4MD3 Business to Business Marketing

1. 4MD3 Business to Business Marketing Steve Howse January 12, 2009

2. Business Marketing 4MD3 • intro to Instructor • Course overview / structure • The marks • The project • www.business.mcmaster.ca/courses/com4MD3

3. Steve Howse, Adjunct Professor •  B of Commerce 1988 • 16 years corporate • 4th year consulting • Office hours Monday 5:30 to 7:00pm • Derek Weidl (derek.weidl@gmail.com) • Who are you?

4. Course Overview • Lecture, case study, video, guest speakers • 1 Hand-in case • Large team project • Mid term exam • Participation • This course will utilize your previous learning's

5. Components and Weights • Individual Work • Class Participation 15% • Term Exam 25% • Small Group Work • Hand-in case 15% • Large Group Work • Written report 35% • Project Presentation 10%

6. The Project • Work with a real company  • Examine current marketing mix • Internal / External SWOT • Make a recommendation • You are consultants

7. Pick a team • Choose a company • Prepare a project proposal • Team, company, reason, products, focus, Gant Chart   • Preliminary / Secondary research • Write your report (page 8.9) • Executive Summary • Introduction • Current Marketing Strategy & Mix (cont)

8. Internal analysis • Macroenviromental Analysis • Competitive Analysis • Customer Analysis • Recommended Marketing objectives • Recommended Marketing strategy and mix • Implementation plan and budget • References • Appendices

9. Mark Breakdown (pg 10) • 30% research • 30% analysis • 30% objectives, recommendations, implementation plan • 10% format • Self and peer evaluation

10. Presentation – to the class and client (page 11) • Introduction • Marketing Audit • Analysis of current situation • Your marketing objectives / recommendation • Q&A

11. Preview – Nature Of Business Marketing • BM transaction definition • other names for BM • who buys from business marketers? • what do they buy? • why do they buy? • the BM process  • differences between business marketers and consumer marketers  

12. Business Marketing Transactions • Any transaction involving the purchase by an organization …of a product or service ultimately used by an organization (i.e. business to business) • All transactions in an organizational-product channel are included • Certain early transactions in a consumer-product channel

13. Two terms NOTused in Business Marketing: • Consumers • Retailers

14. Other Names For Business Marketing • Business-to-Business Marketing (B2B) • Industrial Marketing • Organizational Marketing

15. WHAT KINDS OF ORGANIZATIONS BUY? • commercial enterprises • users   • OEMs • industrial distributors • government agencies • institutions

16. WHAT THE ORGANIZATIONS BUY • thebusiness marketer’s total “offering” • the product itself • product-support services • delivery arrangements • adaptation of products, processes, plant, and people to customer needs • an infinite number of offerings is possible

17. PRODUCT CATEGORIES BOUGHT BY THE ORGANIZATIONS • entering goods • raw materials   • manufactured materials • component parts • foundation goods • accessory equipment • capital equipment • facilitating products  • MRO goods • services

18. Why Organizations Buy Our Products • To satisfy their organizational & personal needs • Organizational needs are mainly rational and related to producing their own product • increase their product’s quality • reduce their product’s cost • differentiate their product • Personal needs are mainly irrational or subjective

19. Business Marketing Process • Segmentation • Targeting • Positioning • Programming ( the 4Ps) 

20. BM/CM Differences - Marketers • Must interact more with other departments (multiple buying influences or stakeholders) • Must have enough technical capability to understand: • Their own products • Non-marketing functions in their own organization • Customer processes (cont’d) 

21. BM/CM Differences – Marketers (Continued) • Less able to switch to a different industry • Less tempted to communicate unethically  • Require more legal knowledge • Require better negotiating skills • Face greater international competition

22. BM/CM Differences - General • We’ll cover BM/CM differences in many areas … • Why? • So you can identify the differences between typical BM and CM situations Remember - There will always be exceptions!

23. Lecture 2

24. INTRO TO BUSINESS BUYER BEHAVIOUR • we’ll be looking at BBB for three full weeks! • BM/CM differences • relationships • theories • why is knowledge of BBB so important? 24

25. INTRO TO BBB (CONT’D) • who are the buyers in BBB? • organizations • individuals in them, acting alone or in groups • purchase motivation thus very complex

26. PREVIEW OF BM/CM DIFFERENCES • demand • buyer purchase criteria • buyer behaviour • buyers

27. BM/CM DIFFERENCES– DEMAND • all business demand ultimately derived from consumer demand • joint demand more common • elasticity lower at industry level • but elasticity same at company level owing equal ease of switching suppliers (cont’d)

28. FACTOR AIDING SWITCHING - LOWER PRODUCT DIFFERENTIATION • less processing • higher design input by customers • more industry design codes • products less “styled” • less packaging

29. FACTORS OPPOSING SWITCHING • strong customer relationship with supplier • high cost to customer of switching

30. DEMAND (CONT’D) • business demand more cyclic • so prices more cyclic • as is the buyer-seller power balance (Gov’t year end)

31. BM/CM DIFFERENCES - BUYER PURCHASE CRITERIA • more stress on product function • thus different response to failure • also more stress on product quality • and on custom design of the product • and on product delivery • less stress on price (cont’d) 31

32. BUYER PURCHASE CRITERIA (CONT’D) • written contracts more often required • heavier penalties for “non-performance” • more concern about tax implications • more stress on reciprocity

33. BM/CM DIFFERENCESBUYER BEHAVIOUR • more people involved • not spending own money • behaviour more rational • behaviour more formal • purchase process longer • want closer relationships (cont’d)

34. BUYER BEHAVIOUR (CONT’D) • more loyalty to the "in" suppliers • repeat purchases more common • "multiple sourcing" more common • "make" option more feasible • purchases larger but less frequent • in-store buying rare

35. BM/CM DIFFERENCES - BUYERS • far better informed and trained • use sophisticated purchasing software • often experts in your product • often teach suppliers • fewer in number • but each bigger on average • more concentrated geographically

36. BUSINESS BUYER BEHAVIOURCEs vs. NPIs/GOVERNMENTS • different organizational objective • implication for business marketers • implications for buying behaviour

37. DIFFERENT BUYING OBJECTIVES FOR NPIs/GOVERNMENTS • satisfy political goals • increase employment • implement policy • develop personnel • maintain budget allocation • please other governments

38. FOR NPIs/GOVERNMENTS(Con’t) • domestic suppliers favoured • more caution in general • more price-sensitivity • more bureaucracy • responsiveness to political donations

39. Preparing a Case • Read it once • Read the questions • Read again with a hi-liter • Write out the question • Prepare bullet talking points • Check them off as you go • Make memory jogger notes so you can listen effectively • Read your notes if you have too • Jump start, add and relate, contradict or direction change, summarize with a conclusion