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Business to Business Marketing Notes
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B2B Notes for BUS4026W
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BUS4026WBusiness to Business Marketing
Kathryn Wahl
Lecture 1
Chapter 1
• B2B markets (industrial markets) refer to the marketplace where businesses
purchase products and services from other businesses.
• B2B organisations purchase products for one of three purposes, namely
resale, direct use in producing other products or use in general daily
operations.
• Example: mass mart group eg Makro and Game
• Buy products to resell things
• Furniture: have to purchase timber, nails and paint
• Key distinguishing factor in B2B marketing - the customer is an organisation
or business entity rather than an individual consumer.
• B2B marketing involves B2B markets - a business transaction between a
professional seller and a professional buyer.
• Transactions between organisations compared to consumers
Types of B2B customers or buyers
– Resellers
• An individual or business that purchases products or services
produced by another business with the intention of selling these
products or services to another party for profit = covers both
fixed and variable costs
• Suitable return for shareholders
1
, • Resellers are intermediaries
– Retailers
– Wholesalers
– Producers (commercial enterprises)
• Acquire goods from other businesses
• Utilise and transform goods into sellable products to make a
profit
• Examples: Buyers of raw materials and semi-finished and
finished items
• Eg Coke: sugar, water, tins, glass, packaging in order to
complete production of Coke
– The Government
• Biggest customers in B2B marketing
• Government agencies purchase a wide range of goods and
services.
• E.g.: Paper and printers, weaponry, buildings, highway
construction services, waste disposal services and security
services.
• Government agencies purchase products and services from the
private sector.
• Large and diverse
• Different types of products that are purchased
– Institutions
• Businesses with charitable, educational, community or other
non-business goals constitute institutional markets.
• Schools, universities, hospitals, churches, nursing homes and
non-profit organisations
Individual categories are different to each other but each have own unique
characteristics
• The difference between B2B and B2C marketing
– Key differentiating characteristic - the customer is an organisation
instead of an individual consumer.
– Certain communalities between B2B and B2C
• Main goal to satisfy the customer and build lasting
relationships in order to gain a competitive advantage
• Strategic benefits attached to a value proposition
• Strategic long term advantage
2
,3
, • Key differences
– Sales and purchase volumes
– Number of buyers
– Size of individual buyers
– Location of buyer
– The buyer-seller relationship
– The nature of distribution channels
– The nature of the buying interaction & influences
– The type of negotiations
– The use of reciprocity
– The use of leasing
– Primary promotion methods
• Differences in market structure
– Derived demand
• demand for a business product is linked to the demand of, or the
need for, consumer goods or services
• correlation between the demand for an industrial product and
consumer products
• demand for industrial products that is based on the ultimate
demand for consumer products
– Volatile/fluctuating demand
• Derived demand creates volatility in business market demand
• variations (or fluctuations) in the demand for a product or service
over time
• Factors that lead to fluctuating demand - seasonality, economic
factors and pricing
• Eg high price in oil – alternative ways of transport
– Joint demand
• two or more items are used in combination to manufacture a
product
• demand for one business product is related to the demand for
another
– Inelastic demand
• demand that does not change
• if the price of the product were to increase or decrease, the
demand for the product will not change significantly
• primary demand for B2B products is more price-inelastic than
that of consumer products
– Market concentration
• or the degree of concentration of sellers in the market
• the number of businesses that sell a particular product or related
products in a specific market
4
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