Business-to-Business Markets: Business-to-Business Markets: How and Why Organizations Buy Chapter Six © 2012 Pearson Education, Inc. publishing as Prentice-Hall

Business-to-Business Markets:

How and Why Organizations Buy

Chapter Six© 2012 Pearson Education, Inc. publishing as Prentice-Hall.

Understand the characteristics of business-to-business markets, B2B market demand, and how marketers classify B2B customers

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

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

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

6-2

Chapter Objectives

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

◦Business-to-business (organizational) markets include manufacturers, wholesalers, retailers, and other organizations such as hospitals, and government


6-3

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

Business markets differ from consumer markets in several ways:

◦Multiple buyers are involved◦Fewer organizational customers exist◦Order quantities and cost are much

larger◦Business customers are more

geographically concentration

These differences make B2B marketing more complex


6-4

Factors That Make a Difference in Business Markets

Business-to-business demand differs from consumer product demand

Demand is:◦Derived◦Inelastic◦Fluctuating◦Joint


6-5

Business-to-Business Demand

Derived demand:◦Demand for organizational products is

caused by demand for consumer goods◦Changes in consumer trends can impact

B2B sales

Inelastic demand:◦Changes in price have little or no effect

on the amount demanded


6-6


Fluctuating demand: ◦Small changes in consumer demand

create large increases or decreases in business demand

◦Life expectancy of the product can cause fluctuating demand

Joint demand: ◦Demand occurs for two or more goods

that are used together to create a product


6-7


Producers: ◦Individuals or firms that purchase

products for use in the production of other goods and services Example: Dell buys RAM chips for

integration into their PCs

Resellers: ◦Individuals or firms that buy finished

goods for reselling, renting, or leasing


6-8

Types of Business-to-Business Customers

Organizations: Government markets:◦Federal, state, county, and local

governments that buy goods and services to carry out public objectives, and support their operations

Organizations: Not-for-profit firms:◦Organizations with charitable, educational,

community, and other public service goals that buy goods and services to support their functions and to attract and serve their members


6-9

Types of Business-to-Business Customers

Marketers use the North American Industry Classification System (NAICS) to identify their customers and to find new customers

NAICS is a numerical coding of industries in the United States, Canada, and Mexico


6-10

North American Industry Classification System

B2B E-CommerceInternet exchanges between two or more businesses:◦Includes exchanges of information,

products, services, and payments◦Allows business marketers to link to

suppliers, factories, distributors, and their customers

◦B2B Internet site provides technical support, item and order status information, and customer service


6-11

Business-to-Business E-Commerce and Social Media

Intranets:◦Link a firms’ departments, employees,

and databases Extranets:

◦Allow authorized suppliers, customers, and other outsiders to access the firm’s intranet

Private exchanges:◦Link an invited group of suppliers and

partners over the Web


6-12

Intranets, Extranets, and Private Exchanges

Hackers threaten security:◦Customer credit card number theft◦May destroy firm records or steal trade

secrets◦Authenticating transactions is critical

Well-meaning employees can be security threats

Firewalls and encryption safeguard e-commerce transactions`


6-13

The Dark Side of B2B Commerce

Games generate buzz and drive brand awareness

B2B marketers use social networking sites to promote themselves

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


6-14

B2B and Social Media

http://www.youtube.com/watch?v=QzZyUaQvpdc&feature=related



Buy class framework◦Identifies the degree of effort a firm

needs to collect information and make a decision

Three buy classes:◦Straight re-buy ◦Modified re-buy◦New-task buy


6-15

Business Buying Situations and the Buying Decision Process

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

◦ Purchasing agents ◦ Procurement officers ◦ Directors of materials

management


6-16

Professional Buyers and Buying Centers

The group of people in an organization who participate in a buying decision:

◦ Initiator◦ User◦ Gatekeeper◦ Influencer◦ Decider◦ Buyer


6-17

The Buying Center

Factors prompting recognition:◦ Vary by buying situation

Actions resulting from problem recognition:◦Initiation of a purchase requisition or

request◦Formation of a buying center, if needed


6-18

Business Buying Decision Process Step 1: Problem Recognition

In this stage, buying center members:

◦ Search for info about products and suppliers Marketers must provide information where and

when business buyers need it

◦ Develop product specifications Written descriptions of the quality, size, weight,

color of the item to be purchased

◦ Identify potential suppliers/obtain proposals (bids)


6-19

Business Buying Decision Process Step 2: Information Search

The buying center assesses proposals:

◦Price is a primary consideration◦Other factors may be considered, such as

extra services or other perks◦Customer reference programs, product

demos, and presentations can help sell the marketer’s products to firms


6-20

Business Buying Decision Process Step 3: Evaluate the Alternatives

Single sourcing: ◦Business practice of buying a particular

product from only one supplier

Multiple sourcing: ◦Buying from several different suppliers

Reciprocity: ◦Trading partnership in which two firms

agree to buy from one another


6-21

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

Outsourcing: ◦Obtaining vendors to provide goods /

services that might otherwise be supplied in-house

Crowd-sourcing: ◦Pulling together expertise from around

the globe to work on solving a problem Reverse marketing:

◦Buyers try to find capable suppliers and “sell” their purchase to the suppliers


6-22

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

Organizational buyers assess whether the performance of the product and the supplier live up to expectations:

◦Users are surveyed to determine satisfaction

◦Producers may also research ultimate consumer satisfaction with the final product

◦Changes in demand are analyzed◦Supplier performance is documented


6-23

Business Buying Decision Process Step 5: Evaluate Postpurchase

Metrics used by organizational buyers:

◦Satisfaction◦Quality◦Customer engagement◦Purchase intentions◦Promptness and effectiveness

of problem resolution


6-24

Business Buying Decision Process Step 5: Evaluate Postpurchase

Documents

Business-to-Business Markets: Business-to-Business Markets: How and Why Organizations Buy Chapter Six © 2012 Pearson Education, Inc. publishing as Prentice-Hall