Module 1 Lesson 1 The Nature Of Business Marketing PDF

Module 1 Lesson 1 The Nature of Business Marketing At the end of this lesson, the students will be able to : Explain the meaning of business marketing. Differentiate the various types of business markets. Illustrate the various elements of the marketing mix in business mar...

Module 1 Lesson 1 The Nature of Business Marketing At the end of this lesson, the students will be able to : Explain the meaning of business marketing. Differentiate the various types of business markets. Illustrate the various elements of the marketing mix in business marketing. Compare business to consumer marketing. Determine the marketing environment thru identifying components of microenvironment and factors affecting macro environment. Module 1: The Nature of Business Marketing Lesson 1: A. What is Business Marketing? B. Common Characteristics of Business Markets C. Types of Business Markets D. Elements of the Marketing Mix in Business Marketing Lesson 2: A. Marketing Philosophies in Business Marketing B. Business Marketing vs. Consumer Marketing C. The Marketing Environment Business Marketing Promotes and sells products or services to other organizations. Products and services are often reused or resold by the purchased company. Large organizations like commercial businesses, governments, and institutions use these products for operations. Suppliers and manufacturers may include other business products to satisfy more customers. The goal is to strategically reach out to other businesses. Examples include battery manufacturers providing raw materials for another business's manufacturing process, or popular clothing brands sourcing raw materials and fabric dyes from farms. Business Marketing Here are some familiar characteristics of business markets, namely: 1. Usually serve a smaller consumer market with substantial number of buyers. 2. Can enable business among companies located far from each other. 3. Consistent demand and not influenced by shifts in prices. 4. Expand and decrease based on the number of customers purchasing a final edition of a product. 5. Present more complex purchasing decisions. 6. Purchasing is a formal process. 7. Promoting and selling needs a higher degree of professionalism. 8. Enable long-term relationship amongst buyers and sellers. 9. Purchases made might involve several buyers Common Characteristics of Business Markets 1. Complex Decision-Making Unit Multiple levels of approval are required for business sales. Decision-making involves multiple individuals or departments. Low-value, low-risk items like ballpens, paperclips, and coupon bonds require complex processes. Acquisition of plant equipment requires approval from technical experts, purchasing authorities, board members, production supervisors, and safety experts. Each participant has unique criteria and priorities. 2. More "Rational" Impulse buying is not allowed in business markets. Decision-making should be rational and unemotional. Sales methods like displaying items should be accompanied by demonstrations. Demonstrations should not guarantee acceptance of offers. Common Characteristics of Business Markets 3. Products are More Complex Integration of simplest items into larger corporate systems requires expert involvement. Approval process for even minimal items is complex. Business purchases often tailored to company requirements. 4. Target Audiences are Smaller Most business markets have few but significant business buyers, demonstrating the Pareto Principle or 80:20 rule. Few business buyers significantly impact sales. Business markets have few needs-based segments, dealing with inelastic demand. Demand for business products can shift faster than for consumer goods/services. Most business customers are geographically concentrated. Common Characteristics of Business Markets 5. Personal Relationships are More Vital High level of personal service is required for most business segments. Regular visits by sales and technical representatives, especially to premium segments, are necessary. First-name communication fosters personal relationships and trust. Loyal customers are common, requiring repeated purchases. 6. Markets have Fewer Behavioral and Needs-Based Segments Small number of business segments. Fewer behavioral or needs-based segments. Average market produces three or four segments. Practical and economical. Common Characteristics of Business Markets 7. Buyers are Longer-Term Purchasers Business markets often have customers who don't repeat purchases over time. High-priced, long-term items require aftersales services for maintenance. Repeat purchases often involve component parts requiring ongoing expertise and services. Many companies maintain long-term relationships with vendors, making business marketing attractive. This ensures long-term business and profitability. 8. Markets have Fewer Behavioral and Needs-Based Segments Small number of business segments. Fewer behavioral or needs-based segments. Average market produces three or four segments. Practical and economical. Types of Business Markets Producer Markets A business market is composed of individuals or organizations who pay for Professional Reseller goods and services to use in Service Markets Markets manufacturing other products, Types of to resell, or for their respective Business use in their daily operations. Markets There are several types of business markets, which are: Institutional Government Markets Markets Types of Business Markets Combines labor and capital into sellable outputs. Commonly used in businesses for purchasing goods and services. Producer Governments also produce basic services like police, fire Markets protection, education, public utilities, social services, and public maintenance. Types of Business Markets There are three types of producers, namely: Producer a. Agricultural/Primary Producers- Primary producers primarily Markets produce agricultural goods using natural resources, focusing on extractive production like metal mining, coal drilling, oil tapping, rubber tapping, fish trawling, and food framing. b. Industrial/Secondary Producers - Producers in various industries engage in manufacturing and assembly processes, transforming raw materials into components and assembling products like plastics, houses, roads, and bridges on large, medium, and small scales. c. Service/Tertiary Producers - Producers in this category offer commercial services like transport, communication, banking, insurance, storage, teaching, healthcare, real estate, and other related services for production and distribution. Types of Business Markets Producers are the basis of supply in any economy, and a country with more producers has more goods and services available to meet Producer Markets customer demand. Here are several important roles a producer must play: 1. Supply of different goods and services - Producers supply goods and services based on consumer demands, and an increase in the number of producers leads to an increase in the total quantity of goods supplied. 