Chapter 7: Business Marketing
1
Chapter 7
Business Marketing
This chapter begins with the learning outcome summaries followed by a set of lesson plans for
instructors to use to deliver the content.
• Lecture (for large sections) on page 4
• Company Clips (video) on page 6
• Group Work (for smaller sections) on page 7
Review and Assignments begin on page 8
Review questions
Application questions
Application exercise
Ethics exercise
Video Assignment
Case assignment
Great Ideas for Teaching Marketing from faculty around the country begin on page 21
Chapter 7: Business Marketing
2
Learning Outcomes
7-1 Describe business marketing
7-2 Describe trends in B-to-B Internet marketing
B-to-B companies use the Internet in three major ways. First, they use their websites to facilitate
communication and orders. Second, they use digital marketing to increase brand awareness.
7-3 Discuss the role of relationship marketing and strategic alliances in business
marketing
Relationship marketing entails seeking and establishing on-going partnerships with customers. A
7-4 Identify the four major categories of business market customers
Producer markets consist of for-profit individuals and organizations that buy products to use in
Chapter 7: Business Marketing
3
7-5 Explain the North American Industry Classification System
The North American Industry Classification System (NAICS) is an industry classification system
7-6 Explain the major differences between business and consumer markets
In business markets, demand is derived, inelastic, joint, and fluctuating. Purchase volume is
7-7 Describe the seven types of business goods and services
Major equipment includes capital goods such as heavy machinery. Accessory equipment is
7-8 Discuss the unique aspects of business buying behavior
Business buying behavior is distinguished by five fundamental characteristics. First, buying is
Key Terms
Accessory equipment
Derived demand
Original equipment
Chapter 7: Business Marketing
4
manufacturers (OEMs)
Business marketing (industrial,
business-to-business, B-to-B, or
B2B marketing)
Joint demand
Processed
materials
Business product (industrial
product)
Keiretsu
Raw materials
Business services
Major equipment (installations)
Reciprocity
Business-to-business online
exchange
Modified rebuy
Relationship commitment
Buying center
Multiplier effect (accelerator
principle)
Straight rebuy
Component parts
New buy
Strategic alliance (strategic
partnership)
Consumer product
North American Industry
Classification System (NAICS)
Supplies
Content marketing
Trust
Lesson Plan for Lecture
Brief Outline and Suggested PowerPoint Slides
Learning Outcomes and Topics
PowerPoint Slides
LO1 Describe business marketing
7-1 What Is Business Marketing?
1. Business Marketing
2. Learning Outcomes
3. Learning Outcomes (continued)
4. What Is Business Marketing?
5. Business Marketing?
6. Business and Consumer Products
LO2 Describe trends in B-to-B internet
marketing
7-2 Trends In B-to–B Internet Marketing
7. Trends in B-to-B Internet Marketing
8. Trends in B-to-B Internet Marketing
9. Trends in B-to-B Internet Marketing
(continued)
10. Content Marketing
11. Content Marketing (continued 1)
12. Content Marketing (continued 2)
LO3 Discuss the role of relationship marketing
and strategic alliances in business
marketing
13. Relationship Marketing and Strategic
Alliances
14. Relationship Marketing
15. Strategic Alliance
Chapter 7: Business Marketing
5
Learning Outcomes and Topics
PowerPoint Slides
7-3 Relationship Marketing and Strategic
Alliances
16. Relationships in Other Cultures
LO4 Identify the four major categories of
business market customers
7-4 Major Categories of Business Customers
17. Major Categories of Business Market
Customers
18. Major Categories of Business
Customers
LO5 Explain the North American Industry
Classification System
7-5 The North American Industry
Classification System
19. The North American Industry
Classification System
20. North American Industry
Classification System (NAICS)
LO6 Explain the major differences between
business and consumer markets
7-6 Business versus Consumer Markets
21. Business versus Consumer Markets
22. Nature of Demand in Business
23. Business versus Consumer Markets
LO7 Describe the seven types of business goods
and services
7-7 Types of Business Products
24. Types of Business Products
Types of Business Products
LO8 Discuss the unique aspects of business
buying behavior
7-8 Business Buying Behavior
25. Business Buying Behavior
26. Aspects of Business Buying Behavior
27. Buying Centers
28. Roles in Buying Centers
29. Evaluative Criteria
30. Buying Situations
31. Business Ethics
32. Customer Service
33. Key Terms
34. Key Terms
35. Summary
36. Summary
Suggested Homework
• The end of this chapter contains assignments for the Zappos video and for the IBM case.
