Transcript Business Markets

MARKETING
Real People, Real Choices
Fourth Edition
CHAPTER 6
Business-to-Business Markets:
How and Why
Organizations Buy
Business-to-Business Marketing
• Marketing of goods and services that
businesses and organizations buy for
purposes other than personal consumption
– Manufacturers
– Wholesalers
– Retailers
– Government agencies
– Hospitals
– Universities
6-2
Business Markets
• Generally, the same principles are true
for business and consumer customers
• There are characteristics that make B2B
buying more complex
– Multiple Buyers
– Number of customers
– Size of purchases
– Geographic concentration (e.g.
Silicon Valley CA; Detroit MI)
6-3
B2B Demand Characteristics
• Derived Demand
– Demand for a b2b product depends on
demand for the final b2c product
• Inelastic Demand
– Depends on the proportion of the input to
total input
• Fluctuating Demand
– Some products may be replaced sparingly
• Joint Demand
– When the final product contains more than
one component
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Inelastic Demand
• Inelastic demand means that business
customers buy the same quantity
whether the price goes up or down
• Example: A BMW Z4 Roadster 3.0i has
a list price starting at just over $55,000.
If the price of tires, batteries, or stereos
goes up or down, BMW still must buy
enough to meet consumer demand for
the Z4.
6-5
Fluctuating Demand
• Small changes in consumer demand
can create large increases or decreases
in business demand
• Capital equipment coming up for
replacement can suddenly spike
demand
6-6
Joint Demand
• Joint demand occurs when two or more
goods are necessary to create a
product
• Companies try to avoid dependence on
specific suppliers by dealing with
multiple suppliers whenever possible
6-7
B2B Classifications
• Producers
– Convert raw materials into finished
products
• Resellers
– Resell products without converting them
• Organizations
– Governments
• competitive bids
• requests for proposals (RFPs)
– Not-for-profit organizations
6-8
NAICS – North American Industry
Classification System
• Numerical coding of industries in US, Canada
and Mexico
• Classifies firms into detailed categories
according to their activities
• Replaced the SIC system in 1997
• Reports the number of firms, total dollar
amount of sales, number of employees,
growth rate for industries, broken down by
geographic region
• Can be used to assess potential markets and
to determine how well a firm is doing
compared to their industry group
6-9
The Nature of Business Buying
• The Buying Situation
• The Professional Buyer
• The Buying Center
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The Buying Situation
• A buy class framework identifies the
degree of effort required of the firm’s
personnel to collect information and
make a purchase decision
• Straight rebuy
• Modified rebuy
• New task buying
6-11
The Professional Buyer
• Titles: purchasing agents, procurement
officers, director of materials management
• Focus on economic factors beyond the initial
price of a product, including transportation
and delivery charges, accessory products or
supplies, maintenance, disposal costs, etc.
• Large firms practice centralized purchasing one department does all buying
6-12
The Buying Center
• Group of people in the organization who
participate in the decision-making
process
• May include production workers,
supervisors, engineers, secretaries,
shipping clerks, and financial officers
• Works like a committee
6-13
Roles in the Buying Center
• Initiator begins the buying process
• User needs the product
• Gatekeeper controls the flow of
information to other members
• Influencer dispenses advice or shares
expertise
• Decider makes the final decision
• Buyer executes the purchase
6-14
Considerations in Supplier Selection
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On-time deliveries
Single sourcing vs. multiple sourcing
Outsourcing
Reverse marketing
Reciprocity
6-15
Electronic B2B Commerce
• Internet exchanges between two or
more businesses or organizations
• Allows marketers to link directly to
suppliers, factories, distributors, and
their customers
• Reduces time necessary to order and
deliver goods, track sales, and get
feedback
6-16
Intranets and Extranets
• An intranet is an internal corporate
computer network that uses Internet
technology to link company
departments, employees, and
databases
• An extranet allows outsiders to the
organization to access its intranet
6-17
Security Issues
• Authentication - making sure only
authorized individuals are allowed to
access a site
• Firewalls - combination of hardware and
software that ensures only authorized
individuals gain entry
• Encryption - scrambling a message so
that only another individual has the right
“key” for deciphering it
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