BUSINESS MARKETING
CHAPTER 1 - WHAT IS BUSINESS MARKETING
Today’s marketer its job is a blend of many things:
- Extraverted storyteller
- Data driven analyst
- Someone who is online as well as offline
- Creative as analytic
- Thinking as well as doing
Definition
Business Marketing is the practice of individuals, or organizations, including commercial
businesses, governments and institutions, facilitating the sale of their products or services to
other companies or organizations that in turn resell them, use them as components in
products or services they offer, or use them to support their operations..
Top B2B brands are Intel, Google, Caterpillar, IBM, UPS, …
Industrial vs consumer marketing
Different topics B2B MARKET CONSUMER MARKET
Market characteristics • Geographically • Geographically
concentrated disbursed
• Relatively fewer buyer • (exploded)
• Mass market
Product characteristics • Technical complex • Standardize
• Customized
Service characteristics Timely availability • Somewhat important
extremely important
Buying behavior • Involvement of various • Involvement of family
• functional area from members
both the • Purchase decisions are
• ends mostly based on
• Purchase decisions are physiological/social
• performance based psychological needs
and rational • Relatively less
• Technical expertise technical expertise is
• Stable interpersonal required
relationship • Non-personal
relationship
Channel characteristic • More direct • Indirect
• Fewer intermediaries • Multiple layer of
intermediaries
Promotional • Emphasis personal • Emphasis on mass
characteristic selling media
Price characteristic • Competitive bidding • List price or MRP
and (material
negotiated prices • requirements planning)
• List price for standard
products
,B2B distribution channel characteristics
There is always a switching cost. This is when
you change from distributor.
Characteristics of B2B demand
Derived demand
The demand for a good or service that
results from the demand for another good
or service. When the construction of new
homes rise, so too does the demand for
the materials used in the new properties as
well as demand for labour.
Chain of derived demand
Price Elasticity
A change in price causes a bigger % change in demand
A product is price elastic when an increase in prices results in a fall in demand.
E-bikes battery → When the prices increase with 20%, but the demand for e-bikes is
nevertheless increasing with 50%. This is special!
Price Inelasticity
A change in price causes a smaller % change in demand because there are few alternatives.
If price of petrol falls 30%, the demand for petrol only increases 10%, because there are
alternatives. When the price of a loaf of bread rises 10%, the same % will still buy it.
Joint Demand
Demand for product or services is interdependent on each other. When the price for fuel
lowers, more cars will be bought. When the fuel-prices rise, less cars will be bought.
Who are the B2B buyers?
• Commercial businesses such as industries, services
• Governments, could be local, national and supranational (huge budget)
• Institutes such as hospitals, schools
, A brand can sell to B2C
ánd B2B at the same
time. This is an example
of Dell. They have 2
divisions, and 3
customer types in the
B2B division.
Porter’s Value Chain
The most influential activities from a company that contribute more is marketing and sales.
Looking at the profit of the companies, these activities make the difference.
Primary:
1. Inbound logistics: involve relationships with
suppliers and include all the activities to receive,
store and disseminate inputs
2. Operations: all the activities (product &
service)
3. Outbound logistics: include all the activities to
required to collect, store and distribute the output
4. Marketing & sales: promotion
5. Service: exp: fast delivery
Secondary:
1. Procurement: is the acquisition of inputs or resources, for the firm (buying products)
2. Human resources management: consist of all activities involved in recruiting, hiring, training,
developing…
3. Technological development: pertains to the equipment, hardware, software, procedures and
technical knowledge brought to bear in the firm’s transformation of inputs into outputs
4. Infrastructure: serves the company’s needs and ties its various parts together, it consists of
functions or departments such as accounting, legal, finance, planning, public affairs,
government relations, quality assurance, and general management.
