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Chapter 7

Marketing - Chapter 7.docx

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Dave Ashberry

Chapter Seven: Business-to-Business Markets Business-to-Business (B2B) Marketing – 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 Resellers – marketing intermediaries that resell manufactured products without significantly altering their form - wholesalers and distributors buy jeans and resell them to retailers who then resell them to consumers North American Industry Classification System (NAICS) Codes – a classification scheme that categorizes all firms into a hierarchical set of six-digit codes - can be quite useful to B2B marketers for analyzing market shares, demand for goods and services etc. Characteristics of B2B Buying and B2C Market Characteristics - demand for business products is derived - fewer customers, more geographically concentrated, larger orders - demand is more inelastic, fluctuates more, and more frequently Product Characteristics - products are technical in nature - mainly raw and semi-finished goods are purchased - heavy emphasis placed on delivery time, technical assistance, after sale service, and financing Buying Process Characteristics - buying decision is more complex - may involve competitive bidding, negotiated pricing and complex financial arrangements - buyers and sellers usually work closely to build close long-term relationships Marketing Mix Characteristics - direct selling is the primary form of selling and physical distribution is often essential - advertising are technical is nature, and promotions emphasize personal selling - price is often negotiated, inelastic, frequently affected by trade and quantity discounts 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 Business-to-Business Buying Process 1. Need Recognition 4. Proposal Analysis, Vendor Negotiation, and Supplier Selection 2. Product Specification 5. Order Specifications 3. RFP Process 6. Vendor Analysis B2B Buying Process 1. Need Recognition - the buying organization recognizes through either internal/external sources that is has an unfilled need 2. Product Specification - the organization considers alternative solutions and comes up with potential specifications that suppliers might use to develop their proposals to supply the product 3. RFP Process - request for proposals – a process through which buying organizations invite alternative suppliers to bid on supplying their required components 4. Proposal Analysis, Vendor Negotiation, and Supplier Selection - the buying organization evaluates all the proposals it receives in response to its RFP - firms are likely to narrow the process to a few suppliers, often those whom they have existing re
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