Business Marketing
Management, 13e
Chapter 1: A Business Marketing
Perspective
Chapter Objectives
By the end of this chapter, you should be able to:
1. Define the scope of business-to-business (B2B) marketing
2. Identify the types of customers that comprise B2B markets
3. Compare the similarities and differences between business-to-
consumer (B2C) and B2B marketing
4. Explain a method for classifying B2B products and services
5. Contrast how business marketing strategy is adapted among B2B
classification categories
6. Recognize the key imperatives for business marketing management
7. Describe the nature of buyer–seller relationships in a product’s
supply chain
Defining the Scope of Business (B2B)
Marketing
Business Markets
• Business markets are markets for products and services, local to
international, bought by businesses, government bodies, and
institutions (such as hospitals) for incorporation (for example,
ingredient materials or components), for consumption (for example,
process materials, office supplies, and consulting services), for use
(for example, installations or equipment), or for resale (Lichtenthal, et
al., 2008).
• The only markets not of direct interest are those dealing with
products or services that are principally directed at personal use or
consumption such as packaged grocery products, home appliances, or
consumer banking.
Types of Business Market (B2B)
Customers
Types of Business Market (B2B) Customers (1
of 4)
Table 1-1 Types of Business Market Customers
Commercial Customers Institutional Customers Governmental Customers
Manufacturers Schools, colleges, and Federal government
universities
Construction companies Health-care organizations • Non-defense
Service firms Libraries • Defense
Transportation companies Foundations State government
Selected professional groups Art galleries Local government
Wholesalers Clinics • Counties
Retailers • Townships
Types of Business Market (B2B) Customers (2
of 4)
• Commercial Enterprises as Customers
• Commercial enterprises include manufacturers, construction companies,
service firms (for example, hotels), transportation companies, selected
professional groups (for example, dentists), and resellers (wholesalers and
retailers purchasing equipment and supplies to use in their operations).
• Manufacturer Buying: Fewer than 10% of manufacturing firms ship more than
75% of all products in the U.S. They are also geographically concentrated in
only eight states.
Types of Business Market (B2B) Customers (3
of 4)
• Government Units as Customers
• Federal (1), state (50), and local (89,000) government units generate the greatest
volume of purchases of any customer category in the United States.
• Government Buying
• Formal advertising is when the government solicits bids from appropriate suppliers.
• Negotiated contract is used when the product cannot be differentiated on the basis of price
alone or when there are few potential suppliers.
Types of Business Market (B2B) Customers (4
of 4)
• Institutions as Customers
• Institutional customers comprise the third sector of the business market.
• Institutional buying allows institutions as a group to enjoy lower prices,
improved quality (through improved testing and supplier selection), reduced
administrative costs, and greater competition.
Knowledge Check Activity (1 of 3)
What are the types of customers that comprise B2B markets?
Business (B2B) Markets vs.
Consumer (B2C) Markets
Demand (1 of 2)
• Derived Demand refers to the direct link between the demand for an industrial product and the demand
for consumer products: The demand for industrial products is derived from the ultimate demand for
consumer products.
• Fluctuating Demand: Because demand is derived, the business marketer must carefully monitor demand
patterns and changing buying preferences in the household consumer market, often on a worldwide
basis.
• Microchips: Lifeblood of Modern Economy - The lack of even one of these components can trigger
production delays or shutdowns.
• The bullwhip effect in supply chains is a supply chain phenomenon that describes how small
fluctuations in point of sale demand can cause progressively larger fluctuations in demand at the
distributor, manufacturer, and raw material supplier levels (Hau, 1997).
Demand (2 of 2)
• Stimulating Demand - Some business marketers must not only
monitor final consumer markets but also develop a marketing
program that reaches the ultimate consumer directly.
• Demand Elasticity refers to the responsiveness of the quantity
demanded to a change in price.
A Global Market Perspective
• A complete picture of the business market must include a horizon
that stretches beyond the boundaries of the United States. The
demand for many industrial goods and services is growing more
rapidly in many foreign countries than in the United States.
• Illustration: Smucker as a B2C and B2B Marketer
• Key buying influential (those who have power in buying process)
• B2B vs. B2C characteristics at Smucker
Knowledge Check Activity (2 of 3)
What are the similarities and differences between B2C and B2B
marketing?
Classifying B2B Products and
Services
Classifying Goods for the Business Market
Figure 1-3 Classifying Goods for the Business Market
• What type of goods do business
market customers require, and
how is each type marketed?
• In general, industrial goods
can be divided into three
broad categories: entering
goods, foundation goods, and
facilitating goods.
Source: Philip Kotler, Marketing Management: Analysis, Planning & Control, 4th Edition, (New Jerey, Prentice-Hall, 1980),172.
