Chapter 7 Review PDF

1 Iyania Dr. Yvette Holmes MK 341 A 05 October 2023 Chapter 7 Review A business market (also known as a business-to-business market or B2B market) is composed of individuals, organizations, and groups that purchase a specific type of product for one of three purposes: resale, direct use in producin...

1 Iyania Dr. Yvette Holmes MK 341 A 05 October 2023 Chapter 7 Review A business market (also known as a business-to-business market or B2B market) is composed of individuals, organizations, and groups that purchase a specific type of product for one of three purposes: resale, direct use in producing other products, or use in general daily operations. Marketing to businesses follows the same principles as marketing to consumers; however, there are structural and behavioral differences between the two. When marketing to other businesses, companies must take into consideration how their product will affect other firms within the marketing channel, such as resellers and other manufacturers. Business products are often complex, and the market is usually made up of knowledgeable buyers. The goal of most business marketers is to understand customer needs and provide a value-added exchange which shifts from attracting customers to keeping customers and developing relationships. Business markets can be broken down into four categories: producer, reseller, government, and institutional. Producer markets are individuals and businesses that purchase products to make a profit by using them to produce other products or using them in their operations. This includes buyers of raw materials, as well as purchasers of semi-finished and finished items. Reseller markets are intermediaries that buy finished goods and resell them for a 2 profit. These include wholesalers and retailers. Government markets are federal, state, county, or local governments that buy goods and services to support their internal operations and provide products to their constituencies. Finally, institutional markets are organizations with charitable, educational, community, or other nonbusiness goal The North American Industry Classification System (NAICS) is used to generate comparable statistics among the United States, Canada, and Mexico. It is based on types of production activities performed and is similar to the International Standard Industrial Classification (ISIC) system used in Europe and many other parts of the world. NAICS divides industrial activity into 20 sectors with 1,170 industry classifications. Business marketers can use NAICS in conjunction with other types of data to determine the number and types of potential customers. This can be done by using state directories, commercial industrial directories, or commercial data services. To estimate the purchase potential of business customers or groups of customers, a marketer must find a relationship between the size of potential customers' purchases and a variable available in industrial classification data, such as the number of employees. This relationship can then be applied to customer groups in order to estimate the size and frequency of potential purchases. Transactions between businesses and consumers differ in many ways. Business orders tend to be much larger than individual purchases, and they often require considerable marketing time and effort from the supplier. The supplier must demonstrate their competencies so that customers are assured of the value they are getting. Reciprocity is an agreement between two 3 organizations to buy from each other, but this can lead to less-than-optimal purchases if it restricts competition. Business customers are often better informed about the products they buy, and they may require detailed information on the product's features and specifications. Additionally, personal goals may influence a business's buying behavior. Suppliers and customers may also engage in mutually beneficial partnerships. When making purchasing decisions, business customers take into account price, product quality, service, ethics and social responsibility, and the cost of developing and maintaining relationships with suppliers. Price is important to a business's operating costs and costs of goods sold, and product quality must meet certain standards. Services such as market information, inventory maintenance, delivery, and repair services are also desired. Sustainability has become an increasingly important factor to consider. By building trust with a supplier, buyers can reduce search efforts and uncertainty about prices.