CHAPTER6

BusinesstoBusiness(B2B)
Marketing
ChapterObjectives
1 Explaineachofthe
componentsofthe
businesstobusiness
(B2B)market.

4 Discussthedecisionto
make,lease,orbuy.

7 Classifyorganizational
buyingsituations.

5 Describethemajor
influencesonbusiness
buyingbehavior.

Explainthebuyingcenter
8 concept.

2 Describethemajor
approachestosegmenting
6 Outlinethestepsinthe
B2Bmarkets.
organizationalbuying
process.
3 Identifythemajor
characteristicsofthe
businessmarketandits
demand.

Discussthechallenges
9 andstrategiesfor
marketingtogovernment,
institutional,and
internationalbuyers.

CHAPTER 6 Business-to-Business (B2B) Marketing

BUSINESSTOBUSINESS(B2B)MARKETING
Businesstobusiness(B2B)marketissignificantlylargerthanthe
consumermarket.
Businesstobusiness(B2B)marketingOrganizationalsalesand
purchasesofgoodsandservicestosupportproductionofotherproducts,to
facilitatedailycompanyoperations,orforresale.

CHAPTER 6 Business-to-Business (B2B) Marketing

NATUREOFTHEBUSINESSMARKET
Companiesalsobuyservices,suchaslegal,accounting,officecleaning,
andotherservices.
Somefirmsfocusentirelyonbusinessmarkets.
Example:Caterpillar,whichmakesconstructionandmining
equipment.

COMPONENTSOFTHEBUSINESSMARKET
CommercialmarketIndividualsandfirmsthatacquireproductsto
support,directlyorindirectly,productionofothergoodsandservices.
TradeindustriesRetailersorwholesalersthatpurchaseproductsfor
resaletoothers.
Government.
Publicandprivateinstitutions.

CHAPTER 6 Business-to-Business (B2B) Marketing

B2BMARKETS:THEINTERNETCONNECTION
Morethan94percentofallInternetsalesareB2Btransactions.
Opensupforeignmarketstosellers.
Largestsegmentofthebusinessmarket.

DIFFERENCESINFOREIGNBUSINESSMARKETS
Maydifferduetovariationsinregulationsandculturalpractices.
Businessesmustbewillingtoadapttolocalcustomsandbusinesspractices
andresearchculturalpreferences.

CHAPTER 6 Business-to-Business (B2B) Marketing

SEGMENTINGB2BMARKETS
Segmentationhelpsmarketersdevelopthemostappropriatestrategy.

SEGMENTATIONBYDEMOGRAPHIC
CHARACTERISTICS
Groupingbysizebasedonsalesrevenuesornumberofemployees.

SEGMENTATIONBYCUSTOMERTYPE
Groupinginbroadcategories,suchasbyindustry.
CustomerbasedsegmentationDividingabusinesstobusinessmarket
intohomogeneousgroupsbasedonbuyersproductspecifications.
NorthAmericanIndustryClassificationSystemClassificationusedby
NAFTAcountriestocategorizethebusinessmarketplaceintodetailed
marketsegments.

CHAPTER 6 Business-to-Business (B2B) Marketing

SEGMENTATIONBYENDUSEAPPLICATION
EnduseapplicationsegmentationSegmentingabusinesstobusiness
marketbasedonhowindustrialpurchaserswillusetheproduct.

SEGMENTATIONBYPURCHASECATEGORIES
Segmentingaccordingtoorganizationalbuyercharacteristics.

CHAPTER 6 Business-to-Business (B2B) Marketing

CHARACTERISTICSOFTHEB2BMARKET
GEOGRAPHICMARKETCONCENTRATION
Businessmarketmoreconcentratedthanconsumermarket.
GeographicconcentrationdecreasingasInternettechnologyimproves.

SIZESANDNUMBEROFBUYERS
Businessmarkethassmallernumberofbuyersthanconsumermarket.
Manybuyersarelargeorganizations,suchasBoeing,whichbuysjet
engines.

CHAPTER 6 Business-to-Business (B2B) Marketing

THEPURCHASEDECISIONPROCESS
Ofteninvolvesmultipledecisionmakers,ismoreformal,andmayrequire
biddingandnegotiations.

BUYERSELLERRELATIONSHIPS
Oftenmorecomplexthaninconsumermarketwithagreaterrelianceon
relationshipmarketing.

EVALUATINGINTERNATIONALBUSINESSMARKETS
Businesspurchasingpatternsdifferfromcountrytocountry.
GlobalsourcingPurchasinggoodsandservicesfromsuppliersworldwide.

CHAPTER 6 Business-to-Business (B2B) Marketing

BUSINESSMARKETDEMAND
Demandcharacteristicsvaryfrommarkettomarket.
DERIVEDDEMAND
Thelinkagebetweendemandforacompanysoutputanditspurchasesofresources
suchasmachinery,components,supplies,andrawmaterials.
VOLATILEDEMAND
Deriveddemandcreatesvolatility;forexample,demandforgasolinepumpsmaybe
reducedifdemandforgasolineslows.
JOINTDEMAND
Demandfortwoproductsusedincombinationwitheachother.
INELASTICDEMAND
Demandnotsignificantlyinfluencedbypricechanges.
INVENTORYADJUSTMENTS
Justintime(JIT)inventorypoliciesboostefficiencybycuttinginventoryand
requiringvendorstodeliverinputsastheyareneeded.

