BUSINESS
MARKETING
PERSPECTIVE
BME 112
Ms. Shan Cruz
Instructor
CHAPTER OUTLINE
I. Business marketing
II. Business Market
Customers
III. Business Marketing
Management
IV.Creating the Customer
Value proposition
V. Business and
Consumer
Marketing : A Contrast
VI. The Supply Chain
VII. Classifying Goods
for the Business Market
VIII. Business Marketing
Strategy
After this chapter,
you will understand:
02
04
The type of
customers in this
important market
The dynamic nature of business
marketing environment and the basic
similarities and differences between
consumer-goods and business
marketing
The underlying factors that
influence the demand for
industrial goods.
The nature of buyer- seller
relationships in a product’s
supply chain
The basic characteristic of
industrial products and
services
03
05
01
I. Business Marketing
Business Markets are “ markets for products
and services, local to international bought by
businesses,
government
bodies,
and
institutions
(such
as
hospitals)
for
incorporation ( for example, ingredient
materials or components), for consumption (
for example, process materials, office supplies,
consulting services), for use ( for example,
installations or equipment), or for resale.. The
only markets not of direct interest are those
dealing with products or services which are
principally directed for personal use or
consumption such as packaged grocery
products, home appliances or consumer
banking.
I. Business Marketing
Business marketing Vs. Consumer Marketing
The factors that distinguish business
marketing from consumer marketing
are the nature of the customer and
how the customer uses the product. In
business marketing, the customers are
organizations (business, governments
and institutions).
II. Business Market Customers
Commercial Customers
1. Commercial Enterprise as Customers
2. Government as Customers
3. Institution as Customers
Business Market
Customers
Governmental Customers
Institutional Customers
II. Business Market Customers
1. Commercial Enterprise as Customers
Commercial enterprises include manufactures, construction
companies, service firms, transportation companies, selected
professional groups and resellers. Manufactures are the most
important commercial customers.
2. Government Unit as Customers
Government units purchase from virtually every category of goods
and services – office supplies, notebook computers, food, health care,
military equipment.
II. Business Market Customers
GOVERNMENT BUYING – the government uses two general
purchasing strategies:
Formal advertising – the government solicits bids from
appropriate suppliers. This strategy is followed when the
product is standardized and the specifications are
straightforward. Contracts are generally awarded to the lowest
bidder; however , the government may select the next-tolowest bidder if it can document that the lowest bidder would
not fulfill the contract responsibly.
Negotiated Contract – the government uses negotiated contract
to purchase goods and services that cannot be differentiated
on the basis of price alone or when there are few potential
suppliers.
II. Business Market Customers
3. Institutions as Customers
Institutional customers comprise the third sector of business
market. Schools and health - care organizations make up a
sizable component of the institutional market, which also
includes colleges and universities, libraries, foundations, art
galleries, and clinics. On the other hand , institutional purchases
are similar to governments In that the purchasing process is
often constrained by political considerations dictated by law.
Other institutions are privately operated and managed like
corporations; they may even have a broader range of purchase
requirements than their large corporate counterparts. Like the
commercial enterprise, institutions are adopting sophisticated
approaches to purchasing.
II. Business Market Customers
INSTITUTIONAL BUYING - Many institutions are staffed with professionals,
including doctors, professors and researchers. Depending on it’s size,
institution may employ a purchasing agent and, in large institutions, a
sizable purchasing department . Business marketing and sales personnel,
in formulating their marketing and personal selling approaches, must
understand the needs of the full range of participants in the buying
process.
- Institutional buying is group purchasing . Hospitals, schools and
universities may join cooperative purchasing associations to secure
purchasing efficiencies. Group buying allows institutions to enjoy lower
prices, improved quality, reduced administrative costs, and greater
competition.
II. Business Market Customers
Table 1.1 TYPES OF BUSINESS MARKET CUSTOMERS
Commercial
Customers
Manufacturers
Construction Companies
Service firms
Transportation companies
Selected professional groups
Wholesalers
Institutional
Customers
Schools, colleges,
universities
Health-care organizations
Libraries
Foundations
Art galleries
Clinics
Governmental
Customers
Federal government
• Non- defense
• Defense
State government
Local government
• Countries
• Townships
III. Business Marketing Management
Business markets Vs. Consumer- Goods Markets
Market - driven firms demonstrate :
A set of values and beliefs that places the customers’
interest first
• The ability to generate, disseminate, and productively
use superior information about customers and
competitors , and
• The coordinated use of interfunctional resources.
