This is crucial to:
•Identify profitable market segments
•Locate buying influences within segments
•Reach organizational buyers efficiently and effectively with an offer
Each decision goes through various steps.
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Buying as a Process
• Buying is a process, not an event
• There are various points in the process that are referred to as “Critical
Decision Points” and “Evolving Information Requirements”
• It starts with “Problem Recognition”
Organizational Buying Process
2. General
1. Problem 3. Product
Description
Recognition Specifications
of Need
Organizational 5. Acquisition
4. Supplier
Buying and Analysis
Search
Process of Proposals
6. Supplier 7. Selection
8. Performance
Selection of
Review
Order Routine
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1. Problem Recognition
• Before anything is bought, most buyers need to be
made aware of a problem.
1. Problem Recognition
Internally:
• A machine breaks down
• Someone needs to order an Administrative equipment or product
• Someone recognizes an opportunity that can be captured by
acquiring the product
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1. Problem Recognition
Externally:
• More often than not, it is the salesperson who
precipitates the need for a new product
• Advertising also can influence purchasing
• Many organizations use the Push/Pull Strategy
2. General Description of Need
Once a need is recognized, the purchasing department works with the buying
group to define what is needed by asking:
• What is the extent of the problem?
• What alternatives can solve the problem?
• Where can the solution be purchased?
Each small decision ultimately helps define the product specifications.
Sometimes the supplier is involved if the supplier influences the sale (i.e., the
supplier makes the buyer aware of the need).
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3. Product Specifications
Many times the question boils down to:
1. Is it a new task buy?
2. Is it a straight rebuy?
3. Is it a modified rebuy?
Buyers try to be objective and consider many ideas.
Professional sellers try to influence this decision as early as
possible in the buying process—if they can!
3. Product Specifications
This is an important because it often determines how
the contract is structured and the specific wording
that it uses.
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4. Supplier Search
• Who will be the supplier?
• The creating influencer has a lot of say about
the choice of supplier. If a salesperson creates
the need, often the specs are written so that
only the salesperson’s organization is able to
fulfill the contract.
• In established businesses, often only preferred
vendors are considered.
5. Acquisition and Analysis of Proposals
• This step occurs only when the buying organization lacks adequate information to
make a decision.
• Proposals are presented in detail often by a team engineers, users and purchasing
agents. Successful proposals determine the supplier.
• Many times, this step is perfunctory. The buyer may have already determined the
preferred vendor, but legally it may be necessary to seek other vendor proposals
to attain government contracts.
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6. Supplier Selection
At this point, negotiation includes not only monies, but also:
1.Quantities
2.Delivery times
3.Level of service
4.Warranties
5.Payment schedules
6.And a host of final details that determine selection
7. Selection of Order Routine
• Once the supplier is selected, the order routines are established
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8. Performance Review
After receipt of the product or service, a performance review asks:
1. Did the supplier meet delivery time?
2. Did the product meet the specs?
3. Does the contract have to be modified?
4. Did the vendor live up to expectations?
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