Business Markets

(B2B Marketing)
VARTIKA SRIVASTAVA
Sessions 1 and 2

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 Course Outline
B2B Marketing
2022-2024 Batch
Course duration: 30 hrs (20 sessions) Credits: 3

Name of the Faculty: Prof. Manoj Kumar Jha, Prof. Neeraj Pandey, Prof. Vartika Srivastava, Guest
Faculty*

Course Description: Welcome to the domain of Business-to-Business (B2B) Marketing!

• The course will help to improve your understanding of the unique aspects of business markets.
• The course would cover details about strategic as well as tactical approaches to initiate profitable
marketing interventions in organizations.
• Students will gain a breadth of knowledge in the fundamentals of B2B Marketing through
conceptual theories, examples, business applications, and cases.

Learning Objectives:
This course is a study of the core concepts of marketing as applied to Business-to-Business (B2B)
activity. Upon completion of the course students should be able to:
• Demonstrate an understanding of the basic principles of B2B marketing.
• Demonstrate an understanding of the broad concepts of working with and marketing for
business-to-business companies.
• Demonstrate the uses of the marketing mix elements in a B2B corporate strategy; and
• Demonstrate critical thinking skills through the completion of the group project.

Pedagogy:
The course will involve classroom teaching, case studies, group exercises, seminars, assignment,
and discussion in the class. Material for this course is derived from many sources including
practitioners, readings from textbooks, supplemental texts (journal articles, newspapers, and
magazines), various online sources, and assignments. Being a Marketing course, we can’t learn if
we don’t go beyond the classroom! Hence, a considerable part of the learning will also be derived
from the marketplace. The more you add value in the classroom by bringing in interesting
experiences, insights, additional reading material like recent news articles, we will all be able to
learn more from each other.

Textbook:
Michael Hutt, Dheeraj Sharma and Thomas Speh. B2B Marketing, 11th Edition.

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 Group Project Marks - 10

Review an Indian B2B focused company. Groups are expected to interview at least 3 senior
professional from the company and answer the following questions

Write a detailed note on possible customer segments in that industry, what is

1 the segment that your chosen firm is targeting & how - offering/pricing/
anything else.

What is the sales strategy that they adopt? Give evidences to support your
2
reasoning

What are the major challenges that they face in growing their business; What
3
solutions would you recommend for the same?

Names, Designation and Contact of the professional interviewed must be provided

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 Code of Conduct Expected from
Students
1. Please be in the classroom on time. Students shall not be permitted to enter the class once the session begins
2. Keep your phone away, while you are in the classroom; trust us parallel processing will drain you 
3. Academic Honesty - Following the Honour Code of NITIE
 Plagiarism will not be tolerated! Disciplinary Committee.
 Stealing/copying in exams and assignments again a big NO!
 Privacy and Copyrights - Do NOT take screenshots or record sessions without instructor permission.
 Do NOT post/share course material with outsiders/third parties. This will be a serious offence.
 Also, reference everything right.
 Respect other individuals.
4. Classroom Etiquette
 Be polite: Always use an appropriate salutation and the person’s name
 Be courteous: Use professional language while communicating
 Be compliant: Comply with the rules your instructor will establish inside the classroom
 Be respectful: towards your peers and your instructor
 Be legal: Obey copyright laws
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Business Marketing
• “Business Marketing” or “Industrial Marketing” are used
interchangeably
• 50% of all B school graduates join firms that directly compete
in the business market
• Because of interest in high-tech markets and the size of
industrial markets, increased attention is being paid to
business marketing management

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Learning Objectives
Nature and scope of the business markets

Characteristics of the business markets

Components of business markets

Characteristics of business market demand

Buying processes in business markets

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 B2B Marketing is Huge
Business marketers serve the largest markets of all.

Business markets involve many more rupees, dollars and items as compared to consumer markets.

Few big customers can account for enormous levels of purchasing activity. (India’s 100 largest Manufacturing
companies purchase more than INR 50 Lakh Crore worth of goods and services annually.)

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Top B2B
Brands??

