CHAPTER 1

BUSINESS MARKETING
2
LEARNING OUTCOMES

Describe business marketing
Describe the role of the Internet in business marketing
Discuss the role of relationship marketing and strategic
alliances in business marketing
Identify the four major categories of business market
customers
Explain the major differences between business and consumer
markets
Describe the types of business goods and services
Discuss the unique aspects of business buying behavior






What Is Business Marketing?
3
Business
Marketing

The marketing of goods and
services to individuals and
organizations for purposes
other than personal
consumption.
The Nature of Business-to-Business
Buying
Business-to-
Business buying
behavior:
Refers to decision
making and other
activities of
organizations as
buyers.
Business-to-Business
buying is the
selection of suppliers,
sources, or vendors.

The Nature of Business-to-Business
Buying
Organizations fall into
four categories:
Business firms
Government markets
Reseller markets
Institutional markets
Supply-Chain Management
Supply-Chain
Management:
The integration of
business processes from
end user through original
suppliers that provides
products, services, and
information that add value
for customers.
Supply Management
Supply Management:
The identification, acquisition, access,
positioning, and management of resources
the organization needs or potentially needs
in the attainment of its strategic objectives.
BUSINESS PRODUCTS
8

The key is intended use

Are used to manufacture other products
Become part of another product
Aid the normal operations of an organization
Are acquired for resale without change in form

REVIEW LEARNING OUTCOME
Business Marketing
9
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CONSUMER
BUSINESS
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Characteristics of Business-to-
Business Buying Behavior
Consumers buy for
their own use and for
household
consumption.

Business buyers
purchase for:
Further production (raw
materials, components)

Use in their firms
operations

Resale to other
customers

Characteristics of Business-to-
Business Buying Behavior
Derived Demand:
Demand for business-to-business products is often
dependent on demand in consumer markets.
Evaluating Business-to-Business
Markets: NAICS
The Importance of Business-to-
Business Buying
Two Key Reasons:
1. The size of business markets
offers many opportunities for
marketers.

2. Many firms are trying to increase
profits by improving purchasing
practices.
Trends in Business-to-Business
Buying
1. Electronic Commerce
2. Strategic Cost
management
3. Strategic Sourcing
4. Supply-chain partner
selection &
contribution
5. Relationship
management
6. Performance
measurement
7. Global-supplier
development
8. Third-party purchasing
9. Competitive bidding
10. Strategic supplier
alliances
11. Win-win negotiation
strategy
12. Complexity management
Productivity Improvement
Outsourcing

Corporate downsizing
often involves downsizing
of the purchasing function

Reducing cycle time
Use of Technology
B2B Exchanges:
Organizational buying via the Internet.

Private Exchanges:
Those that link invitation-only buyers and
sellers.

Electronic Commerce Applications in
Purchasing
Requesting proposals and price quotes.
Posting bids.
Transmitting purchase orders.
Using Electronic Data Interchanges.
Ordering with electronic catalogs.
Seeking suppliers.
Tracking delivery schedules.
Managing contracts.
Managing inventory.
Paying invoices/making payments.
Business Marketing on the
Internet
18
Describe the role of the
Internet in
business marketing

Measuring Online Success
19
Stickiness
A measure of a Web sites
effectiveness; calculated by
multiplying the frequency of visits
times the duration of a visit times the
number of pages viewed during each
visit.

Stickiness = Frequency x Duration x Site Reach
A Relationship Perspective


Environmental Impact
Buyers emphasize an Ethics
Perspective by:
Examining the costs associated with
product disposal.

Looking for ways to recycle or reuse
products.
Types of Buying Decisions
Type of Buying Newness of Information Consideration of
Decision the Problem Requirements New Alternatives
New task High Maximum Important

Modified rebuy Medium Moderate Limited

Straight rebuy Low Minimal None
The Buying Decision Grid
The Business Buying Process
The Buying Center
Buying Center:
Includes more than the purchasing department or the
purchasing function; it is made up of people throughout
the organization at all levels.


The makeup of the buying center
may vary as decisions change.

The Buying Center
Gatekeepers:
Control the flow of information and
communication among the buying-center
participants.
Sponsor:
Advocates purchase of a particular product of
service.

Government Markets
Government Market:
Includes federal, state, and local government
organizations that purchase goods and services.
The government market is the largest
in the world, with the United States
federal government the largest
customer in this market

Reseller Markets
Reseller Market:
Made up of firms that
purchase goods and in
turn sell them to others
at a gain.

This market includes:
Wholesalers
Retailers

3.5 million companies with more
than 20 million employees make
up reseller markets.


Other Institutional Markets
Nonprofit organizations must
also purchase goods and
services to support their
activities.

These organizations include:
Educational institutions
Public & private hospitals
Religious & charitable organizations
Trade associations

Ethical Issues
Ethics is a constant
concern in business-
to-business
negotiations and
transactions.
Bribery takes many
forms:
Gifts from vendors to
people involved in decision
making

Money under the table

Promises for the future

Ethical Issues

Reciprocity:
When firm A purchases from supplier B who
in turn buys As own products and services.


Fairness, honesty, and trust should influence all
negotiations and selection of suppliers or vendors.


Firms pursuing global markets
encounter ethical dilemmas.