b2b marketing

Business-to-Business Business-to-Business Markets:Markets:

How and Why Organizations BuyHow and Why Organizations Buy

Chapter SixChapter Six© 2012 Pearson Education, Inc. publishing as Prentice-Hall.

6-2© 2012 Pearson Education, Inc. publishing as Prentice-Hall.

Chapter ObjectivesChapter Objectives

Understand the characteristics of Understand the characteristics of business-to-business markets, business-business-to-business markets, business-to-business market demand, and how to-business market demand, and how marketers classify business-to-business marketers classify business-to-business customerscustomers

Appreciate opportunities for using e-Appreciate opportunities for using e-commerce and social media in business-commerce and social media in business-to-business settingsto-business settings

Identify and describe the different Identify and describe the different business buying situations and the business buying situations and the business buying decision processbusiness buying decision process


Real People, Real Choices: Real People, Real Choices: Decision Time at NCR CorporationDecision Time at NCR Corporation

Which option should NCR pursue in Which option should NCR pursue in order to market the new generation of order to market the new generation of point of sale workstations effectively? point of sale workstations effectively? • Option 1:Option 1: Attend the trade show as in the Attend the trade show as in the

pastpast

• Option 2:Option 2: Skip the show this year and Skip the show this year and reallocate resources to other alternativesreallocate resources to other alternatives

• Option 3:Option 3: Forego the show this year and Forego the show this year and find out if the venue and sponsorship find out if the venue and sponsorship changes are realchanges are real


Business Markets: Buying and Business Markets: Buying and Selling When the Customer is Selling When the Customer is

Another FirmAnother Firm Business-to-business marketing Business-to-business marketing

The marketing of goods and services The marketing of goods and services that businesses and other that businesses and other organizations buy for purposes other organizations buy for purposes other than personal consumptionthan personal consumption• Business-to-business (organizational) Business-to-business (organizational)

markets include manufacturers, markets include manufacturers, wholesalers, retailers, and other wholesalers, retailers, and other organizations such as hospitals, and organizations such as hospitals, and governmentgovernment


Factors That Make a Factors That Make a Difference Difference

in Business Markets in Business Markets Business markets differ from consumer Business markets differ from consumer

markets in several ways:markets in several ways:• Multiple buyers are involvedMultiple buyers are involved

• Fewer organizational customers existFewer organizational customers exist

• Order quantities and cost are much Order quantities and cost are much largerlarger

• Business customers are more Business customers are more geographically concentrationgeographically concentration

These differences make B2B marketing These differences make B2B marketing more complexmore complex


Business-to-Business DemandBusiness-to-Business Demand

Business-to-business demand differs Business-to-business demand differs from consumer product demand from consumer product demand

Demand is:Demand is:

• DerivedDerived

• InelasticInelastic

• FluctuatingFluctuating

• JointJoint



Derived demand:Derived demand:

• Demand for organizational products is Demand for organizational products is caused by demand for consumer goodscaused by demand for consumer goods

• Changes in consumer trends can Changes in consumer trends can impact B2B salesimpact B2B sales

Inelastic demand:Inelastic demand:

• Changes in price have little or no effect Changes in price have little or no effect on the amount demandedon the amount demanded



Fluctuating demand: Fluctuating demand: • Small changes in consumer demand Small changes in consumer demand

create large increases or decreases in create large increases or decreases in business demandbusiness demand

• Life expectancy of the product can Life expectancy of the product can cause fluctuating demand cause fluctuating demand

Joint demand: Joint demand: • Demand occurs for two or more goods Demand occurs for two or more goods

that are used together to create a that are used together to create a productproduct


Types of Business-to-Business Types of Business-to-Business CustomersCustomers

Producers: Producers: • Individuals or firms that purchase Individuals or firms that purchase

products for use in the production of products for use in the production of other goods and servicesother goods and servicesExample:Example: Dell buys RAM chips for Dell buys RAM chips for

integration into their PCsintegration into their PCs Resellers: Resellers: • Individuals or firms that buy finished Individuals or firms that buy finished

goods for reselling, renting, or leasinggoods for reselling, renting, or leasing


Types of Business-to-Business Types of Business-to-Business CustomersCustomers

Organizations: Government markets:Organizations: Government markets:• Federal, state, county, and local governments Federal, state, county, and local governments

that buy goods and services to carry out that buy goods and services to carry out public objectives, and support their public objectives, and support their operationsoperations

