IMC 2011 by ARM

Session 3

Ali Raza Merchant

IMC CourseBusiness-to-Business

Buyer Behaviour

IMC 2011 by ARM

Defining various types or categories of business-to- business buyers

Major roles associated with making purchases, called the business buying center

Steps of business purchasing decision are outlined

Important new factors and issues in business-to-business sales are discussed

Topic Content Summary

IMC 2011 by ARM

Business-to-Business Customer Types

IMC 2011 by ARM

Types of Products

•Many types of goods and services are sold to business-to-business market place

•These can include services like employee medical insurance, cleaning & maintenance services etc

•Each requires a distinct marketing approach

Major Equipment

Component Parts

Accessories

Process Materials

IMC 2011 by ARM

Business Customers & What They Buy

Type of Goods & Services

Manufacturers

GOVT.

Institutions

Wholesale /

Distributors

Retail

Major Equipment

Accessory Equp

Component Parts

Process Materials

Maintenance Sup

Operating Supp

Raw Material

Operating Serv

Professional Serv

IMC 2011 by ARM

Business Buying Centers 1. Users

3.

Influencers

2. Buyers

Actual Users of Product or Service such as Secretarial Staff (Stationery), Factory Workers (Tin Cans/ RM) or HR (Hiring Services)

Responsible for making purchases

In large organizations buyers can be purchasing agents or members of purchase department in a company

Who shape purchasing decisions by providing information specs or criteria e.g. Engineers

4. Deciders

Individuals who authorize buying decision

Can by CFO, VP, MD

5.

Gatekeeper

Controls flow of info to members of buying center

Lets them know if certain alternatives have been rejected

IMC 2011 by ARM

Was set up by AK Sumar and MNA in the 1960’s, during Ayub Khan’s Govt.

Was unique in many ways as it was unconventional in its advertising – never used models

Had a high quality fabric manufacturers’ perception among consumers due to which it commanded higher price

In the early 1990’s MFTM was a large textile company in Pakistan with a 50 50 emphasis on dressing fabrics for local as well as home textile products for export

MFTM was a vertically integrated unit with spinning, weaving, bleaching & dying, printing and stitching units

Mohd. Farooq Textile Mills (MFTM) - Backgrounder

IMC 2011 by ARM

Mohd. Farooq Textile Mills (MFTM)

IMC 2011 by ARM

MFTM was manufacturing Lawn Fabric for women, 100% Cotton Fabric, Wash & Wear Fabric for the local market

Production for local market was marketed through two distributors under the supervision of Head of local sales

The brand was well respected and commanded a higher price, which affording consumers were willing to pay

Local market was not the company’s business focus

Interesting Facts About MFTM

IMC 2011 by ARM

MFTM exports were growing at a phenomenal rate

The export market was value added and allowed the company to make greater margins, particularly in view of the govt. rebates and foreign exchange earnings

The company sold home textile products to manufacturers and retail store brands in Germany, France, Holland & Switzerland

The flagship product were 100% Satin for Home Textiles which included single and double bed sets i.e. Quilt Cover and Pillow

In addition to Satin the company also manufactured Flannel and 100 Cretonne, a comparatively low priced cotton fabric

The average gross margin of Satin was 45%

The company did not have its own brand for exports – it was a toll manufacturer for other brands like Luxorette, Irisette, Carfour, La Redoute, Kaufhoff, Neckermann etc

Interesting Facts About MFTM

IMC 2011 by ARM

Home textile Portfolio

IMC 2011 by ARM

Home textile Portfolio

IMC 2011 by ARM

Pakistan was one of the markets that was limited in its export of textiles through quota

Quota meant that a manufacturer could only export a particular category of textile goods to a country if they possessed quota in value terms

Therefore, if MFTM had an order of $100,000 for home textiles from Europe, it needed to have equivalent quota to ship the goods. If not they could buy quota from a manufacturer with surplus quota

Quota was barrier tariff created by USA, Europe and Australia to restrict Pakistani textiles which were low cost and were eating away their own textile industry

Since MFTM sold high priced Satin products its export value resulted in higher quota every year

Exporter Quota – A Barrier to Entry

IMC 2011 by ARM

Management Structure of MFTMChief

Executive

Director Mills

Head of Spinning

Head of Weaving

Head of Dying

Head of Printing

Head of Finished Folding

Stitching Master

Director Marketing

G.M.Exports / Home Textiles

Head of Local Sales

Director Finance /

Admin

Purchase Manager

Manager Finance

Manager Administratio

n

Manager Logistics

Asstt. Manager

Documentation

IMC 2011 by ARM

MFTM Purchase Decision Home Textiles

(Labels & Packaging)

Grey Cloth

Spinning

Requirements included:

•Labels for Wash Instructions

•Inlay Cards

•PE or PP Bags for Packing

Raw Cotton was the main input material

Also required was polyester for blended yarn

Chemicals for sizing yarn

Parts and maintenance for weaving looms

Bleaching, Dying & Printing

Chemicals & dyes for fabric processing

Screens for printing

Parts & maintenance

Stitching

Thread and accessories for stitching

Stitching machines spares & maintenance

Manager Purchase

IMC 2011 by ARM

B2B Buying Process

Identification of Need

Establishment of Specs

Identification of

Alternatives

Evaluation of

VendorsSelection

of Vendors Negotiati

on of purchase

terms

IMC 2011 by ARM

Dual Channel MarketingDUAL CHANNEL

MARKETING When a firm sells virtually

the same products or services to both consumers

and businesses

Spin off Sales

Consumers who use officially given

product by Company buy same

for personal use

Image Concerns

Marketers have to be careful that image projected in one market does not

damage the other

Difference v/s Similarities

• Use different messages

• Create different brands

• Use multiple channels or different

channels

Products like Digital Cameras, Calculators, Computers, Fax, Cell phones

Kodak imaging products

First B2B then Consumers