Business marketing
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Marketing |
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Business marketing is a
Marketing can be broken down into many sections such as business-to-business marketing, business-to-consumer marketing, as well as business-to-developer marketing. However, business marketing is typically associated with business-to-business marketing.[1]
Origins
The practice of a purveyor of goods trading with another may be as old as commerce itself. In relation to marketing today, its history is more recent. Michael Morris, Leyland Pitt, and Earl Dwight Honeycutt say that for several years business marketing took "a back seat" to consumer marketing.[2] This entailed providers of goods or services selling directly to households through mass media and retail channels. David Lichtenthal (professor of marketing at Zicklin School of Business) notes in his research that business marketing has existed since the mid-19th century. He adds that the bulk of research on business marketing has come in the last 25 years.[3]
This began to change in the middle to late 1970s. Academic periodicals, including the Journal of Business-to-Business Marketing[4] and the Journal of Business & Industrial Marketing[5] now publish studies on the subject regularly. Professional conferences on business marketing are held every year[citation needed] and courses are commonplace at many universities today. According to Jeremy Kourdi, more than half of marketing majors start their careers in business marketing rather than consumer marketing.[6]
Internal and external efficiency
The internal efficiency of a business entity is the factor by which it prepares a product or service in a cost efficient manner.[citation needed] The external efficiency of a business entity is the factor by which it effectively markets itself so as to utilize the market, in order to retrieve maximum profits from that internal efficiency.[citation needed] So in a B2B market setting, the external efficiencies of the business entities due to conduct trade is vital to the success of the B2B transaction, especially if they belong to the same concern, in which case an internal market between the co-owned business entities is emergent.[citation needed] Being able to make use of external economies of scale within the same ownership group is actually one of the motivations for creating a concern.[7][8]
Business and consumer markets (B2C)
Business markets have derived demand – a
A single consumer market demand can give rise to hundreds of business market demands.[
As the spending power of citizens increases, countries generally see an upward wave in their economies. Cities or countries with growing consumption are generally growing business markets.[citation needed]
Vs. consumer marketing
Despite the differences between business and consumer marketing from a surface perspective being seemingly obvious, there are more subtle distinctions between the two with substantial ramifications. Dwyer and Tanner note that business marketing generally entails shorter and more direct channels of distribution.[citation needed]
While consumer marketing is aimed at large groups through
Both business to business (B2B) and business-to-consumer (B2C) marketing is done with the ultimate intention of making a profit to the seller (business-to-business marketing).[
- successfully match the product or service strengths with the needs of a definable target market;
- position and price to align the product or service with its market, often an intricate balance; and
- communicate and sell it in the fashion that demonstrates its value effectively to the target market.
These are the fundamental principles of the 4 Ps of marketing (the marketing mix) first documented by E. Jerome McCarthy in 1960.[9]
While "other businesses" might seem like the simple answer, Dwyer and Tanner say business customers fall into four broad categories: companies that consume products or services, government agencies, institutions and resellers.[citation needed]
The first category includes
Strategies
Target market
Often the
Pricing
The business market can be convinced to pay premium prices more often than the consumer market with appropriate pricing structure and payment terms.[citation needed] This pricing premium is particularly achievable if it is supported with a strong brand.[13]
Size
Hutt and Speh (2001) note that "business marketers serve the largest market of all; the dollar volume of transactions in the industrial or business market significantly exceeds that of the ultimate consumer market."[citation needed] For example, they note that companies such as GE, DuPont and IBM spend more than $60 million a day on purchases to support their operations.[citation needed]
Dwyer and Tanner (2006) say the purchases made by companies, government agencies and institutions "account for more than half of the economic activity in industrialized countries such as the United States, Canada and France."[citation needed]
A 2003 study sponsored by the Business Marketing Association estimated that business-to-business marketers in the United States spend about $85 billion a year to promote their goods and services. The BMA study breaks that spending out as follows (figures are in billions of dollars)[citation needed] :
- Trade Shows/Events -- $17.3
- Internet/Electronic Media -- $12.5
- Promotion/Market Support -- $10.9
- Magazine Advertising -- $10.8
- Publicity/Public Relations -- $10.5
- Direct Mail -- $9.4
- Dealer/Distributor Materials -- $5.2
- Market Research -- $3.8
- Telemarketing -- $2.4
- Directories -- $1.4
- Other -- $5.1
Despite the stream of leads and undeniable impact of marketing in B2B organizations, a 2021 report by Statista states that majority of businesses only allocate 5% of their budget towards promotions.[14] By contrast, B2C companies typically spend 5% to 12% of their total revenue towards marketing.[15][improper synthesis?]
