Analysing Business Market

8/9/2019 Analysing Business Market

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Dr. Ranjan Kantha, KBS 111/26/2009

AnalyzingBusiness Markets


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What is Organizational Buying?

It is the decision-making process bywhich organizations establish the

need for products and services,and

identify, evaluate, and choose amongalternative brands and suppliers.


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Organization Typical Buying Situation

Manufacturer of consumerproducts

Sona Steering supplies steering wheels to Maruti UdyogLimited.

Manufacturer of IndustrialGoods

Tata Timken supplies bearings to Alsthom motormanufacturers who supply to Cummins Engineering

Health care Johnson and Johnson supplies surgical staplers toApollo Hospitals in Hyderabad

Information and Entertainment Sony Television decides whether to sell Sony Max signalsto Bhaskar Television for cable distribution in Indore

Service Industries Infosys decides to sell its financial software Finnacle to

Bank of Baroda

Non-profit Organization Child Relief and You (CRY) makes cards for UNOs Indiaoffice

Government The Government of India asks for sealed bid for GoldenQuadrilateral Golden Highway project

Mining, Forestry and Fishing Oil and Natural Gas Corporation (ONGC) purchasesdrilling machines and off shore platform equipments for

oil explorationAgriculture A farmers cooperative Society purchases a Sonalika

tractors for its members


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Difference between Consumer and Business MarketsDifference between Consumer and Business Markets

Decision Variables OrganizationalMarketing

Consumer Marketing

Appeal Rational Dramatic

Platform Logical Emotional

Brand Excitement Not Desired Imperative

Brand Personality Mostly Corporate Essential and both Productand Corporate

Pre-launch Research Not Vital Vital

Span of DistributionControl

Narrow Wider

Number of Orders Small Large

Size of the Order Large Very Small

Cost of OrderProcessing Low High


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Top Business MarketingChallenges

Expand understanding of customer needs Compete globally as China and India reshape

markets

Master analytical tools and improve quantitativeskills

Reinstate innovation as an engine of growth Create new organizational models and linkages


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Characteristics of BusinessMarkets

Fewer, larger buyers Close supplier-

customer

relationships Professional

purchasing

Many buyinginfluences

Multiple sales calls Derived demand

Inelastic demand

Fluctuating demand

Geographically

concentrated buyers Direct purchasing


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The Buying CenterInitiatorsInitiators

UsersUsers

InfluencersInfluencers

DecidersDeciders

ApproversApprovers

BuyersBuyers

GatekeepersGatekeepers


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Role and Responsibility of Buying Center

Initiators:These are the people who request for something to be purchased. They maybe users or others in the work organization.

Users:They use the products thus, initiating the purchase process. They report on theproduct performance e.g. worker.

Influencers: Individuals in the organization, influence the decision-making process byproviding information on criteria for buying consultants e.g. Research andDevelopment specialists inside the organization and consultants outside theorganization.

Deciders:Organizational members with decision-making power who decide about thepurchase e.g. engineers deciding specifications or vice-president (finance) who

decides in favor of the purchase. Gatekeepers: People in the organization who have the power to prevent sellers or

information from reaching the members of buying centers e.g. purchasing agents,receptionist, secretaries and telephone operators.

Approvers:People in the organization who authorize the proposed actions of deciders

or buyers. Buyers:These are the people who have formal authority to select the suppliers and

arrange the purchase terms. Buyers help in product specifications, in selection ofsuppliers and negotiating purchases and include senior people in purchasedepartment.

Organizational Buyer Behavior


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Buying Motives of Business Buyers

Motive Objective

Efficiency In performance, practicability and increased capacity

Economy In money, in use or in time

Good Quality In materials and workmanship

Simplicity In construction, operation and application

Saleability In Increasing saleabilityof user's product

Ease of operation In easier handling, greater convenience, handiness

Space saving In compactness, ease for storage and holding

Obsolescence In which it needs improvement, replacement or additions

Safety In providing safety to employees, clients and customers

Cleanliness In plant, user's product, or for the workmen



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Buying Situation

Straight rebuyStraight rebuy

Modified rebuyModified rebuy

New taskNew task


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Buying Decision Phases

BuyingDecision

Phases

New Task Modified Rebuy Straight Rebuy

1. Problemrecognition

Anticipate problem, useadvertising and creativesales people to convincebuyers of problem solving

capabilities.

In supplier: Maintainquality servicestandardsOut supplier; Watch for

developing trends.

In supplier; Maintainclose relationship ofusers and buyers.Out supplier: Convince

firm to recognizealternatives.

2. Solutiondetermination

Provide technical assistanceand information

In and out supplierstress capability,reliability, and problem

solving capabilities

- same -

3. Determiningneeded item

Provide detailedproduct/service informationto decision-maker.

Same as phase 2. - same -

4. Searching forand qualifyingsupplier

In supplier: maintaindependability, Out supplier:demonstrate ability toperform task.

In supplier, watch forproblem out supplier;demonstrate ability toperform task.

- same -

5. Analyzingproposals Understand details ofcustomer problems/ needs:make timely proposals.

Understand details ofcustomerproblems/needs; maketimely proposals.

Make timely proposals.



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Steps in Organizational Buying

Recognizing an Organizational Need

Identifying Suppliers

Determining Products Specifications

Searching for Information andEvaluating Suppliers

Negotiating a Purchase Order

Evaluating Performance of theProduct & Supplier



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Stages in the Buying Process:Buyphases

Problem recognition General need description

Product specification

Supplier search

Proposal solicitation

Supplier selection Order-routine specification

Performance review


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Buygrid Framework


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Vendor Analysis

O


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Handling Price-Oriented

CustomersLimit quantity purchasedLimit quantity purchased

Allow no refundsAllow no refunds

Make no adjustmentsMake no adjustments

Provide no servicesProvide no services


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Methods for Researching

Customer Value

Internal engineeringassessment

Field value-in-useassessment

Focus-group valueassessment

Direct survey

questions

Conjoint analysis

Benchmarks

Compositionalapproach

Importance ratings


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Trust DimensionsTransparent

Product/Service

Quality

Incentive

Partnering

Cooperating

Design

Product

Comparison

Supply Chain

PervasiveAdvocacy


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Factors AffectingBuyer-Supplier Relationships

Availability ofalternatives

Supply marketdynamismComplexity ofsupply

Importance ofsupply

Documents

Analysing Business Market