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Essay on Business Marketing
Essay Contents:
- Essay on the Introduction to Business Marketing
- Essay on the Meaning of Industrial (Business) Marketing
- Essay on the Origins of Business Marketing
- Essay on the Nature of Business Marketing
- Essay on the Nature of Demand in Industrial Markets
- Essay on the Types of Demand in Industrial Marketing
- Essay on Business to Business (B2B) Marketing Strategies
- Essay on Target Market in Business Marketing
- Essay on B2B Marketing Communications Methodologies
- Essay on Driving Growth in B2B Marketing
Essay # 1. Introduction to Business Marketing:
Business marketing is the sum total of all marketing activities that facilitates of promoting and selling goods or services by one business organization to another business organization.
It mostly involves the supply and purchase of raw materials for the manufacture of goods or service. Business marketing is best done with the help of sales representatives as the needs vary from client to client which should be serviced in a customized way.
Business marketing is kind of less complicated as it is easy to identify the client and set up an appointment with them. Highly professional and trained people are involved in the purchase of industrial goods.
In order to sell to them, the marketing is done in the form of technical selling where the sales representative makes an appointment with the prospective buyer, understands their needs and proposes a solution by which they could offer their service and closes the deal.
Most of the industrial goods purchase generally involves tendering process which is rampant in government and few private institutions of India. The tender process calls for multiple suppliers and the best bid with low price and satisfying all the necessary requirements of the contract is awarded the task to supply industrial goods.
Business marketing is often directed to individuals within an organization, who act on behalf of the needs of the organization. Business-to-business marketing involves any products or services a company purchases to resell, use as components in their own products or services, or to support their daily operations.
Any given business-to-business transaction can involve years of complex marketing efforts, including online and offline promotions.
Essay # 2.
Meaning of Industrial (Business) Marketing:
Industrial (business) marketing consists of all activities involved in the marketing of products and services to organizations which may be commercial, profit or nonprofit institutions, government agencies or resellers that use products or services in the production of consumer or industrial goods and services and to facilitate the operations of the enterprise.
This includes all activities involved in communicating the value of a business’s products and services to another business.
Business and Consumer Markets 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.
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 an upward wave in its economy.
Essay # 3.
Origin of Business Marketing:
The practice of one vendor 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 and 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 point out those more marketing majors begin their careers in business marketing today than in consumer marketing.
Business markets are markets for products and services, local to international, bought by Businesses, Government Bodies, Institutions such as Hospitals or corporate for incorporation for consumption example, process materials, office supplies and 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 and how the customer uses the product.
Essay # 4.
Nature of Business Marketing:
Nature of business marketing can be summarized as follows:
(i) Business marketing consists of all organisations that purchase goods and services to use in the creation of their own goods and services.
(ii) Business marketing is the process of matching and combining the capabilities of the supplier with the desired outcomes of the customer to create value for the “customers customer” and hence for both organisations.
(iii) Business markets present different types of challenges and opportunities as compared to consumer markets.
(iv) Business markets are markets for products and services, local to international, bought by businesses, government bodies and institutions for incorporation (ingredient material or components), for consumption (process material, consulting services), for use ( installations or equipment)or for resale.
(v) Business marketing is to create value for buying organization with products and services that focus on buying needs.
(vi) Business organization buy products and services to satisfy many objectives like production of goods and services, making profit, reducing costs and so on. Thus, products sold through this route and intention like Iron, Steel Machine Tools, Computers, Office Equipments etc. are called industrial products.
Essay # 5.
Nature of Demand in Industrial Markets:
The behavior of the industrial market demand is dependent on the nature of demand in the consumer markets; thus industrial demand is derived in nature. Joint demand, fluctuating demand, and stimulation of demand are some of the characteristics of industrial demand.
Industrial demand is sensitive to the price of the product, and to the price of complementary products and substitutes. Industrial markets are also characterized by oligopsony. End consumers, business conditions and price are the important factors that influence industrial demand.
