Chapter 5 Business-to-Business Marketing PDF

Chapter 5 Business-to- Business Marketing © 2023 McGraw Hill Limited 5-1  Chapter 5: Business-to-Business (B2B) Marketing LEARNING OBJECTIVES LO1 Describe the nature and composition of B2B markets LO2 Explain the key differences betwe...

Chapter 5 Business-to- Business Marketing © 2023 McGraw Hill Limited 5-1  Chapter 5: Business-to-Business (B2B) Marketing LEARNING OBJECTIVES LO1 Describe the nature and composition of B2B markets LO2 Explain the key differences between B2B buying and B2C buying LO3 List the steps in the B2B buying process LO4 Identify the roles within the buying centre LO5 Detail different buying situations © 2023 McGraw Hill Limited 5-2  Business-to-Business Marketing ⚫ The Mastercard Track Business Payment Service payment system to facilitate, enable, and standardize the ways money moves from one firm to another. © 2023 McGraw Hill Limited 5-3  B2B Marketing ⚫ Buying & selling goods or services to be used: ⚫ in the production of other goods & services, ⚫ for consumption by the buying firm, or ⚫ for resale by wholesalers & retailers ⚫ Distinction between B2B & Business to Consumer (B2C): ⚫ Who is the ultimate purchaser & user of the product or service? © 2023 McGraw Hill Limited 5-4  B2B Markets ⚫ B2B firms focus their efforts on serving specific types of customer markets to create value for those customers. ⚫ Shopify – helping businesses establish an online presence ⚫ Apple & Google - integrate their operating systems into cars. Apple (left) and Google (right) both offer smartphone connectivity for specific car manufacturers. © 2023 McGraw Hill Limited 5-5 B2B Markets © 2023 McGraw Hill Limited 5-6  Manufacturers or Producers Buy raw materials, components or parts Manufacture their own goods © 2023 McGraw Hill Limited 5-7  Resellers Manufacturer Reseller Retailer © 2023 McGraw Hill Limited 5-8  Institutions Schools, Museums, Religious Organizations © 2023 McGraw Hill Limited 5-9  Government ⚫ Canadian Government spends $240B annually buying goods & services ⚫ Provincial and local governments also make significant purchases ⚫ Firms specialize in selling to government MERX is the most complete source of public tenders, private tenders, U.S. tenders, and private-sector construction news available in Canada. © 2023 McGraw Hill Limited 5-10 Key Challenges of Reaching B2B Clients ⚫ Identify decision makers in organization who authorize or influence purchases ⚫ Understand the buying process of each potential client ⚫ Identify factors that influence the buying process of potential clients © 2023 McGraw Hill Limited 5-11  Differences Between B2B & B2C Markets Market Characteristics Differences Product Between Characteristics Business Buying Process and Characteristics Consumer Markets Marketing Mix Characteristics © 2023 McGraw Hill Limited 5-12  Differences Between B2B & B2C Markets Market Characteristics Differences Between Demand for business products is derived Business & Fewer customers, more Consumer geographically concentrated & orders are larger Markets Demand is more inelastic © 2023 McGraw Hill Limited 5-13  Differences Between B2B & B2C Markets Product Characteristics Differences Between Products technical in Business & nature, purchased based on specifications Consumer Mainly raw & semi-finished goods Markets Heavy emphasis on delivery time, technical assistance, after sale service, financing © 2023 McGraw Hill Limited 5-14  Differences Between B2B & B2C Markets Buying Process Characteristics Buying decisions more complex Differences Competitive bidding, negotiated Between pricing, complex financial arrangements Business & Qualified, professional buyers - more Consumer formalised buying process Buying criteria and objective specified Markets Multiple participants in purchase decisions Reciprocal arrangements common Close long-term relationships Online buying common © 2023 McGraw Hill Limited 5-15  Differences Between B2B & B2C Markets Marketing Mix Characteristics Differences Between Direct selling & physical distribution often essential Business & Advertising more technical, Consumer promotions emphasize personal selling Markets Price often negotiated, inelastic, affected by trade/quantity discounts © 2023 McGraw Hill Limited 5-16 The B2B Buying Process © 2023 McGraw Hill Limited 5-17  Stage 1: Need Recognition ⚫ Can be generated internally or externally ⚫ Sources for recognizing new needs: – Suppliers – Salespeople – Competitors The first step in the B2B decision process is to recognize that the schools need to purchase 1,000 tablets. © 2023 McGraw Hill Limited 5-18 Stage 2: Product Specification Suppliers use to develop proposals Can be done collaboratively with suppliers © 2023 McGraw Hill Limited 5-19  Stage 3: Request For Proposal (RFP) Process ⚫ Buying organizations invite alternative suppliers to bid on supplying their required components or specifications © 2023 McGraw Hill Limited 5-20 Stage 4: Proposal Analysis & Supplier Selection ⚫ Often several vendors are negotiating against each other ⚫ Considerations other than price play a role in final selection © 2023 McGraw Hill Limited 5-21  Stage 5: Order Specification (Purchase) ⚫ Firm places the order ⚫ The exact details of the purchase are specified ⚫ All terms are detailed including payment © 2023 McGraw Hill Limited 5-22  Stage 6: Vendor Performance Assessment Using Metrics (4) (3) (1) (2) Importance X Vendor Key Issues Importance Score Performance Performance (2) X (3) Customer.40 5 2.0 Service Issue.20 4 0.8 Resolution Delivery.10 5 0.5 Quality.30 3 0.9 Total 1.0 4.2 © 2023 McGraw Hill Limited 5-23  The Buying Centre The Buying Centre Corporate Culture Buying Situations © 2023 McGraw Hill Limited 5-24 The Buying Centre © 2023 McGraw Hill Limited 5-25  Organizational Culture Organizational Culture reflects the set of values, traditions, and customs that guides its managers’ and employees’ behaviour DHL is collaborating with vendors in its innovation centres to develop new robotics technology that can be used to improve productivity in its distribution centres. © 2023 McGraw Hill Limited 5-26 Organizational Culture © 2023 McGraw Hill Limited 5-27  Building B2B Relationships ⚫ There is a vast variety of ways to enhance relationships, and these methods seem to be advancing and evolving by the minute. ⚫ For example, blogs and social media can: ⚫ build awareness, provide search engine results, ⚫ educate potential and existing clients about products or services, ⚫ warm up a seemingly cold corporate culture. © 2023 McGraw Hill Limited 5-28 Building B2B Relationships Bosch provides free tools to social media micro-influencers, who then review the products on their own YouTube channels. © 2023 McGraw Hill Limited 5-29  Buying Situations ⚫ Purchasing ⚫ Buying for the first additional time units or ⚫ Likely to be products quite that have involved been previously ⚫ The buying purchased centre will probably use ⚫ Most B2B all six steps purchases in the buying fall into this ⚫ Purchasing a similar product but category process changing specifications ⚫ Current vendors have an advantage © 2023 McGraw Hill Limited 5-30