1.

Explain the major differences between Consumer and Business Markets regarding: number of
customers, sales-volume, buyer-seller relationships
Characteristic B2B Market B2C Market

Sales volume Greater Smaller

Purchase volume Greater Smaller

Number of buyers Fewer Many

Size of individual Larger Smaller

buyers

Location of buyers Concentrated Diffuse

Buyer-seller Closer More

relationship Impersonal

Nature of channel More direct Less direct

Buying influences Multiple Single/Multiple

Type of negotiations More complex Simpler

Use of reciprocity Yes No

Use of leasing Greater Less

Key promotion Personal Selling Advertising

method

BUYER-SELLER RELATIONSHIP
- Technical expertise an asset
- Interpersonal relationships between buyers
and sellers
- Significant info exchanged between participants
on a personal level
- Stable, long-term relationships encourage
- Less technical expertise
- Non-personal relationships
- Little info exchanged between
participants on a personal level
- Changing, short-term relationships
encourage switching loyalty
2. Which different forms of demand can be found in the B to B market?
- Derived demand: is the demand experienced by the chain of suppliers and producers that
contribute to the creation of a total offering. Without initial consumer demand, there will not
be any demand on the chain of suppliers
- Joint demand: two products are used together and demanded together. Both products are
consumed at the same time
- Discontinuous demand: when a consumer goods manufacturer experiences an increase in
demand, additional raw materials and supplies are consumed. Suppliers of these items
experience greater demand and are required to increase production capacity. When the
demand on suppliers reaches a level that is the maximum that existing facilities can efficiently
product, the capitalization of new production capability is required, resulting in a
discontinuity in supply capability
- Inelastic demand: If a manufacturer has taken a particular component into its production
process, the manufacturer may not be able to quickly substitute to another component in the
production of a product even though the price of the component would have gone up
- Volatile demand: Small changes in the end-users demand for products can cause big changes
in the demand for components, products or services in the supply chain
3. What kind of trends and changes can be found in the B to B market?
- Hypercompetition: smart, fast competitors
- Formation of partner networks: Products, projects, and systems have become so complex and
interrelated that no company can provide a whole product by itself
- Adoption of information technology and the internet: Internet technology offers enhanced
communication, enhanced customer service, and reduced costs.
- Supply chain management: Tracking, accounting systems, online ordering, inventory,
coordination of marketing programs, automated sharing of market information, etc…
- Time compression: an increase in the speed of doing business. With hyper-competition,
competitive pressures cause companies to attempt to get new products and to replace these
products with succeeding generations of products even more rapidly
4. What is a Buying Center?
The buying center is a collection of individuals with a stake in the buying decision, individuals who
contribute to the final purchase decision. Members of the buying center determine the
organization’s needs and the methods the organization uses to satisfy them
5. What organization departments are usually considered to be part in a buying center?
Finance, production, purchasing, engineering, etc...
6. Which steps are included in the Buying Decision Process?
Problem Recognition -> General Need Description -> Product Specification -> Supplier/Source
Search -> Proposal Solicitation -> Selection -> Make the Transaction Routine -> Evaluate
Performance
7. Why is it difficult to generalize the process of business buying behavior?
Familarity on the nature of the process. Effect of the supplier’s marketing process, particularly in
the early stages of the buying process. Complexity of the problem and solution. Risk aversion of
the decision makers and influencers. Importance of the decision.Speed with witch the solution
needs to be in place. Complexity tends to lengthen the process. Importance and risk aversion tend
to make the proces proceed with more rigor or canse and tend to involve people higher in the
 organizational hierarchy. A requirement for speed tends to work against rigot and case and tends
to reduce the scope of investigation
8. How could you define Strategy?
Strategy is the determination of goals or objectives and the general means for reaching them. The
objectives include target levels for profitability, sales, growth and other measures important to
the firm. address, what kind of products of services to offer in these markets, what kind of actions
need to be performed to obtain paying customers and what resources are needed to accomplish
the actions
9. Describe the hierarchy of business strategy
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10. Explain the steps in the strategic management process.
Setting goals and objectives -> Analysis of the current situation -> SWOT analysis -> Strategy
design and choice -> Implementation plan design -> Strategy implementation -> Monitoring the
environment and performance -> Analysis of variance from desired performance levels ->
Adjustment based on analysis of variance
11. What is the balanced scorecard and how can it be used in the company’s strategic management?
A tool to integrate the strategic management process. Focuses on the goals of the organization
and quantifies these into specific performance targets. Goals and measures are specified in four
core areas: financial performance, customer perspective, internal business performance,
shareholder value
The process pursued in developing the scorecard starts with managers discussing their vision for
the company’s future and what will contribute to it. A list of potential scorecard criterias are
