Business to business marketplace is, in fact, significantly larger. Worldwide business-to-business
commerce conducted over the internet totals more than $2 trillion. This chapter discusses buying
behaviour in the business or organizational market.
Consumer buying involves purchases made by people like you and me. By contrast, B2B purchases are
made by businesses, government and marketing intermediates to be resold, combined with other items
to create a finished product for resale or used up in the day-to-day operations of the organization.
Business to business marketing is organizational sales and purchases of goods and services to support
production of other products, for daily company operations, or for resale.
Commercial market includes individuals and firms that acquire products to support, directly or
indirectly, production of other goods and services.
Trade industries are retailers or wholesalers that purchase products for resale to others.
Resellers are marketing intermediaries that operate in the trade sector.
Segmenting B2B market
Customer-based segmentation is dividing a business-to-business market into homogeneous groups
based on buyers’ product specifications. North American industry classification system is a classification used by NAFTA countries to categorize
the business marketplace into detailed market segments.
End-use application segmentation is segmenting a business-to-business market based on how industrial
purchasers will use the product.
Customer relationship management is a combination of strategies and tools that drives relationship
programs, reorienting the entire organization to a concentrated focus on satisfying customers.
Characteristics of the B2B Market include:
More concentrated than the consumer market
Fewer but larger customers
Purchase process more formal and complex; longer time-frame
Relationship marketing more important
Business purchasing patterns differ from country to country.
Global sourcing is purchasing goods and services from suppliers worldwide. It can bring significant cost
savings but requires adjustments
Derived demand is demand for a resource that results from demand for the goods and services that are
produced by that resource.
Joint demand is demand for a product that depends on the demand for another product used in
combination with it. Inelastic demand is a demand such that, throughout an industry, will not change significantly due to a
Just-in-time is inventory practise that seek to boost efficiency by cutting inventories to absolute
minimum levels. With JIT, suppliers’ representatives work at the customer’s facility.
Sole sourcing is purchasing a firms entire stock of an item from just one vendor.
To make, buy or lease decision
Firms acquiring finished goods have three options: make, buy, or lease
Offshoring is the movement of high-wage jobs from one country to lower-cost overseas locations
Nearshoring is the movement of jobs to vendors in countries close to the business’s home country
Outsourcing includes using outside vendors to provide goods and services formerly produced in-house
Problems with offshoring and outsourcing include
Cost savings are less than expected.
Can raise security concerns over proprietary technology or customer data
Can reduce company’s ability to respond quickly to marketplace
Can create conflicts between nonunion outside workers and in-house union employees
Can negatively affect employee morale and loyalty
The business buying process
B2B buying decisions react to various influences,