001 introduction to industrail marketing.pptx

B2B Marketing

1. Learning Objectives LO1 : Know the characteristics of Business-to-Business (B2B) marketing and markets . LO2 : Define and understand customer value in business markets . LO3 : Discuss similarities and differences in the characteristics between B2B marketing and consumer marketing. LO4 : Explain the importance of relationships in B2B markets. LO5 : Analyze demand for industrial products. 1/10 Chapter-1

2. Characteristics of B2B Marketing & Markets . B2B marketing is marketing of goods & services to companies. B2B or Business markets consist of private sector companies, institutions, and government organizations. Business markets are made up of fewer but larger customers than consumer markets. Business customers buy products and services to produce other goods and services, make profits, reduce costs, and so on. 2/10 Chapter-2

3. Define and Understand C ustomer V alue in Business Markets . Value or Customer Value in business markets is the economic, technical, service, and social benefits received by a customer firm in exchange for the price paid for a product or service offering. Benefits include functional and emotional. Costs include monetary, time and energy. Value = Benefits divided by costs, or Benefits less costs. 3/10 Chapter-3

4. Similarities & Differences in Characteristics Between B2B Marketing & Consumer Marketing Similarities are in basic tasks, namely: Deciding target markets. Finding target customers’ needs/wants. Developing products/services to meet the needs of target markets. Evolving and implementing marketing plan to satisfy target customers better than competitors. Establishing market-driven organization. 4/10 Chapter-4

5. B2B Marketing & Consumer Marketing (Continued) Differences are substantial. Characteristics Business Markets Consumer Markets Market Geographically concentrated Geographically dispersed Fewer buyers Mass Markets/Many buyers Product Technically more complex Less technical complexity Mainly customized Standardized Service (Availability, Timely delivery) Very important Somewhat important Buyer Behavior Functional involvement of firms Family involvement & influence Buying mainly on rational basis Social/psychological/physiological buying needs. Technical expertise required Less technical expertise required. Interpersonal relationships: stable between buyers & sellers Non-personal relationship between buyers & sellers. 5/10 Chapter-5

6. B2B Marketing & Consumer Marketing (Continued) Differences Characteristics Business Markets Consumer Markets Channel More direct Indirect Fewer channel levels Multiple channel levels Promotion Importance to personal selling & dialogue Importance to advertising & monologue Price Competitive bidding / negotiated prices List price / maximum retail price (MRP) Marketing strategy changes Have company-wide implications Can be made within marketing function 6/10 Chapter-6

7. Importance of Relationship in B2B Marketing Buyer – seller relationships in B2B marketing need to be close and long term. To understand clearly needs of the customer and the customer’s customers, the selling firm must be customer focused. High switching costs (i.e. costs of switching suppliers) make relationships between buying & selling firms difficult to end in B2B marketing. In consumer marketing, switching costs usually are not high. In B2B marketing, salespeople are key for developing the relationship between buying and selling firms. 7/10 Chapter-7

8. Demand for Industrial Products Derived Demand Demand for industrial products is derived from the demand for consumer goods. Fluctuating/Volatile demand Demand for industrial products is more fluctuating or volatile than the demand for consumer goods. This is called acceleration effect by economists. 8/10 Chapter-8

9. Demand for Industrial Products (continued) Joint Demand It refer to situations when two products are used together and are demanded together . Cross-Elasticity of Demand It is the reaction of the sales of one product to a price change in another product . Elasticity of demand It is the change in demand due to change in price. Demand is ‘inelastic’ if the percentage change in quantity demanded is less than the percentage change in price. Demand is ‘elastic’ if the percentage change in quantity demanded is more than the percentage change in price. 9/10 Chapter-9

10. Demand for Industrial Products (continued) Reverse-Elasticity of Demand In this, a price increase can cause an increase in demand and a price decrease would be followed by a decrease in demand. These short-team reactions are opposite from what we would normally expect from business buyers. Bull-Whip Effect It shows large fluctuations in orders, as the orders move up the supply chain from dealers/industrial distributors to the manufacturer to its suppliers. It distorts demand/orders information within the supply chain. 10/10 Chapter-10