BUSINESS MARKETING
CHAPTER 1: WHAT IS BUSINESS MARKETING?
BUSINESS TO BUSINESS MARKETING
DEFINITION
= the practice of organizations facilitating the sale of their products or services to other companies that resell
them or use them as component in products or services they offer
there are two sides: seller and buyer
EXAMPLES
- Google: we are not paying to use Google, so we are not their main business.
they profit from other companies who pay to have the highest position in the search page
- EVS: organize giant events online and make sure it is live on television vb. Olympics
BUSINESS VS CONSUMER MARKETING
s
Areas of difference B2B market Consumer market
Marketing characteristics Geographically concentrated Geographically disbursed
Few customers Mass market
Product characteristics Technical complex Standardize
Customized
Service characteristics Service is timely available Somewhat important
Extremely important (followed after
purchase
Buying behavior Involvement of functional area from Involvement of family members
both ends
Purchase decisions are performance Purchase decisions are based on
based and rational physiological/ social/ psychological
needs
Technical expertise Relatively less technical expertise is
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 List price
prices
List price for standard products
CHARACTERISTICS OF B2B DEMAND
DERIVED DEMAND
= the demand for a good or service that results from the demand for another good or service
Ex. The price of flights were very high, and there was demand for a cheaper flight, so they profit from this
demand and made special airplanes designed with cheaper materials so they can offer cheaper seats. The
result of this is that Ryanair made extra cheaper planes, so there was a demand of all the materials which are
needed for making the plane. they profit along with the raised demand of cheaper plane seats.
Ex. the demand for smartphones created a derived demand for lithium-ion batteries, touch-sensitive glass
screens, microchips, and circuit boards, as well as raw materials like gold and copper need to make those chips
and circuit boards.
The different types of industries add value to the chain in each step. It becomes B2C when you have the
finished product, all the other steps are B2B.
,PRICE ELASTICITY
= a change in price causes a bigger or smaller % change in demand
Elastic: bigger change in demand
an increase in prices causes a bigger % fall in demand. Ex. If the price falls 20% and demand increases 80%,
the PED= -4. (80/ -20 = -4)
Inelastic: smaller change in demand
if price of petrol falls 30%, but the demand for petrol only increases 10%.
there are other alternatives, the price doesn’t have a big impact on the demand
JOINT DEMAND
= the demand for product or services is interdependent on each other
if you buy something you automatically buy other products
Ex. Coffe powder, sugar & milk
Car & fuel
BUYERS OF B2B
1. Commercial business
Industry: they buy different products and make their own product
Services: provide service to other companies vb. IT, bank
2. Government: local
spend a lot of money on things that have to do with B2B
Ex. Restorations, gardening of parks
3. Government: national and supra national
Belgian parliament
Ex. materials for the army
4. Institutes
schools, hospitals,..
Ex. Beamers, chairs, machines for in the hospital,…
PORTER’S VALUE CHAIN
, This model indicates the different activities in a company, every company has a
- Firm infrastructure: serves the company’s needs and ties its parts together
- HR management: activities involved in recruiting, hiring, training, dismissing personnel
- Technological department: hardware, software, technological knowledge… to transform inputs into
outputs
- Procurement department: buying products to make the end product (acquisitions of inputs &
resources)
these things don’t make the company successful, the primary activities do. They make the company special
and different from other competitors.
- Inbound logistics: relationships with suppliers, include activities to receive and store inputs
- Operations: all the activities to transform inputs into outputs
- Outbound logistics: include all activities to collect, store and distribute output
- Marketing & sales: informs buyers about products and services,
- Service: activities to keep the product or service working effectively after it is sold
the success of the company depends on the quality of marketing and sales
CHAPTER 1: WHAT IS BUSINESS MARKETING?
BUSINESS TO BUSINESS MARKETING
DEFINITION
= the practice of organizations facilitating the sale of their products or services to other companies that resell
them or use them as component in products or services they offer
there are two sides: seller and buyer
EXAMPLES
- Google: we are not paying to use Google, so we are not their main business.
they profit from other companies who pay to have the highest position in the search page
- EVS: organize giant events online and make sure it is live on television vb. Olympics
BUSINESS VS CONSUMER MARKETING
s
Areas of difference B2B market Consumer market
Marketing characteristics Geographically concentrated Geographically disbursed
Few customers Mass market
Product characteristics Technical complex Standardize
Customized
Service characteristics Service is timely available Somewhat important
Extremely important (followed after
purchase
Buying behavior Involvement of functional area from Involvement of family members
both ends
Purchase decisions are performance Purchase decisions are based on
based and rational physiological/ social/ psychological
needs
Technical expertise Relatively less technical expertise is
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 List price
prices
List price for standard products
CHARACTERISTICS OF B2B DEMAND
DERIVED DEMAND
= the demand for a good or service that results from the demand for another good or service
Ex. The price of flights were very high, and there was demand for a cheaper flight, so they profit from this
demand and made special airplanes designed with cheaper materials so they can offer cheaper seats. The
result of this is that Ryanair made extra cheaper planes, so there was a demand of all the materials which are
needed for making the plane. they profit along with the raised demand of cheaper plane seats.
Ex. the demand for smartphones created a derived demand for lithium-ion batteries, touch-sensitive glass
screens, microchips, and circuit boards, as well as raw materials like gold and copper need to make those chips
and circuit boards.
The different types of industries add value to the chain in each step. It becomes B2C when you have the
finished product, all the other steps are B2B.
,PRICE ELASTICITY
= a change in price causes a bigger or smaller % change in demand
Elastic: bigger change in demand
an increase in prices causes a bigger % fall in demand. Ex. If the price falls 20% and demand increases 80%,
the PED= -4. (80/ -20 = -4)
Inelastic: smaller change in demand
if price of petrol falls 30%, but the demand for petrol only increases 10%.
there are other alternatives, the price doesn’t have a big impact on the demand
JOINT DEMAND
= the demand for product or services is interdependent on each other
if you buy something you automatically buy other products
Ex. Coffe powder, sugar & milk
Car & fuel
BUYERS OF B2B
1. Commercial business
Industry: they buy different products and make their own product
Services: provide service to other companies vb. IT, bank
2. Government: local
spend a lot of money on things that have to do with B2B
Ex. Restorations, gardening of parks
3. Government: national and supra national
Belgian parliament
Ex. materials for the army
4. Institutes
schools, hospitals,..
Ex. Beamers, chairs, machines for in the hospital,…
PORTER’S VALUE CHAIN
, This model indicates the different activities in a company, every company has a
- Firm infrastructure: serves the company’s needs and ties its parts together
- HR management: activities involved in recruiting, hiring, training, dismissing personnel
- Technological department: hardware, software, technological knowledge… to transform inputs into
outputs
- Procurement department: buying products to make the end product (acquisitions of inputs &
resources)
these things don’t make the company successful, the primary activities do. They make the company special
and different from other competitors.
- Inbound logistics: relationships with suppliers, include activities to receive and store inputs
- Operations: all the activities to transform inputs into outputs
- Outbound logistics: include all activities to collect, store and distribute output
- Marketing & sales: informs buyers about products and services,
- Service: activities to keep the product or service working effectively after it is sold
the success of the company depends on the quality of marketing and sales
