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Names:
Khalid AL-Ghamdi
200800105
Mohammed AL-Ansari
200901949
Abdullah AL-Jaafr
200800753
Mohammed AL-Sada
200901338
Chapter 6:
Most large companies sell to other organizations. The buying behavior of organizations that
buy goods and services for use in the production of other products and services that are sold,
rented, or supplied to others. The decision process by which business buyers determine which
product and services their organization need to purchase and then find, evaluate, and choose
among alternative suppliers and brands.
Business markets contain fewer but larger buyers. The business buyer demand is derived from
final consumer demand. Demand in many business markets inelastic – not affected as much in
the short run by price change – demand in business markets fluctuates more and more quickly.
Business purchases involve more buyers. Also, business buying involves a more professional
purchasing effort. Business buyers usually face more complex buying decisions. The business
buying process is also more formalized that consumer buying. In business buying, buyers and
sellers work more closely together and build close long term relationships.
Many customer companies are now practicing supplier development, systematically
developing networks of supplier-partners to ensure an appropriate and dependable supply of
product and materials for use in making products or reselling them to others.
Within the organization, buying activity consists of two major parts: the buying-center,
composed of all the people involved in the buying decision, and the buying decision process.
There are 3 types of buying situations:
1) Straight buy: A business buying situation in which the buyer routinely reorders
something without any modification.
2) Modified rebuy: A business buying situation in which the buyer wants to modify product
specifications, prices, terms, or suppliers.
3) New task: A business buying situation in which the buyer purchases a product or service
for the first time.
Buying a packaged solution to a problem from a single seller is also an option for many
business buyers, thus they avoid all the separate decisions involved in a complex buying
situation.
Participants in the business buying process are as follows:
1) Users: Members of the buying organization who will actually use the purchased product
or service.
2) Influencers: People in an organization’s buying center who affect the buying decisions;
they often help define specifications and also provide information for evaluating
alternatives.
3) Buyers: People in an organization’s buying center who make an actual purchase.
4) Deciders: People in an organization’s buying center who have formal or informal power
to select or approve the final suppliers.
5) Gatekeepers: People in an organization’s buying center who control the flow of
information to others.
There are many major influences on business buyers such as environmental, organizational,
interpersonal, and individual. Environmental factors consist of the economy and demand, supply
conditions, technology, politics, competition from others and cultures and customs.
Organizational influences contain the objectives, strategies, structure, systems, and
procedures of the firm. Interpersonal factors are usually hard to assess such as group dynamics,
influence, expertise, and authority. Individual factors are affected by age, education, motives,
personality, preferences, and buying style.
The business buying process is an eight stage system that buyers who face a new task buying
situation usually go through. The first stage is when someone in the company recognizes a
problem or need that can be met by acquiring a good or a service. The second stage describes the
general characteristics and quantity of a needed item. The third stage is when the buying
organization decides on and specifies the best technical product characteristics for a needed item.
The fourth stage is when the buyer tries to find the best vendors. The fifth stage is when the
buyer invites qualified suppliers to submit proposals. The sixth stage is when the buyer reviews
proposals and selects a supplier. The seventh stage is when the buyer writes the final order with
the chosen supplier, listing all the specifications and characteristics. The final stage is when the
buyer assesses the performance of the supplier and decides to continue, modify, or drop the
arrangement.
Advances in information technology have made it possible for companies to engage in Bto-B transactions online. They named it: e-procurement. Companies can do e-procurement in
many ways. They can conduct reverse auctions, in which they put their purchasing requests
online and invite suppliers to bid for the business. Or they can engage in online trading
exchanges through which companies work collectively to facilitate the trading process.
Companies also can conduct e-procurement by setting up their own company buying sites.
Businesses-to-businesses e-procurement yields many benefits. First, it shaves transaction
costs and results in more efficient purchasing for both buyers and suppliers. E-procurement
reduces the time between order and delivery. And a web-powered purchasing program eliminates
the paper work associated with traditional requisition and ordering procedures and helps an
organization keep better track of all purchases. Finally, beyond the cost and time savings, eprocurement frees purchasing people from a lot of drudgery and paper work.
The institution market consists of schools, hospitals, nursing homes, prisons, and other
institutions that provide goods and services to people in their care. Institutions differ from one
another in their sponsors and their objectives.
Government markets offer large opportunities for many companies, both big and small. In
most countries, government organizations are major buyers of goods and services .In the US
alone, federal, state, and local governments contain more than 82,000 buying units that purchase
more than $1 trillion in goods and service each year.
Chapter 7:
Companies today recognize that they cannot appeal to all buyers in the marketplace, or at
least not all buyers are the same way. Market segmentation divides a market into smaller
segments with distinct needs, characteristics, or behavior that might require separate marketing
strategies or mixes. To value each market segment’s attractiveness and to select on or more
segments to enter we use market targeting. The third step in customer-driven market strategy is
differentiation where we differentiate the market offering to create superior customer value. The
final step is positioning, here you arrange for a market offering to occupy a clear distinctive, and
desirable place relative to competing products in the minds of target consumers.
Chapter 8:
A product is anything that can be offered to a market for attention, acquisition, use, or
consumption that might satisfy a want or a need. A service on the other hand is an activity,
benefit, or satisfaction offered for sale that is essentially intangible and does not result in the
ownership of anything. Products are a key element in the overall market offering. A company’s
market offering includes both tangible “soap, toothpaste, i.e...” and non-tangible goods
“services.”
