Business to Business Marketing Lecture 19By Natasha Lamb

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Explain the differences in marketing products and services to organizations rather than consumers. (4.2)By using examples, discuss how marketing to business clients differ from marketing to end consumers.

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Learning GoalsDefine the business market and how it differs from consumer markets 2. Identify the major factors that influence business buyer behavior 3. List and define the steps in the business buying decision process 4. Compare the institutional and government markets and explain how they make their buying decisions1.

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Case Study UPSCustomer Needsy

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Consumers need fast, friendly, low-cost package delivery Business needs are more complex Shipping part of complex logistics process including purchasing, inventory, order status, invoices, payments, returns

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360,000 people and 88,000 vehicles offer ground, air, freight worldwide Helps customer navigate the complexities of international shipping Offers a wide range of financial services Provides consulting services to improve logistics operations

These UPS ads target businesses as a supply chain solution

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DefinitionBusiness market consists of all organizations that buy goods and services for incorporation into other goods for consumption, use or resale y In the business market customers are organizations:y

Governments Institutions Businesses66

Government Marketsy y y y

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In most countries government organizations are major buyers of goods and services Require suppliers to submit bids and often give job to lowest bidder Favor domestic suppliers Is carefully watched by outside publics, ranging from Congress to different public groups, interested in how tax payers money is spent Require considerable paperwork67

Characteristics of Business Markets

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What are similarities between business and consumer markets?

Both involve people who assume buying roles. y Both make purchases to satisfy needs.y

How Business Marketing Differs from Consumer Marketing?Market Structure and Demand y Nature of buying unit y Types of decisions and decision process involvedy

Business MarketsCharacteristicsyMarketing Structure and Demand y Nature of the Buying Unit y Types of Decisions and the Decision Processy

Compared to consumer markets:Business marketsx have fewer but larger customers

Business customersx are more geographically concentrated

Demand is differentx Demand is derived x Demand is price inelasticx Demand fluctuates more

Business MarketsCharacteristicsMarketing Structure and Demand y Nature of the Buying Unit y Types of Decisions and the Decision Processy

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Compared to consumer purchases:Involve more buyers in the decision process More professional purchasing effort

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Business MarketsCharacteristicsMarketing Structure and Demand y NaturBuying Unit y e of the Types of Decisions and the Decision Processy y

Compared to consumer purchasesMore complex buying decisions The buying process is more formalized

Buyers and sellers work more closely together and build long-term relationships

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Business-toBusiness-to-Business Company DuPont ChemicalsEstablished in 1802 with gunpowder as its first product y In 1910 moved away from explosives with the first non-leather material, which was snatched up for upholstery and automobile parts y Today, the firm delivers science-based solutions that make real differences in people's lives around the world in areas such as food and nutrition, health care, apparel, safety and security, construction, electronics and transportation y Revenue of $27 billiony

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Business-toBusiness-to-Business Company DuPont Chemicalsy

Examples of B2B markets and products:Heath Care - Medical fabrics to provide comfort and safety to surgeons Automobile airbag fibers and engineering plastics for safety Dental filaments for toothbrushes Glass technology to reduce glare and noise, save energy, protect against breakage Footware flexibility for rubber, strength of plastic Farming pesticides Guitar manufacturers DuPont product give the look of vintage lacquer

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Consumer vs. Business Buying ProcessStep 1 2 Buying Process Consumer Step Business Need Recognition 1 Problem Recognition Information Search 2 General Need Description 3 Product Specification 4 Supplier Search Evaluation of Alternatives 5 Proposal Solitation Purchase Decision 6 Supplier Selection 7 Order- Routine Specification Postpurchase Behavior 8 Performance Review

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Institutional and Government Marketsy

Institutional MarketsConsist of churches, schools, prisons, hospitals, nursing homes and other institutions that provide goods and services to people in their care.

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Institutional and Government Marketsy

Institutional MarketsOften characterized by low budgets and captive patrons. Marketers may develop separate divisions and marketing mixes to service institutional markets.

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How does market structure and demand of the business markets for Intels microprocessor chips differ from those of final consumer markets?xBusiness markets for Intels chips are fewer in number, but the buyers purchase considerably more than buyers in consumer markets. xBusiness customers for Intels chips are more geographically concentrated xBusiness buyer demand for Intels chips is derived demand. This derived demand is driven by consumer demand for products which contain Intels chips. xDemand for Intels chips is more inelastic than elastic; that is, changes in price for Intels chips will not materially impact, the short run, the quantity purchased by business customers. xDemand for Intels chips fluctuate more, and more quickly, than in consumer markets. This is due to the fact that a small percentage raise in end user demand for products that contain Intels chip may cause a significantly large percentage change in demand for Intels chips.

Discussion Question Buyer Behaviory

You have just been reassigned from Coca-Colas consumer division to its Institutional Division. Your first assignment is to convince your former college to switch from Pepsi to CocaCola in their dining halls. Consider the followingHow will demand differ from the consumer market? What is it derived from? Is it elastic? How does the buying process differ? What questions will you have to answer?

Major Influences on Business Buyers

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This Volvo truck ad mentions objective factors, such as efficiency and ease of maintenance. But it stresses more emotional factors such as the raw beauty of the truck and its comfort and roominess, features that make drivers a lot more possessive

Discussion Question Buyer BehaviorYour job selling Coca-Cola to your old college has proven more difficult than you imagined. There seem to be many influences on your buyers behavior that you did not expect.1. What environmental factor might exist? 2. Organizational factors? 3. Interpersonal factors? 4. Individual factors?

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