Business Marketing
1 Chapter 1: What is Business Marketing?
Definition Business marketing: is the practice of individuals, or organizations, including commercial businesses,
governments 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
Example Global top B2B Brands: Example Belgian Top B2B Brands:
1.1 Business Vs Consumer Marketing
Areas of Difference B2B Market Consumer Market
Market Characteristics Geographically Concentrated Geographically Disbursed
Relatively Fewer Buyer Mass Market
Product Characteristic Technical Complex Standardize
Customized
Service Characteristic Service , timely Availability Somewhat Important
extremely Important
Buying Behavior Involvement of Various Involvement of family members
functional area from both the
ends
Purchase Decisions are Purchase decisions are mostly based on Physiological
performance based and /social/psychological needs
rational
Technical Expertise Relatively less technical expertise is required
Stable Interpersonal Non- Personal relationship
relationship
Market characteristics
- Geographically concentrated: B2B’s are centralized at the edge of cities, you find them in the centre or
concentrated around the airport or around a harbour. They are concentrated because they are
collaborating.
1
, - Relatively fewer buyer – Mass market => B2B verkopen niet aan iedereen, enkel aan bepaalde andere
bedrijven die hun product nodig heeft. B2C verkopen aan iedereen, het is op de consumer market en
is dus beschikbaar in alle winkels en voor iedereen.
Product characteristics
- Customized to that one and only customer bv. bedrijf dat dashboards maakt voor Volvo, enkel en
alleen voor Volvo.
- Standardize: je koopt ergens een product en aan de andere kant van de wereld koop je hetzelfde
product en is het ook helemaal hetzelfde bv. Apple Iphone
Service characteristic
- Very important for B2B
- Services that is linked to the product
- Newspapers are printed at night and machines run till 5am. If the machine isn’t working constantly
then the newspaper isn’t there the day after at time. That’s a big problem because ze moeten hun
kranten kunnen weggeven op tijd de dag erna. Dus de machines moeten blijven werken
Areas of Difference Industrial Market Consumer Market
Channel Characteristic More Direct Indirect
Fewer Intermediaries Multiple layer of Intermediaries
Promotional Characteristic Emphasis on Personal Selling Emphasis on Mass Media
(Advertising)
Price Characteristic Competitive Bidding and Negotiated List Price or MRP
Prices
List Price for Standard Products
Channel
- Direct way of selling, it’s highly personalized, it’s face to face. Personal sales are important.
1.2 B2B Distribution Channel Characteristics
Onderste rij: consumer world
2e, 3e, 4e rij: business world
1.3 Organisations or consumers?
Most of what? B2C or B2B?
Which group is geographically most concentrated?
Who’s buying on an international level?
Who’s has a steady relationship with its supplier?
Who can switch most easily towards another supplier?
=> CHARACTERISTICS B2B
2
,1.4 Characteristics of B2B Demand
Derived Demand = the demand for a good or service that results from the demand for another good or service
- Example: Postnl, Housing market when construction of new homes rises, so too does the demand
for materials used in properties as well as demand for labour.
- Not a direct demand of a consumer out of the market but an indirect derived demand = not directly
linked to the end consumer. It’s all the business that happens before.
1.5 The Chain of Derived Demand
- Starts by the demand: the t shirt : high added value because it makes you look beautiful
- Starts by raw material: has no added value, we can’t do anything with raw material bv.cotton
- Low added value & low level of design: it’s not produced yet
- High price sensitivity: prices on a daily basis can be different
- Low brand loyalty: almost no branding here in the beginning of
- Only thing that is B2B here: between distribution and shirt, the one who buys the shirt.
- Shirt = only finished product. Price is always the same. Different from basis materials as Cotton.
1.6 Characteristics of B2B Demand
1.6.1 Price Elasticity
A change in price causes a bigger % change in demand
A good is price elastic when an increase in prices causes a bigger % fall in demand.
Example: if price falls 20% and demand increases 80%, the PED= -4.0 (PED= price Elasticity of Demand)
E-bikes battery: the price of e-bikes increases with 20%, but the demand for e-bikes is nevertheless increasing
with 50%. This is special
Clear link between the price (up/down) & the demand of the product
1.6.2 Joint Demand
Demand for product or services is interdependent on each other
Ex: Car& fuel, printer & ink, Coffee powder Sugar & milk in making coffee
- When you are selling/producing something at the same time, you need another product that is linked
to that product. The one product is useless without the other product.
- Bv.: In Belgium there are not enough charging points, so we can’t sell more/enough battery cars on
large scale
3
, 1.6.3 Price Inelasticity
A change in price causes a smaller % change in demand because there are few alternatives
Ex: If price of petrol falls 30%, but demand for petrol only increases 10%
- There’s no clear link between the price of a product and the consumption of a product. The price of
gas at the gas station doesn’t have any influence on the number of the distance we drive.
1.7 Who are the B2B buyers?
3 main groups
- Commercial business (most important); they are selling/buying to each other
- Government: big spender, buying products and services directly from the producer, sometimes local
but also on a national and supra national level.