•
III. Business Marketing Management
DISTINCTIVE CAPABILITIES – a close
examination of a market-driven firm
reveals
two
particularly
important
capabilities: market sensing and customer
linking.
Market-sensing capability concerns how well
the organization is equipped to continuously
sense changes in its market and anticipate
customer responses to marketing programs.
Market-driven firms spot market changes
and react well in advance of their
competitors.
Customer- linking capability comprises the
particular skills, abilities, and processes an
organization has developed to create and
manage close customer relationships.
III. Business Marketing Management
MANAGING CUSTOMERS AS ASSETS - firms
must
develop
and
nurture
customer
relationship management capabilities, which
include all the skills required to identify,
initiate, develop and maintain profitable
customer relationships.
EMPHASIZING A PROFIT FOCUS – developing a
firm grasp on the profit impact of marketing
strategy actions is fundamental to the job of
a business marketing manager. Included
here is the need to isolate forces that drive
customer profitability ,aligning resources
spent on customers to the revenues and
profit that will be secured.
III. Business Marketing Management
PARTNERING FOR INCREASED VALUE
– a business marketer becomes a
preferred
supplier
to
major
customers such as Apple, Texas
Instruments,
or
Procter
and
Gamble by working closely as
partner, developing an intimate
knowledge of the customer’s
operations,
and
contributing
unique value to that customer’s
business.
III. Business Marketing Management
What makes a Marketing Leader?
Leaders transform marketing into a strategic
function by performing four fundamental roles.
1.
2.
3.
4.
THE INSTIGATOR
THE INNOVATOR
THE INTEGRATOR
THE IMPLEMENTER
IV. Creating the Customer Value Preposition
A customer value preposition captures the
particular set of benefits that a supplier
offers to advance the performance of the
customer organization.
The building blocks of a successful value
proposition include:
• Points of parity – the value elements with
essentially
the
same
performance
characteristics
as
the
next
best
alternative.
• Points of difference – the value elements
that render the supplier’s offering either
superior or inferior to the next best
alternative.
IV. Creating the Customer Value Preposition
Business Market Characteristic for Industrial Products
Derived
Demand
-
Stimulating
Demand
Fluctuating
Demand
refers to the direct link
- Because demand is
between the demand
derived,
for
marketer must carefully
an
product
industrial
and
the
demand for consumer
The
demand for industrial
products is derived
from
the
ultimate
demand for consumer
products.
products
:
the
monitor
business
demand
patterns and changing
buying
preferences
in
the household consumer
market,
often
worldwide basis.
on
a
- Some business
marketers must not
only monitor final
consumer markets
but also develop a
marketing program
that reaches the
ultimate consumer
directly.
Price
Sensitivity
-Demand
refers
elasticity
to
responsiveness
quantity
the
of
the
demanded.
Inelasticity results when
demand is insensitive to
price – that is, when the
percentage
change
in
demand is less than the
percentage
price.
change
in
V. BUSINESS AND CONSUMER MARKETING : A CONTRAST
CHARACTERISTICS OF BUSINESS MARKET CUSTOMERS
Characteristic
Example
• Business market customers are comprised of
commercial enterprises, institutions, and
governments
• Among Dell’s customer are Boeing, Arizona Sate
University, and numerous state and local
government units.
• A single purchase by a business customer is far
larger than that of an individual consumer.
• An individual may buy one unit of software package
upgrade from Microsoft while Citigroup purchases
10,000
• The demand for industrial products is derived
• New home purchase stimulate that demand for
from the ultimate demand for consumer products.
carpeting, appliances, cabinets, lumber, and a
wealth of other products.
• Buyer-seller relationships tend to be close and
enduring
• IBM’s relationship with some key customers spans
decades.
• Buying decisions by business customers often
involve multiple buying influences, rather than a
single decision maker.
