B2B Chapter 1-2

Question 1

Business Markets

Answer 1

markets for products and services, local to international, bought by businesses, government bodies, and institutions for incorporation, for consumption, for use, or for resale

Question 2

Government buying

Answer 2

Two purchasing strategies: formal advertising and negotiated contracts

Question 3

Difference between B2B and B2C

Answer 3

The intended use of product and intended consumer

Question 4

Market driver firms demonstrate

Answer 4

A set of values and beliefs that places the customers’ interests first.
The ability to generate, disseminate, and productively use of superior information about customers and competitors.
The coordinated use of interfunctional resources (for example, R&D and manufacturing).

Question 5

Market-sensing capability

Answer 5

The capability that concerns how well the organization is equipped to continuously sense changes in its market and anticipate customer responses to marketing programs.

Question 6

Customer-linking capability

Answer 6

The capability that comprises the particular skills, abilities and processes an organization has developed to create and manage close customer relationship.

Question 7

Customer relationship management capabilities:

Answer 7

The skills required to identify initiate, develop, and maintain profitable customer relationships.

Question 8

Customer value proposition

Answer 8

The proposition that captures the particular set of benefits that a supplier offers to advance the performance of the customer organization.

Points of parity: the value elements with essentially the same performance as the next best alternative
Points of difference: the value elements that render the supplier’s offering either superior or inferior to the next best alternative.

Question 9

Key buying influential

Answer 9

The influential who have power in the buying process.

Question 10

Derived demand

Answer 10

refers to the direct link between the demand for an industrial product and the demand for consumer products: The demand for industrial products is derived from the ultimate demand for consumer products.

Question 11

Demand elasticity

Answer 11

Demand is elasticity when a given percentage change in price brings about an even larger percentage change in the quantity demanded.

Question 12

Relationship marketing

Answer 12

The marketing that centers on all marketing activities directed toward establishing, developing, and maintaining successful exchanges with customers.

Question 13

Supply chain management

Answer 13

It is a technique for linking a manufacturers’ operations with those of all of its strategic suppliers and its key intermediaries and customer’s enhance efficient and effectiveness.

Question 14

Business market customers

Answer 14

Can be categorized into commercial enterprises, governmental organizations, and institutions.

Question 15

Commercial enterprises

Answer 15

Users, OEM, dealers and distributors

Question 16

Original Equipment Manufacturers(OEMs):

Answer 16

The OEM purchases industrial goods to incorporate into other products it sells in the business or ultimate consumer market.
For example, Dell buy microprocessors from Intel to put into their computers.

Question 17

Classification of goods in Business markets: Entering goods

Answer 17

Raw materials: Include both farm products and natural products, are processed only to the level required for economical handling and transport; they basically enter the buying organization’s production process in their natural state.
Manufactured materials and parts: They undergo more initial processing. Component materials such as textiles or sheet steel have been processing before reaching a clothing manufacturer or automaker but must be processed further before becoming part of the finished consumer product.

Question 18

Classification of goods in Business markets: Foundation goods

Answer 18

Consist of capital items.

Installations: They include major long term investment items that underlie the manufacturing process, such as buildings, land rights, and fixed equipment.
Accessory equipment: An equipment that is generally less expensive and is short-lived and not considered part of the fixed plant. Can be found in plant as well as in office.

Question 19

Classification of goods in Business markets: Facilitating goods

Answer 19

Are the supplies and services that support organizational operations.
Supplies: For example, printer, paper; or business forms, and maintenance and repair items, such as paint and cleaning materials.
Services: Business service include maintenance and repair support (for example, machine repair) and advisory support (for example, management consulting and information management)

Question 20

Business marketing strategy

Answer 20

: A marketing strategy appropriate for one of the above mentioned category of goods may be entirely unsuitable for another. For example, personal selling is more important for installations whereas personal selling is less important for supplies than other categories of goods.

Question 21

Organizational buying behaviour

Answer 21

Can best be understood by adopting a decision process perspective.

Question 22

Customer decision journey(CDJ):

Answer 22

Describes the customer decision process and include two critica steps.
Inspiration, where customers turn online channels to find, create, and compare ideas.
Sharing, in which customers relate their experiences or post case studies using a variety of social media.

Question 23

Organizational buying process:

Answer 23

Problem recognition
General description of need
Product specifications
Supplier search
Acquisition and analysis of proposals
Supplier selection 
Selection of order routine
Performance Review

Question 24

Customer buying situations

Answer 24

Three types of buying situations, New task, Modified rebuy, and Straight rebuy.

