Business to Business Marketing

Business to Business Marketing



Business to Business Marketing

Marketing has been refined as a function that concerns all activities impacting on a customer . (Brown 2008) It is the process of planning and executing the conception of ideas, and the pricing, promotion and distribution of goods and services. A company operates in a dynamic environment and researches and understands its customer, in order to design a marketing mix that exerts influence over the market, causing a reaction from the customer. An understanding of organisational buying behaviour is essential for the development of appropriate industrial marketing strategy . A car component supplier, for example Michelin (the world's largest tyre manufacturer, would use this understanding in order to meet the needs of their customers, in this case car manufacturers (such as Volvo and Fiat). (Greco 2005)

Buyer behaviour encompasses all the reasons why customers buy, their choice criteria, when, how and where they buy. Business marketing is a different concept but both are heavily linked. It is the task of selecting, developing and managing customer relationships for the advantage of both customer and supplier, with regard to their respective skills, resources, technologies, strategies and objectives . It relates to the exchange and flow of goods and services from business to business, enabling them to operate, produce, add value and/or resell a certain product or service, in this case to use the tyre to produce a finished product. (Dwyer 2006)

The nature of the product in a business market also needs to be considered. A tyre would be a purchased organisational product, classified as an entering good, in that it is a manufactured part ready to be used in the final assembly stage of the supply chain. According to P. Doyle (2000), the demand for all business goods is ultimately derived from the demand for consumer goods. The amount of tyres bought depends on consumer purchases of cars and the type of cars they buy. Brassington and Pettitt point out that if there is a recession and consumers stop buying new cars, the demand for tyres will also dry up. (Kotler 2006)

However the demand for this product is relatively inelastic (this is true for most business markets), meaning that increase in price will make no difference to the quantity demanded. A tyre is just one component of a car. A fall in the price of tyres will not have an impact on the quantity of cars demanded; therefore the car manufacturer will not require more tyres following the price change. The manufacturer has obligations and orders to fulfill and demand cannot and will not change in the short term. If the price of tyres goes up then the manufacturer will either charge more for the final product, incorporating the price rise into the total costing of the product, or it will look for a cheaper tyre supplier. (Brown 2008)

Business to business marketing can be shown to differ from consumer marketing in the car component sector for several ...