Chapter 6 Business-to-Business (B2B) Marketing

Question 1

Define B2B

Answer 1

Organizational sales and purchasing of goods and services

Question 2

Business to Business Marketing

Answer 2

• Product
• Promotion
• Distribution
• Customer relations
• Decision making process
• Price

Question 3

Product

Answer 3

Relatively technical in nature, exact form often variable, accompanying service very important

Question 4

Promotion

Answer 4

Emphasis on personal selling

Question 5

Distribution

Answer 5

Relatively technical in nature

Question 6

Customer relations

Answer 6

Relatively enduring and complex

Question 7

Decision making process

Answer 7

Diverse group of organization members make decision

Question 8

Price

Answer 8

Competitive bidding for unique items and list prices for standard items

Question 9

Influences in B2B markets

Answer 9

• Environmental
• Organization
• Interpersonal

Question 10

Define Commercial Market

Answer 10

Individuals and firms that acquire products to support production

Question 11

Define Trade Industries

Answer 11

Retailers and wholesalers that purchase for resale

Question 12

Define Customer

Answer 12

Dividing a business-to-business market into homogenous groups based on buyers’ product specifications

Question 13

Segmentation by End-Use

Answer 13

Based on how industrial purchasers will use the product

Question 14

Segmentation by Purchasing Categories

Answer 14

Segmenting according to organizational buyers characteristics

Question 15

Characteristics of the B2B market

Answer 15

• More concentrated than the consumer market
• Certain industries locate in particular areas to be close to customer
• Due to the internet, business markets may become less geographically concentrated

Question 16

Categories of Business Market Demand

Answer 16

• Derived Demand
• Inventory Demand
• Volatile Demand
• Inelastic Demand
• Joint Demand

Question 17

Define Derived Demand and provide an example

Answer 17

The linkage between demand for a company’s output and its purchases of resources
Example: Demand for computer microprocessor chips is derived from demand for personal computers

Question 18

Define Volatile Demand and provide an example

Answer 18

Demand is more volatile in business markets; created by derived demand
Example: Demand for gas pumps may be reduced if demand for gas slows down

Question 19

Define Joint Demand and provide an example

Answer 19

Demand for a product that depends on the demand for another product used in combination with it
Example: If the supply of lumber falls, the drop in housing construction will affect the demand for concrete

Question 20

Define Inelastic Demand and provide and example

Answer 20

Derived throughout an industry; will not change significantly due to a price change
Example: Construction firms will not necessarily buy more lumber if prices fall unless the overall demand for housing increases

Question 21

Define Global Sourcing

Answer 21

Purchasing goods and services from suppliers worldwide

Question 22

Define Sole Sourcing

Answer 22

Buying entirely from just one vendor

Question 23

Define Offshoring

Answer 23

Movement of high wage jobs from one country to low cost overseas locations

Question 24

Define Nearshoring

Answer 24

Moving jobs to vendors in countries close to the business’ home country
Example: Canada is an attractive nearshoring location for U.S. firms

Question 25

Define Outsourcing

Answer 25

Using outside vendors to provide goods and services formerly produced in house

Question 26

Reasons for Outsourcing

Answer 26

• Cost reduction
• Quality and speed of software maintenance and development
• Greater value

Question 27

Problems with Offshoring and Outsourcing

Answer 27

• Cost savings are less than expected
• Security concerns over proprietary technology or customer data
• Reduces company’s ability to respond quickly to marketplace
• Creates conflict between outside non-union and in house union workers
• Can negatively affect employee morale and loyalty

Question 28

Influences on Purchase Decisions

Answer 28

• Environmental Factors
• Organizational Factors
• Interpersonal Factors

Question 29

Environmental Factors

Answer 29

• Economic, political, regulatory, competitive and technological considerations influence business buying decisions
• Natural disasters

Question 30

Organizational Factors

Answer 30

• Marketers must understand their customer’s organizational structures, policies and purchasing systems
• Many companies use multiple sourcing to avoid depending too much on a sole supplier

Question 31

Interpersonal Infleunces

Answer 31

• People can influence B2B purchase decisions

- Sales personnel must have a good technical understanding of their products

Question 32

Define Merchandisers

Answer 32

Trade sector buyers who secure needed products at the best prices

Question 33

Define Systems Integration

Answer 33

Centralization of the procurement function within an internal division or as a service of an external supplier

Question 34

Define Category Advisor

Answer 34

Trade industry vendor who develops a comprehensive procurement plan for a retailer to buy

Question 35

Stages in the Business-to-Business Buying Process

Answer 35

1. Recognize a problem and find a general solution
2. Determine the characteristics and quantity of a needed good or service
3. Describe characteristics and quantity of a needed good or service
4. Search for and qualify potential sources
5. Acquire and analyze proposals
6. Evaluate proposals and select suppliers
7. Select and order routine
8. Obtain feedback and evaluate performance