[Music] [Music] Hello friends welcome to the lecture four of our elective B2B marketing so in the last uh lecture we had discussed about the differences in the b2c and the B2B market right so in which we had just covered you know about the differences through the market structure and the buyer Behavior how they are different in the b2c market and how they are different in the B2B market and I also explained a concept called transaction cost and its effect on the business marketers and why business marketers are attempt to reduce the transaction cost so that
the co entire cost of the product can come down and they can become more competitive in nature and buyers can easily buy the product okay so we'll continue from there now today we'll be discussing some more differences for example how the decision making uh differs in the consumer marketing and the B2B marketing if you look at the consumer Market uh there is no as such quality test very little quality test is done right for example if it is done also it is done at the you know manufacturers level and not at the consumer level okay
but in case of a B2B Market the quality check is a very important parameter in fact the B2B Market is all about you know the differentiating factor or the differentiator is about quality and service so how good service a company can offer or how good quality can it offer that uh separates the know one good company from the other so consumer marketing and uh when you compare the B2B market and the consumer Market the quality becomes a very important issue in this B2B market and as I said Also earlier the buyers are ignorant because it's
a standardized product they don't worry about it and they trust a brand for example it's a brand like H or proor and gamble or Marico or anybody so they trust it and they buy it all right but uh here since the B2B Market we had said that most of the products are customized in nature and they done according to the specifications of the buyer so the uh buyer is well informed and the seller is also well informed in fact you will be it is very interesting to know that both you know buyer and seller they
work in a partnership mode uh in a B2B market and it plays a very vital role in the new product development process the decisions are basically amateurish right and a single uh you know person takes a decision largely for example in your house for example either the the mother of the house or the you know the lady of the house she takes a decision and uh but in the B2B marketing it's most like a joint decision making is a professional decision making you know attempt there's hardly any negotiation in a B2 C products but there's
a lot of negotiation in the B2B product why the simple reason is again when I'm saying the product is customized and uh the cost of a product is dependent on several other products for example if you talk about a computer a computer somebody can sell at let's say uh 50,000 Rupees somebody can sell at 60,000 Rupees somebody can sell at maybe some other price why because they can show certain differences in the parts that they are using during the assembly so as a result of it they can you know change the price of the product
okay so uh because of this reason it leaves a scope for negotiation in the uh in this B2B Market but the consumer Market Market because it's a standardized product there is hardly any scope for bargain or you know negotiation the number of influencers who can influence the buying decision is relatively less but here there's a large number of influencers I I'll share a article with you of uh Dr state where he talks about buying behavior of the uh in the industrial markets or the B2B market now the number of influencers in the business Market is
very high why because for example as I said it's a huge volume purchase and it's a very complex know item and uh it has a huge involvement so that is why you see there might be a person who is using the product from the shop floor and there might be a person who is a decision maker or the so the quality control the finance the production the marketing person everybody will try to influence the uh the decision process according to their needs and wants okay so that is one uh difficulty in this market it's a
challenge in the businesses to business Market Marketing in terms of products if you look at uh you know the B2B and b2c the unit of sale is very small so somebody goes to a shop maybe buys a one unit of product but here in the B2B the volume of purchase is very high so large quantity obviously it depends on the kind of frequency or the number of orders you want to make but still comparatively it's a large order right it's a bulk order and the volume discounts are also offered to the buyers service is a
very very less important component uh in the b2c market but here it becomes a strategic key that means it becomes a very uh it's a important differentiator right means you can possibly create a brand right of yourself by using Service as the uh differentiator right so for example when talk about companies like semens when we talk about companies like havs it is not about the only the product because the product might be same so you can't make much of a difference in the product but what you can make is a difference differences in the service
for example yesterday I was reading about castol now castol is a lubricant manufacturer and it is going through certain challenges obviously because the markets are changing and electrical vehicles are coming into place so their usual products are maybe having a little you know difficulty but what castol has interestingly done I was watching the video of its MD so he said that they are now getting into Service uh kind of centers they are built around 1 70 service centers which they will use as uh you know uh key differentiator right they'll provide uh service they'll provide
uh education to the mechanics and they have created competitions like you know super mechanic uh contest so uh all these things they are using just to ensure that their product is is always uh you know uh promoted by these people who can have a direct influence like the mechanic or the garage owner or anybody right so standardized and customized products I have already said and here there is no cost of Maintenance but here the maintenance cost again becomes another important so that is why Service uh becomes a important key factor in the B2B market now
