Module 1
• Introduction to B2B Marketing:
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Business marketing
Business market customers
Characteristics of business markets
Organizational buying and buying behaviour
The buying process
• Organizational markets of India: (self study)
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Organizational and business markets
Government as a customer
Commercial enterprises
Commercial and institutional customers
Introduction to
Business-to-Business
(B2B) Marketing
What Is Marketing?
The process by which companies
engage customers, build strong
customer relationships and create
value in order to capture value
from customers in return.
- Philip Kotler
BUSINESS MARKETING
IS
• MARKETING OF GOODS AND SERVICES TO:
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Commercial Customers
Government Bodies
Institutions (i.e. hospitals)
Non-Profit Organizations (i.e. American Red Cross)
FOR
• Using as raw material, facilitate or resell
Business Market Customers
• The business market consists of four
major categories of customers: producers,
resellers, governments, and institutions.
The producer segment of the business
market is quite large. It consists of
individuals and organizations that buy
goods and services to produce other
products, to become part of other
products, or to facilitate the organization's
daily operations.
Business Market Customers
• The reseller market consists of retail and
wholesale businesses that buy finished
goods and resell them for a profit.
Government
organizations
include
thousands of federal, state, and local
buying units. Expenses on Defense,
Judicial and Education.
Business Market Customers
• The fourth major segment of the business
market consists of institutions seeking to
achieve goals that differ from such
ordinary business goals as profit, market
share, and return on investment. This
segment includes many schools, hospitals,
churches, civic clubs, and private nonprofit
organizations.
Classifying Business Goods & Services
3 Main Categories of Products
Entering Goods
Become part of the finished product
Cost assigned to the manufacturing process
Foundation Goods
Capital Items
Typically depreciated over time
Facilitating Products
Support organizational operations
Handled as overhead expenses
Classifying Business Goods & Services
Entering Goods
 Raw Materials
 Farm products & natural products (Wheat, Iron Ore)
 Only processed as necessary for handling & transport
 Require extensive processing
 Manufactured Materials & Parts
 Any product that has undergone extensive processing prior
to purchase
 Component Materials require additional processing (Steel)
 Component Parts generally do not require additional
processing (tire, microchips)
 E.G
Classifying Business Goods & Services
Foundation Goods
Installations
Major long-term investment items
Buildings, land, fixed equipment, etc.
Accessory Equipment
Less expensive & short-lived
Not considered part of fixed plant (lift trucks)
Portable tools e.g Desks, PC’s, etc.
Classifying Business Goods & Services
Facilitating Products
Supplies
Any supplies necessary to maintain the
organization’s operations. E.g. stationery
Services
Maintenance & Repair support
Advisory support (legal, advertising)
Logistical support
Comparing Business-to-Business
Marketing and Consumer Marketing
B2B versus B2C Marketing
Characteristic
B2B Market
B2C Market
Sales volume
Greater
Smaller
Purchase volume
Greater
Smaller
Number of buyers
Fewer
Many
Location of buyers
Concentrated
Diffuse
Buyer-seller relationship
Closer
More Impersonal
Nature of channel
More direct
Less direct
Buying influences
Multiple
Single/Multiple
Type of negotiations
More complex
Simpler
Use of reciprocity
Yes
No
Use of leasing/renting
Greater
Less
Key promotion method
Personal Selling
Advertising
Is it a B2C or a B2B Transaction?
You buy a gear to fix your mountain
bike.
Ford buys the same gear to fix a
machine.
Xerox buys soft drinks for its cafeterias.
You start a landscaping business and
purchase a lawnmower.
The U.S. government buys…anything.
Characteristics
ofof
the
Business
Characteristics
business
Market
market
• In certain cases the business market is much similar to
the consumer market. In both kinds people are involved
to assess the needs of products or services & perform
different kinds of roles for the satisfaction of those
needs. But in general, there are certain factors that
distinguish business market from the consumer market.
Following are the some of these distinguishing factors.
• Market Structure & Demand
• Nature of Buying Unit
• Kinds of Decision & Decision Process
Characteristics of the Business
Market
• Market Structure & Demand
• Usually there are few, but larger kind of
business buyer deal by organizations
related to business market. Moreover,
these buyers are much concentrated
geographically. The demand involved in
the business market is the derived
demand that finally comes from the
demands of final consumers..
Characteristics of the Business
Market
• In certain cases the business markets deal
with the inelastic demand, which is not
influenced by the price changes of the
relative products or services especially in
the short run.
Characteristics of the Business
Market
• For example, if the price leather is reduced, then the
demand of the shoe producer is not increased unless the
price of the producing shoes also reduces which
ultimately enhances the demand of the final customers
for shoes. The demand of the business market is much
more fluctuating. This means that the demand for the
business products or service changes more quickly than
the demand for the consumer products or services. The
business demand is affected greatly by a small degree of
increase in the consumer demand. In certain cases only
15% increase in the consumer demand would cause the
business demand to be enhanced for about 250% in
coming days
Characteristics of the Business
Market
• Derived Demand: Derived demand is created
from the final consumer demand. If the need of
consumable goods increase or decrease then
the industrial market increase or decrease.
• Inelastic demand: Demand of many business
market is more inelastic. The demand is not
affect as much as short run by price changes.
• Fluctuating demand: Demand in business
markets fluctuates more and more quickly. If the
need of consumable goods little increase then
the need of industrial goods more increase.
Characteristics of the Business
Market
• Nature of Buying Unit
• In the consumer purchase, the participants
involved are less along with relatively little efforts.
But in case of business purchase, there are many
more participants involved in the purchase
process & also the increased professional effort.
• Business purchase is more complex that
consumer purchase and the buyer have more
professional effort. Sometimes this purchase is
implemented by appointing trained up purchase
agent.
Characteristics of the Business
Market
• These purchasing decisions are carried out by the
highly professional people of the organizations who
have spent many years of their lives in learning the
way to purchase the business products effectively.
With purchase of any main items of business market,
there is an established buying committee that includes
a group of technical experts along with the members
of top management who collectively perform the
buying decision. The business organizations are
spending much on training their brightest employees
for dealing with the business customers efficiently &
effectively.
Characteristics of the Business
Market
• Kinds of Decision & Decision Process
• The purchasing decisions of the business
buyers are more complex than the
decisions of the consumer buyers.
Complex
economic
&
technical
considerations, large sums of money &
interactions among different people at
various levels have taken place in the
business purchase process.
Characteristics of the Business
Market
• As then the business purchase process is longer in
duration therefore the decisions of the buyers are
also finalized in longer duration. Moreover, the
business buying process is more formalized than the
consumer buying process. In the business purchase
process occurring in the larger organizations, special
efforts are exerted for the specification of the detailed
product, writing purchase orders, carefully the
identification of suppliers & formal approval. The
purchasing process is also detailed through the
preparation of the policy manuals by the purchasing
organization.
Get more info
• https://www.youtube.com/watch?v=_39C3
ACFWIU&ab_channel=FocusLocus
For more info
• https://www.youtube.com/watch?v=peiwGr
QMsz8&ab_channel=ProfessorWolters
Organizational Markets of India
• Refer book “ Business Marketing” by
Sharad Sarin Chapter 3 pg. 47 to 80