• This chapter’s online study tools include flashcards, visual summaries, practice quizzes,
Chapter 7: Business Marketing
6
and other resources that can be assigned or used as the basis for longer investigations into
marketing.
Lesson Plan for Video
Company Clips
Segment Summary: Zappos
Zappos, known for its outstanding customer service and speedy shipping, also gives away
information about making organizational culture work for employees and the company. The
program, Insights, offers companies assistance in building strong cultures around core values in a
variety of ways, starting with free tours. Despite seeming like this would give away valuable
competitive information, Zappos is expanding this service to help other companies deliver
happiness to their customers.
Pre-Class Prep For Your Students
• Have students familiarize themselves with
the following terms and concepts: business
marketing, the four major categories of
customers, business versus consumer
markets, types of business products, and
customer service.
• Have students visit the Zappos Insights
website: http://www.zapposinsights.com.
As they browse, they should consider how
Zappos uses the above concepts on their
website.
Video Review Exercise
Activity
Warm Up
• Begin by asking students the following question: “What is the difference
between business and consumer markets?” See if they can give examples.
Chapter 7: Business Marketing
7
In-Class
Preview
• Review the definition for relationship marketing.
• Ask students for their best explanation to the following statement from the
textbook: “Building long-term relationships with customers offers companies
a way to build competitive advantage that is hard for competitors to copy.”
• While acknowledging salient points in students’ explanations, write the
following points on the board:
o Loyal customers are profitable = win
o Loyalty earns customer rewards = win
• Review the Company Clips questions with students. They should be prepared
to answer them after viewing the video.
Viewing
(Solutions
below)
1. What benefit does Zappos receive from developing its Insights program?
2. In what ways does Zappos seek out business customers? In what ways does it
build its relationships with its business customers?
Follow-up
Take-home-assignment: Have students take the Zappos tour
(https://www.zapposinsights.com/tours). Have them write a paragraph discussing
why other companies might want to visit Zappos and how the Zappos culture
could be applied at other companies.
Solutions for Viewing Activities
1. What benefit does Zappos receive from developing its Insights program?
2. In what ways does Zappos seek out business customers? In what ways does it build its
relationships with its business customers?
Lesson Plan for Group Work
In most cases, group activities should be completed after some chapter content has been covered,
probably in the second or third session of the chapter coverage. (See “Lesson Plan for Lecture”
above.)
Chapter 7: Business Marketing
8
• For “Class Activity—Marketing to Distribution Channels,” divide the class into small
groups of four or five people. Provide the information and the questions asked by the class
activity.
• Applications questions 1, 2, and 8 lend themselves well to group work. For these activities,
divide the class into small groups of four or five people. Each group should read the
question and then use their textbooks, or any work that was completed previously, to
perform the exercise. Then each group should discuss or present their work to the class.
Class Activity—Marketing to Distribution Channels
Ask your students to go to the Internet and locate websites that are targeted to business
customers. Have them report on the information available at these websites that would be
valuable to the business customer. Also have them report on the types of marketing appeals that
are used to attract business customers. Have them evaluate the effectiveness of the website from
a marketing and customer service perspective.
Review and Assignments for Chapter 7
Review Questions
1. Why is relationship or personal selling the best way to promote in business
marketing?
2. Explain how a marketer could use the website
http://www.census.gov/eos/www/naics/index.html to better understand the NAICS
system.
There is a link on the top of the NAICS Web page labeled “FAQs” that answers frequently
3. How might derived demand affect the manufacturing of an automobile?
Chapter 7: Business Marketing
9
© 2018 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
demand for rubber. So automobiles, with so many complex components, drive the demand
for a great many products, hence the derived demand.
4. Intel Corporation supplies microprocessors to Compaq for use in their computers.
Describe the buying situation in this relationship, keeping in mind the rapid
advancement of technology in this industry.
Students should address some of the points outlined below.
Application Questions
1. As the marketing manager for Huggies diapers made by Kimberly-Clark, you are
constantly going head-to-head with Pampers, produced by rival Procter & Gamble.
