business marketing lecture 1

8/4/2019 Business Marketing Lecture 1

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Business MarketingLecture 1

by Gita MS Agarwal



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Industrial Marketing

Also called: Business-to-Business (B2B)and Organizational Marketing.

Definition: the creation and management of mutually beneficial relationshipsbetween organizational suppliers and

organizational customers.Customer can be private firm, public

agency, or nonprofit organization.



Customer-Business and

organization Business organizations :

Manufacturing companies

Government undertakings

Private sector organizations

Educational institutions Hospitals

Distributors and dealers

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The Marketing Concept

Creating value for customers with goods

and services that address organizational

needs and objectives.



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Marketing Concept

Three major components:

All company activities should begin with,

and be based on, the recognition of a fundamental customer need.

A customer orientation should be integrated throughout the functional areas of the firm:

production, engineering, finance, R&D.Customer satisfaction is viewed as the means

to long-term profitability goals.



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Market Orientation

Acquire intelligence from the external

environment.

Disseminate that intelligence throughout

the organization.

Respond to the intelligence: take action.

(Kohli and Jaworski 1990, Journal of Marketing)



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Marketing Mission Statement

State in terms of meeting customer needs,

not in terms of products or technologies.

Marketing Myopia (Levitt 1960 HBR)



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Marketing Activities

Identify customer needs Research customer behavior

Divide market into manageable segments

Develop new products/services

Establish/negotiate prices

Deliver, install, service products

Ensure adequate and timely supply of products

at correct place Allocate resources across product lines

Communicate with customers

Evaluate/control marketing programs



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Marketing Mix

Limited number of variables under Marketing’s control to create positionthat is attractive to the target market

segment.

Four Ps

Product

Price

Promotion

Place (Distribution)



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External Environment

Characterized by:

Degree of Stability

Complexity

Diversity

Hostility



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External Environment

Six Environments

Technological

Economic

Social/Cultural (Customer)

Political/Legal

Natural/ClimaticCompetitive



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So what’s different about B2B?

Marketing Concept

Marketing Mix

Market Segmentation

Product Life Cycle

All apply in both B2C and B2B.



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So what’s different about B2B?

The technical characteristics of the

product are important.

These products directly affect theoperations and economic health of the

customer.

The customer is an organization rather

than an individual consumer, or family.



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Five Major Differences

Between B2B and B2C

Products/Services being marketed

Nature of demand

How the customer buys

Communication process Economic/Financial factors



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Products/Services

More complex

Functional vs. Symbolic Attributes

Large unit dollar value/Large quantities

Custom/Tailored

Various Stages from raw material to finished goods.

Foundation, Entering, Facilitating Goods



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Raw Material Extraction

Material Processing

Manufacturing

Parts/Subassembly

Assembly

Distribution

Wholesale/Retail Trade

Final Consumers

Facilitators

Firms in Production Chain



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Nature of Demand

Derived

Joint/Shared Concentrated

Inelastic



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How Customer Buys

Group Process

Formal Lengthy

Loyal

Decisions based on risk and opportunity



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Communication

Personal selling more important thanmass paid advertising

Support sales with other promotionalactivities: advertising in trade journals,catalogs, trade shows, direct mail, WWW.

Message focused on technical, factual,and descriptive content.

Multiple audience members.



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Economic/Financial Factors

Competition oligopolistic

Power/Dependency relationships

Reciprocity:Doing business with

companies that do business with them.

Economic variables: interest rates,

inflation, business cycle



Differences between Industrial

and Consumer MarketingBases Industrial Markets Consumer Markets

Market Characteristics Geographically

Concentrated. Relatively

Few buyers

Geographically

disbursed. Mass markets

Product Characteristics Technical complexity,

Customised

Standardised

Service Characteristics Service, timely delivery

And availability very

important

Service, delivery, and

availability somewhat

important

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Buyer behavior Involvement of various

functional areas in both

buyer and supplier

firms. Purchase

decisions are mainly

made on rational

/performance basis.

Technical expertise,

Stable interpersonalrelationship between

buyers and sellers

Involvement of family

members .Purchase

decisions are mostly

made on

physiological/social.psy

chological needs.

Less technical expertise.

Non personal

relationship

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Decision making Observable stages.

Distinct

Unobservable

Mental stages

Channel Characteristics Shorter. More direct.Fewer

intermediaries/middlem

en

Indirect.Multiple layers of

intermediaries

Promotional

Characteristics

Emphasis on personal

selling

Emphasis on advertising

Price Characteristics Competitive bidding and

negotiated prices. List

prices for standard

products

List prices or maximum

retail price (MRP)

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business marketing lecture 1

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