Nature Of B2b Market 4m4f1d

Nature of Industrial Marketing By Mahendra Singh

Industrial Marketing Business-to-Business (B2B) and Organizational Marketing.  Business-to-Business direct marketing involves the process of providing goods and services to industrial market intermediaries, as opposed to ultimate (final) consumers 

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

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Definition: the creation and management of mutually beneficial relationships between organizational suppliers and organizational customers.

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Customer can be private firm, public agency, or nonprofit organization. 2

Marketing Concept 

Three major components: ◦ All company activities should begin with, and be based on, the recognition of a fundamental customer need. ◦ A customer orientation should be integrated throughout the functional areas of the firm: production, engineering, finance, R&D. ◦ Customer satisfaction is viewed as the means to long-term profitability goals.

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Strategic Focus Grid High

Follower

Interact

Isolate

Shaper

Customer Focus

Low Low

Technology Focus

High 4

Market Orientation 

Acquire intelligence from the external environment.

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Disseminate that intelligence throughout the organization.

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Respond to the intelligence: take action.

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Marketing Mission Statement 

State in of meeting customer needs, not in of products or technologies.

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Marketing Myopia (Levitt 1960 HBR)

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Marketing Activities       

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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 place Allocate resources across product lines Communicate with customers Evaluate/control marketing programs 7

Marketing Mix 

Limited number of variables under Marketing’s control to create position that is attractive to the target market segment.

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Four Ps ◦ ◦ ◦ ◦

Product Price Promotion Place (Distribution) 8

External Environment 

Characterized by: ◦ ◦ ◦ ◦

Degree of Stability Complexity Diversity Hostility

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Challenges   

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Marketing costs are increasing while the audience reached is decreasing Face-to-face selling, down in efficiency, is up in cost Customer relationship managers often do not integrate an analytical approach to combining operations with marketing programs and campaigns Standard Industry Classification is not as predictive in the current business environment Communication clutter is at an all time high 10

External Environment 

Six Environments ◦ ◦ ◦ ◦ ◦ ◦

Technological Economic Social/Cultural (Customer) Political/Legal Natural/Climatic Competitive

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what’s different about B2B? Marketing Concept  Marketing Mix  Market Segmentation  Product Life Cycle 

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All apply in both B2C and B2B.

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what’s different about B2B? 

The technical characteristics of the product are important.

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These products directly affect the operations and economic health of the customer.

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The customer is an organization rather than an individual consumer, or family. 13

Five Major Differences Between B2B and B2C Products/Services being marketed  Nature of demand  How the customer buys  Communication process  Economic/Financial factors 

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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 

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Raw Material Extraction

Material Processing Manufacturing Parts/Subassembly Assembly

Facilitators

Distribution

Wholesale/Retail Trade

Final Consumers

Firms in Production Chain

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Nature of Demand Derived Demand  Inelastic Demand  Widely Fluctuating Demand  Knowledgeable Demand  These characteristics/types of demand distinguish industrial demand from consumer demand 

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How Customer Buys 

Group Process

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Formal

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Lengthy

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Loyal

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Decisions based on risk and opportunity 18

Communication Personal selling more important than mass paid advertising  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 . 

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Economic/Financial Factors Competition oligopolistic  Power/Dependency relationships  Reciprocal: Doing business with companies that do business with them.  Economic variables: interest rates, inflation, business cycle 

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