CH04: Analyzing Business Markets Flashcards
business market
all orgs that acquire goods/services used in the production of other goods/services
main characteristics of business markets
- fewer, larger buyers
- close supplier/customer relationships
- derived demand
- inelastic demand
- fluctuating demand
- direct purchasing
types of buying situations
- straight rebuy
- modified rebuy
- new task
people involved in the buying center
- initiators
- users
- influencers
- deciders
- approvers
- buyers
- gatekeepers
what is the role/purpose of the buying center
seek the best value from fewer and better suppliers
the 8 stages of the business-buying process
- problem recognition
- need description
- product specification
- supplier search
- proposal solicitation
- supplier selection
- contract negotiation
- performance review
product value analysis
an approach to cost reduction that studies whether components can be redesigned, standardized, or made cheaper without adversely affecting performance; basically, optimizing costs without sacrificing quality
vertical hub
buying hub centered on an industry (e.g. plastics, steel, paper)
functional hub
buying hub centered on a business function (e.g. logistics, media buying, energy management)
main factors by which to evaluate vendors
- price
- reputation
- reliability
- agility
blanket contract
supplier promises to resupply the buyer as needed, at agreed-upon prices, over a specified period of time; stockless purchase plan
long-term contracts
used by buyers to ensure a steady flow of materials; used when buyer fears a shortage of key materials and are willing to buy and hold large quantities
vendor-managed inventory
suppliers are privy to customer inventory levels and take responsibility for continuous replenishment programs
systems buying
an all-in-one solution from one seller; originated from govt wanting complete weapons systems
systems selling
used as a marketing tool; one supplier provides a turnkey solution; supplier bids out the subcomponents to subcontractors
enhancing services
high quality services added to product offerings to provide value and establish ties with customers; bundled services to improve customer satisfaction (e.g. Caterpillar includes training, etc. in all purchases)
ways to inform business customers
- online presence
- search engine optimization
- social media
- webinars/podcasts
relevant forces influencing buyer-supplier relationships
- availability of alternatives
- importance of supply
- complexity of supply
- supply market dynamism
risks involved with business selling
- specific investments (expenditures tailored to a particular company and value-chain partner)
- opportunism (buyers or sellers lying)
institutional market
schools, hospitals, nursing homes, prisons, etc. that must provide goods and services to people in their care
govt orgs
major buyer of goods and services in most countries