Growth
According to Morris, Pitt and Honeycutt (2001), the growth of business marketing is largely due to three "revolutions".[citation needed]
- Technological revolution. Technology is changing at an unprecedented pace, and these changes are speeding up the pace of new product and service development. A large part of that has to do with the Internet, which is discussed in more detail below. Technology and business strategy go hand in hand. Both are correlated. While technology supports forming organization strategy, the business strategy is also helpful in technology development. Both play a role in business marketing.[citation needed]
- Entrepreneurial revolution. To stay competitive, many companies have downsized and reinvented themselves. Adaptability, flexibility, speed, aggressiveness and innovativeness are the keys to remaining competitive today. Marketing is taking the entrepreneurial lead by finding market segments, untapped needs and new uses for existing products, and by creating new processes for sales, distribution and customer service.[citation needed]
- (Occurring within marketing itself) Companies are looking beyond traditional assumptions and they are adopting new frameworks, theories, models and concepts. They are also moving away from the mass market and the preoccupation with the transaction. Relationships, partnerships and alliances are what define marketing today. The cookie-cutter approach is out. Companies are customizing marketing programs to individual accounts.[citation needed]
Impact of the Internet
According to Anderson and Narus (2004), two new types of resellers have emerged as by-products of the Internet: infomediaries and metamediaries.[
See also
- Business-to-business marketing
- Business-to-consumer marketing
- Business-to-government marketing
- Industrial marketing
- Marketing
Footnotes
- Anderson, James C., and Narus, James A. (2004) Business Market Management: Understanding, Creating, and Delivering Value, 2nd Edition, 2004, ISBN 978-0131408418
- Business Marketing Association (2003) "Marketing Reality Survey"
- Blaney, Bill (2012) B2B A To Z. Marketing Tools and Strategies That Generate Leads For Business-To-Business Companies, Denham Publishing, 2012. p. 8-12 ISBN 978-0988497702
- Dwyer, F. Robert, Tanner, John F. (2006). Business Marketing: Connecting Strategy, Relationships, and Learning (3rd ed.). McGraw-Hill/Irwin. ISBN 978-0073529905.)
{{cite book}}
: CS1 maint: multiple names: authors list (link - Greco, John A. Jr. (June 13, 2005). "Past indicates promising future for b-to-b direct". BtoB Magazine.
- Hutt, Michael D., Speh, Thomas W. (2004). Business Marketing Management: A Strategic View of Industrial and Organizational Markets (8th ed.). Thomson/South-Western. ISBN 978-0324190434.)
{{cite book}}
: CS1 maint: multiple names: authors list (link - Morris, Michael H., Pitt, Leyland F., and Honeycutt, Earl Dwight (2001) Business-to-Business Marketing: A Strategic Approach, Sage Publications Inc.
- Reid, David A.; Plank, Richard E. (2004). Fundamentals of Business Marketing Research. Best Business Books, an Imprint of The Haworth Press, Inc. ISBN 978-0789023117.
- Brown, Duncan and Hayes, Nick. Influencer Marketing: Who really influences your customers?, Butterworth-Heinemann, 2008
- John Fahy and David Jobber, Foundations of marketing, Rogan (2011: p137)
References
- ^ "Business Marketing | Encyclopedia.com". www.encyclopedia.com. Retrieved 2023-10-27.
- ^ Morris, Pitt and Honeycutt, pg. xix
- ^ Chauhan, Gyan; Anbalagan, C. "Strategy and Trends in B2B Business: Opportunities and Challenges - A Global Prospective" (PDF). International Faculty and Student Multi-Research Consortium. Archived from the original (PDF) on 1 September 2015. Retrieved 3 August 2015.
- S2CID 169087808.
- ISSN 0885-8624.
- ISBN 978-9814484664. Retrieved 6 August 2015.
- ^ "Internal vs. External Economies of Scale: What's the Difference?".
- ^ "On the Efficiency of Internal and External Corporate Control Mechanisms".
- ^ McCarthy, Jerome E.: "Basic Marketing: A Managerial Approach". Homewood, IL: Irwin, 1996
- ^ Malaval: "Strategy and Management of Industrial Brands: Business to Business Products and Services", page 16. 2001
- ^ Brown, Duncan and Hayes, Nick. Influencer Marketing: Who really influences your customers?, Butterworth-Heinemann, 2008
- ^ Glynn. Business-to-business Brand Management, Emerald Group Publishing, 2009
- ^ Kotler & Pfoertsch: "B2B Brand Management", page 53. Springer Berlin, 2006
- ^ Guttmann, A (February 26, 2021). "Share of B2B Budgets Devoted To Marketing In The U.S. In 2020". Statista. Archived from the original on 2020-12-03.
- ^ "What is an average marketing budget for a small business?". BDC.ca. 2020-09-12. Retrieved 2023-07-31.