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Lecture

Chapter 7.docx

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Department
Business
Course
BUSI 2208
Professor
Irfan Butt
Semester
Winter

Description
Marketing - Chapter 7 B2B Marketing: Refers to the process of buying and selling goods and services to be used in the production of other goods and services, for consumption buying organization, and or for resale by wholesalers and retailers.  Distinction between a B2B and B2C transaction is not the product or service itself, rather it is the ultimate purchaser and user of that product or service B2B Markets Manufacturers or Producers: Buy raw materials, components, and parts that allow them to manufacture their own goods. Resellers: Marketing intermediaries that resell manufactured products without significantly altering their form  Wholesalers and distributors buy a product from a manufacturer for all of mankind and then sell them to the ultimate consumer Institutions: hospitals, educational organizations, prisons, religious organizations, also purchase goods and services for the people they serve. Government: Most countries the government tends to be one of the largest purchasers of goods and services.  Canadian government spends about $240 billion annually on procuring goods and services  Bulk done by centrally by Public works and Government Services Canada. B2B Classification System and Segmentation: Statistics Canada collects data about business activity in the Country through its classification scheme, which categorizes all firms into a hierarchical set of North American Industry classification System (NAICS) codes.  The NAICS codes replaced the Standard Industrial Classification that was used since 1930’s  First two digits represent the industry group, the third digit represents the subsector, the fourth digit represents the industry group, and fifth digit represents a specific sub-group within the industry. The full six digits refer to the country level or National Industry\  Classification system can be very useful to B2B marketers for analyzing markets shares, demand for goods and services, import competition into the Canadian market, and for segmenting and targeting markets  Manufacturers can assess the number size and geo-graphical dispersion within each type of market Difference between B2B and B2C Markets Market Characteristics  Consumers buy goods to satisfy personal needs and wants, heavily influenced by price, personal taste etc.  B2B markets, demand for goods and services is derived from B2C sales in the same supply chain. o Derived Demand: The linkage between consumers demand for a company’s output and its purchase of necessary inputs to manufacture or assemble that particular output  Fewer customers, more geographically concentrate, and orders are much larger  Demand is more inelastic, fluctuates more, and more frequently Product characteristics  Products are technical in nature and purchased based on specifications  Mainly raw materials and semi-finished goods are purchased  Heavy emphasis is placed on delivery time, technical assistance, after sale service, and financing assistance Buying Process characteristics  Buying decision is more complex  Buying may involve competitive bidding, negotiated pricing, and complex financial arrangements  Qualified, professional buyers who follow more formalized buying process  Buying criteria and objectives are specified procedure for evaluating and selecting vendors and products  Reciprocal arrangements exist and negotiations between buyers and sellers are common  Buyers and sellers usually work closely to build close long-term relationships  Online buying over the internet is common Marketing Mix characteristics  Direct selling is the primary form of selling and physical distribution is often essential  Advertising are technical in nature and promotions emphasize personal selling  Price is often negotiated, inelastic, frequently affected by trade and quantity discounts.  Price usually includes service or maintenance component The B2B Buying Process: B2B and B2C are similar but differ in many ways  Both start with need recognition, but the search for information and alternative evaluation steps are more formal and structured in B2B  Typically B2B buyers specify their needs in writing and ask potential suppliers to submit formal proposals  B2B buying decisions usually made by committees after a great deal of consideration  There are formal performance evaluations of product performance sold Step 1: Need recognition  The buying organization recognizes, through their internal or external sources that there is an unfulfilled need  They may be running low on a specific part for the completion of another product Step 2: Product Specifications: Organizations consider alternative solutions and comes up with potential specifications that suppliers might use to develop their proposals to supply the product. Stage 3: RFP Process: Request for Proposal (RFP) is a process through which buying organizations invite alternative suppliers to bid on supplying their requ
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