Business Markets (chapter 7)
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Transcript of Business Markets (chapter 7)
Auren B. GalangMarketing Management
Middle Managers04.20.10
Business Marketingis the practice of individuals, or organizations,
including commercial businesses, governments and institutions, facilitating the sale of their products or services to other companies or organizations that in turn resell them, use them as components in products or services they offer, or use them to support their operations. Also known as industrial marketing, business marketing is also called business-to-business marketing, or B2B marketing, for short.
B2B versus Consumer Marketing
Fewer, Larger Buyers
• Professional and Direct Purchasing
B2B versus Consumer MarketingMultiple Buying Influence
Demand in business is based on the consumer market but fluctuates with the business cycle
More Geographically concentrated buyers
Buying Situations1. Straight Rebuy – routine basis ordering usually from
preferred suppliers; ex : office supplies
2. Modified Rebuy – the buyer wants to modify specifications, pricing, delivery terms
3. New Task – a purchaser buys the product for the first time.
Greatest opportunity and challenge to get into a certain institution.
Systems Buying and Selling Many business buyers prefer to buy a total solution to
a problem from one seller called systems buyingA prime contractor will be responsible in bidding out
and assembling the systems subcomponents.
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Systems contracting One variant of systems selling where a single supplier
provides the buyer with his entire requirement of MRO ( maintenance, repair, operating )
Buying Center
Gatekeepers
Buyers
Approvers Deciders
Influencers
Users
Initiators
Buying Center
Buying centers influence is both a rational and emotional decision as they both serve the organization’s and the individual’s needs.
The Buying Process1. Problem Recognition
2. General need description and Product Specification
3. Supplier Searcha) E-procurement
b) Lead generation
4. Proposal Solicitation
The Buying Process5. Supplier Selection
a) Overcoming price pressures
b) Number of suppliers
6. Order- Routine Specification
7. Performance review
Managing B2B Customer Relationship
Benefits of Vertical Coordination
TRUST• Transparent• Product / Service Quality• Incentive• Partnering with Customers• Cooperating Design• Product Comparison and Advice• Supply Chain• Pervasive Advocacy
Risks and OpportunismRISK – in the form of specific investments
these are expenditures that are tailored to a particular company and value chain partner
Opportunism – is a form of cheating or under supply relative to an implicit or explicit contract
It may occur when the buyer cannot easily monitor supplier performance