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Summary business marketing
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BUSINESS MARKETING1.What is business marketing
- = Business Marketing is the practice of individuals, or organizations, including
commercial businesses, governments and institutions
o facilitating the sale of their products or services to other companies
o or organizations that in turn resell them
o use them as components in products or services they offer
o or use them to support their operations
1.1. Business vs. consumer marketing
Areas of difference B2B market Consumer market
Market characteristics Geographically concentrated = found them in a Geographically disbursed
place outside the city, all the B2B are together
Relatively fewer buyer Mass market
Product characteristics Technical complex Standardize
Customized
Service characteristics Service, timely availability extremely important Somewhat important
Buying behavior = how Involvement of various functional area from Involvement of family members
do we come to a both the ends
decision to buy Purchase decisions are performances based Purchase decisions are mostly based
something and rational on physiological/ social needs
Technical expertise Relatively less technical expertise
required
Stable interpersonal relationship Non-personal relationship
Channel characteristics More direct Indirect
Fewer intermediaries Multiple layers of intermediaries
Promotional Emphasis on personal selling Emphasis on mass media (advertising)
characteristics
Price characteristics Competitive bidding and negotiated prices List price or MRP
List price for standard products
1.2. B2B distribution channel charateristics
- B2B is so much more than B2C
- B2C is just a small part of it (4th line)
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, BUSINESS MARKETING
1.3. Characteristics of B2B demand
- Derived demand
o The demand for a good or service that results from the demand for another
good or service
o The chain of derived demand (zie tekening)
o Example Ryanair: huge demand for flights huge demand for seats they
have not enough seats invest in more potential seats need more
airplaines producing more components
- Price elasticity
o A change in price causes a bigger % change in demand
o good price elastic: when an increase in prices causes a bigger % fall in demand
e.g. if price falls 20% and demand increases 80%
the PED = -4.0 (PED = Price Elasticity of Demand)
o Remarkable example: E-bikes battery
The price of e-bikes increases with 20%
But the demand for e-bikes is nevertheless increasing with 50%
This is special
- Joint Demand
o Demand for product or services is interdependent on each other
o Ex: Coffee Powder, Sugar & Milk in Making Coffee
o Ex: Software- Operating System, Car & Fuel
o Ex: Gillette: shaving foam and the shaver
- Price inelasticity
o No hard link between consumption of a product and the price
o Change in price causes a smaller % change in demand there are less alternatives
o Example: if price of petrol falls 30%, but demand for petrol only increases 10%
1.4. Who are the B2B buyers?
- Commercial business: Industry and services
- Government: Local (ex. equipments for parks), national (military airplane) and supra national
- Institutes (equipments for schools, hospitals)
1.5. Understanding B2B market and environment with
buyers perspective
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, BUSINESS MARKETING
1.6. Porter’s value chain
- Primary
o Inbound Logistics
involve relationships with suppliers and include all the activities
required to receive, store, and disseminate inputs
o Operations
all the activities required to transform inputs into outputs (products and services)
o Outbound Logistics
all the activities required to collect, store, and distribute the output
o Marketing and Sales
activities inform buyers about products and services, induce buyers to
purchase them and facilitate their purchase
o Service
includes all the activities required to keep the product or service
working effectively for the buyer after it is sold and delivered
- Secondary
o Procurement
is the acquisition of inputs, or resources, for the firm.
o Human Resource management
all activities involved in recruiting, hiring, training, developing,
compensating and (if necessary) dismissing or laying off personnel
o Technological Development
pertains to the equipment, hardware, software, procedures, and
technical knowledge brought to bear in the firm’s transformation of
inputs into outputs
o Infrastructure
serves the company’s needs and ties its various parts together
accounting, legal, finance, planning, public affairs, government
relations, quality assurance, and general management
- Marketing and service: what the competition is about, very important
2.Procurement process
- To supply the organization with a flow of materials and service to meet its needs
- To ensure continuity of supply by maintaining effective relationships with existing
sources and by developing other sources of supply either as alternatives or to meet
emerging or planned needs
o You supply to companies because they have the need for your product and
they depend on you for their product service and continuity
- To buy efficiently and wisely, obtaining by ethical means the best value for every € spent
- To maintain sound cooperative relationships with other departments providing
information and advice as necessary to ensure the effective operation of the
organization as a whole
o Some companies buy very cheap raw materials maybe child labor
- To develop staff, policies, procedures and organization to ensure the achievement of
these objectives
o The same vision for the whole company
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