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chapter 7 Business Marketing (B2B marketing)

business marketing
marketing of goods and service to people and organizations for purposes other than personal consumption
ex: the sale of a PC to your college
business product/industrial product
used to manufacture good or services to facilitate an organization’s operations, or to resell to other consumers.
consumer product
bought to satisfy an individual’s wants or needs
intended use, no physical form
the key characteristic distinguishing business products from consumer products
business customers
some large firms that produce goods like steel, computer memory chips, or production equipment market exclusively to___
business to business electronic commerce
the use of the internet to facilitate activities between organizations. this method has evolved and grown rapidly.
the same
companies selling to business buyers face _______ challenges as all markets, including determining the target market and deciding how to best reach it
social media has gone mainstream- companies adopt social media strategies as a faster pace every year
business marketing can be tough because
branding
the number one goal reported for social media marketing
push out content
while social media is indeed used for branding, it is also used to _________- a tactic that has become important.
content marketing
based on the idea of developing valuable content for interested audience members-namely through videos, white papers, e-mail newsletters, webinars, and blog posts- and subsequently using e-mail marketing, search engine optimization, paid search, and display advertising to “pull” customers to the site.
blogs, social networking sites, Twitter, video streaming sites, e-newsletters, and mobile marketing
tools most commonly used by B2B marketers
Web analytics (such as Google analytics, or Onmiture
most marketers use some sort of ________ to determine which activities generate leads and then use that information to make their web sites more effective. metrics include external search traffic, internal search engine analysts, and key word search results.
recency, frequency, monetary value
three of the most important measurements of online success
recency
relates to the fact that customers who have made a purchase recently are more likely to purchase again in the near future
frequency data
helps marketers identify frequent purchases who are most likely to repeat that behavior in the future
monetary value of sales
important because big spenders can be the most profitable customers for a business
conversion task
the behavior that the marketer wants the visitor to take-such as signing up for email or watching a video
conversion rate
defined as a ratio of the number of people who visited the site to the number of people who went on to complete the desired action
stickiness
one common way of evaluating a web application, web site, or other piece of interactive technology by combing frequency data with the length of time a visitor spent on the web sit and the number of pages viewed during each visit

frequency x duration x site reach

quickly determine whether visitors will embrace the change or not.
by measuring the stickiness factor of a web site before or after a design or function change, the marketer can ____
gains an even more precise understanding of how a site change affects business
by adding purchase information to determine the level of stickiness needed to provide a desired purchased, the marketer ___
trends in B-to-B marketing
-marketers have become better at using the internet
-marketers not only have website but also have a site that attracts, interests, satisfies, informs, and retains customers
-new apps about customers are developed that lower cost, increase supply chain efficiency, or enhance customer loyalty, retention and trust.
that suppliers know them personally, monitor their movement, and offer personal interaction through social media, etc.
what business costumers expect
distributors
many people used to think that the internet would eliminate the need for _______, but this has occurred less frequently than expected because they still perform important functions such as providing credit, aggregating supplies from different sources, making deliveries, and processing returns
social media
_______ usage in B2B and B2C marketing has been the most pervasive marketing trend in the past 5 years. it requires a lot of adjustment and constant evaluation.
content
the key to social media for B2B marketers is to create compelling and useful ___ for consumers. for example, Marketo develop white papers and ebooks on topics such as generating leads using social media for its customers and potential customers
Other goals for B2B marketers
using social media to gather leads
product promotion
traffic building
search engine optimization
competitive intelligence and listening
customer feedback/support
product development
awareness, engagement, conversions
some metrics particularly useful for increasing the success of a social media campaign
awareness
the attention that social media attracts, such as number of followers
engagement
refers to the interactions between the brand and audience
conversions
occur when action is taken
relationship marketing
a strategy that entails seeking and establishing ongoing partnerships with customers
more profitable
loyal customers are __________ than those who are price sensitive and perceive little or no difference among brands or suppliers
social networking sites
encourage businesses to shop around and research options for all needs. this means that for many suppliers retaining their current customer has become a big focus.
building long term relationships with customers
offers companies a way to build competitive advantage
strategic allience or partnership
a cooperative agreement between business firms. can take the form of licensing or distribution agreements , joint ventures, research and development consortia, and partnerships. they may be between manufacturers, manufacturers and customers, manufacturers and suppliers, and manufacturers and channel intermediaries.

