INTRODUCTION

UNIT 1 TO B2B
 CONTENTS

 Definition of B2B Marketing

 Differences between B2B and B2C Marketing
 Business goods classification
 Types of Business customers
 Buy-grid model
 Buyer’s Techniques
 Decision Making Unit or Buying Centre
 The Webster and Wind Model
 The Sheth Model
 INTRODUCTION

 The business market has been defined to include

organizations that buy products and services for use in the
production of other products and services that are sold,
rented or supplied to others.
 It also includes retailing and wholesaling firms that acquire
goods for the purpose of reselling or renting to others.
 The full B2B market includes customers who are institutions
like hospitals and charities and all levels of government.
 Business buyers generally buy to increase their company’s
profits. Institutional buyers have the same concerns but they
may be focused on providing an adequate surplus
 INTRODUCTION

The most effective marketing programs directed at

business buyers are always based on one of the
following three basic appeals:
_ increasing sales;
_ reducing costs;
_ meeting government regulations/avoiding
negative PR.
DEFINITION
 DIFFERENCES BETWEEN B2B AND B2C
Bases Of Segmentation
Sr No.
1 Market characteristics
2 Product characteristics
3 Service Characteristics
4 Buyer behaviour
Industrial Markets
Geographically concentrated,
Relatively fewer buyers
Technical complexity,
Customised
Service, timely delivery and
availability very important
Involvement of various functional
areas in both buyer and supplier
firms,
Purchase decisions are mainly
made on rational/ performance
basis,
Technical expertise important,
Stable interpersonal relationship
between buyers and sellers
Consumer Markets
Geographically disbursed,
Mass markets
Standardised
Service, delivery, and availability
somewhat important
Involvement of family members,
Purchase decisions are mostly
made on physiological/social/
psychological needs,
Less technical expertise,
Non-personal relationship
DIFFERENCES BETWEEN B2B AND B2C

5 Decision-making Observable stages, Unobservable, Mental

Distinct stages

6 Channel Directly and also through Directly sold or through

Characteristics. various channels at the one or two steps of
same time distribution

7 Promotional Emphasis on personal Emphasis on advertising

Characteristics selling

8 Price Characteristics Competitive bidding, List prices or maximum

leasing, negotiated prices. retail price
DIFFERENCES BETWEEN B2B AND B2C

9. Demand Derived demand Direct demand

10. Marketing managers Technically qualified; Advertising graduates;

interdepartmental one department can
coordination required make changes for large
number of customers

11. Buyer’s data Very difficult to obtain Very easily obtained

 CHARACTERISTICS OF INDUSTRIAL
MARKETING
 Geographically concentrated

 The customers are relatively fewer

 The distribution channels are multiple

 The buyers (or customers) are well informed

 The buying organisations are highly organised and use

sophisticated purchasing techniques

 The purchasing decisions are based on observable stages in

industrial marketing.
 BUSINESS GOODS CLASSIFICATION
 Entering goods and services – products and services that
become part of other products – raw materials, component
parts and materials. Expensed rather than capitalized
 Foundation goods and services – products that are used to
make other products. This includes installations and
accessory equipment. Capitalized rather than expensed
 Facilitating goods and services – products and services that
help an organization achieve its objectives. These goods also
do not enter the product or even the production process.
Facilitating goods are usually divided into supplies and
business services. In this category are items which are often
characterized as MRO (maintenance, repair, and operations).
All Expensed.
TYPES OF BUSINESS CUSTOMERS
 BUY-GRID MODEL

 The buy-grid model is a business model depicting rational

organizational decision making. Business marketers use the
buy-grid model to portray the steps businesses go through in
making purchase decisions. The model includes two
components: Buy Phase and Buy Class.
 Buy phase represents the logical Eight steps businesses in
business decision making process.
 On the other hand the number of steps varies with the Buy-
class. There are Three buy-class categories:
New Buys
Rebuys
Modified Rebuys
BUY-GRID MODEL
 DECISION MAKING UNIT OR BUYING
CENTRE
 Initiators. These are the individuals who first recognize the
problem.
 Gatekeepers. These individuals control the flow of knowledge,
either by being proactive in collecting information, or by
filtering it. They could be junior staff who are told to visit a
trade fair and collect brochures, or a personal assistant who
sees his or her role as being to prevent salespeople from
“wasting” the decision-maker’s time.
 Buyers. The individuals given the task of sourcing suppliers and
negotiating the final deal. Often these are purchasing agents
who complete the administrative tasks necessary for buying.
These people often work to a specific brief, and may have very
little autonomy, even though they may be the only contact a
supplier’s salespeople have at the purchasing organization.
 DECISION MAKING UNIT OR BUYING
CENTRE
 Deciders. These are the people who make the final decisions, and may
be senior managers or specialists. They may never meet any
representatives of the supplying companies. Deciders generally rely
heavily on advice from other members of the DMU.
 Users. These are the people who will be using the products which are
supplied: they may be engineers or technicians, or even the cleaning
staff who use cleaning products. Their opinions may well be sought by
the deciders, and in many cases the users are also the initiators.
 Influencers. These people “have the ear of” the deciders. They are
trusted advisers, but from the supplying company’s viewpoint they are
extremely difficult to identify. Influencers may be employed by the
purchasing firm (for example, engineers, information systems
managers or research managers) or they may be consultants (for
example, architects, acoustics and safety consultants). An influencer
might even be the decider’s golf partner, old college friend, or teenage
son.
 THE WEBSTER AND WIND MODEL

Environmental variables Buying Centre Variables

• Physical • Authority
• Technological • Size
• Economic • Key influencers
• Political and legal • Interpersonal relationship
• Labour unions • Communication
• Cultural
• Customer demands
• Competitive practices moreover pressures
• Supplier information

Organisational Variables Individual Variables

• Objective/goals • Personal Goals
• Organisation structure • Education
• Purchasing policies and procedures • Experience
• Evaluation and reward systems • Values
• Degree of decentralization in purchasing • Job position
• Lifestyle
• Income
THE SHETH MODEL