Chapter 6

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CHAPTER 6 CHAPTER 6 Module 1 Module 1
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Transcript of Chapter 6

Page 1: Chapter 6

CHAPTER 6CHAPTER 6

Module 1Module 1

Page 2: Chapter 6

Business-to-Business Business-to-Business Markets:Markets:

How and Why Organizations BuyHow and Why Organizations Buy

Chapter SixChapter Six

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6-3© 2012 Pearson Education, Inc. publishing as Prentice-Hall.

Chapter ObjectivesChapter Objectives

Understand the characteristics of Understand the characteristics of business-to-business markets, business-business-to-business markets, business-to-business market demand, and how to-business market demand, and how marketers classify business-to-business marketers classify business-to-business customerscustomers

Appreciate opportunities for using e-Appreciate opportunities for using e-commerce and social media in business-commerce and social media in business-to-business settingsto-business settings

Identify and describe the different Identify and describe the different business buying situations and the business buying situations and the business buying decision processbusiness buying decision process

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Real People, Real Choices: Real People, Real Choices: Decision Time at NCR CorporationDecision Time at NCR Corporation

Which option should NCR pursue in Which option should NCR pursue in order to market the new generation of order to market the new generation of point of sale workstations effectively? point of sale workstations effectively? • Option 1:Option 1: Attend the trade show as in the Attend the trade show as in the

pastpast

• Option 2:Option 2: Skip the show this year and Skip the show this year and reallocate resources to other alternativesreallocate resources to other alternatives

• Option 3:Option 3: Forego the show this year and Forego the show this year and find out if the venue and sponsorship find out if the venue and sponsorship changes diminish the eventchanges diminish the event’’s values value

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Business Markets: Buying and Business Markets: Buying and Selling When the Customer is Selling When the Customer is

Another FirmAnother Firm

Business-to-business marketing: Business-to-business marketing: The marketing of goods and services The marketing of goods and services that businesses and other that businesses and other organizations buy for purposes other organizations buy for purposes other than personal consumptionthan personal consumption

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Business-to-Business Business-to-Business AdvertisingAdvertising

Learn more at b2badvertising.org

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Figure 6.1Figure 6.1Key Differences in Business Versus Key Differences in Business Versus

Consumers MarketsConsumers Markets

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Figure 6.2Figure 6.2Derived DemandDerived Demand

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Business-to-Business DemandBusiness-to-Business Demand

Business-to-business demand differs Business-to-business demand differs from consumer product demand from consumer product demand

Demand is:Demand is:

• DerivedDerived

• InelasticInelastic

• FluctuatingFluctuating

• JointJoint

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Business-to-Business DemandBusiness-to-Business Demand

Inelastic demand:Inelastic demand:

• Changes in price have little or no effect Changes in price have little or no effect on the amount demandedon the amount demanded

Fluctuating demand: Fluctuating demand:

• Small changes in consumer demand Small changes in consumer demand create large increases or decreases in create large increases or decreases in business demandbusiness demand

• Life expectancy of the product can Life expectancy of the product can cause fluctuating demandcause fluctuating demand

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Business-to-Business DemandBusiness-to-Business Demand

Joint demand: Joint demand:

• Demand occurs Demand occurs for two or more for two or more goods that are goods that are used together to used together to create a productcreate a product

Examples?Examples?

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ItIt’’s Debatables DebatableClass Discussion QuestionClass Discussion Question

Suppose that the price of a key component Suppose that the price of a key component used in your product has unexpectedly used in your product has unexpectedly tripled. Think about the pros and cons of tripled. Think about the pros and cons of each of the following potential actions. each of the following potential actions. Where do you stand?Where do you stand?

1) Pass the price increase onto the customer1) Pass the price increase onto the customer

2) Absorb the price increase2) Absorb the price increase

3) Change vendors and purchase a lower-3) Change vendors and purchase a lower-priced alternative part insteadpriced alternative part instead

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CHAPTER 6CHAPTER 6

End Module 1End Module 1

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CHAPTER 6CHAPTER 6

Module 2Module 2

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Figure 6.3Figure 6.3The Business MarketplaceThe Business Marketplace

What are some examples?What are some examples?

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Table 6.2Table 6.2North American Industry North American Industry

Classification SystemClassification System

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Business-to-Business Business-to-Business E-Commerce and Social MediaE-Commerce and Social Media

B2B E-Commerce:B2B E-Commerce:Internet exchanges between two or Internet exchanges between two or more businessesmore businesses

•Facilitates exchangesFacilitates exchanges

•Links marketers to value chain Links marketers to value chain membersmembers

•Web site is critically importantWeb site is critically important

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Intranets, Extranets, Intranets, Extranets, and Private Exchangesand Private Exchanges

IntranetsIntranets• Link a firmsLink a firms’’ departments, employees, departments, employees,

and databases and databases Extranets Extranets • Allow authorized suppliers, customers, Allow authorized suppliers, customers,

and other outsiders to access the firmand other outsiders to access the firm’’s s intranetintranet

Private exchanges Private exchanges • Link an invited group of suppliers and Link an invited group of suppliers and

partners over the Webpartners over the Web

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B2B and Social MediaB2B and Social Media

Games generate buzz and drive brand Games generate buzz and drive brand awarenessawareness

B2B marketers use social networking B2B marketers use social networking sites to promote themselves sites to promote themselves

Linked In is the most prominent social Linked In is the most prominent social networking site for B2B marketers and networking site for B2B marketers and offers several advantagesoffers several advantages

SLOBs – Office Depot Linked In

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Figure 6.4Figure 6.4Elements of the Buy Class Elements of the Buy Class

FrameworkFramework

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Professional Buyers and Professional Buyers and Buying CentersBuying Centers

Trained professional buyers typically Trained professional buyers typically carry out buying in business-to-carry out buying in business-to-business markets:business markets:

• Purchasing agents Purchasing agents

• Procurement officers Procurement officers

• Directors of materials managementDirectors of materials management

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Table 6.3Table 6.3Roles in the Buying CenterRoles in the Buying Center

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Suppose the business school is Suppose the business school is buying equipment for a buying equipment for a computer lab. computer lab.

