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Business to Business (B2B)

Presented ByLOKESH GUPTARAKESH SONARMANISH PANDEYVIKASH SHARMA

BAIJNATH MANDALADITYA MAHAKULKAR

Balaji Institute Of Telecom Management (BITM) Pune

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B2B Defined

Organizational sales and purchases of goods and services to support production of other products, to facilitate daily company operations, or for resale.

transactions between businesses.

both the buyer and the seller are business entity.

Like between a manufacturer and a wholesaler or a wholesaler and a retailer.

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Flows within a B2B market

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• Nature of demand - derived, joint, inelastic.

• Buyer-seller relationships.

• Purchase Decision Process.

• Sizes and Numbers of Buyers.Sizes and Numbers of Buyers.

Characteristics of B2B markets

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Nature of DemandNature of Demand

Derived DemandDerived Demand: demand for a resource that results from demand for the goods and services that are produced by that resource.

Joint DemandJoint Demand: demand for a product that depends on the demand for another product used in combination with it.

Inelastic DemandInelastic Demand: demand that, throughout an industry, will not change significantly due to a price change.

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Buyer-Seller RelationshipsBuyer-Seller Relationships

More intense than consumer relationships

Require better communication among the organizations’ personnel.

Primary goal of B2B relationships is to provide advantages that no other seller can, for instance:

Lower-pricesQuicker deliveryBetter quality and reliabilityMore favorable financing terms

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The Purchase Decision Process

Businesses must understand the dynamics of the organizational purchasing process.

Decision-makers at several layers may influence final orders.

Process is more formal and professional than with consumers

Sizes and Numbers of BuyersSizes and Numbers of Buyers

Business market features a limited number of buyers.

Use statistical information to estimate the size and characteristics of business markets is available

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Business Categories

GovernmentGovernmentMarketsMarkets

ResellerResellerMarketsMarkets

Federal, state, and local

Wholesalers and retailers

InstitutionalInstitutionalMarketsMarkets

Hospitals (profit and nonprofit), educational and religious institutions, and trade associations.

BusinessBusinessFirmsFirms

Manufacturers of tangible goods and firms that provide services such as health care, entertainment, and transportation

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The Buying ProcessRecognize Recognize problem orproblem oropportunityopportunity

DetermineDeterminedesired productdesired productcharacteristicscharacteristicsand quantityand quantity

DescribeDescribedesired productdesired productspecificationsspecifications

Make Make purchasespurchases

and evaluateand evaluateperformanceperformance

Evaluate andEvaluate andselect select

supplierssuppliers

Locate andLocate andqualifyqualify

supplierssuppliers

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Stage 1: Anticipate a Problem/Need/Opportunity and a General Solution

• Example: Desktops cannot be used anywhere the user want.

Stage 2: Determine the Characteristics and Quantity of a Needed Good or Service

• Example: Offering a Laptop system that are mobile. Can use any where the user want.

Stage 3: Describe Characteristics and the Quantity of a Needed Good or Service

• Example: Firms need the laptops that fulfill the requirement of the customer. also anticipate the quantity of that product.

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Stage 4: Search for and Qualify Potential Sources

• Choice of supplier may be fairly straightforward or very complex.

Stage 5: Acquire and Analyze Proposals

• May involve competitive bidding, especially if the buyer is the government or a public agency.

Stage 6: Evaluate Proposals and Select Suppliers

• Buyers choose proposal best suited to their needs.

• Final choice may involve trade-offs between feature such as price, reliability, quality, and order accuracy.

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Stage 7: Select an Order Routine

• Buyer and vendor work out best way to process future purchases.

Stage 8: Obtain Feedback and Evaluate Performance

• Buyers measure vendors’ performance.

• Larger firms are more likely to use formal evaluation procedures.

• Some firms rely on outside organizations to gather quality feedback and summarize results.

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THE BUYING CENTER CONCEPT

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DEVELOPING EFFECTIVE B2B MARKETING STRATEGIES

Formalized purchasing proceduresBids: written sales

proposals from vendorSpecifications: written

descriptions of needed goods or services

Group purchasing is an important factor

Challenges of Government and

Institutional Markets

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Classifying Business Buying Situations

Recurring purchase decision in which a customer repurchases a good or service that has performed satisfactorily in the past

Straight Rebuy

Purchase decision in which a purchaser is willing to reevaluate available options for repurchasing a good or service

Modified Rebuy

First-time or unique purchase situation that requires considerable effort by the decision Makers

New-Task Buying

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Who is the Customer?

B2B Organization.B2C Individual/Household

Volume of Transaction?B2B much higher.B2C very less as compare to B2B.

What does the customer do with your product?

B2B Uses it for business purpose to make another product.B2C Use it for personal purpose

What are customers needs?

B2B Satisfies organizational goals profit maximization, cost reduction,performance improvement.

B2C Satisfies personal needs.

Difference Between B2B And B2C

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Decision making?

B2B Involve Large groups in purchasing decisions.B2C involve family opinions and decisions.

Transaction involves?

B2B transactions involving subcomponent ,raw materials or intermediate product.B2C specifically sale of the finished product to the end customer.

Switching?

B2B Find switching to another supplier difficult.B2C Find switching to another supplier easy.

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How many and what type of customer?

B2B Number of customers- Limited & well known & profiled customer.B2C Number of customers- Unlimited & anonymous.

What are the key strategy difference?

B2B Personal selling, relationship building, differentiated pricing.B2C TV advertising, distribution through retailers, fixed pricing.

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