When designing products, marketers must first define the core, problem solving benefits or
services that consumers seek. At the second level product planners must turn the core benefit into
an actual product. Finally, product planners must build an augmented product around the core
benefit and actual product by offering additional consumer services and benefits.
Consumer product is a product bought by final consumers for personal consumption.
Convenience product is a customer product that customers usually buy frequently, immediately
and with minimal comparison and buying effort. Shopping product is a consumer product that
the customer in the process of selecting and purchasing usually compares on such attributes as
suitability, quality, price, and style. Specialty product is a consumer product with unique
characteristics or brand identification for which a significant group of buyers is willing to make a
special purchase effort. Unsought product is a product that the consumer either does not know
about or knows about but does not normally consider buying. Industrial product is a product
bought by individuals and organizations for further processing or for use in conducting a
business.
Organization marketing consists of activities undertaken to create, maintain, or change the
attitudes and behavior of target consumers towards an organization. Person marketing consists of
activities undertaken to create, maintain, or change attitudes or behavior toward particular
people. Place marketing involves activities undertaken to create, maintain, or change attitudes or
behavior toward particular places. Social marketing is the use of commercial marketing concepts
and tools in programs designed to influence individuals’ behavior to improve their well-being
and that of society.
Product quality is the characteristics of a product or service that bear on its ability to satisfy
stated or implied customer needs. Brand is a name, term, sign, symbol, design, or a combination
of these that identifies the products or services of one seller or group of sellers and differentiates
them from those of competitors. Packaging is the activity of designing and producing the
container or wrapper for a product.
Product line is a group of products that are closely related because they function in a similar
manner and sold to the same customer groups are marketed through the same types of outlets or
fall within given price ranges. Product mix (or product portfolio) is the set of all product lines
and items that a particular seller offers for sale.
Service intangibility: services cannot be seen, tested, felt, heard, or smelled before they are
bought. Service inseparability: services are produced and consumed at the same time and cannot
be separated from their providers. Service variability: the quality of services may vary greatly
depending on who provides them and when, where, and how. Service perishability: services
cannot be stored for later sale or use. Service profit-chain: the chain that links service firm profits
with employees and customer satisfaction.
Internal marketing: orienting and motivating customer contact employees and supporting service
people to work as a team to provide customer satisfaction. Interactive marketing is training
service employees in the fine art of interacting with customers to satisfy their needs. Brand
equity is the differential effect that knowing the brand name has own customer response to the
product or its marketing. Store brand (or private brand) is a brand created and owned by a
reseller of a product or service.
Cope branding is the practice of using the established brand names of two different companies
on the same product. Line extension is extending an existing brand name to new forms, colors,
sizes, ingredients or flavors of an existing product category. Brand extension is extending an
existing brand name to new product categories.
Chapter 9:
A firm can obtain new products in two ways. One is through acquisition- by buying a whole
company, a patent, or a license to produce someone elses product. The other is through the firms
own new product development efforts. By new products we mean original products, product
improvements, product modifications, and new brands that the firm develops through its own
R&D efforts.
Idea generation is the systematic search for new product ideas. Using internal sources, the
company can find new ideas through formal R&D. Companies can also obtain good new product
ideas from any of a number of external sources.
Crowdsourcing is inviting broad communities of people, customers, employees, independent
scientist and researchers and even the public at large into the new product innovation process.
Idea screening is screening new product ideas to spot good ideas and drop poor ones as soon as
possible. Product concept is a detailed version of the new product idea stated in meaningful
consumer terms. Concept testing is testing new product concepts with a group of target
consumers to find out if the concepts have strong consumer appeal.
Marketing strategy development is designing an initial marketing strategy for a new product
based on the product concept. The marketing strategy statement consists of three parts. The first
part describes the target market; the plan value proposition; and the sales, market share, and
profit goals for the first few years.
Business analysis is a review of the sales, costs, and profit projections for new product to find
out whether these factors satisfy the company’s objectives. Product development is developing
the product concept in to a physical product to ensure that the product idea can be turned into a
workable market offering. Test marketing is the stage of new product development in which the
product and its proposed marketing program are tested in realistic market settings.
Commercialization is introducing a new product into the market.
Under the sequential product development approach, one company department works
individually to complete its stage of the process before passing the new product along to the next
department and stage. Team based new product development is an approach to developing new
products in which various company departments work closely together, overlapping the steps in
the product development process to save time and increase effectiveness.
The new product development process should be holistic and systematic rather than
compartmentalized and haphazard. Otherwise, few new ideas will surface, and many good ideas
will die. To avoid these problems, a company can install an innovation management system to
collect, review, evaluate, and manage new product ideas.
Product life cycle is the course of a product’s sales and profits over its lifetime. It involves five
distinct stages: product development, introduction, growth, maturity, and decline. Style is basic
and distinctive mode of expression. Fashion is a currently accepted or popular style in a given
field. Fad is a temporary period of unusually high sales driven by consumer enthusiasm and
immediate product or brand popularity.
Introduction stage is the PLC stage in which a new product is firt distributed and made available
for purchase. Growth stage is the PLC stage in which a product sales start climbing quickly,
Maturity stage is the PLC stage in which a product’s sales growth slow or levels off. Decline
stage is the PLC stage in which a product sales decline.