Chapter 7: Business Marketing Prepared by Amit Shah, Frostburg State University Designed by Eric Brengle, B-books, Ltd. Copyright 2010 by Cengage Learning

Chapter 7: Business Marketing

Prepared by Amit Shah, Frostburg State University

Designed by Eric Brengle, B-books, Ltd.

Copyright 2010 by Cengage Learning Inc. All Rights Reserved 1

Learning Outcomes

2

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

LO1

LO2

LO3

LO4

Copyright 2010 by Cengage Learning Inc. All Rights Reserved

Learning Outcomes

3

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

LO5

LO6

LO7

LO8


What is Business Marketing?

4

Describe business marketing.

LO1


What is Business Marketing?

5

The marketing of goods and services to individuals and organizations for purposes

other than personalconsumption.


Business Products

6

Business Products:

Are used to manufacture other products

Become part of another product

Aid the normal operations of an organization

The key is intended use.


Review Learning OutcomeBusiness Marketing

7

LO1

cupboards

oven

folderand pen

Teddy bear

CONSUMER BUSINESScupboards

Coffee pot

oven

folderand pen

photocopier


Business Marketing on the Internet

8

Describe the role of the internet in

business marketing.

LO2


Measuring Online Success

9

Stickiness- A measure of a Website’s effectiveness; calculatedby multiplying the frequency ofvisits times the duration of a

visit times the number of pagesviewed during each visit.

Stickiness= Frequency x Duration x Site Reach


Evolution of E-Business Initiatives

10

• 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 initiatives Present initiatives

Time


Review Learning OutcomeThe Internet in Business Marketing

11

LO2

THEN

NOW Reduce costsBuild partnerships and alliancesBuild and support brandingDevelop customer-focused technology and systemsIntegrate online and traditional media

Revenue GenerationAggressive Disintermediation InitiativesBasic Marketing Communication

Business Internet Uses

and


Relationship Marketing andStrategic Alliances

12

Discuss the role of relationship marketing and

strategic alliances inbusiness marketing.

LO3


Strategic Alliances

13

A cooperativeagreement between

business firms (strategic partnerships).


Relationships in Other Cultures

14

Keiretsu- A network of interlocking corporate

affiliates.


Review Learning OutcomeRelationship Marketing and Strategic Alliances

15

LO3

Supplier(e.g. Intel)

SupplierSupplier

Company(e.g. Dell)

Company 1(e.g. Starbucks)

Company 2(e.g. Jim Beam)

Company(e.g UPS)

Customer/Distributor(e.g. Ford)


Major Categories of Business Customers

16

Identify the four major categories

of business market customers.

LO4


Major Categories of Business Customers

17

Producers

Resellers

Governments

Institutions

OEMs

WholesalersRetailers

FederalMunicipalLocal

Schools Hospitals CollegesChurches Unions Fraternal groupsCivic Clubs FoundationsNonbusiness organizations


Producers

18

Original Equipment Manufacturer’s-

OEMsIndividuals and organizations that buy business goods and

incorporate them into the products that they produce

for external sale to other producers or to consumers.


Review Learning OutcomeBusiness Market Customers

19

LO4

Business MarketingBusiness Marketing

InstitutionsInstitutionsResellersResellers

Wholesalers

Retailers

ProducersProducers

OEMs

GovernmentsGovernments

Federal

State

Municipal

County

Unions

CivicClubs

Other

Churches

Foundations

Nonprofits


North American Industry Classification System

20

Explain the North American Industry

Classification System.

LO5


NAICS

21

NAICS (North American IndustryClassification System)- A detailednumbering system developed bythe United States, Canada, and

Mexico to classify North Americanbusiness establishments by

their main production processes.


Example of NAICS Hierarchy

NAICS

Level

Sector Subsector Industry Group

U.S.

Industry

NAICS

Code

31-33 334 3346 334611

Description Manufacturing Computer

electronic

product manufacturing

Mfg. and reproduction of magnetic/optical media

Reproduction of software

22Copyright 2010 by Cengage Learning Inc. All Rights Reserved

NAICS

23

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


Review Learning OutcomeNorth American Industry Classification System

24

LO5


Business versus Consumer Markets

25

Explain the major differences

between business and consumer markets.

