*Chapter_5_-_B2B_Marketing_A2L

Business-to-Business Marketing (B2B Marketing)

• Involves the buying and selling of goods or services for:
  • Production of other goods/services
  • Consumption by the buying firm
  • Resale by wholesalers and retailers

Key Learning Objectives

• LO1: Describe the nature and composition of B2B markets
• LO2: Explain differences between B2B buying and B2C buying
• LO3: Describe the B2B buying process
• LO4: Identify roles within the buying centre
• LO5: Detail different buying situations

Composition of B2B Markets

• Companies target specific customer markets to create value, such as:
  • Shopify: Assisting businesses in establishing online presence
  • Apple & Google: Integrating operating systems into cars
• Types of B2B Markets:
  • Resellers
  • Manufacturers
  • Institutions
  • Government

Resellers & Manufacturers

• Manufacturers/Producers:
  • Buy raw materials, components, or parts to manufacture their goods.
  • Ex: Volkswagen Group, which owns brands like Audi, Porsche, Lamborghini.
• Resellers:
  • Act as intermediaries that buy products and sell them to end customers (retailers) or other businesses.

Government Purchasing

• The Canadian government spends approximately $240 billion annually on goods/services.
• Provincial/local governments are also significant purchasers.
• Firms often specialize in selling to government entities.

Understanding B2B Buying Process

• Challenges include:
  • Identifying decision-makers in organizations who influence purchases.
  • Understanding the complex buying process of potential clients.
  • Factors influencing the buying process.

Differences Between B2B and B2C Markets

• Demand:

  • B2B product demand is derived from consumer demand.
  • B2B markets have fewer customers but larger, concentrated orders.
  • Demand is generally more inelastic.

• Product Characteristics:

  • B2B products are often technical and purchased based on specific criteria.
  • Emphasis on delivery time, technical assistance, and after-sale service.

• Buying Process:

  • More complex with multiple decision-makers involved.
  • Negotiated pricing and competitive bidding are common.
  • Buying criteria are formally specified.

• Marketing Characteristics:

  • Direct selling and personal relationships are crucial.
  • Advertising is more technical; promotions focus on personal selling.

B2B Buying Process Steps

1. Need Recognition:

   • Generated by internal/external sources (suppliers, sales teams).

2. Product Specification:

   • Developed based on recognized needs; may involve suppliers collaboratively.

3. Request for Proposal (RFP) Process:

   • Organizations invite suppliers to bid on their specifications.

4. Proposal Analysis & Supplier Selection:

   • Multiple suppliers negotiate against each other based on various criteria, not just price.

5. Order Specifications (Purchase):

   • Firm places the order with detailed specifications and terms.

6. Vendor Performance Assessment:

   • Evaluation based on key issues, importance scores, and performance metrics.

The Buying Centre

• Consists of various roles typically including:
  • Initiator
  • Gatekeeper
  • Influencer
  • User
  • Decider
  • Buyer

Buying Situations

• Different buying situations include:

  • New Buy: First-time purchase leading to high involvement.
  • Modified Rebuy: Buying a similar product with changes in specifications.
  • Straight Rebuy: Reordering a previously purchased product (less involvement).

• Most B2B purchases fall under modified or straight rebuy categories, emphasizing vendor relationships.