Ch 5 Flashcards
B2B Markets
Resellers, institutions, gov’t, manufacturers
Buying process characteristics
Buying decisions more complex
Competitive bidding, negotiated pricing, complex financial arrangements
Qualified, professional buyers - more formalized buying process
Buying criteria and objective specified
Multiple participants in purchase decisions
Reciprocal arrangements common
Close long-term relationships
Online buying common
Differences between B2B and B2C Markets
market, product, buying process, marketing mix characteristics
market characteristic differences between b2b and b2c
Demand for business products is derived
Fewer customers, more geographically concentrated & orders are larger
Demand is more inelastic
Product characteristics
Products technical in nature, purchased based on specifications
Mainly raw & semi-finished goods
Heavy emphasis on delivery time, technical assistance, after sale service, financing
Stage 1: need recognition
Buying organization recognizes through either internal or external sources, that it has an unfilled need
Can be generated internally or externally
Marketing mix characteristics
Direct selling & physical distribution often essential
Advertising more technical, promotions emphasize personal selling
Price often negotiated, inelastic, affected by trade/quantity discounts
B2B Buying Process
step 1: need recognition
step 2: product specification
step 3: RFP process
step 4: proposed analysis and supplier selection
step 5: order specification (purchase)
step 6: vendor performance assessment using metrics
Stage 2: product specification
After recognizing need and considering alternative solutions, organization writes list of potential specifications vendors might use to develop their proposals
Stage 3: Request For Proposal (RFP) process
buying organizations invite alternative suppliers to bid on supplying their required components or specifications
Stage 4: proposal analysis and supplier selection
Buying organization and critical decision makers, evaluate all the proposals it receives in response to its RFP
Considerations other than price play a role in final selection
Firms narrow process to a few suppliers, often those they have relationships with and discuss terms of the sale (price, quality, delivery and financing)
Stage 5: order specification (purchase)
Firm places its order
Stage 6: vendor performance assessment using metrics
Buying team develops a list of issues that it believes are important to consider in the vendor evaluation
To determine the importance of each issue, buying team assigns an importance score
Buying team assigns numbers that reflect its judgments about how well the vendor performs
The buying centre
The buying centre is the group of people typically responsible for the buying decisions in large organizations.
Six different buying roles within a typical buying centre can be categorized: initiator, influencer, decider, buyer, user, gatekeeper.
Initiator
person who first suggest buying the particular product/service
Influencer
person influences other members of the buying cnetre
Decider
person who ultimately determine any part of or the entire buying decision (whether to buy, what to buy, how to buy, or where to buy)
Buyer
person who handles the paperwork of the actual purchase
User
person who consumes or uses the product/service
Gatekeeper
person who controls information or access to decision makers and influencers
Organizational culture
A firm’s organizational culture reflects the set of values, traditions & customs that guides its managers’ & employees behaviour.
Democratic, consultative, autocratic, consensus
Autocratic buying centre
one person makes decision alone
Democratic buying centre
majority rules
consultative buying centre
uses one person to make a decision, but they solicit input from others before doing so
consensus buying centre
all members of the team must reach a collective agreement through which they can support a particular purchase
buying situatuons
The type of buying situation also affects the B2B decision process
3 types: new buys, modified rebuys, & straight rebuys
New buy
Purchasing for the first time
Likely to be quite involved
The buying centre will probably use all six steps in the buying process
modified buy
Purchasing a similar product but changing specifications
Current vendors have an advantage
straight rebuy
Buying additional units or products that have been previously purchased
Most B2B purchases fall into this category
