Introduction to

Business-to-Business (B2B)
Marketing/Industrial Marketing

What Is Marketing?
the process of planning and
executing
the conception (product), pricing,
promotion, and distribution
of ideas, goods, and services
to create relationships
that satisfy individual and
organizational objectives.

BUSINESS MARKETING
IS
MARKETING OF GOODS AND SERVICES TO:

Companies
Government Bodies
Institutions (i.e. hospitals)
Non-Profit Organizations (i.e. American Red Cross)

FOR
USE IN PRODUCING THEIR PRODUCTS
AND/OR TO FACILITATE THEIR OPERATIONS

What Distinguishes B2B from B2C?

B2B: goods or services are sold for
any use other than personal
consumption
Note: It is not the nature of the
product; it is the reason for the

transaction.

Is it a B2C or a B2B Transaction?

You buy a gear to fix your mountain
bike.
Ford buys the same gear to fix a
machine.
Xerox buys soft drinks for its cafeterias.
You start a landscaping business and
purchase a lawnmower.
The U.S. government buysanything.

B2B versus B2C Marketing

Characteristic

B2B Market

B2C Market

Sales volume

Greater

Smaller

Purchase volume

Greater

Smaller

Number of buyers

Fewer

Many

Size of individual buyers

Larger

Smaller

Location of buyers

Concentrated

Diffuse

Buyer-seller relationship

Closer

More Impersonal

Nature of channel

More direct

Less direct

Buying influences

Multiple

Single/Multiple

Type of negotiations

More complex

Simpler

Use of reciprocity

Yes

No

Use of leasing

Greater

Less

Key promotion method

Personal Selling

Advertising

BUSINESS TO BUSINESS:
IT IS ALL ABOUT DEMAND
DERIVED DEMAND
The demand for a companys products comes
from (derived) the demand for their customers
products.
Most demand comes from consumers.

JOINT DEMAND
Two products are used together and demanded
together Both products are consumed at the
same time

Other Characteristics of Business Demand

Inelastic Demand
Fluctuating Demand

Major Uses of B2B Products

For additional production
(e.g., components are combined
into subassemblies and become
part of the finished product)
For use in operations, but not
part of the finished product
For resale

Classifying Business Goods & Services

3 Main Categories of Products
Entering Goods
Become part of the finished product
Cost assigned to the manufacturing process

Foundation Goods
Capital Items
Typically depreciated over time

Facilitating Products
Support organizational operations
Handled as overhead expenses

Classifying Business Goods & Services

Entering Goods
Raw Materials
Farm products & natural products
Only processed as necessary for handling & transport
Require extensive processing

Manufactured Materials & Parts

Any product that has undergone extensive processing prior
to purchase
Component Materials require additional processing
Component Parts generally do not require additional
processing

Classifying Business Goods & Services

Foundation Goods
Installations
Major long-term investment items
Buildings, land, fixed equipment, etc.

Accessory Equipment
Less expensive & short-lived
Not considered part of fixed plant
Portable tools, PCs, etc.

Classifying Business Goods & Services

Facilitating Products
Supplies
Any supplies necessary to maintain the
organizations operations

Services
Maintenance & Repair support
Advisory support
Logistical support

Categories of B2B Customers

Commercial enterprises
Indirect channel members and
facilitators
OEMs (original equipment
manufacturers)
Users = customers

Governmental organizations
Institutions