Module MM050

Business-to-Business Marketing

 

Module author

Nick Ellis

Durham University
UK

Learning objectives

After you completed this module, you will be able to:

  • Understand the significance of B2B markets and marketing in the global economy;
  • Appreciate the complex processes underpinning organizational buyer behavior;
  • Acknowledge the implications of having to manage the relationships that link firms in channels, chains, and networks;
  • Identify how these issues inform the B2B strategic planning process;
  • Recognize ways of classifying and managing business products and services;
  • Understand value perceptions in B2B marketing and how these can affect pricing;
  • Identify appropriate communication and personal selling strategies for B2B markets;
  • Relate theory to practice via a wide range of case-study examples from a series of international contexts;
  • Appreciate some of the day-to-day challenges faced by B2B marketing and purchasing managers.
Content

Chapter 1: Introduction to B2B Marketing
1.1 Introduction
1.2 The Importance of B2B marketing
1.2.1 Defining B2B marketing
1.2.2 B2B marketing management
1.3 The Importance of Supply/Demand and Value Chains
1.3.1 Supply/demand chains
1.3.2 Value chains
1.4 Some Characteristics of Organizational Markets
1.5 The Importance of Relationships and Networks
1.6 Summary and Reflection

Chapter 2: Organizational Purchasing
2.1 Introduction
2.2 Types of Organizational Markets
2.2.1 Commercial customers
2.2.2 Institutional and governmental customers
2.3 Comparing Organizational and  Consumer Buyer Behavior
2.4 Influences on Organizational Demand
2.4.1 External influences
2.4.2 Internal influences
2.4.3 Social influences
2.5 Organizational Decision-Making Making
2.5.1 The buying centrecenter or decision-making making unit
2.5.2 The decision-making making process

Chapter 3: Interfirm-Firm Relationships (IFRs)
3.1 Introduction
3.2 From Market Transactions to Relational Exchange
3.2.1 Key elements of relationship marketing
3.3 Customer Relationship Management
3.3.1 Relationship life cycles
3.4 Challenges in Managing IFRs

Chapter 4: Channels, Supply Chains, and Networks
4.1 Introduction
4.2 Structure and Role of Marketing Channels
4.2.1 Channel management
4.2.2 Types of intermediary
4.2.3 Channel structure
4.3 Flows and Blockages in Channels
4.3.1 Channel flows
4.3.2 Conflict in marketing channels
4.4 From Channels to Chains
4.5 From Channels and Chains to Networks
4.5.1 Types of industrial networks
4.5.2 Network stakeholder relationships

Chapter 5: Strategic Planning in B2B Marketing
5.1 Introduction
5.2 The Planning Process Demand Chain Management
5.3 Information Sources
5.3.1 Maintaining an MKIS
5.3.2 B2B market research
5.4 B2B Market Segmentation
5.5 Market Positioning
5.5.1 Positioning by value proposition
5.5.2 Repositioning
5.6 B2B Branding Strategy
5.7 Strategic Decisions in Networks

Chapter 6: Business Products Services
6.1 Introduction
6.2 Classifying Business Products
6.3 Managing Business Products
6.3.1 Categorizing product lines
6.3.2 The product life cycle
6.4 Classifying Business Services
6.5 Managing Business Services

Chapter 7: B2B Value Pricing
7.1 Introduction
7.2 Notions of Value in Business Markets
7.3 Making B2B Pricing Decisions
7.4 Competitive Bidding
7.5 Electronic Marketplaces

Chapter 8: B2B Marketing Communications
8.1 Introduction
8.2 Communication Strategies
8.3 Elements of the Communications mix
8.4 Relative Effectiveness of B2B Media
8.4.1 B2B communication via the internetInternet
8.5 Personal Selling in B2B Markets
8.6 Key Account Management

Workload units 3
Read excerpt Business-to-Business Marketing

 

Why Open School of Management believes that competences in B2B marketing are important

Business-to-business (B2B) marketing is the promotion of products and services from the businesses that provide them to the businesses that buy them. In the overall economy, B2B transactions are much more common than business-to-consumer (B2C) or business-to-government (B2G) transactions because the supply chain of goods and services, from their raw materials to the end consumer, consists of many B2B transactions, whereas only one B2C transaction occurs in the process.

However, this special place for B2B interactions in the economy means that B2B marketing has a fundamentally different nature than B2C marketing. It does not mean that there is more B2B marketing in the economy, proportional to the amount of B2C marketing that targets end consumers. Instead, it means that B2B marketing requires more of an investment in each potential business relationship.

The cost of striking up an arrangement with a business interested in buying a product or raw material is higher than the cost of marketing to consumers. Businesses need a lot of time to decide if they are sure about buying a product or service from another business because the cost of finding another source is quite high. These lengthy negotiations typically include several samples of the product and numerous demonstrations, all in an effort to ensure that the relationship will be sound for as long as possible. B2B relations are generally more long-term than B2C relations tend to be; brand loyalty is higher in B2B marketing, out of necessity.

For example, a car company must find suppliers for all of the raw materials and parts that it needs to assemble its vehicles. It has the choice to create its own windshields and windows or outsource that step in the process to another company. In the first case, it needs a glass supplier, and in the second case, it needs a window manufacturer. In both cases, the company providing the materials or service enters into a long process of negotiations with a committee of decision-makers who work for the car company.

