Marketing Mix

The marketing mix of business markets is different from that of consumer markets.
Since most marketers are tuned to thinking in terms of consumer markets, it is important that
marketing mix of business markets is understood as being distinct from that of consumer
markets.

Product:
Business products incorporate more technology in them and hence have shorter product life
cycles. Most business products will need to be serviced periodically as they are more actively
used.
i. The business product life cycle is shorter than that of consumer products because of the
rapidity of technological change and innovation in business markets. When a business buyer
changes its products or its processes, the supplier too will have to make changes in its product
and processes if it wants to retain its business with the buyer.

ii. Business products are customized to the customers’ technical requirements. The supplier
will have to understand the precise requirements of the business buyer to be able to supply
what the buyer requires. Business marketers will have to be prepared to stay with their buyers
for long periods to be able to understand their requirements. It will help if the marketers
understand the business and the technology of the buyer.

iii. Business products are mostly identified by a corporate family brand. Though business
marketers are wary of advertising on the mass media, it can be a good idea to spend some of
their promotional budget on advertising to build a corporate brand. Business marketers would
also do well to sponsor events, especially those in which their clients have interest.

iv. Consumers usually buy products for immediate use, whereas organizations buy products
to fit a planned requirement. An organization may store a product in inventory before using,
though companies are eschewing this practice. They want their suppliers to supply them
items when they are required. It is important that business marketers have some idea about
the sales forecast of their buyer’s product because the quantity and timing of their supplies to
the buyer will depend on the sales pattern of the business buyer’s product. The production
plans of the buyer and the supplier have to be synchronized.
v. A large part of business purchases are materials and components that must undergo further
transformations.

vi. Packaging performs two functions of protection of contents and promotion. The protection
aspect is more important in business product packaging, whereas promotion plays the more
important role in consumer product packaging.

vii. Business customers demand and receive more services in association with products than
customers do in the consumer market. Business buyers receive greater pre-sale and post-sale
services. Business market services range from delivery services to technical services. In many
cases, the provision of associated services clinches a deal for business marketers. Business
buyers prefer suppliers who give them minimum hassles in supplying a product. Business
marketers should always look forward to carrying out most of the ancillary work related to
the product they are supplying.

viii. Business buyers expect various pieces of equipment they purchase to match and work
well together. It is very important that the business marketer understands the existing
technologies and equipment of the buyer so that the equipment supplied by him works with
the buyer’s existing technologies and equipment. A supplier’s capability to make compatible
equipment is a very important criterion in his getting business of a buyer.

ix. The smooth operation of a business depends on the uniform and predictable quality of its
units. The quality of supplies to a business buyer has to be consistent. A business marketer
should understand the relationship between the operations of the buyer organization and his
supplies to the buyer. A business marketer should ensure that operations of his buyers are not
affected due to the bad quality of his supplies.

x. Industrial design creates products that are not only functional but also aesthetically and
ergonomically sound. Good industrial design is less important than functional design for
business products.

xi. System selling involves offering a complete package of products and services,
installations and service. The supplier provides a comprehensive solution to customers’
requirements and problems. Most business buyers prefer a comprehensive solution as it
allows them to focus on their core areas. Business buyers always prefer a supplier who
provides a complete solution rather than the one who provides a partial solution. A business
buyer does not want to take the trouble of having to integrate partial solutions of many
providers.

xii. There is a big after market or spare parts market for most industrial products. Tyres and
battery of a car need to be replaced periodically Customers prefer to buy the brand that has
been originally installed in the product by the manufacturer.

Thus if there is a huge after market for a product, the supplier of that product should provide
concessions to the manufacturer so that his product is installed by the manufacturer. Suppliers
of such products should lay stress on creating a strong brand and capture the aftermarket.
This will put further pressure on the manufacturer to incorporate the supplier’s product, as the
manufacturer may feel that the customers will value his product more if the supplier’s brand
is included in his product.
Promotion:
Business marketers emphasize personal selling. The advertisements for business products are
factual.

i. Business promotion focuses on rational, economic themes. Personal selling dominates the
business marketer’s promotion mix. The salesperson primarily seeks to solve business
customers’ problems, and is supported by a group of inside salespeople. Business advertising
is used to prepare the customer for the sales call and is augmented by sales promotion tools
like trade shows.

ii. The promotion mix emphasizes personal selling because the business buyer requires the
help of the supplier in solving technical problems and the buyer negotiates with the supplier.
Consumer marketers must reach multitudes of customers and therefore use mass promotion
techniques, with the heaviest emphasis on advertising.

iii. The cost of personal selling is very high in business markets. Hence the objective of
organizational promotion is to prepare the customer for the sales call by presenting
information about the selling organizations, its product lines, its customer mix and its area of
specialization. When the customer is adequately aware of the supplier, the salesperson will be
able to devote valuable time to the more difficult and productive activities of problem solving
and negotiation, rather than answering questions for which the customer should already have
answers. In consumer markets advertising concentrates more on positioning products relative
to competing products.

iv. Messages directed to business buyers emphasize factual, rational and economic issues,
such as technical specifications, performance characteristics and enhancement of customer’s
efficiency and profits. Consumer appeals are more emotional and stress on feelings and self-
image. Consumer promotional claims are more imaginative and less factual.

