Introduction of BtoB

8/8/2019 Introduction of BtoB

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Introduction toBusiness-to-Business Marketing

Raghvendra patelRegs no- 5117


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P roduction conceptProduction concept 1776 the wealth of nations adam smith the needs of producers should beconsidered only to meet the needs of consumersThe production concept prevailed till 1920sThe key questions that firm would ask before

producing a product wereCan we produce the product?Can we produce enough of it?


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S ales conceptS ales concept by the early 1930s productionconcept had become common placecompetition increased and there wasunfulfilled demand.The key questions that firm would ask before

producing a product wereCan we sell the product?Can we charge enough for it?


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Marketing conceptM arketing concept after II world war the variety of products hadincreased and selling concept cannot be relied

The key questions that firm would ask What do customers want?

Can we develop it while they still want it? How can we satisfy the customers

In response to discerning customers, firms began to adopt themarketing concept

F ocusing on customer needs before developing Aligning all functions of org to focus on them Realizing a profit by successfully satisfying the customer


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BU S INE SS MARKETING (B to B)IS

MARKETING OF GOOD S AND S ERVICE S TO:

C ompanies Government Bodies Institutions (i.e. hospitals) Non-Profit Organizations (i.e. American Red C ross)

FOR US E IN P RODUCING THEIR P RODUCT S AND/OR TO FACILITATE THEIR O P ERATION S


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B2B versus B2C Marketing


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Characteristic B2B Market B2C Market

Sales volume Greater Smaller Purchase volume Greater Smaller

Number of buyers Fewer Many

Size of individual buyers Larger Smaller

Location of buyers Concentrated DiffuseBuyer-seller relationship Closer More Impersonal

Nature of channel More direct Less direct

Buying influences Multiple Single/Multiple

Type of negotiations More complex Simpler

Use of reciprocity Yes No

Use of leasing Greater Less

Key promotion method Personal Selling Advertising


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Characteristics of Business MarketsM arket C haracteristicsProduct C haracteristicsBuyer behavior Distribution channel C haracteristicsPromotional C haracteristicsPrice C haracteristics


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S ectors of the B2B MarketProducers includes all manufacturers and service

providers; buy goods to use in making other goods or

servicesM iddlemen buy goods for resale; includes allretailers and wholesalers (distributors, vendors)Government includes all federal, state, and local

governments and govt. agencies Nonprofit includes charities, schools anduniversities, museums, etc.


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Derived demandThe demand for industrial products andservices does not exist by itself.It is derived from ultimate demand for consumer goods and services.


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Forces Influencing Organizational Buying Behavior

E nvironmentalForces

OrganizationalForces

GroupForces

OrganizationalBuying

Behavior

E conomic Outlook:Domestic & GlobalPace of Technological

ChangeGlobal Trade Relations

Goals, Objectives, andStrategiesOrganizational Position

of Purchasing

Roles, relativeinfluence, and patternsof interaction of buyingdecision participants

A projected change inbusiness conditionscan drastically alter buying plan.


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Net Market Model


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Building Buyer- S eller RelationshipsM any customers are seeking ways to simplify their lives, and relationships provide a way to do thisC ustomers find comfort with brands that have

become familiar through their ongoing relationshipswith companiesS

uch relationships often lead to more efficientdecision-making my customers and higher levels of customer satisfaction


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Buyer- S eller Relationships inBusiness-to-Business Markets

Business-to-business marketing involves anorganizations purchase of goods and services tosupport company operations or the production of other

productsBuyer-seller relationships between companies involveworking together to provide advantages that benefit

both partiesAdvantages might include the lower prices, quicker delivery, improved quality and reliability, customized

product features, and more favorable financing terms


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Business Buying Behavior

Customer Service

PurchasingE

thics

Buying Situations

E valuation Criteria

Buying Centers

Aspects of Aspects of BusinessBusiness

BuyingBuyingBehavior Behavior


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Organizational Buying center

U n e x p e c t e d S i t u a t i o n a l F a c t o r s U n e x p e c t e d S i t u a t i o n a l F a c t o r s

At t i t u d e s o f Ot he r s

At t i t u d e s o f Ot he r s

Decision-MakingUnit of a BuyingOrganization is

Called Its BuyingCenter.

U s e r s In fl u e n c e r s

Bu ye r sGa t e ke e p e r s

De c i d e r s

Ap p r o ve r s

Roles Include


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BuyerF ormal authority to sign contractsM

ember of purchasing departmentInfluences the vendor selection

Not in technical details

M ain criteria: price + terms and conditions of the contract


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UserPerson working with the product

Interested in benefits and unobstructedfunction of the product to buyLarge knowhow and preconceived opinion


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InfluencerA person with high technical knowledge and

practical experience


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GatekeeperC ontrols the flow of information within the

buying center Assistant of decision maker Influence by preparing the decision and therelevant documents


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DeciderRight to say yes or no

ultimate person


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InitiatorPerson who brings new ideas and solutionsinto the company


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Evaluative Criteria for Business Buyers


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Buying S ituationsS traight rebuy

a routine repurchase that may have been made many

times beforeModified rebuy

the in-between process where some review of the buyingsituation is donethough not as much as in new-task

buyingNew-task buy

a firm has a new need and the buyer wants a great deal of information


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Organizational Buying P rocess/phasesStage 1. P bem Recognition

Stage 2. General Need Description

Stage 3. Product Speci f icationStage 4. Supplier Searc h

Stage 5. Proposal SolicitationStage

6.Supplier

Selection

Stage 7. Order- Routine Speci f icationStage 8. Perf ormance Review


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Major Influences on Organizational BuyersE nvironmentalEconomic de velopments

Suppl yConditionsTec hnological change

Political and regulator yde velopments

Competiti ve Developments

Culture and customs

OrganizationalObjectives

Policies

Procedures

OrganizationalStructure

Systems

Interpersonal

Aut horit yStatus

E mpat hyPersuasi veness

Individual AgeE ducationJob PositionPersonalit yRisk Attitudes

Buyers


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S tages of decision in B2B procurementPreliminary application (initiation phase)

Tender proposal NegotiationProcessing of order

Warranty and services


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Tender preparation phaseDetermination of characteristics and quantity of needed itemsS earch for and qualification of potential sourcesS upplier has to provide an offer Tries to be incomparable with his competitors

C ustomer tries to make the offer best comparable


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S ervicesPrompt and accurate information from suppliersApplication or technical assistanceS pare parts availabilityRepairs and maintenance capabilityTraining if required

Eg:- heart attack detector Water plant


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Consumer vs. Organizational buying behavior

Decisions made by consumers are quite simpleOrganizational buying processes are more complicated, there

are several phases and stepsDifferent buying behavior for different products and targetgroupsS imple consumer goods like food and beverages are boughtvery spontaneously influenced by advertising and product

presentationF or premium consumer goods (expensive clothes, computers)

buying behavior is getting more rational comparison


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S egmentation of industrial marketsDemographics:

industry

company sizecustomer location

Operating variables:

company technology product/brand use statuscustomer capabilities


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P urchasing approaches:Purchasing functionPower structureBuyer-seller relationships

Purchasing policiesPurchasing criteria

S ituational factors:

Urgency of order,Product application,S ize of order.


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Documents

Introduction of BtoB