Marketing 8-10

business-to-business marketing

groups that purchase a specific kind of product for resale, direct use in producing other products, or use in general daily operations

producer markets

businesses that purchase finished or unfinished goods for the purpose of making a profit by using them to produce other products

reseller markets

wholesalers/retailers that buy finished goods and resell them for a profit

wholesalers

purchase products to resale to other retailers/wholesalers

retailers

purchase products to resell to consumers

government markets

federal, state, county, and local governments that buy goods & services to support their internal operations and provide products for their citizens

institutional markets

organizations with charitable, educational, community, or other nonbusiness goals

North American Industry Classification System (NAICS)

system used by the US, Canada and Mexico to generate comparable statistics among its economies

NAICS divided into

20 sectors with 1,012 industry classifications

reciprocity

two organizations agree to buy from one another

partnerships

suppliers and their customers build and maintain mutually beneficial relationships

product specifications

written statements describing a product’s necessary characteristics, standards of quality, and other essential information to identify the best supplier for the product

description

a business buyer purchases by describing or specifying quantity, grade, and other attributes

inspection

used for industrial equipment, used vehicles, and buildings, so the business buyer should base purchases on inspection (ex. 2 identical vans having different amounts of mileage)

sampling

evaluating a portion of the product on the assumption that its characteristics represent the entire lot (ex. grain) when examining the entire lot is not physically or economically realistic

negotiation

buyers describe exactly what they need and submit bids (large or expensive purchases such as commercial vehicles)

new-task purchase

an organization makes an initial purchase of an item to be used to perform and new job or solve a new problem

straight rebuy purchase

buyers purchase the same products routinely under approximately the same terms of sale

modified rebuy

a new-task purchase that is altered after 2-3 orders, or when requirements when a straight rebuy purchase are altered

retention strategies

knowing what customers are likely to purchase and how their purchases might change over time

derived demand

the demand for business products derives from the demand for consumer products

inelastic demand

demand is not significantly altered by a price increase or decrease (the customer has no ready substitutes and is not sensitive to price)

joint demand

two or more items are used in combination to produce a product (ex. and printer and its ink)

fluctuating demand

when consumer products are in high demand, companies buy large quantities and expand production capacity and vice versa

fluctuations in price

a price increase might cause more consumers to buy because they don’t want the price to go up more and vice versa

Business (organizational) buying behavior

the purchase behavior of producers, government units, institutions, and resellers

buying center

the group of people within the organization who make business buying decisions

users

the organizational members who will actually use the product

influencers

technical personnel who help develop product specifications and evaluate alternatives

buyers (purchasing agents/managers)

select suppliers and negotiate terms of purchase, as well as occasionally developing specifications

deciders

choose the products (sometimes also the buyers but can be a separate role)

gatekeepers

control the flow of information to and among the different roles in the buying center

first stage: problem recognition

recognize that a problem or need exists

second stage: development of product specifications

buying center participants assess the problem or need and determine what is necessary to resolve it

third stage: searching for and evaluating potential products and suppliers

looking in company files for existing suppliers, searching company websites, contacting suppliers, etc.

value analysis

an evaluation of each component of a potential purchase

vendor analysis

a formal evaluation of current and potential vendors

fourth stage: select the product to be purchased and the supplier

buyer selects and uses one or more suppliers

multiple sourcing

selecting and using several suppliers

sole sourcing

selecting and using only one supplier

fifth & final stage: evaluate the supplier’s and product’s performance by comparing it with specifications

make sure it’s performance adequately solves the problem recognized in the first stage

environmental factors for buying decisions

competitive and economic factors, political forces, technological changes, and sociocultural issues

organizational factors for buying decisions

include company’s objectives, purchasing policies, resources, size and competition of its buying center

interpersonal factors

relationships among the people in the buying center

individual factors

personal characteristics of participants in the buying center such as age, education level and personality

B2B marketplaces

business buyers and sellers from around the world can exchange information, goods, services, ideas, and payments

international marketing

developing and performing marketing activities across national boundaries, with unique strategies for each region

global marketing

marketing the same products all across the world

born global

companies founded with global competition in mind

sociocultural forces for global marketing

cultural and social difference among nations that impact marketing activities and decisions

economic forces for global marketing

the economic stability of individual nations as well as trade barriers that may affect marketing efforts

currency valuation

the value of the dollar, euro, and yen have major impacts on the prices of products in many countries

floating exchange rate

currencies of those countries fluctuate according to the foreign exchange market

gross domestic product (GDP)

an overall measure of a nation’s economic standing (the market value of a nation’s total output of goods and services for a given period)