LO6


Business versus Consumer Markets

26

CharacteristicCharacteristicCharacteristicCharacteristic

DemandDemand

VolumeVolume

# of Customers# of Customers

LocationLocation

DistributionDistribution

Nature of BuyNature of Buy

Buy InfluenceBuy Influence

NegotiationsNegotiations

ReciprocityReciprocity

LeasingLeasing

PromotionPromotion

Business MarketBusiness MarketBusiness MarketBusiness Market

OrganizationalOrganizational

LargerLarger

FewerFewer

ConcentratedConcentrated

More DirectMore Direct

More ProfessionalMore Professional

MultipleMultiple

More ComplexMore Complex

YesYes

GreaterGreater

Personal SellingPersonal Selling

Consumer MarketConsumer MarketConsumer MarketConsumer Market

IndividualIndividual

SmallerSmaller

ManyMany

DispersedDispersed

More IndirectMore Indirect

More PersonalMore Personal

SingleSingle

SimplerSimpler

NoNo

LesserLesser

AdvertisingAdvertising


Demand in Business Markets

27

Demand is...Demand is...Demand is...Demand is... DescriptionDescriptionDescriptionDescription

DerivedDerived Demand for business products results from demand for consumer products.Demand for business products results from demand for consumer products.

InelasticInelastic A change in price will not significantly affect the demand for product.A change in price will not significantly affect the demand for product.

JointJoint Multiple items are used together in final product. Demand for one item affects all.Multiple items are used together in final product. Demand for one item affects all.

FluctuatingFluctuating Demand for business products is more volatile than for consumer products.Demand for business products is more volatile than for consumer products.


Fluctuating Demand

28

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.

Multiplier Effect (Accelerator Principle) -


Types of Business Products

29

Describe the seven types of business goods

and services.

LO7


Types of Business Products

30

Major EquipmentMajor Equipment

Accessory EquipmentAccessory Equipment

Raw MaterialsRaw Materials

Component PartsComponent Parts

Processed MaterialsProcessed Materials

SuppliesSupplies

Business ServicesBusiness Services


Review Learning OutcomeTypes of Business Goods and Services

31

LO7

Aluminum ore:raw material

Extruded metal:processed material

Propeller blade:component part

Extruding machine:

major equipmentTool cart:accessory equipment

Uniforms:contracted

service

Paper:supply


Business Buying Behavior

32

Discuss the unique aspects of business buying behavior.

LO8


Business Buying Behavior

33

Customer ServiceCustomer Service

Business EthicsBusiness Ethics

Buying SituationsBuying Situations

Evaluative CriteriaEvaluative Criteria

Buying CentersBuying Centers

Aspects of Business

BuyingBehavior

Aspects of Business

BuyingBehavior


Buying Centers

34

All those persons in an organization

who become involved in the

purchase decision.


Roles in the Buying Center

35

InitiatorInitiator InfluencersInfluencers GatekeepersGatekeepers

DeciderDecider PurchaserPurchaser UsersUsers


Evaluative Criteria

1. Quality

2. Service

3. Price

36Copyright 2010 by Cengage Learning Inc. All Rights Reserved

Buying Situations

37

New buy – A situation requiring the purchase of a product for the first time.

Modified Rebuy – A situation in which the purchaser wants some change in the original

good or service.

Straight Rebuy – A situation in which thepurchaser reorders the same goods or

services without looking for new informationor investigation other suppliers.


Customer Service

38

•Divide customers into groups based on their value

•Create policies that govern how service will be allocated among groups


Review Learning OutcomeBusiness Buying Behavior

39

LO8

Customer service

InitiatorInfluencerDecider GatekeeperPurchaserUser

Buying Center

Quality Service Price

EvaluativeCriteria

Buying Situations

New buyStraight rebuyModified rebuy


Documents

Chapter 7: Business Marketing Prepared by Amit Shah, Frostburg State University Designed by Eric Brengle, B-books, Ltd. Copyright 2010 by Cengage Learning