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2002 E

Chapter 2
Classifying Customers, Organizations, and Markets
Prepared by John T. Drea, Western Illinois University

Types of Organizational Customers

Commercial
Commercial
Enterprises
Enterprises
Industrial
Distributors
Value-Added
Resellers

Government
Government
Units
Units
85,000 local,
state, and federal
government units

Original
Equipment
Manufacturers
Users or End Users

Nonprofit and
and
Nonprofit
Not-for-Profit
Not-for-Profit
Organizations
Organizations
Churches,
hospitals,
colleges,
nursing homes,
etc.

Commercial
Commercial
Enterprises
Enterprises

Industrial Distributors

Industrial
Distributors
Value-Added
Resellers
Original
Equipment
Manufacturers
Users or End Users

Provide economic utilities

of form, time, place, and
possession to
manufacturers
Creates assortments of
products from many
manufacturers
Particularly useful for
reaching customers too
small to justify direct sales
efforts
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Commercial
Commercial
Enterprises
Enterprises
Industrial
Distributors
Value-Added
Resellers
Original
Equipment
Manufacturers
Users or End Users

Value-Added Resellers
More than just a
distributor or wholesaler.
Provides unique offering
enhancements tailored to
a customers needs by
combining
products/services from
other manufacturers.
Creates a value network
at the user level.
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Commercial
Commercial
Enterprises
Enterprises
Industrial
Distributors
Value-Added
Resellers
Original
Equipment
Manufacturers
Users or End Users

Original Equipment
Manufacturers (OEMs)
Purchase products
and incorporate those
products into their products.
Usually the largest-volume
users of goods and
services.
Ex: Intel is an OEM supplier
to many computer
manufacturers, Firestone
was an OEM supplier to
Ford for many years.

 Users or End Users (E/U)

Commercial
Commercial
Enterprises
Enterprises
Industrial
Distributors
Value-Added
Resellers
Original
Equipment
Manufacturers
Users or End Users

A manufacturer that
purchases goods or
services for consumption/
incorporation into their
products in such a way
that the identity of the
purchased product is lost.
When Goodyear
purchases steel for
fabrication into steel belts
for tires, Goodyear is the
steel manufacturers E/U.

Producer Types

Raw
Materials
Producers

Component Parts
and Manufactured
Materials
Producers

Accessory
Equipment
Suppliers

Capital
Goods
Manufacturers
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Producer Types
Raw Materials Producers
Often compete in price sensitive markets

Raw
Materials
Producers

Seek value added positions

Products lose identity once incorporated
into the customers product

Raw materials markets are often dominated

by a few very large producers
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Producer Types
Components Parts and Manufactured Materials Producers
Parts retain their same form when
incorporated.
Component Parts
and Manufactured
Materials
Producers

Usually retain identity even when

incorporated into the customers
product.
More differentiated from direct
competition by the value added to
the customers product.
Seagate computer drives are an example.
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Producer Types
Capital Goods Manufacturers
Capital goods involve large purchases
with considerable risk for the customer.
Capital
Goods
Manufacturers

Involves the development of

specifications to ensure that
organizational needs are met.
Adherence to specifications reduces
opportunities for differentiation.
Customers expect an offering that
includes installation, equipment, and
accessories.
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Producer Types
Accessory Equipment Suppliers
Accessory equipment is equipment that
works with some other offering.
Accessory
Equipment
Suppliers

Accessories can be added to a

bundled offering by a channel
intermediary.
Accessory equipment is usually
produced by an independent
supplier.
The key to providing value is to be
compatible with industry standards for
the primary offering.
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Financial
Financial
Publics
Publics

Public Interest
Interest
Public
Groups
Groups

Communities of interested parties who are not direct participants in a

market as customers, channel members, suppliers, or competitors .

Publics
Independent
Independent
Press
Press

Internal
Internal Publics
Publics
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The Macroenvironment
Demographic
influences
Environment
value
creation.
Competitive
Environment

Economic
Environment

Technological
Environment

Sociocultural
Environment

Natural
Environment
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Forms of Competition in B2B Markets

Pure Competition
No single entity dominates the market or
has much of an influence on price.
Most common in commodity industries.
Little product differentiation price is a
major component of the marketing mix.

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Forms of Competition in B2B Markets

Monopolistic Competition
Many buyers, many sellers.
Product is differentiable can vary in
quality, features, and style
A range of prices is possible.
Promotion and branding are important to
product differentiation.
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Forms of Competition in B2B Markets

Oligoplistic Competition
Market consists of a few sellers that are
sensitive of each others strategy.
Barriers limit entry of new competitors.
Prices are aimed at maintaining market
stability.
Key is building relationships with large
volume customers.
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Forms of Competition in B2B Markets

Pure Monopoly
Only one primary seller.
Competitors that do exist are small niche
players.

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An Adaptation
An Adaptation of the Value
Chain
of the
Value Chain

18

Multinational Value Network

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The
Product
Life
Cycle

20

The Technology Adoption Life Cycle

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PLC and TALC

Product Life Cycle
(PLC)

Introduction
Growth
Maturity
Decline

Technology Adoption
Life Cycle (TALC)
Technophiles
Visionaries (aim for
quantum leaps)
Pragmatists (want
proven solutions)
Conservatives
Laggards

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TALC and How Technology Markets Evolve

Chasm
A break in the sales growth curve for a new
technology.
A chasm occurs between visionaries and
pragmatists.

Tornado
The chaos that occurs during a period of rapid
growth.
A dominant supplier usually emerges from a
tornado.
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Using the Technology Adoption Life Cycle

The vendor of an innovation passes through
technophiles and visionaries before
establishing a foothold among pragmatists.
Crossing the chasm (called the market
development gap) between visionaries and
pragmatists is related to a change in the entire
marketing mix.
There are changes in type of customer and what
the customers perceives as being of value.

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Using the Technology Adoption Life Cycle

Tornado
Corresponds to the late introduction/early growth
stage of the PLC
The market wants to support the market leader it
reduces uncertainty for pragmatists.
The market leader has the chance to become the
gorilla the gorilla can do what it wants as long as
it stays close to what pragmatists desire.

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