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Chapter 6

ADM2320 Chapter 6

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University of Ottawa
Marzena Cedzynski

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. B2B Markets  Manufacturers or Producers o Manufacturers buy raw materials, components, and parts that allow them to manufacture their own goods.  Resellers o Resellers are marketing intermediaries that resell manufactured products without significantly altering their form.  Ex: Wholesalers, distributors, and retailers.  Institutions o Hospitals, educational organizations, prisons, religious organizations, and other nonprofit organizations purchase all kinds of goods and services.  Government o The central government tends to be one of the largest purchasers of goods and services. Differences between B2B and B2C Markets Market Characteristics  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 Product Characteristics  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 Order Vendor Need Product RFP Process Proposal Specification Performance Recognition Specification Analysis (Purchase) Assessment Using Metrics 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 the product. 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 components. Stage 4: Proposal Analysis  The organization evaluates all the proposals it receives in respon
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