Marketing Chapter 6 Lecture

Front 1

Business to business buying behavior vs. business consumer buying behavior

Back 1

- Consumer buying is just a couple or one person buying something
- Business to business buying behavior can have 15 or more businesses buying things

Front 2

What are the business marketing segments?

Back 2

- Producers
- Resellers/Intermediaries
- Governments
- Institutions

Front 3

Business marketing segments: Producers

Back 3

- Producers: Companies that take component parts and raw materials and put them together to sell to another seller. EX: GM and Bose
o OEMs

Front 4

Business marketing segments: Resellers/Intermediaries

Back 4

Take a finished good and move it along the channels.
EX: Cengage/McGraw Hill (textbook manufacturer/producer) sells a book to an intermediary who sells it to a retailer.
Value provided by resellers: they create assortments of products for us available in one place (we can buy everything we need here). They also provide a service function (can take back a faulty product).
o Wholesalers
o Retailers
 Take a finished good and move it along different channels

Front 5

Business marketing segments: Governments

Back 5

Government buys very differently. Looks for different value points and serve customers very differently. Whole new set of rules and restrictions if you are selling to the government.
o Federal
o State
o Municipal
o County

Front 6

Business marketing segments: Institutions

Back 6

o Unions
o Civic clubs
o Other
o Churches
o Foundations
o Nonprofits

Front 7

NAICS

Back 7

The more numbers, the more homogeneous

Front 8

What did the Budweiser commercial represent?

Back 8

- Budweiser commercial: lizards are sitting like frogs and want to be in the commercial. One of the lizards says to the other is “You’re forgetting the major point of marketing. Frogs sell beer”.
o Dave calls Budweiser to show the ad in class. They ask for his birthday because he has to be 21. The lady said he needs to call the ad agency in order to get the ad to show in class. He calls and they won’t let him have it because they have to pay actors royalties when the ad is shown. He says it doesn’t make sense because he wants to show their ad to an audience for free. She says that it’s because it is shown on cable so there are different rules.

Front 9

List the types of demand for BUSINESS products

Back 9

- Derived
- Inelastic
- Joint
- Fluctuating

Front 10

Business demand: Derived

Back 10

o Demand for business products results from demand for consumer products.
o In business to business items the sale is derived from the component part market.
o Ex: What happens if people stop buying North Face jackets?
 It hurts not only North Face but also Morlan Mills because Morlan Mills makes the jackets.
 The people that make the zippers are also hurt.

Front 11

Business demand: Inelastic

Back 11

o A change in price will not significantly affect the demand for product.

Front 12

Business demand: Joint*

Back 12

o Multiple items are used together in final product. Demand for one item affects all.
o Example: It takes fleece and zippers to make North Face jackets.
 If you aren’t selling zippers, you aren’t selling fleece.

Front 13

Business demand: Fluctuating

Back 13

o Demand for business products is more volatile than for consumer products.

Front 14

What does it take to make a bottle of beer?

Back 14

- Joint demand: the bottle and cap
o Cap manufacturers need to realize that they won’t sell caps unless other manufacturers sell bottles.
o If you aren’t selling bottles, you aren’t selling caps.

- Derived demand: the bottle, cap, and beer company
o Manufacturers that make the bottle and caps have a business to business sale. They need to realize that they are directly affected with the beer business.
o The demand for the bottle and cap is derived from the beer company.

Front 15

List the organizational buying criteria (7 things)

Back 15

- Price
- Quality specifications
- Delivery schedules
- Past performance
- Production facilities/capacity
- Warranty/claim policies
- Technical capability

Front 16

Organizational buying criteria: Price

Back 16

- Very important
- Quantities companies buy
- Like a V

Front 17

Organizational buying criteria: Quality specifications

Back 17

o The components we put in our products reflect our products.
o Honda example: took a Honda into the dealership because it wasn’t working. The customer blames Honda for a faulty part that wasn’t manufactured by Honda.
o If we’re buying goods/services, quality specifications are very important because the consumer doesn’t know that different companies make different parts of a product
 Ex: consumers don’t know that North Face doesn’t make the zippers that go into their jackets. So consumers blame North Face. North Face must have quality specifications of their products because it affects their image.

Front 18

Organizational buying criteria: Delivery schedules

Back 18

o As consumers it isn’t catastrophic, but in business it is.
o Example: Dell depends on 17 different shipments from different countries for their production of computers. If there is a problem or if we can’t depend on these manufacturers, it will ruin our production and mess up our customer service.
o Just-in-time inventory systems are risky for this reason.
o Buying online can sometimes be late.
o Catastrophic effects can occur from late delivery.
o Make sure you buy products that you know will be delivered on time.
o Also important at the reseller level.
 Patagonia had a problem with dealing to their resellers. In result, retailers went out and bought other products instead of Patagonia.

Front 19

Organizational buying criteria: Past performance

Back 19

o Business to business is a lot more important than business to consumer.
 We want to develop win-win relationships in business. Building relationships is important because if you have a friend in the business and need something, they will help you because you will have built a relationship and not just a transaction.

Front 20

Organizational buying criteria: Production facilities/capacity

Back 20

o Production facilities: Do they have state of the art manufacturing? Can they product products efficiently, consistently? What is their level of up-time? How efficient are they?
o Capacity: If we have fluctuating demand, does the company have the ability to account for that? AKA if our demand goes up, can they expand to meet our demand in a hurry?
 Example: Wal-Mart didn’t have enough American flags after 9/11 when everyone wanted to buy them. They couldn’t meet consumer demand.
o ***Secret of the day: Another part of production facilities/capacity:
 Sustainability
 Labor relations: Long strikes can affect quality.
• You can have good labor relations, bad labor relations, strikes, etc.

Front 21

Organizational buying criteria: Warranty/claim policies

Back 21

If something goes wrong with the product, how easy is it for us to get our money back or to get it fixed?
o Example: Patagonia has an iron clad guarantee in which the retailer has the power to fix problems right away so the consumer will be happy.
o Example: Car company had to hold their bad parts for warranty companies. This took time and made customers unhappy because of the wait.
o Some retailers can fix the problem on the spot. (Patagonia)
o Some retailers will send the product in and have the customer wait to get it back. This is hard on the customer.
o Example: Mrs. Collins asked Dave to get two new cartridges for her color printer. He said yes, I’d be happy to. What a great husband! He buys the cartridges but they wouldn’t work. He takes them back to the store and said they don’t work. Lady said on these particular items, you can’t take it back if the package has been opened. So, he buys 2 more and they don’t work again. Turns out, he didn’t take the strips off the bottom. Point: the

Front 22

List the roles in the buying center (6 things)

Back 22

- Decider
- User
- Gatekeeper
o HR
o Think beyond the gatekeeper
- Purchasers
- Influencer
- Initiator

Front 23

When you're getting a job, what kind of environment is it?*

Back 23

Business to business

- You have to address this by showing them how you are going to solve a need for them

Front 24

Example with students being parts of a company

Back 24

CEO Nathan says we need better forecasting. He tells Jen, President of marketing, that we need to get better forecasting. Sadie prepares the forecast every month to prepare for Jen. Computer guy Dallas (MIS) needs to know that it’s easy to set up a better forecast system. Finance guy needs to know that the system will be profitable in 5 years. Ross (secretary of CEO) has to be sucked up to in order to get to the CEO. Point: you must understand everyone’s roles in order to get something done.