Chapter 6 Business to Business Marketing
Business-to-business (B2B) marketing refers to the process of buying and selling
goods or services to be used in the production of other goods and services, for
consumption by the buying organization, or for resale by wholesalers and retailers.
Manufacturers or Producers
o Manufacturers buy raw materials, components, and parts that allow
them to manufacture their own goods.
o Resellers are marketing intermediaries that resell manufactured
products without significantly altering their form.
Ex: Wholesalers, distributors, and retailers.
o Hospitals, educational organizations, prisons, religious organizations, and
other nonprofit organizations purchase all kinds of goods and services.
o The central government tends to be one of the largest purchasers of
goods and services.
Differences between B2B and B2C Markets
In B2B markets, demand for goods and services is derived from B2C sales in
the same supply chain.
o Derived demand is the linkage between consumers’ output and its purchase
of necessary inputs to manufacture or assemble that particular output.
Fewer customers, more geographically concentrated, and orders are larger
Demand is more inelastic, fluctuates more, and more frequently
In B2B markets, the products ordered are primarily raw materials and
semifinished goods that are processed or assembled into finished goods for
the ultimate consumers.
Heavy emphasis on delivery time, technical assistance, after sale service, financing
Buying Process Characteristics
Buying decisions more complex
Competitive bidding, negotiated pricing, complex financial arrangements
Qualified, professional buyers - more formalised buying process
Buying criteria and objective specified
Multiple participants in purchase decisions
Reciprocal arrangements common
Close long-term relationships
Online buying common Marketing Mix Characteristics
Direct selling and physical distribution often essential
Advertising more technical, promotions emphasize personal selling
Price often negotiated, inelastic, affected by trade/quantity discounts
The B2B Buying Process
Need Product RFP Process Proposal Specification Performance
Recognition Specification Analysis (Purchase) Assessment
Stage 1: Need Recognition
The buying organization recognizes, through either internal or external
sources, (suppliers, salespeople, competitors) that is has an unfilled need.
Stage 2: Product Specifications
The organization considers alternative solutions and comes up with potential
specifications that suppliers might use to develop their proposal to supply
Stage 3: RFP Process
The request for proposals is a common process through which buying
organizations invite alternative suppliers to bid on supplying their required
Stage 4: Proposal Analysis
The organization evaluates all the proposals it receives in respon