Business Marketing Techniques

Archive for February, 2010

There are fewer numbers of buyers and sellers in business markets. The business market is larger than consumer markets because it includes the business of various intermediaries. Business markets have fewer sellers and buyers in any market segment than do consumer markets. Customers in consumer markets initiate a direct demand with their purchases. The demand for business products or services depends on the level of activity that the buying organization can create in its own markets.

Thus business demand is derived. This derived demand would not exist if the buyer organization could not find customers for its own products or services.
The business buyer may buy an equipment to produce five hundreds units a day. A second equipment will be required only if sales are expected to exceed five hundred units. But as soon as the business buyer’s sale exceeds five hundred units, he will buy another equipment, increasing the sale of business marketer’s product by hundred percent. As a result, there is no direct one to one relationship between the business buyer’s sales fluctuations and the business marketer’s sales.

This makes the sales to business buyers more volatile than changes of demand experienced in consumer markets by a retailer. Business markets include the various early, value adding stages of manufacturing and distributing consumer goods, and also the sales of business goods and services to manufacturing, processing, commercial, institutional, and government organizations. The business market is significantly larger than consumer market.

Businesses tend to concentrate geographically because of the availability of natural resources or of skilled work force, the distribution advantages, or the desire to be close to customers. Thus, business markets tend to be geographically concentrated and business marketers have to travel long distances from one cluster of customers to another. Consumers markets are more diffuse. The organization buying unit called decision making unit involves several individuals because various departments of an organization are affected by the purchase.

Business marketers are required to have in-depth knowledge of their customer’s requirements. Business markets are global in nature because only technical requirements govern the acceptability of the product in various country markets. Consumer marketers use demographic variables like age, income, location and socio-psychological variables like attitudes, preferences, personality, and lifestyle to segment their markets. Business marketers are segmented on the basis of industry, end market served, level of technology, ownership, and characteristics of the buying unit.

Business markets have higher investments in capital equipments and R&D. consumer marketer’s investments are directed more toward marketing activities like researching their huge customer base and promoting to mass markets. Consumer marketers seek regional or national markets because their products are created to appeal to local tastes. Business goods are less dependent on regional and tastes and preference. Also, their specialized technologies and limited applications require that customers be sought outside home markets to achieve economic production volumes and to justify high R&D costs and capital investments.

Therefore business marketers must have more global perspectives of markets, in terms of both customers and competitors. Most consumer marketers seek market share and sales volumes. Business marketers are more likely to have a sizable share of highly segmented, smaller, specialized markets, resulting in more restricted sales volumes. Thus business marketers focus on improving profits in the short run. In consumer markets, innovation involves greater emphasis on style and incremental changes to products that can justify model changes.

Innovation tends to be more of demand-pull type, i.e. new products are developed as a result of research of customer needs. Innovation in business markets is characterized by R&D inspired technological push and radical-breakthroughs that may revolutionize the entire industry. Such innovations would not come by trying to identify to unsatisfied customer needs. Business marketers deal with smaller number of customers, frequently on a face to face basis. They are more sensitive and responsive to their customer’s requirements.

Business buyers focus on rational benefits of the seller’s offer. Many people of the buyer’s organization are involved in any purchase decision. Because their number of customers are small and there is frequent face to face contact, business marketers are closer to customers and more in tune with customer’s buying behavior. The number of customers in business markets is small but per order size is normally high. They buy to keep in inventory so that the item can be used in future.

They buy in bulk because they want to minimize transportation cost and the cost incurred in placing an order. They also buy in bulk and keep inventory to minimize chances of disruption in their work if a supplier failed to supply on time. Business buyers may have contracts to purchase items for a year with a supplier. Long term contracts lasting up the life time of the component are becoming common in business markets. Buyers and sellers become interested in each other operations in many ways. Such intrusive relationships are not very frequent in consumer markets.

By their very nature, services impact customers more directly than products do. A customer walks into a restaurant and realizes immediately whether the ambiance is pleasant or not. Few minutes into the facility, and most customers have already realized whether they have made the right choice of the service provider. Some of the services are more urgently needs than products. Patients may need the immediate attention of doctors.

And again due to its very nature, service providers come in more frequent and intimate contact with customers, and therefore providers have more opportunities to please customers or put him off. For these reasons marketing of services has to be more deliberate and considered. A service provider has to carefully audit his resources and competencies, and then conduct market research to locate the segment which it can serve best. And when it comes to positioning, the provider has to be much focused.

The customer stays in the premise of the provider for long periods of time and has more chances of discovering discrepancies and inconsistencies in the provider’s positioning plank. And also because most customers are very clear about the quality of the service that they want. And when they walk in a premise expecting that level of service, they get very disappointed if their expectations are not met, because such expectations are very precise. So positioning of services has to be razor sharp.

Services are made intractable than products because they come in various shades and hues. The provider has to define his service very precisely and also design the appropriate service-product mix. The basic service, like eating in a restaurant is just one part of the entire service offering. The ambiance, the music and behavior of the employees are other vital components of the service. And decisions have to be made very precisely as to how and in what degree will the ancillary elements be incorporated in the main service.