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Business Markets

Consists of all organizations that


purchase goods and services to use in the
creation of their own goods and services.
These are then ofered to customers.
Business markets consists of fewer but
larger customers than consumer markets.
They are involved in purchase of large
value. having complex economic,
technical and nancial consideration.
Business !arketing
"rocess of matching and
combining the capabilities of
the supplier with the desired
outcome of the customer to
create value for the
customer and hence for
both organizations.
!arketing !ix
"roduct
Term product refers to core product that
can be augmented by additional features
and options that will appeal to diferent
buyers.
#n a consumer product such as new car,
buyers can add many options to car, such
as sound system or a sport suspension
package. Buyers have the choice to
customize $design% their car according to
their tastes and needs.
Consider the product when an
automobile company markets a &eet of
new cars to a rental company.
The new product is still the cars but
now the 'uantity and assortment of
models become important.
The car company arranges an
availability and delivery schedule. (
contract for spare part delivery become
part of deal.
This would also include training of
service personnel. )epending on
capabilities of rental company the car
company may provide some or all
maintenance and service.
#n this we dene business to
business product as the *Total
oferings+ that will provide a complete
solution to buyers needs. This may
include nancing terms, delivery
options based on buyer,s preference.
The desirability portions of ofering
will vary among diferent business to
business buying organizations. -hich
re'uire &exibility of marketer and the
marketing organization.
"rice
"rice is mutually agreed upon amount that
satised both sides in the exchange.
#n B.B market price determination can be
nal step in design, development, and
negotiation, particularly when the product is
a result of collaborative eforts.
Continuing with automotive example, price
for the new car is a xed price based on
manufacturer,s suggested retail price.
!ost consumer in /0 don not expect to
negotiate on price for most products that
they buy.
Consider again &eet ofering from car
company aimed at rental company.
The price is a negotiated price for whole &eet
rather than individual prices for individuals cars.
The automaker ofers nancing that is more
complicated than nancing ofered to consumer.
The package may include special incentive
discounts.
The price difers between consumer
marketing and b.b marketing. "rices for
consumers are xed and discounted , with some
nancing provided for high cost purchases.
"ricing for business consumers often
varies includes more special discounts
and allowances, and involve complex
nancing.
B.B pricing may involve forms such
as commissions or prot sharing.
"ricing internationally may also be
more complex, if the customer
company is multinational. "rice may
have to be ad1usted for diferent
currencies and may have to change as
exchange rates shifts.
"lace
#n consumer market place is about
getting the product to customer in right
form, at right time, with less
inconvenience associated with place of
purchase and with possession ease.
2orm, time, place and possession are
economic utility and are critical part of
value delivered to customer.
#n consumer markets economic utility
refers to consumer preferences in location
convenience, re'uired purchase 'uantities
convince and ac'uisition convenience.
#n car example the company
provide economic utility to
consumers by locating dealership
near population centers.
)ealership are set up to foster
single car purchase in which the
car is available or can be 'uickly
ordered.
(ll activities that facilitate
purchasing car make it possible for
the buyer to start transaction and
drive of with the car in less than a
couple hours.
3conomic utility is an important part of
B.B markets.
#n example , the car manufacturer
ofers cars in appropriate 'uantities in
appropriate time interval. The right cars
are shipped to right location.
0pare parts are made available in
appropriate 'uantities as well. They also
are shipped to right location at right time.
Businesses design their marketing
channels to provide maximum value to
their customers while minimizing costs.
!a1or diference lies in the length and
concentration of the channel.
The 'uantities purchased in
B.B marketing are larger than
consumer purchases with
timing of delivery critical
factor.
This leads to direct
relationship between
manufacturer and customer
and eliminating channel
intermediaries.
"romotion
B.B marketing places diferent
emphasis on the parts of promotion
mix. $advertising, 0ales promotion,
personal selling and public relations%.
#n B.B marketing personal selling is
most used and efective type of
promotion. #t allows rapid and
accurate feed back to marketers.
The carmaker in our example
may have a sales team that
manages account with the care
rental company.
The sales team may provide
information and personnel service
to executives and employees of
the car rental company.
B.B versus Consumer !arketing
Market Structure
B2B

4eographically
concentrated

5elatively fewer
buyers
Channels

0horter, more
direct.

Consumer

4eographically
dispersed.

!ass markets,
many buyers
Channels

#ndirect, multiple
relationships.
"roducts

Can be
technically
complex.

0ervice, delivery
and availability
very important.

"urchased for
other than
personal use.

0tandardized.

0ervice,
delivery and
availability only
somewhat
important.

"urchased for
personal use.
Buyer Behavior

"rofessionally
trained purchasing
personnel

2unctional
involvement at
many levels.
Promotion

3mphasis on
personal selling.
Price

Competitive
bidding or result of
complex purchase
process.

