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Chapter 2. The Business Market: Perspectives on the Organizational Buyer

Chapter 2. The Business Market: Perspectives on the Organizational Buyer. BA 303 BUSINESS 2 BUSINESS MARKETING LINDELL PHILLIP CHEW. The three sectors of the business market, commercial enterprises, government, and institutions.

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Chapter 2. The Business Market: Perspectives on the Organizational Buyer

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  1. Chapter 2. The Business Market: Perspectives on the Organizational Buyer BA 303 BUSINESS 2 BUSINESS MARKETING LINDELL PHILLIP CHEW

  2. The three sectors of the business market, commercial enterprises, government, and institutions. • The chapter is pivotal to formulating an effective business marketing strategy,

  3. Commercial enterprises; • Unique aspects of the sector, geographic concentration and volume concentration by large firms • DERIVED DEMAND • North American Industrial Classification System (NAICS) Replaces SIC system

  4. Commercial Enterprises Unique Characteristics Manufacturing, construction, service, professional groups, resellers • Small in number; large in volume 360,000 manufacturers 10 percent of the manufacturers produce 78 percent of the value added

  5. government purchasing practices and procedures are explored • understand the contractual and legal side of government purchasing federal buying process is provided to emphasize the type of marketing efforts required by potential suppliers

  6. Government contracts Stringent legal requirements, often unrelated to the purchase, small subcontractor preferences, minority employmentPublic laws which specify contractual arrangementsVendors must carefully understand government laws • RED TAPE

  7. Knowledge of government requirement needed for effective negotiation Types of contractsFixed price profit potential is good if inflation is stable andcosts are controlledCost reimbursement effective when extensivedevelopmental efforts are required. Carefully monitored NOTE…HORROR STORIES

  8. say hi to Chester & A 12!NOTE…HORROR STORIESserving up a fixed price nightmare!!Various governmental agencies publish booklets explaining how sell to that particular agencyplease read them!!!! ENTER AT YOUR OWN RISK

  9. Defense Procurement The Department of Defense spends a large portion of thefederal government's budget on procurement Defense Logistics Agency procures & distributes common supplies to all military branchesMilitary branches procure major items • RISKY BUSINESS

  10. institutional buying environment • institutional buying forms a middle ground between the commercial and government sectors in terms of purchasing processes and procedures

  11. Nondefense procurementAccomplished through a wide variety of cabinet departments, commissions & agencies the GSA-General Services Administration Centralized procurement of items in common use byall government agencies • FORMAL ADVERTISED, NEGOCIATED, SET ASIDE

  12. Institutional Market: Unique characteristics A large market composed of a vast array of schools, hospitals, universities,libraries, foundations etc A middle ground between business and government Requires the marketer to respond to the needs of the product users (professional staff) and the buyers (purchasing personnel) Outsourcing Group buying

  13. The Market Centered customer driven to driving organization • Business buyer diversity Marketers must respond to the unique purchasing requirements of each segment of the market The marketing organization is structured so that major customer markets become the centers around which the firm is organized Firm's marketing efforts are therefore focused on each market sector…government, business, institutional, and international

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