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Business to Business
Marketing (BTBM6222)
by
Mr Gordon Kanoyangwa e-mail: [email protected] 073 937 9949 Business to Business marketing (BTBM6222)
Lecture Week 1 31/ 07 / 2023 – 04 / 08 / 2023 Business to Business Marketing (BTBM6222)
Topics and assessment criteria covered
• B2B markets and B2B Marketing • Define B2B markets • Define B2B marketing • Differentiate between the various types of B2B customers. • Differences between B2B and B2C marketing • Differentiate between B2B and B2C markets • Describe the differences between B2B and B2C marketing • Classifying B2B products and Markets • Discuss how B2B products and markets can be classified Chapter 1 Business to business marketing Defining B2B markets and B2B marketing Behind every purchase you make there are a number of B2B transactions that had to occur successfully in order for a purchase to occur. Business to business marketing Defining B2B markets and B2B marketing Behind the scene transactions enable the end consumers to acquire the products and services they need or want. Business to business marketing Defining B2B markets and B2B marketing The nail technician at a local nail salon makes the client’s nails look perfect using products that were made by a well-established cosmetic company. These products were made from materials that were acquired from chemical manufacturers and equipment that was produced by hardware and electrical manufacturers. Business to business marketing Defining B2B markets and B2B marketing A simple purchase such as a manicure is made possible by a web of supporting B2B transactions that have taken place before that. Business to business marketing Defining B2B markets and B2B marketing B2B markets (previously referred to as industrial markets) refer to the marketplace where businesses purchase products and services from other businesses. Business to business marketing Defining B2B markets and B2B marketing B2B markets are markets for products and services, local to international, bought by businesses, government bodies and institutions for incorporation, consumption, use or resale. Business to business marketing Defining B2B markets and B2B marketing B2B organisations purchase products for one of three purposes namely resale, direct use in producing other products or use in general daily operations. Business to business marketing Defining B2B markets and B2B marketing Marketing to a business involves the same concepts and strategies as marketing to the consumer market including activities such as identifying and defining the target market, understanding the behaviours of consumers and developing effective marketing strategies. Business to business marketing Types of B2B customers or buyers B2B customers can be categorized into four basic types of B2B customers namely: i) Resellers ii) Producers iii) Government iv) Institutions Business to business marketing Types of B2B customers or buyers B2B customers can be categorized into four basic types of B2B customers namely: i) Resellers A reseller is an individual or business that purchases products or services produced by another business with the intention of selling these products or services to another party for profit, instead of consuming the products or services themselves. Business to business marketing Types of B2B customers or buyers B2B customers can be categorized into four basic types of B2B customers namely: i) Resellers Retailers are businesses that focus their marketing efforts on the final consumers with the intention of selling products or services directly to them, for example in a store, over the telephone, door to door or by means of a vending machine. Business to business marketing Types of B2B customers or buyers B2B customers can be categorized into four basic types of B2B customers namely: i) Resellers A wholesaler is in an intermediary position between the producer and the retailer in the distribution channel. Business to business marketing Types of B2B customers or buyers B2B customers can be categorized into four basic types of B2B customers namely: ii) Producers (commercial enterprises) Producers acquire goods such as raw material and semi-finished and finished items from other businesses. They then utilize and transform these goods into sellable products to make profit. Business to business marketing Types of B2B customers or buyers B2B customers can be categorized into four basic types of B2B customers namely: iii) The government One of the biggest customers in B2B marketing is the government (national, provincial and local government). Business to business marketing Types of B2B customers or buyers B2B customers can be categorized into four basic types of B2B customers namely: iii) The government Government agencies purchase a wide range of goods and services, from paper and printers to weaponry, buildings, highway construction services, waste disposal services as well as medical and security services. Business to business marketing Types of B2B customers or buyers B2B customers can be categorized into four basic types of B2B customers namely: iv) Institutions Businesses with charitable, educational, community or other non-business goals constitute institutional markets. Business to business marketing Types of B2B customers or buyers B2B customers can be categorized into four basic types of B2B customers namely: iv) Institutions Institutional customers or buyers include organisations such as schools, universities, hospitals, churches, nursing homes and non-profit organisations (CANSA, SPCA or the Jacaranda Children’s home) Business to business marketing The differences between B2B and B2C marketing Market structure differences
Dimension of B2B market B2C market
difference characteristics characteristics Nature of demand Derived Direct
Demand volatility or Greater volatility Less volatility
fluctuation
Demand elasticity Less elastic More elastic
Business to business marketing The differences between B2B and B2C marketing Market structure differences
Dimension of B2B market B2C market
