Marketing Management

1. Marketing Management Chapter 6: Analyzing Business Market Reported By: Eulisan J. Florague

2. Chapter questions • What is the business market, and how does it differ from the consumer market? • What buying situations do organizational buyers face? • Who participates in the business-to-business buying process? • How do business buyers make their decisions? • How can companies build strong relationships with business customers? • How do institutional buyers and government agencies do their buying?

3. Content

4. I. What is organizational buying ? What is business market? • A business market is a group of profit making organizations that buy goods and services for business use. • It consists of industries, distributors and retailers. • This market has rational buying with and experiences an inelastic demand.

5. Characteristics of Business Markets • Fewer, larger buyers • Close supplier-customer relationships • Professional purchasing • Multiple buying influences • Multiple sales calls • Derived demand • Inelastic demand • Fluctuating demand • Geographically concentrated buyers • Direct purchasing

6. How does it differ from the consumer market ?

7. Cont.

8. Buying situations

9. II. Participants in the business buying process

10. The buying center

11. Of Concern to Business Marketers • Who are the major decision participants? • What decisions do they influence? • What is their level of influence? • What evaluation criteria do they use?

12. Stages in Buying Process

13. The buygrid framework Maybe Maybe Maybe Maybe Maybe Maybe

14. Searching for suppliers

15. Overcoming Price Pressures • Limit quantity purchased • Allow no refunds • Make no adjustments • Provide no services

16. Researching Customer Value • Internal engineering assessment • Field value-in-use assessment • Focus-group value assessment • Direct survey questions • Conjoint analysis • Benchmarks • Compositional approach • Importance ratings

17. Order – routine specification • The buyers negotiates: The final order; listing the technical specifications; the quantity needed; the expected time of delivery; return policies; warranties… Performance review Three methods: • The buyer may contact the end users and ask for their evaluations • The buyer may rate the supplier on several criteria using a weighted score method • The buyer might aggregate the cost of poor performance to come up with adjusted costs of purchase including price

18. III. Managing Business- to- Business Customer Relationships

19. The Benefits of Vertical Coordination • Create more value for both buying partners and sellers partners Establishing Corporate Trust and Credibility

20. The relationship between advertising agencies and clients

21. Factors of buyer-supplier relationships

22. Categories of Buyer-Supplier Relationships

23. Business Relationship : Risks and Opportunism Opportunism is a concern Vertical coordination can facilitate stronger customer – seller ties but increase the risk to the customers and supplier specific investment

24. Institutional and Government Markets • Institutional market consists of schools ,hospitals, nursing home, prisons and other institutions that provide goods and services to people in their care

25. Institutional and Government Markets ( Cont ) • Buyers for government organization tend to require a great deal of paperwork from their vendors and to favor open bidding and domestic companies • Suppliers must be prepared to adapt their offers to the special needs and procedures found in institutional and government markets

26. Summary • Business markets differ from consumer markets • Business buyers make purchase decisions base on different buying situations • The buying process consists of eight stages. • sellers use different sales strategies according to their size. One is to use e – marketplaces • There are also different strategies in handling price – oriented customers • Business marketers must form strong bonds and relationships with their customers and provide them added value.