Analyzing Business Markets

Marketing Management, 13th ed

7

Group Members

Names

1. Muhammad Waqas

2. Muhammad Moheeb

3. Muhammad Majid

4.Shaid Zafar

5.Mehtab Mushtaq

Topics

Organizational BuyingBusiness Buying ProcessPurchasing Process Stages in the Buying ProcessManaging Business-to-

Business Customer Relationships.

Institutional and Government Markets

What is Organizational Buying??

Presented BYMuhammad Waqas

What is Organizational Buying?

Organizational buying refers to the decision-making process by which formal organizations establish the need for purchased products and services, and identify, evaluate, and

choose among alternative brands and suppliers.

Top Business Marketing Challenges

• Expand understanding of customer needs• Compete globally as China and India

reshape markets• Master analytical tools and improve

quantitative skills• Reinstate innovation as an engine of growth• Create new organizational models and

linkages

Characteristics of Business Markets

Fewer, larger buyers

Close supplier-customer relationships

Professional purchasing

Many buying influences

Multiple sales callsDerived demandInelastic demandFluctuating demandGeographically

concentrated buyers

Direct purchasing

Buying Situation

Straight rebuyModified rebuyNew task

Participants in the Business Buying

ProcessPresented By Moheeb

Iqbal

The Buying Center

• Webster and Wind call decision making unit of a buying organization the buying center.

The Buying CenterRoles in the purchase decision process

1. Initiators.

2. Users.

3. Influencers.

4. Deciders.

5. Approvers.

6. Buyers.

7. Gatekeepers.

Buying Center Influences

1. Buyers centers usually include several participants with differing interests, authority, status, and persuasiveness.

2. Business buyers also respond to many influences when they make their decisions.

3. Webster cautions that ultimately, individuals, not organizations, make purchasing decisions.

Needs in buying center influence

1. Personal needs.

2. Organizational needs.

Personal needs:

Personal needs motivate the behavior of individuals.

Organizational needs:

Organizational needs legitimate the buying decision process and its outcomes.

Buying Center Targeting

• To target their efforts properly, business marketers have to figure out:

1. Who are the major decision participants?

2. What decisions do they influence?

3. What is their level of influence?

4. What evolution criteria do they use?

Business marketer

Exactly what kind of group dynamics take place during the decision process.

Small Sellers and Larger Sellers.Small sellers:Small sellers concentrate on reaching the

key buying influencers.Larger sellers:Larger sellers go for multilevel in depth

selling to reach as many participants as possible.

Target segmentsTypes of identified customers

There are four types of customers:

1. Price oriented customers.

2. Solution oriented customers.

3. Gold standard customers.

4. Strategic value customers.

Restrictive conditions of the companies

Some companies are willing to handle price oriented buyers by setting a lower price, but establishing restrictive conditions:

1. Limiting the quantity that can be purchased.

2. No refunds.

3. No adjustments.

4. No services.

Some companies who restricts.

1. Cardinal health.

2. GE.

3. IBM.

Solution selling

Solution selling can also alleviate price pressure and comes in different forms. Here are three examples:

1. Solutions to Enhance Customer Revenue.

2. Solution to Decrease Customer Risks.

3. Solutions to Reduce Customer Costs.

The Purchasing Process/Procurement

Presented BY Muhammad Majid

Purchasing Orientations

There are three company purchasing Orientations:

Buying OrientationProcurement OrientationSupply Chain Management Orientation

Types of Purchasing Process

Products related to purchasing process:Routine productsLeverage productsStrategic productsBottleneck products

Stages in Buying Process

Presented By Shaid Zafar

Stages in the Buying Process: Buyphases

Problem RecognitionGeneral Need Description And Product SpecificationSupplier SearchE-Procurement• Proposal SolicitationSupplier SelectionOrder-Routine SpecificationPerformance Review

Problem Recognition

The buying process begins when someone in the company recognizes a problem or need that can be met by acquiring a good or service. The recognition can be triggered by internal or external stimuli.

