Business - to - Business Marketing

1. Business-to-Business Marketing chapter 6 Harcourt, Inc.

2. Objectives • Understand major customer types in the business market • Examine the similarities and differences between household and business consumers • Recognize the importance of close buyer-seller relationships Dr. Rosenbloom

3. Objectives • Explain the decision process of organizational buyers • Understand factors influencing organizational decisions • Explain how organizational buyers evaluate business marketers Dr. Rosenbloom

4. Business to Business Marketing • Business-to-business marketing refers to the buying and selling and other marketing activities that take place between businesses. Dr. Rosenbloom

5. Business to Business Marketing AT&T McCann and Erickson Dr. Rosenbloom

6. Business to Business Marketing Steelcase Furniture The Martin Agency Dr. Rosenbloom

7. Types of Customers • Commercial • Institutional • Governmental • International Dr. Rosenbloom

8. Types of Customers • Commercial • Institutional • Governmental • International • Manufacturers, construction companies, service firms, transport companies, some professional groups, and resellers Dr. Rosenbloom

9. Types of Customers • Commercial • Institutional • Governmental • International • Resellers includes wholesalers, industrial distributors, brokers/agents, and retailers who buy finished products to resell for a profit. Dr. Rosenbloom

10. Types of Customers • Commercial • Institutional • Governmental • International • Concentration of customers • Far fewer but far larger customers • Geographically concentrated in California, New York, Ohio, Illinois, Michigan, Texas, Pennsylvania, New Jersey Dr. Rosenbloom

11. Types of Customers • Commercial • Institutional • Governmental • International • Significant buying power • More than 50% of every dollar earned is spent on materials, supplies, and equipment to produce the product Dr. Rosenbloom

12. Types of Customers • Commercial • Institutional • Governmental • International • Purchasing function • Usually administered by an individual • Relationships are developed between buyer and seller • The Internet is making purchasing more efficient and competitive Dr. Rosenbloom

13. Types of Customers • Commercial • Institutional • Governmental • International • Organizations that provide services without the motivation of profit such as churches, hospitals, universities Dr. Rosenbloom

14. Types of Customers • Commercial • Institutional • Governmental • International • Institutional buying • Similar to government buying • Relationships must be cultivated with the staff (often made up of professionals) Dr. Rosenbloom

15. Types of Customers • Commercial • Institutional • Governmental • International • The government market consists of federal (1), state (50), and local (87,000) governments Dr. Rosenbloom

16. Types of Customers • Commercial • Institutional • Governmental • International • Government buying • Formal advertising (open bid) • Solicits bids from suppliers • Standardized product and straightforward specifications • Negotiated contract • Complex scientific or R&D products • Some competiton from simultaneous negotiations Dr. Rosenbloom

17. Types of Customers • Commercial • Institutional • Governmental • International • The business market stretches beyond domestic borders to include customers in other countries Dr. Rosenbloom

18. Types of Customers • Commercial • Institutional • Governmental • International • Different buying procedures • Formal procedures, negotiations, personnel show differences from one country to another Dr. Rosenbloom

19. Classifying Business Customers NAICS 51: Information NAICS 513: Broadcasting and Telecommunications NAICS 5133: Telecommunications NAICS 51332: Wireless Telecommunications Carriers NAICS 513321:Paging Economic Sector (2-digit) Economic Subsector (3-digit) Industry Group (4-digit) Industry Group (5-digit) U.S. Industry (6-digit) Dr. Rosenbloom

20. Business Market Characteristics Derived: Link between demand for industrial product and demand for consumer products DEMAND Dr. Rosenbloom

21. Business Market Characteristics Fluctuating: Patterns and preferences in the household market can change the demand for industrial goods Derived: Link between demand for industrial product and demand for consumer products DEMAND Stimulating: Some industrial products must market to the ultimate consumer directly Dr. Rosenbloom

22. Business Market Characteristics BUYER-SELLER RELATIONSHIPS Relationship Marketing: Marketing activies directed toward establishing and maintaining exchanges with customers Dr. Rosenbloom

23. Business Market Characteristics Longer-term and closer relationships with fewer suppliers BUYER-SELLER RELATIONSHIPS Relationship Marketing: Marketing activies directed toward establishing and maintaining exchanges with customers Closer interactions among multiple functions on both buying and selling sides Dr. Rosenbloom

24. Business Market Characteristics Supply Chain Management: Linking with strategic suppliers, intermediaries, and customers to improve efficiency SUPPLY CHAIN Dr. Rosenbloom

25. Business Market Characteristics JIT: Just-in-time production to deliver defect-free parts to production just when needed Supply Chain Management: Linking with strategic suppliers, intermediaries, and customers to improve efficiency SUPPLY CHAIN ERP: Software that can help enhance the flow of a supply chain Dr. Rosenbloom

26. Organizational Buying Process Problem Recognition • A problem that can be solved or opportunity captured by acquiring a specific product • Triggered by internal or external forces General Description of Need Detailed Description of Product Specs Supplier Search Acquisition and Analysis of Proposals Supplier Selection Selection of an Order Routine Performance Review Dr. Rosenbloom

