ch7b2b

8/8/2019 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

ch7b2b

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