B2B Marketing

By Professor Preeti Kaushik

 SYLLABUS
 Introduction to Industrial Marketing, Differences between Industrial & Consumer Marketing, Types of B2B products –
Heavy and Light equipments, systems, raw and processed materials, consumable supplies, components and industrial
services

 Industrial Marketing Environment, Types of Customers, Types of buying situations, Key challenges – Managing
commoditization of products, hybrid channels, CSR issues.

 Segmentation of B2B – Product/Applications matrix, Differences in customer strategy, Types of segmentation: Needs
approach, Identifiable/Accessible approach, Shapiro-Bonoma Nested Hierarchy approach - Demographics, Operation
variables, purchasing approaches, situational factors, buyer’s personal characteristics

 Market selection: Horizontal vs vertical choice in the value chain. Product form, consequences of resource commitment by
the firm across the value chain.

 Specialty vs. commodity markets: Types of specialities – convenience specialty, availability specialty, functional specialty,
relationship specialty. Types of commodities – Pure commodities, price/performance commodities; Dynamics of
commodity market and commoditization process
SYLLABUS
 B2B Product Decisions – Service augmentation, Product-Service bundling, Product/ Process innovation,
Service innovation.

 Types of customer benefits in B2B markets: Tangible financial benefits, non-tangible financial benefits,
tangible non-financial benefits, nontangible non-financial benefits, loyalty benefits, B2B branding –
Ingredient branding

 Models of organisational buying behaviour: Sheth BUYGRID model – Webster Wind model, Developing
buyer-seller relationships – Dwyer’s 5 phases

 Key Account Management: Definition, Drivers – Rise of global customers, JIT. Selection of Key Accounts –
Criteria, Analysis of buying process

 Firm networks: Uppsala Model (Johanson and Vahlne), Transaction cost theory (Rugman and Williamson),
Business Ecosystem (Moore). Network formation – Alliances , JV, Decomposition of value chains, Role of
networks in dominant design
 Specialty vs. commodity
markets
Specialty Market
• Specialty market has one or 2 uses
• Specialty products tend to be finished products.
• A company’s product is a specialty product if it is uniquely different than
those of competitors. If the product is different, the producer can make
the case that it is better. If it is a better product, the company can charge
a higher price for it. For example, efforts to build a better mouse trap are
based on the premise that, if you can build a better one, it will have more
value to the customer and you can sell it for a higher price.
• The producer of a differentiated product is said to be a price
maker rather than a price taker. A price maker has some influence over
price, but not as much as most people believe. Essentially a producer of a
differentiated product creates a separate market for his/her individual
product. For example, the demand for “Johnson’s Better Organic Milk” is
unique to Johnson. This allows Johnson the opportunity to charge a price
that is different than that of other organic milk.  This means that an individual producer has no control over his/her
• However, there is a perception that price makers can automatically
generate profits because they can charge any price they want for their
product. It is true that producers of differentiated products can charge
any price they want.
Commodity Market
• Commodity market has multiple uses and applications
• Commodities are fungible. This means that each unit of a
commodity is exactly like every other unit. For example, every
bushel of number 2 corn (15.5 % moisture) can be substituted for
every other bushel of number 2 corn. Because the identity of each
producer’s corn does not have to be kept separate, the corn from
many farmers can be mixed together. This also means that the price
for corn on any given day, at any given location, is the same for all
farmers.
• Commodities tend to be raw materials like corn, wheat, copper,
crude oil, etc. Only commodities can be traded on “futures” markets
because every unit is the same.
• People that produce commodities are referred to as “price takers.” 
price. On any day, they must take what the market offers them. For
example, a corn farmer has no influence over price because each
farmer’s corn is the same. So buyers don’t care which farmer’s corn
they buy.
Hierarchy of customer values
Una
ntici
pat
ed
Valu
es
Desired Values

