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Chapter 4 B2B buying behaviour. 4-2 Brassington & Pettitt, Principles of Marketing 4e, © Pearson...
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Transcript of Chapter 4 B2B buying behaviour. 4-2 Brassington & Pettitt, Principles of Marketing 4e, © Pearson...
4-2Brassington & Pettitt, Principles of Marketing 4e, © Pearson Education 2006
learning objectives
• Understand the nature and structure of B2B buying
• Appreciate the differences between B2B buying and consumer buying
• Analyze the buying process and the reasons why purchasing varies across different buying situations
• Link B2B buying with the development of marketing strategy
4-3Brassington & Pettitt, Principles of Marketing 4e, © Pearson Education 2006
B2B Marketing Defined
B2B marketing is the management process responsible
for the facilitation of exchange between producers of goods and services and their organisational
customers
4-4Brassington & Pettitt, Principles of Marketing 4e, © Pearson Education 2006
Flybe chose Embraer to supply its new aircraft
4-5Brassington & Pettitt, Principles of Marketing 4e, © Pearson Education 2006
B2B and Consumer Markets_1
B2B customers
• Purchase products to meet specific business needs
• Emphasize economic benefits
• Use formal, lengthy purchasing policies and processes
Consumer customers
• Purchase products to meet individual or family needs
• Emphasize psychological benefits
• Buy on impulse or with minimal processes
4-6Brassington & Pettitt, Principles of Marketing 4e, © Pearson Education 2006
B2B and Consumer Markets_2
B2B customers
• Involve large groups in purchasing decisions
• Buy large quantities infrequently
• Want a customised product package
Consumer customers
• Purchase as individuals or as a family unit
• Buy small quantities frequently
• Are content with standardised product
packages
4-7Brassington & Pettitt, Principles of Marketing 4e, © Pearson Education 2006
B2B and Consumer Markets_3
B2B customers
• Experience major problems if supply fails
• Find switching suppliers difficult
• Negotiate on price
Consumer customers
• Experience minor irritation is supply fails
• Find switching suppliers easy
• Accept stated price
4-8Brassington & Pettitt, Principles of Marketing 4e, © Pearson Education 2006
B2B and Consumer Markets_4
B2B customers
• Purchase direct from suppliers
• Justify an emphasis on personal selling
Consumer customers
• Purchase from intermediaries
• Justify an emphasis on mass media
4-9Brassington & Pettitt, Principles of Marketing 4e, © Pearson Education 2006
Types of B2B Customers
• Commercial enterprises
• Government bodies
• Institutions
4-10Brassington & Pettitt, Principles of Marketing 4e, © Pearson Education 2006
Figure 4.2 A Clothing Manufacturer and its Suppliers
Suppliers of raw materials
and components
Suppliers of manufacturing
equipmentSuppliers of labour
Suppliers of other equipment
and supplies
Suppliers of services
Manufacturer
4-11Brassington & Pettitt, Principles of Marketing 4e, © Pearson Education 2006
Characteristics of B2B Markets
Nature of demand Structure of demand
Complexity of buying process
Buyer-seller relationships
4-12Brassington & Pettitt, Principles of Marketing 4e, © Pearson Education 2006
Derived Demand
Goodyear’s RunOnFlat Tyres are featured on
•BMWs,
•Ferraris,
•Corvettes,
•Maseratis, and
•MercedesSource: © Goodyear Dunlop Tyres EuropeB.V. http://eu.goodyear.com
4-13Brassington & Pettitt, Principles of Marketing 4e, © Pearson Education 2006
Joint Demand
Demand for Samsung’s Solid State Disk (SSD) is tightly coupled with the demand for computers and other devices with memory chips
4-14Brassington & Pettitt, Principles of Marketing 4e, © Pearson Education 2006
Inelastic Demand
Elasticity of demand refers to the extent to which the quantity of a
product demanded changes when its price changes;
If a product has inelastic demand, demand does not change due to
price changes
4-15Brassington & Pettitt, Principles of Marketing 4e, © Pearson Education 2006
Should a company purchase from multiple suppliers?