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 • Are markets for products and services from
local to international
• Bought by:
• Businesses
WHAT ARE • Government bodies
BUSINESS • Institutions
• For:
MARKETS? • Incorporation
• Consumption
• Use
• Resale
• Example of each of these functions

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WHAT ARE BUSINESS MARKETS?
Individuals and organizations that buy goods and services to:

Make other
goods and services Conduct the Resell
Organization’s
operations

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What Are Business Products?

• Used to manufacture
other products
• Become part of another product
• Aid in the normal operations of
an organization
• Are acquired for resale Key is the product’s
without change in form intended
use and the intended
• A product purchased for personal use is consumer is different
considered a consumer good

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WHAT ARE BUSINESS PRODUCTS?

Airplanes

INTENDED USE

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Consumer Product or Business Product?
• The intended use determines whether or not a product is a consumer
product or a business product

• If Harpic is used by the ultimate consumer to clean his/her house, it is a

consumer product.

• If Harpic is being used to clean a hospital or a university, it is a business

product.

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Some consumer products become industrial
products
• Nestle India not only sells their well-known food products directly to
the consumer but also markets them to other industries to be used as
ingredients for other derived products.

• Many companies successfully sell to both consumer and business

markets.

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B2C and B2B
The Consumer Market (B2C) and the Business Market (B2B) at
Wipro
Infotech

B2C B2B

Customers: Individuals & Businesses Institutions Government

Households Global Healthcare State
Large corporations Education Central
Small & Medium
sized businesses

Selected PCs PCs

Products: Printers Enterprise Storage
Laptops Servers
Simple Service Complex Service Offerings
Agreements
Mobile applications

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 Class Exercise: Groups of 4-5
Using the categories provided interpret and convert the common B2C products into a B2B product by indicating both
the intended consumer and the intended use of the product.

B2C B2C B2B B2B

PRODUCT USAGE INTENDED USAGE INTENDED

PURPOSE CONSUMER PURPOSE CONSUMER

3M SANDPAPER
JAGUAR FITTINGS
CLOROX BLEACH
COCA-COLA CARBONATED BEVERAGE
DELL LAPTOP COMPUTER
PHILIPS FLUORESCENT LIGHT FIXTURE
NESTLE CHOCOLATES
NESCAFE ESPRESSO MACHINE
MCDONALD BURGERS
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Characteristics of Business Market
Customers
Characteristic
 Business market customers are comprised of commercial
enterprises, institutions, and governments.
 A single purchase by a business customer is far larger than
that of an individual consumer.
 The demand for industrial products is derived from the
ultimate demand for consumer products.
 Relationships between business marketers tend to be close
and enduring.
 Buying decisions by business customers often involve
multiple buying influences rather than a single decision
maker.
 While serving different types of customers, business
marketers and consumer-goods marketers share the same job
titles.
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Example
 Among HCL Technology’s customers are Reliance Industries
Ltd, State Bank of India and many central and state
government’s entities.
 An individual may buy one unit of a software package
upgrade from Microsoft while Citigroup purchases 10,000.
 New home purchases stimulate the demand for paint,
appliances, furniture, lumber, and a wealth of other
products.
 IBM’s relationship with some key customers spans decades.
 A cross-functional team at Hindustan Unilever (HUL)
evaluates alternative laptop PCs and selects Hewlett-
Packard.
 Job titles include marketing manager, product manager, sales
manager, account manager.
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Types of Business Customers
OEMs
Commercial
Firms Wholesalers
Retailers
Resellers

Central State
Governments
Government Government

Educational Civic Societies Healthcare

Institutions
Institutes Nonprofits Other

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Business Market Customer Commercial
Enterprises
Three categories of Commercial Customers:

• Users
• OEMs
• Dealers and distributors

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 Users
• Users purchase industrial products or services to produce
other goods or services that are, in turn, sold in the
business or consumer markets.

• Example: Tata Motors buys machines to produce

automobiles that are sold to consumers and businesses.
Tata Motors is a user.

