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Chapter 2

Classifying Customers, Organizations, and Markets


Prepared by John T. Drea, Western Illinois University
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Types of Organizational Customers

Nonprofit and
Commercial Government
Not-for-Profit
Enterprises Units
Organizations
Industrial Churches,
Distributors 85,000 local,
state, and federal hospitals,
Value-Added government units colleges,
Resellers nursing homes,
etc.
Original
Equipment
Manufacturers
Users or End Users 2
• Industrial Distributors
Commercial – Provide economic utilities
Enterprises
of form, time, place, and
possession to
Industrial
Distributors manufacturers
– Creates assortments of
Value-Added products from many
Resellers
manufacturers
Original – Particularly useful for
Equipment
Manufacturers reaching customers too
small to justify direct sales
Users or End Users efforts
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• Value-Added Resellers
Commercial – More than just a
Enterprises distributor or wholesaler.
Industrial – Provides unique offering
Distributors enhancements tailored to
Value-Added
a customer’s needs by
Resellers combining
Original
products/services from
Equipment other manufacturers.
Manufacturers
– Creates a value network
Users or End Users at the user level.

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• Original Equipment
Commercial
Manufacturers (OEMs)
Enterprises
– Purchase products
Industrial and incorporate those
Distributors products into their
products.
Value-Added
Resellers – Usually the largest-volume
users of goods and
Original services.
Equipment
Manufacturers – Ex: Intel is an OEM
supplier to many computer
Users or End Users manufacturers, Firestone
was an OEM supplier to
Ford for many years. 5
• Users or End Users
(E/U)
Commercial
Enterprises – A manufacturer that
purchases goods or
services for consumption/
Industrial
Distributors incorporation into their
products in such a way
Value-Added that the identity of the
Resellers
purchased product is
Original lost.
Equipment – When Goodyear
Manufacturers
purchases steel for
Users or End Users fabrication into steel belts
for tires, Goodyear is the
steel manufacturer’s E/U.6
Producer Types

Raw Accessory
Materials Equipment
Producers Suppliers

Component Parts
Capital
and Manufactured
Goods
Materials
Manufacturers
Producers

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Producer Types
Raw Materials Producers

Often compete in price sensitive markets

Seek value added positions


Raw
Materials
Producers Products lose identity once incorporated
into the customer’s product

Raw materials markets are often dominated


by a few very large producers
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Producer Types
Components Parts and Manufactured Materials Producers

Parts retain their same form when


incorporated.

Component Parts Usually retain identity even when


and Manufactured incorporated into the customer’s
Materials product.
Producers
More differentiated from direct
competition by the value added to
the customer’s product.

Seagate computer drives are an example.


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Producer Types
Capital Goods Manufacturers

Capital goods involve large purchases


with considerable risk for the customer.

Involves the development of


Capital specifications to ensure that
Goods organizational needs are met.
Manufacturers
Adherence to specifications reduces
opportunities for differentiation.

Customers expect an offering that


includes installation, equipment, and
accessories. 10
Producer Types
Accessory Equipment Suppliers

Accessory equipment is equipment that


works with some other offering.
Accessories can be added to a
Accessory bundled offering by a channel
Equipment intermediary.
Suppliers Accessory equipment is usually
produced by an independent
supplier.
The key to providing value is to be
compatible with industry standards for
the primary offering.
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Financial Public Interest
Publics Groups

Communities of interested parties who are not direct participants in a


market as customers, channel members, suppliers, or competitors.

Publics

Independent
Internal Publics
Press
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The Macroenvironment
influences Demographic
value Environment
creation.
Competitive Economic
Environment Environment

Technological Sociocultural
Environment Environment

Natural
Environment
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Forms of Competition in B2B Markets

• Pure Competition
– No single entity dominates the market or
has much of an influence on price.
– Most common in commodity industries.
– Little product differentiation – price is a
major component of the marketing mix.

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Forms of Competition in B2B Markets

• Monopolistic Competition
– Many buyers, many sellers.
– Product is differentiable – can vary in
quality, features, and style
– A range of prices is possible.
– Promotion and branding are important to
product differentiation.

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Forms of Competition in B2B Markets

• Oligoplistic Competition
– Market consists of a few sellers that are
sensitive of each others’ strategy.
– Barriers limit entry of new competitors.
– Prices are aimed at maintaining market
stability.
– Key is building relationships with large
volume customers.
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Forms of Competition in B2B Markets

• Pure Monopoly
– Only one primary seller.
– Competitors that do exist are small niche
players.

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An Adaptation
An Adaptation of the Value Chain
of the
Value Chain

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Multinational Value Network

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The
Product
Life
Cycle

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The Technology Adoption Life Cycle

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PLC and TALC
• Product Life Cycle • Technology Adoption
(PLC) Life Cycle (TALC)
– Introduction – Technophiles
– Growth – Visionaries (aim for
– Maturity “quantum leaps”)
– Decline – Pragmatists (want
proven solutions)
– Conservatives
– Laggards

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TALC and How Technology Markets Evolve

• Chasm
– A break in the sales growth curve for a new
technology.
– A chasm occurs between visionaries and
pragmatists.
• Tornado
– The chaos that occurs during a period of rapid
growth.
– A dominant supplier usually emerges from a
tornado.
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Using the Technology Adoption Life Cycle

• The vendor of an innovation passes through


technophiles and visionaries before
establishing a foothold among pragmatists.
• Crossing the chasm (called the “market
development gap”) between visionaries and
pragmatists is related to a change in the
entire marketing mix.
– There are changes in type of customer and
what the customers perceives as being of
value.
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Using the Technology Adoption Life Cycle

• Tornado
– Corresponds to the late introduction/early growth
stage of the PLC
– The market wants to support the market leader – it
reduces uncertainty for pragmatists.
– The market leader has the chance to become the
“gorilla” – the gorilla can do what it wants as long
as it stays close to what pragmatists desire.

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