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