when it comes to pricing I have already said that you know it's a uh a single transaction is a small unit right in a consumer marketing but when you talk about one single transaction in the B2B marketing it is a huge uh transaction right so maybe you may give a order uh worth LHS let's say I wants to buy uh certain equipments for its Laboratories right in certain departments so they will give a know bulk order and they would maybe expect a price discount also right so every transaction is a huge value transaction so it
is significant in nature it is a list price selling and here there's a competitive bidding now you must be knowing what is competitive bidding so where you bid against one seller bid against the other right so the the low the bidder at the lowest cost is generally preferred otherwise if you look at the consumer Market there's nothing such because you can directly go to the shop and buy something so this is a little complex market and here it can be in closed bidding it could be an open bidding you know where you can uh also
uh try to influence through your quality and all no negotiation as I have already said and here negotiation on Price is a must as why why what's the reason because nobody knows what the right price is of a B2B product let's say if I am buying a new uh you know uh CNC or a lead machine I don't know what is its price because the price depends on two three factors one what are the competitors selling at what price and the other is the parts that I am buying what is the price of those parts
right for example I was again referring back to that video from Castrol so where uh you know the MD was saying that they have been hit hard because of the increase in the price of raw materials right for their lubricants manufacturing and all so this is uh you know something the part which is hidden in nature right so we don't know exactly what are the different parts involved in the complex machinery and how much of cost has changed in these parts so because the price of the change in components will also influence the price of
the final assembly or the final product so all the things are very important simple pricing policies and here very complex pricing policy right so your pricing policy may involve lot of warranties Services maintenance U volume discounts quantity you know that's volume and quantity same maybe certain time based discounts all these issues right there's no condition of leasing now I hope you understand leasing leasing is a concept where you know a company can without investing its capital or purchasing a item they can take it on rent so leasing is generally done in these markets in the
B2B Market because these are very Capital intensive items so a machine may be worth let's say four five crores even right and then you don't know how much of use you can make out of it and let's say uh you are uh if you invested in that and tomorrow there is a change in technology or something happens then the entire Machinery may be uh not so useful to you so that is why leing is a very uh important uh uh part of the B2B market then coming to the channel right so sales is generally done
through retail outlets here and here it is done through the industrial uh middlemen so the industrial middlemen is are people who are educated and they uh understand the quality of the product the its uh different specifications it's you know uh its use application everything so these middlemen are the people who also sometimes take the ownership of the product and then they add certain value to the product and they act as resellers to that okay possibly a very long Channel you must have seen that in the consumer market for example you know the manufacturers at one
end and the end consumers at the other hand and there is there are three to four uh people involved in between the retailer wholesaler distributor all these people but in the B2B Market there's a very very short channel the simple reason what the simple reason behind it if you see you can't have a long channel in the B2B Market because here there has to be a close relationship between the buyer and the seller if the seller is not close to the buyer and they don't have a direct interaction they might not even understand what is
the requirement of the buyer so that is why if you go through a channel then automatically there will be information uh know uh which will be missed so that is why industrial channels or B2B channels are very short in nature they're generally directly from the manufacturer to the buyer or maybe maximum one level right so sales Outlets are less uh in the B2B Market in comparison to the b2c market and obviously the stock holding is also pretty less because business owners business uh you know houses they are very tick Savvy they are they understand te
technology they understand the importance of competition the role of Technology the change in technology that can have an impact on them and all these things so they would never ever try to hold too much of material because they know the technology might change and can become obsolete or there a new trend might come in the market people might not want your product so it depends uh how much of stock holding you want to keep but that is I I will not say always it is less this less is also a relative word it depends on
what kind of a material you are holding so for example there some materials which are which we need in less amounts but they are very Capital intensive some materials are there which are very generally standardized like nuts bolts and all which we may keep as a C-Class item maybe we requireing bulk so it depends on the class of item also okay now promotion first of all promotion is a is one word which is very less spoken or used in the B2B Market it is only and only in the consumer Market that you see a lot
of promotion right so that is why when you because of this promotion only one reason is that that you understand everybody understand the consumer Market much better than the business Market because business marketers don't believe in promotion right they don't believe in uh all those fancy and you know impulsive buying approaches because they know their product is a more complex and high involvement product so whoever will buy will like to know more about the product and they will be more involved in the product right so that is mass advertising in consumer market and here it
is personal selling so when there is personal selling obviously there's no requirement of advertisement very little if it is required fanciful imaginative themes and here rational and factual so it is exactly what people look into they would like to tell that right so what exactly do they require they will try to prepare the product accordingly the markets need salesperson's role here is persuasive nature right so in the consumer Market the sales person tries to persuade right but here it is not about persuasion it is about problem solving so the sales people is a person is
