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The Business Marketing Course is an important and insightful book that brings together the main theories and contributions of the Industrial Marketing and Purchasing Group in a student-friendly form. The book provides complete coverage of the role of business relationships and networks in domestic and international business - a topic that is now gaining widespread attention among researchers and practitioners and is a vital part of student learning.
—Professor Ian F. Wilkinson, School of Marketing, University of New South Wales, Australia
The second edition of this fine book offers another step forward in terms of structure, coverage and significance. The thoughtful use of figures, tables, boxes and assignments provides further clarity for students.
—Professor Luis Araujo, Department of Marketing, Lancaster University, UK
The new edition of this widely used business marketing text has been completely revised and rewritten. The Business Marketing Course provides a comprehensive insight into business marketing in a compact and accessible format that provides the ideal foundation for courses on business or industrial marketing.
The new edition concentrates on the reality facing business marketers operating in complex and dynamic business networks. The book provides a structured approach to both technology and the development of the marketer’s offerings as well as an expanded guide on how to analyse business networks and customers and how to develop marketing strategy.
The book is essential reading for students who are studying business markets. It is also an excellent guide for all managers who would like a clearer understanding of the complexity of networks in which they operate.
Each chapter in the book concludes with a study assignment based on the authors’ own experience of teaching business marketing.
Aims of this Chapter
To point out the particular characteristics of business markets and business customers and to explain the similarities and differences between consumer and business markets.
To explain the problems and uncertainties that business customers face, the solutions that they seek and why they choose the offerings of particular suppliers.
To highlight the critical task of the business marketing company as the management of its relationships with customers and others and to make a first examination of these relationships.
To explain how each business relationship is part of a complex network of relationships.
The first three chapters in this book discuss ways for the business marketer to understand the complex world in which he has to operate. This understanding will then form the basis for later chapters in which we deal with the tasks facing a marketer. This first chapter will introduce many of the key terms and concepts that we will use throughout this course.
We all know the efforts of companies that try to encourage us to shop in their stores, eat in their restaurants or buy their brands of chocolate bars, insurance policies or cars. We are familiar with the way that these companies package together a combination of product and service in the hope that they will meet our requirements. We spend time reading their brochures or looking in their shop windows. We compare prices and try to judge the relative value of offerings from different companies, before parting with our money. We see their advertising, designed to excite our curiosity or make us identify with the people and lifestyle that they portray. We talk to our friends about the marketing skill of these companies. We are all "experts" in consumer marketing!
But each purchase that we make is the culmination of a vast array of business activities that are not so easy to see and are carried out by many companies, often unknown to us. It is through these activities that products and services are developed, designed, produced, bought, sold, delivered and combined to make up the offerings that are finally marketed to us. This book is about those activities and, in particular, about how marketing takes place between these companies. This is business marketing and it has many similarities to consumer marketing:
Both consumer and business marketing are profits-oriented.
Both are parts of a single process that leads to a purchase by a final consumer.
Both require companies to develop and tailor their skills and resources to satisfy customers' requirements.
Both involve attempts by companies to influence the behaviour of customers.
Both must be based on an understanding of customers' problems and motivations.
However, we will see in this book that business marketing is also different from consumer marketing in a number of ways. These differences are because of the particular problems of business customers and the ways in which they try to solve them. Most students of marketing take up jobs in business marketing and therefore need to understand its special characteristics. Business marketing is more complex than consumer marketing in many ways and thus it can be more challenging for those who work in or study it. But an understanding of business marketing can also help students to a better appreciation of the realities of market behaviour and marketing in general.
The main task of this chapter is to provide a foundation for understanding business marketing. We will not attempt to do this by looking at what happens inside a marketing company and examining its problems and the ways it can plan and operate. Instead, like all good marketers, we will start by looking outside the company at the reality of the surrounding world and the network of companies on which it depends for its success. This analysis will give us an idea of the scale and complexity of business markets. It will also help us to avoid the common marketing problems that follow from looking at the world solely as a set of people that might be persuaded to buy the products that we are selling. Such an approach leads to a very distorted view of those people and their real problems and requirements and ultimately is less likely to be successful.
In this analysis we will also see that business marketing is not just a set of easily learned techniques that can be applied in a mechanical fashion. Instead, it is a complex process of understanding the network of companies around us and working with customers, suppliers and sometimes even with competitors, but also sometimes working against them, through them or in spite of them.
The Nature of Business Markets
Let us start our analysis with the example of a single company that is thinking of buying a major software package. This potential customer will try to evaluate the offerings of a number of potential suppliers. Each is likely to be different from the others. Even if the functionality of their software is similar, each may offer a different level of service, or more immediate availability. These differences in offerings will occur because the suppliers have different abilities, or want different types of customers, or want to gain different things from each sale that they make. The customer will also evaluate the suppliers themselves, as well as their offerings, to find out if they will tailor their offering to its particular requirements, or if they just provide the same to everyone. Because the purchase is important, the customer will also want to check if the suppliers are likely to be a source of future development and whether each supplier is likely to "stand behind" its offer and sort out any problems that may arise.
Similarities and differences between business and consumer purchases
There are some clear similarities between the way that this customer company buys and the way that individual consumers make purchases:
Both the company and consumers will be affected by their previous experience with different suppliers and both will bear in mind the possibility of any future purchases of similar products.
Both will need reassurance if there are aspects of the purchase that they cannot assess for themselves. Both will seek advice from specialists, colleagues or friends if the purchase is difficult or complex.
Both will agonize over some issues they think are important and over some that are unimportant and both will disregard some of each.
Both will make some of these issues explicit, but others will be only implicit and hence much harder for a marketer to see.
Both will also make many simple, repetitive purchases with little or no evaluation.
