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Vitale and Giglierano. B2B MKTG. 2002 Edition. Chapter 2 Classifying Customers, Organizations, and Markets. Prepared by John T. Drea, Western Illinois University. Commercial Enterprises. Industrial Distributors. Value-Added Resellers. Original Equipment Manufacturers.

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B2b mktg

Vitale and Giglierano

B2B MKTG

2002 Edition

Chapter 2

Classifying Customers, Organizations, and Markets

Prepared by John T. Drea, Western Illinois University


Types of organizational customers

Commercial

Enterprises

Industrial

Distributors

Value-Added

Resellers

Original

Equipment

Manufacturers

Users or End Users

Types of Organizational Customers

Nonprofit and

Not-for-Profit

Organizations

Government

Units

Churches,

hospitals,

colleges,

nursing homes,

etc.

85,000 local,

state, and federal

government units


B2b mktg

Commercial

Enterprises

Industrial

Distributors

Value-Added

Resellers

Original

Equipment

Manufacturers

Users or End Users

  • Industrial Distributors

    • Provide economic utilities of form, time, place, and possession to manufacturers

    • Creates assortments of products from many manufacturers

    • Particularly useful for reaching customers too small to justify direct sales efforts


B2b mktg

Commercial

Enterprises

Industrial

Distributors

Value-Added

Resellers

Original

Equipment

Manufacturers

Users or End Users

  • Value-Added Resellers

    • More than just a distributor or wholesaler.

    • Provides unique offering enhancements tailored to a customer’s needs by combining products/services from other manufacturers.

    • Creates a value network at the user level.


B2b mktg

Commercial

Enterprises

Industrial

Distributors

Value-Added

Resellers

Original

Equipment

Manufacturers

Users or End Users

  • Original Equipment Manufacturers (OEMs)

    • Purchase products

      and incorporate those products into their products.

    • Usually the largest-volume users of goods and services.

    • Ex: Intel is an OEM supplier to many computer manufacturers, Firestone was an OEM supplier to Ford for many years.


B2b mktg

Commercial

Enterprises

Industrial

Distributors

Value-Added

Resellers

Original

Equipment

Manufacturers

Users or End Users

  • Users or End Users (E/U)

    • A manufacturer that purchases goods or services for consumption/

      incorporation into their products in such a way that the identity of the purchased product is lost.

    • When Goodyear purchases steel for fabrication into steel belts for tires, Goodyear is the steel manufacturer’s E/U.


Producer types

Producer Types

Accessory

Equipment

Suppliers

Raw

Materials

Producers

Component Parts

and Manufactured

Materials

Producers

CapitalGoods

Manufacturers


Producer types raw materials producers

Often compete in price sensitive markets

Seek value added positions

Products lose identity once incorporated

into the customer’s product

Raw materials markets are often dominated

by a few very large producers

Producer TypesRaw Materials Producers

Raw

Materials

Producers


Producer types components parts and manufactured materials producers

Parts retain their same form when

incorporated.

Usually retain identity even when

incorporated into the customer’s product.

More differentiated from direct

competition by the value added to

the customer’s product.

Seagate computer drives are an example.

Producer TypesComponents Parts and Manufactured Materials Producers

Component Parts

and Manufactured

Materials

Producers


Producer types capital goods manufacturers

Capital goods involve large purchases with considerable risk for the customer.

Involves the development of

specifications to ensure that

organizational needs are met.

Adherence to specifications reduces

opportunities for differentiation.

Customers expect an offering that includes installation, equipment, and accessories.

Producer TypesCapital Goods Manufacturers

CapitalGoods

Manufacturers


Producer types accessory equipment suppliers

Accessory equipment is equipment that works with some other offering.

Accessories can be added to a bundled offering by a channel intermediary.

Accessory equipment is usually produced by an independent supplier.

The key to providing value is to be compatible with industry standards for the primary offering.

Producer TypesAccessory Equipment Suppliers

Accessory

Equipment

Suppliers


B2b mktg

Financial

Publics

Public Interest

Groups

Communities of interested parties who are not direct participants in a market as customers, channel members, suppliers, or competitors.

Publics

Internal Publics

Independent

Press


B2b mktg

The Macroenvironment

influences

value

creation.

Demographic

Environment

Economic

Environment

Competitive

Environment

Sociocultural

Environment

Technological

Environment

Natural

Environment


Forms of competition in b2b markets

Forms of Competition in B2B Markets

  • Pure Competition

    • No single entity dominates the market or has much of an influence on price.

    • Most common in commodity industries.

    • Little product differentiation – price is a major component of the marketing mix.


Forms of competition in b2b markets1

Forms of Competition in B2B Markets

  • Monopolistic Competition

    • Many buyers, many sellers.

    • Product is differentiable – can vary in quality, features, and style

    • A range of prices is possible.

    • Promotion and branding are important to product differentiation.


Forms of competition in b2b markets2

Forms of Competition in B2B Markets

  • Oligoplistic Competition

    • Market consists of a few sellers that are sensitive of each others’ strategy.

    • Barriers limit entry of new competitors.

    • Prices are aimed at maintaining market stability.

    • Key is building relationships with large volume customers.


Forms of competition in b2b markets3

Forms of Competition in B2B Markets

  • Pure Monopoly

    • Only one primary seller.

    • Competitors that do exist are small niche players.


An adaptation of the value chain

An Adaptation

of the

Value Chain

An Adaptation of the Value Chain


Multinational value network

Multinational Value Network


The product life cycle

The ProductLife Cycle


The technology adoption life cycle

The Technology Adoption Life Cycle


Plc and talc

Product Life Cycle (PLC)

Introduction

Growth

Maturity

Decline

Technology Adoption Life Cycle (TALC)

Technophiles

Visionaries (aim for “quantum leaps”)

Pragmatists (want proven solutions)

Conservatives

Laggards

PLC and TALC


Talc and how technology markets evolve

TALC and How Technology Markets Evolve

  • Chasm

    • A break in the sales growth curve for a new technology.

    • A chasm occurs between visionaries and pragmatists.

  • Tornado

    • The chaos that occurs during a period of rapid growth.

    • A dominant supplier usually emerges from a tornado.


Using the technology adoption life cycle

Using the Technology Adoption Life Cycle

  • The vendor of an innovation passes through technophiles and visionaries before establishing a foothold among pragmatists.

  • Crossing the chasm (called the “market development gap”) between visionaries and pragmatists is related to a change in the entire marketing mix.

    • There are changes in type of customer and what the customers perceives as being of value.


Using the technology adoption life cycle1

Using the Technology Adoption Life Cycle

  • Tornado

    • Corresponds to the late introduction/early growth stage of the PLC

    • The market wants to support the market leader – it reduces uncertainty for pragmatists.

    • The market leader has the chance to become the “gorilla” – the gorilla can do what it wants as long as it stays close to what pragmatists desire.


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