Business to Business Marketing

1. Business to Business Marketing Professor Lawrence Feick University of Pittsburgh

2. Organizational markets compared to consumer markets • Fewer buyers • Larger purchases • Derived demand

5. Organizational markets compared to consumer markets (continued) • Differences in the purchasing process • professional buying • the buying center • buyclass

6. Organizational Buying Process Obtain Feedback and Evaluate Performance Select Order Routine Evaluate Proposals and Select Supplier Acquire and Analyze Proposals Search for and Qualify Sources Describe Characteristics and Quantity Determine Characteristics and Quantity Recognize Problem and General Solution

7. The Buying Center • Participants in an organization’s buying decision

8. The Buying Center G A T E K E E P E R S BUYERS DECIDERS INFLUENCERS USERS

9. Organizational buyclasses • Straight rebuy • Modified rebuy • New task purchase

10. Figure 9.9a Chrysler’s Vendor Analysis Form Supplier Rating Chart: Commodity:__________ Supplier Name:__________ Annual Sales Dollars:__________ Shipping Location:__________ 5 4 3 2 1 0 Ex. Good Sat. Fair Poor N/A Quality 40% Supplier defect rates ___ ___ ___ ___ ___ ___ SQA program conformance ___ ___ ___ ___ ___ ___ Sample approval performance ___ ___ ___ ___ ___ ___ Responsiveness to quality problems ___ ___ ___ ___ ___ ___ Overall quality rating ___ ___ ___ ___ ___ ___ Delivery 25% Avoidance of late or overshipments ___ ___ ___ ___ ___ ___ Ability to expand production capacity ___ ___ ___ ___ ___ ___ Engineering sample delivery performance ___ ___ ___ ___ ___ ___ Response to fluctuating supply demands ___ ___ ___ ___ ___ ___ Overall delivery rating ___ ___ ___ ___ ___ ___

11. Figure 9.9b Chrysler’s Vendor Analysis Form 5 4 3 2 1 0 Ex. Good Sat. Fair Poor N/A Price 25% Price competitiveness ___ ___ ___ ___ ___ ___ Absorption of economic price increases ___ ___ ___ ___ ___ ___ Submission of cost savings plans ___ ___ ___ ___ ___ ___ Payment terms ___ ___ ___ ___ ___ ___ Overall price rating ___ ___ ___ ___ ___ ___ Technology 10% State-of-the-art component technology ___ ___ ___ ___ ___ ___ Sharing research development capability ___ ___ ___ ___ ___ ___ Capable and willing to provide circuit design services ___ ___ ___ ___ ___ ___ Responsiveness to engineering problems ___ ___ ___ ___ ___ ___ Overall technology rating ___ ___ ___ ___ ___ ___ Buyer:__________ Date:__________ Comments:_______________________________________________________

12. Product Relatively technical, exact form often variable, accompanying services very important Standardized form, service important but less than for business products Price Competitive bidding for unique items, list prices for standard items List prices, little individual negotiation Promotion Emphasis on personal selling Emphasis on advertising Summary: comparing business to business marketing and consumer marketing (text: Table 9.2) Business-to-Business Marketing Consumer-Goods Marketing

13. Distribution Relatively short, direct channels to market Often complex channels with multiple intermediaries Customer relations Relatively enduring and complex Usually transaction-focused; relationship of relatively short duration Decision-making process Involvement of diverse group of organization members in decision Individual or household members make decision Summary: comparing business to business marketing and consumer marketing (continued) Business-to-Business Marketing Consumer-Goods Marketing Source: Based on Michael Hutt and Thomas Speh, Business Marketing Management, 5th ed. (Fort Worth, Tex: The Dryden Press, 1995), pp. 11-13.

14. Implications • Importance of relationships • Importance of personal selling • Understanding our customer’s customers • Affecting final consumer demand • Solving our customers’ business problems