B2b Marketing Notes

• Business Marketing

• Marketing products/services to other companies, government bodies, institutions, and other organization
• Magnitude: account for large economic activities in industrialized countries
• Mass marketing is not applicable in business marketing

• Characteristics of business market

• Buyer-seller interdependence
• Channel of distribution is shorter
• More direct: personal selling and negotiation (due to direct communication and complex buying procedures)
• Unique promotional strategies

• vary from the department that salesperson is dealing with (e.g. low cost strategy for finance department)
• using trade shows and expositions

• Types of business customers

• Companies that consume (Original equipment manufacturer & Users)
• Gov. Agencies
• Institutions
• Resellers (wholesalers, brokers, industrial distributors)

• Purchasing standards and process

• Strict performance standards (e.g. design specification, cost constraints, delivery window)
• Complex purchasing processes → deal with organizational controls of professional purchasers

• Nature of Demand

• Derived demand

• Demand for business goods is derived from demand of consumer goods (downstream demand)

• Inelastic Demand

• Not affected by price changes (e.g. price discount)
• More substitutes for some industrial products
• Elasticity also driven by derived demand

• Fluctuating Demand

• Demand for business products and services tend to be more volatile → unexpected increase/decrease (e.g. accelerate effect)

• Joint demand

• Typical buying situation
• 1. Straight rebuy

• buyer reorders supplies from current suppliers
• in-supplier

• never be complacent in order to compete with alternatives in market → maintains product/service quality to secure the repeat purchase decision
• reinforce positive customer experience
• add value to customers

• out-supplier may offer something new to exploit dissatisfaction

• 2. Modified rebuy

• buyer decides to change product specifications, prices, supplier service requirement
• in-supplier may lose part of the current supply, while out-supplier sees an opportunity to gain new business
• out-supplier should understand customers’ needs and identify how the in-suppliers’ product helps them to add value → formulate unique proposition

3. New Task

• buyer has no experience with the product/service and must become educated about the product/service in order to make a purchase

• Organizational Buyer Behavior

• Organizational buying: decision making process by which formal organizations establish the need for purchased products/services, and identify, evaluate, and choose among alternative brands and suppliers.

• Behavior choice theory

• Buyers decide what type of situation they are in → self-orientation/company-orientation
• Evaluate person relevance
• Buyer assesses action alternatives and requirements
• Selection of strategy

• Offensive strategies: strategies designed to maximize gain
• Defensive strategies: strategies designed to minimize loss

• Roles

• Suggest people behave within a set of norms/expectations of others due to the role in which they have been placed
• Autonomous: person makes a purchase decision alone for an organization
• Buying center/decision-making unit (DMU): group of participants that make purchase decision for an organization, and who share some common goals as well as risks arising from the decision

• Roles in buying center/DMU
• [pic 1]

• initiator starts the purchasing process by recognizing the needs, deciders are the one who may vote on the final decision
• controller sets budget
• influencers are those individual who can affect the decision maker’s final decision through recommendations of which vendors to include or which product are best suited to solve organization’s needs
• Gatekeepers control info into/out of the buying group or between members

• Purchasing stages

• Recognition of need
• Definition of product/service need
• Establishment of specifications
• Search for suppliers
• Proposal acquisition and analysis
• Supplier evaluation and selection
• Selection of an order procedure
• Implementation and evaluation of performance

• Buying determinants theory

• Environmental factors

• Economy, technology, political, social factors

• Market factors

• Numbers and relative size of competitors/customers

• Organizational factors

• Rewards systems, corporate cultures, policies

• Individual factors

• Experiences, demographics, psychological
• Selective processes: selective exposure, selective attention, selective perception, and selective retention

• Buyer-supplier relationship

• Depends on availability of alternatives, criticality of supply, complexity of supply and supply market dynamism
• Manage B2B customer relationship

• Supply chain management
• Early supplier involvement
• Purchasing alliances
• Care about customers’ stakeholders (e.g. customers’ customer)
• Build trust by:

• Provide info transparently
• Deliver quality expectations
• Help partners learn/grow
• Align incentives to meet customer needs
• Involve customer in product/service design

• Market segmentation

• Process of grouping current and potential customers who have a similar set of needs and wants, and share the similar characteristic (traits, buying patterns, information needs, benefit sought, psychographic profiles, product experiences, industry participation etc.)
• Practical value → enable business to succeed in that market

• Formulate and address marketing strategies to them accordingly
• Promotional resources are more focus
• In depth understanding about customers (loyal/new/potential/previous/rejected)

• strengthen our relationship with current customers

• identify market opportunities and competitive threats

• enable targeting to maximize return
• Prioritization to optimize return

• Compete with a better positioning and tailored offering

• Strategic Market Segmentation Process

• Company business goals
• Market definition

• Re-define market segmentation
• Current customers/potential customers

• Segmentation bases → Consider segmentation variable:[pic 2]

• usually driven by nature of the business/dependent to the availability of primary data

• Analysis
• Evaluation, selection and prioritization
• Marketing implementation

• Challenges of market segmentation process

• Data availability
• Workload and timeliness
• Time available and analytical resources
• Organization commitment

• Segmentation criteria

• Measurable
• Impactful
• Accessibility
• Differentiable
• Actionable

• Strategic application of market segmentation

• Mass marketing
• Segment marketing
• Niche marketing
• Individual marketing