Business to Business Marketing (B2B)

Lecture -3
Introduction to B2B Marketing

Dr. Jogendra Kumar Nayak

Department of Management Studies, IIT Roorkee

1
 Consumer Marketing VS B2B Marketing

Key Area’s of Difference

 Market structure
 Buyer behaviour
 Decision making
 Products
 Price
 Channel
B2C & B2B marketing
 Promotion
at DELL
 Purchasing decisions

2
 Consumer Marketing B2B Marketing

Geographically Diversified Geographically Concentrated

More Customers Fewer Buyers Market

Structure
Monopolistic Competition Oligopolistic Competition

Direct Demand Derived Demand

B2C & B2B marketing
at DELL
Positive Cross Elasticity Negative Cross Elasticity

3
 Terms explained
• Monopolistic competition: many firms compete in the same space but for
slightly different customer groups (hotel). The products cannot be termed
substitutes.
• Derived demand: Increase in demand for education increases the demand for
professors, computers, infrastructure, markers, chalks, notebooks, school bags
etc.
• Cross elasticity of demand: it is the responsiveness in quantity demanded of
one good due to a change in price in another. It is positive for substitute goods
(tea and coffee) and negative for complementary goods(printer and cartridge).
• Transaction cost economics: Oliver Williamson, 1975; frequency, specificity,
uncertainty, bounded rationality (human decisions differ from economically
rational decisions due to cognitive ability, time constraint and imperfect
information), and opportunistic behavior.

4
 Asset specificity
• Asset specificity is the degree to which an asset can be used for multiple
purposes. These can be equipment’s designed for a particular function or
labor trained to perform a single task. Customized software’s, Oil drills,
jetliners, and assembly lines are not easily or cheaply adapted to other
purposes.
• For example, if a buying firm offers a contract to build a new gadget that has
an unusual form and requires different kinds of materials. In such a case a
new and expensive machine must be custom-built just to manufacture this
gadget.

5
 Bounded rationality
• Herbert Simon: human decisions differ from economically rational decisions
due to cognitive ability, social limits, time constraint and imperfect
information.
• Example: while purchasing in a store we get affected by the relationship with
the sales person or storekeeper and the available time and knowledge about
the product.

6
 Consumer Marketing B2B Marketing

Family Involvement Functional Involvement

Impulse Buying Rational Buying Buyer

Behaviour
Less Technical Expertise More technical Expertise

No reciprocity Reciprocity Exists

B2C & B2B marketing
at DELL
Less Personal Relations More personal Relations