Chapter 7 Business marketing the marketing of goods and services to individuals and organizations for purposes other than personal consumption Ex computers sold to a university Business products include those that are used to manufacture other products become part of another product or aid the normal operations of an organizations of an organization Intended use is key Business to business electronic commerce the use of the internet to facilitate the exchange of goods services and info between organizations Measuring Online Success Recency the fact that customers who have made a purchase recently are more likely to purchase again in the near future than customers who haven t purchased in a while Frequency helps marketers to identify frequent purchasers who are definitely likely to repeat their purchasing behavior in the future Monetary Value of sales is important because big spenders can be the most profitable customers for a business Measure Stickiness a measure of a web site s effectiveness calculated by multiplying the frequency of visits times the duration of a visit times the number of pages viewed during each visit site reach Ex By measuring the stickiness factor of a Web site before and after a design or function change the marketer can quickly determine whether visitors embraced the change B2B Internet marketing is the shift of sourcing to the net RSS Real Simple Syndication Feeds are used to publish frequently updated materials such as blogs news headlines audio and video in a standard format Web feeds benefit publishers by letting them syndicate content automatically They benefit readers who want to subscribe to timely updates or aggregated information from various sources Disintermediation the elimination of intermediaries such as wholesalers or distributors from a marketing channel Dell Inc sells directly to business buyers and consumers Internet disintermediation has occurred less frequently than many expected The reason is that distributors often perform important functions such as providing credit aggregation of supplies from multiple sources delivery and processing returns Reintermediation the reintroduction of an intermediary between producers and users They realized that providing direct online purchasing only was similar to having only one store in a city selling a popular brand Relationship marketing is a strategy that entails seeking and establishing ongoing partnerships with customers Loyal customers are also more profitable than those who are price sensitive and perceive little or no difference among brands or suppliers Building relationships is a form of competitive advantage Strategic Alliance Strategic Partnership cooperative agreement between businesses Can be licensing or distribution agreements joint ventures research and development consortia and partnerships May be between manufacturers manufacturers and customers manufacturers and suppliers and manufacturers and channel intermediaries Relationship Commitment a firm believes that an ongoing relationship with some other firm is so important that it warrants maximum efforts at maintaining it indefinitely A perceived breakdown in commitment by one of the parties often leads to a breakdown in the relationship Trust exists when one party has confidence in an exchange partner s reliability and integrity Businesses in China Japan Korea and Mexico rely heavily on personal relationships In Japan exchange between firms is based on personal relationships that are developed through amae or indulgent dependency feeling of nurturing concern for and dependence upon another Reciprocity and personal relationships contribute to amae Relationships between companies can develop into a keiretsu a new work of interlocking corporate affiliates For example executives may sit on the boards of their customers or their suppliers trade with each other engage in joint product development finance marketing Major Categories of Business Customers Producers includes profit oriented individuals and organizations that use purchased goods and services to produce other products or to facilitate the daily operations of the organization Ex construction manufacturing transportation finance real estate food service firms Original Equipment Manufacturers individuals and organizations that buy business goods and incorporate them into the products that they produce for eventual sale to other producers or consumers Resellers The reseller market includes retail and wholesale businesses that buy finished goods and resell them for a profit Business product distributors are wholesalers that buy business products and resell them to business customers Governments Government organizations include thousands of federal state and local buying units Largest single market for goods and services in the world Contracts for government purchases are often put out for bid Interested vendors submit bids usually sealed to provide specific products during a particular time Sometimes the lowest bid is rejected because of lack of experience inadequate financing or poor past performance Federal Govt Viewed as a combination of several large companies with overlapping responsibilities and thousands of small independent units State County and City Government selling to states countries and cities can be less frustrating for both small and large vendors than selling to the federal government Less paperwork Institutions seek to achieve goals other than the standard business goals of profit market share and return on investment Includes schools hospitals universities churches labor unions fraternal organizations civic clubs foundations and other nonbusiness organizations North American Industry Classification System NAICS is an industry classification system introduced in 1997 to replace the standard industrial classification SIC Goods or service producing firms that use identical or similar production processes are grouped together Valuable tool for business marketers engaged in analyzing segmenting and targeting markets Codes help identify firms that may be prospective users of a supplier s goods and services The basic philosophy and practice of marketing are the same whether the customer is a business organization or a consumer Business markets do have some different characteristics than consumer markets Demand Derived Demand the demand for business products because organizations buy products to be used in producing their customers product Demand for a components is
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