University of Technology Sydney **We aren't endorsed by this school
B2B 24205
Nov 19, 2023
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Week 1: Business-to-Business (B2B) Markets and B2B Marketing Everybody made here will come to B Marketing week one. I hope you're doing great this week we're going to learn about the characteristics of business to business markets. B2B Markets are all about how organisations buy and sell from each other to support their operation. It's fascinating to explore the unique features and characteristics of BT markets that make them unique compared to regular consumer. Or B to C markets. We're going to discuss about differences between two markets and two C markets. And learn about the differences in terms of the market, in terms of the buying behaviour of customers, as well as the different marketing practises of the market. There's a top in B2b markets. Without further do, let's go through the lecture slides of this week. Okay, In the first Vito we're going to look at the of between markets and the individual. Going more details and find out about the differences between b2b and B2c markets. In the business markets, the primary customers are organisations accompanies rather than individual consumers. This distinction basically is significant and shapes the dynamics of B two transactions. The customers, the example of customers are universities, for example. When you think about it, education institutions, colleges, these are essentially amongst the BTB customers. They often purchase a wide range of products, services, including perhaps educational materials, laboratory equipment, technology solutions, and so on. You also have governments as one of the most important agencies or entities amongst the business customers. Let me look at the pointer here. We talk about the governments and government agency at various levels where we have local governments, the state governments, federal governments. They are major players in the market. They also purchase a diverse type of goods and services, ranging from office supplies, or vehicles, or anti systems, defence equipment, and so on. We also have businesses, are the companies engaging in TB transactions? They also are very important part of this market. These businesses may purchase raw materials, components, machinery, or, or various services because we have both products and services when you talk about they purchase these products or services for their own operation and production. We also have non profit organisations, including NGOs or charities. They also participate in two transactions. They also purchase some goods and services to support the emissions and initiatives. For example, again, office supplies, fundraising materials, immense management, and so these are the typical type of business customers in the two market. While there might be an overlap in the products that purchased by the key distinguishing feature is that of basically buyer involved customers are entirely different products. When it comes to products, you can find some products that both organisations and consumers in B to C market by, You can think about computers or stationery, or furniture, or automobile repair services. These are regularly sought after by both organisations as well as individual consumers. With that being said, there are certain, basically products that are exclusively tailored for B to B purposes. They're very, very rarely acquired by individual consumers. Some examples you might management consulting services for firms or industrial cranes. Of course, individual consumers do not buy cranes. But when you think about organisations, construction companies, they need to have some factors, for example, which cater to their specific business needs. Apart from the type of buyer. There also differentiating factors that two markets apart from two C markets. One of those important factors is the quantity, the purchase quantity. These really important differentiating factor. Which is the volume of purchases of TB. Transactions, as we discussed later, often involve bulk orders, or significant quantities due to the scale of operations in organisations. Think about the university, They might purchase thousands of computers, millions of dollars to equip their computer lab. Individual consumers typically buy one or two computers of value only a couple of thousand dollar per how the amount of purchases is entirely different when it comes to two versus two C. The other important issue about market is how they use product.
Consumers usually buy a final version of the product. Like us as individual consumer, we buy version of the product. But businesses buy products for different purposes. Or in other words, there are different types of utility that motivate business customers to purchase a product. What are those needs? What are those utilities First, incorporation. One very important aspects of product utilisation is incorporation. Businesses purchase raw materials or components to using their manufacturing processes. Imagine a permanent car manufacturer looking to, for example, enhance the performance and safety of their vehicles. To achieve the they design to incorporate a specialised, let's say, steel alloys into their production process. The steel alloys have unique properties that make them stronger, larger, and more resistant. For example, to corrosion offering significant benefits in terms of fuel efficiency and vehicle durability. That would be part of incorporation. The car manufacturer by those materials um to use them basically in the manufacturing process. Then we have consumptions. B, Customers may acquire products for daily operational use, ranging from office supplies to equipment required in the manufacturing process. Imagine a pharmaceutical research laboratory that focuses on developing, let's say, innovative medications to address various medical conditions. To conduct their cutting edge research, they need a set of art laboratory equipment to facilitate experiments, to facit analysis and data collection. In this scenario, the pharmaceutical research laboratory basically purchase a range of sophisticated laboratory equipment including let's say, high performance microscopes or let's say some handling systems that they're going to use in the manufacturing process for their own daily operational use. Finally, we have businesses that buy products to sell them to other customers, to individual consumers. Consider major retail chain store, major retail chain store like Woolworth Cos or all the for example, that operates a diverse network of stores across the country as part of their product offering. The aim to provide customers with a selection of food, electronic devices, and so on. So these retail chain an intermediary, they purchase food, for example, from the same suppliers, from the manufacturer, and then they resell them to individual consumers. Los Welcome