Chapter 1: What is Business Marketing?
Business marketing
→ The practice of individuals or organizations, including commercial businesses,
government and institutions, facilitating the sale of their products or services to other
companies or organizations that in turn resell them, use them as components in products or
services they offer, or use them to support their operations.
Business vs consumer marketing
Areas of difference B2B Market Consumer Market
Geographically Geographically disbursed
concentrated, at the edge of
cities (centralised)
Market characteristics Relatively fewer buyer Mass market (as many
buyers as possible →
successful), product is
everywhere
Technical complex Standardize
Product characteristic
Customized
Service, timely availability Somewhat important, less
Service characteristic
extremely important relevant
Involvement of various Involvement of family
functional area from both members
the ends
Purchase Decisions are Purchase decisions are
performance based and mostly based on
Buying behavior rational Physiological
/social/psychological needs
Technical Expertise Relatively less technical
expertise is required
Stable Interpersonal Non- Personal relationship
relationship
More Direct Indirect
Channel Characteristic Fewer Intermediaries Multiple layer of
Intermediaries
Promotional Characteristic Emphasis on Personal Emphasis on Mass Media
Selling (Advertising)
Competitive Bidding and List Price or MRP
Negotiated Prices
Price Characteristic
List Price for Standard
Products
,Characteristics of B2B demand
The chain of derived demand
Derived demand
→ The demand for a good or service that results from the demand for another good or
service
→ Example: huge demand in consumer market for flights with Ryanair leads to demand for
new airplanes with Ryanair → Those airplane makers need steel, screens, seats… and all
these parts are part of different companies
,Price elasticity
→ A change in price cause a bigger percent change in demand
→ A good is price elastic when an increase in prices causes a bigger percent fall in demand
→ If price falls 20% and demand increases 80% the PED = -4.0
Example: E-bikes battery
→ The price of e-bikes increases with 20% but the demand for e-bikes is increasing with
50%.
PED = Price Elasticity of Demand
https://www.economicshelp.org/blog/195/economics/calculating-price-elasticity-of-
demand/
Joint demand
→ Demand for product or services is interdependent on each other
Example
→ Coffee powder, sugar and milk in making coffee
Price inelasticity
→ A change in price causes a smaller percent change in demand because there are few
alternatives
Example
→ If price of petrol falls 30%, but demand for petrol only increases 10%
→ You won’t drive less, it will just cost you more
Who are the B2B buyers?
- Commercial businesses (industry & services)
- Government (local & national)
- Institutes (schools, hospitals…)
Commercial businesses
Example industry
→ Printing company, they buy paper from another company
Example services
→ Their building need to be build by another company
, Governmental
Local
Examples: buying materials to maintain the grass in the city…
National and supra national
→ Huge investments
Examples:
→ Belgian parliament buy a lot of products
→ Joint strike fighters (39 billion euros), they just sell to governments, not individuals
Institutes
Examples:
→ Equipment for schools: computers, beamers…
→ Special machines for hospitals
Example of company Dell:
Business marketing
→ The practice of individuals or organizations, including commercial businesses,
government and institutions, facilitating the sale of their products or services to other
companies or organizations that in turn resell them, use them as components in products or
services they offer, or use them to support their operations.
Business vs consumer marketing
Areas of difference B2B Market Consumer Market
Geographically Geographically disbursed
concentrated, at the edge of
cities (centralised)
Market characteristics Relatively fewer buyer Mass market (as many
buyers as possible →
successful), product is
everywhere
Technical complex Standardize
Product characteristic
Customized
Service, timely availability Somewhat important, less
Service characteristic
extremely important relevant
Involvement of various Involvement of family
functional area from both members
the ends
Purchase Decisions are Purchase decisions are
performance based and mostly based on
Buying behavior rational Physiological
/social/psychological needs
Technical Expertise Relatively less technical
expertise is required
Stable Interpersonal Non- Personal relationship
relationship
More Direct Indirect
Channel Characteristic Fewer Intermediaries Multiple layer of
Intermediaries
Promotional Characteristic Emphasis on Personal Emphasis on Mass Media
Selling (Advertising)
Competitive Bidding and List Price or MRP
Negotiated Prices
Price Characteristic
List Price for Standard
Products
,Characteristics of B2B demand
The chain of derived demand
Derived demand
→ The demand for a good or service that results from the demand for another good or
service
→ Example: huge demand in consumer market for flights with Ryanair leads to demand for
new airplanes with Ryanair → Those airplane makers need steel, screens, seats… and all
these parts are part of different companies
,Price elasticity
→ A change in price cause a bigger percent change in demand
→ A good is price elastic when an increase in prices causes a bigger percent fall in demand
→ If price falls 20% and demand increases 80% the PED = -4.0
Example: E-bikes battery
→ The price of e-bikes increases with 20% but the demand for e-bikes is increasing with
50%.
PED = Price Elasticity of Demand
https://www.economicshelp.org/blog/195/economics/calculating-price-elasticity-of-
demand/
Joint demand
→ Demand for product or services is interdependent on each other
Example
→ Coffee powder, sugar and milk in making coffee
Price inelasticity
→ A change in price causes a smaller percent change in demand because there are few
alternatives
Example
→ If price of petrol falls 30%, but demand for petrol only increases 10%
→ You won’t drive less, it will just cost you more
Who are the B2B buyers?
- Commercial businesses (industry & services)
- Government (local & national)
- Institutes (schools, hospitals…)
Commercial businesses
Example industry
→ Printing company, they buy paper from another company
Example services
→ Their building need to be build by another company
, Governmental
Local
Examples: buying materials to maintain the grass in the city…
National and supra national
→ Huge investments
Examples:
→ Belgian parliament buy a lot of products
→ Joint strike fighters (39 billion euros), they just sell to governments, not individuals
Institutes
Examples:
→ Equipment for schools: computers, beamers…
→ Special machines for hospitals
Example of company Dell:
