B2B Chapter 1-2 Flashcards

1
Q

Business Markets

A

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

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2
Q

Government buying

A

Two purchasing strategies: formal advertising and negotiated contracts

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3
Q

Difference between B2B and B2C

A

The intended use of product and intended consumer

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4
Q

Market driver firms demonstrate

A

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).

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5
Q

Market-sensing capability

A

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

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6
Q

Customer-linking capability

A

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

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7
Q

Customer relationship management capabilities:

A

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

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8
Q

Customer value proposition

A

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.

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9
Q

Key buying influential

A

The influential who have power in the buying process.

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10
Q

Derived demand

A

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.

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11
Q

Demand elasticity

A

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

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12
Q

Relationship marketing

A

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

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13
Q

Supply chain management

A

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.

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14
Q

Business market customers

A

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

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15
Q

Commercial enterprises

A

Users, OEM, dealers and distributors

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16
Q

Original Equipment Manufacturers(OEMs):

A

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.

17
Q

Classification of goods in Business markets: Entering goods

A

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.

18
Q

Classification of goods in Business markets: Foundation goods

A

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.

19
Q

Classification of goods in Business markets: Facilitating goods

A

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)

20
Q

Business marketing strategy

A

: 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.

21
Q

Organizational buying behaviour

A

Can best be understood by adopting a decision process perspective.

22
Q

Customer decision journey(CDJ):

A

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.

23
Q

Organizational buying process:

A
Problem recognition
General description of need
Product specifications
Supplier search
Acquisition and analysis of proposals
Supplier selection 
Selection of order routine
Performance Review
24
Q

Customer buying situations

A

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

25
Q

New task

A

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.

26
Q

Straight rebuy

A

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.

27
Q

Modified rebuy

A

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.

28
Q

Forces influenting Organizational buying behaviour

A

Environmental, Organizational, Group, and Individual.

29
Q

Total Cost of Ownership(TCO):

A

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.

30
Q

Reverse auction

A

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.

31
Q

Global account management program

A

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

32
Q

Buying center

A

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.

33
Q

Different roles within a buying center:

A

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.

34
Q

Evaluation criteria

A

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

35
Q

Information processing

A
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
36
Q

Risk-reduce Strategies

A

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