A thorough knowledge of industrial demand will help industrial marketers to develop better marketing strategies and adopt practices that minimize the adverse impact of demand fluctuations.
The demand for industrial goods and services is a derived demand, whereby creating a customer often involves satisfying his direct and indirect needs. Thus, the distance between the industrial marketer and those who are the ultimate consumers is often so great that relevant needs and competition are obscured.
The conflicting interests of the direct customer further restrain the ability to-take effective action on indirect customer. Demand for the industrial demand develops from the ultimate demand for consumer goods and services. Demand is derived from the choice and likes of consumers.
Essay # 6.
Types of Demand in Industrial Marketing:
There are principally three types of demands in industrial marketing.
They are:
Derived demand occurs when there is a demand for a good or factor of production resulting from demand for an intermediate good or service.
Derived demand refers to the indirect way in which the need for industrial goods is generated, i.e. from the demand for the consumer goods or services that they are used to make or provide.
For example, the demand for sheet metal is derived from the demand for products made of sheet metal, as is the demand for machines that cut and shape sheet metal.
Demand for an item used in maintenance repair depends on general business activity and is usually determined by sales of all the various articles produced by the manufacturing complex.
The factors influencing derived demand are:
(i) Influence of the Ultimate Buyer:
The pivotal position of the ultimate buyer is particularly noticeable in the case of marketers who sell to manufacturers of original equipment. When the use of a manufacturer’s produce adds value to the buyer’s end product, derived demand can provide the manufacturer with a potent sales appeal.
(ii) Influence of Business Conditions:
As a result of its derived nature, the demand for industrial goods may fluctuate because of changes in the tempo of business operations and subsequent shifts in inventory objectives.
(iii) Influence of Financial Conditions:
The derived character of demand also gives financial considerations a great deal of leverage in determining how much of an item will be purchased. Such considerations are especially influential in the market for industrial equipment.
(iv) Influence of Price:
Over short-run periods, the demand for many industrial products is likely to show a reverse elasticity.
(v) Materials, Components and Supplies:
Ordinarily, when the price of an article declines, its demand tends to increase; when its price advances, the demand for it tends to fall. In the short run, precisely the reverse is true for many industrial materials and some supplies.
(vi) Major and Minor Equipment:
On the whole, the demand for equipment is likely to be less responsive to shifts in price than that for materials, supplies and components.
Joint demand occurs when demand for two goods is interdependent. Example – It is no good having a printer without the ink to go with it. Similarly ink cartridges are no use without a printer. Another example could be a razor and razor blades.
Joint demand is characterized of certain products (such as cars and tires, bread and butter, toothpaste and toothbrushes) which are used together and where a change in the demand for one causes a similar change in the demand for the other.
While the quantity demanded of both will increase or decrease together, their prices may change at a different rate depending on the availability of substitutes.
Joint demand happens when one product requires the existence of others to be careful while exceptions may be found. Most products require several components, parts or ingredients.
Example:
A bakery require flour, salt, preservatives, yeast in the production of bread. If one of the ingredients cannot be obtained other purchases will be curtailed or discontinued. Joint demand situations can also be affected by changes in product specifications.
Industrial customers often prefer to buy from one supplier rather than purchase individual products from different suppliers. The individual products required do not have individual demand, but are demanded only if the “other” products are available in the supplier line.
The demand for business goods and services tends to be more volatile than the demand for consumer goods and services. This is especially true of the demand for new plant and equipment.
A given percentage increase in consumer demand can lead to much larger percentage increase in the demand for plant and equipment necessary to produce the additional output.
Economists refer to this effect as the acceleration effect. Sometimes a rise of only 10% in consumer demand can cause as much as 200% Industrial demand for products in the next period. This sales volatility has led many business marketers to diversify their products and markets to achieve more balanced sales over the business cycle.
The total demand for many Industrial goods and services is inelastic that is not much affected by price changes. Shoe manufacturers are not going to buy much less leather if the price of leather rises unless they can find satisfactory leather substitutes.
