Analyzing Business Markets Flashcards
What is Organizational Buying? - What is involved
- Business market
- Buying situations
- The buying centre – People
Business market
Consists of all the organizations that acquire goods and services used in the production of other products or services that are sold, rented, or supplied to others
Types of business markets
o Fewer, larger buyers o Close supplier o Customer relationships o Professional purchasing o Multiple buying influences o Multiple sales calls o Derived demand o Inelastic demand o Fluctuating demand o Geographically concentrated buyers o Direct purchasing
Buying situations
o Straight Rebuy
(C-Product, same product)
o Modified Rebuy
(B-Product, similar product)
o New Task
(A-Product, first time buy ever)
The buying center – People
o Initiators
o Users
o Influencers
(the quality-people: influence your decision)
o Deciders
(today, the decision makers are a team, not only one person)
o Approvers
(they can veto)
o Buyers
(person working in the purchasing department who makes sure to get the best deal)
o Gatekeepers
(secretary, person you need to go through to be able to reach CEOs etc.)
Targeting within the Business Center
- Who are the major decision participants?
- What decisions do they influence, and how deeply?
- What evaluation criteria do they use?
The Purchasing / Procurement Process
- Problem recognition
- General need description and product specification
- Supplier search
Problem recognition
Someone in the company recognizes a problem or need that can be met by acquiring a good or service
Not usual for straight rebuy, more for modified rebuy
General need description and product specification
Next, the buyer determines the needed item’s general characteristics, required quantity, and technical specifications
Supplier search
o Vertical markets o Pure play auction o Sport & barter markets o Private exchanges o Buying alliances o Catalog sites
E-Procurement
• Vertical hubs
Some company is near to “help out”
- Functional hubs
- Direct extranet links to major suppliers
• Buying alliances
To ensure industry goes well
• Company buying sites
Stages in the Buying Process
- Proposal solicitation
- Supplier selection
- Order-routine specification
Proposal solicitation
The buyer next invites qualified suppliers to submit written proposals
Supplier selection
Before selecting a supplier, the buying center will specify and rank desired supplier attributes
Proposal solicitation
When asking a supplier for offers since you want to buy a certain amount of the products who is the best supplier will not depend on the price at the end in b2b
Order-routine specification
After selecting suppliers, the buyer negotiates the final order, listing the technical specifications, the quantity needed, the expected time of delivery, return policies, warranties, etc.
A supplier-evaluation model
Supplier selection:
• Overcoming price pressures
Solution selling, risk and gain sharing
• Number of suppliers
More suppliers = more safety in case one cannot fulfill demand
Performance review
The buyer periodically reviews the performance of the chosen supplier(s)
Developing Effective b2b Marketing Programs
- Communication and branding activities
- Systems buying and selling
- Role of services
Buyer–Supplier Relationships
- Basic buying and selling
- Bare bones
- Contractual transaction
- Customer supply
- Cooperative systems
- Collaborative
- Mutually adaptive
- Customer is king
Customer is king idea won’t help you to not go bankrupt!! You want your customer to be happy, but still make profit!
Managing B2B customer relationships
- Risks and Opportunism in Business Relationships
- Institutional and Government Markets
• Institutional market
(Schools, hospitals, nursing homes, prisons, etc. that must provide goods and services to people in their care)
• Government organizations
(Are a major buyer of goods and services in most countries; Military organizations)