Adapting Business Marketing
Strategy Among the Classification
Categories
Illustration: Manufactured Materials and
Parts
• Manufactured materials and parts Table 1-4 Business Marketing Strategy Adaptations
enter the buying organization’s
Manufactured Materials Marketing Strategy Emphasis:
own product. Whether a part is
and Parts:
standardized or customized often
dictates the nature of marketing Customized • Personal Selling
strategy. • Typically purchased in • Relationship Marketing
smaller quantities
Standardized • Competitive Pricing
• Typically purchased in • Reliable Delivery
larger quantities • Supporting Services
• Use Industrial
Distributors for smaller
accounts
Illustration: Installations
• Installations such as fixed Installations:
equipment are classified as Customized • Product/Technology
foundation goods because they • Direct distribution • Service Capabilities
are capital assets that affect the is the norm • Personal Selling
buyer’s scale of operations. • Relationship Marketing
• Initial price/distribution/advertising play
lesser roles
Standardized • Product/Technology
• Industrial • Service Capabilities
distributor is the • Personal Selling
norm • Relationship Marketing
• Initial price/distribution/advertising play
lesser roles
Illustration: Supplies
Supplies:
• Most supply items reach a broad
Customized • Personal Selling
market of business customers • For firms looking to • Relationship Marketing
from many different industries. provide a • Differentiated Product/Services
differentiated
offering compared
to competitors.
Standardized • Advertising directed to resellers and final
• Typically the norm users
for this category • Catalog Listings
• Personal selling confined to resellers and
large final users
• Competitive Pricing
• Timely Reliable Delivery
Key Imperatives for Business
Marketing Management
Developing Distinctive Capabilities
• Market-sensing capability concerns how well the organization is
equipped to continuously sense changes in its market and anticipate
customer responses to marketing programs.
• Customer-linking capability comprises the particular skills, abilities,
and processes an organization has developed to create and manage
close customer relationships.
Strategy Imperatives for B2B Marketers
• Strategy Imperatives for B2B Marketers
• Impact on Business Performance
• Customer relationship management capabilities include all the skills required to
identify, initiate, develop, and maintain profitable customer relationships.
• Understand the Customer Decision Journey
• Customer Engagement
• Align Strategy and Sales
Marketing Leaders Shape Innovation Agenda
• Executives at General Electric observed successful marketers perform
four fundamental rules called a marketer’s DNA.
• The Instigator scans the entire business landscape for marketing ideas as
opposed to thinking exclusively about current products and markets.
• The Innovator demonstrates courage and persistence, plus the political skills
to overcome objections.
• The Integrator builds bridges across multiple functions to unite organizational
members on a clear strategy path.
• The Implementor translates plans into actionable strategies.
Creating the Customer Value Proposition
• A customer value proposition captures the particular set of benefits
that a supplier offers to advance the performance of the customer
organization.
• Value Proposition Illustrated
• Sonoco’s customer value proposition: redesign packaging with greater
manufacturing efficiency and a distinctive look all for the same price.
• What Matters Most?
• Cost savings and enhanced market position and customer appeal
A Relationship Emphasis
Table 1-6 Characteristics of Business Market Customers
• Relationship marketing Characteristic Example
centers on all marketing • Business market customers are comprised of • Among Dell’s customers are Boeing, Arizona State
activities directed commercial enterprises, institutions, and University, and numerous state and local government
toward establishing, governments units
developing, and • A single purchase by a business customer is far • An individual may buy one unit of a software package
maintaining successful larger than that of an individual consumer upgrade from Microsoft while Citigroup purchases
exchanges with 10,000
customers (Morgan and
• The demand for industrial products is derived • New home purchases stimulate the demand for
Hunt, 2012).
from the ultimate demand for consumer carpeting, appliances, cabinets, lumber, and a wealth
• Table 1-6 provides a products of other products
recap of key • Buyer–seller relationships tend to be close and • IBM’s relationship with some key customers spans
characteristics of enduring decades
business market • Buying decisions by business customers often • A cross-functional team at Procter & Gamble (P&G)
customers. involve multiple buying influences, rather than a evaluates alternative laptop personal computers and
single decision maker selects Hewlett-Packard
• While serving different types of customers, • Job titles include marketing manager, product
business marketers and consumer-goods manager, sales manager, and account manager
marketers share the same job titles
Knowledge Check Activity (3 of 3)
What are key imperatives for business marketing management?
The Nature of Buyer-Seller
Relationships in a Product’s Supply
Chain
Consider the Supply Chain for an EV
• Figure 1-4 illuminates the importance of a relationship perspective in business
marketing by considering the chain of suppliers involved in the creation of an electric
vehicle (EV).
Figure 1-4 The Supply Chain
Supply Chain Management
• Supply chain management is a technique for linking a manufacturer’s operations with those of all
of its strategic suppliers and its key intermediaries and customers to enhance efficiency and
effectiveness.
• Managing Relationships in the Supply Chain
• Supply Chain Customers
• Users purchase industrial products or services
• Original Equipment Manufacturers (OEMs) purchase industrial goods
• Dealers and Distributors include commercial enterprises
• Overlap of Categories – commercial enterprises can be in multiple categories
• Understanding Buying Motivations - each purchases the product for a different reason
A Look Ahead
A Look Ahead Figure 1-5 A Framework for Business Marketing Management
• Figure 1-5 provides an
overview of the chief
components of the business
marketing management
process covered in the text.