Demand is especially inelastic in the short run because producers cannot make quick changes in their production methods. Demand is also inelastic for Industrial products that represent a small per cent of the total cost of the item.
5. Cross Elasticity of Demand:
Cross elasticity of demand is the responsiveness of the sales of one product to a price change in another. It can have a dramatic impact on the marketing strategy of an Industrial firm.
Cross elasticity for substitutes is always positive i.e., the price of one good and the quantity demanded of the other always more in the same direction. The more positive is this ratio the larger the cross elasticity and more definite it is that the products compete in the same market.
Cross elasticity for complements is negative-price and quantity move in opposite directions. The more negative this relationship the more closely the demand for the products is related.
The concept of cross elasticity of demand can be very useful to Industrial marketers. For example the quantity of granite required for construction is related to the price of its close substitute bricks or marble and vice-versa.
It is important that a firm know how the demand for its products is likely to be affected by changes in the prices of other goods and also the interrelationship among industries.
Essay # 7.
Business to Business (B2B) Marketing Strategies:
Business-to-business marketing activities involve the sale of one company’s product or service to another company. In today’s competitive financial atmosphere, more and more business organizations are realizing the advantages of marketing services and products to other businesses.
Unlike B2C (consumer marketing), B2B (business to business) is a complex marketing field, which needs a new form of idea and a different set of talents. B2B marketing strategy involves a set of programs that are coupled with the target market opportunities so that attain organizational goals.
Framing this strategy includes three steps, target market choice, setting marketing objectives and developing the B2B marketing program.
Consider a situation where a firm decides to market its products or services to all consumers or to some business. Here, the strategic decision that the firm has to make is whether to sell to the whole product market as one or in its place to focus on a part of the market.
Additionally, firms should determine at what time a present target market strategy requires to be altered and also when to make a decision to terminate serving a specific target market.
There are products that become irrelevant, unable to survive against competition and have slow growth rates due to declining industry growth. These products normally force administration to move back from a market.
Marketing objectives are declared for every market in certain quantitative and qualitative terms. While the quantitative terms involve market share, sales and contribution to profit, the qualitative terms mean that increasing brand image, getting new customer groups, and building customer understanding.
Quantitative objectives fundamentally consist of demand forecasting, which is made at different levels. The maximum possible sales of a product, in a particular market in a specific time gap, are known as market potential. To be precise, market potential is the total of the sales possible by all the sellers in that business.
Developing the B2B marketing program boasts strategic use of four variables, including product, price, place and promotion. The marketing mix is constituted by these four elements jointly.
An important thing is that these variables are consistent with each other. For example – a quality product variable is not in agreement with a heavy price discount. A price image is inconsistent with a highly stylized product set in an exclusive retail outlet.
Essay # 8.
Target Market in Business Marketing:
Targeted marketing is the process of identifying customers and promoting products and services via mediums that are likely to reach those potential customers.
Targeted marketing classifies potential customers, discovers their preferred content delivery mode and digital hangouts and then builds a marketing strategy aimed at that specific group.
Targeted marketing is generally limited in scope but is often more productive than broader types of marketing because it is designed around specific customer preferences.
Targeted marketing is powered by buyer persona, a model of the ideal customer derived from that customer’s demographics, age, race, preferred websites, blogs or video channels and other similar information.
Companies use this information to promote their products and deliver marketing messages to right type of person in a place they are most likely to see it.
For example – the target market for a company that sells virtual server solutions will be individuals in the IT industry. As such, a company looking to sell such a product will aim to target these individuals by promoting the product on the blogs and websites such individuals tend to visit, rather than promoting the product to a broader audience.
The target market for a business product or service is smaller and has more specialized needs reflective of a specific industry or niche. A B2B niche, a segment of the market, can be described in terms of firm graphics which requires marketers to have good business intelligence in order to increase response rates.