GDP danger

a country may look wealthy on paper but it doesn’t show how the wealth is distributed (ex. one family has the majority of the wealth and most of the country lives in poverty)

BRICS

Brazil, Russia, India, China, South Africa - economics are rapidly advancing

political/legal/regulatory forces for global marketing

a country’s legal and regulatory infrastructure can impact how marketing efforts are implemented

import tariff

a tax on imported goods

quota

a limit on the amount of goods an importing country will accept for certain products during a certain time period

embargo

suspension of trade of a particular product or with a certain country

exchange controls

restrictions on the amount of a particular currency that can be bought or sold

balance of trade

the difference in value between a nation’s imports and exports

ethical and social responsibility forces for global marketing

national standards for payoffs and bribes vary by country

Foreign Corrupt Practices Act (1977)

illegal for US firms to attempt to make large payments or bribes to influence policy decisions of foreign governments

U.K. Bribery Act

companies in the UK can face penalties for bribery even if the bribery occurred outside the country

cultural relativism

morality varies from one culture to another and business practices are differentially defined as right or wrong by particular cultures

Business for Social Responsibility (BSR)

tracks emerging issues and trends and assists organizations in developing practical business ethics tools

competitive forces in global marketing

viewed as a staple of global marketing, each country has unique competitive aspects

global customer

customers travel the globe and expect to be able to buy the same product with the same features all across the world

technological forces for global marketing

advances in technology making international marketing easier

North American Free Trade Agreement (NAFTA 1994)

merged Canada, Mexico, and the US into one market and eliminated tariffs on goods produced and traded across these countries

United States-Mexico-Canada Agreement (USMCA 2020)

replaced NAFTA, includes updates related to digital trade, currency, labor policies, environmental standards, and more

European Union (EU 1958)

established to promote trade among it’s members - currently consists of 27 countries

Southern Common Market (MERCOSUR 1991)

free trade alliance representing two-thirds of South America’s population

Asia-Pacific Economic Cooperation (APEC 1989)

promotes open trade and technical cooperation among member nations - currently with 21 members representing 38% of the world’s population

Regional Comprehensive Economic Partnership (RCEP)

a free trade agreement between 15 nations in the Asia-Pacific Region

Association of Southeast Asian Nations (ASEAN 1967)

promotes trade and economic integration among member nations in Southeast Asia

World Trade Organization (WTO 1947)

global trade association that promotes free trade among 164 member nations

dumping

selling products at unfairly low prices

exporting

the sale of products to foreign markets

importing

the purchase of products from a foreign source

trading company

links buyers and sellers in different countries but is not involved in manufacturing

export agents

bring together buyers and sellers from different countries and collect a commission for arranging sales

stage 1 entry into international markets

only marketing domestically

stage 2 entry into international markets

export internationally with representatives (independent export agents)

stage 3 entry into international markets

establish international sales operations (physical or virtual presence overseas)

stage 4 entry into international markets

full commitment with international manufacturing operations

regional marketing

marketing strategies are developed for each major region

multinational marketing

international markets are a consideration, with customization for the country markets based on differences across regions and countries

limited exporting

no international marketing strategies, but international distributors or selected customers purchase some of its products

domestic marketing

all marketing strategies focus on the market in the country of origin

licensing

requires a licensee to pay commission / royalties on sales, allow someone else to use your name for manufacturing, you also make a % on sales

franchising

a form of licensing where the company grants a franchisee the right to market its product in return for an agreement to conduct business in accordance with the company’s standard operations

contract manufacturing

when a company hires a foreign firm to product a designated volume of the firm’s product (ex. iPhones manufactured in China)

outsourcing

anytime you hire someone overseas or third party

offshoring

moving a business process that was done domestically to a foreign country

offshore outsourcing

contracting with an organization to perform some or all business functions in a country that is not where the product will be sold

joint venture

a partnership between a domestic firm and a foreign firm or government

strategic alliances

partnerships formed to create a competitive advantage on a worldwide business (both companies work together but remain independent)

direct ownership

one company owns subsidiaries or other facilities overseas