What individuals/job positions What individuals/job positions might fulfill each role?might fulfill each role?

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CHAPTER 6CHAPTER 6

End Module 2End Module 2

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CHAPTER 6CHAPTER 6

Module 3Module 3

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Figure 6.5Figure 6.5Steps in the Buying ProcessSteps in the Buying Process

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Business Buying Decision Process Business Buying Decision Process Step 1: Problem RecognitionStep 1: Problem Recognition

Factors prompting recognition vary by Factors prompting recognition vary by buying situationbuying situation

Actions resulting from problem Actions resulting from problem recognition include:recognition include:

• Initiation of a purchase requisition or Initiation of a purchase requisition or requestrequest

• Formation of a buying center, if neededFormation of a buying center, if needed

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Business Buying Decision Process Business Buying Decision Process Step 2: Information Search Step 2: Information Search

In this stage, buying center members:In this stage, buying center members:

• Search for information about products Search for information about products and suppliersand suppliers

• Develop product (or service) Develop product (or service) specificationsspecifications

• Identify potential suppliers and obtain Identify potential suppliers and obtain proposals (or bids)proposals (or bids)

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Business-to-Business Business-to-Business ServicesServices

To facilitate the buying center’s information search, marketers must provide information where and when business buyers need it

This ad sells expense monitoring services

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Business Buying Decision Process Business Buying Decision Process Step 3: Evaluate the Step 3: Evaluate the

AlternativesAlternatives The buying center assesses proposalsThe buying center assesses proposals• Price is a primary considerationPrice is a primary consideration

• Other factors may be considered, such Other factors may be considered, such as extra services or other perksas extra services or other perks

• Customer reference programs, product Customer reference programs, product demos, and presentations can help sell demos, and presentations can help sell the marketerthe marketer’’s products to firmss products to firms

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What factors should What factors should be evaluated be evaluated besides price? besides price?

When would price When would price NOT be the most NOT be the most important factor?important factor?

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Single sourcing: Single sourcing:

• Business practice of buying a particular Business practice of buying a particular product from only one supplierproduct from only one supplier

Multiple sourcing: Multiple sourcing:

• Buying from several different suppliersBuying from several different suppliers

Reciprocity: Reciprocity:

• Trading partnership in which two firms Trading partnership in which two firms agree to buy from one anotheragree to buy from one another

Business Buying Decision Process Business Buying Decision Process Step 4: Select the Product and Step 4: Select the Product and

SupplierSupplier

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Business Buying Decision Process Business Buying Decision Process Step 4: Select the Product and Step 4: Select the Product and

SupplierSupplier Outsourcing: Outsourcing: • Obtaining vendors to provide goods / Obtaining vendors to provide goods /

services that might otherwise be services that might otherwise be supplied in-housesupplied in-house

Crowdsourcing: Crowdsourcing: • Pulling together expertise from around Pulling together expertise from around

the globe to work on solving a problemthe globe to work on solving a problem Reverse marketing: Reverse marketing: • Buyers try to find capable suppliers and Buyers try to find capable suppliers and

““sellsell”” their purchase to the suppliers their purchase to the suppliers

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CrowdsourcingCrowdsourcing

Kluster.com (Brainstorming)Kluster.com (Brainstorming)

Namethis.com (Brand names)Namethis.com (Brand names)

Redesignme.com (Product redesign)Redesignme.com (Product redesign)

99designs.com (Logo design)99designs.com (Logo design)

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Business Buying Decision Process Business Buying Decision Process Step 5: Evaluate PostpurchaseStep 5: Evaluate Postpurchase

Organizational buyers assess whether Organizational buyers assess whether the performance of the product and the the performance of the product and the supplier live up to expectationssupplier live up to expectations• Users are surveyed to determine Users are surveyed to determine

satisfactionsatisfaction

• Producers may also research ultimate Producers may also research ultimate consumer satisfaction with the final consumer satisfaction with the final productproduct

• Changes in demand are analyzedChanges in demand are analyzed

• Supplier performance is documentedSupplier performance is documented

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Business Buying Decision Process Business Buying Decision Process Step 5: Evaluate PostpurchaseStep 5: Evaluate Postpurchase

Metrics used by organizational buyersMetrics used by organizational buyers

• SatisfactionSatisfaction

• QualityQuality

• Customer engagementCustomer engagement

• Purchase intentionsPurchase intentions

• Promptness and effectiveness of Promptness and effectiveness of problem resolutionproblem resolution

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Real People, Real Choices: Real People, Real Choices: Decision Made at NCR CorporationDecision Made at NCR Corporation

Brad chose option 2Brad chose option 2

•Why do you think that Brad passed on Why do you think that Brad passed on the trade show and reallocated its the trade show and reallocated its resources to two smaller events?resources to two smaller events?

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Next time: chapter 7Next time: chapter 7End Chapter 6End Chapter 6

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All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in

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