v. The business salesperson is primarily a technical problem solver, providing information

and solutions. Product training is extensive, and the salesperson has a thorough background
and experience in the industry. Consumer salesperson recognizes that there are many similar
competing solutions for the consumer’s needs and therefore relies less on information and
more on persuasion. Consumer salesperson training focuses less on product knowledge and
more on developing selling techniques. Inside salespeople i.e., salespeople who contact
customers solely by telephone are widely used in business markets. They inform customers of
inventory levels and product availability, solve customer problems over the telephone, and
solicit new prospects for outside salespeople to visit. Inside salespeople are not used
extensively by consumer marketers.

vi. Business sales promotion makes more use of catalogues, direct mail, trade shows and
exhibits. Consumer marketers use sales promotion tools like couponing, sampling and point-
of-purchase displays.

Distribution:
Most of the time, there may not be any intermediary in the business market. The channel
members should be conversant with technical aspects of the product.
i. Business channels are shorter but more complex, and channel members have greater
product knowledge. More direct, selective, or exclusive channels are used and delivery
reliability is very important.

ii. Business distribution channels tend to be short and direct because of the customer’s needs
for technical assistance and assured delivery. The geographic concentration of business
customers facilitates shorter channels and provides sufficient sales volume to support
dealerships, branches and direct calls by salespeople. Channels for consumer products usually
are much longer and more direct.

iii. Although business channels are shorter, they tend to be more complex than channels for
consumer products because of the many different types of businesses and classes of
customers that make up business markets. A manufacturer of an industrial product such as
refrigeration equipment may sell to the government, to OEMs in several different industries,
to contractors, to repair and maintenance companies, and through various types of distributors
and manufacture agents in different territories. A manufacturer of a consumer product like
corn flakes would sell to supermarkets, hotels, restaurants and convenience stores through a
broker.

iv. Business channel members must be thoroughly familiar with the technical aspects of the
product they handle and the industries and commercial organizations to which they sell. In
contrast, retailers’ product knowledge of consumer products is weak. Retailers in consumer
markets concentrate on maintaining inventories, providing product displays, and offering
credit and delivery service.

v. Small numbers and greater concentrations of customers in business markets provide more
opportunities for business marketers to use direct or exclusive distribution approaches.
Because of the large numbers of buyers and the diffuse nature of buyers, consumer marketers
use intensive and selective channels of distribution.

vi. Late delivery, misdirected shipments and damaged goods, although annoying,
nevertheless usually are not disastrous for consumers. On the other hand, in business markets,
reliability is crucial and has a direct impact on profitability. Shipment expediting and vendor
performance analysis are therefore important functions in business markets. Organizational
customers may also negotiate JIT arrangements, impose non-performance penalties on their
suppliers and periodically evaluate various logistical alternatives.

Price:
Price is negotiated between buyers and suppliers in business markets. A buyer will be willing
to pay a higher price for a product if it improves the buyer’s functioning and profitability.

i. Organizational buyers make extensive use of competitive bidding, ranging from the less
formal solicitation of quotations to the very formal sealed-bid tender requests that are used by
government agencies to avoid any appearance of underhandedness. Some companies have
policies requiring a minimum number of price quotations for every purchase. Price
comparisons in consumer markets are often based on impressions rather than on facts and are
limited to homogeneous shopping goods.

ii. Price negotiation is a common practice in business markets, with various trade-offs in
specifications and product-service requirements changing throughout the negotiation process.
In most consumer markets customers generally accept or reject the prices offered to them,
and very little negotiation is involved in the transaction.

iii. Business customers often use leasing as an alternative to financing a large purchase
because it is easier for them to pay in small instalments than shell out a large sum of money
at one time. There are also some tax benefits. In consumer markets customers rarely lease
their household equipment’s. In consumer markets an item is rarely a purely functional item.
There is pride and satisfaction in owning an item. In business markets all items are bought
because they serve a specific purpose.

iv. The price of a purchased business product is only one of the various costs evaluated by
business buyers. A customer when buying a manufacturing machine must consider the
lifetime costs and benefits of the purchase. These might include factors like faster machining
speeds, higher output, lower energy consumption, lower maintenance costs, lower repair
costs, lower downtime for setup, greater functional flexibility, higher resale price as used
equipment, or lower disposal costs. When a manufacturer is considering several alternative
components to purchase, he might evaluate their prices, benefits and costs in terms of value
added from the end customers’ perspective.

v. An intermediary in the distribution channel must consider how long a particular purchase
will incur inventory costs. An organization must also consider the effect of a purchase on its
employees. Business buyers consider the effects of technological obsolescence on purchases
and the product’s potential for adaptation, modification, or upgrading as technology changes.
These considerations may make the purchase price considerably less important than the
lifetime costs and benefits for the business buyer. Such deliberations are not common in
consumer markets.

vi. A complicated set of discounts is applied to the list price. These discounts depend on
factors like the class of customers (government, distributor, dealer, user), the volume of
purchase, the service performed by the customer on behalf of the seller (discounts for
delivery), the supplier’s need for business (underutilized capacity), the probability of follow-
on business, the perceived relative buying and negotiation power of the buyer and
competitive conditions.