Marketing Management, 12/eA South Asian Perspective

7 Analyzing

Business Markets

Dr. Hitesh Ruparel

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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?

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Chapter Questions How do business buyers make their

decisions? How can companies build strong

relationships with business customers? How do institutional buyers and

government agencies do their buying?

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Organizational Buying

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

services, and identifyevaluate, and choose among

alternative brands and suppliers.

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Characteristics of Business Markets Fewer, larger buyers Close supplier-

customer relationships Professional

purchasing Many buying influences Multiple sales calls

Derived demand Inelastic demand Fluctuating demand Geographically

concentrated buyers Direct purchasing

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Buying Situation

Straight rebuy Modified rebuy New task

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The Buying Center

Initiators Users Influencers Deciders Approvers Buyers Gatekeepers

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Of Concern to Business Marketers

Who are the major decision participants? What decisions do they influence? What is their level of influence? What evaluation criteria do they use?

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Purchasing Process

Understand the perception of purchase dept in the organization

Understand the Administration of Purchase Dept.

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Stages in Purchase process

Problem Recognition General Need Description and Product Specification Supplier Search

Catalog sites Vertical marketsPure play auction sites Spot marketsPrivate exchanges Barter marketsBuying alliances External Links

Proposal Solicitation Supplier Selection Order Routine Specification Performance Review

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Types of Business Customers

Price-oriented Solution-oriented

Gold-standard Strategic-value

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Handling Price-Oriented Customers

Limit quantity purchased Allow no refunds Make no adjustments Provide no services

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Purchasing Orientations

Buying Procurement Supply chain management

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Product-Related Purchasing Processes

Routine products Leverage products Strategic products Bottleneck products

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Methods of e-Procurement

Websites organized using vertical hubs Websites organized using functional hubs Direct extranet links to major suppliers Buying alliances Company buying sites

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Assessing Customer Value

Internal engineering assessment

Field value-in-use assessment

Focus-group value assessment

Direct survey questions

Conjoint analysis Benchmarks Compositional

approach Importance ratings

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Order Routine Specification and Inventory Stockless purchase plans Vendor-managed inventory Continuous replenishment

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Desirable Outcomes of a B2B transaction: OTIFNE

On time In full No error

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Establishing Corporate Credibility

Expertise Trustworthiness Likeability

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Factors Affecting Buyer-Supplier Relationships Availability of alternatives Importance of supply Complexity of supply Supply market dynamism

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Categories of Buyer-Seller Relationships

Basic buying and selling

Bare bones Contractual

transaction Customer supply

Cooperative systems Collaborative Mutually adaptive Customer is king

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Opportunism

Some form of cheating orundersupply relative to animplicit or explicit contract.

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Govt. & Inst. Purchase

Get into the Purchase Registry Be with Big Contractors Watch Tender Websites Network with Emerging Bidders for

Outsourcing Opportunities