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Introduction to Business-to-Business (B2B) Marketing

What Is Marketing? the process of planning and executing the conception (product), pricing, promotion, and distribution of ideas, goods, and services to create relationships that satisfy individual and organizational objectives.

BUSINESS MARKETING
IS MARKETING OF GOODS AND SERVICES TO:
Companies Government Bodies Institutions (i.e. hospitals) Non-Profit Organizations (i.e. American Red Cross)

FOR USE IN PRODUCING THEIR PRODUCTS AND/OR TO FACILITATE THEIR OPERATIONS

What Distinguishes B2B from B2C?


B2B: goods or services are sold for any use other than personal consumption Note: It is not the nature of the product; it is the reason for the

transaction.

Is it a B2C or a B2B Transaction?


You buy a gear to fix your mountain bike. Ford buys the same gear to fix a machine. Xerox buys soft drinks for its cafeterias. You start a landscaping business and purchase a lawnmower. The U.S. government buysanything.

B2B versus B2C Marketing


Characteristic
Sales volume Purchase volume

B2B Market
Greater Greater

B2C Market
Smaller Smaller

Number of buyers
Size of individual buyers Location of buyers Buyer-seller relationship Nature of channel Buying influences

Fewer
Larger Concentrated Closer More direct Multiple

Many
Smaller Diffuse More Impersonal Less direct Single/Multiple

Type of negotiations
Use of reciprocity Use of leasing Key promotion method

More complex
Yes Greater Personal Selling

Simpler
No Less Advertising

BUSINESS TO BUSINESS: IT IS ALL ABOUT DEMAND


DERIVED DEMAND
The demand for a companys products comes from (derived) the demand for their customers products. Most demand comes from consumers.

JOINT DEMAND
Two products are used together and demanded together Both products are consumed at the same time

Other Characteristics of Business Demand

Inelastic Demand Fluctuating Demand

Major Uses of B2B Products For additional production (e.g., components are combined into subassemblies and become part of the finished product) For use in operations, but not part of the finished product For resale

Classifying Business Goods & Services


3 Main Categories of Products Entering Goods
Become part of the finished product Cost assigned to the manufacturing process

Foundation Goods
Capital Items Typically depreciated over time

Facilitating Products
Support organizational operations Handled as overhead expenses

Classifying Business Goods & Services


Entering Goods Raw Materials
Farm products & natural products Only processed as necessary for handling & transport Require extensive processing

Manufactured Materials & Parts


Any product that has undergone extensive processing prior to purchase Component Materials require additional processing Component Parts generally do not require additional processing

Classifying Business Goods & Services


Foundation Goods Installations
Major long-term investment items Buildings, land, fixed equipment, etc.

Accessory Equipment
Less expensive & short-lived Not considered part of fixed plant Portable tools, PCs, etc.

Classifying Business Goods & Services


Facilitating Products Supplies
Any supplies necessary to maintain the organizations operations

Services
Maintenance & Repair support Advisory support Logistical support

Categories of B2B Customers


Commercial enterprises
Indirect channel members and facilitators OEMs (original equipment manufacturers) Users = customers

Governmental organizations Institutions