generally a mechanic or engineer or somebody who has a technical knowledge and he can help you in the problem solving for example the sales people in a company like IBM or infosis or vpro are people who will come to your company and they will try to understand your problem and then try to solve a problem right but that is a different uh in the consumer Market just a persuasive role right right so that is why advertisement also in connection with it plays a very vital role and the purchase decision is simple and short in the
consumer Market but here is a very complex and lengthy process so even if you look at uh any purchase in the B2B Market it can span up to years not even days and months it can up to span up to years right and uh here there are small and frequent orders so people tend to give small and frequent orders but here there are large and infrequent ERS for some products it could be large frequency can be you know decisive or frequency can be debatable because it depends on what class of items it is but generally
they are large orders so there's no penalty as such but here there is a penalty generally involved in the B2B product because if you do anything wrong right then you will have to be you will be penalized for it and because you have to pay for our losses that is how this relationship works okay weak vendor loyalty and here High vendor loyalty that means what the vendors are no more uh just vendors in the B2B Market they are more like Partners so they help in the new product development process right so there's a lot of
loyalty factor involved in fact there are interesting case studies about buyer Supply relationship in the B2B Market where buyers have you know invested heavily in the sellers and they have tried to build infrastructure for them and according to what they would require their products what kind of products they require accordingly they have invested in the vendors infrastructure and they've ensured that they always make a regular purchase from vendors so this vendor loyalty is a very important point because these are capital and long time Horizon products okay so this relationship can last for long because it's
not a one or two day Affair okay here you generally use a eoq model economic order quantity which we say you know which is affected by demand and the know holding and ordering cost and here we generally follow a jit model just in time model of buying because we don't want to keep too much of inventory with us so whenever we require we will get the material so that kind of an arrangement is generally happens right now as I was saying you know industrial demand uh is a very important indicator for any country right so
industrial growth industrial demand is a very important indicator suppose let's say the construction industry grows right along with the construction industry what comes is steel cement labor you know different other materials so industrial demand is an indicator of a country's growth right so many of times if you see uh even uh you know in terms of economics if I explain there is a concept where even uh governments try to put in their uh money so that investment can grow up or production can grow up right so they believe that more the production more the consumption
right automatically economy will become more healthier in nature right so an example if you see the demand for industrial product simply means the quantity of the industrial goods which businesses are demanding in all products so if you look at the this is for the steel you know production and consumption of Steel right crude steel and finished Steel so from 2016 to 20 you can see there is a constant rise and only in 2018 there was a fall slight fall right and uh for the same in Finish steel also right now in export and import also
you can see this uh know that there has been a slight fall in comparison to 17 but 18 uh 19 and 20 if you see but 20 again there was coid and coid uh also has affected which you cannot understand from this graph but if you extend the graph further you can understand that coid also had a major impact and it was once in a century you know kind of a event so it made a serious dent on our uh demand for products and all people people didn't have the money to purchase right and producers
were having already inventory a lot of inventory with them so there was no need of making more so these kind of issues happened uh and raw material costs improved and everything happened now uh coming uh from here we try to see that when you talk about consumer products you must have read about you know levels of a product so a product at certain levels we say now basically we say there are five levels of a product so is the same logic applicable to the B2 Market are can we understand the B2B Market from this product
level Theory this product level theory was given by Philip Cotler where he tried to explain how can a product be understood from different level point of view what are these levels let's see so so the question Here Comes Is can B2B products be understood from a product level perspective too let's see so as Cotler had mentioned so a product can have a core benefit it can then have a basic product it can then be you know have a expected uh some product then it can be a augmented product and then finally a potential product so
he he says that every product is small to small product for example a let's say a cosmetic or a you know a soap or anything so everything can be divided into these five levels and can be understood through these five levels and if you understood understand this three five levels then it will be very easy for you to even go to the uh B2B products in the same way now core benefit is something like we say that's the minimum requirement right kind of a thing and as we go up we will see that up to
the expected product you hardly can create any differentiation because all your measor competitor or you know the producers they generally give the same kind of output right but yes if you look at the last two stages right so these two stages here you can make it you can use it as a differentiator so Suppose there are two players in the market A and B now A and B can challenge each other by bringing in ch changes which are augmented in nature or which are potential in nature so can this Theory which Cotler has you know
