A FRAMEWORK for MARKETING MANAGEMENT Kotler KellerCunningham Chapter 6 Analyzing Business Markets.

A FRAMEWORK for MARKETING MANAGEMENT

Kotler Keller Cunningham

Chapter 6Chapter 6Analyzing Business

Markets

Chapter Questions

• What is the business market, and how does it differ from the consumer market?

• What buying situations do organizational buyers face?

• Who participates in the business-to-business buying process, and how are buying decisions made?

• How can marketers build strong relationships with business customers?

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Profile: Canadian Marketing Excellence

VANCITY

• Vancouver’s Vancity is Canada’s largest credit union (institution that is owned by its members)

• Vancity was recently ranked as one of Macleans “Top 100 Employers”

• Launched Canada’s first low-interest loan for hybrid vehicles and won an innovation award for its gay and lesbian marketing campaign

© Copyright 2008 Pearson Education Canada

• Business-to-business marketing has also been successful:• Through the use of touch-point marketing, Vancity has

been able to tailor products specifically to the business segment

• It launched a direct mail campaign aimed at 2,800 business owners for a new Vancity Expense Gold Visa, rewarding members for their business purchases

• By 2004, Vancity had managed to triple its business accounts

6-3

Organizational Buying

Decision-making process by whichformal organizations establish theneed for purchased products and

services, and identify,evaluate, and choose among

alternative brands and suppliers



Fewer buyersFewer buyers

Larger buyersLarger buyers

Geographically Geographically concentrated buyersconcentrated buyers

Closer relationships with Closer relationships with suppliers/customerssuppliers/customers

Compared to Consumer Markets, Business Markets Have



Leasing

Multiple buying influences

Fluctuating demand

Reciprocity

Inelastic demand

Professional purchasing

Direct purchasing

Derived demand

Multiple sales calls

Other Other Business Business

Market Market CharacteristicsCharacteristics


Organizational Markets

GOVERNMENT OF CANADA

•The Canadian government buys around $13 billion worth of goods and services annually from various suppliers•Over 85 departments, agencies, Crown Corporations, and special operating agencies•Public Works and Government Services Canada (PWGSC) is the government’s largest purchasing organization;

•Averaging 33,000 contracts and totalling $10 billion annually

6-7© Copyright 2008 Pearson Education Canada


Buying Situations

• Straight rebuy• Modified rebuy• New task

• Routine reorders from approved vendor list

• Low involvement, minimal time commitment

• Example: copier paper



Buying Situations


• Specifications, prices, delivery terms, or other aspects require modification

• Moderate level of involvement and time commitment

• Example: desktop computers



Buying Situations


• Purchasing a product or service for the first time

• High level of involvement and time commitment; multiple influences

• Example: selecting a website design firm or consultant


Systems Buying and Selling

Turnkey solution desired;

bids solicited

Primecontractors

Second-tiercontractors

System subcomponents

assembled


The Buying Centre

InitiatorsInitiators

UsersUsers

InfluencersInfluencers

DecidersDeciders

ApproversApprovers

BuyersBuyers

GatekeepersGatekeepers


Types of Business Customers

Price-oriented

Gold-standard

Strategic-value

Solution-oriented


Handling Price-oriented Customers

Limit quantity purchasedLimit quantity purchased

Allow no refundsAllow no refunds

Make no adjustmentsMake no adjustments

Provide no servicesProvide no services


Solution Selling

• Solutions to enhance customer revenues

• Solutions to decrease customer risks

• Solutions to reduce customer costs


Buyphases: Stages in the Business Buying Process

Problem recognition

General need description

Product specification

Supplier search

Proposal solicitation

Supplier selection

Performance review

Order-routine specification


Table 6.3 Buygrid Framework


Order Routine Specification

Stockless purchase plans

Vendor-managedinventory

Continuous replenishment


Establishing Corporate Credibility

Expertise

LikeabilityTrustworthiness


Factors Affecting Buyer-Supplier Relationships

Availability of alternatives

Supply marketdynamism

Complexity ofsupply

Importance ofsupply


Opportunism

Some form of cheating orundersupply relative to

an implicit or explicit contract


For Discussion

How can we apply what we knowabout consumer behaviour

to the behaviour of organizations in business-to-business

situations?


A FRAMEWORK for MARKETING MANAGEMENT Kotler KellerCunningham Chapter 6 Analyzing Business Markets.

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