Transcript B2B Buying Behaviour

B2B Buying Behaviour
Lecture 4
learning objectives
• Understand the nature and structure of B2B buying
• Appreciate the differences between B2B buying and
consumer buying
• Analyze the buying process and the reasons why
purchasing varies across different buying situations
• Link B2B buying with the development of marketing
strategy
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4e, © Pearson Education 2006
B2B marketing defined
B2B marketing is the management
process responsible for the facilitation
of exchange between producers of
goods and services and their
organisational customers
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B2B and Consumer Markets
B2B customers
• Purchase products to
meet specific business
needs
• Emphasise economic
benefits
• Use formal, lengthy
purchasing policies and
processes
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Consumer customers
• Purchase products to
meet individual or family
needs
• Emphasise psychological
benefits
• Buy on impulse or with
minimal processes
B2B and Consumer Markets
B2B customers
• Involve large groups in
purchasing decisions
• Buy large quantities
infrequently
• Want a customised product
package
Consumer customers
• Purchase as individuals or
as a family unit
• Buy small quantities
frequently
• Are content with
standardised product
packages
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B2B and Consumer Markets
B2B customers
• Experience major
problems if supply fails
• Find switching
suppliers difficult
• Negotiate on price
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Consumer customers
• Experience minor
irritation if supply fails
• Find switching
suppliers easy
• Accept stated price
B2B and Consumer Markets
B2B customers
• Purchase direct from
suppliers
• Justify an emphasis on
personal selling
Consumer customers
• Purchase from
intermediaries
• Justify an emphasis on
mass media
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Types of B2B Customers
• Commercial enterprises
• Government bodies
• Institutions
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Characteristics of B2B Markets
Nature of demand
Structure of demand
Complexity of
buying process
Buyer-seller
relationships
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Derived Demand
Goodyear’s RunOnFlat
Tyres are featured on
•BMWs,
•Ferraris,
•Corvettes,
•Maseratis, and
•Mercedes
Source: © Goodyear Dunlop Tyres Europe
B.V. http://eu.goodyear.com
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Joint Demand
Demand for Samsung’s
Solid State Disk (SSD) is
tightly coupled with the
demand for computers
and other devices with
memory chips
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Inelastic Demand
Elasticity of demand refers to the
extent to which the quantity of a
product demanded changes when its
price changes;
If a product has inelastic demand,
demand does not change due to
price changes
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Advantages of Single Sourcing
• Improved
communications
• Increased
responsiveness
• Shared design of
quality control systems
• Elimination of supplier
switching costs
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• Improvement in product
cost effectiveness
• Reduced prices through
larger volume
• Reduced prices through
reduced supplier costs
• Enhanced ability to
implement JIT systems
Disadvantages of Single Sourcing
• Increased costs through
lack of competitive
pressure
• Increased supply
vulnerability
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• Reduced market
intelligence and
flexibility
• Improved supplier
appraisal capacity
Advantages and Disadvantages
of Multiple Sourcing
Advantages
• Increased competitive
pressure
• Improved supply continuity
• Improved market
intelligence
• Improved supplier appraisal
effectiveness
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Disadvantages
• Perceived lack of
commitment
• Increased costs
• Less supplier investment
• Reduced willingness to
adapt
• Higher operating costs
Purchase Significance
New Task
Modified
re-buy
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Routine
re-buy
Question for discussion
From the supplier’s point of view, how might
the marketing approaches aimed at a
customer making a new task purchase differ
from those aimed at a routine re-buy
customer?
Buying Decision-Making Process
Precipitation
Product
specification
Supplier
selection
Commitment
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Buying Centres
Consumer
B2B
Initiator
User
Influencer
Influencer
Decider
Decider
Purchaser
Buyer
User
Gatekeeper
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Buying Criteria:
Economic Influences
Appropriate
prices
Product
specification
Quality
consistency
Supply reliability
and continuity
Customer
service
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Approaches to Supplier Handling
Adversarial
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Multiple suppliers
Regular price quotes
Adversarial negotiations
Sporadic communication
Little cooperation
Quality and time scales to meet
lowest expectations
Emphasis on lowest unit price
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Collaborative
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Few suppliers
Long-term relationship
Partnerships
Frequent, planned communication
Integrated operations
Quality and time scales ‘designed in’
Emphasis on lowest overall cost
Relationship Life Cycle
Awareness
Exploration
Expansion
Commitment
Dissolution
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Buying Criteria:
Non-Economic Influences
Prestige
Career security
Friendship
Other
personal needs
Trust
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4e, © Pearson Education 2006
Question for discussion
You are the purchasing manager of a large organisation with an
enormous annual spend. Most of your contracts are awarded by
tender. What would your attitude be to the following offers from
potential suppliers, and to what extent would they influence your
decision-making:
(a) a bottle of whiskey at Christmas?
(b) an invitation to lunch to discuss your requirements?
(c) an offer of the free use of the supplier’s managing director’s
Spanish villa for two weeks?
(d) £1500?