drawn accordingly. Strategy-makers discuss the list and agrees upon the future strategy and a
shorter list of measures. Then vision, objectives and measures are set. A set of activities to
address the performance targets is designed and implementation plans are instituted. Data are
collected and compared to the targets. Performance becomes the driver for strategy and strategy
changes
12. Is it necessary to segment a market in a B2B context?
Yes. Segment makes it possible to know a market well enough to tailor an offering to the specific
needs of a few customers rather than creating an offering whose attributes are compromised
13. How important is positioning in B2B-markets?
• For new customers: For each target segment chosen, the members will have one or more value
dimensions that are most important to them. The company must design an offering to each
segment that creates superior value to the segment’s members in a differentiated way.
• For old customers: Positioning depends on the customer’s own experience with the solution
(product, service and other dealings with the supplier). Communication can help the customer to
focus on important aspects of his experience, set expectations and interpret results of usage.
Customer’s evaluate value based on what they actually received
• So, companies must provide better value than competitors, communicate the differented offering
and deliver the promised offering as well as find ways to surpass your customers’ expectations
14. Explain market segment and niche market.
Niche is a segment that is relatively small with fairly well-defined boundaries. The term is often
used in a way that suggest that the niche can be served mostly or entirely by a single supplier
15. Discuss the phases in the generalized product life cycle. How can a marketer use the model?
 Development, introduction, growth, maturity, decline stage.
16. What are the possible pitfalls in the elimination of b2b-products or product-lines when they reach
the start of their decline in the market?
Not a simple financial decision, eliminating a product can have an impact not just on the
organization but on the organization’s customers as well. The discontinuation may affect the sale
or profitability of other products or product lines. Company image may be affected when an
elimination-decision of a solution has been made
17. What role does marketing play in the new product development process?
Understand the technology in depth, from the viewpoint of the user. Define and redefine current
and future customer needs. Motivate other company departments and organizations. Screen and
select ideas from all sources. Guide the new product development with the continuous
redefinition of current and future customer needs already noted. Reward the efforts of the
technical and support staff. Catalyze company resources to get the right talent on the job – be
willing to cross traditional company boundaries
18. Why do new products fail and what can be done to eliminate these risks?
- Poor marketing is a major cause of product failures. No market study performed (22%). The
missing Marketing Plan. No real need exists (28%). The market size is overestimated or a “me
too” product fails to penetrate the market (24%). The offering fails to meet needs adequately
(15%). Market will not pay (13%)
- A good marketing plan is a solution to all of these
19. How does innovation differ from proactivity?
Innovation: is the creation of something new and commercially useful or the improvement of
something to make it more useful. It might involve the application of science or technology, but
does not have to
Proactivity: is doing something before others do it. Taking the lead in a market or in a new
development, even when the offering that will become obsolete by your action is your own, is a
key element in market ownership
20. What is the difference between radical innovation and disruptive innovation?
Radical innovations can product large changes in the functions and performance of a product or
offering
Disruptive innovation: introducing a product or business idea that creates a new kind of value
21. How are positive associations for a brand established in the memory of persons in the customer’s
buying center?
Every time ustomers interact with a supplier, use its product, or interact with a customer service
person, impressions are formed. Every time they see an advertisement, hear a news story, or talk
to someone who has an opinion, impressions are formed
22. What kind of pricing decisions can be made through the stages in the Product Life Cycle?
- Introduction stage:
Innovators form the customer segment. The Marketer is trying to obtain adaptation from
innovators who usually don’t have big budgets and who don’t really need the product anyway.
No real competition exists, so pricing can be set commmensurate with perceived value
eventhough value may not yet be readily apparent. Pricing is more constrained by customers
perceptions than by competitive pressures and the marketer may focus more on learning about
 needs and building early references than on creating cash-flow. Price may be a way of getting
customer’s reactions to price levels
- Growth stage:
Early adopters are the main customer segment. The offering is usually custom-built and is still
undergoing rapid improvements in design and performance. The supplier may want to obtain trial
and therefore uses penetration-price. The customer organizations may provide a forecast of
usage that the supplier can use in financial and capacity planning efforts. The supplier may also
try to pay for ongoing R&D costs, plus customization cost and training costs
If the design and development process has not been part of a collaboration or partnership
between the supplier and the customer, R&D, customization and customer training will tend to
push the price up. Early adopters may see the product as something that provides a competitive
advantage and tend to place a high value on it, justifying relatively high prices
- Maturity stage:
Consolidation happens among participants. The structure of the supply base begins to appear
