Business-to-

Business Marketing

David Holdford, RPh, MS, PhD

Professor, School of Pharmacy

Virginia Commonwealth University

Serving Businesses Who Serve Others

Most pharmacists engage in

business-to-consumer

(B2C) marketing

But they also serve

businesses

And government

Business-to-business

markets (called B2B)

In B2B markets, both the seller

and buyer are businesses

Examples of B2B

Wholesalers serve pharmacies, MD offices, hospitals, & other health care businesses

Pharmacies serve pharmacy benefit managers (PBMs) & health insurance companies

Consulting companies serve pharmaceutical companies and government

Pharmacies serve local employers

Software companies provide software and platforms to health care providers

Business-to-government

markets (called B2G)

In business-to-government

marketing, the buyers are local,

state, or federal governmental

entities

This presentation will emphasize B2B

Examples of B2G

Business services provided to:

Medicare,

Medicaid,

Veterans Administration, or

Department of Defense

DIFFERENCES IN

B2C VERSUS B2B

MARKETING

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Seller

Buyer

Buyer

Buyer

One Seller, Many Buyers(e.g., Pharmaceutical Company

Selling to Retail Pharmacies)

Seller

Seller

Seller

Buyer

One Buyer, Many Sellers(e.g., Health Care Providers

Selling to the Federal Government)

Inter-med-iary

Seller

Seller

Seller

Buyer

Buyer

Buyer

Many Sellers & Many Buyers With An Intermediary(e.g., Wholesaler Mediating Transactions

Between Pharmaceutical Companies and Retailers)

Seller

Seller

Seller

Buyer

Buyer

Buyer

Many Sellers & Many Buyers With No Intermediary(e.g., Famers Market)

In B2B,

Buyers, Sellers,

& Intermediaries

are Businesses

http://www.slideshare.net/dholdford/marketing-channels-in-pharmacy-practice

Typical Channels for Drugs

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Pharmaceutical Company

Wholesaler

Pharmacy

Patient

PharmaceuticalCompany

Patient

PharmaceuticalCompany

Patient

Pharmacy

Producer

Intermediary

Intermediary

End User

http://www.slideshare.net/dholdford/marketing-channels-in-pharmacy-practice

Typical Channels for Drugs

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Pharmaceutical Company

Wholesaler

Pharmacy

Patient

PharmaceuticalCompany

Patient

PharmaceuticalCompany

Patient

Pharmacy

Producer

Intermediary

Intermediary

End User

http://www.slideshare.net/dholdford/marketing-channels-in-pharmacy-practice

B2B

B2C

BUSINESSES AND

INDIVIDUAL CONSUMERS

USE DIFFERENT

PURCHASE PROCESSES

B2B decisions about purchases

are made by people who are held

accountable by the business

Decision makers may be detached and

less emotional in their decision making

process than in B2C because

• they use the business’s money and

• do not typically suffer the consequences

of their purchase decisions directly

Still, they are human beings

And human beings have feelings, emotions,

biases, worries, & concerns like everyone

Addressing those human issues is essential

in B2B marketing

THE B2B DECISION IS

OFTEN COMPLEX

B2B purchases generally

consist of a systematic assessment of

alternatives and

take many months or years to complete,

particularly if important

B2B purchases may include

a request for proposals (RFP),

submission & analysis of proposals, and

a negotiation of final terms for purchase

THE SOLUTION BEING

OFFERED IS OF

HIGH VALUE

The complexity of the decision and the

solution to the problem usually results in a

large price tag for the product or service

It is common for contracts for business

solutions to generate millions of dollars for

sellers

Some solutions might consist of multiple sales

(e.g., prescriptions) but the sales are bundled

into one contract (e.g., contract to provide

services for 100,000 covered lives)

THERE ARE

MANY DECISION MAKERS

Big decisions are made by many

people serving multiple roles

Procurers: people who deals with the nuts and bolts of the purchase process (e.g., check invoices, evaluate technical specifications of contracts)

Financial advisors: people who deal with the financial feasibility and advisability of the choice (e.g., What is the return of investment (ROI), Can we afford it?)

