FALL 2002 BA 303 FOR EXAMINATION ONE L.P. CHEW

EXAMINATION ONE CHAPTERS 1 thru 5, 7 and 8

BA 303 BUSINESS 2 BUSINESS MARKETING

CHAPTER ONE

The chapter is pivotal to developing an effective understanding of business marketing management, as the essence of the business market and its unique aspects are often the basis for the development of marketing strategies.

BA 303-B 2 B MARKETING

Every marketer whether focused on consumer or business markets must embrace a market orientation which places the consumer first and uses superior information about customers to manage marketing efforts. It is, however, important to understand how consumer and business market environments differ.

WE ARE IN BUSINESS TO CREATE AND SERVICE A CUSTOMER. CUSTOMER SATISFACTION IS PARAMONT

B 2 B MARKETING WE STRIVE TO CUSTOMER DRIVE

Business MarketsMarkets for products and services bought by business, government, orinstitutions. Products to be incorporated into other products, used, consumed, or resold

Business MarketingProcess of

determining needs and developing marketing mixes fororganizations

The nature of the customer and how the product is used distinguishesbusiness and consumer goods marketing

Characteristics of Business Markets

Derived demandBusiness consumer demand is derived from demand for the final products of which they become a part

Fluctuating demand Since demand is derived, the businessmarketer must monitor and forecast demand in final consumermarkets

Business and Consumer Marketing: A Contrast

Emphasis on personal selling

The service component of the product offering plays a key role

Protracted price negotiations for individual products are common

Business marketers typically sell direct to large accounts

Relational emphasis

Building a long term relationship is the goal

Business Market CustomersCommercial enterprises

UsersPurchase goods for use in

making other productsBuy equipment and machinery

that are employed to manufacture other productsOriginal equipment manufacturers

Buy products which will be incorporated into a finished product

Business Market CustomersCommercial enterprises

Dealers and distributorsPurchase business products for

the purpose of reselling them to users and OEM's. Business middlemen which facilitate the distribution processUnderstanding the classifications provides guidelines for effectivestrategy formulation

Business product categories

Entering goods. Become part of the finished product of the purchaser

Raw materials and manufactured goods

Treated as expense items

Foundation goodsUsed to produce

productsInclude installations

(buildings, equipment) and accessory equipment (light factory equipment, office equipment)Treated as capital items

Facilitating goodsSupplies and services

to support the organization'soperationsInclude supplies, repair, and maintenance items andservicesTreated as expense items

1. General Motors costs may be higher because they are not taking advantage of thedistinctive competencies of auto parts suppliers. These suppliers are often able tomake selected parts more effectively and efficiently because they concentrate oncreating competence in a very narrow line of products. In other words, auto partssuppliers are able to deliver superior value as a result of their distinctivecompetencies in a limited product line. A manufacturer's decision rules on whatto buy or make should be based on analyses of those products and processes forwhich they have a distinctive competence.

2. Many business marketers spend considerable sums for advertising to finalconsumers because of the nature of derived demand for many business products.In the case of DuPont, advertising to final consumers should help to expand the demand for clothing made with DuPont's fabric and thus expand the total demand for DuPont's products.