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
