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Chapter 7 - Summary MKTG - MKTG

Introduction to Marketing (University of Regina)

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Chapter 7
BUS210
Business Marketing

What is Business Marketing?

- Business-to-business Marketing: process of matching capabilities between two non-
consumer entities to create value for both organizations and the “customer’s customer”
 Relationships
o Cooperation
o Trust
o Commitment
 Active interaction between businesses
o Transactions + Transactions + Transactions = INTERACTION
 Trust
 Mutual respect
 Common goals through cooperation
 More concentrated

Business vs Consumer Marketing

- Consumer Marketing
 Active seller
 Passive buyer
- Business Marketing
 Active seller
 Active buyer

Network Approach
- Looks at the factors and forces around a firm and the other firms that will have an
impact on their business
- Cooperation of different businesses together
- Way of doing business in Japan and China
 Keiretsu: Japanese term. “Group”. In business used as a term of partnership and
alliances
 Guanxi: Chinese term. The network of relationships that work together and
support one another
- Networks of Centers of Excellence (NCE)
 Government and industry funding to develop networks of organizations to tackle
economic and social changes in Canada

Demand in Business Marketing

- Derived Demand: demand in the business market that comes from demand in the
consumer market
 Monitor consumer preferences
 Influence final consumer preferences
- Inelastic Demand: in regards to price; if price goes up, demand is not effected (ex: gas)
- Joint Demand: demand for parts tied to each other (ex: printer and ink)

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Chapter 7
BUS210
Business Marketing

- Fluctuating Demand
 Less stable than demand for consumer products
 Multiplier Effect: phenomenon in which a small increase/decrease in consumer
demand can produce a much larger change in demand for the facilities and
equipment needed to make the consumer product

Other Fundamental Aspects of Business Marketing

- Customers
 Far few customers
 Much easier to identify them
 Each one crucial to success
- Location of buyers
 More geographically concentrated
 By industry
- Use of reciprocity
 Trust results in buying from each other
 Not unethical nor illegal provided no coercion
- Use of leasing
 Very common to reduce capital outlay
 Creates a relationship
 Builds network

Types of Business Products

- Major equipment: large and expensive purchases that depreciate over time (buildings,
machinery)
- Accessory equipment: smaller in size and expense than major equipment. More
standardized and often sold to consumers (power tools, printers)
- Raw materials: unprocessed/untapped materials that are extracted/harvested for
consumption of further processing (oil, canola, potash)
- Component Parts and Materials: finished products ready for assembly/requiring very
little in the way of further processing to become part of other products (pulp paper,
engines, chemicals)
- Supplies: consumable items that are not part of the final product but provide some
solution to a business’ needs (paper, pencils)
- Business services: complementary and ancillary actions that companies undertake to
meet business customers’ needs

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Chapter 7
BUS210
Business Marketing

Major Categories of Business Customers

- Producers
 OEMs (Original Equipment Manufacturers): individuals and organizations that
buy business goods and incorporate them into the products that they produce
for eventual sale to other producers/consumers
- Resellers
 Retailers and wholesalers
 Buy to resell
- Governments
 Federal government
 Municipal, academic, social and hospitals (MASH)
- Institutions
 Schools
 Churches
 Civic clubs
 Colleges
 Unions
 Foundations

Business Buying Behaviour

- Customer service
- Buying Centres: includes all those people in an organization who become involved in the
purchase decision
 Initiator: person who first suggests making a purchase
 Influencers: People who influence the buying decision. Help define specifications
and provide info for evaluating options
 Decider: person who has the formal/informal power to choose/approve the
selection (management)
 Purchaser: person who actually negotiates the purchase. Could be anyone from
the president of the company to the purchasing agent, depending on the
importance
 Gatekeepers: group members who regulate the flow of info. Frequently the
purchasing agent view this role as a source of their power. An administrative
assistant may also act as a gatekeeper by determining which vendors schedule an
appointment with a buyer
- Evaluation criteria
 Quality  service  price
- Buying situations
 New Task: situation requiring the purchase of a product for the first time
 Modified: normally less critical and less time-consuming than a new buy
 Straight Rebuy: situation in which the purchaser reorders the same
goods/services without looking for new info or new suppliers

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Chapter 7
BUS210
Business Marketing

Business to Business Electronic Commerce

- Selling products online
- Marketing tools include social media

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