Upload
hue-bui-thi
View
404
Download
6
Embed Size (px)
DESCRIPTION
Citation preview
Marketing Management
Chapter 7: Analyzing Business Market
Chapter questions What is the business market, and how does it
differ from the consumer market?What buying situations do organizational
buyers face?Who participates in the business-to-business
buying process?How do business buyers make their
decisions?How can companies build strong
relationships with business customers?How do institutional buyers and government
agencies do their buying?
Content
I. What is organizational buying?
II. Participants in the business buying process
III. Managing business-to-business customer
relationships
What is business market?A business market is a group of profit making
organizations that buy goods and services for business use.
It consists of industries, distributors and retailers.
This market has rational buying with and experiences an inelastic demand.
I. What is organizational buying ?
Fewer, larger buyersClose supplier-customer relationshipsProfessional purchasingMultiple buying influencesMultiple sales callsDerived demandInelastic demandFluctuating demandGeographically concentrated buyersDirect purchasing
Characteristics of Business Markets
Consumer Business
Every customer has equal value and represents a small % of revenue
There are a small number of big customers that account for a large % of revenue
Sales are made remotely, the manufacturer doesn't meet the customer
Sales are made personally, the manufacturer gets to know the customer
Products are the same for all customers. The service element is low
Products are customized for different customers. Service is highly valued
Purchases are made for personal use - image is important for its own sake
Purchases are made for others to use - image is important where it adds value to customers
How does it differ from the consumer market ?
Cont.The purchaser is normally the user
The purchaser is normally an integrator, someone down the supply chain is the user.
Costs are restricted to purchase costs
Purchase costs may be a small part of the total costs of use
The purchase event is not subject to tender and negotiation
The purchase event is conducted professionally and includes tender and negotiation.
The exchange is one off transaction. There is no long-time view (financial services differ)
The exchange is often one of strategic intent. There is the potential for long term value
Straight rebuy •Reorders supplies (office supplies, bulk chemicals) at a routine basis and chooses from list of suppliers.
Modified rebuy •The buyer want to modified products specs, prices, delivery requirements from previous orders.
New task •Purchaser buys a products for the first time
Buying situations
II. Participants in the business buying process
The buying center
• Those requesting the product1. Initiators
• Those who will you use the product or service 2. Users
• Those who influence the buying decisions3. Influencers
• Those who decide on products reqs & suppliers4. Deciders
• Those authorizing actions of buyers • tho5. Approvers
• Those who have authority to select supplier & arrange purchase terms6. Buyers
• Those who prevent information from reaching members of buying center7. Gatekeepers
Who are the major decision participants?What decisions do they influence?What is their level of influence?What evaluation criteria do they use?
Of Concern to Business Marketers
Stages in Buying Process
Problem recognition
General need description
Product specification
Supplier search
Proposal solicitation
Supplier selection
Order routine
specification
Performance review
The buygrid framework
New Task Modified Rebuy
Straight Buy
Problem recognition
General need description
Product specification
Supplier search
Proposal solicitation
Supplier selection
Order-routine specification
Performance review
Maybe
Maybe
Maybe
Maybe
Maybe
Maybe
Searching for suppliers• Electronic catalogsCatalog sites• Ordering raw materials from
specialized websitesVertical markets
• Online marketplaces (Ebay, Amazon)Pure play auction sites
• On spot electronic markets, prices change by the minuteSpot markets
• Private exchange to link groups of suppliers over the webPrivate exchanges
• Participants offer to trade goods or services Barter markets
• Companies buying the same goods join together to form purchasing consortia
Buying alliances
Limit quantity purchasedAllow no refundsMake no adjustmentsProvide no services
Overcoming Price Pressures
Internal engineering assessmentField value-in-use assessmentFocus-group value assessmentDirect survey questionsConjoint analysisBenchmarksCompositional approachImportance ratings
Researching Customer Value
Order – routine specificationThe buyers negotiates: The final order; listing the
technical specifications; the quantity needed; the expected time of delivery; return policies; warranties…
Performance reviewThree methods:1. The buyer may contact the end users and ask for
their evaluations2. The buyer may rate the supplier on several
criteria using a weighted score method3. The buyer might aggregate the cost of poor
performance to come up with adjusted costs of purchase including price
III. Managing Business- to- Business Customer Relationships
The Benefits of Vertical Coordination
• Create more value for both buying partners and sellers partners
Establishing Corporate Trust and Credibility
The relationship between advertising agencies and clients
In the relationship formation stage, one partner experienced substantial market
growth.
Information asymmetry between partnership would generate more
profit than if the partner attempted to invade the
other firm’s area
At least one partner had high barriers to entry that would prevent the
other partner from entering the business
Dependence asymmetry existed such that one
partner was more able to control or influence
the other’s conduct
Factors of buyer-supplier relationships
Availability of
alternatives
Importance of supply
Complexity of supply
Supply market
dynamism
Categories of Buyer-Supplier Relationships
Basic buying and selling
Bare bones
Contractual transaction
Customer supply
Business Relationship : Risks and Opportunism
Vertical coordination can facilitate stronger customer – seller ties but increase the risk to the customers and supplier specific investment
Opportunism is a concern
Institutional and Government Markets Institutional market consists of
schools ,hospitals, nursing home, prisons and other institutions that provide goods and services to people in their care
Institutional and Government Markets ( Cont )
Buyers for government organization tend to require a great deal of paperwork from their vendors and to favor open bidding and domestic companies
Suppliers must be prepared to adapt their offers to the special needs and procedures found in institutional and government markets
SummaryBusiness markets differ from consumer marketsBusiness buyers make purchase decisions base on different buying situationsThe buying process consists of eight stages. sellers use different sales strategies according to their size. One is to use e – marketplacesThere are also different strategies in handling price – oriented customersBusiness marketers must form strong bonds and relationships with their customers and provide them added value.