Regardless of the size of the target market, the business customer is making an organizational purchase decision and the dynamics of this, both procedurally and in terms of how they value what they are buying from you; differ dramatically from the consumer market.
There may be multiple influencers on the purchase decision, which may also have to be marketed to, though they may not be members of the decision making unit.
The business market can be convinced to pay premium prices more often than the consumer market if you know how to structure your pricing and payment terms well. This price premium is particularly achievable if you support it with a strong brand.
Promotion planning is relatively easy when you know the media, information seeking and decision making habits of your customer base, not to mention the vocabulary unique to their segment. Specific trade shows, analysts, publications, blogs and retail/wholesale outlets tend to be fairly common to each industry/product area.
What this means is that once you figure it out for your industry/product, the promotion plan almost writes itself (depending on your budget) but figuring it out can be a special skill and it takes time to build up experience in your specific field. Promotion techniques rely heavily on marketing communications strategies.
The importance of a knowledgeable, experienced and effective direct (inside or outside) sales force is often critical in the business market. If you sell through distribution channels also, the number and type of sales forces can vary tremendously and your success as a marketer is highly dependent on their success.
Essay # 9.
B2B Marketing Communications Methodologies:
The purpose of B2B marketing communications is to support the organizations’ sales effort and improve company profitability. B2B marketing communications tactics generally include advertising, public relations, direct mail, trade show support, sales collateral, branding, and interactive services such as website design and search engine optimization.
The Business Marketing Association is the trade organization that serves B2B marketing professionals. It was founded in 1922 and offers certification programs, research services, conferences, industry awards and training programs.
An important first step in business to business marketing is the development of your positioning statement. This is a statement of what you do and how you do it differently and better and more efficiently than your competitors.
The next step is to develop your messages. There is usually a primary message that conveys more strongly to your customers what you do and the benefit it offers to them, supported by a number of secondary messages, each of which may have a number of supporting arguments, facts and figures.
Whatever form your B2B marketing campaign will take, build a comprehensive plan up front to target resources where you believe they will deliver the best return on investment, and make sure you have all the infrastructure in place to support each stage of the marketing process – and that doesn’t just include developing the lead – make sure the entire organization is geared up to handle the inquiries appropriately.
A standard briefing document is usually a good idea for briefing an agency. As well as focusing the agency on what’s important to you and your campaign, it serves as a checklist of all the important things to consider as part of your brief.
Typical elements to an agency brief are – Your objectives, target market, target audience, product, campaign description, your product positioning, graphical considerations, corporate guidelines and any other supporting material and distribution.
The real value in results measurement is in tying the marketing campaign back to business results. After all, you’re not in the business of developing marketing campaigns for marketing sake.
So always put metrics in place to measure your campaigns, and if at all possible, measure your impact upon your desired objectives, be it Cost per Acquisition, Cost per Lead or tangible changes in customer perception.
Essay # 10.
Driving Growth in B2B Marketing:
The tremendous growth and change that business marketing is experiencing is due in large part to three “revolutions” occurring around the world today, according to Morris, Pitt and Honeycutt.
First is the technological revolution. Technology is changing at an unprecedented pace and these changes are speeding up the pace of new product and service development.
Technology and business strategy go hand in hand. Both are correlated. While technology supports forming organization strategy, the business strategy is also helpful in technology development. Both play a great role in business marketing.
Second is the entrepreneurial revolution. To stay competitive, many companies have downsized and reinvented themselves. Adaptability, flexibility, speed, aggressiveness and innovativeness are the keys to remaining competitive today.
Marketing is taking the entrepreneurial lead by finding market segments, untapped needs and new uses for existing products and by creating new processes for sales, distribution and customer service.
The third revolution is one occurring within marketing itself. Companies are looking beyond traditional assumptions and adopting new frameworks, theories, models and concepts.
They’re also moving away from the mass market and the preoccupation with the transaction. Relationships, partnerships and alliances are what define marketing today. The cookie-cutter approach is out. Companies are customizing marketing programs to individual accounts.