to the second window of the week. In the previous do, we talked about the specific nature of B two markets. We started to define the two markets in this biddle we're going to learn more about the specific characteristics and the differences between two B and B2c. In particular, we're going to talk about the differences in terms of market structure and how the markets in B2b differs from two C. These are the differences 2-2 C. In general, we are going to discuss about differences in terms of market structure, point behaviour, and marketing practises In the Indio, which is the second middle of the week, we're going to focus on market structure differences. How marketing two basically differs from two. Let's look at this table basically indicates how market structure differs in that this table compares the differences between, these are the dimensions of market structure. And then in the second column we have the previous market, and the third column we have the markets. Looking into market structure, we can classify these differences in terms of three broad categories. We have the category of demand, how demand differs in two, B compared to two. And then we have differences in terms of customers. And then we have difference in terms of the market, right? So we're going to go through these differences, but from time to time, I'll bring this table again just again to help you to recall what sort of differences we are talking about. Okay, so first let's talk about the characteristics of demand in business market. Characteristics of demand in business market have strict different implications. The reason why we talk about those differences is the implications of the difference is very important for the market. Let's go through out what are the implications or what do I mean by implications? The concept of drive demand in business market, the demand for the products is derived from the ultimate demand for consumer products. This means that the demand for raw materials, the demand for components and other industrial goods is driven by the demand or the finished su products that incorporate these materials. For example, think about the demand for steel in the construction industry that's drived from the ultimate demand for new homes and commercial buildings. As the housing market experiences growth, the
demand for construction materials, including steel, increases to meet the needs of builders and developers. Let us go through this picture to learn more about the term demand. For example, one family may need only one house, but for a builder, this demand may come from Okay, so the customer design to build one house, he or she may need to have, let's say, 40 buckets of paint. However, for the builder, the amount of demand is multiplication of customers, and 40 buckets of paint simply means 40 times 104,000 buckets of pain. The phenomena that is called accelerator effect. Accelerator effect means change, changes in consumer demands can lead to much larger percentage changes in demands for suppliers in the B to B market. Again, the demand in business market is derived from consumer market. In um, marketing is direct, in business market is drive from consumer markets. So let's continue. The next difference in terms of demand, we call it as fluctuating demand. What does it mean? Fluctuating demand means that the business market should carefully monitor fluctuating trends and patterns in consumer market. We just talked about the concept of Trump demand. Consumer demands and vary due to, let's say, seasonal changes, economic factors and shift in consumer preferences as a result of demand for industry products can also experience fluctuation on again, because the two demand, right, because it fluctuated production and inventory planning for to company. So think about the demand for holiday theme, the merchandise hallowing customs, Christmas decoration, right? They experience significant fluctuation throughout the year to manufacture of those products. Again, we do not talk about individual consumers. We talk about the manufactures of those Christmas decor. Manufacture of those hallowing customs, right? The manufacture, manufacturer of those products to carefully the production schedule and inventory levels to match seasonal instrument demands. But anyways, two markets experience greater fluctuation demands compared to business markets. We can think about economic sensitivity. Markets are often more closely tied to macroeconomic conditions. They are more closely tied to industry trends or changes in economic conditions such as restrictions or industry specific downturns and lead to more significant fluctuations in demand for to products and services. Of course, dependency on engagement demand also makes it more complex because the two demand again is drive from consumer demands which introduces additional layer of complexity. Fluctuation in consumer demand can have amplified effect, as Justice talked about, accelerator effect, the fluctuation in B2c market can have amplified the effect on two demands. Due to multiplier effects throughout the supply chain. While increasing demand from consumers or from customers have a great impact on the demand from the supplier. Decreasing demand. So similar impact but of course in a reverse condition, right? Can you think about what would be the demand for the builder if demand for housing customers, strut, they won't have markets, right? Because of the nature of tru, demand, the influence of fate consumer is high. Which brings in the notion of emulating demand one way which to marketed to increase fail by stimulating demand of all ultimate consumers for specific products. Services like because company we just serve business customers have nothing to do with integral individual consumers. No. Because sometimes we need to at our product even though we do not sell directly to individual consumers. Why? Because if individual consumers would like to adopt that product, of course we would be able to sell more to the intermediary firm, to our business customers. That's the concept of stimulating demand to effectively meet market demand. Business marketers should monitor consumer markets and develop strategies that stimulate demand. At the consumer level, understanding consumer behaviour and preferences are low, companies tailor their products and marketing efforts to create demand for their industrial offerings. Think about the manufacture of innovative smartphone components that monitors consumer preferences and trends in the smartphone markets. By identifying emerging consumer needs, we run market search, don't we? When we run market search, we identify emerging consumer needs. They can then develop cutting edge components that entice the smartphone manufacturers to adopt the technology. Then you could stimulate demand for your own industrial products. One implication of
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