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B2B marketing

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the process of buying and selling goods or services to be used in the production of other goods and services for consumption by the buying organization and or resale by wholesalers and retailers

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typical B2B marketing transactions involves manufacturers (Levi's, Ford) selling to

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wholesalers that, in turn, sell products to retailers

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B2B marketing can also involve service firms (UPS)

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they market their services to other businesses but not to the ultimate consumer (you)

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B2B

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transactions tend to be more complex and involve multiple members of both the buying organization and the selling organization

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B2C

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entails a simple transaction between the retailer and the individual consumers action is the ultimate user of that product

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both B2B companies and B2C firms find it productive to

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focus their efforts on key industries or market segments

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B2C firms and B2B firms focus on serving

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specific types of customer markets by creating value for those customers

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derived demand

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reflects the link between consumers' demand for a company's output and the company's purchase of necessary inputs to manufacture or assemble that particular output

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derived demand example

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if more customers want to purchase staplers (a B2C transaction), a company that produces them must purchase more metal from its supplies to make the additional staplers (B2B transaction)

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Manufacturers

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buy raw materials, components, and parts that allow them to make and market their own goods and ancillary services

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manufacturers example

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volkswagen group owns and distributes the Audi, Bentley, Bugatti, (and others) vehicle brands

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resellers

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are marketing intermediaries that resell manufactured products without significantly altering their form

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wholesalers, distributors and retailers

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all are considered resellers

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retailers represent resellers and engage in

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B2B transactions when they buy fixtures, capital investments, leasing locations, financing operations and merchandise for their stores

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example of resellers

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wholesalers and distributors buy Xerox products and sell them to retailers (B2B transaction), then retailers resell those Xerox products to the ultimate consumer (B2C transaction)

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institutions

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hospitals, educational organizations, and religious organizations, also purchase all kinds of goods and services

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public institutions also engage in

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B2B relationships to fulfill their needs for capital construction, equipment, supplies, food and janitorial services

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government

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in most countries the central gov is one of the largest producers of goods and services

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NAICS

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the north american industry classification system is the standard used by federal statistical agencies in classifying business establishments for the purpose of collecting, analyzing and publishing statistical data related to the US business economy

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NAICS stages

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1. need recognition 2. product specification 3. RFP process 4. proposal analysis and supplier selection 5. order specification 6. vendor performance assessment using metrics

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stage 1 NAICS

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need recognition

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need recognition

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buying organization recognizes, through either internal or external sources, that it has an unfulfilled need

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stage 2 NAICS

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product specification

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product specification

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after recognizing the need and considering alternative options, buyers write a list of potential specifications that venders might use to develop their proposals

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stage 3 NAICS

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RFP process

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RFP Process

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request for proposals common process through which organizations invite alternative vendors or suppliers to bid on supplying their required components or specifications

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How to advertise RFP

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The purchasing company may simply post its RFP needs on its website or work through various B2B web portals or inform their preferred vendors directly

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web portal

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internet site whose purpose is to be a major starting point for users when they concert to the web

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general portals such as Yahoo! or MSN, B2B partners connect to

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specialized or niche portals to participate in online information exchanges and transactions

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these web portal exchanges help streamline

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procurement or distribution processes. Portals can provide tremendous cost savings because they eliminate periodic negotiations and routine paperwork and they offer the means to form a supply chain that can respond quickly to the buyer's needs

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stage 4 NAICS

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proposal analysis, vendor negotiation and selection

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proposal analysis, vendor negotiation and selection

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buying organization and its critical decision makers evaluate all the proposals it receives in response to its RPF

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firms narrow the process to a few suppliers

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often those with which they have existing relationships, and discuss key terms of the sale, such as price, quality, delivery and financing

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some firms have a policy that requires them to negotiate with several suppliers

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particularly if the product or service represents a critical component or aspect of the business. this policy keeps suppliers on their toes; they know that the buying firm cn always shift a greater portion of its business `

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stage 5 NAICS

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order specification

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order specification

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firm places order with its preferred suppliers and the supplier then sends an acknowledgement that it has received the order and fills it by the specified date

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stage 6 NAICS

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vendor analysis/ vendor performance assessment using metrics

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vender performance

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firm analyzes vendors' performance so they can make decisions about their future purchases

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to initiate a vendor perfomance analysis

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buying team develops a list of issues that it believes are important in the vendor evaluation

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to determine the importance of each issue the buying team

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assigns an importance score to each. the more important the issue, the higher its score, but the importance scores must add up to 1

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the buy-in team assigns numbers that

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reflect its judgements about how well the enforced performs. using a 5 point scale where 1 equals poor performance and 5 equals excellent performance

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to calculate an overall performance score

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the team combines the importance of each issue and the vendor's performance scores by multiplying them

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exhibit: different roles in buying center

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initiator influencer decider buyer user gatekeeper

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initiator

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the person who first suggests buying the particular product pr service

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influencer

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the person whose views influence other members of the buying center in making the final decision

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decider

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most important the person who ultimately determines any part of or the entire buying decision, whether to buy, what to buy, how to buy or where to buy

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buyer

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the person who handles the paperwork of the actual purchase

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user

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the person who consumes or uses the product or service

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gatekeeper

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the person who controls information or access, or both, to decision makers and influencers

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exhibit: types of organizational culture

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autocratic buying center democratic buying center consultative buying center consensus buying center

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organizational culture

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reflects the set of values, traditions, and customs that guide its employees' behavior-- firms that culture often compromises a set of unspoken guidelines that employees share with one another through various work situations

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autocratic buying center

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a buying center in which one person makes the decision alone, though there may be multiple participants

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democratic buying center

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a buying center in which the majority rules in making decisions

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consultative buying center

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a buying center in which one person makes the decision but he or she solicits input from others before doing so

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consensus buying center

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a buying center in which all members of the team must reach a collective agreement that they can support a particular purchase

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exhibit: 3 types of organizational buying

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new buy, modified rebuy, straight rebuy

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new buy

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situation, a customer purchases a good or service for the first time, which means the buying decision is likely to be quite involved because the buyer or the buying organization does not have any experience with the item

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during a new buy the buying center is likely to go through

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all six steps in the buying process and involve many people in the buying decision

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the most complex and difficult buying situation

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new buy because it requires the buying organization to make changes in its current practices and purchases

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modified rebuy

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buyer has purchased a similar product in the past but has decided to change some specifications, such as the desired price, quality level, customer service level, options, etc

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example of modified rebuy

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ohio state university sports department might ask adidas to modify the specifications for its basketball shoes after noticing some improvements made to the adidas shows used by the university of michigan

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straight rebuy

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occur when the buyer or buying organization simply buys additional units of products that had previously been purchased

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example of straight rebuy

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sports teams need to repurchase a tremendous amount of equipment that is not covered by apparel sponsorships, such as tape for athletes ankles or weights for weight room

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