What is Business Marketing

What is Business Marketing and What Does it Depend On?

Business marketing is the formulation of strategy to sell products and services to other organizations. This strategy is also influenced by the characteristics of the product or service itself, irrespective of the target market. Let's find out what it exactly is.
Business marketing has evolved to indicate the marketing of any product or service to an organization that is itself involved in the development of products and services for others. It is also known as industrial marketing.

Nature
The issues which business marketers face are significantly different than those that face marketers of consumer products or services. The fundamentals, of course, are similar. That is, all marketers are concerned with the selection of target markets, with segmentation within these markets, and with decisions regarding product, promotion, pricing, and distribution.

The nature of organizational buying, characterized by multiple influences, professional buyers, and long-term relationships, is very different from that of consumer buying. Because companies buy in order to achieve organizational purposes, there is more emphasis on functionality.

As a result, most products and services produced to meet the needs of organizations, find markets in many countries. Selection of markets, the critical decision, has the horizontal dimension of consumer goods, plus a vertical dimension.

Strategy
At the heart of business marketing is the formulation of strategy; strategy that takes into account the nature of demand for the particular product or service, the industry in which the firm competes and events and trends in the broader external environment. The marketing strategy, however, is not conceived in an organizational vacuum. Its purpose is to assist the firm to achieve its objectives. It must take into account, the capabilities and aspirations of the firm, and it must work closely and in harmony with other functional strategies.

Business Products and Services
Marketing strategy is also influenced by characteristics of the product or service itself, irrespective of the target market. A number of classification schemes have been developed to further identify the nature of these goods and services, as a basis for understanding the nature of purchasing process for them, and thus developing a strategy. Most classification schemes include the following:
  • Raw materials
  • Manufactured materials
  • Components
  • Services
Marketing Strategy and Planning
There is only one valid definition of business purpose: to create a customer. Markets are managed by people, not created by God, nature, or economic forces. The want which a business satisfies may have been felt by customers, before they were offered the means of satisfying it, but it remained a potential want, until the action of business people converted it into effective demand.

The marketing concept holds that the purpose of a business is, or should be, to satisfy the wants and needs of its customers, better than its competitors and at a profit. This requires the collective efforts of all those in the organization. Guiding these collective efforts is the role of business strategy. Marketing strategy may guide the development of business strategy, but it also supports it and works in harmony with other functional strategies.

Typically, business strategies establish broad business objectives, indicate the scope of the business, in terms of products and markets, and identify the principal technologies and source of competitive advantage.

The components of business strategy are usually the functional strategies. These include a marketing strategy, which deals with target markets and the actions necessary to reach them effectively, a manufacturing strategy, which deals with make or buy decisions, plant size and manufacturing processes, a research and development or engineering strategy, a financial strategy, which deals with methods of financing, financial terms, credit risks, or working capital requirements, size and nature of the work force, and people management systems.

Depending on the nature of the business, the business strategy may include other dimensions as well. Marketing strategy, however, lies at the heart of business strategy. More than any other, it is concerned with the external environment and so it is supposed to provide guidance with regard to markets to be served and products to the produced. These business decisions can only be made in the context of the resources of the firm and its collective skills and abilities. Marketing strategy, therefore, must be as concerned with the capabilities of the firm, as it is with customers, competitors, and other elements of the external environment.
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