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Chapter1 Fs

Uploaded by

Kaustubh More
Copyright
© © All Rights Reserved
Available Formats
Download as PDF, TXT or read online on Scribd
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Chapter-1

Learning Objectives
LO1 : Know the characteristics of Business-to-Business
(B2B) marketing and markets.
LO2 : Define and understand customer value in business
markets.
LO3 : Discuss similarities and differences in the
characteristics between B2B marketing and
consumer marketing.
LO4 : Explain the importance of relationships in B2B
markets.
LO5 : Analyze demand for industrial products.
1/10
Chapter-2

Characteristics of B2B Marketing & Markets.


• B2B marketing is marketing of goods & services
to companies.
• B2B or Business markets consist of private sector
companies, institutions, and government
organizations.
• Business markets are made up of fewer but
larger customers than consumer markets.
• Business customers buy products and services to
produce other goods and services, make profits,
reduce costs, and so on.
2/10
Chapter-3

Define and Understand Customer Value in


Business Markets.
• Value or Customer Value in business markets
is the economic, technical, service, and social
benefits received by a customer firm in
exchange for the price paid for a product or
service offering.
• Benefits include functional and emotional.
• Costs include monetary, time and energy.
• Value = Benefits divided by costs, or Benefits
less costs. 3/10
Chapter-4

Similarities & Differences in Characteristics


Between B2B Marketing & Consumer Marketing
• Similarities are in basic tasks, namely:
- Deciding target markets.
- Finding target customers’ needs/wants.
- Developing products/services to meet the
needs of target markets.
- Evolving and implementing marketing plan to
satisfy target customers better than
competitors.
- Establishing market-driven organization. 4/10
Chapter-5

B2B Marketing & Consumer Marketing


(Continued)
• Differences are substantial.
Characteristics Business Markets Consumer Markets
Geographically concentrated Geographically dispersed
Market Fewer buyers Mass Markets/Many buyers
Technically more complex Less technical complexity
Product Mainly customized Standardized
Service (Availability, Very important Somewhat important
Timely delivery)
Functional involvement of firms Family involvement & influence
Buying mainly on rational basis Social/psychological/physiological
Buyer Behavior buying needs.
Technical expertise required Less technical expertise required.
Interpersonal relationships: Non-personal relationship
stable between buyers & sellers between buyers & sellers.
5/10
Chapter-6

B2B Marketing & Consumer Marketing


(Continued)
• Differences
Characteristics Business Markets Consumer Markets
More direct Indirect
Channel Fewer channel levels Multiple channel levels

Promotion Importance to personal Importance to advertising &


selling & dialogue monologue
Competitive bidding / List price / maximum retail
Price negotiated prices price (MRP)

Marketing strategy changes Have company-wide Can be made within


implications marketing function

6/10
Chapter-7

Importance of Relationship in B2B


Marketing
• Buyer – seller relationships in B2B marketing need to be
close and long term.
• To understand clearly needs of the customer and the
customer’s customers, the selling firm must be customer
focused.
• High switching costs (i.e. costs of switching suppliers)
make relationships between buying & selling firms
difficult to end in B2B marketing.
• In consumer marketing, switching costs usually are not
high.
• In B2B marketing, salespeople are key for developing the
relationship between buying and selling firms.
7/10
Chapter-8

Demand for Industrial Products


• Derived Demand
- Demand for industrial products is derived
from the demand for consumer goods.
• Fluctuating/Volatile demand
- Demand for industrial products is more
fluctuating or volatile than the demand for
consumer goods.
- This is called acceleration effect by
economists.
8/10
Chapter-9
Demand for Industrial Products(continued)
• Joint Demand
- It refer to situations when two products are used
together and are demanded together.
• Cross-Elasticity of Demand
- It is the reaction of the sales of one product to a
price change in another product.
• Elasticity of demand
It is the change in demand due to change in price.
- Demand is ‘inelastic’ if the percentage change in quantity
demanded is less than the percentage change in price.
- Demand is ‘elastic’ if the percentage change in quantity
demanded is more than the percentage change in price. 9/10
Chapter-10
Demand for Industrial Products(continued)
• Reverse-Elasticity of Demand
- In this, a price increase can cause an increase in
demand and a price decrease would be followed
by a decrease in demand.
- These short-team reactions are opposite from
what we would normally expect from business buyers.
• Bull-Whip Effect
- It shows large fluctuations in orders, as the orders
move up the supply chain from dealers/industrial
distributors to the manufacturer to its suppliers.
- It distorts demand/orders information within the
supply chain. 10/10

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