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Business Marketing

 In the broadest sense, the practice of one purveyor of goods doing trade with another is as old as commerce itself. As a niche in the field of marketing as we know it today, however, its history is more recent. In his introduction to Fundamentals of Business Marketing Research, J. David Lichtenthal, professor of marketing at the City University of New York's Zicklin School of Business, notes that industrial marketing has been around since the mid-19th century, although the bulk of research on the discipline of business marketing has come about in the last 25 years.

Morris, Pitt and Honeycutt, 2001, point out that for many years business marketing took a back seat to consumer marketing, which entailed providers of goods or services selling directly to households through mass media and retail channels. This began to change in middle to late 1970s. A variety of academic periodicals, such as the Journal of Business-to-Business Marketing and the Journal of Business & Industrial Marketing, now publish studies on the subject regularly, and professional conferences on business-to-business marketing are held every year. What's more, business marketing courses are commonplace at many universities today. In fact, Dwyer and Tanner (2006) point out that more marketing majors begin their careers in business marketing today than in consumer marketing.
Business Markets -- (Business Marketing Management:B2B By Michael D Hutt & Thomas w Speh) Business markets are markets for products & services, local to international, bought by; 1. Business, 2.Government Bodies, 3.Institutions such as Hospitals or corporates for incorporation (E.G; ingredient materials or components) for consumption(E.g. process materials, office supplies & consulting services) for use or for resale..... The only markets not of direct interest are those dealing with products or services which are principally directed at personal use or consumption such as packaged grocery products , home appliances, or consumer banking The factors that distinguish business marketing from consumer marketing are the nature of the customer & how the customer uses the product.

Business & consumer markets - the link

Business markets have a derived demand - this means that a demand in business markets exists only because of another demand somewhere in the consumer market. Lets take a few examples :
  • The government of India wishes to purchase equipment for a nuclear power plant in Jaitapur - a business market demand. The underlying consumer demands that have triggered this demand are that the people of India are now consuming more electricity - they have bought more washing machines, microwaves, computers, charged devices etc.
  • The demand for restaurant furniture is based on the consumer demand of more restaurants.
Thus business markets do not exist in isolation. Cities or countries with growing consumption are generally growing business markets too.
A single consumer market demand can give rise to hundreds of business market demands. The demand for cars in India creates demands for steel, tyres, forgings, castings, plastic components which in turn has created demands for mining, rubber, forging machines, casting sand and polymers. Each of these growing demands has further triggered more demands. Thus as the spending power of citizens increase, the country generally sees a upward wave in its economy.

Business marketing vs. consumer marketing

Although on the surface the differences between business and consumer marketing may seem obvious, there are more subtle distinctions between the two with substantial ramifications. Dwyer and Tanner (2006) note that business marketing generally entails shorter and more direct channels of distribution.
While consumer marketing is aimed at large groups through mass media and retailers, the negotiation process between the buyer and seller is more personal in business marketing. According to Hutt and Speh (2004), most business marketers commit only a small part of their promotional budgets to advertising, and that is usually through direct mail efforts and trade journals. While that advertising is limited, it often helps the business marketer set up successful sales calls.
Marketing to a business trying to make a profit (business-to-business marketing) as opposed to an individual for personal use (Business-to-Consumer, or B2C marketing) is similar in terms of the fundamental principles of marketing. In B2C, B2B and B2G marketing situations, the marketer must always:
  • successfully match the product or service strengths with the needs of a definable target market;
  • position and price to align the product or service with its market, often an intricate balance; and
  • communicate and sell it in the fashion that demonstrates its value effectively to the target market.

  These are the fundamental principles of the 4 Ps of marketing (the marketing mix) first documented by E. Jerome McCarthy in 1960.

The first category includes original equipment manufacturers, such as large automakers who buy gauges to put in their cars and also small firms owned by 1-2 individuals who purchase products to run their business. The second category - government agencies, is the biggest. In fact, the U.S. government is the biggest single purchaser of products and services in the country, spending more than $300 billion annually. But this category also includes state and local governments. The third category, institutions, includes schools, hospitals and nursing homes, churches and charities. Finally, resellers consist of wholesalers, brokers and industrial distributors.
So what are the meaningful differences between B2B and B2C marketing?
A B2C sale is to a "Consumer" i.e. an individual who may be influenced by other factors such as family members or friends, but ultimately the sale is to a single person who pays for the transaction. A B2B sale is to a "Business" i.e. organization or firm. Given the complexity of organizational structure, B2B sales typically involve multiple decision makers. The marketing mix is affected by the B2B uniqueness which include complexity of business products and services, diversity of demand and the differing nature of the sales itself (including fewer customers buying larger volumes).[2] Because there are some important subtleties to the B2B sale, the issues are broken down beyond just the original 4 Ps developed by McCarthy.


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