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 Producers
• Profit oriented companies

• Produce products - OEM’s and

Subcontractors

• E.g., Intel produces microchips

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 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 or to consumers.
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Business Markets - Characteristics
Commercial Institutions

Profile Size

Even Small
Regional
differences
Concentration
are important

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 Institutional Markets

Low Budgets Captive Patrons

Government Markets

Specialized Buying Public Review

Outside Publics Open Bids

Negotiated Contracts

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Government as
Customers
• Central and State Government and local bodies
• Purchase up to 1/3 Gross Domestic Product (GDP);
Significant rise in government spending
• Government units purchase virtually every category
of goods and services
• Office supplies to food to military equipment
• Generally use bidding approach; Two general
purchasing format
• Formal advertising – standardized products
• Negotiated contracts
• Goods and services that cannot be
differentiated on basis of price alone
• To reach out to internet savvy population, e-
government initiatives launched
• Sparking new avenues for business marketers

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Institutions as Customers

• This is the nonprofit segment of the market that does not seek to achieve normal business goals such as ROI,
%share of market or profit
• Market includes universities, hospitals, schools, religious bodies, NGOs, foundations, etc.

• Make up sizable market

• E.g., In 2019-20, India allocated Rs 6.43 lakh crore ($88 billion) of public funds for education; Of this, Rs
56,537 crore ($7.74 billion) to school education--60%--and Rs 38,317 crore ($5.25 billion) to higher education.

• Govt. institutions can be constrained by political considerations and laws

• Private institutions may have broader range of requirements
• Group purchasing is important – secure purchasing efficiencies
• Carefully crafted marketing strategy with benefits and schedule
• E.g., Bharti Airtel has adopted Internet as the central marketing strategy to provide benefits and services

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Class Exercise 2
1. Randomly choose a number between 1- 18 - Type of customer
2. Randomly choose a number between 1- 18 - B2B Product

3. “Your team is has been assigned as the new account manager for the product category provided and you
are to call on the business market customer to present your offering. Describe a usage situation that would
be appropriate for this combination.”

Each group will be given 5-10 minutes to discuss and write a brief description as to how the type of Business
Market selected would use and or buy the product selected.

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 TYPES OF BUSINESS CUSTOMERS

MANUFACTURER CONSTRUCTION SERVICE FIRMS

WHOLESALERS RETAILERS SCHOOLS
FOUNDATIONS ART GALLERIES CLINICS

LOCAL GOVERNMENTS/
STATE GOVERNMENT SHIPPING SERVICES
MUNICIPALITIES

PROFESSIONAL GROUPS LIBRARIES HEALTH CARE ORGANIZATIONS

CENTRAL GOVERNMENT CENTRAL GOVERNMENT

RESELLERS
COMMERCIAL DEFENSE

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 LIST OF PRODUCTS

ADVERTISING AND MARKETING

SURGICAL SUPPLIES FINANCIAL SERVICES
SERVICES
FORKLIFTS INSURANCE LAPTOP COMPUTERS

SECURITY SYSTEMS AIRPLANES GRAPES

STEEL DRUMS CHEMICALS SHIPPING

TRAVEL SERVICES PAINT LIGHT FIXTURES

CARBONATED BEVERAGES ASPHALT PAVING SMARTPHONE

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 Business Marketers vs.
Consumer-Goods Marketers
Similarly:

Both marketers benefit by employing a market

orientation, i.e.:

• They need to understand and satisfy

customer needs

• They are both market driven

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 1. A set of values and beliefs that
places customers’ interests first
2. An ability to generate, disseminate,
Market-Driven and productively use superior
Firms information about customers and
competitors
Demonstrate… 3. The coordinated use of
interfunctional resources (e.g.,
research and development,
manufacturing)

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Market-Driven
Firms
Have distinctive capabilities:

• Market sensing capability: A

company’s ability to sense
change and to anticipate
customer responses

• Customer linking: The ability

to develop and manage close
customer relationships

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Market-Driven
Companies
Deliver Value Propositions
• Create programs that include
products, services, ideas and
solutions to problems that offer
value and provide opportunities for
their customers.

