nature of b2b market
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Nature of Industrial Marketing
By
Mahendra Singh
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Industrial Marketing
Business-to-Business (B2B) and OrganizationalMarketing.
Business-to-Business direct marketing involves theprocess of providing goods and services to industrialmarket intermediaries, as opposed to ultimate (final)consumers
Industrial goods are differentiated from final consumergoods based on their ultimate use
Definition: the creation and management of mutuallybeneficial relationships between organizationalsuppliers and organizational customers.
Customer can be private firm, public agency, ornonprofit organization.
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Marketing Concept
Three major components:All company activities should begin with,
and be based on, the recognition of afundamental customer need.
A customer orientation should beintegrated throughout the functional areasof the firm: production, engineering,finance, R&D.
Customer satisfaction is viewed as themeans to long-term profitability goals.
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Follower Interact
Isolate Shaper
CustomerFocus
Low Technology Focus High
High
Low
Strategic Focus Grid
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Market Orientation
Acquire intelligence from the externalenvironment.
Disseminate that intelligencethroughout the organization.
Respond to the intelligence: take
action.
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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 placeAllocate resources across product lines
Communicate with customers
Evaluate/control marketing programs
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Marketing Mix
Limited number of variables underMarketings 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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Challenges
Marketing costs are increasing while theaudience reached is decreasing
Face-to-face selling, down in efficiency,is up in cost
Customer relationship managers oftendo not integrate an analytical approachto combining operations with marketingprograms and campaigns
Standard Industry Classification is not aspredictive in the current businessenvironment
Communication clutter is at an all time
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External Environment
Six Environments
Technological
Economic Social/Cultural (Customer)
Political/Legal
Natural/Climatic Competitive
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whats 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 Demand
Inelastic Demand
Widely Fluctuating Demand
Knowledgeable Demand
These characteristics/types of demand
distinguish industrial demand from
consumer demand
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How Customer Buys
Group Process
Formal
Lengthy
Loyal
Decisions based on risk andopportunity
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Communication
Personal selling more important thanmass paid advertising
Support sales with other promotional
activities: 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
Reciprocal: Doing business with
companies that do business withthem.
Economic variables: interest rates,
inflation, business cycle
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