L/O/G/O

B2B markets and products

Ing. Denisa Kubaľová, PhD.
B2B marketing 2014-2015
 Contents

Understanding industrial markets

B2B marketing customers

B2B
markets
B2B marketing products
and
products
Key Account Management?

Discussion
Understanding Industrial Markets
• The industrial market is composed of commercial
enterprises, governmental organizations and
institutions whose purchasing decisions vary with the
type of industrial good or service consideration..
• Size and diversity!!! – the most striking characteristics

– How marketing strategy should differ with the type of organization being
targeted and the products being sold?
Diversity of industrial markets and
products purchased
 B2B marketing customers

Commercial Governmental Non-profit

enterprises agencies institutions and
charitable
institutions
 Commercial enterprises
• IBM, Coca-Cola, Apple, Samsung......
• Purchase industrial goods and/or services for
purposes other than selling directly to ultimate
customers
– Industrial distributors and dealers
– Original equipment manufacturers
– Users
• First sector consisting of private, profit-seeking
organizations – manufacturing and non-
manufacturing firms – largest share of B2B market
 Commercial enterprises – industrial
distributors and dealers
• Distributors are companies that do not actually
produce a product but resell the goods of a
manufacturer
• They purchase industrial goods and resells them
in basically the same form to commercial,
government and institutional markets
• Industrial marketer‘s intermediaries – importance
in the industrial channel to both large and small
manufacturers; growing in number and
sophistication
 Commercial enterprises – original
equipment manufacturers
• They purchase industrial goods and services and
incorporate them into the items they manufacture
and sell – products are incorporated into the final
product (computers, adding machines..)
• Example – the electronic engine controls producer
who sells parts to Ford would view Ford as OEM
 Commercial enterprises - users
• Are purchasing industrial products or services to
support their manufacturing process or facilitate
the operation of their business
• Products used to produce output consist of items
such as lathes, drilling machines, grinding
wheels...
• Products purchased by users are not incorporated
into the final product
• Overlap of
categories
 Governmental agencies
• Various federal, state and local governments,
international and domestic governments
• Fixed budgets, detailed specifications,
standardization, the public nature of government
operations, competitive bidding, extensive
paperwork requirements, long lead times...
• Government budgets for a given fiscal year are
usually fixed by legislative action.
 Institutional markets
• Extremely diverse collection of organizations -
hospitals, universities and colleges,
environmental groups, museums...
• Institutions can be publicly or privately owned –
weak cost control, limited purchasing expertise,
the nature of their relationship with vendors,
uneconomical price behavior...
• Most of these organizations are quite small and
many are not major purchasers of industrial
goods and services..
Classification of Industrial products

Materials Capital Suppliers

and Parts Items and Services

• Raw materials • Installations • Supplies

• Manufactured • Accessory • Business
materials and equipment services
parts
Materials and parts – Raw materials
• Raw materials – agricultural products, natural gas –
normally enter the production process with little or no
alteration – OEM or user products

• Example – when Sara Lee (producer of frozen cakes

and pies) purchases gas to fire the massive ovens
used to produce all delicious cakes in freezer
sections of the grocery stores, it is a „user“ customer.
When it purchases fruits for further processing to fill
those delicious delicacies, it is an OEM.
 Materials and parts – Manufactured
Materials and Component parts
• Include all types of raw materials
that are subjected to some
amount of processing before
entering the manufacturing
process
• Example – component parts
such as switches, motors and
customized gears can be
installed directly into products
with little or no additional
changes
 Capital items
• Installations – major, long-term investment items
such as factories and office buildings and fixed
equipment such as generators, lathes, computers...
• Accessories – light equipment and tools – portable
power drills, computers – have wide usage
throughout the buying organization as compared with
capital equipment – terminals bought specifically for
accounting, engineering, production, personnel and
marketing..
• Purchasers of installations and accessory equipment
are normally user customers.
 Suppliers and services
• Support the operation of the purchasing firm – these
goods do not become part of the finished product or
support the production process, they are treated as
operating expense items for the periods in which
they are consumed.

• Suppliers – soap, cleaning compounds, typing

paper – maintain day-to-day operations – normally
standardized
• Services – operating, maintenance, repair services
 Conclusion
Customers in the industrial market are a diverse
group of organizations that were defined as
commercial enterprises, governmental agencies and
institutions.
Because of the diversity of products sold in the industrial
market – materials and parts, capital items, supplies and
services.
By looking at the way products enter the production
process or cost structure of the buying organization –
marketers develop differentiated strategies.
Purchasing practices in the industrial market are highly
specialized and technical, employing analytical tools –
material requirements planning, economic order
quantity, value analysis...
 „B2B marketers sell relationships not
products.“

• The purchases of commercial customers

are expected to enhance the profit-making
capability of the firm.
 Discussion

If you are selling in both the commercial market and the

government market, could you employ a single marketing
strategy? Explain your answer.

„Marketing to industrial firms in enhanced through the

understanding of value analysis.“ Do you agree or
disagree? Explain why.

How does government purchasing differ from

purchasing by commercial organizations?
 L/O/G/O

Thank You!