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Chapter 5

Marketing Chapter 5.docx

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Ambika Badh

Marketing Chapter 5 Business-to-business (B2B) marketing • Organizational sales and purchases of goods and services to support production of other products, for daily company operations, or for resale Four major categories define the business market: 1. The commercial market 2. Trade industries 3. Government organizations 4. Institutions Components of the Business Markets Commercial market • Individuals and firms that acquire products to support, directly or indirectly, production of other goods and services Trade industries • Retailers or wholesalers that purchase products for resale to others • Resellers o Marketing intermediaries that operate in the trade sector The government category of the business market includes domestic units of government as well as foreign governments. This important market segment makes a wide variety of purchases, such as highways and Internet services. Institutions are the fourth component of the business market. This category includes a wide range of organizations, such as hospitals, churches, schools, etc. B2B Markets: The Internet Connection About 93% of all Internet sales are B2B transactions. Marketing 2MA3: Chapter 5 1 Many B2B marketers have set up private portals that allow their customers to buy needed items. Segmenting B2B Markets Among the major ways to segment business markets are demographics, customer size, end- use application, and purchasing situation. Customer-based segmentation • Dividing a B2B market into homogenous groups based on buyers’ product specifications North American Industry Classification System (NAICS) • Classification used by NAFTA countries to caregorize the business marketplace into detailed market segments End-use application segmentation • Segmenting a B2B market based on how industrial purchasers will use the product Customer relationship management (CRM) • 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 Several characteristics distinguish the business market from the consumer market: 1. Geographic market concentration • Certain industries locate in particular areas to be close to customers 2. The sizes and numbers of buyers • Many buyers in limited-buyer markets are large organizations 3. The purchase decision process • Business must understand the dynamics of the organizational purchase process 4. Buyer-seller relationship 2 Marketing 2MA3: Chapter 5 • More complex than consumer relationships, and they require superior communications among the organizations Business Market Demand • Derived Demand o Demand for a resource that results from demand for the goods and services that are produced by that resource o Organizational buyers purchase two general categories of business produces  Capital items  Expense items • Volatile Demand • Joint Demand o Demand for a product that depends for another product used in combination with it • Inelastic Demand o Demand that will not change significantly due to a price change • Inventory adjustments Just-in-time (JIT) • Inventory practices that seek to boost efficiency by cutting inventories to absolute minimum levels. With JIT II, suppliers’ representatives
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