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
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• 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
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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
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Organizational Buying
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
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Organizational Buying
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
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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
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Organizational Buying
Buying Situations
• Straight rebuy• Modified rebuy• New task
• Routine reorders from approved vendor list
• Low involvement, minimal time commitment
• Example: copier paper
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Organizational Buying
Buying Situations
• Straight rebuy• Modified rebuy• New task
• Specifications, prices, delivery terms, or other aspects require modification
• Moderate level of involvement and time commitment
• Example: desktop computers
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Organizational Buying
Buying Situations
• Straight rebuy• Modified rebuy• New task
• 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
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Systems Buying and Selling
Turnkey solution desired;
bids solicited
Primecontractors
Second-tiercontractors
System subcomponents
assembled
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The Buying Centre
InitiatorsInitiators
UsersUsers
InfluencersInfluencers
DecidersDeciders
ApproversApprovers
BuyersBuyers
GatekeepersGatekeepers
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Types of Business Customers
Price-oriented
Gold-standard
Strategic-value
Solution-oriented
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Handling Price-oriented Customers
Limit quantity purchasedLimit quantity purchased
Allow no refundsAllow no refunds
Make no adjustmentsMake no adjustments
Provide no servicesProvide no services
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Solution Selling
• Solutions to enhance customer revenues
• Solutions to decrease customer risks
• Solutions to reduce customer costs
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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
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Order Routine Specification
Stockless purchase plans
Vendor-managedinventory
Continuous replenishment
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Establishing Corporate Credibility
Expertise
LikeabilityTrustworthiness
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Factors Affecting Buyer-Supplier Relationships
Availability of alternatives
Supply marketdynamism
Complexity ofsupply
Importance ofsupply
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Opportunism
Some form of cheating orundersupply relative to
an implicit or explicit contract
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