You are considering unlocking the potential of the business market to increase your
share of the disposable diaper market, but how? Write an outline of several ways you
could transform this quintessentially consumer product into a successful business
product as well.
2. How could use you use the website http://www.btobonline.com to help define a target
market and develop a marketing plan?
This website provides some services to organizations that wish to do business with other
organizations. Links on the website include: services, resources, finance, tools, media kits,
© 2018 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
3. Reconsider question 1. How could you use the Internet in your business marketing of
Huggies diapers?
Students’ answers will vary but should include ideas for all four Ps.
4. Understanding businesses is the key to business marketing. Publications like
Manufacturing Automation, Computer Weekly, Power Generation Technology &
Markets, and Biotech Equipment Update can give you insights into many business
marketing concepts. Research the industrial publications to find an article on a
business marketer that interests you. Write a description of the company using as
many concepts from the chapter as possible. What major category or categories of
business market customers does this firm serve?
Students’ answers will vary since they can select any business marketer.
5. What do you have to do to get a government contract? Check out the websites
http://www.fedbizopps.gov and http://www.governmentbids.com to find out. Does it
seem worth the effort?
Students’ answers will vary.
6. Pick a product, and determine its NAICS code. How easy was it to trace the groups
and sectors?
Students’ answers will vary depending on the product selected.
7. Your boss has just asked you, the company purchasing manager, to buy new
computers for an entire department. Since you have just recently purchased a new
home computer, you are well educated about the various products available. How will
your buying process for the company differ from your recent purchase for yourself?
As with family purchasing decisions, several people may play a role in the business
purchase process. The boss is the initiator and may be the decider. The coworkers for
© 2018 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
8. In small groups, brainstorm examples of companies that feature the products in the
different business categories. (Avoid examples already listed in this chapter.) Compile
a list of ten specific products, and compare them with another group. Have each
group take turns naming a product, and have the other groups identify its
appropriate category. Try to resolve all discrepancies through discussion. It is
certainly possible that some identified products might appropriately fit into more
than one category.
Students’ answers will vary widely by group.
9. A colleague of yours has sent you an e-mail seeking your advice as he attempts to sell
a new voice-mail system to a local business. Send him a return e-mail describing the
various people who might influence the customer’s buying decision. Be sure to
include suggestions for dealing with the needs of each.
Students’ answers should address some of the points given below.
The initiator is the person who first suggests making a purchase. This could be a CEO or
an office manager or someone else. Influencers or evaluators often define specifications for
Application Exercise
Chapter 7: Business Marketing
12
Purchasing agents are often offered gifts and gratuities. Increasingly, though, companies are
restricting the amount and value of gifts that their purchasing managers can accept from vendors.
The idea is that purchasing managers should consider all qualified vendors during a buying
decision instead of only those who pass out great event tickets. This exercise asks you to
consider whether accepting various types of gifts is ethical.
Activities
1. Review the following list of common types of gifts and favors. Put a checkmark next to the
items that you think it would be acceptable for a purchasing manager to receive from a
vendor.
Advertising souvenirs Automobiles
Clothing Dinners
Discounts on personal purchases Food and liquor
Golf outings Holiday gifts
Large appliances Loans of money
Lunches Small-value appliances
Tickets (sports, theater, amusement parks, etc.) Trips to vendor plants
Vacation trips
2. Now look at your list of acceptable gifts through various lenses. Would your list change if
the purchasing manager’s buying decision involved a low-cost item (say, pens)? Why, or
why not? What if the decision involved a very expensive purchase (like a major
installation)?
3. Form a team and compare your lists. Discuss (or debate) any discrepancies.
Purpose: This exercise helps students confront the gray areas in their own ethical perceptions.
Setting It Up: Distribute the checklist above. You can have students work individually, in pairs,
or in groups to complete it. Expect some debate, as differences over what students consider
ethical are bound to arise. After students have had adequate time to determine the gifts they find
ethical, show them the grid on the next page. Discuss any differences in perceptions.
This exercise was inspired by the following Great Idea in Teaching Marketing:
Gregory B. Turner, College of Charleston
Student Ethics Versus Practitioner Ethics
This exercise can be used during a logistics or ethics segment in a basic marketing class. The
students find it quite enjoyable, and it helps promote student participation in the classroom. I
Chapter 7: Business Marketing
13
have developed a standard list of gifts and gratuities that are offered to purchasing agents. This
list was developed based on personal research as well as other current research in this area. I
distribute the list along with a scenario that places the students in the roles of purchasing agents.
