Part One

Business Markets and

Business Marketing
 Part One
Business Markets and Business Marketing
• Chapter 1
• Introduction to Business Marketing
• Chapter 2
• The Character of Business Marketing
• Chapter 3
• The purchasing Function
• Chapter 4
• Organizational Buyer Behavior
 Chapter 1
Business Markets
and
Business Marketing
McGraw-Hill/Irwin Copyright © 2006 The McGraw-Hill Companies, Inc. All rights reserved.
 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
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 BUSINESS TO BUSINESS IS NOT
BUSINESS TO CONSUMER

• Do Not Serve Same Types of Customers

• Do Not Serve the Same Number of Customers

• Do Require Strong Buyer-seller Relationships

• Do Depend on Strong Buyer Demand for their

Customer’s Products

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 TYPICAL BUSINESS TO BUSINESS
GOODS AND SERVICES INCLUDE:
• RAW MATERIALS

• MANUFACTURING MATERIALS
(Transformed from raw materials)

• COMPONENT OR OEM PARTS

(Part of a completed product)

• ACCESSORY EQUIPMENT (Tools)

• CAPITAL EQUIPMENT (Machinery)

• MRO ITEMS (Operating supplies)

1-6
 BUSINESS TO BUSINESS:
IT IS ALL ABOUT RELATIONSHIPS
BUSINESS TO BUSINESS DEPENDS ON:
• Close Business and Personal Relationships
Because of
• Shorter Distribution Channels
Leads to
• Emphasis on Personal Selling
Through
• Dependence on WEB Integration
and
• Unique Promotional Strategies
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BUSINESS TO BUSINESS CHALLENGES

• The size and location of customers – bigger,

fewer, and concentrated

• Strict performance standards for products

by customers

• Complicated purchasing decisions –

Involvement and time

1-8
 BUSINESS TO BUSINESS:
IT IS ALL ABOUT DEMAND

• DERIVED DEMAND
• The demand for a company’s products comes
from (derived) the demand for their customer’s
products.
• Most demand comes from consumers.

• JOINT DEMAND
• Two products are used together and demanded
together – Both products are consumed at the
same time
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 BUSINESS TO BUSINESS
DERIVED DEMAND SIMPLIFIED

• YOU CAN MAKE HEADLAMP

ASSEMBLIES FOR AUTOS
Consumers
want more Automobile
cars manufacturers Need more
need more of your
components company’s
and steel headlamp
assemblies
Consumers
stop buying Automobile
cars manufacturers
stop making You can’t sell
cars headlamp
assemblies
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 BUSINESS TO BUSINESS: THREE
CRITICAL QUESTIONS FOR A SUCCESSFUL
BUSINESS TO BUSINESS PROGRAM

A BUSINESS MUST DETERMINE:

1. Who Are Its Customers?

2. What Do Its Customers Want?

3. How Do Its Buyers Make Their Buying

Decisions?

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 Business marketing Business Marketing Consumer Marketing
McDonalds
Salt is added to
fries
You

Salt mine Morton’s Salt Kroger

Salt is sold in
shakers
Salt is mined Salt is processed into
food-grade or
industrial grade salt
General Foods
Salt is added to
frozen dinners
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CUSTOMER FOCUSED TEAM STRUCTURE
OEM parts
Components Manufactured
Raw materials materials
Assemblies Subassemblies
Original
equipment OEM Capital equipment
products Accessory
equipment
Distributors
Facilitating
Value-
IBM services and
Maintenance added Users
products
repair, and resellers
operations Integrated
supplies solutions vendors Maintenance,
Supply houses repair, and
operations
supplies
Components Raw materials
Manufactured materials

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 Transported via facilitating services

Raw Manufactured Sub- Assembly Component Finished

Materials materials assembly parts car

Purchase order printed—facilitating product

Amount and type of car determined by

research—facilitating service

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