Marketing by business types

Mag. Maria Peer
Marketing by Business Types
Transaction processes of industrial products and services are very heterogenous
Example: selling standardized screws which are regularly sold to the same customer (eg. integrated supplier to the automotive industry) is to be treated differently to the
selling of complex waste water plants with high investment volume and its significantly higher risk of making a wrong decision.

Mag. Maria Peer
B2B Marketing
The most close-to-the-market business function cannot provide the same programs and tools for these different tasks
Marketing literature provides certain typologies for B2B companies

Mag. Maria Peer
Backhaus – defined four different types of business
Supplier to
industry
Investment
Systems
Products
+
-
-
+
Dependcency between transactions
Number of potential customers

Mag. Maria Peer
Backhaus – 4 different types of business - systems
The vertical axis indicates if the transactions are independent from each other or if they are dependent. These can be found when customers decide on a certain system, but do not buy all relevant items at once.

Mag. Maria Peer
Backhaus: 4 different types of business
supplier to industry: The dependency is also strong because of suppliers regulations and quality standards
The horizontal axis shows the potential number of customers. Very low in the case of supplier to industry or with investment goods – steel plants, ships oil platforms

Mag. Maria Peer
Backhaus: 4 different types of business
With products or systems: the number of potential customers can be very high. Eg. in the construction equipment industry this can be the whole sector.

Mag. Maria Peer
Product business
Markets in the product business are frequently rather anonymous. The buyer is free. There is no dependence on previous purchases.

Mag. Maria Peer
Specific marketing considerations for product business
Product policy: product development and innovation, range of products
Prices: to find the right competitive price – in relation to the benefit provided, define the price strategy carefully
Distribution policy: different sales structures, after sales service
Communication policy:?increasing trust in the product supplied (brand) ?providing sufficient information ?establishing and maintaining customer relationship ?communicating and ensuring competitive differentiation

Mag. Maria Peer
System business
Also confronted with a widely anonymous market. But in contrast to product business there is a connection between purchases. The customer has a certain benefit when he decides to stay with the same supplier.
System business is found typically in the field of information technology. The decision to buy a certain server system, a software package influences later decisions dramatically. Customer is uncertain. Marketing?reduce uncertainty by standardization or increasing the customer‘s confidence.

Mag. Maria Peer
Specific marketing considerations for system business
Product policy: supplier has to consider compatibility with his customers existing system (releases in IT-business)
Price: introductory offers – higher prices with later buyers
Distribution: due to complexity of goods – some distribution channels cannot be used, personal sales with experienced sales people ? service options, network, after sales services
Communication: specifies due to interdependence
Increasing customer‘s confidence
Proving the customer to have made the right decision
Reducing the feeling of risk – provide references and testimonials

Mag. Maria Peer
Supplier to industry business
Single customers ? long term relationship, customer becomes dependent
Substitution of business partners is difficult = heavy-weight-key account management

Mag. Maria Peer
Supplier to industy business
Single customer focus: highly specialised solutions, causes advanced interaction and integration of processes on both sides. The customer influences product research and development. 3 main quality aspects: product, lifespan, availability
Integration of product features – products can be used only by one customer
Integration of lifespan: eg. LCD-panel of an industrial testing device – if it drops out it would be more economical to replace the whole item; the quality of seats of cars has to be guaranteed for the whole car‘s average lifespan

Mag. Maria Peer
Supplier to industy business
Integration of availability: the more OEMs (Original Equipment Manufacturer) reduce their own vertical range of manufacture – the more important it is to provide just in time availability ? influences the production and logistics process
Longterm interdependency: products are standardized for the single customer

Mag. Maria Peer
Specific marketing considerations for supplier to industry business
No hit-and-run situations possible
Product policy <- customer
Price – regulated by contract and determined by longterm agreement
Communication – most important in the initial phase or loosing the customer