Fluctuating demand in b2b marketing examples

1. The Characteristics of Business-to-Business (B2B) Markets

Business-to-business (B2B) markets are generally more rational than business-to-consumer (B2C) markets. The primary decision criteria are quality required for lowest cost. One would think that would make the job of marketing in a B2B environment easier, but clearly as the week's readings illustrate, that is not the case. B2B marketing represents the highest volume of marketing dollars spent. Most of that goes to professional salespeople.

Listen to Ted Schulte, a professional salesperson calling on B2B markets, as he discusses the benefit of relationship selling.

http://app.wistia.com/embed/medias/37400abd9d

The characteristic of B2B markets that is most opposite of B2C markets is the concept of derived and fluctuating demand. These concepts explain why when consumer purchasing goes down, the effect on the economy is multiplied by all the transactions that occur throughout the channels. A slowdown in consumer spending is not good for the economy.

A good way to illustrate derived demand is with an example.

Observe the increase in tourism that occurs after a specific location is featured in a blockbuster movie. What businesses are impacted? Airlines and hotels, Uber, and restaurants of course.

This happened with Mexico City following the release of the 2015 James Bond film Spectre which prominently featured the city in the opening sequence.

Following the success of the Bond film, Mexico City decided to create a "Day of the Dead" experience similar to the film's opening sequence parade to entertain expected tourists. Companies outside of the typical travel space also had to increase capacity to meet demand, both short-term(e.g., artisans, craftspeople, construction workers) and long term (e.g., tour guides). That is derived demand.

Marcus, L. (2020, February 13). Made for travel: When tourists demand something to see. https://www.cnn.com/travel/article/purpose-built-tourist-attractions-intl-hnk/index.html

Can you think of another situation similar to movie/travel effect?

2. Types of B2B Buyers

This section of the week's readings explains the categories of B2B buyers:

producers
resellers
governments
institutions
The US government is the world's largest purchaser of goods and services, spending more than $425 billion per year. Check out this link that lists the Top 100 contractors to the US government and the volume of business they represent. Also note that the US government is required to contract 23 percent of its business to small businesses.

3. Buying Centers

Buying centers, sometimes called procurement, are where B2B buying decisions are made.

Consider your own workplace. Do you work for a company, the military, or at a nonprofit institution such as a hospital? Describe your organization's buying center and how it adds value by procuring what your organization needs to conduct its business and produce its own products or services? How are the buying decisions made?

4. Segmenting B2B Markets

Most organizations determine how to segment their own markets or sometimes industry groups determine the market segments. The B2B market segments are not as numerous as those we discussed in B2C market segments, but just like B2C markets, segmenting business markets is useful as a way to reach the most profitable segments effectively and efficiently.

The week's readings outline one approach to segmenting B2B markets based on behaviors and/or needs. Others are segmented by geography, or by client type, or size of client, giving special attention to those customers who represent a large share of the organization's business. This video explains how segmentation applies in B2B markets.

B2B International Market Research. (2014, February 12). An introduction to B2b segmentation research. [Video] https://youtu.be/ZxDXLWkZfbE

5. Types of B2B Offerings

This section of the week's readings is highly descriptive of the primary categories of B2B offerings.

6. Stages in the B2B Buying Process and B2B Buying Situations

The stages in the B2B buying process do not differ significantly from the B2C buying process. The length of the process and the number of players in the decision does vary greatly. Also, firms have categories of buying processes. It may be a simple routine purchase based on prior experience, or it may be a bid process for a new purchase in which the firm wants to find out as much as it can about the product being purchased and which company is most able to fill the need.

7. Marketing Information Systems (MIS)

You might remember Joy Mead, associate director of marketing at Procter & Gamble, when she spoke about consumer behavior. Listen to this clip to hear Mead talk about the research techniques and methods Procter & Gamble uses to develop consumer insight. You will learn that the company isn't just interested in what consumers want now but also years into the future.

http://app.wistia.com/embed/medias/c89771530a

Primary marketing research is generally used when all other options for gathering marketing data have been exhausted. It is very expensive, and sometimes the research itself is flawed in its design.

One of the areas of primary marketing research we are all familiar with is the customer satisfaction survey. Even this supposedly simple type of survey is difficult to design to elicit the most accurate responses from customers. Let’s get a little experience in question design.

Go to Survey Monkey. Click on “Examples,” then “Customer Satisfaction,” then on the Customer Satisfaction Survey Template, click "Preview." On the right side, click on “Surveys 101.” (You should not have to sign up for an account to access this information.)

Scroll through the tutorial on survey design, paying special attention to the section on "How to Design a Survey."

8. Predicting, Monitoring, and Measuring Marketing Strategies

The readings explain the importance of measuring and monitoring marketing strategies, yet academic research has uncovered the many barriers to measuring return on marketing investment. Here is a video by a Columbia University professor showing his research results highlighting how marketers struggle measuring marketing's impact on a firm's ROI.

Rogers, D. (n.d.). Measuring ROI: Is my digital media strategy working? [Video] https://www8.gsb.columbia.edu/video/videos/measuring-roi-my-digital-media-strategy-working

One of the most measurable of marketing activities is direct marketing. That is because a company can capture the number of inquiries and the percent of those inquiries that result in sales. Digital marketing activities have made measurement easier, especially when a marketer is using search engines and the goal of a marketer is to optimize the results of consumer searches.

Here is a brief tutorial on search engine optimization: https://www.commoncraft.com/video/search-engine-optimization-seo

Now, a marketer can measure how many people reach the website and through a particular online vehicle. How does a marketer take the measurement to the next step, measuring sales revenue that results from those efforts? Could it be as simple as dividing the number of "hits" by the sales revenue generated from those hits over a specific period of time?

The American Marketing Association has developed a marketing dashboard tool for use by its members. Here is a brief description of the dashboard tool and how it is used.

https://youtu.be/uVMe5oeLOyY

Recap of Week 8 Learning Activities

Week 8 introduced us to three special topics in marketing. Business-to-business marketing is not so difficult to understand if you use the framework of consumer marketing as the basis for understanding the differences. Marketing information systems is also a special topic. Those of you who are marketing majors will cover this subject more thoroughly in MRKT 310, Marketing Research. The most difficult topic this week is predicting, monitoring, and measuring marketing activities. The big takeaway, however, should be the critical importance of measurements since companies now demand more accountability for every marketing dollar spent.