Business Marketing

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Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved Chapter 6

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CHAPTER

6

Business Marketing

Prepared byDeborah Baker

Texas Christian University

Introduction to MarketingMcDaniel, Lamb, Hair

9

2Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved Chapter 2

Learning Outcomes

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

LOI

LO2

LO3

LO4


Learning Outcomes

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


Describe business marketing

What Is Business Marketing?LOI


BusinessMarketing

BusinessMarketing

The marketing of goods and

services to individuals and

organizations for purposes

other than personal

consumption.

LOI What Is Business Marketing?

6Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved Chapter 6LOI

Business Products:

Are used to manufacture other products

Become part of another product

Aid the normal operations of an organization

Are acquired for resale without change in form

Business Products

The key is intended use.


REVIEW LEARNING OUTCOMEBusiness Marketing

LOI

cupboards

oven

folderand pen

Teddy bear

CONSUMER BUSINESScupboards

Coffee pot

oven

folderand pen

photocopier


Describe the role of the Internet in

business marketing

Business Marketing on the InternetLO2


LO2

StickinessStickiness

A measure of a Web site’s

effectiveness; calculated by

multiplying the frequency of

visits times the duration of a

visit times the number of pages

viewed during each visit.

Measuring Online Success

Stickiness = Frequency x Duration x Site Reach


LO2Evolution of E-Business Initiatives

• Revenue generation• Aggressive

disintermediation initiatives

• Basic marketingcommunication 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

LO2

THEN

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

Revenue GenerationBasic Marketing Communication

Business Internet Uses

and


Discuss the role of relationship marketing and

strategic alliances inbusiness marketing

Relationship Marketing andStrategic AlliancesLO3


LO3

StrategicAlliance

StrategicAlliance

Strategic Alliances

A cooperative agreement

between business firms

(strategic partnership).


LO3

KeiretsuKeiretsu

Relationships in Other Cultures

A network of interlocking

corporate affiliates.


REVIEW LEARNING OUTCOMERelationship Marketing and Strategic Alliances

LO3

Supplier(like Intel)

SupplierSupplier

Company(like Dell)

Company 1(like Starbucks)

Company 2(like Jim Beam)

Company(like UPS)

Customer/Distributor(like Ford)


Identify the four majorcategories of

business market customers

Major Categories of Business CustomersLO4


LO4Major Categories of Business

Customers

Producers

Resellers

Governments

Institutions

OEMs

WholesalersRetailers

FederalMunicipalLocal

Schools Hospitals CollegesChurches Unions Fraternal groupsCivic Clubs FoundationsNonbusiness organizations


LO4

OriginalEquipment

Manufacturers

OriginalEquipment

Manufacturers

Producers

OEMs.

Individuals and organizations

that buy business goods and

incorporate them into the

products that they produce for

eventual sale to other producers

or to consumers.


REVIEW LEARNING OUTCOMEBusiness Market Customers

LO4

Business MarketingBusiness Marketing

InstitutionsInstitutionsResellersResellers

Wholesalers

Retailers

ProducersProducers

OEMs

GovernmentsGovernments

Federal

State

Municipal

County

Unions

CivicClubs

Other

Churches

Foundations

Nonprofits


Explain the North American Industry

Classification System

North American Industry Classification SystemLO5


NAICSNAICS

LO5 NAICS

A detailed numbering system

developed by the U.S., Canada,

and Mexico to classify North

American business

establishments by their main

production processes.

North American Industry

Classification System

22Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved Chapter 6 LO5

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

Example of NAICS Hierarchy


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

NAICS


Explain the major differences between business and

consumer markets

Business versus Consumer MarketsLO6

25Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved

Chapter 6

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

LO6 Business versus Consumer Markets


LO6

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.

JointJointMultiple 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.

Demand in Business Markets


Multiplier EffectMultiplier Effect

(Accelerator Principle)

(Accelerator Principle)

LO6 Fluctuating Demand

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.


Describe the seven types of business goods

and services

Types of Business ProductsLO7


LO7

Major EquipmentMajor Equipment

Accessory EquipmentAccessory Equipment

Raw MaterialsRaw Materials

Component PartsComponent Parts

Processed MaterialsProcessed Materials

SuppliesSupplies

Business ServicesBusiness Services

Types of Business Products

Online

http://www.sysco.com


REVIEW LEARNING OUTCOMETypes of Business Goods and Services

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


Discuss the unique aspects of business buying behavior

Business Buying BehaviorLO8


Customer ServiceCustomer Service

Business EthicsBusiness Ethics

Buying SituationsBuying Situations

Evaluative CriteriaEvaluative Criteria

Buying CentersBuying Centers

Aspects of Business

BuyingBehavior

Aspects of Business

BuyingBehavior

Business Buying Behavior


Buying CenterBuying Center

LO8 Buying Centers

All those persons in an

organization who become

involved in the purchase

decision.


LO8

InitiatorInitiator InfluencersInfluencers GatekeepersGatekeepers

DeciderDecider PurchaserPurchaser UsersUsers

Roles in the Buying Center

Online

http://www.loctite.com


LO8 Evaluative Criteria

1. Quality

2. Service

3. Price


LO8

New BuyNew BuyA situation requiring the purchase of a product for the first time.

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

ModifiedRebuy

ModifiedRebuy

A situation where the purchaser wants some change in the original good or service.

A situation where the purchaser wants some change in the original good or service.

StraightRebuy

StraightRebuy

A situation in which the purchaser reorders the same goods or services without looking for new information or investigating other suppliers.

A situation in which the purchaser reorders the same goods or services without looking for new information or investigating other suppliers.

Buying Situations


Customer ServiceLO8

Divide customers into groups based on their value

Create policies that govern how service will be allocated among groups


REVIEW LEARNING OUTCOMEBusiness Buying Behavior

LO8

Customer service

InitiatorInfluencerDecider GatekeeperPurchaserUser

Buying Center

Quality Service Price

EvaluativeCriteria

Buying Situations

New buyStraight rebuyModified rebuy

Business Marketing

Business

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