ch7b2b
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B2B Marketing
Many businesses
are wisely turning their suppliers and distributors into
valued partners.
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Business to Business Marketing
Terms Often Used:
Industrial Marketing,Business Marketing andOrganisational Marketing.
B2B Marketing =
Creation and managementInd.Supplier Ind.Customer Mutually beneficial
Customer Segments
Commercial enterprisesInstitutionsGovernmentResellers
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So what’s different about B2B?
Market features Product Attributes Service Aspects
Buyer Behaviour Channels of DistributionPromotion & Advertisi
Pricing Demand Characteristics
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Business Market vs Consumer Market
lBusiness market characteristics:
lFewer buyers and larger buyerslClose supplier-customer relationshiplProfessional purchasinglSeveral buying influenceslMultiple sales callslDerived demand from consumer marketslInelastic demandlFluctuating demandl
Geographically concentrated buyerslDirected purchasinglReciprocitylLeasing
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Fewer. Larger Buyers- Tyre co.s
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Derived Demand- Cement co.s
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Differences Between B2B
and B2CMarket Features:
lSpecific Locations
lRelatively fewer buyers
Product Attributes:
lTechnically Complex
lCustomised
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Differences Between B2Band B2C
l
Service Aspects:
lHigh importance of :
¡Timely delivery
¡Good Service
¡Availabilityl
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Buyer Behaviour
lInvolvement of various functional areas
lPurchase decisions-Objective,performance basis
lTechnical importance
lStable interpersonal relationshipslDecision making- Observable stages &
distinct
lHigh switching costs
Differences Between B2Band B2C
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Differences Between B2B
and B2C
Distribution Channels:lShorter lFewer IntermediarieslMore DirectPromotion & Advertising:lMore emphasis on personal sellingl
Trade journals, Business magazines & directmaillTrade shows, Trade fairs & Technical
seminarslInternet
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Differences Between B2B and B2C
Pricing:
lCompetitive bidding
lNegotiated prices
lList prices for standard productsDemand Characteristics:
lDerived Demand
lJoint DemandlCross elasticity of Demand
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Model of Business Buyer Behavior
TheEnvironment
Marketing
Stimuli:•Product•Price•Place•Promotion
Other Stimuli:•Economic•Technological•Political•Cultural•Competitive
The BuyingOrganization
•The Buying Center •B2B Customer types•Buying situations(buyclasses)•Buying processstages (buyphases)
•
Interpersonal andindividual influences
•OrganizationalInfluences
Buyer Responses
•Product or
service choice
•Supplier Choice
•Order Quantities
•Delivery termsand times
•Service terms
•
Price/Payment
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Major Types of Business-to-BusinessCustomers
lUser: the product (e.g., electric timer) is used inthe production of other products.
lOriginal Equipment Manufacturer (OEM):the product (e.g., electric timer) is incorporateddirectly into a final consumer product (e.g.,microwave oven).
lDistributor: the product (e.g., electric timer) is
purchased and resold to users and OEMs.
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New Task BuyingNew Task Buying
InvolvedDe
cisio
n
Mak
ing Modified RebuyModified Rebuy
Major Types of Buying Situations (Buyclasses):New criteria? New suppliers? Modified criteria and/or suppliers?
Straight RebuyStraight Rebuy
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Participants in the Business BuyingProcess
lThe Buying Center ¡Initiators¡Users¡Influencers¡
Deciders¡Approvers¡Buyers¡Gatekeepers (who are they?)¡Other issues:
lKey buying influencers (small sellers)lMultilevel in-depth selling and system
selling (large sellers)lHow can we determine who is in the
buying center?? Decisions? Influence?Criteria??
¡
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Types of Business Customers
Price-
oriented
Gold-standard Strategic-value
Solution-
oriented
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Purchasing Orientations
Buying
Procurement
Supply ChainManagement
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S t a g e 1 . P r o b l e m R e c o g n i t i o n
S t a g e 2 . G e n e r a l N e e d D e s c r i p t i o n : b i l l o f m a t e r i a l s / P V A
S t a g e 3 . P r o d u c t S p e c i f i c a t i o n
S t a g e 4 . S u p p l i e r S e a r c h : e x t r a n e t , a l l i a n c e s , c o . s i t e s
S t a g e 5 . P r o p o s a l S o l i c i t a t i o n : R F P o r R F Q
S t a g e 6 . S u p p l i e r S e l e c t i o n : v e n d o r a n a l y s i s , # ?
S t a g e 7 . O r d e r - R o u t i n e S p e c i f i c a t i o n : b l a n k e t ?
S t a g e 8 . P e r f o r m a n c e R e v i e w
Stages in the Business Buying Process(Buyphases)
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Methods of e-Procurement
lWebsites organized using vertical hubs
lWebsites organized using functional hubs
lDirect extranet links to major suppliers
lBuying alliances
lCompany buying sites
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Forms of Electronic Marketplaces
•Catalog sites•Vertical markets
•Pure play auction sites•Spot markets
•Private exchanges•Barter markets
•Buying alliances
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An Example of Vendor Rating(price quoted is adjusted by quality, delivery, and service ratings)
Attributes Rating Scale
ImportanceWeights
Poor (1)
Fair (2)
Good(3)
Excellent(4)
Price .30 x
Supplier reputation .20 x
Product reliability .30 x
Service reliability .10 x
Supplier Flexibility .10 x
Total score: .30(4) + .20(3) + .30(4) + .10(2) + .10(3) = 3.5
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Order Routine Specification and Inventory*:Blanket Contracts
Stocklesspurchase plans
Vendor-managedinventory
Continuousreplenishment
*Leasing represents another option.
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B2G E Commerce
lKorea Online E Procurement System-KONEPS¡Bidding,
¡Contract,¡Delivery inspection,
¡Payment of proceeds
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B2G E Commerce
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KONEPS
l35,000 public organizations
l150,000 supplying companies
lOnline visit by 140,000 persons/day
lDaily exchange of 100,000 electronicdocuments.
l93% of the public bidding
lPublic Service Award from the UN
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What we learnt in this chapter
lAspects of business-to-business (industrial)buyer behavior, including:a. What is the business market, and how does it differ from
the consumer market?b. The three types of business-to-business customers
(users, OEMs, and distributors)c. The buying center participants (e.g, gatekeepers), their
roles, and the political processd. The three types of buying situations (buyclasses) (e.g.,
new task, modified rebuy, straight rebuy)e. Steps in the business buying process (buyphases)f. Vendor ratingg. Internet business buyingh. B2G E-Commerce
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