• A cross-functional team at Procter & Gamble
(P&G) evaluates alternative laptop personal
computers and selects Hewlett-Packard
• While serving different types of customers,
business marketers and consumers- goods
marketers share the same job titles.
• Job titles include marketing ,manager, product
manager, sales manager, account manager.
VI. THE SUPPLY CHAIN
THE SUPPLY CHAIN
Upstream
Suppliers
(USX, DuPont)
Direct Suppliers
(TRW, Johnson,
Controls)
Suppliers of
manufactures
materials and
parts such as
sheet metal or
plastic resin
Purchase input
used in creating
power-steering
systems (TRW) or
car seats (Johnson
Controls)
Business Marketing
Auto
Manufacturers
(Ford, General
Motors)
Purchase input
used in
creating
automobiles
Business Marketing
Auto Buyers
(Consumers )
Purchase
automobiles
Consumer Marketing
( Individual Households) and
Business Marketing
(Organization such as Fleet Buyers
VI. THE SUPPLY CHAIN
SUPPLY CHAIN MANAGEMENT
- Supply
Chain
Management
is
a
technique for linking a manufacturer’s
operations with those of all of its strategic
suppliers and its key intermediaries and
customers to enhance efficiency and
effectiveness.
- The goal of the supply chain strategy is to
improve the speed, precision and
efficiency of manufacturing through
strong supplier relationships.
- If the business marketer can become a
valued partner in a customer’s supply
chain, the rewards are substantial: The
focus shifts from price to value and from
products to solutions.
VI. THE SUPPLY CHAIN
Managing Relationship In The Supply Chain
To effectively initiate and sustain profitable relationship
with a customer like IBM, Honda Procter & Gamble, the
marketing
manager
must
carefully
coordinate
the
multiple linkages that define the relationships.
In the view of Frank V. Cespedes, recent developments
place more emphasis on the firm’s ability to:
•
Generate timely market knowledge by segment and by
individual account;
•
Customize
product
service
packages
for
diverse
customer groups, and
•
Capitalize on local field knowledge from sales and
service units to inform product strategy in real time.
Developing and nurturing close, long-term relationships is
an important goal for the business marketer.
VI. THE SUPPLY CHAIN
Commercial Enterprises as Consumers
01
Users
Users
purchase
industrial products or
services to produce
other
goods
or
services that are , in
turn,
sold
in
the
business or consumer
markets.
02
Original Equipment
Manufacturers (OEMs)
The OEM purchases
industrial goods to
incorporate
into
other products it
sells in the business
or
ultimate
consumer market.
03
Dealers and
Distributors
Dealers
and
distributors include
commercial
enterprises
that
purchase industrial
goods for resale to
users and OEM’s.
Overlap of
Categories
These
3
commercial
enterprise
are
not
mutually exclusive. Their
classification is based on
the intended purpose the
product serves for the
customer.
A marketer should have a
good understanding of
the diverse organizational
consumers that make up
the business market.
VII. CLASSIFYING GOODS FOR THE BUSINESS MARKET
ENTERING
GOODS
RAW MATERIALS
INSTALLATIONS
• Farm Products (e.g., wheat)
• Natural Products (e.g., iron ore
lumber
• Buildings and Land Rights (e.g., offices)
• Fixed Equipment (e.g., computers,
elevators)
MANUFACTURED MATERIALS AND PARTS
ACCESSORY EQUIPMENT
• Light Factory Equipment (e.g., lift trucks)
• Office Equipment ( e.g., desks, pc’s)
• Component Materials (e.g., steel)
• Component Parts (e.g., tires,
microchips
FOUNDATION
GOODS
SUPPLIES
• Operating Supplies (e.g., lubricants,
papers)
• Maintenance and Repair Items (e.g.,
paint, screws)
FACILITATING
GOODS
BUSINESS SERVICES
• Maintenance and Repair Services (e.g.
computer repair)
• Business Advisory Services (e.g. legal,
advertising, management consulting)
Classifying Goods For The Business Market
VIII. BUSINESS MARKETING STRATEGY
Framework for Business Marketing Management
Thank
You