27. Organizational Buying Process Problem Recognition • Organization members must determine how the problem/opportunity can be dealt with • Focus on general characteristics and quantity of item General Description of Need Detailed Description of Product Specs Supplier Search Acquisition and Analysis of Proposals Supplier Selection Selection of an Order Routine Performance Review Dr. Rosenbloom

28. Organizational Buying Process Problem Recognition • Extension of general description of need • Key buying individuals enter the process General Description of Need Detailed Description of Product Specs Supplier Search Acquisition and Analysis of Proposals Supplier Selection Selection of an Order Routine Performance Review Dr. Rosenbloom

29. Organizational Buying Process Problem Recognition • Which suppliers to consider as candidates • Time invested depends on buying situation General Description of Need Detailed Description of Product Specs Supplier Search Acquisition and Analysis of Proposals Supplier Selection Selection of an Order Routine Performance Review Dr. Rosenbloom

30. Organizational Buying Process Problem Recognition • Can occur simultaneously with suppler search when standardized items involved • Different organization members enter (engineers, consultants, etc.) General Description of Need Detailed Description of Product Specs Supplier Search Acquisition and Analysis of Proposals Supplier Selection Selection of an Order Routine Performance Review Dr. Rosenbloom

31. Organizational Buying Process Problem Recognition • Alternate proposals analyzed • One or more offers accepted • Negotiations may continue on General Description of Need Detailed Description of Product Specs Supplier Search Acquisition and Analysis of Proposals Supplier Selection Selection of an Order Routine Performance Review Dr. Rosenbloom

32. Organizational Buying Process Problem Recognition • Purchase specifics are developed (delivery, warranties, etc.) General Description of Need Detailed Description of Product Specs Supplier Search Acquisition and Analysis of Proposals Supplier Selection Selection of an Order Routine Performance Review Dr. Rosenbloom

33. Organizational Buying Process Problem Recognition • Determines future buying processes • Follow through by marketer is essential! General Description of Need Detailed Description of Product Specs Supplier Search Acquisition and Analysis of Proposals Supplier Selection Selection of an Order Routine Performance Review Dr. Rosenbloom

34. Straight Rebuy Buying Situations Modified Rebuy New Buy Dr. Rosenbloom

35. Buying Situations • A combined effort between supplier and customer will produce better products and processes which will, in turn, improve manufacturing and marketing Straight Rebuy Dr. Rosenbloom

36. Modified Rebuy Buying Situations Straight Rebuy New Buy Dr. Rosenbloom

37. Buying Situations • Situation in which purchasers require some additional information, however, a fairly routine process is followed Modified Rebuy Dr. Rosenbloom

38. New Buy Buying Situations Straight Rebuy Modified Rebuy Dr. Rosenbloom

39. Buying Situations • First-time or unique purchase situation that requires considerable effort to collect extensive information about alternatives in the marketplace New Buy Dr. Rosenbloom

40. Environmental Forces • Economic influences • Sensitivity to demand in ultimate consumer markets • Global economic variations • Technological influences • More intense search efforts • Less time on searches Influences on Organizational Buyers Dr. Rosenbloom

41. Organizational Forces • Strategic priorities • Support firm’s mission and strategies • Strategic role purchasing • Aligning purchasing with corporate strategy • Organizational positioning of purchasing • Centralized vs individual user Influences on Organizational Buyers Dr. Rosenbloom

42. Individual Forces • Rational motives vs emotional motives • Differing evaluative criteria • Specifications that organizational buyers use to compare products/services • Different educational background, experiences, etc. Influences on Organizational Buyers Dr. Rosenbloom

43. Group Forces: Buying Center • Different individuals are important at different times during the purchase process • Relative influence and evaluative criteria • Isolating the buying situation • Buying centers fluctuate based on the buying situation Influences on Organizational Buyers Dr. Rosenbloom

44. Group Forces: Buying Center • Identify buying influentials • Key influencers often outside the purchasing department • Buyer Roles Influences on Organizational Buyers Dr. Rosenbloom

45. Users Buying Center Roles • People who will actually use the purchased good or service • Influence on purchase decision can be extensive or negligible • Influencers • Buyers • Deciders • Gatekeeper Dr. Rosenbloom

46. Influencers Buying Center Roles • Users • Provide advice and information about various alternatives • Outside consultants • Experienced employees • Technical personnel • Buyers • Deciders • Gatekeeper Dr. Rosenbloom

47. Buyers Buying Center Roles • Users • Employee who actually purchases the product or service • Could be anyone from the president of the company to a purchasing agent • Influencers • Deciders • Gatekeeper Dr. Rosenbloom

48. Deciders Buying Center Roles • Users • Make the decision on which products to buy • The size and importance of the decision dictate who performs the role • Influencers • Buyers • Gatekeeper Dr. Rosenbloom

49. Gatekeeper Buying Center Roles • Users • Control the flow of information within the organization • Again, can be anyone in the organization including the secretary who opens the mail • Influencers • Buyers • Deciders Dr. Rosenbloom

50. Supplier Evaluation • Measuring Value • Accurate measurement of value is critical to purchasing • Evaluating supplier performance • Weighted-point plan • Organization weights each performance factor according to relative importance Dr. Rosenbloom