Question 25

New task

Answer 25

A situation where the organization decision makers perceive the problem or need as totally different from pervious experiences. Extensive problem solving is an elaborate decision-making process in which organizational buyers operate, when confronting a new-task buying situation. Strategic new-task decisions are of extreme importance to the firm both strategically and financially. If the buyer perceives that a rapid pace of technological change surrounds the decision, search effort is increased but concentrated in a shorter time period. Long-range planning drives the decision process.

Question 26

Straight rebuy

Answer 26

When there is a continuing or recurring requirement, buyers have substantial experience in dealing with the need and require little or no new information. Evaluation of new alternative solutions is unnecessary and unlikely to yield appreciable improvements. Routine problem solving is the decision process employed by organization buyers in the straight rebuy. Organizational buyers apply well-developed choice criteria to the purchase decision. The criteria have been refined over time as the buyers have developed predispositions toward the offerings of one or a few carefully screened suppliers Operating resources is the goods and services needed to run the business, such as computer and office supplies, maintenance and repair items. Justifier is an element of the offering that would make a noteworthy difference to their company’s business.

Question 27

Modified rebuy

Answer 27

is the situation where organizational decision makers feel they can derive significant benefits by re-evaluation alternatives. The buyers have experience in satisfying the continuing or recurring requirement, but they believe it is worthwhile to seek additional information and perhaps to consider alternative solutions. Limited problem solving is a problem-solving process in which consumers are not motivated t search for information or to rigorously evaluate each alternative; instead they use simple decision rules to arrive at a purchase decision Complex modified rebuy is a large set of choice alternatives and poses little uncertainty. The range of choices enhances the buyer’s negotiation strength. The importance of the decision motivates buyers to actively search for information apply sophisticated analysis techniques, and carefully consider long-term needs. This decision situation is particularly well suited to competitive bidding process.

Question 28

Forces influenting Organizational buying behaviour

Answer 28

Environmental, Organizational, Group, and Individual.

Question 29

Total Cost of Ownership(TCO):

Answer 29

When purchasing a product or service, the procurement manager always considers a host of costs above and beyond the actual purchase price. Acquisition cost is the ocst recognized associated ain convincing customer to purchase a product or service. It includes selling price and transportation costs but also the administrative costs of evaluating suppliers, expediting orders, and correcting errors in shipments or delivery. Possesion cost is the full cost of ising any non-consumable product. It includes financing, storage, inspection, taxes, insurance, and other internal handling costs. Usage cost is the cost associated with the ongoing use of the purchased product such as installation, employee training, user labour and field repair, as well as product replacement and disposal costs.

Question 30

Reverse auction

Answer 30

is the process where one buyer who invites bids from several prequalified suppliers who face off in a dynamic, real-time, competitive bidding process. Reverse auctions are most widely used in automobile, electronics, aerospace, and pharmaceutical industries.

Question 31

Global account management program

Answer 31

is a global standard that treats a customer’s worldwide operations as one integrated account, with coherent terms for pricing, service, and product specifications.

Question 32

Buying center

Answer 32

is the concept where a center provides rich insights into the role of group forces in organizational buying behavior. The buying center usually consists of at least 4 individuals.

Question 33

Different roles within a buying center:

Answer 33

Users are the ones who use the product in question. Users may have anywhere from inconsequential to extremely important influence o n hte purchase decision. Gatekeepers control information to be reviewed by other members of the buying center. They may do so by disseminating printed information, such as advertisements, or by controlling which salesperson speaks to which individual in the buying center. Influencers are those who affect the purchase decision by supplying information for the evaluation of alternatives or by setting buying specifications. Typically, those in technical departments, such as engineering, quality control, and R&D, have significant influence on the purchase decision. Deciders actually make the buying decision, whether or not they have the formal authority to do so or not. The identity of the decider is the most difficulty role to determine: buyers may have formal authority to buy, but the president of the firm may actually make the decision. A decider could ne a design engineer who develop a set of specifications that only one vendor can meet. Buyer has a formal authority to select a supplier and implement all procedures connected with securing the product. More powerful members of the organization often usurp the power of the buyer.

Question 34

Evaluation criteria

Answer 34

are the specifications that organizational buyers use to compare alternative industrial products and services.

Question 35

Information processing

Answer 35

``` What an individual organizational buyer chooses to pay attention to, comprehend, and retain has an important bearing in procurement decisions. Selective exposure Selective attention Selective perception Selective retention ```

Question 36

Risk-reduce Strategies

Answer 36

Individuals area motivated by a strong desire to reduce risk when it comes to purchase decisions. Individual decisions tend to occur for straight rebuys and modified rebuys when the risk is low. For high risk decisions such as new tasks and high risk modified rebuys, decisions seem to be made in group. Perceived risks include two components: Uncertainty about the outcome of a decision. The magnitude of consequences from making the wrong decision