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, publishing as Prentice Hall 1

  The process of matching and combining
the capabilities of the supplier with the
desired outcomes of the customer to
create value for the “customer’s
customer.”

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 Product

Marketing mix as a set of

ingredients into an
offering/solution

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 The total offering is created by a
partnership between the buying
organization and the marketing
organization.
 The process creates an augmented
product that is specific to the buying
unit’s needs and maximizes the value
creation capabilities of the marketer.
Core Product
+ Financing Terms
+ Delivery Options
= “Total Offering”
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 The mutually agreed-upon amount that
satisfies both sides in an exchange.
 Often varies from fixed price, with more
special discounts and allowances (in
comparison to consumer markets.)
 May involve things other than a one-time
price payment (such as commissions.)
Price is the measure
of value exchanged
and is determined
by the market—not
by costs.
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 Place is about getting the product to the
customer in order to maximize economic utility.

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 Business-to-business marketing requires a
different emphasis on different parts of the
promotional mix
Consumer V.S. Business to Business

 Emphasis is frequently  Emphasis is frequently

on advertising. on personal selling.
 Communication with  Communication with
customers is often a customers should be a
monologue. dialogue.
 Relationship is often  Relationship is often
brief. long-lasting.

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Copyright © 2011 Pearson Education, Inc., publishing as Prentice Hall 1-8
 Business
Consumer to
Business

 Geographically  Geographically
Dispersed Concentrated
 Mass Market;  Relatively Few
Many Buyers Buyers
 Monopolistic  Oligopolistic
Competition Competition
A market situation in which there are many A competitive situation in which there are
sellers and many buyers of products which only a few sellers (of products that can be
can be differentiated on price and other differentiated but not to any great extent);
features. each seller has a high percentage of the
market and cannot afford to ignore the
actions of the others.
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 5 customers contributing to
80% of the Revenue:
PTC
Pepsi
Fewer & Large Buyers Unilever
P&G
 Business
Consumer to
Business

 Can be technically
Standardized complex
 Customized to user
Service, delivery and
preference
availability only
 Service, delivery and
somewhat important
Purchased for availability very
important
personal use
 Purchased for other
than personal use

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 Business
Consumer to
Business

 Professionally trained
 Individual purchasing
purchasing personnel
Family involvement,
 Functional involvement at
influence
Social or psychological many levels
 Task motives
motives predominate
predominate

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 Business
Consumer to
Business

 Less technical Technical expertise is an

expertise asset
 Nonpersonal Interpersonal
relationships relationships between
 Little personal buyers and sellers
Significant personal info
information exchanged
 Changing, short-term exchanged between
relationships participants
Stable, long-term
encourage switching
relationships encourage
loyalty
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Walmart doesn’t have a “Purchasing Department”; it has a “Supplier
Development Department.” The giant retailer knows that it can’t just rely on
spot suppliers who might be available when needed. Instead, Walmart
manages a robust network of supplier-partners that help provide the hundreds
of billions of dollars of goods that it sells to its customers each year
 Business
Consumer to
Business

 Indirect, multiple
 Shorter, more direct
relationships
Organization
 Little or no customer
involvement as part of
supply chain
supply chain
involvement

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 Business
Consumer to
Business

Emphasis on personal
Emphasis on advertising,
selling, dialogue
monologue
Most communications
Companies compete for
invisible to the consumer
visibility and awareness of
Consumer is seldom
consumer market
aware of B2B brands and
companies

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 Business
Consumer to
Business

 Usually list or Complex purchasing

predetermined prices process or competitive
bidding, depending on
purchase type

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 Business
Consumer to
Business

 Derived
 Direct
 Inelastic (short run)
 Elastic
 Volatile (leveraged)
 Less volatile
 Discontinuous

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 DERIVED DEMAND- ultimately derived from the demand of the consumer
goods
› The demand for a company’s products comes from (derived) the demand
for their customer’s products.
› Most demand comes from consumers.
 Many businesses have Inelastic demand & more fluctuating demand
 The total demand for many business products is not much affected by price
changes, especially in the short run e.g. A drop in the price of leather will not
cause shoe manufacturers to buy much more leather unless it results in lower
shoe prices that, in turn, increase consumer demand for shoes
 Derived Demand

 Communicating how the cream is thoroughly mixed and

standardized into every drop of milk through the Homogenization
process hence giving complete Nutrition in every drop.
Characteristic B2B Market B2C Market
Sales volume Greater Smaller

Purchase volume Greater Smaller

Number of buyers Fewer Many

Size of individual buyers Larger Smaller

Location of buyers Concentrated Diffuse

Buyer-seller relationship Closer More Impersonal

Nature of channel More direct Less direct

Buying influences Multiple Single/Multiple

Type of negotiations More complex Simpler

Use of reciprocity Yes No

Use of leasing Greater Less

Key promotion method Personal Selling Advertising

  The puzzle of the B2B Consumer needs
“Total
Offering”

•Product
•Service
•Image
•Availability
•Quantity
•Evaluated
Price

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Copyright © 2011 Pearson Education, Inc., publishing as Prentice Hall 23
 Value Chain: Suppliers

Value Value Value

Activities Activities
Value Value
Activities
Value Value Value Value
Enabling Creating Enabling Creating Enabling Creating

From Exhibit 1-5: Value Enabling activities Inbound logistics would refer more
include infrastructure, human resources, to the transport, storage and
procurement and technology/technology delivery of goods coming into your
business, whilst outbound
development. Value Creating activities include
logistics refers to the same but for
inbound and outbound logistics, operations, goods going out of your business.
marketing and sales and customer service.

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 Perceives
Infrastructure

M
Offering:
ar
gi
Human resources

n
th
Procurement

ro
ug
Technology &
Product
h
technology development

va
l
Target
ue
Support activities Service
Added value
Direct activities Image Customers
e
cs cs s a lu Availability
i ti le e v
i st g is sa rvic gh
Quantity
g lo & se ou
lo o ns d g r r
d
at
i un in e th Evaluated Price
o un r o ket m i n
b pe ut
b ar to
ar
g
In O O M Cus M
Creates
Of particular note is that the customer and
the supplier that created the total offering
may perceive it quite differently.

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  With example, explain derived demand.
 With respect to the following, explain the
differences between B2B and B2C
marketing:
› Market structure
› Product
› Promotion
› Buyer seller relationship

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