Business to Business Marketing

What is the business market? All organizations that acquire good &

services uses to produce other products or services that are sold, rented or supplied to others

Major Industries B-B: Agriculture Forestry Fisheries Mining Manufacturing Construction Transportation Communication Public utilities Banking Finance Insurance Distribution Services

Fewer, Larger Buyers

o Goodyear Tires needs contracts from major automakers Ford, GM, Chrysler

o Suppliers for defense (Lockheed, Boeing)

Trend—Big business selling to smaller businesses

Close Supplier-Customer Relationship

Customize because of the power of larger customers

Reciprocal Relationship

EX. Paper manufacturer buys chemicals from chemical company that buys their paper

Professional Purchasing

Trained purchasing agents

RFQ’s, RFP’s and purchase contracts

marketers have to provide more technical data and formal proposals

specific differentiation on product & priceWhat do RFQ and RFP mean?

Well-trained, very knowledgeable salespeople

More people influence buying decisions/committees

Several Buying Influences

Multiple Sales CallsMore sales calls—EVEN YEARS

for a sale4-4.5 calls to close an

average industrial saleLarge capital projects—quote

to completed project can take years

Derived Demand

Steel for big 3 auto makers depends on consumer demand for SUV’s and trucks (more steel req’d)

If recession, demand lower, can’t increase market

Inelastic demandPRICE DOES NOT AFFECT DEMAND

Example: shoe leather for shoes—regardless of price shoe manufacturers will pay for the necessary leather

Direct Purchasing Business buyers often buy directly from

manufacturers rather than intermediaries—especially complex items such as aircraft

BUYING CENTER Initiators Users Influencers Deciders Approvers Buyers Gatekeepers

Minimum of 5 or 6 members: including government, technical advisors, etc.

Kodak Sold X-ray film to hospital lab technicians

Realized professional making purchasing decisions

Advertising must reach NEW decision makers

Four Types of Business Customers

Price-oriented (transactional)

Solution oriented (consultative)

Gold-standard (quality)

Strategic-value (long-term/sole supplier)