Business to Business Marketing PowerPoint Presentation

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chapter 6 Business-to-Business Marketing Harcourt, Inc.

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Dr. Rosenbloom Objectives Understand major customer types in the business market Examine the similarities and differences between household and business consumers Recognize the importance of close buyer-seller relationships

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Dr. Rosenbloom Objectives Explain the decision process of organizational buyers Understand factors influencing organizational decisions Explain how organizational buyers evaluate business marketers

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Dr. Rosenbloom Business to Business Marketing Business-to-business marketing refers to the buying and selling and other marketing activities that take place between businesses.

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Dr. Rosenbloom Business to Business Marketing McCann and Erickson AT&T

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Dr. Rosenbloom Business to Business Marketing The Martin Agency Steelcase Furniture

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Dr. Rosenbloom Types of Customers Commercial Institutional Governmental International

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Dr. Rosenbloom Types of Customers Commercial Institutional Governmental International Manufacturers, construction companies, service firms, transport companies, some professional groups, and resellers

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Dr. Rosenbloom Types of Customers Resellers includes wholesalers, industrial distributors, brokers/agents, and retailers who buy finished products to resell for a profit. Commercial Institutional Governmental International

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Dr. Rosenbloom Types of Customers Concentration of customers Far fewer but far larger customers Geographically concentrated in California, New York, Ohio, Illinois, Michigan, Texas, Pennsylvania, New Jersey Commercial Institutional Governmental International

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Dr. Rosenbloom Types of Customers Significant buying power More than 50% of every dollar earned is spent on materials, supplies, and equipment to produce the product Commercial Institutional Governmental International

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Dr. Rosenbloom Types of Customers Purchasing function Usually administered by an individual Relationships are developed between buyer and seller The Internet is making purchasing more efficient and competitive Commercial Institutional Governmental International

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Dr. Rosenbloom Types of Customers Organizations that provide services without the motivation of profit such as churches, hospitals, universities Commercial Institutional Governmental International

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Dr. Rosenbloom Types of Customers Institutional buying Similar to government buying Relationships must be cultivated with the staff (often made up of professionals) Commercial Institutional Governmental International

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Dr. Rosenbloom Types of Customers The government market consists of federal (1), state (50), and local (87,000) governments Commercial Institutional Governmental International

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Dr. Rosenbloom Types of Customers Government buying Formal advertising (open bid) Solicits bids from suppliers Standardized product and straightforward specifications Negotiated contract Complex scientific or R&D products Some competiton from simultaneous negotiations Commercial Institutional Governmental International

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Dr. Rosenbloom Types of Customers The business market stretches beyond domestic borders to include customers in other countries Commercial Institutional Governmental International

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Dr. Rosenbloom Types of Customers Different buying procedures Formal procedures, negotiations, personnel show differences from one country to another Commercial Institutional Governmental International

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Dr. Rosenbloom Economic Sector (2-digit) Economic Subsector (3-digit) Industry Group (4-digit) Industry Group (5-digit) Classifying Business Customers NAICS 51: Information NAICS 513: Broadcasting and Telecommunications NAICS 5133: Telecommunications NAICS 51332: Wireless Telecommunications Carriers NAICS 513321: Paging U.S. Industry (6-digit)

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Dr. Rosenbloom Business Market Characteristics Derived: Link between demand for industrial product and demand for consumer products DEMAND

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Dr. Rosenbloom Business Market Characteristics Derived: Link between demand for industrial product and demand for consumer products Fluctuating: Patterns and preferences in the household market can change the demand for industrial goods Stimulating: Some industrial products must market to the ultimate consumer directly DEMAND

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Dr. Rosenbloom Business Market Characteristics Relationship Marketing: Marketing activies directed toward establishing and maintaining exchanges with customers BUYER-SELLER RELATIONSHIPS

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Dr. Rosenbloom Business Market Characteristics Relationship Marketing: Marketing activies directed toward establishing and maintaining exchanges with customers Longer-term and closer relationships with fewer suppliers Closer interactions among multiple functions on both buying and selling sides BUYER-SELLER RELATIONSHIPS

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Dr. Rosenbloom Business Market Characteristics Supply Chain Management: Linking with strategic suppliers, intermediaries, and customers to improve efficiency SUPPLY CHAIN

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Dr. Rosenbloom Business Market Characteristics Supply Chain Management: Linking with strategic suppliers, intermediaries, and customers to improve efficiency JIT: Just-in-time production to deliver defect-free parts to production just when needed ERP: Software that can help enhance the flow of a supply chain SUPPLY CHAIN

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Dr. Rosenbloom Problem Recognition General Description of Need Detailed Description of Product Specs Supplier Search Acquisition and Analysis of Proposals Supplier Selection Selection of an Order Routine Performance Review Organizational Buying Process A problem that can be solved or opportunity captured by acquiring a specific product Triggered by internal or external forces