used to strengthen operations and better compete

fierce competitors
sometimes alliance partners are _____. for example, the partnership between sports and concert promotion company Anschutz Entertainment Group and online ticket marketplace StubHub. On StubHub, even goers can bypass official ticket retailers like AEG and buy them directly from other people at a discount, so AEG incorporated StubHub tickets into its own checkout system, collection a commission on each StubHub order
in different industries
other alliances form btwn companies that operate____. H&R block partners with Arizona’s private catholic school system in a marketing campaign highlighting the Private Education tax credit, allowing low-income students to attend the state’s catholic private schools.
exhibit 7.1 on page 122 example!!
relationship commitment
means that a firm believes an ongoing relationship with some other firm is so important that it warrants maximum efforts at maintaining it indefinitely.
trust
exists when one party has confidence in an exchange partner’s reliability and integrity
relationships in other cultures
-businesses in china, japan, korea, mexico, and europe rely heavily on relationships
-in Japan, relationships are developed through amae, or indulgent dependency (the feeling of nurturing concern for, and dependence on one another)
keiretsu
a networking of interlocking affiliates. executives may sit on the boards of their customers or supplies. members of this trade with each other whenever possible and often engage in joint product development, finance, and marketing activity.
relationships
many firms have found that the best way to compete in asian countries is to form _____ with asian firms. Good has allied with several Asian tech companies to introduce its mapping and location based services in new Asia markets.
the business market consists of four major categories of customers
producers, resellers, governments, and institutions
producers
include profit-oriented people and organizations that use purchased goods and services to product their own, to incorporate in other products or facilitate in the daily operations.examples include finance, real estate, and food service firms, construction, manufacturing transportation.
original equipment manufacturers (OEM)
producers are often called _______. this includes all individuals/organizations that buy business goods and incorporate them into the products they produce for sale

ex: GM that buy steel, paint, tires, and batteries

resellers
includes retail and wholesale businesses that buy finished goods and resell them for a profit. they sell mainly to final consumers; wholesalers sell mostly to retailers
ex: P&G, Kraft, Coca Cola sell directly to large retailers and retail chains through wholesalers to smaller retail units
governments
include federal, state, and local buying units. they account for the greatest volume of purchases in the US
marketing to these agencies can be hard.
contracts for government purchases are often put out for big. interested vendors submit bids to provide specific products during a particular time. grounds for rejecting the lowest bid include lack of experience, inadequate financing, past poor performance.
bidding allows suppliers a fair chance at winning
federal government
we can view it as a combo of several large companies with overlapping responsibility and thousands of small independent units.
state, county and city government
selling to these governments is more simple.
includes school districts, highway departments, housing agencies, etc.
institutions
includes schools, hospitals, college, churches, labor unions, fraternal organizations, civic clubs, etc.
some institutional purchasers operate similar to governments in that the purchasing process is influence, administered and determined by gov’t units.
The North American Industry Classification System (NAICS)
an industry classification system introduced in 1997 to replace the SIC. it classifies North American business establishments.
this is a special tool for marketers engaged in analyzing, segmenting, and targeting markets.
each classification group is relatively homogenous in terms of raw materials required, components used, manufacturing processes employed, and problems faced.
it can also be used for identifying potential new customers (REVIEW IN BOOK)
the more digits, the more homogenous
the same
the basic philosophy and practice of marketing are _____ whether the customer is a business organization or a consumer
demand
consumer ___is quite different from that in the business market. business demand is derived, inelastic, joint, and fluctuating
derived demand
organizations buy products to be used in producing their customer’s products.
ex: the number of rills that a firm needs is derived from the demand for products that are produced using these machines.