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Three Types of Value Proposition

Source: Reprinted by permission of Harvard Business Review. Exhibit from “Customer Value Propositions in Business Markets” by James C. Anderson, James A. Narus, and
Wouter van Rossum, March 2006. Copyright © 2006 by the Harvard Business School Publishing Corporation; all rights reserved.

Frank V. Cespedes and Das Narayandas, Core Reading: Business-to-Business Marketing, HBP No. 8145 (Boston: Harvard Business School Publishing, 2019).
Copying or posting is an infringement of copyright.
Consumer Vs. Consumer Markets Business Markets
Business Large no. of buyers, Similar Fewer customers
Markets wants

Transaction are small in Large transactions

value
Business markets have some clear
differences
Products can be mass- Customized product or
• Organization must acquire and produced price
retain profitable customers in both
markets
• However, often business markets spend
Selling process is brief, end- Selling is long and
less energy and efforts to communicate user focused complex process
the benefits that they deliver
• Marketers need to think and sell in Demand in elastic and Demand is Inelastic and
terms of ‘BENEFITS’ they can offer unpredictable usually derived

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 Business vs. Consumer Market
Mrk.Characteristics Consumer Business Mrk.Characteristics Consumer Business
Number of buyers Many Few Demand Normal Fluctuating

Size of Buyers Small Large Prof. Purchasing No Yes

Supplier Relations No Close Purchasing Middlemen Direct

Concentration No. Yes Buying Influence No Yes

Demand Unpredictable Derived Reciprocity No Yes

Demand Elastic Inelastic Leasing Some Heavy

Due to these differences, business marketers need to understand how demand

for industrial products and services differs from consumer demand.
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 Derived demand

Business Fluctuating demand

Market:
Demand
Stimulating demand
Characteristics

Price sensitivity / demand elasticity

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 • The demand for business products is called
derived demand because the demand for
industrial products is derived from the ultimate
demand for consumer products.
Derived
Demand • As a result, business marketers must carefully
monitor fluctuating trends and patterns in
consumer markets.

• Example??

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 Because demand is derived, an increase or decrease
in consumer demand can create a fluctuating
demand for many industrial products.

Example:

Fluctuating • An increase in mortgage rates can quickly stifle

new home sales. This slows down the need for
Demand new household products. Businesses react by
decreasing their inventory of materials or
putting off buying new machinery.
• This action explains why the demand for many
industrial products tends to fluctuate more than
the demand for consumer products.
• A decrease in interest rates has the opposite
influence.
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Stimulating Demand
• Sometimes, business marketers need to stimulate demand for consumer goods which
either incorporate their products or are used to make consumer products.

• Example????
• Pharmaceutical manufacturers advertise on television by presenting various ailments
followed by offering their products as solution to the ultimate consumer. (“Ask your
doctor if XYZ is right for you!”)

• Sometimes manufacturers offer deep price discounts that influence members of the
supply chain to lower their prices, in the hope of influencing the ultimate consumer to
buy their product.

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 Inelastic Demand
• Inelastic demand is demand without regard to
price. An increase or decrease in the product
price will not significantly affect the demand for
the product.

• Example??

• Example: Price for petrol

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Elasticity of Demand
Elastic Demand Curve Inelastic Demand Curve
D
D
Price

Price
D

D
Quantity Quantity
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 Classifying Goods for the Business Market

Classify industrial goods by asking the following:

How does the good or service enter the
production process?
How does it enter the cost structure of the firm?

Example: OEM for autoparts?

Source: Adapted from Philip Kotler, Marketing Management:
Analysis, Planning, and Control, 4th ed. (Englewood Cliffs, N.J.:
Prentice-Hall, 1980), p. 172, with permission of Prentice-Hall,
Inc.
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 Marketing’s Cross-Functional Relationships

• Professional business marketers act as an integrator between various functional

areas within the company

• Functional areas include:

• Manufacturing
• Research & Development (R&D)
• Customer Service
• Accounting
• Logistics
• Procurement

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 Marketing’s Cross Functional Relationship

Business marketing planning must

be coordinated and synchronized
with corresponding planning efforts.
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 A Framework for Business Marketing Management

Business marketing strategy

is formulated within the
boundaries established
by the corporate
mission and
objectives.

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