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Dr. Rosenbloom Problem Recognition General Description of Need Detailed Description of Product Specs Supplier Search Acquisition and Analysis of Proposals Supplier Selection Selection of an Order Routine Performance Review Organizational Buying Process Organization members must determine how the problem/opportunity can be dealt with Focus on general characteristics and quantity of item

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Dr. Rosenbloom Problem Recognition General Description of Need Detailed Description of Product Specs Supplier Search Acquisition and Analysis of Proposals Supplier Selection Selection of an Order Routine Performance Review Organizational Buying Process Extension of general description of need Key buying individuals enter the process

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Dr. Rosenbloom Problem Recognition General Description of Need Detailed Description of Product Specs Supplier Search Acquisition and Analysis of Proposals Supplier Selection Selection of an Order Routine Performance Review Organizational Buying Process Which suppliers to consider as candidates Time invested depends on buying situation

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Dr. Rosenbloom Problem Recognition General Description of Need Detailed Description of Product Specs Supplier Search Acquisition and Analysis of Proposals Supplier Selection Selection of an Order Routine Performance Review Organizational Buying Process Can occur simultaneously with suppler search when standardized items involved Different organization members enter (engineers, consultants, etc.)

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Dr. Rosenbloom Problem Recognition General Description of Need Detailed Description of Product Specs Supplier Search Acquisition and Analysis of Proposals Supplier Selection Selection of an Order Routine Performance Review Organizational Buying Process Alternate proposals analyzed One or more offers accepted Negotiations may continue on

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Dr. Rosenbloom Problem Recognition General Description of Need Detailed Description of Product Specs Supplier Search Acquisition and Analysis of Proposals Supplier Selection Selection of an Order Routine Performance Review Organizational Buying Process Purchase specifics are developed (delivery, warranties, etc.)

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Dr. Rosenbloom Problem Recognition General Description of Need Detailed Description of Product Specs Supplier Search Acquisition and Analysis of Proposals Supplier Selection Selection of an Order Routine Performance Review Organizational Buying Process Determines future buying processes Follow through by marketer is essential!

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Dr. Rosenbloom Modified Rebuy New Buy Straight Rebuy Buying Situations

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Dr. Rosenbloom Straight Rebuy Buying Situations A combined effort between supplier and customer will produce better products and processes which will, in turn, improve manufacturing and marketing

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Dr. Rosenbloom Straight Rebuy New Buy Modified Rebuy Buying Situations

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Dr. Rosenbloom Modified Rebuy Buying Situations Situation in which purchasers require some additional information, however, a fairly routine process is followed

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Dr. Rosenbloom Modified Rebuy Straight Rebuy New Buy Buying Situations

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Dr. Rosenbloom New Buy Buying Situations First-time or unique purchase situation that requires considerable effort to collect extensive information about alternatives in the marketplace

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Dr. Rosenbloom Environmental Forces Economic influences Sensitivity to demand in ultimate consumer markets Global economic variations Technological influences More intense search efforts Less time on searches Influences on Organizational Buyers

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Dr. Rosenbloom Organizational Forces Strategic priorities Support firm’s mission and strategies Strategic role purchasing Aligning purchasing with corporate strategy Organizational positioning of purchasing Centralized vs individual user Influences on Organizational Buyers

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Dr. Rosenbloom Individual Forces Rational motives vs emotional motives Differing evaluative criteria Specifications that organizational buyers use to compare products/services Different educational background, experiences, etc. Influences on Organizational Buyers

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Dr. Rosenbloom Group Forces: Buying Center Different individuals are important at different times during the purchase process Relative influence and evaluative criteria Isolating the buying situation Buying centers fluctuate based on the buying situation Influences on Organizational Buyers

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Dr. Rosenbloom Group Forces: Buying Center Identify buying influentials Key influencers often outside the purchasing department Buyer Roles Influences on Organizational Buyers

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Dr. Rosenbloom Users Influencers Buyers Deciders Gatekeeper People who will actually use the purchased good or service Influence on purchase decision can be extensive or negligible Buying Center Roles

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Dr. Rosenbloom Influencers Users Buyers Deciders Gatekeeper Buying Center Roles Provide advice and information about various alternatives Outside consultants Experienced employees Technical personnel

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Dr. Rosenbloom Buyers Users Influencers Deciders Gatekeeper Employee who actually purchases the product or service Could be anyone from the president of the company to a purchasing agent Buying Center Roles

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Dr. Rosenbloom Deciders Users Influencers Buyers Gatekeeper Make the decision on which products to buy The size and importance of the decision dictate who performs the role Buying Center Roles

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Dr. Rosenbloom Gatekeeper Users Influencers Buyers Deciders Control the flow of information within the organization Again, can be anyone in the organization including the secretary who opens the mail Buying Center Roles

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Dr. Rosenbloom Supplier Evaluation Measuring Value Accurate measurement of value is critical to purchasing Evaluating supplier performance Weighted-point plan Organization weights each performance factor according to relative importance