2. Entrepreneurship - Entrepreneurs are producers as well. They are responsible in allocating the factors of production like land, labor, and capital for the smooth conduct of business operations. Types of Business Markets 3. Optimal use of resources - Producers are responsible for optimizing the use of economic resources such as land, forest, water, human, Producer Markets and mineral resources to aid a country's economic development. 4. Export promotion - Promoting exports can reduce a country's balance of payment by encouraging producers to manufacture goods and services for export, increasing foreign exchange reserves due to dollar earnings. 5. Increase in income and employment - Increased production in a country boosts income and employment rates, leading to the growth of more industries and increased opportunities. 6. Rise in demand for factors of production - Producers generate demand for their products, indirectly creating derived demand, which increases the factors of production responsible for manufacturing that product. Types of Business Markets Resellers buy finished products from wholesalers or manufacturers at wholesale prices and sell them directly to end Reseller Markets users at retail prices. They provide marketing, promotions, transportation, pricing, and customer service. Resellers act as intermediaries between producers and customers, handling consumer complaints and preventing large unvendable inventory. Resellers in the Philippines include department stores, grocery stores, specialty stores, and online retailers like Amazon and eBay. The COVID-19 pandemic has increased the use of online shopping, with top online resellers including Lazada, Shopee, Zalora, and Carousell. Types of Business Markets Government markets purchase goods and services for internal operations, not for profit. Government National and local government units use a bidding process to avoid Markets red tape. Purchases include bombers, sculpture, chalkboards, furniture, toiletries, clothing, fire engines, vehicles, and fuel. Legality of purchases is crucial under R.A. 9184, or Government Procurement Reform Act. Government organizations typically award contracts to the lowest bidder. Suppliers' quality and reputation are often considered in contract awarding. Suppliers need patience due to extensive paperwork. Product differentiation, advertising, and personal selling are less important in winning bids. Types of Business Markets Composed of large buyers, such as schools, hospitals, nursing homes, churches, and prisons. These organizations operate within Institutional predetermined budget limits but have captured customers. Markets Hospital Market - Manages food, beds, X-ray equipment, surgery tools, and other necessary items for optimal patient care. Aims to provide a total service package to patients. Church Market - Buys food, paper plates, and utensils for worship and events. Purchases benches for seating during worship services. Prints newsletters for propagating the word of God. Hotels - Active participants in the market, often ordering in large quantities for discounts. Some hotels also operate restaurants, purchasing ingredients for their food. Colleges and Universities - Regular buyers of textbooks, computers, classroom furniture, and teaching aids. Types of Business Markets Offers sales of professional services and related goods to businesses across all industries. Professional Major input is human capital. Service Businesses provide services by leveraging employees' knowledge Markets and skills. Examples include doctors, legal, and accounting firms. Market segments include design, research, promotional, consulting, legal, accounting, and other professional services. Rising popularity of DIY tools and websites threatens the professional service market. Many firms use online tools for in-house office and home design. Elements of the Marketing Mix in Business Marketing Transaction of goods and services between businesses. Marketing mix: combination of marketing activities controlled by the company. All company must have a product, 000 price said item, promote it, and hire staff to deal with customers and consider a process in doing this. The 7Ps are vital in the business-to- business marketing as they are dependent on one another: Elements of the Marketing Mix in Business Marketing Product Qualified product/service offering meets specific business requirements. Quality ensures performance and user satisfaction. Product/service differentiation from competitors. Price Considers market's willingness to pay. Evaluates demand and supply. Determines target segmentation. Considers production costs. Elements of the Marketing Mix in Business Marketing Place Crucial for marketers as point of sale. Advancements in communication technologies increase online accessibility. Promotion Actions to recognize product/service offering. Common activities include advertising, public relations, personal selling, sales promotion, and word of mouth. Importance of choosing right promotion scheme for business markets. Rarely use traditional media like TV/radio commercials in business-to-business marketing. Elements of the Marketing Mix in Business Marketing People Direct or indirect employees involved in daily operations. Play distinctive roles in production, promotion, delivery, and transport of products and services. Considered assets of a company due to their role in creating positive business buyer experiences. Process Represents flow of product/service provision. Enables interaction between buyer and seller. Guarantees time and cost savings. Ensures consistent product/service specification delivery. Elements of the Marketing Mix in Business Marketing Physical Evidence Attracts and targets the right buyer segment. Helps reach the right positioning, especially in service industries. Shows proof of service quality and capacity to deliver promised value. Influences buyers to make purchases through interaction between company representative and buyers. Examples include furniture, signage, and layout.