Anticipated Values
Factors differentiating Organisational Buyer
from Household Buyer
• Size of the Buyer
• Risks in Purchases
• Concentration of Buyers
• Organisational Purchase Decisions are Joint
• Adherence to Specifications
 Difference between Consumer &
Industrial Sectors
Consumer Sector
• Mostly Cost-driven customers
• Stress on ‘Comforts’
• Purchases for personal use
• • Major deciding factors are Profitability,
Major deciding factors are Family needs,
Fashion, Social necessity
• Decisions are fast and simple
• Marketing is for masses through radio, TV,
newspaper ads etc.
• Buyers are reasonably sensitive to
technological changes
Industrial Sector
• Mostly Value-driven customers
• Stress on ‘Benefits’
• Purchases for business use
Productivity, Payback, Operational ease &
Maintenance
• Decisions are slow and complex
• Marketing is through focused approach through
direct one-to-one presentation and discussion
• Buyers are very sensitive to technological
changes
Characteristics of business market
customers
• Business Market customers are composed of commercial enterprises, institutions,
& governments. Eg. Dell
• A single purchase by a business customer is far larger than that of an individual
consumer. Eg. Microsoft
• The demand for industrial products is derived from the ultimate demand for
consumer products. Eg. Realty
• Relationships between business marketers tend to be close and enduring. Eg. IBM
• Buying decisions by business customers often involve multiple buying influences,
rather than a single decision maker. Eg. To buy laptop
• While serving different types of customers, business marketers and consumer-
goods marketers share the same job titles. Eg.
CLASSIFICATION OF GOODS FOR BUSINESS MARKETS
FOUNDATION GOODS
ENTERING GOODS
INSTALLATIONS
FARM PRODUCTS
- Building & Land Rights
(Eg. Wheat)
(Eg. Office)
-Natural Products
- Field Equipment
(Eg. Lumber, Iron Ore)
(Eg. Computers, Elevators)
MANUFACTURED MATERIALS & PARTS
ACCESSORY EQUIPMENT
-Component Materials
-Light Factory Equipment
(Eg. Steel)
(Eg. Lift tracks)
- Component Parts
-Office Equipment
(Eg. Tires, Microchips)
(Eg. Desks, PC’s)

FACILITATING GOODS
SUPPLIES
-Operating Supplies
(Eg. Lubricants, paper)
-Maintenance & Repair Items
(Eg. Paint, Screws)
BUSINESS SERVICES
-Maintenance & Repair Services
(Eg. Computer repair)
- Business Advisory Services
(Eg. Legal, Advertising, Management Consulting)
Factors involved in industrial buyer’s
decision making process
• Continuous and Reliable Product Performance
• Guaranteed Delivery
• Technology Fit
• Price
• Service
• Company Sales Force
• Transparency
 Buying Centre &
Roles in Buying Centre (Refer to DMU from Marketing Mgmt)

• Actual User
• Influencer
• Decider
• Buyer
• Gatekeeper
Decision Making Process
• Need Recognition
• Product Specification
• Laying Down Qualifications for Potential Vendors
• Inviting Proposals from Qualified Vendors
• Evaluating Proposals
• Selecting the Vendor
• Determination of Order Size and Placement of Order
• Review & Feedback
Segmental analysis for Industrial
Goods
Product/ Applications Matrix
Buying Situations
• Straight Rebuy - a situation in which a purchaser buys the same product in the
same quantities from the same vendor. Nothing changes. Postpurchase
evaluations are often skipped, unless the buyer notices an unexpected change in
the offering such as a deterioration of its quality or delivery time.
• Modified Rebuy - occurs when a company wants to buy the same type of product
it has in the past but make some modifications to it. Maybe the buyer wants
different quantities, packaging, or delivery, or the product customized slightly
differently. A modified rebuy doesn’t necessarily have to be made with the same
seller.
• New Buy - occurs when a firm purchases a product for the first time. New buys
are the most time consuming for both the purchasing firm and the firms selling to
them. If the product is complex, many vendors and products will be considered
Influences on Buying Decisions
• Environmental
• Organisational
• Interpersonal
• Individual
Shapiro-Bonoma Nested Hierarchy approach
Shapiro-Bonoma Nested Hierarchy
approach
• Shapiro and Bonoma suggested segmentation for industrial markets
on the basis of criteria as under:
• Demographics – Industry type, Size of the company, Geographical area
• Operating variables – Technology, Customer profile
• Purchase approaches – Terms of payment, Negotiating power of vendors,
Nature of relationship with suppliers and stakeholders
• Situational factors – Size of the order, Customization as per Usage, Urgency/
Delivery timeline
• Personal characteristics – Risk-taking capacity, Loyalty,