Friday, December 7, 2012

Chapter 7: Business Marketing

This chapter, the final chapter of the semester, is on business marketing.  This specific type of marketing is of goods and services to individuals and organizations for purposes other than personal consumption.  An example of business marketing are the market for the Starbucks coffee machines which are used to make the coffee for their customers.  Since these machines are not being used by the Starbucks customer themselves but instead it creates the product which their customers consume, it is a business product and is marketed to the Starbucks business.  They are also business products since it is used to manufacture other products, being the coffee which is then sold to the consumer.

After the launch of the new Verismo machine, which is a multi-purpose, single serve, coffee machine by Starbucks, and the larger model carries more water to make multiple cups, it may become easier for small offices and people of small businesses to create their own coffee.  This makes it convenient for them and overall may be more cost efficient then purchasing a specialty coffee everyday.

Now business products generally fall into one of 7 categories, depending on their use.  These 7 categories are: major equipment, accessory equipment, raw materials, component parts, processed materials, supplies, and business services.  For Starbucks, an example of a business product are the coffee machines mentioned earlier.  These are part of the major equipment category, since it's a capital good.  Another business product of Starbucks are the coffee beans used to make the coffee, which is a type of raw material.  Raw materials are unprocessed extractive or agricultural products.    These are also business products because it becomes a part of another product, in which the organization sells.  Other examples of raw materials for other businesses are items such as corn, wheat, fruits, and vegetables.

The use of strategic business alliances, which is a cooperative agreement between business firms and may take form of: licensing or distribution agreements, joint ventures, research and development consortia, and partnerships, is an area of marketing strategy that Starbucks frequently uses.  According to chron.com, which is the Houston premier local news provider, the list of business alliances Starbucks has includes Barnes and Nobles, PepsiCo, United Airlines, Kraft, and NAACP.  "According to Rebecca Larson, assistant Professor of Business at Liberty University, Starbucks partnered with Barnes and Nobles bookstores in 1993 to provide in-house coffee shops, benefiting both retailers.  In 1996, Starbucks partnered with PepsiCo to bottle, distribute, and sell the popular coffee-based drink, Frappacino.  A Starbucks-United Airlines alliance has resulted in their coffee being offered on flights with the Starbucks logo on the cups and a partnership with Kraft foods has resulted in Starbucks coffee being marketed in grocery stores.  In 2006, Starbucks formed an alliance with the NAACP, the sole purpose of which was to advance the company's and the NAACP's goals of social and economic justice," stated within the Houston Chronicle piece.

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