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MKTG 2030
Ben Kelly

Jessica Gahtan 1 MKTG2030 Chapter 5: Business-to-business markets: How and Why Organizations Buy 5.1 Business Markets: Buying and Selling When the Customer Is Another Firm Business-to-Business (B2B) markets (Aka organizational markets) the groups of customers that include manufacturers, wholesalers, retailers, and other orgs like hospitals, universities and gov’t agencies FACTORS THAT MAKE A DIFFERENCE IN BUSINESS MARKETS Multiple Buyers: The product must meet the requirements of everyone involved in the company decisions Number of Customers: Less orgs than consumers Size of Purchases: Larger purchases that equal a lot more money Geographic Concentration: Many businesses are located in a small geographic area rather than being spread out across the country (can concentrate sales efforts, for example) B2B DEMAND Derived Demand is derived directly or indirectly from consumer demand for another g/s Inelastic Demand means that it usually doesn’t matter if the price of a B2B product goes up or down- business customers still buy the same quantity- inelastic if the product is one of MANY that are used to create a product Fluctuating Demand: Even small changes in consumer demand can largely impact demand- one reason is that businesses tend to order certain product infrequently Joint Demand occurs when two or more goods are necessary to create a product TYPES OF BUSINESS-TO-BUSINESS CUSTOMERS Producers purchase products for the production of other g/s that they, in turn, sell to make a profit. - Fishing, agricultural, and lumber industries; manufacturers of consumer goods and component parts; services, including financial, transportation, restaurants, hotels, health care, recreation and entertainment, and others. Resellers buy finished goods for the purpose of reselling, renting, or leasing to consumers and other businesses. Provide customers with time, place and possession utility; I.e. Wholesalers, distributors; Retailers. Government markets the federal, provincial, regional and municipal governments that buy g/s to carry out public objectives and to support their ops Not-for-profit institutions tend to operate on low budgets; b/c nonprofessional part-time buyers (who have other duties) make purchases The North American Industry Classification System (NAICS) is the numerical coding system that the US, Canada, and Mexico use to classify firms into detailed categories according to their business activities; firms may also use the NAICS to fine new customers. 5.2 Business-to-Business E-Commerce and Social Media Business-to-Business e-commerce refers to Internet exchanges b/w two or more businesses or organizations; using the internet for e-commerce reduces the wait time for thinks like getting feedback from customers, tracking sales, etc. it also allows the org to link with customers, suppliers, etc. which helps them build a good relationship INTRANETS, EXTRANETS, AND PRIVATE EXCHANGES Intranet internal corporate computer network that only employees have access to; allow companies to process internal transactions with greater control and consistency Extranet is a private, corporate computer network that links company departments, employees, and databases to suppliers, customers, and others outside the org.; useful when a company needs to have secure communications with outside entities - Intranets and extranets are very cost efficient Private exchanges are systems that link an invited group of suppliers and partners over the web THE DARK SIDE OF B2B E-COMMERCE - Security risks i.e. hackers breaking into their sites and stealing trade secrets - To increase security of their internet sites and transactions, most companies have safeguards in place (firewalls and encryption) B2B AND SOCIAL MEDIA - Social media channels were, according to a study, the most effective to reach and engage prospects at mid-to-large-size companies - Twitter was the most viable to reach senior managers at mid-to-large companies Jessica Gahtan 2 MKTG2030 - Certain
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