Industrial or B2B Marketing

8/3/2019 Industrial or B2B Marketing

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Marketing Industrial or B2B Marketing


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B2B and B2C

B2B is short hand forbusiness to

business.

In B2B transactions one business sells its

products or services to another business.

B2C is shorthand for business to consumer.

In B2C transactions a business sells its

products to an individual or family.


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Customers and consumers

Customers are buyers of goods and services.

Consumers are the end users who derive

enjoyment from the good or service.

In industrial or business to business markets weuse the word customer but not consumer.

The word consumer should be reserved for

individuals who buy goods and services for their

own and their familys consumption.


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B2B markets

Industrial/B2B markets involve the sale of goodsbetween businesses. These are goods that are notaimed directly at consumers.

B2B markets include the sale of: Finished goods

Supplies e.g. fuel

Capital goods e.g. machinery

Raw materials for processing

Components for assembling into larger goods

Services to other businesses e.g. legal or accountingservices


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B2B marketing

This refers to marketing goods and servicesto other firms

B2B marketing is concerned with industrial

goods and services for use in the buyersown activities

The market is very different from consumeror B2C markets

Different considerations apply The marketing mix will be different from that

employed in a B2C market.


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Customers in B2B markets

They are customers -not consumers

There will be a smaller number of customers than

in B2C markets but order size is likely to be large

Purchasing is based on rational considerations Demand is derived from the demand for the buyers

own products

Commercial relationships are long term

A sale is often preceded by lengthy negotiations


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B2B customers often / usually

Purchase goods and services that meet specific businessneeds.

Emphasise economic benefit.

Use formalised lengthy purchasing policies and processes.

Involve large groups of people in purchasing decisions. Buy large quantities and buy infrequently.

Want a customised product package.

Experience major problems if supply fails.

Find switching to another supplier difficult. Negotiate on price.

Purchase direct from suppliers.

Justify an emphasis on personal selling.


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B2C consumers often / usually

Purchase goods to meet individual or family needs.

Emphasis on psychological benefit.

Buy on impulse or within minimal processes.

Purchase as individuals or as a family unit.

Buy small quantities and frequently.

Are content with a standardise product package.

Experience minor irritation if supply fails.

Find switching to another supplier easy.

Accept the stated price. Purchase from intermediaries.

Justify an emphasis on mass media communication.


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Buyer decision marking in B2B markets

Customers will place larger orders than customersin B2C markets.

Buying decisions are often made by a team (thedecision making unit).

Decision making is more rational and deliberativethan in B2C markets.

There is a strong emphasis on price, efficiency,performance, quality rather than appearance.

B2B customers are less likely to be swayed bypersuasive advertising.


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Marketing research

B2C - many consumer markets are very

large and therefore marketing research is

based on sampling

B2B - the number of business customers is

smaller and it may be possible to survey all

businesses in the market.


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Segmentation in B2B markets

Geographical

Type of customer

Customer size

Usage rate

Loyalty of customer

Type of end use Purchasing procedures


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The product in B2B markets

B2C- the product is often mass producedwith standard features

B2B- the product may be custom made to

do a specific job Large order size

Often made to order or even customised

Technically complex Conforms with detailed customer

specifications


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Price in B2B markets

In B2B markets price is not normally fixed as

it is in consumer markets.

Buyers are in a strong position especially if

they are placing large orders. As a result

negotiation over price is usual.

Price linked to customer specification, total

offering and negotiation. Pricing incentives.


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Promotional mix in B2B Markets

Will be different from that employed in B2Cmarkets.

B2C- tends to a stress on advertising throughmedia and sales promotion..

B2B-Greater stress on personal selling involvingexplanation, demonstration and follow up.

Specialist media for advertising.

Advertising tends to be informative.

Publicity and public relations are very important. Some role for sales promotions but aimed at the

trade.

Relation / partnership marketing.


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Comparison of promotional activities

B2B

Small number ofidentifiable customersfacilitates personalcommunication.

Complex products requirelengthy buyer sellerdialogue.

High value infrequentpurchase require extensive

informative literature. Purchase decision made

by a group of people- needto understand the role ofeach.

B2C

Mass market reached bymass communication.

Impersonal channels forstandardised products..

Low value, low risk,frequent purchase lessneed for information,greater stress onintangible benefits, greater

use of incentives. Short time scale, often

impulse buying byindividual or family-greaterstress on point of sale.


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Distribution

Frequently direct with only short channels of

distribution.

Limited use of intermediaries.

Efficient delivery and logistics is crucial.


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Key characters Of B2B Markets

Fewer larger Buyers

Professional Purchasing Often purchased by trained purchasing agents

who must follow organizational protocol .

Multiple buying Influences

Multiple sales calls on an average takes around 7.2 calls to close a deal

,might be more in case of capital equipment where time of prospecting to salemay be in years .

Derived demand

Inelastic and Fluctuating demand

Geographically concentrated Buyers Hoisery ( coimbatore ) , diamonds (

surat ) , auto parts ( Pune and Nasik )

Direct Purchasing


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Buying situations In org Buying

Straight re buy

Modified Re Buy

New Buy

Least decisions in straight re buy and maximum in New re

buy . The role of the sales force is to open new accounts for New

Buy


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The buying center

Participants

Initiators who request something needs to be

purchased

Users Those who will use the service or productpurchased

Influencers people who influence the buying

decision .- FINANCE , MANUFACTURING

Approvers people who approve the budget and

give a go ahead call


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Actual Buyers people who actually hunt forsuppliers and buy the product at most feasible rate

Gate Keepers include telephone secretaries ,receptionists ,people who can prevent the information from

reaching the buying center .


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Several people can occupy a given role and multiple people can

occupy one role

A typical buying center may have one to almost 100 people in various

roles .According to one study on an average almost 3.5 people where

involved in buying centers


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Buying center influencers

Buying centers have multiple influencers like engineers ,

finance , logistics .

Each individual has his own perceptions based on age ,

income ,education , personality ,attitudes keep it simple

, want the best , want every thing done . Ultimately a bunch of individuals decide on buying not an

entire organization , hence it is required to maintain a

strong corporate brand , that sends uniform signals to the

market .


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The Organisational purchasing

process

1. Problem recognition

2. General need description

3. Product specification

4. Supplier search

Trade sources

trade shows

catalogs

Vertical Markets plastics .com buying alliances to gain deeper discounts

E procurement vertical hubs , functional hubs


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5 . Proposal solicitation

6 . Supplier selection may depend on many factors Price , supplier reputation , product reliability , service

reliability ,supplier flexibility7 . Order routine specification involve expert negotiations ,

exchange of purchase plan , service and delivery contracts

8 . Performance review may be quarterly , half yearly orannually


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Selling to governments

The sales cycle is very lengthy

Lot of bureaucracy

Under table deals

Un usual time delays

Frequent change of purchasing personnel .

Procedures very elaborate and have to meet legal norms

Tenders , Bidding and contracts more common

But once the deal is in , it stays in .

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