B 2 B Markets

By
Mahendra Singh
Central University of Jharkhand
THE BUSINESS MARKET
Four main components:
Commercial market Individuals and firms that acquire products to
support, directly or indirectly, production of other goods and services.
Largest segment of the business market.
Trade industries Retailers or wholesalers that purchase products for resale
to others.
Also called resellers, marketing intermediaries that operate in the trade
sector.
Governmentall domestic levels (federal, state, local) and foreign
governments; also act as sellerse.g., confiscated goods.
Public and private institutions, such as hospitals, churches, colleges and
universities, and museums.
B2B MARKETS in age of Internet Connection
More than 94 percent of all Internet sales are B2B transactions.
Opens up foreign markets to sellers.
Largest segment of the business market.
DIFFERENCES IN FOREIGN BUSINESS MARKETS
May differ due to variations in regulations and cultural practices.
Businesses must be willing to adapt to local customs and business practices
and research cultural preferences.
Classification of B 2 B Markets (North American Industry Classification
System (NAICS)
Federal government developed Standard Industrial Classification in 1930s
to subdivide business market into detailed segments.
Replaced by NAICS with implementation of NAFTA.
North American Industry Classification System Classification used by
NAFTA countries to categorize the business marketplace into detailed market
segments.
CHARACTERISTICS OF THE B2B MARKET
GEOGRAPHIC MARKET CONCENTRATION
Business market more concentrated than consumer market.
Example: Companies that sell to the federal government are often
located near Washington, D.C.
Businesses becoming less geographically concentrated as Internet
technology improves.
SIZES AND NUMBER OF BUYERS
Business market has smaller number of buyers than consumer market.
Many buyers are large organizations, such as Boeing, which buys jet
engines.
THE PURCHASE DECISION PROCESS
Sellers must navigate organizational buying processes that often involve
multiple decision makers.
Purchasing process usually more formal than in consumer market.
Purchases may require bidding and negotiations.
BUYER-SELLER RELATIONSHIPS
Often more complex than in consumer market.
Greater reliance on relationship marketing.
EVALUATING INTERNATIONAL BUSINESS MARKETS
Business purchasing patterns differ from country to country.
Global sourcing Purchasing goods and services from suppliers worldwide.
Can bring significant cost savings but requires adjustments.
BUSINESS MARKET DEMAND
Demand characteristics vary from market to market.
THE MAKE, BUY, OR LEASE DECISION
Firms acquiring needed products can get them in one of three ways:
Make the good or provide the service in-house.
Purchase it from another organization.
Lease it from another organization.
Producing the item may be cheapest route, but most firms cannot make all
of the products they need.
Many companies purchase many of the goods they need.
Companies can spread out costs through leasing.
THE RISE OF OFFSHORING AND OUTSOURCING
Off shoring Movement of high-wage jobs from one country to lower-cost
overseas locations.
Example: China makes two-thirds of the worlds copiers, microwaves,
DVD players, and shoes, and virtually all of the worlds toys.
Allows firms to concentrate their resources on their core business and
access specialized talent or expertise.
Near shoring Moving jobs to vendors in countries close to the businesss
home country.
U.S. firms often near shore in Canada or Mexico.
Out shoring Using outside vendors to provide goods and services formerly
produced in-house.
Commonly out shore for three reasons: cost reduction, quality and
speed of software maintenance and development, and greater value.
CHALLENGES OF INSTITUTIONAL MARKETS
Institutional buyers include schools, hospitals, libraries, foundations, and
others.
Have widely diverse buying practices among, and even within, institutions.
Multiple buying influences can affect buying decisions, such as conflicts
between professional staff and purchasing departments.
CHALLENGES OF INTERNATIONAL MARKETS
Marketers must consider buyers attitudes and cultural patterns.
Local industries, economic conditions, geographic characteristics, and legal
restrictions must also be considered.
Remanufacturing, or restoring worn-out products to like-new condition, can
be an important strategy in places that cannot afford new products.
Foreign governments are also an important market.