B2B MARKETING

Reference book

Principles of Marketing 14th Edition Kotler & Armstrong Industrial Marketing nd Edition Krishna !a"aldar

Definition
#$usiness to $usiness %$ $& marketing consists of all

acti"ities in"ol"ed in marketing goods and ser"ices b' firms to organi(ations) non*profit institutions and go"ernment that use those goods and ser"ices for the production of consumer + industrial goods) ser"ices and to facilitate the operation of their enterprises,* Industrial marketing committee re"ie. board) 1/04
Industrial marketing is also called business marketing or

business to business marketing %$ $&,

B2B MARKETING
A t'pe of commerce transaction that e1ists bet.een t.o

business entities,
$usiness to business refers to business that is conducted

bet.een companies) rather than bet.een a compan' and indi"idual consumers,

2his is in contrast to business to consumer %$ 3& and

business to go"ernment %$ 4&,

3ontd7,
A t'pical suppl' chain in"ol"es multiple business to business transactions) as companies

purchase components and other ra. materials for use in its manufacturing processes,
2he finished product can then be sold to indi"iduals "ia business to consumer

transactions,
Man' a times a t'pical business suppl' chain operates as follo.s 5

B2B

6irm B2B

Customer B2C

B2B

An e1ample that illustrates the business to business concept is

automobile manufacturing,
Man' of a "ehicle8s components are manufactured

independentl' and the auto manufacturer must purchase these parts separatel',
6or instance) the tires) batteries) electronics) hoses and door

locks ma' be manufactured else.here and sold directl' to the automobile manufacturer,

$usiness $u'er beha"iour refers to the bu'ing beha"iour of organi(ations

that bu' goods and ser"ices for use in the production of other products and ser"ices that are sold) rented or supplied to others,
2herefore) $ $ beha"iour is also referred to as 9rgani(ational bu'er

beha"iour or Industrial bu'er beha"iour,

$usiness bu'ers consists of a group that e"aluates each purchase the

organi(ation makes,
$usiness bu'ers must ha"e a thorough understanding of business markets,

2he' must build profitable relationships .ith business customers b'

creating superior customer "alue

Characteristics of business markets

A. Marketing structure and demand
6e.er but larger bu'ers 3ustomers more geographically concentrated $usiness bu'er demand is deri"ed from final consumer

demand
:emand in business markets is more inelastic :emand in business markets fluctuates more ;uickl'
7contd

B. Nature of bu ing unit . $usiness purchases in"ol"es more bu'ers . More professional purchasing effort . <suall' the bu'er asks for protot'pes) samples and mock ups to a"oid

risks
C. T !es of decisions and the "ecision #rocess . More comple1 bu'ing decisions . $usiness bu'ing process is more formali(ed . $u'ers and sellers .ork closel' . =ong term relationships are built
7contd

In business bu'ing process) bu'er and seller are

dependent on each other

>ales goes to suppliers .ho understand the re;uirement of

their bu'ers
3ustomer companies are no. practicing supplier

de"elopment
2he' also de"elop net.ork of supplier partners to ensure

dependable suppl' of products

Eg, 3aterpillar) ?al*Mart) IKEA

Purchasing objectives
"e$i%er & a%ai$abi$it should be a"ailable .hen needed #roduct 'ua$it >hould be consistent .ith specifications =o.est !rice 2o ma1imi(e profits (er%ices should be a"ailable as and .hen .anted %information)

technical assistance) training) spare parts a"ailabilit') etc& the .a' to meet the contingencies of the bu'er

(u!!$ier re$ationshi! so that sometimes supplier goes out of #ersona$ ob)ecti%es !igher status) @ob securit') salar'

increments) promotions) social considerations %friendship) mutuall' beneficial relationship) personal&AA

Buy phases (Steps in organisational buying decision making process)

1, , B, 4, 0, F, G, H, /,

Recognition of problem or need ma' originate in bu'ing firm) or ma' also be recogni(ed b' a smart marketer :etermination of the characteristics and ;uantit' of the needed product :e"elopment of specifications or description of needed product %2echnical department) outside consultant) or suppliers& CA=<E ADA=E>I> >earch for and ;ualifications of the potential suppliers 9btaining and anal'(ing supplier proposals E"aluation and proposals and selection of suppliers >election of an order routine Performance feedback and post purchase e"aluationAA

Buying situations
Ne* !urchase %Ne* task& 2he compan' is bu'ing the product

for the first time, Risks are more) more people in"ol"ed) decision ma' take longer

Modified Re+bu

* 2he compan' has bought the product earlier, It needs to change the specifications a little bit or the supplier, * 2he compan' needs certain products continuousl' and hence repeat orders are placed fre;uentl' on the same suppliers,

Repeat purchase or straight Re+bu

Buying Centre (or Decision making unit) oles of buying centre members
Initiators usuall' users but not al.a's %sellerI) 3E9s) top managers .ho are

e1posed to more de"eloped en"ironment&

Inf$uencers technical people) outside e1pert or consultant ,sers Actual users of the product Bu ers 2hese are professional bu'ers .hose @ob is defined as purchasing @ob,

