B 2 B Markets

By Mahendra Singh Central University of Jharkhand

THE BUSINESS MARKET

Four main components: 1. Commercial market Individuals and firms that acquire products to support, directly or indirectly, production of other goods and services. Largest segment of the business market. 2. Trade industries Retailers or wholesalers that purchase products for resale to others. Also called resellers, marketing intermediaries that operate in the trade sector. 3. Governmentall domestic levels (federal, state, local) and foreign governments; also act as sellerse.g., confiscated goods. 4. Public and private institutions, such as hospitals, churches, colleges and universities, and museums.

B2B MARKETS in age of Internet Connection

More than 94 percent of all Internet sales are B2B transactions. Opens up foreign markets to sellers. Largest segment of the business market.
DIFFERENCES IN FOREIGN BUSINESS MARKETS

May differ due to variations in regulations and cultural practices. Businesses must be willing to adapt to local customs and business practices and research cultural preferences.

Classification of B 2 B Markets (North American Industry Classification System (NAICS)

Federal government developed Standard Industrial Classification in 1930s to subdivide business market into detailed segments. Replaced by NAICS with implementation of NAFTA. North American Industry Classification System Classification used by NAFTA countries to categorize the business marketplace into detailed market segments.

CHARACTERISTICS OF THE B2B MARKET

GEOGRAPHIC MARKET CONCENTRATION

Business market more concentrated than consumer market. Example: Companies that sell to the federal government are often located near Washington, D.C. Businesses becoming less geographically concentrated as technology improves.
SIZES AND NUMBER OF BUYERS

Internet

Business market has smaller number of buyers than consumer market. Many buyers are large organizations, such as Boeing, which buys jet engines.

THE PURCHASE DECISION PROCESS

Sellers must navigate organizational buying processes that often involve multiple decision makers. Purchasing process usually more formal than in consumer market. Purchases may require bidding and negotiations.
BUYER-SELLER RELATIONSHIPS

Often more complex than in consumer market. Greater reliance on relationship marketing.
EVALUATING INTERNATIONAL BUSINESS MARKETS

Business purchasing patterns differ from country to country. Global sourcing Purchasing goods and services from suppliers worldwide.

Can bring significant cost savings but requires adjustments.

BUSINESS MARKET DEMAND

Demand characteristics vary from market to market.

THE MAKE, BUY, OR LEASE DECISION

Firms acquiring needed products can get them in one of three ways: Make the good or provide the service in-house. Purchase it from another organization. Lease it from another organization. Producing the item may be cheapest route, but most firms cannot make all of the products they need. Many companies purchase many of the goods they need. Companies can spread out costs through leasing.

THE RISE OF OFFSHORING AND OUTSOURCING

Off shoring Movement of high-wage jobs from one country to lower-cost overseas locations. Example: China makes two-thirds of the worlds copiers, microwaves, DVD players, and shoes, and virtually all of the worlds toys. Allows firms to concentrate their resources on their core business and access specialized talent or expertise. Near shoring Moving jobs to vendors in countries close to the businesss home country. U.S. firms often near shore in Canada or Mexico. Out shoring Using outside vendors to provide goods and services formerly produced in-house.

Commonly out shore for three reasons: cost reduction, quality and speed of software maintenance and development, and greater value.

CHALLENGES OF INSTITUTIONAL MARKETS

Institutional buyers include schools, hospitals, libraries, foundations, and others. Have widely diverse buying practices among, and even within, institutions. Multiple buying influences can affect buying decisions, such as conflicts between professional staff and purchasing departments.
CHALLENGES OF INTERNATIONAL MARKETS

Marketers must consider buyers attitudes and cultural patterns.

Local industries, economic conditions, geographic characteristics, and legal restrictions must also be considered.
Remanufacturing, or restoring worn-out products to like-new condition, can be an important strategy in places that cannot afford new products. Foreign governments are also an important market.