business marketers must carefully monitor their customers’ forecasts because derived demand is based on expectations of future demand for those consumer’s products

inelastic demand
increase or decrease in price will not hugely affect demand
the price of a product used in the production of a final product is often minor.
joint demand
occurs when two or more items are used together in a final product. ex: a decline in the availability of memory chips will slow production of microcomputers, which will reduce demand for disk drives.
fluctuating demand
demand for business products tends to be less stable
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. this is called the multiplier effect.
purchase volume
business customers tend to buy large quantities.
number of customers
business marketers usually have far fewer customers than consumer marketers, so its easier to identify prospective buyers, monitor current needs and levels of satisfaction, and create relationships.
the main disadvantage is that each customer becomes crucial
concentration of customers
manufacturing operations in the US tend to be more concentrated than consumer markets
distribution structure
many consumer products pass through a distribution system. in business marketing, channels of distribution are usually shorter. there are more direct channels
business to business online exchange
electronic trading floor that provides companies with integrated links to their customers and suppliers. the goal is to simplify purchasing and make it more efficient
nature of buying
business buyers often approach purchasing more formally. some professional purchasers earn the CPM
nature of buying influence
typically more people are involved in a single business purchase decision in a consumer purchase.
type of negotiations
consumers are used to negotiating price on cars and real estate, but usually consumers expect sellers to set price and other conditions. but negotiating in business is common. buyers and sellers negotiate product specifications, delivery dates, payment terms, and other matters. final contracts are often very detailed.
use of reciprocity
business purchases often choose to buy from their own customers. for example, GM buys engines for use in its car and trucks from BorgWarner, which is turn buys many of the cars and trucks it needs from GM.
use of leasing
consumers normally buy products rather than lease them. but leasing allows firms to reduce capital outflow, acquire a seller’s latest products, receive better services, and gain tax advantages. the benefits to the leaser include greater total revenue from leasing compared to selling and an opportunity to do business with customers who cannot afford to buy.
primary promotional method
business marketers tend to emphasize personal selling in their promotion efforts, especially for pricy item, custom products, large purchases, and situations with negotiations.
types of business products
major equipment, accessory equipment, raw materials, component parts, processed material, supplies, business services
major equipment
includes capital goods such as large or expensive machines, mainframe computers, airplanes, buildings. this stuff is depreciated over time. it is often custom designed for each consumer. personal selling is an important strategy for marketers.
accessory equipment
generally less expensive and shorter lived like microcomputers, power tools, and table drills. it is often charged as an expense in the year it is bought. they are often more standardized and customers are more dispersed. advertising is a better tool for this
raw materials
examples include mineral ore, timber, corn, vegetables, etc. extensive users usually buy big quantities. none can greatly influence price or supply because the market sets the price. promotion is almost always personal selling and distribution channels are usually direct.
component parts
either finished items ready for assembly or products that need little processing. examples include tired, and motors. they can retain their identity after becoming part of the product. there are two important markets: the OEM and the replacement

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processed materials
products used directly in manufacturing other products. they’ve had some processing. it includes, sheet metal, chemicals, treated lumber, corn syrup, and plastics. they do not retain their identity.
most are marketed to OEMS or distributors servicing OEM market.
supplies
consumable items that do not become part of the final product such as lube, detergents, paper towels, pencils, etc.they are normally standardized. this category is often in the MRO category (maintenance, repair, operating) and competition is intense.
business services
expense items that don’t become part of a final product. business often retain outside providers.
business buying behavior has 5 aspects
buying centers, evaluative criteria, buying situations, ethics, customer service
buying centers
all people in an organization that become involved in the purchase decision
buying center roles
initiator: suggests making the purchase
influencer/evaluator: influence buying decision and define specification and provide info for evaluating options
gatekeepers: regulate information flow
decider: chooses or approves selection of the supplier or brand
purchaser: negotiates the buy
users: use the product
what executives look for in sales reps
ability to marshal resources
understand buyer’s business goals
responsive to requests
willingness to be accountable
evaluative criteria
quality, service, price
new buy
situation requiring the purchase of a product for the first time.
modified rebuy
less critical and less time consuming. the purchaser wants some change in the original good/service. it may be a new color, more respondents in a marketing research study, or additional services in a contract.
straight rebuy
the purchaser reorders the same goods or services without looking for new information or investigating other suppliers.

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