Chapter 6: Business-to-Business Markets • Differences between B2B and B2C: ‒ Purpose of buying ‒ Quantity ‒ Price ‒ More than one decision maker ‒ Advertising method • Business-to-business marketing: The marketing of goods and services that businesses and other organizations buy for purposes other than personal consumption. – Business-to-business (organizational) markets include
Chapter 6: Business-to-Business Markets • Differences between B2B and B2C: ‒ Purpose of buying ‒ Quantity ‒ Price ‒ More than one decision maker ‒ Advertising method • Business-to-business marketing: The marketing of goods and services that businesses and other organizations buy for purposes other than personal consumption. – Business-to-business (organizational) markets include manufacturers, wholesalers, retailers, and other organizations such as hospitals, and government • Characteristics That Make a Difference in Business Markets: Business markets differ from consumer markets in several ways: – Multiple buyers are involved – Fewer organizational customers exist – Order quantities and cost are much larger – Business customers are more geographically concentration These differences make B2B marketing more complex • Business-to-Business Demand: Business-to-business demand differs from consumer product demand, because demand is: ‒ Derived demand: Demand for organizational products is caused by demand for consumer goods Example: demand for rubber is caused by demand for tires, sneakers, and other products that have rubber as a component Stereos are a part of the Porsche car. → Demand of Porsche car causes the demand of stereos. → Demand of stereos causes the demand of voice coil. → Demand of voice coil causes the demand of wire. → Demand of wire causes the demand of metal products. ‒ Inelastic demand: Changes in price have little or no effect on the amount demanded ‒ Fluctuating demand: Small changes in consumer demand create large increases or decreases in business demand Life expectancy of the product can cause fluctuating demand ‒ Joint demand: Demand for two or more goods used together to create a product • Types of Business-to-Business Customers Producers: – Individuals or firms that purchase products for use in the production of other goods and services • Raw materal, Equipment, Supplies. Resellers: – Individuals or firms that buy goods for reselling, renting, or leasing Organizations: Government markets – Federal, state, county, and local governments that buy goods and services to carry out public objectives and to support their operations Organizations: Not-for-profit firms – Organizations with charitable, educational, community, and other public service goals that buy goods and services to support their functions and to attract and serve their members • Marketers use the North American Industry Classification System (NAICS) to identify their customers and to find new customers ‒ NAICS is a numerical coding of industries in the United States, Canada, and Mexico • Business Buying Situations Buy class framework – Identifies the degree of effort a firm needs to collect information and make a decision Three buy classes: Straight rebuy is a buying situation in which business buyers make routine purchases that require minimal decision making. The buyer has purchased the same items many times before and routinely reorders them when supplies are low, often from the same suppliers. Modified rebuy is a buying situation classification used by business buyers to categorize a previously made purchase that involves some change and that requires limited decision making. Such a situation occurs when buyers want to change to a better product when purchasing this kind of product again. Newtask buy is a new businesstobusiness purchase that is complex or risky and that requires extensive decision making. Uncertainty and risk characterize buying decisions in this classification, and they require the most effort because the buyer has no previous experience on which to base a decision. • Trained professional buyers typically carry out buying in business-tobusiness markets: – Purchasing agents – Procurement officers – Directors of materials management • The Buying Center: The group of people in an organization who participate in a buying decision Initiator, who can be the production employee or sales manager, has to recognize that a purchase needs to be made. User, who can be the production employee or secretary, is the individual who will ultimately use the product. Gatekeeper, who can be the buyer or purchasing agent, has to control flow of information to others in the organization. Influencer, who can be engineer, quality control expert, technical specialist or outside consultant, can affect decision by giving advice and sharing expertise. Decider, who can be purchasing agent, manager or CEO, has to make the final purchase decision. Buyer, who is the purchasing agent, has to execute the purchase decision.