Download Chapter 14 - PPT 14 PART II Business to Business Marketing

CHAPTER 6 Business-to-Business (B2B) Marketing
THE MAKE, BUY, OR LEASE DECISION
• Firms acquiring needed products can get them in one of three ways:
• Make the good or provide the service in-house.
• Purchase it from another organization.
• Lease it from another organization.
• Producing the item may be cheapest route, but most firms cannot make all
of the products they need.
• Many companies purchase many of the goods they need.
• Companies can spread out costs through leasing.
CHAPTER 6 Business-to-Business (B2B) Marketing
THE RISE OF OFFSHORING AND OUTSOURCING
• Offshoring Movement of high-wage jobs from one country to lower-cost
overseas locations.
• Example: China makes two-thirds of the world’s copiers, microwaves,
DVD players, and shoes, and virtually all of the world’s toys.
• Allows firms to concentrate their resources on their core business and
access specialized talent or expertise.
• Nearshoring Moving jobs to vendors in countries close to the business’s
home country.
• U.S. firms often nearshore in Canada or Mexico.
• Outshoring Using outside vendors to provide goods and services formerly
produced in-house.
• Commonly outshore for three reasons: cost reduction, quality and
speed of software maintenance and development, and greater value.
CHAPTER 6 Business-to-Business (B2B) Marketing
PROBLEMS WITH OFFSHORING AND OUTSOURCING
• Many companies discover their cost savings are less than expected.
• Can raise security concerns over proprietary technology or customer data.
• Can reduce flexibility to respond quickly to marketplace.
• Can create conflicts with unions, even leading to shutdowns and strikes.
• Can negatively affect employee morale and loyalty.
CHAPTER 6 Business-to-Business (B2B) Marketing
THE BUSINESS BUYING PROCESS
• More complex than the consumer decision process.
• Takes place within formal organization’s budget, cost, and profit
considerations.
INFLUENCES ON PURCHASE DECISIONS
Environmental Factors
• Economic, political, regulatory, competitive, and technological
considerations influence business buying decisions.
• Example: Law freezing cable rates or introduction of new product
by a competitor will affect demand.
• Natural disasters, such as Hurricane Katrina.
• Example: Rising fuel prices prompted Viking Energy
Management to lock in fuel prices.
CHAPTER 6 Business-to-Business (B2B) Marketing
Organizational Factors
• Successful marketers understand their customers’ organizational structures,
policies, and purchasing systems.
• Some firms have centralized procurement, others delegate it throughout the
units.
• Many companies use multiple sourcing to avoid depending too heavily on a
sole supplier.
Interpersonal Influences
• Many different people influence B2B buying decisions, sometimes as
individuals and sometimes as part of a committee.
• Marketers must know who the influencers are and understand their
priorities.
• Sales personnel must be flexible and have a good technical understanding
of their products.
CHAPTER 6 Business-to-Business (B2B) Marketing
The Role of the Professional Buyer
• Many organizations rely on professionals, often called merchandisers, who
implement systematic buying procedures.
• Firms usually buy expense items with little delay but carefully consider
capital purchases.
• May rely on systems integration, centralization of the procurement function.
• Corporate buyers often use the Internet to identify sources of supplies.
CHAPTER 6 Business-to-Business (B2B) Marketing
MODEL OF THE ORGANIZATIONAL BUYING PROCESS
CHAPTER 6 Business-to-Business (B2B) Marketing
Stage 1: Anticipate a Problem/Need/Opportunity and a
General Solution
• Example: Need to provide employees with a good cup of coffee to enhance
productivity.
Stage 2: Determine the Characteristics and Quantity of a
Needed Good or Service
• Example: Offering a coffee system that brews one cup of coffee at a time
according to each employee’s preference.
Stage 3: Describe Characteristics and the Quantity of a
Needed Good or Service
• Example: Firms need a simple system for
brewing a good cup of coffee; quantity
requirements are easily correlated to the
number of coffee drinkers.
CHAPTER 6 Business-to-Business (B2B) Marketing
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.
CHAPTER 6 Business-to-Business (B2B) Marketing
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.