CHAPTER 6 Business-to-Business (B2B) Marketing

THEMAKE,BUY,ORLEASEDECISION
Firmsacquiringneededproductscangettheminoneofthreeways:
Makethegoodorprovidetheserviceinhouse.
Purchaseitfromanotherorganization.
Leaseitfromanotherorganization.
Producingtheitemmaybecheapestroute,butmostfirmscannotmakeall
oftheproductstheyneed.
Manycompaniespurchasemanyofthegoodstheyneed.
Companiescanspreadoutcoststhroughleasing.

CHAPTER 6 Business-to-Business (B2B) Marketing

THERISEOFOFFSHORINGANDOUTSOURCING
OffshoringMovementofhighwagejobsfromonecountrytolowercost
overseaslocations.
NearshoringMovingjobstovendorsincountriesclosetothebusinesss
homecountry.
OutshoringUsingoutsidevendorstoprovidegoodsandservicesformerly
producedinhouse.

PROBLEMSWITHOFFSHORINGANDOUTSOURCING
Costsavingsmaybelessthanexpected.
Canraisesecurityconcernsoverproprietarytechnologyorcustomerdata.
Canreduceflexibility,createconflictswithunions,ornegativelyaffect
employeemoraleandloyalty.

CHAPTER 6 Business-to-Business (B2B) Marketing

THEBUSINESSBUYINGPROCESS
Morecomplexthantheconsumerdecisionprocess.
Takesplacewithinformalorganizationsbudget,cost,andprofit
considerations.

INFLUENCESONPURCHASEDECISIONS
Environmentalfactorseconomic,political,regulatory,competitive,and
technologicalconsiderationsinfluencebusinessbuyingdecisions.
Organizationalfactorsstructures,policies,andpurchasingsystems,
whichmaybecentralizedinoneofficeordelegatedtounitsthroughoutthe
organization.
InterpersonalInfluencesofallorganizationalmembersinvolvedinthe
buyingdecision.
Concernsandproceduresofprofessionalbuyerswhoimplement
systematicbuyingprocedures.

CHAPTER 6 Business-to-Business (B2B) Marketing

CLASSIFYINGBUSINESSBUYINGSITUATIONS
Businessbuyingbehaviorinvolvesdegreeofeffortinvolvedinthedecision
andthelevelswithintheorganizationinwhichthesedecisionsaremade.
Straightrebuyingrecurringpurchasedecisioninwhichacustomer
reordersaproductthathassatisfiedneedsinthepast.
Modifiedrebuyingpurchaserwillingtoreevaluateavailableoptions.
NewTaskBuyingfirsttimeoruniquepurchasesituationsthatrequire
considerableeffortbythedecisionmakers.
Reciprocitypracticeofbuyingfromsuppliersthatarealsocustomers.

ANALYSISTOOLS
Valueanalysisexamineseachcomponentofapurchaseinanattemptto
eitherdeletetheitemorreplaceitwithamorecosteffectivesubstitute.
Vendoranalysisongoingevaluationofasuppliersperformanceina
varietyofareas.

CHAPTER 6 Business-to-Business (B2B) Marketing

THEBUYINGCENTERCONCEPT
BuyingcenterParticipantsinanorganizationalbuyingaction.

BUYINGCENTERROLES
Decider
Buyer
Users
Gatekeeper
Influencer

CHAPTER 6 Business-to-Business (B2B) Marketing

INTERNATIONALBUYINGCENTERS
Marketersmayhavedifficultyidentifyingmembersofforeignbuying
centers.
Marketerswhocanquicklyidentifydecisionmakershaveanadvantage
overcompetition.

TEAMSELLING
Combiningseveralsalesassociatesorotherstafftohelptheleadaccount
representativereachallthosewhoinfluencethepurchasedecision.
Mayincludemembersofthesellerfirmsownsupplynetworkinthesales
situation.

CHAPTER 6 Business-to-Business (B2B) Marketing

DEVELOPINGEFFECTIVEBUSINESSTO
BUSINESSMARKETINGSTRATEGIES
Marketermustdevelopstrategybasedonparticularorganizationsbuying
behaviorandonthebuyingsituation.

CHALLENGESOFGOVERNMENTMARKETS
Purchasestypicallyinvolvedozensofinterestedpartiesandmaybe
influencedbysocialgoals.
Mostfederalgovernmentpurchasesmustgothroughacomplexbidding
processgovernedbytheFederalAcquisitionRegulation.
GSAAdvantageallowsgovernmentbuyerstomakepurchasesonlineat
preferredgovernmentprices.

CHAPTER 6 Business-to-Business (B2B) Marketing

CHALLENGESOFINSTITUTIONALMARKETS
Includeschools,hospitals,libraries,foundations,andothers.
Multiplebuyinginfluencescanaffectbuyingdecisions,suchasconflicts
betweenprofessionalstaffandpurchasingdepartments.

CHALLENGESOFINTERNATIONALMARKETS
Marketersmustconsiderbuyersattitudesandculturalpatterns.
Localindustries,economicconditions,geographiccharacteristics,andlegal
restrictionsmustallbeconsidered.
Foreigngovernmentsarealsoanimportantmarket.