BUSINESS MARKETING

KUMAR GAURAV PRASAD

PM2019048

Q1) The 12 major differences between b2b and b2c marketing are:

1. Interdependence of departments
2. Differences in product management responsibilities
3. Marketing strategy=corporate strategy
4. More rational decision
5. Narrower customer base More buying influences and locations
6. Different segmentation
7. More markets and channels
8. Personal customer contact more important
9. Technology
10. Derived demand
11. Less end-user info
12. Sales cycle are often quite long in B2B than B2C

As B2B marketing is very different than B2C marketing. Hence it is very important for a B2B marketer
to understand these difference. These difference tell you where you need to change you marketing
so that it suits you customer.

1. Interdependence of departments- In B2B the dependence of one department on other is more

than in B2C marketing hence we need to incorporate a strategy which involves all the
department. Example- In B2C customers buy what we sell but in B2B we sell what customers
want to buy and it varies with each different customer. Such as customer want a particular kind
of lift and at a particular price hence we need finance department to understand is it possible
for us to take that project at that price and production department to understand whether we
can make that lift in stipulated time.
2. Differences in product management responsibilities-
3. Marketing strategy=corporate strategy
4. More rational decision
5. Narrower customer base More buying influences and locations
6. Different segmentation
7. More markets and channels
8. Personal customer contact more important
9. Technology
10. Derived demand
11. Less end-user info
12. Sales cycle are often quite long in B2B than B2C
Q2) Market Leader Defense Strategies

 Position defense - This involves building barriers which prevent or restrict competitors from
entering the market. These barriers may be related to inputs, process.
 Flanking defense - Since market leaders often ignore parts of the market which they feel are not
worth approaching, competitors can sometimes find an opening without directly confronting
the market leader.
 Pre-emptive defense - The market leader will sometimes attack the other companies before
they can move in, for example by using a massive price cut to stave off a threat of entry.
Counter-offensive defense when attacked, the market leader launches an instant counter-
attack. This can take the form of a promotional campaign, a price war or the development ofa
“me-too” version of the competitor’s product.
 Mobile defense - The market leader moves into new markets before the competitors can do so.
In effect, the market leader takes a proactive approach.
 Contraction defense - Sometimes the market leader finds itself unable to defend all its markets
and withdraws to its core business. In some cases this has not proved sufficient, and the
company has continued to retreat until it has nowhere left to go.

Market Challenger Defense Strategies

 Frontal attack - In a frontal attack the market challenger attacks the target company by matching
its efforts across the board. The challenger attacks the competitor’s strengths rather than its
weaknesses, in effect entering into a war of attrition. The company with the greatest resources
will usually win in these circumstances, but such frontal attacks are costly for all concerned.
 Flanking attack - The flanking attack concentrates on the competitor’s weaknesses, seeking out
areas where the competitor is unable to compete effectively. The challenger will identify areas
of the business which the competitor is serving badly. Sometimes the company under attack will
simply retreat rather than fight for a market which is marginal for it, so this can be an effective
strategy for a small firm attacking a larger one.
 Encirclement attack - This strategy involves attacking from several directions at once. It works
best when the attacker has more resources than the defender.
 Bypass attack - Here the challenger bypasses the other firms entirely and targets totally new
markets. This is particularly effective in a global context, where a new market may open up in
which the leading competitors are not represented.
 Guerrilla attack - The challenger makes occasional attacks on a larger competitor, using different
tactics each time in order to confuse the target competitor. The constant switching of tactics
does not allow the competitor time to formulate a response, in effect forcing the competitor to
become a follower.

Q3) suppose we increase price from 100 to 105. Assuming we are selling 100 units.
 Original New
Sales 10000 10500
Less: Direct cost 5000 5000
Less: Admin cost 4000 4000
Profit 1000 1500
Hence we can see that by increasing the price just by 5% our profit has increased by 50%. This is known
as magic of price which implies that a small increase in price can lead to huge increase in profit.
However there are some flaws to it as we are assuming the demand will remain same even after the
increase in price.

In B2B the demand curve is stepped. Which depicts that there is a range till which demand will not
change even if we increase the price. Hence in b2b we can take advantage of this magic of price.

The major pricing objectives are:

 Survival – When companies have underutilization of production, intense competition, and large
amount of inventory the firm might choose to survival pricing policy. As operating a low or no
profit is better than incurring huge loss by closing down the business. Hence in this company
main objective is to cover the variable cost and some fixed cost. It is only for a short term and
after the company happens to survival such difficult situation they must again raise the price.
 Maximum Sales Growth - Some companies want to maximize unit sales and for that they set the
lowest price assuming the market is price sensitive. This is called market penetration pricing.
This is done with a belief that higher sales volume will lead to lower unit cost and higher long
run profit.
 Product Quality Leadership - A company may have an objective to be product quality leader in a
market. The company therefore, produces superior quality product and charges slightly higher
prices than the competitor’s prices. Such pricing objective results in higher than average rate of
return to the company.