General Need Description and Product Specification

Next, the buyer determines the needed item’s general characteristics and required quantity.

For standard items, this is simple. For complex items, the buyer will work with

others- engineers , users- to define characteristics like reliability, durability, or price.

Business marketers can help by describing how their products meet or even exceed the buyer’s needs.

E-Procurement

Websites are organized around two types of e-hubs:

vertical hubs centered on industries (plastics, steel, chemicals, paper) and

functional hubs ( logistics, media buying , advertising energy management). In addition to using these websites , companies can do e-procurement in other ways:

1.Direct extranet links to major suppliers.2.Buying alliances

Supplier Selection

Before selecting a supplier, the buying center will specify desired supplier attributes and indicate their relative importance .

To rate and identify the most attractive suppliers , buying centers often use a supplier evaluation model.

Methods for Researching Customer Value

• Internal engineering assessment

• Field value-in-use assessment

• Focus-group value assessment

• Direct survey questions

• Conjoint analysis• Benchmarks• Compositional

approach• Importance ratings

Order-Routine Specification

• After selecting suppliers, the buyer negotiate the final order, listing the technical specifications, the quantity needed , the expected time of delivery, return policies, warranties, and so on.

Stockless purchase plansVendor-managed inventoryContinuous replenishment

The buyer periodically reviews the performance of the chosen supplier(s).

Three methods are commonly used. The may contacts the end users and

ask for their evaluations; the buyer may rate the supplier on several criteria using a weighted score method.

Performance Review

Managing Business-to-Business Customer

RelationshipsPresented By Mehtab

Mushtaq

Establishing Corporate Trust and Credibility

ExpertiseTrustworthinessLikability

Trust Dimensions

• Transparent• Product/Service

Quality• Incentive• Partnering

• Cooperating design• Product comparison• Supply chain• Pervasive advocacy

Factors Affecting Buyer-Supplier Relationships

• Availability of alternatives

• Importance of supply

• Complexity of supply

• Supply market dynamism

Categories of Buyer-Seller Relationships

• Basic buying and selling

• Bare bones• Contractual

transaction• Customer supply

• Cooperative systems

• Collaborative• Mutually adaptive• Customer is king

Categories of Buyer-Seller Relationships

• Buying and selling

• Relatively simple, routine exchanges with moderately high level of cooperation and information exchange.

• Bare Bones

• Similar to basic buying and selling but more adaptation by the seller and less cooperation and information exchange

Categories of Buyer-Seller Relationships

• Contractual transaction• Generally low levels of trust,

cooperation, and interaction; exchange is defined by formal contract.

• Customer Supply• Traditional customer supply situation

where competition rather than cooperation is the dominant form of governance.

Categories of Buyer-Seller Relationships

• Cooperative systems

• Although coupled closely in operational ways, neither party demonstrates structural commitment through legal means or adaptation approaches.

• Collaborative

• Much trust and commitment leading to true partnerships.

Categories of Buyer-Seller Relationships

• Mutually adaptive• Much relationships specific adaption for buyer

and seller, but without necessarily strong trust or cooperation.

• Customer is king• Although bonded by a close, cooperative

relationships, the seller adapts to meet the customer’s needs without expecting much adaptation or change on the part of the customer in exchange.

What is Opportunism?

Opportunism is some form of cheating or undersupply relative to

an implicit or explicit contract.

Institutional and Government Markets (Buyers)

• Institutional market – schools, hospitals, prisons.• Must provide goods and services to people in their

care• Need minimum quality standard at low price/low

budgets. Cost-quality trade-offs.• Government is a major buyer of goods and services

• Tender process (require bids)• Lowest bidder (exceptions on quality) • Need to follow detailed guidelines (lots paperwork)• Favour - domestic suppliers• Subject to public scrutiny

The END