• Example: J. D. Power and Associates
CHAPTER 6 Business-to-Business (B2B) Marketing
CLASSIFYING BUSINESS BUYING SITUATIONS
• Business buying behavior involves degree of effort involved in the decision
and the levels within the organization in which these decisions are made.
Straight Rebuying
• A recurring purchase decision in which a customer reorders a product that
has satisfied needs in the past.
• Purchaser see little reason to assess competing options.
• Marketers who maintain good relationships with customers can go a long
way toward ensuring straight rebuys.
• High-quality products.
• Superior service.
• Prompt delivery.
CHAPTER 6 Business-to-Business (B2B) Marketing
Modified Rebuying
• Purchaser willing to reevaluate available options.
• May occur if supplier has let a rebuy circumstance deteriorate because of
poor service or delivery performance.
New-Task Buying
• First-time or unique purchase situations that require considerable effort by
the decision makers.
• Most complex category of business buying.
• Often requires purchaser to consider alternative offerings and vendors.
CHAPTER 6 Business-to-Business (B2B) Marketing
Reciprocity
• Practice of buying from suppliers that are also customers.
• In U.S., Department of Justice and the Federal Trade Commission view
reciprocity as an attempt to reduce competition.
ANALYSIS TOOLS
• Value analysis—examines each component of a purchase in an attempt to
either delete the item or replace it with a more cost-effective substitute.
• Vendor analysis—an ongoing evaluation of a supplier’s performance in
categories such as price, EDI capability, back orders, delivery times, liability
insurance, and attention to special requests.
CHAPTER 6 Business-to-Business (B2B) Marketing
THE BUYING CENTER CONCEPT
• Buying center Participants in an organizational buying action.
BUYING CENTER ROLES
CHAPTER 6 Business-to-Business (B2B) Marketing
INTERNATIONAL BUYING CENTERS
• Marketers may have difficulty identifying members of foreign buying
centers.
• Foreign buying centers often include more participants than those in U.S.
• Marketers who can quickly identify decision makers have an advantage
over competition.
TEAM SELLING
• Combining several sales associates or other staff to help the lead account
representative reach all those who influence the purchase decision.
• May include members of the seller firm’s own supply network in the sales
situation.
• Example: Reseller of specialized computer applications whose clients
require access to training.
CHAPTER 6 Business-to-Business (B2B) Marketing
DEVELOPING EFFECTIVE BUSINESS-TOBUSINESS MARKETING STRATEGIES
• Marketer must develop strategy based on particular organization’s buying
behavior and on the buying situation.
CHALLENGES OF GOVERNMENT MARKETS
• Government agencies make up the largest customer group in the U.S.
• More than 85,000 government units buy products.
• Purchases typically involve dozens of interested parties.
• Influenced by social goals, such as minority subcontracting programs.
• Can have either fixed-price contracts or cost-reimbursement contracts.
CHAPTER 6 Business-to-Business (B2B) Marketing
Government Purchasing Procedures
• Many purchases go through Government Services Agency, a central
management agency.
• By law, most federal government purchases must go through a complex
bidding process governed by the Federal Acquisition Regulation.
• Recent reforms have sped purchasing and increased flexibility.
• State and local governments follow procedures similar to federal
government.
Online with the Federal Government
• Government buyers often rely on electronic commerce.
• GSA Advantage allows government buyers to make purchases online at
preferred government prices.
• Many government units lag behind the private sector in electronic
procurement procedures.
CHAPTER 6 Business-to-Business (B2B) Marketing
CHALLENGES OF INSTITUTIONAL MARKETS
• Institutional buyers include schools, hospitals, libraries, foundations, and
others.
• Have widely diverse buying practices among, and even within, institutions.
• Multiple buying influences can affect buying decisions, such as conflicts
between professional staff and purchasing departments.
CHALLENGES OF INTERNATIONAL MARKETS
• Marketers must consider buyers’ attitudes and cultural patterns.
• Local industries, economic conditions, geographic characteristics, and legal
restrictions must also be considered.
• Remanufacturing, or restoring worn-out products to like-new condition, can
be an important strategy in places that cannot afford new products.
• Foreign governments are also an important market.