Q4) Government departments are largest categories of buyers in the market. Government departments
have strict rules and regulations and to close a deal strong negotiating skill are needed. Government
deals are characterized by the tendering system for the new computer system. Governments may issue
a “cost-plus” contract, in which the organization is given a specific task to carry out, and bills according
to the cost of the contract plus an agreed profit margin.

Q5)

Consideration Consumer Business to Business

Universe Large. Dependent on category under
investigation but usually unlimited
Respondent Fairly easy. Can interview in malls at
accessibility home, on the telephone, via the
Internet or using mail techniques
Small. Fairly limited in total population
and even more so if within a defined
industry category.
Difficult. Usually only during working
hours at plant, office, or on the road
Respondent is usually preoccupied with
other priorities
 Respondent Over the years has become more and
cooperation more difficult, yet millions of consumers
have never been interviewed
A major concern. Due to the small
population, many respondents are being
over-researched. The purchaser and
decision makers in the business firm are
the buyers of a variety of products and
services from office supplies to heavy
equipment.

Sample size Can usually be drawn as large as Usually much smaller than consumer
required for statistical confidence since sample, yet the statistical confidence is
the population is in the hundreds of equal to the relationship of the sample
millions. to the total population

Respondent Usually fairly simple. Those aware of a
definitions category or brand, users of a category or
brand, demographic criteria, etc. The
ultimate purchaser is also a user for
most consumer products and services.
Interviewers Can usually be easily trained. They are
also consumers and tend to be
somewhat familiar with the area under
investigation for most categories.
Study costs Key dictators of cost are sample size and
incidence. Lower incidence usage
categories (for example, users of soft
moist dog food, powdered breakfast
beverages, member of the etc.) or
demographic or behavioural screening
criteria (attend a movie at least once a
month, over 65 years of age, and own a
cat, etc.) can up costs considerably
Somewhat more difficult. The user and
the purchasing decision maker in most
cases are not the same. The users tend
not to be the ultimate purchasers and in
many cases do not have any influence
on the decision-making process.
Difficult to find good B2B interviewers.
At least a working knowledge of the
product class is essential. Preferably
more than just a working knowledge.
Relative to consumer research, the
critical elements resulting in significantly
higher per-interview costs are: lower
incidence levels, difficulties in locating
the “right” respondent (that is, the
correct buying centre or network) and
securing cooperation, time, and
concentration of effort for the interview
itself.

Section B

Q. a) The commercial buying behavior is different than individual buying behavior in many ways:

 Commercial buyers will require huge no doors for their office whereas in individual buyer will
require only few.
 In office door they will require doors which are cost effective and they can compromise on the
quality for getting the benefit of cost whereas in individual household they can compromise cost
for quality as houses are bought once in lifetime and everyone wants their house to be safe.
 Office doors are simpler and its main purpose is to serve as a door but in house door is the
entering point and it represents the beauty of house as well. Hence individual wants their doors
to look more stylish to represent their status in their locality.
 In office we generally see glass or steel doors which helps to keep the cold air of ac inside but in
household doors are usually made of premium wood.

b) Raj doors are in a highly competitive market as there are many players existing in the market.
Market leader are having only 28% and 20% market share and Raj doors is having 14% market share.
Wooden and plastic doors are major segments in which raj doors and others are operating. Raj
doors are selling 3 different variety of doors which are Solidex, Fibrex and Lightex and they are
having sub brands in GTEX brand also. The area where Raj doors are lacking is the wooden doors as
he is not focusing on wooden door much. They need to create a brand for wooden doors as well and
then use price differentiation for wooden brands as per need of the customers.

c) Hence there are 2 other players which are having higher market share than Raj doors I would
suggest raj to act as a challenger and hence following strategy can be implemented:

 I would suggest him to identify areas in which the market leaders are not performing well or
areas in which the 2 market leaders are having a price war. There is an opportunity for Raj
doors to enter in their market in those segments.
 The company can also come up with new variants of doors which are not there in the
market or which are not sold by the market leaders.
 Raj doors can also use Guerrilla attack to confuse the market leaders by continuously
changing their tactics and attacking the leader which various variants or various promotional
techniques.
 They can also come up with the products which Raj doors are not having but market leaders
are selling such as wooden doors to compete in the market.
 They can also launch me too brands at cheaper price to eat up the market leaders share.
 5 market segments they deal with like government organisations, residential, commercial,
individual and fabricators. Government sectors like railways, navy, airways all uses metallic
doors, so they should focus more on these sectors.