Introduction to
Business-to-Business
(B2B) Marketing
What Is Marketing?
• the process of planning and
executing
• the conception (product), pricing,
promotion, and distribution
• of ideas, goods, and services
• to create relationships
• that satisfy individual and
organizational objectives.”
BUSINESS MARKETING
IS
• MARKETING OF GOODS AND SERVICES TO:
–
–
–
–
Companies
Government Bodies
Institutions (i.e. hospitals)
Non-Profit Organizations (i.e. American Red Cross)
FOR
• USE IN PRODUCING THEIR PRODUCTS
AND/OR TO FACILITATE THEIR OPERATIONS
What Distinguishes B2B from B2C?
• B2B: goods or services are sold for
any use other than personal
consumption
• Note: It is not the nature of the
product; it is the reason for the
transaction.
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.
B2B versus B2C Marketing
Characteristic
B2B Market
B2C Market
Sales volume
Greater
Smaller
Purchase volume
Greater
Smaller
Number of buyers
Fewer
Many
Size of individual buyers
Larger
Smaller
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
Greater
Less
Key promotion method
Personal Selling
Advertising
BUSINESS TO BUSINESS:
IT IS ALL ABOUT DEMAND
• DERIVED DEMAND
– The demand for a company’s products comes
from (derived) the demand for their customer’s
products.
– Most demand comes from consumers.
• JOINT DEMAND
– Two products are used together and demanded
together – Both products are consumed at the
same time
Other Characteristics of Business Demand
• Inelastic Demand
• Fluctuating Demand
Major Uses of B2B Products
For additional production
(e.g., components are combined
into subassemblies and become
part of the finished product)
For use in operations, but not
part of the finished product
For resale
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
 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
 Component Parts generally do not require additional
processing
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
Portable tools, PC’s, etc.
Classifying Business Goods & Services
Facilitating Products
Supplies
Any supplies necessary to maintain the
organization’s operations
Services
Maintenance & Repair support
Advisory support
Logistical support
Categories of B2B Customers
• Commercial enterprises
–Indirect channel members and
facilitators
–OEMs (original equipment
manufacturers)
–Users = customers
• Governmental organizations
• Institutions