Ch. 7 - Business Marketing

Business marketing, also called industrial marketing, is the marketing of goods and services to individuals and organizations for purposes other than personal consumption. Chanel’s objective of marketing their products is clearly for personal consumption. However, individuals and organizations are frequently purchase Chanel’s products for business purpose. For example, individuals, act as purchasing agents, purchase Chanel’s products to sell on their online store. Also, some companies frequently launch a campaign to give Chanel products as a gift to their lucky customers.

Strategic Alliances

A strategic alliances, sometime called a strategic partnership, is a cooperative agreement between business firms. Chanel has strategic partnership with retailers, like Macy’s and Bloomingdale’s, to authorize some of Chanel’s products available in Macy’s and Bloomingdale’s. Chanel has a counter of fragrances and cosmetic products in Macy’s and Bloomingdale’s.

Business versus Consumer Markets

The basic philosophy and practice of marketing are the same whether the customer is a business organization or a consumer. However, business do have characteristics different from consumer markets. Chanel focuses on the consumer markets. Let’s assume that Chanel focuses on business markets, what are the differences?

ð  Consumer marketing, sales are made to individuals who are the final decision makers, yet they may be influenced by family members or friends. Business marketing, sale is made to a business or firm.

·         Demand- Chanel produces reasonable amount of their products, but Chanel also put limit on some of its products to remain exclusive. It produces based on their consumers and itself.  Assume that Chanel focus on business market, the demand for Chanel will be called derived demand. Derived demand is a demand for a commodity, service, etc., that is a consequence of the demand for something else.

·         Purchase Volume- If Chanel is a business marketing company, it will sell much more products than of a consume product company. Business consumer buy in much larger quantities than consumer.

·         Number of Customers-If Chanel as a business marketer usually have far fewer customers than consumer marketers. Chanel currently have a lot of loyal customers because of its exclusivity.

·         Location of Buyers-Business customers tend to be much more geographically concentrated than consumers. If Chanel is business marketer, its focus will be in California, Illinois, Michigan, New Jersey, New York, Ohio, and Pennsylvania. Chanel currently operates its retail stores only in New York, New Jersey, Connecticut, and Pennsylvania because its objective is to be upscale.

·         Distribution Structure-Chanel’s distribution structure is quite simple. Chanel adopt both direct and dual distribution on certain products. In business marketing, Chanel’s channel of distribution will be shorter. It only has to adopt the direct channels, where manufacturers market directly to users.

·         Nature of Buying- Chanel, as of consumer marketing company, the nature of buying of its customers are based upon their customers’ needs or wants and the ability and willingness to buy. If Chanel as the business marketing company, its consumer will be professionally trained purchasing buyers who spend their entire career purchasing products.

·         Primary Promotional Method-Chanel has adopted personal selling, public relations, and advertising for sales promotion. On other hand, if Chanel as business marketing company, it will tend to emphasize personal selling in their promotion efforts.