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1. 5 chapter BUSINESS MARKETING Prepared by Angela Zigras, Seneca College Deborah Baker, Texas Christian University Chapter 5

2. You Will Learn To ... 1. Describe business marketing. 2. Describe the role of the Internet in business marketing. 3. Discuss the role of relationship marketing and strategic alliances in business marketing. Chapter 5

3. You Will Learn To ... 4. Identify the four major categories of business market customers. 5. Explain the North American Industry Classification System. 6. Explain the major differences between business and consumer markets. Chapter 5

4. You Will Learn To ... 7. Describe the seven types of business goods and services. 8. Discuss the unique aspects of business buying behaviour. Chapter 5

5. Business Marketing The marketing of goods and services to individuals and organizations for purposes other than personal consumption. Chapter 5

6. Key is intended use What is Business Marketing? Business Products • Are used to manufacture other products • Become part of another product • Aid the normal operations of an organization • Are acquired for resale without change in form Chapter 5

7. E-Commerce The process of selling goods and services on the Internet BusinessE-Commerce Electronic transactions between companies ConsumerE-Commerce Electronic transactions between business and individuals that purchase for individual consumption E-Commerce Chapter 5

8. Benefits of Internet’s Interactivity • Convenience and increased efficiency • Better customer service • Lower transaction costs • New relationship-building opportunities Chapter 5

9. Business E-Commerce Benefits 1. Lower prices 2. Greater selection of products and vendors 3. Access to customer and product sales data 4. Around-the-clock ordering & customer service 5. Lower costs 6. Customized products Chapter 5

10. Strategic Alliance A cooperative agreement between business firms. (strategic partnership) Chapter 5

11. Benefits of Strategic Alliances • Access to markets or to technology • Economies of scale by combining activities • Faster market entry for new products • Sharing of risk Chapter 5

12. Categories of Business Customers Producers Categories of Business Customers Resellers Governments Institutions Chapter 5

13. Tips for Successful Alliances • Trust one another • Share a common interest • Bring different skills to the table • Share gains • Decide who has direct customer contact • Understand the importance of customer satisfaction Chapter 5

14. NAICS A detailed numbering system developed by Canada, U.S., and Mexico to classify North American business establishments by their main production processes. North American Industry Classification System Chapter 5

15. NAICS • Provides common industry classification system • Valuable tool for marketers in analyzing, segmenting, and targeting markets • Data can be used to determine: • Number, size, and geographic dispersion of firms • Market potential / market share estimates • Sales forecasts Chapter 5

16. Characteristic Business Market Consumer Market Organizational Individual Demand Volume Larger Smaller # of Customers Fewer Many Location Concentrated Dispersed Distribution More Direct More Indirect Nature of Buy More Professional More Personal Buy Influence Multiple Single Negotiations More Complex Simpler Reciprocity Yes No Leasing Greater Lesser Promotion Personal Selling Advertising Business vs. Consumer Markets Chapter 5

17. Derived Demand for business products results from demand for consumer products Inelastic A change in price will not significantly affect the demand for product Joint Multiple items are used together in final product. Demand for one item affects all Fluctuating Demand for business products is more volatile than for consumer products Demand in Business Markets Demand is... Description Chapter 5

18. Multiplier Effect (Accelerator Principle) Phenomenon in which a small increase or decrease in consumer demand can produce a much larger change in demand for the facilities and equipment needed to make the consumer product. Chapter 5

19. Types of Business Products Major Equipment Major Categories of Business Products Accessory Equipment Raw Materials Component Parts Processed Materials Supplies Business Services Chapter 5

20. Business Buying Behaviour Buying Centres Evaluation Criteria Aspects of Business Buying Behaviour Buying Situations Purchasing Ethics Customer Service Chapter 5

21. Buying Centre All those persons in an organization who become involved in the purchase decision. Chapter 5

22. Roles in the Buying Centre Initiator Influencers Gatekeepers Decider Purchaser Users Chapter 5

23. Price Service Quality Evaluative Criteria for Business Buyers Chapter 5

24. New Buy Modified Rebuy StraightRebuy Buying Situations Chapter 5

25. New Buy A situation requiring the purchase of a product for the first time. Modified Rebuy A situation where the purchaser wants some change in the original good or service. Straight Rebuy A situation in which the purchaser reorders the same goods or services without looking for new information or investigating other suppliers. Buying Situations Chapter 5

26. Customer Service Customer Service is enhanced through technology Online Services World Wide Web CD-ROMs Chapter 5