- Institutes: schools, hospitals
Commercial Business : Industry & Services
Government: Local
Advantage: there is never a failure of the government, so you will get your money anyway
Disadvantage: you’ll have to wait a long time on your money
Government: national & supra national : Belgian Parliament & Rafale/Joint Strike Fighter/Eurofighter
Institutes: School & Hospitals
Important budges to spend on other companies bv. PC
Spending a lot of money in innovative high quality new
materials all the time – a lot of surgery is done by robots
4
1 Chapter 1: What is Business Marketing?
Definition Business marketing: is the practice of individuals, or organizations, including commercial businesses,
governments 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
Example Global top B2B Brands: Example Belgian Top B2B Brands:
1.1 Business Vs Consumer Marketing
Areas of Difference B2B Market Consumer Market
Market Characteristics Geographically Concentrated Geographically Disbursed
Relatively Fewer Buyer Mass Market
Product Characteristic Technical Complex Standardize
Customized
Service Characteristic Service , timely Availability Somewhat Important
extremely Important
Buying Behavior Involvement of Various Involvement of family members
functional area from both the
ends
Purchase Decisions are Purchase decisions are mostly based on Physiological
performance based and /social/psychological needs
rational
Technical Expertise Relatively less technical expertise is required
Stable Interpersonal Non- Personal relationship
relationship
Market characteristics
- Geographically concentrated: B2B’s are centralized at the edge of cities, you find them in the centre or
concentrated around the airport or around a harbour. They are concentrated because they are
collaborating.
1
, - Relatively fewer buyer – Mass market => B2B verkopen niet aan iedereen, enkel aan bepaalde andere
bedrijven die hun product nodig heeft. B2C verkopen aan iedereen, het is op de consumer market en
is dus beschikbaar in alle winkels en voor iedereen.
Product characteristics
- Customized to that one and only customer bv. bedrijf dat dashboards maakt voor Volvo, enkel en
alleen voor Volvo.
- Standardize: je koopt ergens een product en aan de andere kant van de wereld koop je hetzelfde
product en is het ook helemaal hetzelfde bv. Apple Iphone
Service characteristic
- Very important for B2B
- Services that is linked to the product
- Newspapers are printed at night and machines run till 5am. If the machine isn’t working constantly
then the newspaper isn’t there the day after at time. That’s a big problem because ze moeten hun
kranten kunnen weggeven op tijd de dag erna. Dus de machines moeten blijven werken
Areas of Difference Industrial Market Consumer Market
Channel Characteristic More Direct Indirect
Fewer Intermediaries Multiple layer of Intermediaries
Promotional Characteristic Emphasis on Personal Selling Emphasis on Mass Media
(Advertising)
Price Characteristic Competitive Bidding and Negotiated List Price or MRP
Prices
List Price for Standard Products
Channel
- Direct way of selling, it’s highly personalized, it’s face to face. Personal sales are important.
1.2 B2B Distribution Channel Characteristics
Onderste rij: consumer world
2e, 3e, 4e rij: business world
1.3 Organisations or consumers?
Most of what? B2C or B2B?
Which group is geographically most concentrated?
Who’s buying on an international level?
Who’s has a steady relationship with its supplier?
Who can switch most easily towards another supplier?
=> CHARACTERISTICS B2B
2
,1.4 Characteristics of B2B Demand
Derived Demand = the demand for a good or service that results from the demand for another good or service
- Example: Postnl, Housing market when construction of new homes rises, so too does the demand
for materials used in properties as well as demand for labour.
- Not a direct demand of a consumer out of the market but an indirect derived demand = not directly
linked to the end consumer. It’s all the business that happens before.
1.5 The Chain of Derived Demand
- Starts by the demand: the t shirt : high added value because it makes you look beautiful
- Starts by raw material: has no added value, we can’t do anything with raw material bv.cotton
- Low added value & low level of design: it’s not produced yet
- High price sensitivity: prices on a daily basis can be different
- Low brand loyalty: almost no branding here in the beginning of
- Only thing that is B2B here: between distribution and shirt, the one who buys the shirt.
- Shirt = only finished product. Price is always the same. Different from basis materials as Cotton.
1.6 Characteristics of B2B Demand
1.6.1 Price Elasticity
A change in price causes a bigger % change in demand
A good is price elastic when an increase in prices causes a bigger % fall in demand.
Example: if price falls 20% and demand increases 80%, the PED= -4.0 (PED= price Elasticity of Demand)
E-bikes battery: the price of e-bikes increases with 20%, but the demand for e-bikes is nevertheless increasing
with 50%. This is special
Clear link between the price (up/down) & the demand of the product
1.6.2 Joint Demand
Demand for product or services is interdependent on each other
Ex: Car& fuel, printer & ink, Coffee powder Sugar & milk in making coffee
- When you are selling/producing something at the same time, you need another product that is linked
to that product. The one product is useless without the other product.
- Bv.: In Belgium there are not enough charging points, so we can’t sell more/enough battery cars on
large scale
3
, 1.6.3 Price Inelasticity
A change in price causes a smaller % change in demand because there are few alternatives
Ex: If price of petrol falls 30%, but demand for petrol only increases 10%
- There’s no clear link between the price of a product and the consumption of a product. The price of
gas at the gas station doesn’t have any influence on the number of the distance we drive.
1.7 Who are the B2B buyers?
3 main groups
- Commercial business (most important); they are selling/buying to each other
- Government: big spender, buying products and services directly from the producer, sometimes local
but also on a national and supra national level.
- Institutes: schools, hospitals
Commercial Business : Industry & Services
Government: Local
Advantage: there is never a failure of the government, so you will get your money anyway
Disadvantage: you’ll have to wait a long time on your money
Government: national & supra national : Belgian Parliament & Rafale/Joint Strike Fighter/Eurofighter
Institutes: School & Hospitals
Important budges to spend on other companies bv. PC
Spending a lot of money in innovative high quality new
materials all the time – a lot of surgery is done by robots
4
