A business market consists of all the organisations that buy goods and services to use in the production of
other products and services that are sold, rented or supplied to others.
The business buying process is the decision-making process by which business buyers establish the need for
purchased products and services and identify, evaluate and choose between alternative brands and suppliers.
The industrial market consists of all the individuals and organisations acquiring goods and services that are
used in the production of other goods and services.
The reseller market consists of all the individuals and organisations that acquire goods for the purpose of
reselling or renting them to others, usually at a profit.
The government market consists of government units at all levels – federal, state and local government that
purchase or rent foods used in carrying out their functions.
The institutional market includes schools, hospitals and other institutions that provide goods and services to
people in their care. Government buying is part of the institutional market.
Procurement managers and officers are business managers responsible for buying company supplies, raw
materials and capital items, directly from suppliers in most cases.
Derived demand is the organisational demand that ultimately comes from the demand for consumer goods.
Business markets are differentiated from consumer markets by:
1. Fewer buyers
2. Large buyers
3. Close supplier-customer relationships – Due to the smaller customer base as well as the importance
and power of these larger customers, close relationships form in business markets
4. Geographically concentrated buyers – Business buyers are concentrated in Sydney and Melbourne
5. Inelastic demand – Total demand for many business goods and services is not much affected by price
6. Fluctuating demand – Demand for business goods and services tends to be more volatile than the
demand for consumer goods and services. A given percentage increase in consumer demand can lead
to a much larger percentage increase in the demand for plant and equipment needed for additional
A straight rebuy is an industrial buying situation in which the buyer routinely reorders something without
A modified rebuy is an industrial buying situation in which the buyer wants to modify product specifications,
prices, terms or suppliers.
A new task is an industrial buying situation in which the buyer purchases a product or service for the first time.
Systems buying is the purchase of a packaged solution to a problem, which avoids making all the separate
decisions involved in buying each item or service separately.
A buying centre consists of all the individuals and units that participate in the organisational buying decision
The buying centre includes users, influencers, buyers, deciders and gatekeepers (the person in the buying
centre who controls the flow of information to others)
The business buying process:
1. Problem recognition 2. General need description – Company describes the general characteristics and quantity of needed
3. Product specification – Organisation decides the best technical product characteristics for the needed
4. Supplier search
5. Proposal solicitation – Buyer invites qualified suppliers to submit proposals
6. Supplier selection
7. Order routine specification – Buyer writes the final order with the chosen supplier, technical
characteristics, quantity needed etc.
8. Post-purchase performance review – Buyer rates satisfaction with suppliers and decides whether or
not to continue the relationship
Micromarketing is a form of target marketing in which companies cater to the needs and wants of narrowly
defined geographic, demographic or psychographic segments.
Marketing has passed through three stages:
1. Mass marketing – Sellers mass produces, mass distributes and mass promotes one product to all
2. Product-variety marketing – Seller produces two or more products that have different features, style,
quality, size etc.
3. Target marketing – Seller identifies market segments, selects one or more and develops products and
marketing mixes tailored to each.
Market segmentation – Dividing a market into distinct groups of buyers with different needs
Market targeting – Evaluating each segment’s attractiveness and deciding which one to
Market positioning – Setting the competitive positioning for the product and creating a
detailed marketing mix
The ultimate form of target marketing is customised marketing in which the company adapts its product and
marketing program to the needs of a specific customer.
For a market segment to be useful, it must fulfil five points:
1. Measurable – Size and purchasing power of segment must be measurable
2. Accessible – Segments must be able to be effectively reached and served
3. Substantial – Segment must be large enough and profitable enough
4. Differentiable – Segments must be distinguishable and respond differently to various marketing mix
5. Actionable – Effective programs must be able to be designed for attracting and serving segments
A target market describes a set of buyers sharing common needs or characteristics that the company decides
There are three market coverage strategies; undifferentiated, differentiated and concentrated marketing.
1. Undifferentiated marketing is a strategy in which a company might decide to ignore market segment
differences and go after the whole market with one market offer.
