Chapter 4: Business-to-business Marketing
4.1 What is Business-to-business marketing?
= Marketing to (people in) the business market
→ Companies, governments or not-for-profit organizations
→ Refers to the value exchange between organizations, anywhere in the value
chain, suchas:
Manufacturers, Wholesalers, Retailers/resellers, Service providers, Non-governmental
organizations (NGO), Government
eg. La Lorraine, Deloitte, Johnson&Johnson
Business markets:
- More money and items involved than consumer markets
- enormous market
4.2 The Characteristics of Business Markets
1. Nature of demand
- Derived demand: Demand is derived from the demand to consumer goods
- Volatility of demand ( Volatility = Unpredictable changes in demand)
→ Demand is impacted by major events like natural disasters,
pandemics
- Elasticity of demand → inelastic: If suppliers raise their prices,
manufacturers will first try to absorb this in their own cost structure
Elasticity: Predictable reactions to price
2. The buying processes
- More formal
- High financial value
- Higher product complexity
=> Decision-Making Unit (DMU): The group of people involved in
organizational purchasing processes
3. International dimensions
- Easier to conduct internationally
- Needs of businesses around the world are more similar to one
another than the needs of consumers
4. Relationships
→ more likely in B2B
- Of major significance
- Relatively few players, larger value
- Interdependence, collaboration, and in some cases partnership in the
development, supply, and support of products and services is a core element
of B2B marketing
- Embedded (insluiten) ties = Strong inter-organizational ties
- Reciprocal (wederzijds) relationships
, Key components to build professional relations:
- Technical support
E.g., joint R&D, after-sales service, training
- Expertise
E.g., consultancy, dual selling
- Financial support
E.g., financing options, cooperative promotions, reciprocal buying
- Service levels
E.g., reliability, speedy or JIT delivery, automated reordering systems
- Risk reduction
E.g., demonstrations, guarantees, warranties, preventive maintenance, proactivity
example: Strength of relationships
- P&G: 17% of sales to Walmart
- Sales worth $10 billion annually
- 400+ people dedicated to relations with Walmart
- P&G electronically linked into Walmart’s systems so its systems knew when every
individual product left Walmart stores
- …
4.3 Types of B2B Customers, Goods, and Services
Types of Organizational Customers:
- Commercial: Distributors, original equipment manufacturers (OEMs), wholesalers,
retailers…
- Government: Health, policing, education, transport, environmental protection,
national defense and security…
- Institutions: Not-for-profit organizations (e.g., churches and charities), community-
based organizations (e.g., housing associations), and government-related
organizations (e.g., hospitals, schools, museums, libraries, and universities)
Types of business goods and services
decision for company: Make or buy the product?
answer: Outsourcing: Hiring a party outside a company to perform services or create goods
that were traditionally performed in-house by the company's own employees and staff
→ companies have adapted their purchasing behaviours
4.1 What is Business-to-business marketing?
= Marketing to (people in) the business market
→ Companies, governments or not-for-profit organizations
→ Refers to the value exchange between organizations, anywhere in the value
chain, suchas:
Manufacturers, Wholesalers, Retailers/resellers, Service providers, Non-governmental
organizations (NGO), Government
eg. La Lorraine, Deloitte, Johnson&Johnson
Business markets:
- More money and items involved than consumer markets
- enormous market
4.2 The Characteristics of Business Markets
1. Nature of demand
- Derived demand: Demand is derived from the demand to consumer goods
- Volatility of demand ( Volatility = Unpredictable changes in demand)
→ Demand is impacted by major events like natural disasters,
pandemics
- Elasticity of demand → inelastic: If suppliers raise their prices,
manufacturers will first try to absorb this in their own cost structure
Elasticity: Predictable reactions to price
2. The buying processes
- More formal
- High financial value
- Higher product complexity
=> Decision-Making Unit (DMU): The group of people involved in
organizational purchasing processes
3. International dimensions
- Easier to conduct internationally
- Needs of businesses around the world are more similar to one
another than the needs of consumers
4. Relationships
→ more likely in B2B
- Of major significance
- Relatively few players, larger value
- Interdependence, collaboration, and in some cases partnership in the
development, supply, and support of products and services is a core element
of B2B marketing
- Embedded (insluiten) ties = Strong inter-organizational ties
- Reciprocal (wederzijds) relationships
, Key components to build professional relations:
- Technical support
E.g., joint R&D, after-sales service, training
- Expertise
E.g., consultancy, dual selling
- Financial support
E.g., financing options, cooperative promotions, reciprocal buying
- Service levels
E.g., reliability, speedy or JIT delivery, automated reordering systems
- Risk reduction
E.g., demonstrations, guarantees, warranties, preventive maintenance, proactivity
example: Strength of relationships
- P&G: 17% of sales to Walmart
- Sales worth $10 billion annually
- 400+ people dedicated to relations with Walmart
- P&G electronically linked into Walmart’s systems so its systems knew when every
individual product left Walmart stores
- …
4.3 Types of B2B Customers, Goods, and Services
Types of Organizational Customers:
- Commercial: Distributors, original equipment manufacturers (OEMs), wholesalers,
retailers…
- Government: Health, policing, education, transport, environmental protection,
national defense and security…
- Institutions: Not-for-profit organizations (e.g., churches and charities), community-
based organizations (e.g., housing associations), and government-related
organizations (e.g., hospitals, schools, museums, libraries, and universities)
Types of business goods and services
decision for company: Make or buy the product?
answer: Outsourcing: Hiring a party outside a company to perform services or create goods
that were traditionally performed in-house by the company's own employees and staff
→ companies have adapted their purchasing behaviours
