Chp 5: business to business marketing Flashcards
define business to business (B2B) marketing
process of buying and selling goods or services to be used in the production of other goods and services, for consumption of the buying organization, or for resale by wholesalers and retailers
what is the difference between B2B and B2C
not the product/service but rather the ultimate purchaser/user of that product/service
LO1: just like B2C, what does B2B focus on and give example
Just like B2C, B2B focus their efforts on serving specific types of customer markets to create value for those customers ex. Shopify helps companies establish online stores
LO1: what do many firms find it productive to do?
focus on key industries or market segments rather than on ultimate consumers
LO1: 4 B2B markets
resellers, institutions, government, manufacturers
LO1: B2B markets - 2 points to manufacturers/producers
1) Manufacturers buy raw materials, components and parts that allow them to manufacture their own good
2) Many B2B companies are demanding, as a condition for doing business, that suppliers demonstrate a social responsibility
LO1: B2B markets: define resellers
marketing intermediaries that resell manufactured products without significantly altering their form
LO1: B2B markets - 4 examples of resellers
1) Example: wholesalers buy jeans from Levi and sell to retailers and those retailers sell to consumers
2) Wholesalers, distributors, retailers are all resellers
LO1: B2B markets - 2 points to institutions
1) Like hospitals, universities
2) Purchase goods and services for the people they serve
LO1: B2B markets - 1 point to government
Tends to be one of the largest purchasers of goods/services
LO1: 3 key challenges of reaching B2B clients
1) marketers must identify the right persons/decision markers within org who can authorize or influence purchases
2) they must understand the buying process of each potential client
3) they need to identify the factors that influence the buying process of potential clients
LO1: example of key challenging of reaching B2B clients
institutions like universities tend to have small budgets so seek best value when buying products/services for org. Unlike governments with large budget but they have are subject to public scrutiny on purchases
LO1: how can marketers avoid the challenge of reaching B2B clients
Many companies have salespeople dedicated to specific clients to address complexity of B2B markets
LO2: 4 market characteristics of B2B compared to B2C
1) Demand for business products is derived from B2C sales in same supply chain, fluctuates more, and more frequently
2) Fewer customers, more geographically concentrated, orders are larger
3) Demand is more inelastic - demand is not as affected by price in short run
4) In B2C: consumers buy goods to satisfy own individual needs and are heavily influenced by price, personal taste, brand reputation, and personal recommendations of friends/family
LO2: define derived demand
linkage between consumers demand for company’s output and its purchase of necessary inputs to manufacture particular output
LO2: 4 product characteristics of B2B compared to B2C
1) Products are more technical in nature and purchased based on specifications by the buyer
2) Mainly raw and unfinished products purchased
3) Heavy emphasis placed on delivery time, technical assistance, after sale service, and financing assistance
4) In B2C: consumers buy finished goods for own personal consumption
LO2: 8 buying characteristics of B2B compared to B2C
1) More complex
2) Buying may involve competitive bidding, negotiated pricing, and complex financial arrangements
3) Buying involves qualified, professional buyers who follow more formal buying process
4) Buying criteria and objectives are specified, as are procedures for selecting vendors/products by organization
5) Multiple people with varied interest participate in buying decisions
6) Reciprocal arrangements exist - where 2 firms agree to buy each other’s products/services
7) Buyers and sellers usually work closely to build close long term relationships
8) Online buying over internet is common
LO2: 4 marketing mix characteristics of B2B compared to B2C
1) Direct selling is primary form of selling and physical distribution often essential
2) Advertising is technical in nature and promotions emphasize personal selling
3) Price is often negotiated, frequently affected by trade and quantity discounts, price usually includes service or maintenance component
4) In B2C: a salesperson is not really involved in fast moving consumer goods like grocery stores. In B2B, a salesperson is an integral part of a transaction.
LO3: define NAICS - define, who is it done by, spell it out
classification scheme that categorizes firms into a hierarchical set of 6 digit codes. Done by Statistics canada. (north american industry classification system)
LO3: benefit of NAICS code
Can represent product’s potential because it has info on number, size, and geographical dispersion of firms within each type
LO3: 2 points - ways B2B firms classify and segment markets
1) B2B firms can segment and target markets based on firms in the NAICS code that corresponds to the product they are selling.
2) Markets can be segmented also based on geography, account size, etc.
LO4: what buying process step occurs in both B2B and B2C
Both B2B and B2C start with need recognition
LO4: 3 ways buying process steps differ in B2B and B2C
1) Typically B2B buyers specify needs in writing and ask suppliers to submit formal proposals, whereas B2C buying is made by individuals and sometimes unplanned
2) Formal performance evaluations of vendor and product sold typically do not occur in B2C, but they do experience postpurchase dissonance and evaluate purchase decision
3) info search and alternative evaluation stages are more formal and structured in B2B
LO4: recall 5 steps in B2C consumer buying process
1) need recognition
2) info search
3) alternative evaluation
4) purchase decision
5) post decision behaviour
