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BUS 321
| Term | Definition |
|---|---|
| Derived demand | Demand for industrial products depends on demand for consumer products |
| B2B demand volatility | Small changes in consumer demand cause large changes in industrial purchases |
| B2B market characteristics | Fewer buyers larger buyers and geographically concentrated |
| Types of business products | Installations accessory equipment raw materials component parts process materials MRO supplies business services |
| Importance of relationships | B2B buying involves high risk multiple decision makers and long-term value |
| Buying Center | Group of people involved in the B2B buying decision |
| Buying center roles | Users influencers deciders approvers buyers gatekeepers |
| Straight rebuy | Routine reorder with little evaluation |
| Modified rebuy | Purchase with changed terms specifications or quantities |
| New-task buy | First-time purchase requiring extensive evaluation |
| Organizational buying influences | Environmental organizational interpersonal individual and situational factors |
| Vendor analysis | Evaluating suppliers on price quality reliability service and support |
| MUG (Marketer’s Ultimate Goal) | Create an increasing base of profitable repeat customers who give referrals |
| Two revenue sources | Get more revenue from current customers and gain new customers |
| How to grow current-customer revenue | Increase transaction size increase purchase frequency increase price |
| Market segmentation | Dividing a market into meaningful similar identifiable groups |
| Importance of segmentation | It is the first step in creating a marketing strategy |
| PMGM (Ansoff Matrix) | Market penetration product development market development diversification |
| Segmentation requirements | Measurable accessible substantial responsive |
| Sales forecast role | Used for inventory planning resource allocation scheduling and cash flow |
| Forecasting methods | Judgmental quantitative and combination |
| Forecast accuracy | Improved by using multiple forecasting methods |
| Product definition (B2B) | A bundle of benefits and solutions that provide value |
| Competitive advantage | Satisfying customer needs better than competitors |
| Core vs add-on benefits | Core = required attributes add-ons = differentiators |
| Customer sacrifices | Price acquisition costs operations costs |
| What matters to B2B buyers | Add-ons trustworthiness and lower operations costs |
| Product positioning | How customers perceive your product vs competitors |
| Perceptual map | A visual representation of competitive positioning |
| Positioning steps | Identify competitors identify attributes collect ratings evaluate positions select strategy |
| Product development phases | Idea generation screening specs development beta testing launch |
| Lead user | Early adopter with advanced needs influencing innovation |
| Product management tools | Product life cycle and BCG matrix |
| Distribution channel | The marketer’s bridge to the market |
| Channel objectives | Right product right place right time |
| Channel tasks | Selling negotiation transport inventory financing storage training |
| Channel types | Direct and indirect |
| Direct channel conditions | Complex sale customized product large accounts need negotiation |
| Indirect channel conditions | Fragmented markets small transactions buyers buying many items |
| Multi-channel use | Serve large customers directly and small customers via intermediaries |
| Distributor | Full-service intermediary that takes title and carries inventory |
| Distributor functions | Technical support credit delivery customer maintenance assortment |
| Manufacturers’ rep | Independent agent who sells but does not take title paid by commission |
| Channel member motivation | Margins and commissions that meet market norms |
| Channel management issues | Selecting motivating managing conflict evaluating performance |
| Distribution competitive advantage | Working closely with channel partners creates sustainable advantage |
| SCM definition | Coordinating suppliers manufacturers distributors and customers to increase efficiency |
| SCM goals | Reduce waste speed up flows meet customer needs minimize inventory |
| SCM benefits to firms | Lower costs faster response to market demand |
| SCM benefits to customers | Better quality lower costs improved service |
| Logistics vs SCM | Logistics = movement/storage SCM = entire supply chain coordination |
| Logistics management | Managing flow and storage from point of origin to point of consumption |
| Logistics activities | Customer service order processing transportation warehousing inventory packaging handling |
| JIT | Inventory system aiming to reduce inventory to near zero |
| JIT risk | High risk because products cannot be inspected before use |
| Transportation modes | Rail truck air water pipeline |
| Logistics and retention | Logistics keeps customers satisfied and loyal |
| Transactional relationship | Short-term exchange focused on low price |
| Collaborative relationship | Long-term trust-based partnership focused on mutual value |
| CLV | Total lifetime profit expected from a customer |
| How to increase CLV | Retention upselling cross-selling lower service costs |
| Switching cost | Financial or emotional cost of changing suppliers |
| Why B2B relationships are complex | Multiple decision makers long cycles high risk |
| Role of trust | Reduces uncertainty increases cooperation and loyalty |
| Effective pricing | “The harvest” capturing created value |
| Pricing challenge | Many stakeholders with different goals |
| Price elasticity | Responsiveness of demand to price changes |
| Elastic demand | Demand changes significantly with price changes |
| Inelastic demand | Demand changes very little with price |
| Cost-plus pricing | Price = cost + markup |
| Target pricing | Start with a target price based on customer value then design costs |
| Break-even formula | Fixed costs ÷ (Selling price – Variable cost) |
| Price skimming | Charging a high initial price to recover development cost |
| Skimming marketer benefit | Recovers development costs early |
| Skimming innovator benefit | Segments the market by willingness to pay |
| Penetration pricing | Low initial price to gain market share quickly |
| When penetration is used | High elasticity competitive threat and cost reductions possible |
| Price change question | “Why is the competitor doing this?” |
| Risk of matching a price cut | Dangerous because competitor may cut again |
| Avoiding price wars | Add value-added features |
| Intangibility | Services cannot be seen touched or stored |
| Inseparability | Services are produced and consumed simultaneously |
| Variability | Service quality varies based on provider |
| Perishability | Services cannot be stored |
| Lack of ownership | Customer buys access not ownership |
| Importance of service quality | Drives loyalty and retention |
| Service blueprint | Diagram mapping service steps to ensure consistency |
| Services in B2B | Differentiates suppliers reduces risk and increases value |
| Importance of communication | Products don’t sell themselves benefits must be communicated |
| Primary B2B communication tool | Personal selling |
| MarCom mix | Advertising sales promotion PR direct marketing personal selling |
| MarCom challenge | Must blend with other marketing strategies |
| Awareness objectives | Build brand personality support sales calls create demand |
| Action objectives | Generate leads increase attendance build mailing lists close sales |
| Most important buying impetus | Word of mouth |
| Why WOM matters | Buyers use trusted recommendations to reduce risk |
| Customer journey shift | More reliance on online media |
| What customers seek online | Information during evaluation |
| Post-purchase behavior | Sharing their experiences online |
| WOM vs referral marketing | WOM is organic referral marketing is structured and incentivized |
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