2. Differentiated marketing is a strategy in which a company decides to target several market segments
and designs separate offers for each.
3. Concentrated marketing is a strategy in which a company goes after a large share of one or a few
markets. 4. Permission marketing is centred on getting customers’ consent to receive information from a
A product position is the way a product is defined by consumers on important attributes
The positioning task consists of three steps:
1. Identify possible competitive advantages
2. Select the right competitive advantages
3. Effectively communicate and deliver the chosen position to the market
Competitive advantage is an advantage over competitors gained by offering consumers greater value, either
through lower prices or by providing extra benefits that justify a higher price.
A company or market offering can be differentiated on the basis of product, service, personnel and image:
Product differentiation – Performance, style, design, durability, consistency
Services differentiation – Speedy, reliable delivery and quality installation
Personnel differentiation – Hiring and training better staff than competitors
Image differentiation – Singular, distinctive message that conveys product’s main benefits and positioning
Many marketers believe that companies should aggressively promote only one benefit to target markets
Under-positioning – Failing to position the company at all, nothing special about company
Over-positioning – Giving buyers too narrow a picture of the company
Confused positioning – Leaving buyer with a confused image of a company
Differences are only worth establishing if:
Important – The difference delivers a highly valued benefit to target buyers
Distinctive – Competitors don’t offer the difference
Superior – Difference is superior to other ways customers might obtain the benefit
Communicable – Difference is communicable and visible to buyers
Pre-emptive – Difference is not easy to copy
Affordable – Buyers can afford to pay for difference
Profitable – Company can introduce the difference profitably
Fast-moving consumer goods are products which are consumed in a single use or on a few usage occasions
A product has three levels, the core, actual and augmented product.
1. The core product describes the main benefits that consumers receive when they buy a product.
2. The actual product consists of the styling, features, brand name, packaging and other components
that combine to deliver core product benefits.
3. The augmented product describes the additional consumer services and benefits built around the
core and actual products.
Thus, a product is more than a simple set of tangible features and instead is a bundle of benefits that satisfies
Consumer products are those bought by final consumers for personal consumption
Convenience products are goods and services that the customer usually buys frequently and with minimal
buying effort and comparison
Shopping products are goods and services that the consumer compares on such bases as suitability, quality,
price and style Specialty products are those that have unique characteristics or brand identification for which some buyers
are willing to make a special purchase effort
Unsought products are goods and services that consumers don’t know about or don’t normally think of buying
Industrial products are those bought by businesses for further processing or for use in conducting a
Materials and parts are industrial goods that enter the manufacturer’s product completely including raw
Capital items are industrial goods and services that aid in the buyer’s manufacturing or service operations
Supplies and services are industrial goods and services that don’t enter the finished product at all
A service is an activity or benefit that one party may offer to another that is essentially intangible and doesn’t
result in the ownership or anything.
Service inseparability refers to how services cannot be separated from their providers
Service variability refers to the possibility for a service to change from person to person due to customer
Service perishability distinguishes services from products as there is no stored physical inventory
In services marketing, the 4Ps approach has an additional 3 Ps; people (appearance and behaviour of service
deliverers), processes (how the service is delivered) and physical evidence (layout, brochures, signs etc.)
Product quality refers to the ability of a product to perform its functions including durability, reliability etc.
Product design is the process of designing a product’s style and function
A brand is a name, term, sign, symbol or combination of these intended to identify the goods or services of a
Brand equity is the value of a brand based on the extent to which it has brand loyalty, name awareness,
perceived quality, strong brand associations etc. The fundamental asset underlying brand equity is customer
equity; the value of the customer relationships that the brand creates.
Brand strategy entails decision pertaining to brand positioning, brand name, sponsorship and brand
Co-branding is the practice of using the established brand names of two different companies on the same
Line extension is using a successful brand name to introduce additional items in a given product category
under the same brand name.
Brand extension is a new or modified product launched under an already successful brand name.