Organizations: Not-for-profit firms:Organizations: Not-for-profit firms:• Organizations with charitable, educational, Organizations with charitable, educational,

community, and other public service goals community, and other public service goals that buy goods and services to support their that buy goods and services to support their functions and to attract and serve their functions and to attract and serve their membersmembers


North American Industry North American Industry Classification SystemClassification System

Marketers use the North American Marketers use the North American Industry Classification System (NAICS) Industry Classification System (NAICS) to identify their customers and to find to identify their customers and to find new customersnew customers

• NAICS is a numerical coding of NAICS is a numerical coding of industries in the United States, Canada, industries in the United States, Canada, and Mexicoand Mexico


Business-to-Business Business-to-Business E-Commerce and Social MediaE-Commerce and Social Media

B2B E-CommerceB2B E-CommerceInternet exchanges between two or more Internet exchanges between two or more businesses:businesses:• Includes exchanges of information, products, Includes exchanges of information, products,

services, and paymentsservices, and payments

• Allows business marketers to link to Allows business marketers to link to suppliers, factories, distributors, and their suppliers, factories, distributors, and their customerscustomers

• B2B Internet site provides technical support, B2B Internet site provides technical support, item and order status information, and item and order status information, and customer servicecustomer service


Intranets, Extranets, Intranets, Extranets, and Private Exchangesand Private Exchanges

Intranets:Intranets:• Link a firms’ departments, employees, Link a firms’ departments, employees,

and databases and databases Extranets:Extranets:• Allow authorized suppliers, customers, Allow authorized suppliers, customers,

and other outsiders to access the firm’s and other outsiders to access the firm’s intranetintranet

Private exchanges:Private exchanges:• Link an invited group of suppliers and Link an invited group of suppliers and

partners over the Webpartners over the Web


The Dark Side of B2B The Dark Side of B2B CommerceCommerce

Hackers threaten security:Hackers threaten security:• Customer credit card number theftCustomer credit card number theft

• May destroy firm records or steal trade May destroy firm records or steal trade secretssecrets

• Authenticating transactions is criticalAuthenticating transactions is critical Well-meaning employees can be Well-meaning employees can be

security threats security threats Firewalls and encryption safeguard Firewalls and encryption safeguard

e-commerce transactionse-commerce transactions `̀


B2B and Social MediaB2B and Social Media

Games generate buzz and drive brand Games generate buzz and drive brand awarenessawareness

B2B marketers use social networking B2B marketers use social networking sites to promote themselves sites to promote themselves

Linked in is the most prominent social Linked in is the most prominent social networking site for B2B marketers and networking site for B2B marketers and offers several advantagesoffers several advantages


Business Buying Situations Business Buying Situations and the Buying Decision and the Buying Decision

ProcessProcess Buy class frameworkBuy class framework

• Identifies the degree of effort a firm Identifies the degree of effort a firm needs to collect information and make a needs to collect information and make a decisiondecision

Three buy classes:Three buy classes:

• Straight rebuy Straight rebuy

• Modified rebuyModified rebuy

• New-task buyNew-task buy


Professional Buyers and Professional Buyers and Buying CentersBuying Centers

Trained professional buyers typically Trained professional buyers typically carry out buying in business-to-carry out buying in business-to-business markets:business markets:

• Purchasing agents Purchasing agents

• Procurement officers Procurement officers

• Directors of materials managementDirectors of materials management


The Buying CenterThe Buying Center

The group of people in an organization The group of people in an organization who participate in a buying decision: who participate in a buying decision:

• InitiatorInitiator

• UserUser

• GatekeeperGatekeeper

• InfluencerInfluencer

• DeciderDecider

• BuyerBuyer


Business Buying Decision Process Business Buying Decision Process Step 1: Problem RecognitionStep 1: Problem Recognition

Factors prompting recognition vary by Factors prompting recognition vary by buying situationbuying situation

Actions resulting from problem Actions resulting from problem recognition include:recognition include:

• Initiation of a purchase requisition or Initiation of a purchase requisition or requestrequest

• Formation of a buying center, if neededFormation of a buying center, if needed


Business Buying Decision Process Business Buying Decision Process Step 2: Information Search Step 2: Information Search

