Chp 5: business to business marketing Flashcards
define business to business (B2B) marketing
process of buying and selling goods or services to be used in the production of other goods and services, for consumption of the buying organization, or for resale by wholesalers and retailers
what is the difference between B2B and B2C
not the product/service but rather the ultimate purchaser/user of that product/service
LO1: just like B2C, what does B2B focus on and give example
Just like B2C, B2B focus their efforts on serving specific types of customer markets to create value for those customers ex. Shopify helps companies establish online stores
LO1: what do many firms find it productive to do?
focus on key industries or market segments rather than on ultimate consumers
LO1: 4 B2B markets
resellers, institutions, government, manufacturers
LO1: B2B markets - 2 points to manufacturers/producers
1) Manufacturers buy raw materials, components and parts that allow them to manufacture their own good
2) Many B2B companies are demanding, as a condition for doing business, that suppliers demonstrate a social responsibility
LO1: B2B markets: define resellers
marketing intermediaries that resell manufactured products without significantly altering their form
LO1: B2B markets - 4 examples of resellers
1) Example: wholesalers buy jeans from Levi and sell to retailers and those retailers sell to consumers
2) Wholesalers, distributors, retailers are all resellers
LO1: B2B markets - 2 points to institutions
1) Like hospitals, universities
2) Purchase goods and services for the people they serve
LO1: B2B markets - 1 point to government
Tends to be one of the largest purchasers of goods/services
LO1: 3 key challenges of reaching B2B clients
1) marketers must identify the right persons/decision markers within org who can authorize or influence purchases
2) they must understand the buying process of each potential client
3) they need to identify the factors that influence the buying process of potential clients
LO1: example of key challenging of reaching B2B clients
institutions like universities tend to have small budgets so seek best value when buying products/services for org. Unlike governments with large budget but they have are subject to public scrutiny on purchases
LO1: how can marketers avoid the challenge of reaching B2B clients
Many companies have salespeople dedicated to specific clients to address complexity of B2B markets
LO2: 4 market characteristics of B2B compared to B2C
1) Demand for business products is derived from B2C sales in same supply chain, fluctuates more, and more frequently
2) Fewer customers, more geographically concentrated, orders are larger
3) Demand is more inelastic - demand is not as affected by price in short run
4) In B2C: consumers buy goods to satisfy own individual needs and are heavily influenced by price, personal taste, brand reputation, and personal recommendations of friends/family
LO2: define derived demand
linkage between consumers demand for company’s output and its purchase of necessary inputs to manufacture particular output
LO2: 4 product characteristics of B2B compared to B2C
1) Products are more technical in nature and purchased based on specifications by the buyer
2) Mainly raw and unfinished products purchased
3) Heavy emphasis placed on delivery time, technical assistance, after sale service, and financing assistance
4) In B2C: consumers buy finished goods for own personal consumption
LO2: 8 buying characteristics of B2B compared to B2C
1) More complex
2) Buying may involve competitive bidding, negotiated pricing, and complex financial arrangements
3) Buying involves qualified, professional buyers who follow more formal buying process
4) Buying criteria and objectives are specified, as are procedures for selecting vendors/products by organization
5) Multiple people with varied interest participate in buying decisions
6) Reciprocal arrangements exist - where 2 firms agree to buy each other’s products/services
7) Buyers and sellers usually work closely to build close long term relationships
8) Online buying over internet is common
LO2: 4 marketing mix characteristics of B2B compared to B2C
1) Direct selling is primary form of selling and physical distribution often essential
2) Advertising is technical in nature and promotions emphasize personal selling
3) Price is often negotiated, frequently affected by trade and quantity discounts, price usually includes service or maintenance component
4) In B2C: a salesperson is not really involved in fast moving consumer goods like grocery stores. In B2B, a salesperson is an integral part of a transaction.
LO3: define NAICS - define, who is it done by, spell it out
classification scheme that categorizes firms into a hierarchical set of 6 digit codes. Done by Statistics canada. (north american industry classification system)
LO3: benefit of NAICS code
Can represent product’s potential because it has info on number, size, and geographical dispersion of firms within each type
LO3: 2 points - ways B2B firms classify and segment markets
1) B2B firms can segment and target markets based on firms in the NAICS code that corresponds to the product they are selling.
2) Markets can be segmented also based on geography, account size, etc.
LO4: what buying process step occurs in both B2B and B2C
Both B2B and B2C start with need recognition
LO4: 3 ways buying process steps differ in B2B and B2C
1) Typically B2B buyers specify needs in writing and ask suppliers to submit formal proposals, whereas B2C buying is made by individuals and sometimes unplanned
2) Formal performance evaluations of vendor and product sold typically do not occur in B2C, but they do experience postpurchase dissonance and evaluate purchase decision
3) info search and alternative evaluation stages are more formal and structured in B2B
LO4: recall 5 steps in B2C consumer buying process
1) need recognition
2) info search
3) alternative evaluation
4) purchase decision
5) post decision behaviour
LO4: 6 steps in B2B buying process
1) need recognition
2) product specification
3) RFP process
4) proposal analysis and supplier selection
5) order specification (purchase)
6) vendor performance assessment using metrics
LO4: explain stage 1 of B2B buying process: need recognition
Firm recognizes it has an unfilled need
LO4: explain stage 2 of B2B buying process: product specification
Write a list of potential specifications that vendors might use to develop proposals like screen size for computers
LO4: explain stage 3 of B2B buying process: RFP process - define request for proposal (RFP)
buying organizations invite suppliers to bid on supplying their required components/specifications
LO4: explain stage 4 of B2B buying process: proposal analysis and supplier selection
Evaluate proposals, narrow selection and discuss price, quality, delivery, financing
LO4: explain stage 5 of B2B buying process: order specification (purchase) - 2 points
1) Firm places order with preferred supplier(s)
2) Order includes description of goods, prices, delivery dates, and maybe penalties if it is not filled in time and supplier sends acknowledgement
LO4: explain stage 6 of B2B buying process: vendor performance assessment using metrics - what do metrics include
Metrics include delivery (based on promised delivery date), quality, customer service, issue resolution
LO4: explain stage 6 of B2B buying process: vendor performance assessment using metrics - 4 steps of performance assessment
1) buying team develops list of issues it believes are important to consider in vendor evaluation
2) assign importance score to each (which add up to 1)
3) assign numbers that reflect its judgement about how well vendor performs using 5 point scale where 5 means excellent
4) multiplies importance with score to get overall evaluation on 5 point scale
LO5: 3 factors B2B buying process may be influenced by within purchasing organization
1) buying centre
2) buying org’s philosophy or corporate culture
3) buying situation
LO5: define buying centre
group of people typically responsible for the buying decisions in large organizations
LO5: what must marketers understand about roles within buying process and example
Marketers must understand who plays a role in buying process and adapt to it in marketing and sales efforts ex. Employee who uses machine vs CEO who approves it
LO5: can some people take on multiple roles in buying centre?
