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Marketing Applications andPractices
Rubina DMello
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B2B Marketing
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B2B Marketing Organizational sales and purchases of goods
and services to support production of other
products, to facilitate daily companyoperations, or for resale.
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What are these? Industrial markets
oAll organizations that purchase goods and
services to use in the creation of their owngoods and services.
Industrial marketingo The process of matching and combining the
capabilities of the supplier with the desiredoutcomes of the customer to create value forthe customers customer.
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B2B versus B2C Marketing B2C=Business-to-Consumer Market=
businesses sell products and services to
consumers for household or personal use B2B=Business-to-Business Market=
businesses sell products and services to otherbusinesses for use in their daily operations or
for making other products and services
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B2C versus B2B Marketing The B2B market is 5X as large as
theB2C
market in the USA.
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Difference between B2B & B2CIndustrial Markets Consumer Markets
Structure Relatively fewer buyers Clusteringgeographical concentration
Large number of customersMass markets
Products Complex, needing customization,alliedservices important
Standardised for mass markets
BuyerBehaviour
Functional involvement, rationalmotives, importance of relationships
Psychological motives, familyinvolvement
Decisions Distinct, observable stages Mental, not observable
Channels Shorter, more direct Indirect, multiple
Promotion Importance of personal selling Advertising important
Price Bidding and negotiations a norm; listprices for standard products of lowvalue
List prices and standard discounts
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Difference between B2B & B2CB2B Marketing B2C Marketing
Relationship driven Product driven
Maximize the value of relationship Maximize the value of the transaction
Small, focused target market Large target market
Multi-step buying process, longersales cycle
Single step buying process, shortersales cycle
Brand identity created on personalrelationship
Brand identity created throughrepetition and imagery
Education and awareness buildingactivities
Merchandising and point of purchaseactivities
Rationale buying decision based on
business value
Emotional buying decision based on
status, desire or price
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3. Meet customerneeds in a way that provides
value to the customer
4. Meet organizational goals
2. Understand customer needs
1. Be contextually
market sensitive
In Industrial marketingscenario, to
successfully practicethe marketing concept,
it should:
The Marketing Concept
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The Value Chain and
Offering
Added value
Infrastructure
Human resources
Procurement
Technology &
technology developmentSupport activities
Margin through value
Direct activities
Customer serviceMarketing & salesOutbound logistics
OperationsInbound logistics
Offering:
ProductServiceImage
AvailabilityQuantity
Evaluated Price
TargetCustomers
Creates
Perceives
Margin through value
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COMPONENTS OF THE
BUSINESS MARKET
Commercial market Individuals and firmsthat acquire products to support, directly or
indirectly, production of other goods andservices.
Trade industries Retailers or wholesalersthat purchase products for resale to others.
Government. Public and Private Institutions
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Types of OrganizationalC
ustomersGovernment
Units
Nonprofit andNot-for-ProfitOrganizations
CommercialEnterprises
IndustrialDistributors
Value-Added
ResellersOriginalEquipmentManufacturers
Users or End Users
local,state, and federalgovernment units
Churches,hospitals,colleges,nursing homes,
etc.
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Producer Types
Component Partsand Manufactured
MaterialsProducers
CapitalGoods
Manufacturers
Accessory
EquipmentSuppliers
Raw
MaterialsProducers
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Producer TypesOften compete in price sensitivemarkets
Raw materials markets are oftendominated
by a few very large producers
Products lose identity onceincorporated
into the customers product
Seek value addedpositionsRaw
MaterialsProducers
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Producer Types
More differentiated from direct
competition by the valueadded tothe customers product.
Usually retain identity evenwhenincorporated into thecustomers product.
Parts retain their same formwhenincorporated.
Mico Fuel pumps are anexample.
Component Partsand Manufactured
MaterialsProducers
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Producer Types
Adherence to specifications
reducesopportunities for differentiation.
Involves the development ofspecifications to ensure thatorganizational needs are met.
Capital goods involve largepurchases with considerable risk forthe customer.
Customers expect an offering thatincludes installation, equipment,
and accessories.
CapitalGoods
Manufacturers
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Producer Types
Accessory equipment is usuallyproduced by an independent
supplier.
Accessories can be added to a
bundled offering by a channelintermediary.
Accessory equipment is equipmentthat works with some other offering.
The key to providing value is to becompatible with industry standardsfor the primary offering.
AccessoryEquipmentSuppliers
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Market Demand
JointDemand
DerivedDemand
VolatileDemand
InelasticDemand
InventoryAdjustment
Demand characteristics vary from market to market.
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DERIVED DEMAND The linkage between demand for a companys output and its purchases of
resources such as machinery, components, supplies, and raw materials.
VOLATILE DEMAND Derived demand creates volatility; for example, demand for gasoline pumps
may be reduced if demand for gasoline slows.
JOINT DEMAND Demand for two products used in combination with each other.
INELASTIC DEMAND Demand not significantly influenced by price changes.
INVENTORY ADJUSTMENTS Just-in-time (JIT) inventory policies boost efficiency by cutting inventory and
requiring vendors to deliver inputs as they are needed.
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Three Kinds of
Organizational Purchases Straight rebuy
o a routine repurchase that may have been made
many times before Modified rebuyo the in-between process where some review of
the buying situation is donethough not asmuch as in new-task buying
New-task buyo a firm has a new need and the buyer wants a
great deal of information
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Multiple Roles in the
Buying Center
BuyingCenter
Users
Buyers
Gatekeepers Deciders
Influencers
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SEGMENTING B2B
MARKETSSegmentation helps marketers develop the most appropriatestrategy.