In this stage, buying center members:In this stage, buying center members:

• Search for information about products and Search for information about products and supplierssuppliersMarketers must provide information where and Marketers must provide information where and

when business buyers need itwhen business buyers need it

• Develop product specificationsDevelop product specificationsWritten descriptions of the quality, size, weight, Written descriptions of the quality, size, weight,

color of the item to be purchasedcolor of the item to be purchased

• Identify potential suppliers and obtain Identify potential suppliers and obtain proposals (or bids)proposals (or bids)


Business Buying Decision Process Business Buying Decision Process Step 3: Evaluate the Step 3: Evaluate the

AlternativesAlternatives The buying center assesses proposals:The buying center assesses proposals:• Price is a primary considerationPrice is a primary consideration

• Other factors may be considered, such Other factors may be considered, such as extra services or other perksas extra services or other perks

• Customer reference programs, product Customer reference programs, product demos, and presentations can help sell demos, and presentations can help sell the marketer’s products to firmsthe marketer’s products to firms


Single sourcing: Single sourcing:

• Business practice of buying a particular Business practice of buying a particular product from only one supplierproduct from only one supplier

Multiple sourcing: Multiple sourcing:

• Buying from several different suppliersBuying from several different suppliers

Reciprocity: Reciprocity:

• Trading partnership in which two firms Trading partnership in which two firms agree to buy from one anotheragree to buy from one another

Business Buying Decision Process Business Buying Decision Process Step 4: Select the Product and Step 4: Select the Product and

SupplierSupplier


Business Buying Decision Process Business Buying Decision Process Step 4: Select the Product and Step 4: Select the Product and

SupplierSupplier Outsourcing: Outsourcing: • Obtaining vendors to provide goods / Obtaining vendors to provide goods /

services that might otherwise be services that might otherwise be supplied in-housesupplied in-house

Crowdsourcing: Crowdsourcing: • Pulling together expertise from around Pulling together expertise from around

the globe to work on solving a problemthe globe to work on solving a problem Reverse marketing: Reverse marketing: • Buyers try to find capable suppliers and Buyers try to find capable suppliers and

“sell” their purchase to the suppliers“sell” their purchase to the suppliers


Business Buying Decision Process Business Buying Decision Process Step 5: Evaluate PostpurchaseStep 5: Evaluate Postpurchase

Organizational buyers assess whether Organizational buyers assess whether the performance of the product and the the performance of the product and the supplier live up to expectations:supplier live up to expectations:• Users are surveyed to determine Users are surveyed to determine

satisfactionsatisfaction

• Producers may also research ultimate Producers may also research ultimate consumer satisfaction with the final consumer satisfaction with the final productproduct

• Changes in demand are analyzedChanges in demand are analyzed

• Supplier performance is documentedSupplier performance is documented


Business Buying Decision Process Business Buying Decision Process Step 5: Evaluate PostpurchaseStep 5: Evaluate Postpurchase

Metrics used by organizational buyers Metrics used by organizational buyers include:include:

• SatisfactionSatisfaction

• QualityQuality

• Customer engagementCustomer engagement

• Purchase intentionsPurchase intentions

• Promptness and effectiveness of Promptness and effectiveness of problem resolutionproblem resolution


Real People, Real Choices: Real People, Real Choices: Decision Made at NCR CorporationDecision Made at NCR Corporation

Brad chose option 2Brad chose option 2

•Why do you think that Brad passed on Why do you think that Brad passed on the trade show and reallocated its the trade show and reallocated its resources to two smaller events?resources to two smaller events?


Meet Jim Multari, director of research at Meet Jim Multari, director of research at PBS Kids Sprout PBS Kids Sprout

Sprout is an emerging cable network Sprout is an emerging cable network that attempts to foster parent and that attempts to foster parent and preschooler interactionpreschooler interaction

The decision to be made: The decision to be made: Should the network target current Should the network target current viewers, nonviewers, or both for its first viewers, nonviewers, or both for its first ever brand awareness campaign? ever brand awareness campaign?

Keeping It Real:Keeping It Real: Fast-Forward to Fast-Forward to Next Class Decision for PBS KIDS Next Class Decision for PBS KIDS

SproutSprout