There is a representative of the glass or window company who presents a sample or demonstration and outlines the terms of the transaction. The process can take days or weeks to ensure that both parties are absolutely sure that they will not want to back out of the deal once it begins. To do so would be to waste time and money, and neither company wants to suffer those losses.

In this way, B2B marketing is like a courtship that plays out over days or weeks. There are examples of B2B marketing in industry periodicals and targeted promotional campaigns, but the evidence of the marketing is completely unlike what most people recognize as marketing. B2B marketing is not about promotional jingles or clever, pithy copywriting. It's a protracted process that requires patience, strategy and steadfastness on all sides.

 

Why study B2B Marketing?

With the expanding global economy and the growing importance of free trade and globalization, B2B marketing is one of the most important jobs in the world. The entire structure of goods and services that are marketed to other businesses is different than the economy of competing products marketed toward consumers. Products marketed toward businesses are more differentiated; they each have a specific niche, and there is very little overlapping.

Not much money is spent on brand awareness in B2B marketing because buyers within companies are already aware of their choices. The decision-making committees that have the final say in a B2B relationship make it their business to know what the market offers. When a seller approaches them with an offer, they discuss the specifics and fine details of the agreement. In other words, brands are well known among buyers in the B2B economy.

B2B marketing, therefore, is a set of interpersonal skills similar to public relations or sales. The marketing itself is a form of specialized knowledge within the business community, and it requires training, experience, planning and creativity. Other important skills include foreign languages, foreign value conversions, negotiation skills and effective communication. B2B marketing can be distilled down to an understanding of the market values of products, resources and services, which requires an expansive understanding of world markets.

Because businesses already know what their suppliers offer, and because they usually have already conducted research into their potential purchases, the negotiations involved in B2B marketing are a matter of communication. The supplier is intimately familiar with the product or service, and the buyer is only passingly familiar. There are no hidden agendas in B2B marketing; a supplier who misrepresents the product will quickly go out of business.

The market of buyers and sellers coming together in a business-to-business context is more well-defined than the market of businesses selling products to consumers. Most business students and graduates are quite familiar with B2C marketing concepts, having witnessed them firsthand since childhood. For anyone planning to work in the B2B market training is essential.

Consequently, branding is one of the most important parts of B2B marketing, if not the most important. Each product supplier must spend most of his time developing a brand image so that buyers have a clear picture in their minds of his product. This branding is a way of communicating the benefits and features of a product before any meetings take place. It's the heart of B2B marketing, and becoming proficient in B2B branding requires a great deal of subtlety and consideration. The fact that each product has exactly one brand name associated with it makes the B2B marketplace well-defined and predictable.

Part of the work of branding a product in the B2B market is managing perceptions. Buyers' perceptions of the products they buy are what set the prices they pay. For this reason, understanding proper B2B branding can make the difference between a high-profit sale and a marginal sale.

 

Module overview

The B2B Marketing module covers the essential concepts of global B2B branding and B2B relationships. The learning outcomes of the module are as follows. Students will gain an understanding of the importance of B2B marketing within the scope of the global economy and learn to recognize the subtle and intricate inner-workings of organizational transactions. This point is important because it underlies all the other points of significance in B2B marketing. Purchases made as an organization, rather than an individual, are at the heart of B2B marketing.

Students will study the global networks that tie the B2B market together through chains, channels and networks, and they will gain experience in strategically using these concepts in the B2B planning process. To get a firm grasp on the principles of B2B branding, students will learn about the classification and management of B2B products and services. They will go into depth studying the product value perceptions that define the market for B2B buyers and sellers.

An important section of the module teaches students effective communication across global B2B networks. This skill is perhaps the most useful and indispensable skill to master before completing the module because it sets the stage for successful B2B relations. After learning some of the most effective communication techniques, students will be presented with real-world scenarios to illustrate the concepts they've learned so far. Before the module is over, they will be familiar with the day-to-day duties of a B2B relations manager or marketing executive.

The module is divided into eight sections, with five or six subsections in each one. The sections follow an effective outline based on the learning objectives, beginning with a familiarization with the B2B marketplace and moving on to purchasing, B2B relationships, supply chain networks, strategic planning, products and services, B2B value perceptions and, finally, B2B communication strategies. Some module highlights include discussions of value chains, organizational decision-making, customer relationship management, market positioning, classifying and managing business products and services, bidding, pricing and sales tactics.

At the end of the module, students will have a functional understanding of the interplay between B2B buyers and sellers regarding value perceptions. These perceptions are what make branding so important in the B2B marketplace. Section 7 goes into depth on these concepts. Another key learning outcome is an understanding of the intricate supply chain networks that result from existing channels and chains. Section 4 of the module covers these networks.

One important point that many business students tend to ignore about B2B marketing is the classification and management of business products and services. These skills arise directly from B2B branding and value perception. Being able to effectively classify and manage a product or service helps to differentiate one brand from another, a crucial distinction between the B2B and B2C markets. Gaining this perspective, along with insight from the other sections of the module, will allow students to see much more of the global B2B economy than before.

 

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