SEGMENTATION BY DEMOGRAPHICCHARACTERISTICSo Grouping by size based on sales revenues or number of
employees.
SEGMENTATION BY CUSTOMER TYPE
Grouping in broad categories, such as by industry.
Customer-based segmentation Dividing a business-to-businessmarket into homogeneous groups based on buyers productspecifications.
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SEGMENTATION BY END-USE APPLICATION
End-use application segmentation Segmenting a business-to-
business market based on how industrial purchasers will use theproduct. Example: A supplier of industrial gases that sells hydrogen to some
companies and carbon dioxide to others.
SEGMENTATION BY PURCHASE CATEGORIES
Segmenting according to organizational buyer characteristics. Example: Whether a company has a designated central purchasing
department or each unit within the company handles its ownpurchasing.
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Common
Bases forSegmentation
By productoffered
By industry inwhich thecustomer
participates
By size ofthe customers
company
By buyingbehavior
By technologyused by thecustomer
By sizeof account
By geographicregion
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Attractiveness of SegmentsMarket
Attractiveness
CompetitiveAttractiveness
ChannelAttractiveness
InternalAttractiveness
Attractiveness Other
Considerations
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Market Attractiveness
MarketAttractiveness
Large and fast growingsegments are more attractivethan smaller and slow-growingsegments
This necessitates accuratelypredicting future growth.
Other issues includeo Adaptability of market
segments,o Existing relationships with
the buying center members,and
o Available customers budget
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Competitive Attractiveness
CompetitiveAttractiveness
What is the likely existenceor emergence of
competition in the marketsegment?
Are there barriers to entryfacing competitors?
Does being first to market
provide an advantage?
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Channel Attractiveness
ChannelAttractiveness
It is preferable to targetcustomers already served bywell-established marketing
channels, or if an existingchannel can be adapted, itmay serve the segment.
When there is no suitableexisting channel, a marketview of competition may benecessary.o How is the existing need
being met?o
Will customers switch
?
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Internal Attractiveness
InternalAttractiveness
A segment is more attractivewhen the segments needscan be met by the firms corecompetencies.
This is identified throughenvironmental analysis.
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Attractiveness OtherC
onsiderations
Attractiveness Other
Considerations
Other factors that mightcause a segment to ratedhigher or lower include:o Public policy (excessive
government regulationcan cause a segment tobe downgraded)
o Organizational goals(market share goals maymake firms moreaggressive in targeting)
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THE BUSINESS BUYING
PROCESS More complex than the consumer decision process. Takes place within formal organizations budget, cost,
and profit considerations.
INFLUENCES ON PURCHASE DECISIONSo Environmental factorso Organizational factors
o Social Factorso Personal Factors
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Stages of Organizational Buying
Process
Problem Recognition General Description of need
Product specifications Supplier search Acquisition and analysis of proposals Supplier selection
Selection of order routine Performance review
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Straight rebuy example :
buying office suppliesStage Result
Definition Monthly rebuy of office supplies; office manager fills inthe order form
Selection Minimal consideration; decided to use their regularsupplier; order faxed to supplier
Deliver solution Supplier delivers order
End game Supplies used; invoice arrives and is paid; suppliercalls to check on satisfaction
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New Task example : acquiring automated
sales and customer management system
Stage Result
Definition Recognised problem; analysed with help of consultant;supplier helps write specifications and RFP; supplierssubmit proposals
Selection Discussions and negotiations with suppliers; supplierselected (the one who helped initially); contratnegotiated and signed
Deliver solution System delivered in modules; fested, user trained,system modified as needed
End game System operated; result observed and analysed;discussions begin with supplier for acquisition of new
modules and upgrades
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The Marketing Mix:The 4 Ps of Marketing
Product Price
Promotion
Place
TheMarketing
Mix
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Types of Negotiating Situations inB2B
SalesSituation
Stand-alone
Transaction
Balanced between
Transaction andRelationship
Effectivebargainingstyles
Competitive;
Problem solving
Problem solving;
Compromising
Effectiveapproach Use of leverage
Seek commoninterests
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Marketing Mix: Place
Place is about getting the product to thecustomer in order to maximize economic utility.
Economic
Utility
Form Utility (having the product in the rightsize package, quantity, etc.)
Time Utility (having product available atuseful times)
Place Utility (getting the product to thecustomer where & when it is expected)
Possession Utility (making it easy totransfer ownership to the buyer)
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Marketing Mix:Promotion
Consumermarketing Emphasis is frequently
on advertising. Communication with
customers is often amonologue. Relationship is often
brief.
Industrialmarketing Emphasis is frequently on
personal selling. Communication with
customers should be adialogue. Relationship is often long-
lasting.
Business-to-business marketing requires a differentemphasis on different parts of the promotional mix
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Factors in designing promotion
mix strategies
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Advertising is only oneaspect of the entiremarketing strategy.
The advertising decision
process begins with theformulation ofadvertising objectives.
Equally important is theevaluation and selection
of the media.
The Decision Stages forDeveloping the Business-to-Business Advertising Program
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B2B Selling Characteristics
1. Repeated, ongoing relationships
2. Solution-oriented, total systemeffort
3. Long time period beforeselling effort pays off
4. Continuous adjustment of needs
5. Creativity in problem solving oftendemanded by buyer of seller
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The Product Life Cycle
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