Both will make purchases when their main concern is to minimize the amount of time that is involved.
But if we look closer, there also seem to be some differences between this business purchase and many consumer purchases. For example:
A number of people are likely to be involved in a business purchase: These may be from different levels in the customer's hierarchy and from a number of functions, such as operations, finance, marketing or purchasing. Each individual will have their own concerns about a purchase, about such things as how reliable the software will be in use, how it will add to the performance of the company's own products or how expensive it will be to buy. Some of these people may provide information to others about possible suppliers, some may evaluate different offerings or suppliers, others may fix the maximum price that the company is prepared to pay. Some may advise on what should be bought, while others take decisions based on that advice. The business marketer must identify who is involved in the purchase, where they are located, what are their interests and how he can reach and influence them.
The number of people involved means that business purchases are often much more complex than those by consumers. But we should also remember that many important consumer purchases, such as a new car, or even a pair of shoes that are apparently made by only a single person are often influenced by others, such as friends or family.
The people involved in a business purchase are professional: Trained individuals with the job title of "buyer" are often involved in making business purchases, sometimes alone and sometimes with others. But in a major software purchase, the potential users of the software may be most involved and most concerned with what is bought and from whom. In this case the professional buyer may simply be the person who places the order after these others have decided what they want. In some cases there may be a formal procedure for making purchases, but in other cases the process may be quite informal and it will be difficult for a marketer to see what is happening or who is involved.
However, the difference between the skill and "professionalism" of business and consumer purchasers is not clear-cut. In the software case, the company may be making a major purchase of software for the first time and those involved may be rather intimidated by the process. They will be far less self-confident or "expert" than those consumer buyers who are experienced buyers of products that are important to them, such as when a keen cyclist buys a new bike.
A business purchase may take a long time from the moment when the issue is first raised till final delivery: How long a business purchase takes will depend on many factors, such as the complexity of the customer's requirements; the importance or value of the purchase; the number of different interest groups involved in the purchase and the level of their knowledge and the help and advice that previous suppliers can provide.
All these factors would be important when buying a major business operating software, just as they would be in the purchase of a gas-fired power station by a company that had previously only used coal or when an airline was thinking of outsourcing its aircraft maintenance to a contractor. In contrast, many other business purchases for low-value, high-use products or services, such as printing paper or car rental are made instantly by a computer from the previous supplier when stocks reach a certain low point, or the item is needed.
Consumer purchases can also take a long time, such as when someone changes their car. It may be a couple of years from when the consumer first thinks that their current car is getting past its best to the time when they actually purchase a new one.
In many cases each business customer is individually important to a supplier and responsible for a significant proportion of its total sales. Similarly, each supplier can be individually important to a customer: If the customer in our example of the software purchase was a large corporation, then the loss of the account would be a disaster to the supplier. It would be a similar disaster for a customer to lose a software supplier on which it had relied for handling all its operations. An even more extreme case of dependence occurs in commercial aviation, where there are only two main suppliers of airliners and only a few dozen major customers.
In contrast, other businesses have many individually unimportant customers. For example, Federal Express provides deliveries for thousands of small businesses. Many business marketers face both situations simultaneously. They have a small number of large customers and a large number of small ones. For example, the major multinational engineering company, ABB has 100 customers that represent 60 per cent of its total sales and 39 000 that account for the remaining 40 per cent.
In the consumer case, each customer is usually relatively unimportant to a supplier, but a single supplier can be very important to a particular customer. Many people buy almost all of their food from a single supermarket or completely furnish their house from Ikea.
A business purchase or sale is not an isolated event: Every purchase will be affected by the previous experience of both customer and supplier, with each other and with others. Each transaction will also affect the future dealings between the companies. Because of this we say that business purchases occur as part of a relationship between customer and supplier. Many business relationships are complex. There is often frequent interaction and information exchange between the two companies, involving a number of people from different functional areas on both sides. Business relationships are often long-term and require both customer and supplier to adapt a number of aspects of their activities.
Consumers also have continuing relationships with supermarkets, fashion stores and producers of everything from cars to coffee. When they need to make a particular purchase they are likely to go to the supplier with whom they have a good relationship. Consumer marketers try to cultivate these relationships using the techniques of "Relationship Marketing". However, the interactions between consumers and their suppliers are likely to be one-way, from supplier to customer by impersonal media such as mail-shots. Consumer marketers are also much less likely to make adaptations to suit particular consumers. Although recently many of them have tried to develop the idea of "mass customization" to more closely tailor their offerings to customer requirements.
A Definition of Business Marketing
These similarities and differences lead us to the definition of business marketing that will form the basis of this book:
Business marketing 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.
Each business relationship has to be managed by a marketing company:
whether it is individually critical to the company's survival;
whether it represents a major part of the company's total sales or purchases or whether it is only one of thousands of similar relationships;
whether it is friendly or antagonistic, close or distant, complex or simple.
Excerpted from The Business Marketing Course by David Ford Pierre Berthon Stephen J. Brown Lars-Erik Gadde Håkan Håkansson Peter Naude Thomas Ritter Ivan Snehota Excerpted by permission.
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Notes on the Authors.
Preface to the Second Edition.
Chapter 1. The Idea Of Business Networks.
Chapter 2. Analysing Business Network.
Chapter 3. Customers and Suppliers.
Chapter 4. Technology, Business Networks and Business Marketing.
Chapter 5. Understanding Customers.
Chapter 6. Managing Relationships with Customers.
Chapter 7. Designing Offerings: Developing the Promise.
Chapter 8. Implementing the Offering: Fulfilling the Promise.
Chapter 9. Costs, Price and Value.
Chapter 10. Developing Marketing Strategy.