MAR Chap 1
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MAR5409_PPT_ch01.pptx0
Chapter 1 A Business Marketing Perspective
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The dynamic nature of the business marketing environment and the basic similarities and differences between consumer-goods and business marketing
The types of customers in this important market
The underlying factors that influence the demand for industrial goods
Chapter Outline
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The nature of buyer-seller relationships in a product’s supply chain
A method for classifying products and services for the business market
Chapter Outline (continued)
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Markets for products and services bought by businesses, government bodies, and institutions for:
Incorporation
Consumption
Use
Resale
Business Markets
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Business marketers serve the largest market of all
Dollar volume of the business market greatly exceeds the consumer market
Single customer can account for an enormous level of purchasing activity
Known as industrial marketing
Business Marketing
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Factors that distinguish business marketing from consumer marketing
Nature of the customer
Utility of the product for the customer
Key to successful marketing strategy
To identify unique dimensions of each major business market and formulate programs that respond to specific characteristics of each business market sector
Business Marketing (continued)
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Commercial Enterprises
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Manufacturers
Construction companies
Service firms
Transportation companies
Selected professional groups
Resellers
Business marketers serve fewer but larger customers than consumer-products marketers
Customers can be manufacturers of products who in turn target millions of potential buyers
Geographical concentration indicates that a large potential volume exists in a given area
Large metropolitan areas are lucrative business markets
Concentration of Customers
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Generate the greatest volume of purchases of any customer category in the U.S.
E-government initiatives generate a large market opportunity
Government Units
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Formal advertising - Government solicits bids from appropriate suppliers
Followed when the product is standardized and the specifications are straightforward
Negotiated contract - Employed when:
Purchased goods and services cannot be differentiated on the basis of price alone
Few potential suppliers exist
Government Purchasing Strategies
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Similar to governments
Institutional purchasing process is constrained by political considerations and dictated by law
Some institutions are administered by government units while some are privately operated and managed
Institutional Customers
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Institutions may employ a purchasing agent or a purchasing department
Group buying - Institutions may join cooperative purchasing associations to secure purchasing efficiencies
Allows institutions to enjoy lower prices, improved quality, reduced administrative costs, and greater competition
Institutional Buying
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Benefit by employing a market orientation
Requires proficiency in understanding and satisfying customers
Are market-driven
Business Markets and Consumer-Goods Markets
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Set of values and beliefs that places customers’ interests first
Ability to generate, disseminate, and productively use superior information about customers and competitors
Coordinated use of interfunctional resources
Aspects of Market-Driven Firms
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Distinctive Capabilities
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Market sensing capability
Ability to continuously sense change and to anticipate customer responses
Customer linking
Capability to develop and manage close customer relationships
Marketing expenditures that were considered expenses are considered investments now
Marketers need to:
Demonstrate return on investment from marketing spending
Deliver strong financial performance
Be more accountable to shareholders
Impact on Business Performance
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Includes the skills required to identify, initiate, develop, and maintain profitable customer relationships
Helps to meet performance standards
Customer Relationship Management (CRM)
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Customers can determine how, when, and where they want to acquire information
Customers can access information from Websites, YouTube, and peers in the business network
Customer Decision Journey
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Through:
Close working partnership
An intimate knowledge of the customer’s operations
Unique value contribution to the customer’s business
Market-driven firms place high priority on customer-linking capabilities and closely align product decisions with the customer’s operations
Customer Engagement
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Firms must:
Clearly communicate the strategy
Select the right customer prospects and match them with the optimal products and services
Make the strategy relevant by operationalizing the distinctive features of the value proposition
Aligning Strategy and Sales
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Roles of Marketing Managers
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Instigator
Capitalizes on the close connection to customers, thinks strategically, and challenges the status quo
Innovator
Takes an active role in shaping the company’s innovation agenda
Integrator
Links multiple functions to unite organizational members on a clear strategy path
Implementer
Mobilizes diverse organizational members across the firm
Customers compare value elements of a firm’s offering with those offered by the next best alternative
Captures set of benefits that a supplier offers to advance the performance of the customer organization
Customer Value Proposition
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Building Blocks of a Successful Value Proposition
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Points of parity
Value elements with the same performance characteristics as the next best alternative
Points of difference
Value elements that render the supplier’s offering either superior or inferior to the next best alternative
Nature of markets
Market demand
Buyer behavior
Buyer-seller relationships
Environmental influences
Market strategy
Differences in Consumer and Business Marketing
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Derived demand
Demand for industrial products is derived from the ultimate demand for consumer products
Fluctuating demand
Business marketers carefully monitor fluctuating trends and patterns in consumer markets
Downturn in the economy creates the opposite result
Characteristics of Business Markets
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Stimulating demand
Business marketers must monitor final consumer markets and develop a plan that reaches the ultimate consumer directly
Price sensitivity
Responsiveness of the quantity demanded to a change in price
Called demand elasticity
Characteristics of Business Markets (continued)
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Marketers must look beyond the borders of the United States
Growing demand for industrial products in Germany, Japan, Korea, Brazil, China, and India
Global Market Perspective
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Intended use determines whether or not a product is a consumer product or a business product
Business marketing emphasizes personal selling rather than advertising to reach potential buyers
Business product includes an important service component
Business and Consumer Marketing
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All marketing activities directed toward establishing, developing, and maintaining successful exchanges with customers
Building one-to-one relationships with customers is the core of business marketing
Relationship Marketing
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Figure 1.1 - Key Characteristics of Business Market Customers
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Figure 1.2 - Supply Chain For Automobile Creation
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Technique of linking a manufacturer’s operation with suppliers, key intermediaries, and customers to enhance efficiencies and effectiveness
Aims to improve the speed, precision, and efficiency of manufacturing through strong supplier relationships
Achieved through information sharing, joint planning, shared technology, and shared benefits
Supply Chain Management
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Long-term relationships are built on trust and demonstrated performance
Strategic partnerships require open lines of communication between multiple layers of the buying and selling organizations
Managing Relationships in the Supply Chain
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Users
Buy industrial products or services to produce other goods or services that are, in turn, sold in the business or consumer markets
Original Equipment Manufacturers (OEMs)
Purchase industrial goods to incorporate into other products it sells in the business or ultimate consumer market
Categories of Commercial Customers
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Dealers and distributors
Purchase industrial goods for resale to users and OEMs
Distributor accumulates, stores, and sells a large assortment of goods to industrial users, assuming title to the goods it purchases
Categories of Commercial Customers (continued)
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Figure 1.3 - Categories of Industrial Goods
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