End users: people who actually use the good or service

Influencers: people who can impact the decision making process and/or the final choice define criteria’s for the decision-making

Deciders: people with the formal and informal authority to determine the final choice--often upper management

People may serve one or

many overlapping roles

It is important to identify

individuals and their

respective roles prior to

proposing a solution

B2B IS ABOUT

PERSONAL RELATIONSHIPS

BETWEEN PEOPLE

B2B marketing is built on human

interactions

Those interactions identify

needs and tailor

communications to those needs

Credibility and trust are essential

for B2B relationships to thrive

PERSONAL SELLING IS A

PREFERRED

PROMOTIONAL

COMMUNICATION METHOD

PromotionalMethods

Marketer Controlled

Oral Two Way Personal

Communications

Personal Selling (e.g., motivational

interviewing)

One Way Non-personal

Communication

Advertising(e.g., broadcast, print,

Internet)

Individualized Non-Personal

Communication

Direct Marketing(e.g., telemarketing,

mailings)

Communication Designed to Promote

Immediate Action

Promotional Sales(e.g., samples,

coupons)

Marketer Influenced

Strategies to Manage Public Image

Public Relations(e.g., political

advocacy)

Strategies to Manage Word-of-mouth Conversations

Buzz Promotion(e.g., cultivating thought leaders)

Since B2B is about personal

relationships, personal selling is

preferred

It consists of two-way communication

It allows the seller to better

understand the needs of buyers and to

tailor messages to the buyers’ needs

and wants

Best Promotional

Methods for…

B2B

Pitching the message one-to-one or to groups

Offer deals like rebates & group

discounts

Generate WOM among decision

makers

B2G

Same as B2B

Political advocacy

B2CIntegrated

promotional communications

Personal Selling is typically part of an integrated strategy

using other methods too

Best Promotional

Methods for…

B2B

Pitching the message one-to-one or to groups

Offer deals like rebates & group

discounts

Generate WOM among decision

makers

B2G

Same as B2B

Political advocacy

B2CIntegrated

promotional communications

It is Often Combined with Rebates and Discounts

Best Promotional

Methods for…

B2B

Pitching the message one-to-one or to groups

Offer deals like rebates & group

discounts

Generate WOM among decision

makers

B2G

Same as B2B

Political advocacy

B2CIntegrated

promotional communications

And Supported by Efforts to Promote Positive Word

of Mouth from Key Opinion Leaders

Best Promotional

Methods for…

B2B

Pitching the message one-to-one or to groups

Offer deals like rebates & group

discounts

Generate WOM among decision

makers

B2G

Same as B2B

Political advocacy

B2CIntegrated

promotional communications

B2G Marketing Needs to Add PA to their Portfolio

Because of the Influence of Legislators and Regulators

in Decisions

OBJECTIVE MESSAGES

ARE PREFERRED OVER

EMOTIONAL ONES

Ultimately, decision making in

organizations is more

systematic and seeks

objective outcomes

Therefore, objective

messages backed up with

real evidence are preferred

A return on investment (ROI)

calculation is usually

expected by buyers to guide

their decisions

Gain from Investment – Cost of Investment

Cost of InvestmentROI =

Pharmaceutical companies must often

provide pharmacoeconomic information

about their products to pharmacy &

therapeutics committees in hospitals

Managing B2B Relationships

Pharmacists need to effectively manage

B2B relationships by

• Choosing the right business partners for

their services

• Making a case for the value they provide to

partners & the customers served by partners

• Continually working to gain and maintain their

partners' trust

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Summary

Pharmacists are intermediaries in most pharmacy

channels, so they often participate in B2B

relationships

Their value in B2B relationships results from how

well they serve their partners within the supply

chain

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