yes
LO5: list 6 buying roles within buying centre
1) initiator
2) influencer
3) decider
4) buyer
5) user
6) gatekeepers
LO5: define initiator role in buying centre
person who first suggests buying particular product/service
LO5: example of initiator role in buying centre
your doctor determines treatment for your illness
LO5: define influencer role in buying centre
person whose views influence other members of buying centre in making final decision
LO5: example of influencer role in buying centre
medical device supplier, pharmacy. Retailer of particular bandaid influenced doctor’s decision to use that bandaid on you
LO5: define decider role in buying centre
person who ultimately determines any part of or the entire buying decision, whether what to buy, how to buy, where to buy, what to buy
LO5: example of decider role in buying centre
hospital is ultimately responsible for deciding whether to buy that band aid brand
LO5: define buyer role in buying centre
person who handles paperwork of actual purchase
LO5: example of buyer role in buying centre
hospital’s materials manager is the actual buyer of the bandaid
LO5: define user role in buying centre
person who consumes or uses product/service
LO5: example of user role in buying centre
the patient, you may decide that another bandaid suits your needs better
LO5: define gatekeeper role in buying centre
person who control info or access, or both, to decision makers and influencers
LO5: example of gatekeeper role in buying centre
purchasing department. May believe that brand is too expense or other band aids are better so it may ask hospital to reconsider purchase
LO5: what must final purchase decision take into consideration?
Final purchase decision must take into consideration every single buying centre participant
LO5: organizational culture
reflects set of values, traditions, customs that guide employees behaviour
LO5: define culture
comprises set of unspoken guidelines that employees share with each other through various work situations
LO5: example of org culture and how this impacts buying process
walmart buyers are not allowed to accept even cup of coffee from vendor, this highlights overall corporate culture
LO5: 4 general types corporate buying centre culture may be divided into
1) autocratic
2) democratic
3) consultative
4) consensus
LO5: why is knowing corporate buying centre culture important for marketers
Knowing which buying centre culture is prevalent in org helps seller decide how to approach that particular client and to whom to deliver important info
LO5: define autocratic buying centre culture
there may be multiple participants, but one person makes decision along
LO5: define democratic buying centre culture
majority rules
LO5: define consultative buying centre culture
uses one person to make decision but they solicit input from others before doing so
LO5: define consensus buying centre culture
all members must reach collective agreement before supporting purchase
LO5: 3 things that can help build B2B relationships
1) social media/blogs
2) twitter
3) white papers
LO5: explain how social media/blogs is helpful to build B2B relationships
blogs/social media can build awareness, provide search engine results, educate potential and existing clients about products, and warm up a seemingly cold corporate culture
LO5: explain how twitter is helpful to build B2B relationships
Twitter is useful because B2B marketers can communicate with other businesses
LO5: explain how white papers are useful to build B2B relationships - explain, what it provides, and example
1) B2B marketers can use white papers for marketing efforts and majority of B2B buyers read them before making a purchase.
2) Provides info about industry and its challenges in educational context, rather than promotional.
3) Example: helpful for technical product to be explained for how it solves the firm’s problem
LO6: 3 types of buying situations that affect B2B decision/buying process
1) new buys
2) modified rebuys
3) straight rebuys
LO6: define new buys
customer purchases good/service for first time
LO6: 5 implications of new buys
1) Means buying decisions is likely to be involved because buyer does not have experience with item
2) Likely to proceed through all 6 steps in buying process and involve many people
3) willing to spend time and effort
4) careful search and evaluation of info
5) medium to high involvement (whole new decision)
LO6: define modified rebuy
buyer has purchased similar product in past but has decided to change some specifications, like desire price, quality level, customer service level and options
LO6: 4 implication of modified rebuy
1) Current vendors likely to have advantage in acquiring sale in this situation
2) moderate level of involvement and perceived risk
3) willing to compare few alternatives
4) tend to use shortcuts or rely on recommendations
LO6: define straight rebuy
when buyer simply buys additional units of products they had previously purchased
LO6: 5 implications of straight rebuy
1) Buyer is often only member of buying centre involved in process
2) Can go directly to 5th step of buying process
3) Similar to B2C process
4) recognize a problem and make a purchase
5) little time and effort spent
LO6: what does different buying situation call for?
different marketing and selling strategies
lecture: what is new buy in B2C
extended or complex problem solving
lecture: what is modified rebuy in B2C
limited problem solving
lecture: what is straight rebuy in B2c
routine buying