oligopolistic. A few dominant players begin to exercise the ability to control the market. The
dominant suppliers control pricing, often by investing in cost reductions to be able to drive prices
lower
Reducing cost is sometimes done by outsourcing technology development. Companies will try to
find low-cost sources of undifferentiated product or service modules. On the other hand,
performance improvement through technology integration is an important source of competitive
advantage. If parts of the production is outsourced, a potential risk is that the company looses its
ability to fully integrate the technology with other parts of its products and therefore looses a
portion of its unique value
Pricing during maturity depends upon how much the supplier can differentiate its offering. Since
product features offer little chance for differentiation, usually differentiation arises in the
relationship between the supplier and the customer. If the supplier succeeds in creating
nonproduct differentiation, a higher price can be charged. If the relationships are not strong
enough, the supplier needs to be able to drive costs down to stay competitive and profitable
- Decline & Maturity stages:
As the market moves into decline, pricing depends upon the market segments still served and the
number of suppliers still competing for a market-share
Because of unique switching costs, some users may continue to use old technology, equipment
or supplies. A premium price may then be possible to charge for such customers, but there is a
upper limit set by the switching costs. Customers may stay with older products as long as they can
get a low price. Depending on the supplier’s cost structure, it may still be profitable to serve these
customers
23. Define Price Skimming and discuss in what kind of market conditions the technique can be used.
Price skimming is charging relatively high prices that take advantage of early customers’ strong
need for the new product. Since the benefits of the product are so attractive and/or important to
them, customers are willing to pay higher prices
Without competitors offering similar products, the supplier can charge a skimming price and these
first customers will pay the premium
24. Discuss the different actions in Managing Pricing Tactics.
- Bundling, when several products or services are sold together as a package for one price
- Discount, reductions in price for some special reason
- Allowance, a credit against price given to channel members in exchange for some logistical or
market-prospecting new accounts, for providing after-sale service of for advertising. Determine
what needs to be done to influence the final customer’s buying decision and then providing
sufficient incentive for the channel intermediary to perform the necessary activities
Customers and resellers get used to getting discounts and allowances and expect them. It must
be made clear that reductions are offered only for specific purposes
- Competitive bidding, can be arranged to choose suppliers. It can be done in different ways, sealed
bid and open bid. Mostly, the lowest bid wins the contract, but in many cases the customer
evaluates the total offering and chooses the vendor it considers to offer the best package
- Initiating price changes, can be considered due to changes in the nature of demand, competition
or used technology in the market. Price levels will need to be reviewed and at times, prices will
need to be changed. Price changes will induce reactions from customers and competitors
25. Why can channel structure differ between segments, even though the products are the same?
Customers in different market segments may have different expectations about the level of
services that are provided with purchases
26. Explain the four kinds of economic utility
Form utility is the usable quantity or mode of the product most preferred by the customer
Time utility describes the availability of the product when the customer needs it
Place utility is demonstrated by delivery of component parts directly to the customers’
manufacturing site
Possession is the methodology by which the customer obtains ownership or the right to use of
the product or service
27. How is the repeated, ongoing relationship in business to business selling an advantage for both
the seller and the buyer?
The repeated, ongoing nature of the relationship can eventually permit the seller to be a
motivator in new solutions for the buying organization
28. What risks must be considered when changing representation from manufacturers’
representatives to a direct sales force?
The cost of sales calls
29. Explain what promotion can do and what it cannot do.
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30. What types of promotion are most appropriate at the different stages of the buying decision
process?
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31. Explain the use of Trade Shows as a tool to both sales promotion and public relations.
Trade Shows and Conferences, attendance at industry trade shows is expected of any serious
player in the market segment. Without visibility at the industrys show it is much more difficult to
build avareness among potential customers. Companies position themselves by attending to
certain trade shows. Technical conferences or seminars usually occur simultaneously with trade
shows. At trade shows’ press conferences new product introductions or new alliances are
announced. Trade shows usually generate sales leads and inquires that should be followed up as
soon as possible by the field-teams
32. What communication purposes can be addressed in a B2B Web site?
Recognize and understand companies’ problems. Collect and compare info about alternative
solutions and costs. Collect and compare info about alternative suppliers, their partners, and their
successful delivery of value to priot customers and easily and quickly obtain such things as training
materials, user manuals, and troubleshooting guides for use during the installation, testing, and
use of the supplier’s products or service.