Marketing Exam 2 Chapter 7 Business Marketing B2B the marketing of goods and services to individuals and organizations for purposes other than personal consumption businesses selling to businesses Any product or service bought from another company associated with production or business operations or selling to a distributor Purposes of business products to manufacture other products to become part of another product to aid the normal operations of an organization to resell without change in form Importance of business marketing items change hands in sales to business buyers more than to end consumers there are more sales in B2B than in B2C ex Producing and selling shoes B2B hide dealers sell hide to tanners tanners sell leather to shoe manufacturers manufacturers sell shoes to wholesalers or distributors distributors sell shoes to retailers B2C retailers sell shoes to end consumer Trends in Business Marketing Disintermediation eliminating intermediaries such as wholesalers or distributors from a marketing channel ex selling online Reintermediation the reintroduction of an intermediary between producers and users distributors can provide information that is not online Strategic Alliances Partnerships a cooperative agreement between business firms producers working together to develop improvements producers and retailers working together ex Honest Tea and Coca cola Walmart and Proctor and Gamble Relationship Marketing an ongoing relationship with another firm is so important that the relationship warrants maximum efforts at maintaining it indefinitely Business Market Customers Producers profit oriented individuals and organizations that use purchased goods and services to produce other products to incorporate into other products or to facilitate the daily operations of the organization 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 to consumers ex Toyota buys steel paint tires glass etc from other firms Resellers retail and wholesale businesses that buy finished goods and resell them for a profit Retailers sells mainly to final consumers Wholesalers sell mostly to retailers and other organizational customers Governments end users that include federal state and local buying units Federal Government kind of like a combination of several large companies with overlapping responsibilities and thousands of small independent units State County and City Governments less frustrating for both small and large vendors simpler paperwork ex School districts highway departments government operated hospitals etc Institutions seek to achieve goals other than the standard business goals of profit market share and return on investment ex schools hospitals nonprofits churches prisons fraternal organizations other nonbusiness organizations Types of Business Products Major Equipment capital goods such as large or expensive machines mainframe computers generators airplanes and buildings depreciated not expensed ex plant machinery to make sheet metal Accessory Equipment goods such as portable tools and office equipment that are less expensive and shorter lived than major equipment help in the process not part of the finished product expense items relatively inexpensive ex tool cart and tools Raw Materials unprocessed extractive or agricultural products such as mineral ore lumber wheat corn fruits vegetables and fish ex aluminum ore Component Parts either finished items ready for assembly or products that need very little processing before becoming part of some other product ex propeller blade Processed Materials products used directly in manufacturing other products ex sheet metal bought from producer in order to produce airplane Supplies consumable items that do not become part of the final product help in the process ex paper Contracted Service supplied by another company ex uniforms Business derived inelastic joint fluctuating Consumer individual Differences between business and consumer markets 1 Demand 2 Purchase Volume Business larger 3 Number of customers Business fewer 4 Location Consumer smaller Consumer many Business concentrated Consumer dispersed Business more direct Consumer more indirect Business professional Consumer personal Business multiple people Consumer individual 5 Distribution 6 Nature of Buy 7 Buy influences 8 Negotiations Business more complex Consumer simpler 9 Reciprocity every player gets something out of the deal Business yes Consumer no 10 Leasing 11 Main Promotion Business greater Consumer lesser Business personal selling sales rep Consumer advertising Systems Buying buying a total solution from one firm rather than buying each item individually common with government contracts prime contractor provides a turnkey solution ex Indonesian government requested bids to build a concrete plant near Jakarta winning contractor will choose the site hire the construction crews assemble the materials and equipment hire the factory workers and turn the plant over to the customer Business Buying Behavior 1 Buying Center all those people n an organization who become involved in the purchase decision initiator influencer decider purchaser user gatekeeper 2 Evaluative Criteria evaluating products and suppliers against three important criteria quality service and price Quality technical suitability involves salespeople and product Service survey of buyers needs report and recommendations installing equipment equipment training dependability Price low prices without sacrificing quality 3 Buying Situations deciding to make something or buy it from an outside supplier New Buy a situation requiring the purchase of a product for the first time high involvement Modified Rebuy a situation in which the purchaser wants some change in the original good or service in between something has changed Straight Rebuy a situation in which the purchaser reorders the same goods or services without looking for new information or investigating other suppliers routine decision Stages in the Business Buying Process 1 Problem Recognition 2 Product Specification develop a request for proposal Request for Proposal RFP document that spells out requirements of purchase 3 Supplier Search e hubs vs functional hubs functional service product supplier 4 Solicit Proposals issue RFP 5 Evaluate Proposals and Select Supplier price vs technical Implement Ordering Process 6 7 Evaluate Supplier
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