MARKETING

MANAGEMENT

ANALYZING BUSINESS
MARKET
 CONTENT
1.What is Organizational Buying.?

2.Participants in the Business Buying Process.

3.Managing Business to Business Customers

Relationships.
 1.What is Organizational Buying.?
Frederick E. Webster Jr. and Yoram Wind define organizational buying as the decision making process by
which formal organizations establish the need for purchased products and services and identify, evaluate,
and choose among alternative brands and suppliers.
What is Business Market.?
• A business Market is a group of profit making organizational 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.
 Characteristics of Business Market
• Fewer, large buying
• Close supplier-customer relationships
• Professional purchasing
• Multiple sales calls
• Derived demand
• Inelastic demand
• Fluctuating demand
• Geographically concentrated buyers
• Direct purchasing
  How does it differ from the consumer market.?
Consumer Business
Every customers has equal value and represents a small There are a small number of big customers that account for a
percent % of revenue. large percent % of revenue.

Sales are made remotely, the manufacturer doesn’t meet the Sales are made personally, the manufacturer gets to know the
customer. customer.

Products are the same for all customers. The service element is Products are customized for different customers. Service is
low. highly valued.

Purchases are made for personal use image is important for its Purchases are made for other to use image important where it
own sake. adds value to customers.
cont..
The purchaser is normally the user. The purchaser is normally an integrator, someone down the
supply chain is the user.

Costs are restricted to purchase costs. Purchase costs may be a small part of the total costs of use.

The purchase event is not subject to tender and negotiation. The purchase event is conducted professionally and
includes tender and negotiation.

The exchange is one off transaction. There is no long-time The exchange is often one of strategic intent. There is the
view (Financial services differ) potential for long-term value.
 Buying Situations:

Recorder supplies (office supplies, bulk chemicals) at a routine basis and chooses list of
Straight suppliers,
rebuy

The buyer want to modified products specs, prices, delivery requirement from previous
Modified orders.
rebuy

Purchase buys a products for the first time.

New task
I. Participants in the business buying process.
 The Buying Center
1.Initiators Those requesting the product.

2.Users Those who will you use the product or service.

3.Influences Those who influence the buying decisions.

4.Deciders Those who decide o product reqs and suppliers.

5.Approvers Those authorizing actions of buying.

6.Buyers Those who have authority to select supplier and arrange purchase terms.

7.Gatekeepers Those who prevent information from reaching members of buying center.
  Of concern to Business Market

 Who are the major decision participants.?

 What decisions do they influence.?
 What is their level of influence.?
 What evaluation criteria do they use.?
Big sales to small business
 small business defined as those with fewer than 500 employees represent 99.7 percent of all employer firms
and employ about half of all private sector employees. They have generated 60 percent to 80 percent of net
new jobs annually over the past decade. According to the small business administration’s office of advocacy,
nearly 640,000 small business opened in the united states in 2007. those new venture s all need capital
equipment, technology, supply, and services. Look beyond the united sates to new venture around the world
and you have a huge and growing B-to-B market here’s how two top companies are reaching it:
1. Don’t lump small and midsize business together.
2. Do keep it small.
3. Do use the internet.
4. Don’t forget about direct contact.
5. Do provide support after the sale.
6. Do your homework.
  Stages in buying process

Problem Order routine

Supplier selection
recognition specification

General need Proposal Performance

description solicitation review

Product Supplier search

specification
  The Buygrid Framework
Buy Classes
Buy phases New Task Modified Rebuy Straight Buy
Problem recognition Maybe No
General need description Maybe No

Product specification Yes Yes

Supplier search Maybe No

Proposal solicitation Maybe NO

Supplier selection Maybe No

Order-routine specification Maybe No

Performance Yes Yes

  Searching For Suppliers

Catalog sites Electronic catalogs.

Vertical markets Ordering raw materials from specialized websites.

Pure play auction sites Online marketplace ( Ebay, Amazon).

Spot markets On spot electronic markets, prices change by the minute.

Private exchanges Private exchange to link groups of suppliers over the web.

Barter markets Participants offer to trade goods or services.

Buying alliances Companies buying the same goods join together to form
purchasing consortia.
 Overcoming Price Pressures

 Limit quantity purchased.

 Allow no refunds.
 Make no adjustment.
 Provide no services.
  Researching Customer value
 Internal engineering assessment.
 Field value in use assessment.
 Focus group value assessment.
 Direct survey questions.
 Conjoint analysis.
 Benchmarks.
 compositional approach.
 Importance.
 Order-Routine Specification
 The buyers negotiates the final order listing the technical specifications the quantity needed the expected
time of delivery return policies warranties and so on. Many industrial buyer lease heavy equipment such
as machinery and trucks. The lessee gains a number of advantages:
 The latest products, better service, the conservation of capital and some tax advantages. The lessor often
ends up with a larger net income and the chance to sell to customers that could not afford outright
purchase.

 Performance Review
 The buyer periodically reviews the performance of the chosen suppliers using one of three methods.
1. The buyer may contact the end users and ask for their evaluations.
2. The buyer may rate the supplier on several criteria using a weighted score method.
3. The buyer might aggregate the cost of poor performance to come up with costs of purchase including
price.
 Managing Business-to-Business customer
Relationships
To improve effectiveness and efficacy, business suppliers and customers are exploring different ways to mange
their relationships. Closer relationships are driven in part by supply chain management, early supplier
involvement and purchasing alliances. Cultivating the right relationships with business is paramount for any
holistic marketing program.
 Business-to- Business marketers are avoiding “spray and Pray” approaches to attracting and reading
customers in favor of honing in on their targets and developing one-to-one marketing approaches.
  The Benefits of Vertical Coordination
 Vertical coordination between buying partners and seller, so they can transcend merely transacting and instead
engage in activities that create more value for both parties. Building trust is one prerequisite to healthy long-
term relationships.

 A number of forces influence the development od a relationship between business partners. Four relevant
factors are availability of alternatives, important of supply, complexity of supply, and supply market
dynamism. Based on these we can classify buyer-supplier relationships into eight categories.
 The Benefits of Vertical Coordination
Create more value for both Buying Partners and sellers partners.

Establishing corporate trust and credibility.

Categories of buying supplier relationships

Basic Buying Cooperative

and selling system

Bare bones Collaborative

Contractual Mutually
transaction adaptive

Customer is
Customer supply
king
 Factors of buyer supplier relationships

Availability
Importance
of
of supply
alternatives

Supply
Complexity
market
of supply
dynamism
 The Relationship between Advertising Agencies and
Clients
Information asymmetry
In the relationship formation
between partnership would
stage, one partner
generate more profit than if
experienced substantial
the partner attempted to
market growth
invade the other firm’s area

Dependence asymmetry
At least one partner had
existed such that one partner One partner benefited
high barriers to entry
such that one partner was from economies of scale
that would prevent the
more able to control or related to the
order partner from
influence that other’s relationship
entering the business
conduct
 Business Relationship Risks and Opportunism

 Vertical coordination can facilities stronger customer seller ties but increase the risk to the
customers and supplier specific investment.
 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.
 Cont…
 Buyers for government organization tend to require a great deal of paperwork from their vendors and to favor open
bidding and domestic companies.

 Supplier must be prepared to adapt their offers to the special needs and procedure found in institutional and
government .
THANK YOU