proposed can this also be uh helpful to understand the B2B Market let's see so the step one it says is what is your core product right that's what it said so core so customers buy core products to fulfill a need right so the questions that you need to answer while asking this question is why do people buy a product your product or anybody's product what are their core needs what benefit do they get from purchasing your product so suppose you are a manufacturer of let's say certain computers or you know uh let's say softwares or
something so why should a person buy your product what are his core needs and what benefits will they get by purchasing your product right for example an example I have taken is core need is Digital Image processing right so I'm into digital image processing and uh where you must have about adob Photoshop and all like softwares so which is something I want to do right so this is my core need so what you can do you can write down the to make it more uh you know for any if you are a manager or somebody
what you can do is you can write down your points and the benefit they get from the product and the success of the product at meeting this core needs so what how would you rate the success so that is a judgmental you know kind of a thing you may take a opinion of the sales people the marketing team or uh some customers who have used the product and give a score uh from 1 to 10 so 10 being the higher side and one being on the lower side and the competitive strength of you know of
the the features in between in the market that is available so how would you place yourself so by doing this it at least gives you a more quantitative knowledge or a number that is better to understand or better to compare against others than uh just being subjective in nature then what are your generic products now this is the one the image processing we are talking about now what are your generic products now generic products are generally made up of the various qualities and features of your product so what features does your product contain that the
customers need what benefit does the customer get from each feature now you have so many features but let's say many of the features customers might not be using for example I have seen at least in Mobile phones for example there are many features which we don't even use and I think you would agree to me what are the opportunities for improving the generic product how can I improve the generic product right so again we write it like this and we try to make a comparison right now in this case generic the need to process digital
images could be satisfied by a generic and personal computer using free image processing software or a processing laboratory so he says this is the generic thing right so if I have successfully passed through the core and generic what is next the next is the expectation so what is the expectation that the customer has from us now expectation are what people imagine they will get from the product they buy so if you don't give this much whatever they expect then they will be dissatisfied rather you should always be trying to as a company or a B2B
marketer you should be trying to give more than what the uh customer can think right which is augmented and potential so what can be the you know expectations what expectations do people have of the product for example that it will last forever that it will never break down it will give them a status so these are some expectations and please remember these things can change with time I'll explain that now in this case the expectation the compu is the computer is specified to deliver fast image processing and as a high resolution and accurate color screen
right so if you look at it you can feel oh well this is really good I was expecting and I am getting what I was expecting right then comes the next level and that is where I had said initially that here this is the step where you can create a differentiation right so you can be different from your uh competitors and you can maybe do better right because the first three steps are moral or less basic requirements and customers expect minimum this much augmented products are those elements that differentiate the product from the competition this
could be intangible such as brand and image also so the process is same how do your customers perceive your brand to be different from the competition what do your customers value about your brand so these are very challenging questions and every marketer B2B marketer or anybody they have to answer to these questions so so some you cannot shy away you just can't avoid these questions because sometimes this in if you answer these questions you may score very poorly but at least it will help you to correct yourself Rectify yourself and grow up augmented the computer
comes preloaded with a high-end image processing software for no extra cost or at a deeply discounted incremental cost so this is the augmented now the next step right and finally is the potential what are the potential components your product offers right now products and offers have to change we now look at the future components so as I said technology is changing so here you can see virtual reality or augmented reality so we are talking about those kind of Concepts which have are coming up right for example companies like Tata Technologies which is a great Indian
company now these companies are into the space of you know even uh in gaming for nazara Technologies now these companies are now getting into one notch further right so they're trying to expl ask the questions like what are the unmet needs of the customers what are the unmet needs what do customers uh need which we have could not have met till now how easy is it to fulfill this unmit need how will fulfilling the unmit need affect the demand for my product now after doing this exercise the potential say the customer receives ongoing image processing
software upgrades with new and useful features for example so new technology you tell them you upgrade them so this is something that is regularly offered by the marketer so these five steps are very essential and maybe you are into a B2B or a B2 C it doesn't matter I will rather say that in the B2B uh know Market it is sub it is more important because these are high and complex items and the involvement of customers is very high and the effect of any breakdown or loss is very significant so accordingly if you break up
this into these levels and understand them and try to CER to each it can help you to enrich your product to improve your product okay what I'll do is I'll stop here right and in the next uh lecture we'll continue with something uh fresh from here and uh I hope you have understood what I have explained uh we'll meet in the next lecture thank you [Music]