The students are asked to then indicate the acceptability of the gifts and gratuities to them. The
class then computes the averages and compares the results to previous outcomes of practitioners.
The results typically generate some spirited discussion.
TYPE OF GIFT/FAVOR
A
B
C
D
E
F
G
H
Advertising Souvenirs
29
19
69
30
54
80
73
92
Automobiles
0
0
—
0
—
—
1
1
Clothing
5
0
6
16
0
—
7
3
Dinners
38
10
22
79
8
—
48
70
Discounts on Personal
Purchases
11
5
9
18
15
—
11
21
Food & Liquor
31
5
49
40
0
36
30
29
Golf Outings
26
5
2
57
0
—
28
47
Holiday Gifts
27
17
29
56
0
—
43
30
Large Appliances
0
0
—
0
—
2
1
1
Loans of Money
0
0
—
0
—
—
1
1
Lunches
47
24
36
93
23
80
68
90
Small Value Appliances
2
5
0
6
0
6
6
6
Tickets (Sports, Theater, etc.)
28
5
13
59
0
42
37
60
Trips to Vendor Plants
39
11
42
48
0
—
31
51
Vacation Trips
0
0
0
2
0
4
2
2
A = 1995 – 1997 NAPM National Meetings (Turner et al. 1998)
B = 1994 State of South Carolina (Turner et al. 1995)
C = 1994 State of Alabama (Turner et al. 1995)
D = 1992 NAPM C-V Region Survey (Turner et al. 1992)
E = 1990 State of Arizona (Forker 1990)
F = 1990 Purchasing World Readers Poll (Modic 1990)
G = 1988 NAPM and Ernst & Whinney Survey (Janson 1988)
H = 1979 NAPM and Illinois Institute of Technology Survey (Anjou 1979)
Ethics Exercise
Cameron Stock, purchasing manager for a sports equipment manufacturer, is responsible for
Chapter 7: Business Marketing
14
buying $5 million of supplies every year. He has a preferred list of certified suppliers who are
awarded a large percentage of his business. Cameron has been offered a paid weekend for two in
Las Vegas as a Christmas present from a supplier with whom he has done business for a decade
and built a very good relationship.
Questions
1. Would it be legal and ethical for Cameron Stock to accept this gift?
It may be legal to accept the gift in certain states, but it would not be ethical. Although
2. How is this addressed in the AMA Code of Ethics? Go to the AMA website at
http://www.marketingpower.com, and reread the Code of Ethics. Write a brief
paragraph summarizing where the AMA stands on the issue of supplier gifts.
There is no specific paragraph in the code regarding supplier gifts. There is, however, a
Video Assignment: Zappos
Zappos, known for its outstanding customer service and speedy shipping, also gives away
information about making organizational culture work for employees and the company. The
program, Insights, offers companies assistance in building strong cultures around core values in a
variety of ways, starting with free tours. Despite seeming like this would give away valuable
competitive information, Zappos is expanding this service to help other companies deliver
happiness to their customers.
1. Zappos Insights is an example of:
a. business supplies.
b. B-to-B e-commerce.
c. business service.
d. an accessory for businesses.
© 2018 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
2. When Zappos started charging for certain training events, they were worried that people
would not pay. However, they have paid. What does this indicate about the Insights
program?
a. The Insights program has great service, just like Zappos.
b. The Insights program is a high-quality program that offers great service for a price
that is acceptable to businesses.
c. The Insights program is priced low enough to be acceptable for management
consulting services.
d. The buying center agreed on using the Zappos program.
3. The primary customers of Zappos are consumers. However, Zappos Insights experiences
very different customers, including:
a. all members from the buying center.
b. OEMS, raw materials handlers, and other B-to-B providers.
c. resellers, producers, and institutions.
d. members of strategic alliances.
4. Zappos wants to deliver happiness to the highest number of people, which has driven the
company’s commitment to work with other companies to help them develop a culture
promoting happy employees. This could be considered:
a. a joint demand for happy employees.
b. a derived demand for joy into the supply chain.
c. a strategic alliance for culture building.
d. the multiplier effect of happiness.