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1. 10 MarketingLamb, Hair, McDaniel Designed by Eric Brengle B-books, Ltd. Prepared by Amit Shah Frostburg State University Business Marketing CHAPTER 7

2. Learning Outcomes Describe business marketing Describe the role of the Internet in business marketing Discuss the role of relationship marketing and strategic alliances in business marketing Identify the four major categories of business market customers LOI LO2 LO3 LO4

3. Learning Outcomes Explain the North American Industry Classification System Explain the major differences between business and consumer markets Describe the seven types of business goods and services Discuss the unique aspects of business buying behavior LO5 LO6 LO7 LO8

4. What Is Business Marketing? LOI Describe business marketing

5. BusinessMarketing What Is Business Marketing? LOI The marketing of goods and services to individuals and organizations for purposes other than personal consumption.

6. Business Products The key is intended use. 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 LOI

7. LOI REVIEW LEARNING OUTCOMEBusiness Marketing CONSUMER BUSINESS cupboards cupboards Coffee pot oven oven folderand pen Teddy bear photocopier folderand pen

8. Business Marketing on the Internet LO2 Describe the role of the Internet in business marketing

9. Stickiness Measuring Online Success LO2 A measure of a Web site’seffectiveness; calculated by multiplying the frequency of visits times the duration of a visit times the number of pages viewed during each visit. Stickiness = Frequency x Duration x Site Reach

10. Evolution of E-Business Initiatives • Revenue generation • Aggressivedisintermediation initiatives • Basic marketingcommunication strategies • Reduce costs • Build channel partnerships and trust • Customer-focusedtechnology and systems • Brand building and development • Integrate online and traditional media Time Past initiatives Present initiatives LO2

11. LO2 REVIEW LEARNING OUTCOMEThe Internet in Business Marketing Business Internet Uses Revenue GenerationBasic Marketing Communication THEN NOW and Reduce costsBuild partnerships and alliancesBuild and support brandingDevelop customer-focused technology and systemsIntegrate online and traditional media

12. Relationship Marketing andStrategic Alliances LO3 Discuss the role of relationship marketing and strategic alliances in business marketing

13. StrategicAlliance Strategic Alliances LO3 A cooperative agreement between business firms (strategic partnership).

14. Keiretsu Relationships in Other Cultures LO3 A network of interlocking corporate affiliates.

15. LO3 REVIEW LEARNING OUTCOMERelationship Marketing and Strategic Alliances Supplier(e.g. Intel) Supplier Supplier Company(e.g. Dell) Company 1(e.g. Starbucks) Company 2(e.g. Jim Beam) Company(e.g UPS) Customer/Distributor(e.g. Ford)

16. Major Categories of Business Customers LO4 Identify the four major categories of business market customers

17. Producers OEMs WholesalersRetailers Resellers Federal MunicipalLocal Governments Schools Hospitals CollegesChurches Unions Fraternal groupsCivic Clubs Foundations Nonbusiness organizations Institutions Major Categories of Business Customers LO4

18. OriginalEquipmentManufacturers Producers LO4 OEMsIndividuals and organizations that buy business goods and incorporate them into the products that they produce for eventual sale to other producers or to consumers.

19. LO4 REVIEW LEARNING OUTCOMEBusiness Market Customers Business Marketing Producers Resellers Governments Institutions OEMs Wholesalers Federal Unions Churches Retailers State CivicClubs Foundations Municipal Other Nonprofits County

20. North American Industry Classification System LO5 Explain the North American Industry Classification System

21. NAICS NAICS LO5 A detailed numbering system developed by the United States, Canada, and Mexico to classify North American business establishments by their main production processes. North American Industry Classification System

22. Example of NAICS Hierarchy LO5

23. NAICS LO5 • Provides a 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 • New customer identification

24. LO5 REVIEW LEARNING OUTCOMENorth American Industry Classification System

25. Business versus Consumer Markets LO6 Explain the major differences between business and consumer markets

26. Characteristic Business Market Consumer Market Demand Organizational Individual 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 LO6 Business versus Consumer Markets

27. Demand is... Description 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 LO6

28. Multiplier Effect 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. (Accelerator Principle) Fluctuating Demand LO6

29. Types of Business Products LO7 Describe the seven types of business goods and services

30. Types of Business Products Major Equipment Accessory Equipment Raw Materials Component Parts Processed Materials Supplies Business Services LO7

31. LO7 REVIEW LEARNING OUTCOMETypes of Business Goods and Services Extruding machine:major equipment Aluminum ore:raw material Tool cart:accessory equipment Extruded metal:processed material Propeller blade:component part Uniforms:contractedservice Paper: supply

32. Business Buying Behavior LO8 Discuss the unique aspects of business buying behavior

33. Buying Centers Evaluative Criteria Aspects of Business Buying Behavior Buying Situations Business Ethics Customer Service Business Buying Behavior LO8

34. Buying Center All those persons in an organization who become involved in the purchase decision. Buying Centers LO8

35. Initiator Influencers Gatekeepers Decider Purchaser Users Roles in the Buying Center LO8

36. LO8 Evaluative Criteria • Quality • Service • Price

37. New Buy Modified Rebuy Straight Rebuy A situation requiring the purchase of a product for the first time. A situation in which the purchaser wants some change in the original good or service. A situation in which the purchaser reorders the same goods or services without looking for new information or investigating other suppliers. Buying Situations LO8

38. Customer Service LO8 • Divide customers into groups based on their value • Create policies that govern how service will be allocated among groups

39. LO8 REVIEW LEARNING OUTCOMEBusiness Buying Behavior EvaluativeCriteria Buying Center Buying Situations • Quality • Service • Price New buyStraight rebuyModified rebuy Initiator Influencer Decider Gatekeeper Purchaser User Customer service