Principles of Contemporary Marketing Kurtz & Boone Chapter 6 Business-to-Business (B2B) Marketing CHAPTER 6 Business-to-Business (B2B) Marketing Chapter Objectives 1. Explain each of the components of the business-to-business (B2B) market. 2. Describe the major approaches to segmenting business-tobusiness (B2B) markets. 3. Identify the major characteristics of the business market and its demand. 4. Discuss the decision to make, buy, or lease. 5. Describe the major influences on business buying behavior. Copyright © 2012 by South Western, a division of Cengage Learning. All rights reserved. CHAPTER 6 Business-to-Business (B2B) Marketing Chapter Objectives 6. Outline the steps in the organizational buying process. 7. Classify organizational buying situations. 8. Explain the buying center concept. 9. Discuss the challenges of and strategies for marketing to government, institutional, and international buyers. Copyright © 2012 by South Western, a division of Cengage Learning. All rights reserved. CHAPTER 6 Business-to-Business (B2B) Marketing Copyright © 2012 by South Western, a division of Cengage Learning. All rights reserved. CHAPTER 6 Business-to-Business (B2B) Marketing Nature of the Business Market o Companies buy services, too o Influences in B2B markets: o Environmental o Organizational o Interpersonal o An organization’s goals must be considered in the B2B buying process Copyright © 2012 by South Western, a division of Cengage Learning. All rights reserved. CHAPTER 6 Business-to-Business (B2B) Marketing Components of the Business Market o Commercial market - Individuals and firms that acquire products to support, directly or indirectly, production of other goods and services o Trade industries - Retailers or wholesalers that purchase products for resale to others o Government o Public and private institutions Copyright © 2012 by South Western, a division of Cengage Learning. All rights reserved. CHAPTER 6 Business-to-Business (B2B) Marketing Segmenting B2B Markets o Segmentation helps marketers develop the most appropriate strategy o Segmentation by demographic characteristics o Segmentation by customer type o Segmentation by end-use application o Segmentation by purchase categories Copyright © 2012 by South Western, a division of Cengage Learning. All rights reserved. CHAPTER 6 Business-to-Business (B2B) Marketing Characteristics of the B2B Market o Geographic market concentration o The sizes and numbers of buyers o The purchase decision process o Buyer–seller relationships Copyright © 2012 by South Western, a division of Cengage Learning. All rights reserved. CHAPTER 6 Business-to-Business (B2B) Marketing Evaluating International Business Markets o Business purchasing patterns differ from country to country o Global sourcing - Purchasing goods and services from suppliers worldwide o Can bring significant cost savings but requires adjustments Copyright © 2012 by South Western, a division of Cengage Learning. All rights reserved. CHAPTER 6 Business-to-Business (B2B) Marketing Copyright © 2012 by South Western, a division of Cengage Learning. All rights reserved. CHAPTER 6 Business-to-Business (B2B) Marketing The Make, Buy, or Lease Decision o Firms acquiring finished goods have three options: o Make the good or provide the service in-house o Purchase it from another organization o Lease it from another organization Copyright © 2012 by South Western, a division of Cengage Learning. All rights reserved. CHAPTER 6 Business-to-Business (B2B) Marketing The Rise of Offshoring and Outsourcing o Offshoring - Movement of high-wage jobs from one country to lower-cost overseas locations o Nearshoring - Moving jobs to vendors in countries close to the business’s home country o Outsourcing - Using outside vendors to provide goods and services formerly produced in-house Copyright © 2012 by South Western, a division of Cengage Learning. All rights reserved. CHAPTER 6 Business-to-Business (B2B) Marketing Influences on Purchase Decisions o Environmental factors o Organizational factors o Interpersonal influences o Merchandisers – Trade sector buyers who secure needed products at the best possible prices o Category advisor - Trade industry vendor who develops a comprehensive procurement plan for a retail buyer Copyright © 2012 by South Western, a division of Cengage Learning. All rights reserved. CHAPTER 6 Business-to-Business (B2B) Marketing Copyright © 2012 by South Western, a division of Cengage Learning. All rights reserved. CHAPTER 6 Business-to-Business (B2B) Marketing Classifying Business Buying Situations o Straight rebuy o Modified rebuy o New-task rebuy o Reciprocity Copyright © 2012 by South Western, a division of Cengage Learning. All rights reserved. CHAPTER 6 Business-to-Business (B2B) Marketing Analysis Tools o Value analysis o Systematic study of the components of a purchase to determine the most cost-effective approach o Vendor analysis o Assessment of supplier performance such as price, back orders, timely delivery, and attention to special requests Copyright © 2012 by South Western, a division of Cengage Learning. All rights reserved. CHAPTER 6 Business-to-Business (B2B) Marketing The Buying Center Concept o Buying center - Participants in an organizational buying action o Buying center roles o Users o Gatekeepers o Influencers o Deciders o Buyers Copyright © 2012 by South Western, a division of Cengage Learning. All rights reserved. CHAPTER 6 Business-to-Business (B2B) Marketing Challenges of Government Markets o Purchases typically involve dozens of interested parties o Purchases are influenced by social goals o Contractual guidelines are an important influence in selling to government markets Copyright © 2012 by South Western, a division of Cengage Learning. All rights reserved. CHAPTER 6 Business-to-Business (B2B) Marketing Challenges of Institutional Markets o Institutional buyers - Schools, hospitals, libraries, foundations, clinics, churches, and not-for-profit agencies o Widely diverse buying practices o Multiple buying influences can affect buying decisions o Group purchasing is an important factor Copyright © 2012 by South Western, a division of Cengage Learning. All rights reserved. CHAPTER 6 Business-to-Business (B2B) Marketing Challenges of International Markets o Marketers must consider buyers’ attitudes and cultural patterns o Local industries, economic conditions, geographic characteristics, and legal restrictions must be considered o Remanufacturing – Efforts to restore older products to like-new condition o Foreign governments are an important business market Copyright © 2012 by South Western, a division of Cengage Learning. All rights reserved.