#ndividual
purchasing.

2amily involvement
efect.
Promotion

3mphasis on
marketing.
Price

"redetermined
price
Buyer 0eller 5elationships

Technical
expertise an asset

#nterpersonal
relationships
between buyers
and sellers.

0ignicant info
exchanged
between
participants on
personal level

0table long term


relations
encourage loyalty.

6ess technical
expertise

7onperson
relationships.

6ittle info
exchanged b8w
participants on
personal level.

Changing short
term relationship.

0hort term
relationships
encourage
switching.
!arketing Concept
To be successful the rm should
be9

!arket sensitive

/nderstand customer needs

!eet needs in a coordinated way


that provide value to customer.

)o so in a way that meet


organizational goals.
Consumer Demand
:uantity of goods and services desired
to be bought, given market condition.
Derived Demand
)emand experienced by the chain of
suppliers and producers that contribute
to the creation of total ofering.
-ithout initial consumer demand, there
is no demand on the chain of suppliers.
Example
)emand for nylon bers by
consumers does not exit.
7ylon is however demanded to spin
yarn b8c yarn is demanded to weave
fabric b8c fabric is demanded to make
clothes.
(ll these demands are *)erived
)emand.+
( result of ultimate *Consumer
)emand+ for nylon clothing items.
5elationship !arketing
3!C markets high;end data storage systems
implement strategy during <==>s of building
direct relationship with customers.
-hile #B! was reducing its eforts to
maintain relationships with customers.
3!C was focusing on working with customers
to solve their problems.
-ith this understanding 3!C launched
products that made data storage and
management faster, easier and more efective.
#n <==? 3!C passed #B! in number of
storage systems used with #B! mainframe
computers.
@(6/3 A @(6/3 CB(#7
@alue is the sum of all the
benets that customer receives
in buying and using a product
less than the cost involved.
@alue Chain is the chain of
activities that creates something
of value for the targeted
customers.
)irect @ersus 0upportive
(ctivities
)irect activities contribute directly to
ofering.
0upportive activities make it possible to
perform direct activities.
4oal is to combine elements to create
value as perceived by target market.
)irect activities include #nbound A
outbound logistics, Cperations,
marketing and sales, customer service.
0upportive activities include
infrastructure, human resources,
procurement and technology and
technology development.
3xample is marketing creates brand
image , which is valuable to customers b8c it
provides assurance of 'uality and
upgradability. !arketing then a direct
activity.
Buman resource management denes
positions and recruits, hires, trains, and
motivate people who are necessary to do
marketing and other activities. Therefore
human resource management is a
supportive activity.
Trends A Changes in Business
!arketing
B.B marketing environment is
changing rapidly and adaptation to this
change re'uire some new ways of
thinking and acting.
Hyper competition
-e are seeing many smart, fast
competitors across many industries. 7ew
companies that emerge 'uickly almost
overnight challenge established
companies. )ue to this rapidly increasing
hyper competition existing companies are
adapting new methods and techni'ues.
This changing competitive landscape
means the business market must adapt
competitive analysis techni'ues and
competitive actions, focused on addressing
competition from specic competitors to
accommodate this high level of uncertainty.
Formation of Partner et!ork
"roducts, systems have become so complex
and interrelated that no company can
provide a *whole product+ by itself.
0oftware providers needs to partner with
hardware vendors, and system integrators
to provide enterprise level software
systems.
$35" systems%
0imilar partnership occurs for new
product development and lling product
lines. 6arge companies recognizing that
often other companies have crucial pieces
of technology.
The same kind of partner networks are
occurring in industries as construction,
energy production and distribution,
consulting and employment services.
"doption of #$ and #nternet
#T ofers enhanced communication,
enhanced customer service, and reduced
costs. The concept of total ofering and
discount price show that these benets can
be taken by both buyers and sellers.
0upply Chain !anagement
0upply chain extends from raw material and
component suppliers, through manufacturer,
and through distribution channel to nal
buyer.
Companies have 3lectronic data #nterchange
$3)#% is use to manage supply chain. #t is also
used and useful as a facilitator of supplier
and buyer relation ships.
3)# is a technology for exchanging
information concerning ordering of goods. #t
consists of order and fulllment information
as well as payments through electronic funds
transfer.
Time Compression
!eans an increase in speed of doing
business.
Bow organizations reacts to this has both
short term and long term efects on their
performance and survivability.
-ith hyper competition competitive pressures
cause companies to get new products faster
and replace these products with succeeding
generations of products more rapidly.
*Bow are you dealing with compressionD+
*-C5E B(5)35 (7) 2(0T35+

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