*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.