MarketingManagement.pdf

Characteristic Description Example

Fewer buyers

Larger buyers

Close supplier-

customer

relationship

Geographically

concentrated

buyers

Derived

demand

Inelastic

demand

Fluctuating

demand

Business marketers normally deal

with far fewer buyers than do

consumer marketers.

Buyers for a few large firms do most

of the purchasing in many industries.

With the smaller customer base and

the importance and power of the

larger customers, suppliers are

frequently required to customize

offerings, practices, and performance

to meet the needs of individual

customers.

More than half of U.S. business buyers

are concentrated in seven states:

New York, California, Pennsylvania,

Illinois, Ohio, New Jersey, and

Michigan, which helps to reduce

selling costs.

Demand for business goods is

ultimately derived from demand for

consumer goods, so business

marketers must monitor the buying

patterns of ultimate consumers.

Total demand for many business

goods and services is inelastic and

not much affected by price changes,

especially in the short run, because

producers cannot make quick

production changes.

Demand for business products tends

to be more volatile than demand for

consumer products.An increase in

consumer demand can lead to a

much larger increase in demand for

plant and equipment needed to

produce the additional output.

Goodyear Tire Company aims to get

orders from buyers for the Big Three

U.S. automakers (General Motors,

Ford, and Daimler-Chrysler).

Major companies are big customers

in industries such as aircraft engines

and defense weapons.

Tooling supplier Stillwater

Technologies shares office and

manufacturing space with key

customer Motoman, a supplier of

industrial robots, to minimize delivery

distances and enhance their symbiotic

working relationship.^1

Because the Big Three U.S.

automakers have their U.S.

headquarters in the Detroit area,

industry suppliers head there on sales

calls.

The Big Three U.S. automakers are

seeing higher demand for steel-bar

products, mostly derived from

consumers’ demand for minivans and

other light trucks, which consume far

more steel than cars.

Shoe manufacturers will not buy

much more leather if the price of

leather falls. Nor will they buy much

less leather if the price rises unless

they can find satisfactory substitutes.

An increase of only 10% in consumer

demand for computers might result in

a 200% increase in business demand

for related parts, supplies, and

services; a 10% drop in consumer

demand for computers might cause a

complete collapse in business demand.

Table 3.3 Characteristics of Business Markets

Continued

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