BUS 2 BUS Ch 1 Notes
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business-to-business: is the exchange of products, services or information between
businesses, rather than between businesses and consumers
B2B used to be called Industrial Marketing - term applied to primary and secondary
industries –
o primary: agricultural and extractive (coal, iron-ore) industries;
o secondary: tangible products (cars, planes, furniture, etc.)
Nowadays the primary and secondary industries account for a relatively small share of
economic activity, and it is the tertiary sector of the economy (the service industries) that
contributes most to measures of national income
B2B is not synonymous with marketing goods and services to manufacturing industries.
first deficiency: marketing is service-based
second deficiency: ignoring the importance of Brazil, Russia, India, China and South
Africa (BRICS)
political matters can have a profound and direct influence on international business deals,
and therefore on the environment within which business-to-business marketing strategy is
developed
personal selling: is advertising
interpersonal networking is a particularly important aspect of business marketing
Characteristics of B2B Markets Affect Marketing
o Market Structure Differences
o Buying Behavior Differences
o Marketing Practice Differences
consumers only buy goods and services to satisfy their wants, whereas businesses only
buy things to facilitate the production of goods and services
Consumer demand is direct while business demand is derived
Derived: the demand for something only exists so long as there is a demand for the goods
or services that it helps produce (Direct)
it is downstream demand that influences the level of derived demand in a specific
business market
accelerator effect refers to the ratio of the demand for capital equipment to the demand
for the output of the customer industry.
concentration ratio is defined as the combined market shares of the few largest firms in
the market
Growing ‘service-dominant logic’ in marketing = whatever customers
buy (tangible good, intangible, services or combo) - in all cases it is services that generate
the value that customers desire.
when entering a market, you must become very familiar with the business of those
companies and adapt your products and services so that they exactly match their
requirements, which may well involve specific investment in new technology or new
systems
marketers looking to develop a strategy in a dominant industry you need to be aware of
buying power of top companies
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it is argued that businesses have less freedom simply to stop buying things than
consumers, so that business demand is likely to be less price elastic (that is, less
responsive to price changes)
 it has been suggested that there will be more instances of reverse (or ‘perverse’) price
elasticity of demand in business markets than in consumer markets
 the key difference between business marketing and consumer marketing is the nature of
the customer rather than the nature of the product
 The standard approach to classifying business products is to use a classification system
that is quite separate from the usual consumer product classifications
 SYSTEM OF CLASSIFICATIONS: Concentrate on nature of product, seller-oriented
classification scheme
 Installations are major investment items such as heavy engineering equipment, which
are treated as investment items by the customer, so that the costs involved in acquiring
them are depreciated over their expected economic life.
 Accessory equipment consists of smaller items of equipment such as hand tools.
 Maintenance, repair and operating (MRO) supplies are individually minor items of
expenditure that are essential to the running of the organization
 Raw materials are unprocessed basic materials such as crude oil, coal and metal ores
 Manufactured materials and parts include raw materials that have been processed
(such as finished steel and prepared timber) and component parts (such as computer
optical drives and automobile windscreens)
 Business services are often subdivided into maintenance and repair services and business
advisory services.
 OEMs are manufacturing businesses that buy component parts from other firms to
incorporate into a finished product that is then sold under their own brand name to other
businesses or to consumers.
 after-market sales of component parts to the owner of the product after it has been sold
by the OEM
 Effort and risk are considered to be the costs incurred by the buyer when making a
decision
o effort is a variable that includes the amount of money, energy and time that the
buyer is willing to expend in order to acquire a given product.
Murphy and Enis classification: is buyer-oriented, classifying products in the basis of
dimensions that are considered meaningful to buyers
 Convenience products involve very little effort and negligible risk for the buyer
 Preference products involve a little more effort than convenience products but
substantially more risk
 Shopping products involve a great deal more effort and perceived risk than convenience
or preference products. This would include major items of accessory equipment,
manufactured materials and parts, and market research services.
 Specialty products are the highest ranked in terms of both buyer risk and effort.
Installations (such as major new items of engineering plant) and highly specialized
business services (such as the services of a top management consultancy firm)
Quiz 1 :
Primary industries can be defined as including agricultural and extractive products
Concerning the classification of the customers in the business market, GM is a User when
purchasing a mainframe computer system from IBM, but is a OEM when purchasing tires from
Goodyear.
Inbound Notes:
 Inbound is a method of attracting, engaging, and delighting people to grow a business
that provides value and builds trust.
 Inbound mentality as well as strategy
 It’s about how you sell it, no matter the department; marketing, sales, customer service
 Make experiences that make prospects feel valued
 Flywheel: Attract, Engage, and Delight
 Attract stage: the focus is on attracting prospects and customers through relevant and
helpful content
o Helpful content is contextual content
 Engage stage: begins the moment a person takes desired action
o Collect info about individual you’re working with
 Delight: provide outstanding experience anytime the customer interacts with your
company
o Create advocates for your company, know what motivates your prospects
 Inbound Fundamentals: inbound principles, company purpose, business goals, buyer
personas, buyers journey
 Acknowledge that prospects are people
 Your purpose is WHY your company exists
 CRM manages the entire customer journey