Supplier categories at Phillips:
• Supplier-partners
• Preferred suppliers
• Commercial suppliers
4-16Brassington & Pettitt, Principles of Marketing 4e, © Pearson Education 2006
Advantages of Single Sourcing
• Improved communications
• Increased responsiveness
• Shared design of quality control systems
• Elimination of supplier switching costs
• Improvement in product cost effectiveness
• Reduced prices through larger volume
• Reduced prices through reduced supplier costs
• Enhanced ability to implement JIT systems
4-17Brassington & Pettitt, Principles of Marketing 4e, © Pearson Education 2006
Disadvantages of Single Sourcing
• Increased costs through lack of competitive pressure
• Increased supply vulnerability
• Reduced market intelligence and flexibility
• Improved supplier appraisal capacity
4-18Brassington & Pettitt, Principles of Marketing 4e, © Pearson Education 2006
Advantages and Disadvantages of Multiple Sourcing
Advantages
• Increased competitive pressure
• Improved supply continuity
• Improved market intelligence
• Improved supplier appraisal effectiveness
Disadvantages
• Perceived lack of commitment
• Increased costs
• Less supplier investment
• Reduced willingness to adapt
• Higher operating costs
4-19Brassington & Pettitt, Principles of Marketing 4e, © Pearson Education 2006
Purchase Significance
New Task
Routinere-buy
Modified re-buy
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Buying Decision-Making Process
Precipitation
Supplierselection
Commitment
Product specification
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Roles in the Buying Process
• Purchasing - handle relationships with suppliers
• Production/operations - meeting targets for the end product in both quantity and quality terms
• Engineering - the specification and design
• Research and Development (R&D) – look for new solutions to problems
• Finance - devolve budgets to appropriate managers
• Marketing - outputs of the production process
4-22Brassington & Pettitt, Principles of Marketing 4e, © Pearson Education 2006
Buyer-Seller Contact in B2B Markets (Unit Production Model)
Production engineering
Quality
Sales
Design
Purchasing
Design
Production engineering
Quality
etc. etc.
Supplier Buyer
Source: Adapted from Johanson (1982), copyright 1982 © John Wiley & Sons Limited. Reproduced with permission.
4-23Brassington & Pettitt, Principles of Marketing 4e, © Pearson Education 2006
Buyer-Seller Contact (Mass Production Model)
Production engineering
Design
Sales
Quality
etc.
Purchasing
Source: Adapted from Johanson (1982), copyright 1982 © John Wiley & Sons Limited. Reproduced with permission.
4-24Brassington & Pettitt, Principles of Marketing 4e, © Pearson Education 2006
Figure 4.7 Commodity Positioning Matrix
4-25Brassington & Pettitt, Principles of Marketing 4e, © Pearson Education 2006
Buying Centres
Initiator
Influencer
Decider
Purchaser
User
User
Influencer
Decider
Buyer
Gatekeeper
Consumer B2B
4-26Brassington & Pettitt, Principles of Marketing 4e, © Pearson Education 2006
Buying Criteria: Economic Influences
Appropriate prices
Qualityconsistency
Productspecification
Supply reliabilityand continuity
Customerservice
4-27Brassington & Pettitt, Principles of Marketing 4e, © Pearson Education 2006
Buying Criteria: Non-Economic Influences
Prestige
FriendshipCareer security
Other personal needs
Trust
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Approaches to Supplier Handling
Adversarial• Multiple suppliers
• Regular price quotes
• Adversarial negotiations
• Sporadic communication
• Little cooperation
• Quality and time scales to meet lowest expectations
• Emphasis on lowest unit price
Collaborative• Few suppliers
• Long-term relationship
• Partnerships
• Frequent, planned communication
• Integrated operations
• Quality and time scales ‘designed in’
• Emphasis on lowest overall cost
4-29Brassington & Pettitt, Principles of Marketing 4e, © Pearson Education 2006
Relationship Life Cycle
Awareness
Exploration
Expansion
Commitment
Dissolution
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Key Terms_1
• Activities directed towards marketing by one organisation to another are called _____.
B2B marketing
• A group of individuals that contribute towards or take direct responsibility for organisational purchasing decisions is called a _____.
Buying centre
• Another term for buying centre is _____.
Decision making unit
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Key Terms_2
• What form of demand for products or components in B2B markets depends on consumer demand further down the chain?
Derived demand
• What form of demand for one product or component in a B2B market is dependent on the supply or availability of another?
Joint demand
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Key Terms_3
• A _____ occurs when goods and services are purchased relatively infrequently by organisations that reevaluate their choices before making a repeat purchase decision.
Modified re-buy
• _____ is the sourcing of a particular B2B product from more than one supplier simultaneously.
Multiple sourcing
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Key Terms_4
• _____ occurs when products are purchased infrequently by organisations, and involve a high level of formalised information collection and analysis before a purchasing decision is made.
New task purchasing
• The criteria to which an organisational purchase must conform in terms of quality, design, compatibility, performance, price, etc is called _____.
Product specification
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Key Terms_5
• _____ refers to an organisation's preferences, systems, and procedures for purchasing.
Purchasing policy
• The evolution of buyer-seller relationships in B2B markets, through stages including awareness, exploration, expansion, commitment and dissolution is called the _____.
Relationship lifecycle
4-35Brassington & Pettitt, Principles of Marketing 4e, © Pearson Education 2006
Key Terms_6
• A _____ occurs when products are purchased frequently by organisations from established suppliers, with little or no formal decision-making involved in the repeat purchase.
Routine re-buy
• The sourcing of a particular B2B product from only one supplier is called _____.
Single sourcing