Objectives:1. What is the business market, and how does it

differ from the consumer market?2. What buying situations do organizational buyers

face?3. Who participates in the business-to-business

buying process?4. How do business buyers make their decisions?5. How can companies build strong relationships

with business customers?6. How is B2B relationship marketing conducted in

the Japanese keiretsu and the Korean chaebol?7. How do institutional buyers and government

agencies do their buying?

- The decision making process by which formal organizations establish the need for purchased products and services and identify, evaluate, and choose among alternative brands and suppliers

Fewer, larger buyers Close supplier-customer relationship Professional purchasing Several buying influences Multiple sales calls Derived demand Inelastic demand Fluctuating demand Geographical concentrated buyers

Straight rebuy – reordering in a routine basis

Modified rebuy – modify product specifications, prices, delivery requirements and other terms.

New task – buying for the first time.

1. The buying centers Initiators Users Influencers Deciders Approvers Buyers gatekeepers

2. Buying center influences3. Buying center targeting

3 company purchasing orientations:1. buying orientation – short term and tactical (ability to obtain the lowest price for a given level of quality and availability)2. procurement orientation – buyers seek quality improvements and cost reduction.3. supply chain management orientation – buyers become more strategic, value-adding operations ( e.g. JOT delivery, etc.)

1. Routine products – low value and cost, therefore customer seek for the lowest price

2. Leverage products – high value and cost, therefore high risk (suppliers will minimize customer’s total cost)

3. Strategic products – high value, cost and risk to customers , hence customers want a well-known supplier and is willing to pay a higher price

4. Bottleneck products – low value, cost but involves risk – wants a supplier who can guarantee a steady supply of reliable products (e.g. spare parts)

1. Problem recognition’2. General need description and

product specification3. Supplier search4. E-procurement5. Proposal solicitation6. Supplier selection7. Order routine specification8. Performance review

Benefits of Vertical Coordination (Cannon and Perreault on buyer-supplier relationships differed according to the ff factors:

1. Basic buying and selling – high level of cooperation and information exchange.

2. Bare bones – more seller adaptation but less cooperation and information exchange

3. Contractual transaction – defined by formal contract4. Cooperative systems – not by contract nor structural5. Collaborative – trust and commitment leads to

partnership6. Manually adaptive – relationship built but not much

trust and cooperation7. Customer is king – cooperative relationship, seller

adapts to meet needs of customer with no expectations.

Japanese’s Production Keiretsu – characterized by vertical integration of manufacturers and their suppliers (buy group products model), resulting to building strong interdependence and social ties and eventually, mutual trust.

Korean’s Chaebol – family-owned and smaller and more tightly integrated than the Keiretsu.