Chapter 7 What is Business Marketing 12 13 2012 Business Marketing is the marketing of goods and services to individuals and organizations for purposes other than personal consumption Business products used to manufacture other products become part of another product acquired for resale without change in form Business Marketing on Internet Use of internet to facilitate the exchange of goods services and information between organizations Stickiness measure of websites effectiveness o Stickiness Frequency x Duration x Site Reach Trends in B2B Internet Marketing o Old Revenue generation Aggressive disintermediation initiatives eliminating intermediaries such as wholesalers or distributors from marketing channel o New Reduce costs Build channel partnerships and trust Customer focused technology and systems Brand building and development Integrate online and traditional media Relationship Marketing and Strategic Alliances Loyal customers are more profitable than price sensitive customers with little brand loyalty Long term relationships build competitive advantage Strategic Alliances cooperative agreement between business firms o Form of licensing or distribution agreements joint ventures research and development consortia partnerships Major Categories of Business Customers Producers profit oriented individuals transportation construction o OEMS individuals and organizations that buy business goods and incorportate them into products they produce for eventual sale to other producers Resellers Wholesalers and retailers Governments federal state local Institutions Schools clubs hospitals etc North American Industry Classification System NAICS detailed numbering system developed by US Canada Mexico to classify NA business establishments by main production processes o Provides common industry classification Business versus Consumer Markets Demand consumer demand for products is quite different from demand in bus market Derived Demand demand for business products results from demand for consumer products Inelastic Demand A change in price will not significantly affect demand for product Joint Demand Multiple items are used together in final product demand for one item affects all Fluctuating Demand Demand for business products is more volatile than for consumer products Types of Business Products Major Equipment includes capital goods such as large expensive Accessory Equipment generally less expensive and shorter lived than major equipment power drills Raw Materials unprocessed extractive or agricultural products like Component parts finished items ready for assembly or products that need very little processing Processed Materials are products used directly in manufacturing Supplies consumable items that do not become part of final Business Services are expensive that do not become part of final machines mineral ore other products product product Business Buying Behavior Buying Centers includes all people in organization who become involved in the purchase decision Evaluative Criteria evaluate products on quality service and price Buying Situations firms must decide whether to make something or buy it from an outside supplier Business Ethincs moral principles or values that govern conduct of individual Customer Service increasingly recognizing the benefits of developing a formal system to monitor customer opinions
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