1. CHAPTER 7 Business Marketing Designed by Eric Brengle B-books, Ltd. Prepared by Amit Shah Frostburg State University Marketing Lamb, Hair, McDaniel 10

2. Learning Outcomes Describe business marketing Describe the role of the Internet in business marketing Discuss the role of relationship marketing and strategic alliances in business marketing Identify the four major categories of business market customers LO I LO 2 LO 3 LO 4

3. Learning Outcomes Explain the North American Industry Classification System Explain the major differences between business and consumer markets Describe the seven types of business goods and services Discuss the unique aspects of business buying behavior LO 5 LO 6 LO 7 LO 8

4. What Is Business Marketing? Describe business marketing LO I

5. What Is Business Marketing? The marketing of goods and services to individuals and organizations for purposes other than personal consumption. LO I Business Marketing

7. REVIEW LEARNING OUTCOME Business Marketing LO I cupboards oven folder and pen Teddy bear CONSUMER BUSINESS cupboards Coffee pot oven folder and pen photocopier

8. Business Marketing on the Internet Describe the role of the Internet in business marketing LO 2

9. Measuring Online Success LO 2 A measure of a Web site’s effectiveness; calculated by multiplying the frequency of visits times the duration of a visit times the number of pages viewed during each visit. Stickiness = Frequency x Duration x Site Reach Stickiness

11. REVIEW LEARNING OUTCOME The Internet in Business Marketing LO 2 THEN NOW Reduce costs Build partnerships and alliances Build and support branding Develop customer-focused technology and systems Integrate online and traditional media Revenue Generation Basic Marketing Communication Business Internet Uses and

12. Relationship Marketing and Strategic Alliances Discuss the role of relationship marketing and strategic alliances in business marketing LO 3

13. Strategic Alliances LO 3 A cooperative agreement between business firms (strategic partnership). Strategic Alliance

14. Relationships in Other Cultures LO 3 A network of interlocking corporate affiliates. Keiretsu

15. REVIEW LEARNING OUTCOME Relationship Marketing and Strategic Alliances LO 3 Supplier (e.g. Intel) Supplier Supplier Company (e.g. Dell) Company 1 (e.g. Starbucks) Company 2 (e.g. Jim Beam) Company (e.g UPS) Customer/ Distributor (e.g. Ford)

16. Major Categories of Business Customers Identify the four major categories of business market customers LO 4

17. Major Categories of Business Customers LO 4 Producers Resellers Governments Institutions OEMs Wholesalers Retailers Federal Municipal Local Schools Hospitals Colleges Churches Unions Fraternal groups Civic Clubs Foundations Nonbusiness organizations

18. Producers LO 4 OEMs Individuals and organizations that buy business goods and incorporate them into the products that they produce for eventual sale to other producers or to consumers . Original Equipment Manufacturers

19. REVIEW LEARNING OUTCOME Business Market Customers LO 4 Business Marketing Institutions Resellers Wholesalers Retailers Producers OEMs Governments Federal State Municipal County Unions Civic Clubs Other Churches Foundations Nonprofits

20. North American Industry Classification System Explain the North American Industry Classification System LO 5

21. NAICS LO 5 A detailed numbering system developed by the United States, Canada, and Mexico to classify North American business establishments by their main production processes. North American Industry Classification System NAICS

22. Example of NAICS Hierarchy LO 5 NAICS Level Sector Subsector Industry Group U.S. Industry NAICS Code 31-33 334 3346 334611 Description Manufacturing Computer electronic product manufacturing Mfg. and reproduction of magnetic/ optical media Reproduction of software

24. REVIEW LEARNING OUTCOME North American Industry Classification System LO 5

25. Business versus Consumer Markets Explain the major differences between business and consumer markets LO 6

26. Business versus Consumer Markets LO 6 Characteristic Demand Volume # of Customers Location Distribution Nature of Buy Buy Influence Negotiations Reciprocity Leasing Promotion Business Market Organizational Larger Fewer Concentrated More Direct More Professional Multiple More Complex Yes Greater Personal Selling Consumer Market Individual Smaller Many Dispersed More Indirect More Personal Single Simpler No Lesser Advertising

27. Demand in Business Markets LO 6 Demand is... Description Derived Demand for business products results from demand for consumer products. Inelastic A change in price will not significantly affect the demand for product. Joint Multiple items are used together in final product. Demand for one item affects all. Fluctuating Demand for business products is more volatile than for consumer products.

28. Fluctuating Demand LO 6 Multiplier Effect (Accelerator Principle) Phenomenon in which a small increase or decrease in consumer demand can produce a much larger change in demand for the facilities and equipment needed to make the consumer product.

29. Types of Business Products Describe the seven types of business goods and services LO 7

30. Types of Business Products LO 7 Major Equipment Accessory Equipment Raw Materials Component Parts Processed Materials Supplies Business Services

31. REVIEW LEARNING OUTCOME Types of Business Goods and Services LO 7 Aluminum ore: raw material Extruded metal: processed material Propeller blade: component part Extruding machine: major equipment Tool cart: accessory equipment Uniforms: contracted service Paper: supply

32. Business Buying Behavior Discuss the unique aspects of business buying behavior LO 8

33. Business Buying Behavior LO 8 Customer Service Business Ethics Buying Situations Evaluative Criteria Buying Centers Aspects of Business Buying Behavior

34. Buying Centers LO 8 Buying Center All those persons in an organization who become involved in the purchase decision.

35. Roles in the Buying Center LO 8 Initiator Influencers Gatekeepers Decider Purchaser Users

37. Buying Situations LO 8 New Buy A situation requiring the purchase of a product for the first time. Modified Rebuy A situation in which the purchaser wants some change in the original good or service. Straight Rebuy A situation in which the purchaser reorders the same goods or services without looking for new information or investigating other suppliers.