Buying behaviour & marketing mix in business markets Flashcards
Second lecture
Explain the “marketing myopia” with example
People buy drills with bits not because they want the bits but they want the holes. A similar reference to people buying gasoline, not because they want gasoline but because they want to continue driving their cars.
“The industry is a customer-satisfying process, not a goods-producing process”
Failures were caused when companies were product-oriented rather than customer-oriented.
What question should the seller ask themselves to avoid marketing myopia?
- How do you view the product, what is it really that you sell?
- How does that influence the view of the competition?
- How does that influence the strategy development of the company= What is that the company is to be best at?
What should the seller focus on and what requirements are there on the sellers offerings?
The focus must be on the buyer. Buyers have lots of needs, problems, unrealized opportunities that may be the targets for supplier assistance.
The offerings must be percieved by the buyer as a suitable solution to the needs/problems/opp.
How to “Evaluate” offerings (Benefits vs cost)
- Solutions demanded are those where benefits outweigh costs
- Potential buyers make different interpretations
- There are no objective evaluation, actors behave in accordance with their perceptions
What is “purchase orientation” ?
“Purchase orientation” refers to a set of guidelines that help managers make decisions related to purchasing. It defines the scope and influence managers have over purchasing decisions, which can vary among customers and even within a single organization, depending on the specific product category. Essentially, it’s a framework to guide how businesses approach and manage their buying activities.
Three different purchase orientations
Buying orientation
Procurement orientation
Supply management orientation
Explain buying orientation
- Obtaining the best deal
- Risk avoidance, maximise power
- Many supplier for same product
- Supplier played against each other
- Price reduction through competition
- Suppliers are opponents rather than partners
(least scope for business marketer to create customer value)
Explain procurement orientation
- Quality improvement
- Reducing total cost of ownership
- Supplier co-op
- scope for business marketer to contribute to customers focus/value (iceberg metaphor)
Explain supply management orientation
- Maximise value along supply chain
- Firms effort focused on delivering value to end customer
- Sourcing strategy centering around firms core competence and capabilities
- Supply network that completes required business processes
- highly collaborative relationships with selected suppliers
Explain the idea of the purchasing categories according to Kraljics matrix (not the actual categories, yet)
Organizations buy a whole range of products and services, they vary in importance. Along the x axis of the matrix its “Supply risk/Market complexity”, ranging from low to high. On the y-axis its “Business impact (profit impact)”, meaning how much the product contributes to the financial success of the business
Explain the four product categories in the Kraljics matrix
Non critical products - Low impact, low risk, standard products, purchase efficiency, e-procurement
Bottleneck products - Low impact, high risk. Important to ensure a stable supply, long term contracts. Multiple supplier solutions.
Leverage products - High impact, low supply risk, negotiations, cost optimizations. Commpetitive pricing.
Strategic products - High impact, high risk, long term partnerships, collab with suppliers. Non competitive pricing?
Purchasing decision process
- Problem/need recognition
- Determining product specification
- Product and supplier search
- Proposals evaluation and supplier selection
- Specification of order routine
- Performance evaluation and feedback
Three types of buying situations
- New task
Search information, anticipate, tailor supply needs - Modified rebuy
Benefits of supply switch - Straight rebuy
Reinforce relatinship, Automated ordering
Problems with supplier relationships are solved…
within existing supplier relationships
- Investments made
- Costs for searching and evaluating new alternatives
- Business-as-usual preffered in most cases
Outside existing supplier
- Customer is facing new problems
- External factors result in new competences
- Dissatisfaction with existing supplier
What are the roles in the decision making unit of a buying team?
Initiator - Request item, trigger process
User - Influence decision, may be part of DMU
Influencer - Affects final decision
Decider - Makes final decision (may be more than one)
Buyer - Makes purchase: Administers decision
Gatekeeper - Controls information in/out of buying group, can affect decisions
