12e Chapter 1 A Business Marketing Perspective © 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use. Chapter Outline The dynamic nature of the business marketing environment and the basic similarities and differences between consumer-goods and business marketing The types of customers in this important market The underlying factors that influence the demand for industrial goods © 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use. Chapter Outline (continued) The nature of buyer-seller relationships in a product’s supply chain A method for classifying products and services for the business market © 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use. Business Markets Markets for products and services bought by businesses, government bodies, and institutions for: Incorporation Consumption Use Resale © 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use. Business Marketing Business marketers serve the largest market of all Dollar volume of the business market greatly exceeds the consumer market Single customer can account for an enormous level of purchasing activity Known as industrial marketing © 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use. Business Marketing (continued) Factors that distinguish business marketing from consumer marketing Nature of the customer Utility of the product for the customer Key to successful marketing strategy To identify unique dimensions of each major business market and formulate programs that respond to specific characteristics of each business market sector © 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use. Commercial Enterprises Manufacturers Construction companies Service firms Transportation companies Selected professional groups Resellers © 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use. Concentration of Customers Business marketers serve fewer but larger customers than consumer-products marketers Customers can be manufacturers of products who in turn target millions of potential buyers Geographical concentration indicates that a large potential volume exists in a given area Large metropolitan areas are lucrative business markets © 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use. Government Units Generate the greatest volume of purchases of any customer category in the U.S. E-government initiatives generate a large market opportunity © 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use. Government Purchasing Strategies Formal advertising - Government solicits bids from appropriate suppliers Followed when the product is standardized and the specifications are straightforward Negotiated contract - Employed when: Purchased goods and services cannot be differentiated on the basis of price alone Few potential suppliers exist © 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use. Institutional Customers Similar to governments Institutional purchasing process is constrained by political considerations and dictated by law Some institutions are administered by government units while some are privately operated and managed © 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use. Institutional Buying Institutions may employ a purchasing agent or a purchasing department Group buying - Institutions may join cooperative purchasing associations to secure purchasing efficiencies Allows institutions to enjoy lower prices, improved quality, reduced administrative costs, and greater competition © 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use. Business Markets and ConsumerGoods Markets Benefit by employing a market orientation Requires proficiency in understanding and satisfying customers Are market-driven © 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use. Aspects of Market-Driven Firms Set of values and beliefs that places customers’ interests first Ability to generate, disseminate, and productively use superior information about customers and competitors Coordinated use of interfunctional resources © 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use. Distinctive Capabilities Market sensing capability • Ability to continuously sense change and to anticipate customer responses Customer linking • Capability to develop and manage close customer relationships © 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use. Impact on Business Performance Marketing expenditures that were considered expenses are considered investments now Marketers need to: Demonstrate return on investment from marketing spending Deliver strong financial performance Be more accountable to shareholders © 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use. Customer Relationship Management (CRM) Includes the skills required to identify, initiate, develop, and maintain profitable customer relationships Helps to meet performance standards © 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use. Customer Decision Journey Customers can determine how, when, and where they want to acquire information Customers can access information from Websites, YouTube, and peers in the business network © 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use. Customer Engagement Through: Close working partnership An intimate knowledge of the customer’s operations Unique value contribution to the customer’s business Market-driven firms place high priority on customerlinking capabilities and closely align product decisions with the customer’s operations © 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use. Aligning Strategy and Sales Firms must: Clearly communicate the strategy Select the right customer prospects and match them with the optimal products and services Make the strategy relevant by operationalizing the distinctive features of the value proposition © 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use. Roles of Marketing Managers Instigator •Capitalizes on the close connection to customers, thinks strategically, and challenges the status quo Innovator •Takes an active role in shaping the company’s innovation agenda Integrator •Links multiple functions to unite organizational members on a clear strategy path Implementer •Mobilizes diverse organizational members across the firm © 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use. Customer Value Proposition Customers compare value elements of a firm’s offering with those offered by the next best alternative Captures set of benefits that a supplier offers to advance the performance of the customer organization © 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use. Building Blocks of a Successful Value Proposition Points of parity •Value elements with the same performance characteristics as the next best alternative Points of difference •Value elements that render the supplier’s offering either superior or inferior to the next best alternative © 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use. Differences in Consumer and Business Marketing Nature of markets Market demand Buyer behavior Buyer-seller relationships Environmental influences Market strategy © 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use. Characteristics of Business Markets Derived demand Demand for industrial products is derived from the ultimate demand for consumer products Fluctuating demand Business marketers carefully monitor fluctuating trends and patterns in consumer markets Downturn in the economy creates the opposite result © 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use. Characteristics of Business Markets (continued) Stimulating demand Business marketers must monitor final consumer markets and develop a plan that reaches the ultimate consumer directly Price sensitivity Responsiveness of the quantity demanded to a change in price Called demand elasticity © 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use. Global Market Perspective Marketers must look beyond the borders of the United States Growing demand for industrial products in Germany, Japan, Korea, Brazil, China, and India © 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use. Business and Consumer Marketing Intended use determines whether or not a product is a consumer product or a business product Business marketing emphasizes personal selling rather than advertising to reach potential buyers Business product includes an important service component © 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use. Relationship Marketing All marketing activities directed toward establishing, developing, and maintaining successful exchanges with customers Building one-to-one relationships with customers is the core of business marketing © 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use. Figure 1.1 - Key Characteristics of Business Market Customers © 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use. Figure 1.2 - Supply Chain For Automobile Creation © 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use. Supply Chain Management Technique of linking a manufacturer’s operation with suppliers, key intermediaries, and customers to enhance efficiencies and effectiveness Aims to improve the speed, precision, and efficiency of manufacturing through strong supplier relationships Achieved through information sharing, joint planning, shared technology, and shared benefits © 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use. Managing Relationships in the Supply Chain Long-term relationships are built on trust and demonstrated performance Strategic partnerships require open lines of communication between multiple layers of the buying and selling organizations © 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use. Categories of Commercial Customers Users Buy industrial products or services to produce other goods or services that are, in turn, sold in the business or consumer markets Original Equipment Manufacturers (OEMs) Purchase industrial goods to incorporate into other products it sells in the business or ultimate consumer market © 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use. Categories of Commercial Customers (continued) Dealers and distributors Purchase industrial goods for resale to users and OEMs Distributor accumulates, stores, and sells a large assortment of goods to industrial users, assuming title to the goods it purchases © 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use. Figure 1.3 - Categories of Industrial Goods © 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use.