difference characteristics characteristics Reverse elasticity More common Less common
Nature of customers Greater heterogeneity Greater homogeneity
Market complexity More complex Less complex
Business to business marketing The differences between B2B and B2C marketing Market structure differences
Dimension of B2B market B2C market
difference characteristics characteristics Market size Large overall value Smaller overall value
Number of buyers per Few Many
segment Relative size of buyers and Often similar Seller much larger sellers Market concentration Often clustered Usually dispersed Business to business marketing The differences between B2B and B2C marketing Buying behaviour differences
Dimension of B2B market B2C market
difference characteristics characteristics Buying influences Many Few
Purchase cycles Often long Usually short
Transaction value Often high Usually small
Buying process complexity Often complex: multiple Usually simple: a single
steps step Business to business marketing The differences between B2B and B2C marketing Buying behaviour differences
Dimension of B2B market B2C market
difference characteristics characteristics Buyer and seller Often high Usually low interdependencies Purchase professionalism Often high Usually low
Important of relationships Often important Usually unimportant
Degree of interactivity Often high Usually low
Business to business marketing The differences between B2B and B2C marketing Marketing practice differences
Dimension of B2B market B2C market
difference characteristics characteristics Selling process Systems selling Product selling
Personal selling and Used extensively Limited
negotiations Driving force Relationship driven Products-driven, concerned with converting concerned with converting prospects into customers shoppers into buyers and making transitions Business to business marketing The differences between B2B and B2C marketing Marketing practice differences
Dimension of B2B market B2C market
difference characteristics characteristics Role and relationships Value of relationships is Limited maximised Promotional strategies Unique, customer specific Mass market
Web integration Greater Limited
Business to business marketing The differences between B2B and B2C marketing Marketing practice differences
Dimension of B2B market B2C market
difference characteristics characteristics Branding Limited Extensive, sophisticated, brand identity created by imagery and repetition Market research Limited Extensive
Segmentation Unsophisticated Sophisticated
Business to business marketing The differences between B2B and B2C marketing Marketing practice differences
Channel of distribution Shorter, more direct Longer channels and more
intermediaries Business to business marketing Differences in market structure B2B markets have certain specific characteristics as the nature of the demand for business products poses unique challenges and opportunities for marketing managers. Business to business marketing Differences in market structure Derived demand Products in B2B markets are generally thought to have a derived demand. This means the demand for a business product is linked to the demand of a consumer good or service. Business to business marketing Differences in market structure Volatile / fluctuating demand Derived demand creates volatility in business market demand which means that there will be variations in the demand for a product or service over time. Business to business marketing Differences in market structure Joint demand Joint demand occurs when two or more items are used in combination to manufacture a product or when the demand for one business product is related to the demand for another. Business to business marketing Differences in market structure Inelastic demand Inelastic demand is demand that does not change. This implies that if the price of the product were to increase or decrease the demand for the product will not change significantly. Business to business marketing Differences in market structure Market concentration Market concentration or the degree of concentration of sellers in the market refers to the number of businesses that sell a particular product or related products in a specific market. Business to business marketing Differences in market structure Market size Due to the large amount of products and services purchased in B2B markets at any single point in time, B2B markets are much larger than B2C markets. B2B markets therefore have a large overall value compared to B2C markets. Business to business marketing Differences in buying behaviour The buying process differs substantially in B2C and B2B markets: i) In B2C markets, emotional elements play a large role in the purchase of goods and service. In B2B markets purchasing decisions tend to be less emotional and more task oriented. Business to business marketing Differences in buying behaviour The buying process differs substantially in B2C and B2B markets: ii) Consumers generally look for specific attributes such as value for money or the use, productivity or quality of the product when making a purchase. Business to business marketing Differences in buying behaviour The buying process differs substantially in B2C and B2B markets: iii) Businesses tend to buy in larger quantities expert discounts for bulk purchases and negotiation more on the terms of delivery. Business to business marketing Differences in buying behaviour The buying process differs substantially in B2C and B2B markets: iv) As the value of transactions can be very high in B2B markets, sellers tend to tailor product offerings to the needs of the buyers. Business to business marketing Differences in buying behaviour The buying process differs substantially in B2C and B2B markets: v) It can be more difficult to satisfy B2B buyers than consumers Business to business marketing Differences in buying behaviour The buying process differs substantially in B2C and B2B markets: vi) Building and maintaining long lasting relationships are given priority in B2B markets as relationships are very important to the success of any B2B organisation The End
