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BA 303

BUSINESS 2 BUSINESS

MARKETINGCHAPTER ONE

The chapter is pivotal to developing aneffective understanding of businessmarketing management, as the essence

of the business market and its uniqueaspects are often the basis for thedevelopment of marketing strategies.

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BA 303-B 2 B MARKETING

Every marketerwhether focused on consumer orbusiness markets must embrace a marketorientation which places the consumer first and

uses superior information about customers tomanage marketing efforts. It is, however,important to understand how consumer andbusiness market environments differ.

WE ARE IN BUSINESS TOCREATE AND SERVICE ACUSTOMER. CUSTOMERSATISFACTION IS PARAMONT

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B 2 B MARKETINGWE STRIVE TO CUSTOMER DRIVE

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Business Marketing

Process of determining

needs and developing

marketing mixes for

organizationsThe nature of the customer

and how the product is used

distinguishes

business and consumer goods

marketing

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Characteristics of Business Markets

D

erived demandBusiness consumer demand is derived

from demand for the final products of

which they become a partFluctuating demand

Since demand is derived, the business

marketer must monitor and forecastdemand in final consumer

markets

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Business and Consumer

Marketing: A Contrast

Emphasis on personal selling

The service component of the product

offering plays a key role

Protracted price negotiations for individual

products are common

Business marketers typically sell direct to

large accounts

Relational emphasis

Building a long term relationship is the goal

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Business Market Customers

Commercial enterprisesUsers

Purchase goods for use in

making other productsBuy equipment and machinery

that are employed to manufacture

other products

Original equipment manufacturers

Buy products which will be

incorporated into a finished product

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Business Market Customers

Commercial enterprisesDealers and distributors

Purchase business products for

the purpose of reselling them to usersand OEM's

. Business middlemen which

facilitate the distribution process

Understanding the classificationsprovides guidelines for effective

strategy formulation

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Business product categories

Entering goods

. Become part of the finished

product of the purchaser

Raw materials andmanufactured goods

Treated as expense items

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Foundation goods

Used to produce productsInclude installations

(buildings, equipment) and

accessory equipment (lightfactory equipment, office

equipment)Treated as capital items

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Facilitating goods

Supplies and services tosupport the organization's

operations

Include supplies, repair, andmaintenance items and

servicesTreated as expense items

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1. General Motors costs may be higher because

they are not taking advantage of the

distinctive competencies of auto parts suppliers.These suppliers are often able to

make selected parts more effectively and efficiently

because they concentrate on

creating competence in a very narrow line ofproducts. In other words, auto parts

suppliers are able to deliver superior value as a

result of their distinctive

competencies in a limited product line. Amanufacturer's decision rules on what

to buy or make should be based on analyses of

those products and processes for

which they have a distinctive competence.

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2. Many business marketers spend

considerable sums for advertising to finalconsumers because of the nature of

derived demand for many business

products.In the case ofDuPont, advertising to

final consumers should help to expand

the demand for clothing made withDuPont's fabric and thus expand the total

demand for DuPont's products.