Purchase Manager) Materials Manager etc, 2heir responsibilities include a& 9btaining ;uotations from suppliers b& >upplier e"aluation and selection) c& Degotiation) d& Processing purchase orders) e& E1pediting deli"eries) f& Implementing purchase policies of the organi(ation

"eciders 2he' make the decision to bu', Gatekee!ers People .ho control the flo. of information to the abo"e people

%receptionists) secretaries) clerks& salesman&AA

Coach A person .ho .ants 'our solution in the organi(ation %Eour inside

!ey members of the buying centre

To! management !ersonne$ M:) CPs) 4Ms) in"ol"ed in high

"alue capital e;uipment purchase decisions

Technica$ !ersonne$ :esign engineers) production + maintenance

managers) Jualit' control managers,,

Materia$s de!artment Accounts & -inance !ersonne$ finali(e final commercial terms)

issuing pa'ments
Marketing function & de!artment ?hen a purchase decision has

an impact on the marketabilit' of the firmKs product) marketing people become influencers in the bu'ing decision process,AA

ID6=<ED3E> 9D $<EID4 :E3I>I9D>

En%ironmenta$ -actors a, =e"el of demand b, Economic 9utlook c, Rate of Interest d, 2echnological change e, Political + Regulator' de"elopment f, 3ompetition

Indi%idua$ a, Age b, Education c, Income d, Attitude to.ards risk*taking e, Personalit' f, Lob Position

.rganisationa$ Bu er

Inter!ersona$ a, Authorit' b, >tatus c, Empath' d, Persuasi"eness

.rganisationa$ /ariab$es a, 9b@ecti"es and 4oals b, 9rganisational policies c, Procedures d, 9rganisational structures e, >'stems

"odel of business buyer behaviour

Definition
#Industrial marketing or $ $ marketing consists of all acti"ities in"ol"ed in

marketing goods and ser"ices b' firms to organi(ations) non*profit institutions and go"ernment that use those goods and ser"ices for the production of consumer + industrial goods) ser"ices and to facilitate the operation of their enterprises,* Industrial marketing committee re"ie. board) 1/04

Industrial marketing) also called business marketing) or business to business

marketing %$ $&,

#ndustrial products (goods and services)

Installations + ma@or e;uipments + 3apital e;uipment Cer'

e1pensi"e large machines or other e;uipment like blast furnace) drilling machine) cranes) etc

Accessories or minor e;uipment =ess e1pensi"e small

machines like lathes) small motors) computers) photocopiers

Ra. materials 2he basic inputs to production) natural state

products like iron ore) bau1ite) agriculture products like sugar cane and fruitsAA

#ndustrial products (goods and services) $%

Processed material 2he' become part of the finished

product after some processing like steel bars) leather) pl'.ood) .ires etc,
3omponent parts 2he' directl' become part of the

finished product e,g, batteries) compressors) motorsAA

#ndustrial products (goods and services) $%

9perating supplies Items that are necessar' for

production and administrati"e operations e,g, paints) soaps) oils) greases) lubricants) stationar') floppies) 3:s
>er"ices 2hese are the support ser"ices like transport)

.arehousing) consultanc') ad"ertising etc,AA

#ndustrial vs consumer marketing

Industrial marketing) like consumer marketing has to

define target market) understand bu'er beha"ior through information s'stem and research) de"elop marketing mi1 and offer it effecti"el',
!o.e"er industrial marketing has certain characteristics

that contrast sharpl' .ith consumer marketing) likeAA7

1. Market size
Industria$ market Cer' large "alue*.ise >mall number of large

consumers

Consumer market Cer' large "olume .ise =arge number of small

consumersAA

2. Structure
Industria$ market 4eographicall' concentrated

Consumer market 4eographicall' dispersedAA

3. Demand
Industria$ market :eri"ed demand) fluctuating

demand) price inelastic) cross elasticit' and re"erse elasticit'

Consumer market Mostl' autonomous and price

elasticAA

4. Nature of products
Industria$ market 2echnicall' comple1

5. Buying motive
Industria$ market Rational + task based Consumer market >ocio*ps'chological) EmotionalAA Consumer market
2echnicall' less comple1)

standardAA

. Buyer mem!ers
Industria$ market Multiple) technicall'

kno.ledgeable

Consumer market !ousehold famil' members)

.ith less technical e1pertiseAA

". Buying factors

Industria$ market Jualit') ser"ice) price in that

order

Consumer market Price) ;ualit') ser"iceAA

#. $rice
Industria$ market Degotiations are

re;uired

Consumer market >tandard price %MRP&)

standard discountsAA

%. $romotion
Industria$ market Emphasis on personal

selling) close supplier* customer relationship

Consumer market Emphasis on ad"ertisingAA

1&. 'eciprocation
Industria$ market Possible

Consumer market Dot possibleAA

11. Distri!ution c(anne)

Industria$ market Mostl' direct

Consumer market Mostl' indirect .ith multiple

le"els) e1cept for direct sellers like Am.a'AA

THANKS