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Principles of Marketing, chapter 7, Unit 2
Terms in this set (50)
Disintermediation has occurred less frequently than many expected
Because distributors perform many functions including aggregation of supplies from multiple sources, delivery, processing returns and providing credit.
Many business customers depend on knowledgeable distributors
For information and advice that are not available to them online. Especially true for small firms.
The reintroduction of an intermediary between producers and users.
Companies that use reintermediation
Often realized that providing direct online purchasing only was similar to having one store in a city selling a popular brand.
Strategy that entails seeking and establishing ongoing partnerships with customers.
RElationship marketing has become an important business marketing strategy
As customers have become more demanding and competition has become more intense.
Are more profitable than those who are price-sensitive and perceive little or no difference among brand/suppliers.
To help retain clients, Mimeo.com uses relationship marketing
By developing an automated system that sends out e-mails or triggers a live contact each time a customer places an order or asks a question.
Marketers should determine their most profitable customers
And look at how to improve the customer experience and how to increase business with those customers in B2B relationship marketing.
A cooperative agreement between business firms. AKA Strategic Partnership
A cooperative agreement between business firms. AKA Strategic Alliance
Strategic Alliances can take the form of
Licensing or distribution agreements, joint ventures, research and development consortia, and partnerships.
Strategic Alliances may be between
Different manufacturers, manufacturers and customers, manufacturers and suppliers, and manufacturers and channel intermediaries.
Strategic Alliances are formed
By business marketers to strengthen operations and better compete.
Office Depot and Netbizz Office Supplies strategic alliance example
One is an office supplier in Singapore, and this was intended to allow customers to use the other international network for their multicountry supply needs. Alliance offers a convenient procurement solution for customers.
Sometimes alliance partners can be fierce competitors, for example
DHL partnered with UPS where UPS provides all airlift services for DHL in the US.
Sometimes alliances are formed between companies that operate in completely different industries.
Choice Hotels and 1-800 Flowers share call-center employees because it's cheaper than outsourcing. When one company experiences increased demand it can call on the other partner's employees and both companies report her employee retention and better recruitment.
For an alliance to succeed in the long term
It must be built on commitment as well as trust
A firm's belief that an ongoing relationship with another firm is so important that the relationship warrants maximum efforts at maintaing it indefinitely.
A perceived reduction in commitment
By one or both parties in a strategic alliance often leads to a breakdown in the relationship.
The condition that exists when one party has confidence in an exchange partner's reliability and integrity.
Japanese term for the feeling of nuturing concern for, and dependence on another.
By reciprocity and personal relationships
A network of interlocking corporate affiliates
Within a Keiretsu
Executives may sit on the boards of their customers or their suppliers.
Members of Keiretsu
Trade with each other whenever possible and often engage in joint product development, finance, and marketing activity.
Four categories of Business Customers
Producers, Resellers, Governments and Institutions
Producers Include profit-oriented individuals and organizations
That make buy goods and services to produce other products, incorporate into other products, or facilitate the daily operations of the organization.
Examples of Producers
Include construction, manufacturing, transportation, finance, real estate, and food service firms.
Original Equipment Manufacturers
Individuals and organizations that buy business goods and incorporate them into the products that they produce for eventual sale to other producers or to consumers.
Stands for Original Equipment Manufacturers, and are individuals and organizations that buy business goods and incorporate them into the products that they produce for eventual sale to other producers or to consumers.
Examples of OEMs
Companies like General Motors that buy steel, paint, tires, and batteries.
Retail and wholesale businesses
Finished goods and then sell them again for a profit.
Mainly to final consumers
Mainly to retailers and other organizational customers.
Consumer Product Firms Like P&G, Kraft Foods, and Coca-Cola
Sell directly to large retailers and retail chains and through wholesalers to smaller retail units.
Business Product Distributors
Are wholesalers that buy business products and resell them to business customers.
Include thousands of federal, state, and local buying units.
Government Organizations are
The largest single market for goods and services in the world.
When governments award contracts, sometimes the lowest bidder is awarded the contract
When this is not true, strong evidence must be presented to justify the decision.
Grounds for government to reject the lowest bid
Include lack of experience, inadequate financing, or poor past performance.
Bidding allows all potential suppliers
A fair chance at winning government contracts and helps ensure that public funds are spent wisely.
While much of the federal government's buying is centralized
No single federal agency contracts for all the government's requirements and no single buyer in any agency purchases all that the agency needs
Paperwork in State, County, and City Governments
Is typically simpler and more manageable tan it is at the federal level.
While paperwork is easier when businesses sell to local governments
Vendors must decide which of the over 82,000 government units are likely to buy their wares.
State and Local Buying Agencies Include
School districts, high-way departments, government-operated hospitals, and housing agencies.
Institutions are organizations
That seek to achieve goals other than the standard business goals of profit, market share, and return on investment.
Institution segment includes
Schools, hospitals, colleges and universities, churches, labor unions, fraternal organizations, and civic clubs among others.
Xerox example of selling to Institutions
Offers education and medical institutions the same prices as government agencies (the lowest possible price) and has a separate sales force that calls on these customers.
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