Rachel Lissak D Whitney BMGT350 Fall 2011 Ch 7 1 7 1 What is Business Marketing Business Marketing marketing G S s to individuals and organizations for a purpose other than personal consumption Difference between business and consumer products is intended use Consumer Good a product bought for personal or family consumption or as a gift Business Product product bought for use in a business Office supplies are both a consumer good and business product 3 primary marketing goals of US businesses 1 Customer Acquisition 2 Creating Brand Awareness 3 Customer Retention Size of business market in US is much bigger than the consumer market 7 2 Business Marketing on the Internet o Business to Business B2B Electronic Commerce use of the internet to facilitate activities between organizations o Companies selling to businesses must determine who the market is and the most effective way to reach them Difficult because business has moved online and overseas o Web Technology used by companies includes blogs podcasts and video Social networks RSS feeds threaded discussions wikis Measuring Online Success o 3 measures of online success 1 Recency Customers who have made a purchase recently are more likely to purchase again in the near future than customers who haven t made a purchase in a while 2 Frequency Data helps marketers identify frequent purchasers who are more likely to make another purchase in the future 3 Monetary Value Big spenders can be the most profitable customers for a business o Stickiness a measure of a website s effectiveness Stickiness Frequency x Duration x Site Reach o There is almost an endless number of factor combinations that can be created to provide a quantitative method for determining buying behavior online Trends in B2B Internet Market o RSS Feeds used to publish frequently updated materials such as blogs news headlines audio and video in a standard format Evolution of Business Initiatives Past Initiatives Present Initiatives Revenue generation Aggressive disintermediation initiatives Basic marketing communication Reduce costs Build channel partnerships trust Customer focused technology strategies systems Brand building development Rachel Lissak D Whitney BMGT350 Fall 2011 Ch 7 2 Integrate online traditional media o New applications are being developed each year that Provide information about present and potential customers Lower costs Enhance customer retention loyalty and trust Increase supply chain efficiency Increase efficiency o Disintermediation eliminating intermediaries from marketing channel o Some firms followed disintermediation with reintermediation Reintermediation reintroduction of an intermediary between producers and 7 3 Relationship Marketing and Strategic Alliances o Relationship marketing has become more important now that customers are more demanding and competition has become more intense o Also important now that companies use social networking sites to advertise users themselves Social networking sites encourage businesses to shop around and research Has made customer retention a priority for suppliers in the past acquiring options for all of their needs new customers was the focus Strategic Alliances o Strategic Alliance Partnership cooperative agreement between business firms o Can take the form of Joint ventures Licensing or distribution agreements Research and Development consortia Partnerships o Business marketers build them to strengthen operations and better compete Sometimes alliance partners are competitors May also be in separate industries o To maintain an alliance long term it must be built on commitment and trust Relationship Commitment a firm s belief that an ongoing relationship with another firm is so important that the relationship warrants maximum efforts at maintaining it indefinitely Trust the condition that exists when one party has confidence in an exchange partner s reliability and integrity Relationships in Other Cultures o Keiretsu a network of interlocking corporate affiliates originated in Japan o Many firms believe that the best way to compete in Asia is to form relationships 7 4 Major Categories of Business Customers o 4 major categories of customers with Asian firms 1 Producers 2 Resellers Rachel Lissak D Whitney BMGT350 Fall 2011 Ch 7 3 3 Governments Institutions 4 Producers o Producer segment of the business market includes profit oriented individuals and organizations that use purchased G S s to produce other products to incorporate into other products or to facilitate daily operations of the organization o Producers are often called OEMs o Original Equipment Manufacturers OEMs individuals and organizations that buy business goods and incorporate them into the products they produce for eventual sale to other producers or consumers o Reseller market includes retail and wholesale businesses that buy finished goods and resell them for a profit Retailers sell mainly to final consumers Wholesalers sell mostly to retailers and other organizational customers o Business Product Distributors wholesalers that buy business products and resell Resellers them to business customers Governments Contracts for government purchases are often put out for bid When the lowest bidder isn t awarded the contract strong evidence is needed to justify the decision o Federal Government Much of their buying is centralized but no single federal agency contracts for all the government s requirements and no single buyer in the industry purchases all that the agency needs o State County and City Government Less frustrating than selling to the federal government The paperwork is much simpler Institutions o Consists of institutions that seek to achieve goals other than standard business goals of profit market share and return on investment o Includes schools hospitals churches labor unions etc 7 5 The North American Industry Classification System North American Industry Classification System NAICS a detailed numbering system developed by the US Canada and Mexico to classify North American businesses establishments by their main production processes Introduced in 1997 to replace the standard industrial classification system SIC 7 6 Business versus Consumer Markets o Basic philosophy and practice of marketing are the same whether the customer is a business organization or a consumer Demand Consumer demand differs from demand in the business market Business demand is derived inelastic joint and fluctuating o Derived Demand Rachel Lissak D Whitney
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