nature of b2b market

8/11/2019 Nature of B2B Market

1/20

Nature of Industrial Marketing

By

Mahendra Singh


2/20

Industrial Marketing

Business-to-Business (B2B) and OrganizationalMarketing.

Business-to-Business direct marketing involves theprocess of providing goods and services to industrialmarket intermediaries, as opposed to ultimate (final)consumers

Industrial goods are differentiated from final consumergoods based on their ultimate use

Definition: the creation and management of mutuallybeneficial relationships between organizationalsuppliers and organizational customers.

Customer can be private firm, public agency, ornonprofit organization.

2


3/20

Marketing Concept

Three major components:All company activities should begin with,

and be based on, the recognition of afundamental customer need.

A customer orientation should beintegrated throughout the functional areasof the firm: production, engineering,finance, R&D.

Customer satisfaction is viewed as themeans to long-term profitability goals.

3


4/20

4

Follower Interact

Isolate Shaper

CustomerFocus

Low Technology Focus High

High

Low

Strategic Focus Grid


5/20

Market Orientation

Acquire intelligence from the externalenvironment.

Disseminate that intelligencethroughout the organization.

Respond to the intelligence: take

action.

5


6/20

Marketing Mission Statement

State in terms of meeting customer

needs, not in terms of products or

technologies.

Marketing Myopia (Levitt 1960 HBR)

6


7/20

Marketing Activities

Identify customer needs Research customer behavior

Divide market into manageable segments

Develop new products/services

Establish/negotiate prices

Deliver, install, service products

Ensure adequate and timely supply of

products at correct placeAllocate resources across product lines

Communicate with customers

Evaluate/control marketing programs

7


8/20

Marketing Mix

Limited number of variables underMarketings control to create positionthat is attractive to the target market

segment.

Four Ps Product

Price Promotion

Place (Distribution)

8


9/20

External Environment

Characterized by:

Degree of Stability

Complexity

Diversity

Hostility

9


10/20

Challenges

Marketing costs are increasing while theaudience reached is decreasing

Face-to-face selling, down in efficiency,is up in cost

Customer relationship managers oftendo not integrate an analytical approachto combining operations with marketingprograms and campaigns

Standard Industry Classification is not aspredictive in the current businessenvironment

Communication clutter is at an all time

high 10


11/20

External Environment

Six Environments

Technological

Economic Social/Cultural (Customer)

Political/Legal

Natural/Climatic Competitive

11


12/20


13/20

whats different about B2B?

The technical characteristics of the

product are important.

These products directly affect theoperations and economic health of

the customer.

The customer is an organization

rather than an individual consumer, or

family.

13


14/20

Five Major Differences

Between B2B and B2C

Products/Services being marketed

Nature of demand

How the customer buys

Communication process

Economic/Financial factors

14


15/20

Products/Services

More complex

Functional vs. Symbolic Attributes

Large unit dollar value/Large

quantities

Custom/Tailored

Various Stages from raw material to

finished goods.

Foundation, Entering, Facilitating

Goods

15


16/20

16

Raw Material Extraction

Material Processing

Manufacturing

Parts/Subassembly

Assembly

Distribution

Wholesale/Retail Trade

Final Consumers

Facilitators

Firms in Production Chain


17/20

Nature of Demand

Derived Demand

Inelastic Demand

Widely Fluctuating Demand

Knowledgeable Demand

These characteristics/types of demand

distinguish industrial demand from

consumer demand

17


18/20

How Customer Buys

Group Process

Formal

Lengthy

Loyal

Decisions based on risk andopportunity

18


19/20

Communication

Personal selling more important thanmass paid advertising

Support sales with other promotional

activities: advertising in trade journals,catalogs, trade shows, direct mail,WWW.

Message focused on technical,

factual, and descriptive content. Multiple audience members.

19


20/20

Economic/Financial Factors

Competition oligopolistic

Power/Dependency relationships

Reciprocal: Doing business with

companies that do business withthem.

Economic variables: interest rates,

inflation, business cycle

20

nature of b2b market

Documents