MRKT 5-8

Business to Business

business which sells to another business instead of to consumers

Organizational buyers

manufacturers, wholesalers, retailers, and government agencies that buy products and services for their own use or for resale

Organizational markets

Industrial: companies selling to other companies
Reseller: candy makers sell to wholesalers, they sell to retailers (SYSCO)
Government: Federal, state, local, need supplies to run government

Organizational buying behavior

the decision-making process to establish the need for products and services and identify, evaluate, and choose among alternative brands and suppliers

Market characteristics

Demand for industrial products and services is derived, Few customers typically exist and their purchase orders are large (making a car, need tires, order tires then sell car)

Products or service

are technical and are purchased based on specifications

Buying process

professional buyers tend to be trained on writing specifications, negotiating and evaluating

demand is derived

Size of order is usually large, number of potential buyers tend to be small

Buying criteria

(1) price, (2) ability to meet the quality specifications (3) meet delivery schedules, (4) technical capability, (5) warranties and claim policies, (6) past performance, and (7) production facilities and capacity

Organization buying involves complex negotiations

Delivery schedules, price, and more

Supplier partnership

looking for regular supplier and develop partnerships; long-term

Supplier development

systematic development of networks of supplier-partners to ensure an appropriate and dependable supply of products and materials for use in making products or reselling them to others

Buying function is responsible for

- Gathering and screening info
- selection and purchase
For organization's use or resale
- Formal bids: when looking for a quote (request for proposal; RFP) when a company sends out a formal bid inviting suppliers to give a quote
- purchasing contract awards (award Dell contract)

Organizational Purchase decision process

(1) problem recognition, (2) information search, (3) alternative evaluation, (4) purchase decision, (5) post purchase behavior

Buying center (purchasing department)

Share common goals, risks, and knowledge

Roles in the Buying Center

Users: use the product (target market)
Influencers: Who has influence on decision, effect buying decision (marketing department)
Buyers: authority to negotiate (purchasing agent/department)
Deciders: Approve suppliers (Marketing department)
Gatekeepers: Control flow of information

Buy Classes

New buy- many people, long decision, uncertain (Greatest opportunity)
Straight rebuy- One person, short time
Modified rebuy- something changed, minor modifications, low-priced, moderate time

Online Buying

in organizational markets is prominent for
1) depend heavily on timely supplier information
2)this technology has been shown to substantially reduce buyer order processing costs
3) reduce marketing costs, particularly sales and advertising expense

E-marketplaces

online trading communities that bring together buyers and supplier organizations, E-hubs, B2B exchanges (not private)

Traditional auction

Opening bid, companies bid

Reverse auction

Companies looking for suppliers, give us a quote, company with lowest price

U.S, China, Japan, Western Europe, Canada

Account for two-thirds of world trade

Products and commodities

85% of world trade, 15% services

Exports

Country sells abroad

Imports

goods brought into a country

Exports and imports

have complementary economic flow

Trade feedback effect

imports affect exports and vice versa

Countertrade

Not always exchanging for money, maybe exchange other goods and services

U.S. leads in

Imports

China leads in

Exports

U.S share of exports

Has decreased (due to protectionism

U.S imports

have increased

Trade deficit

Importing more that they are exporting

Trade surplus

Exports exceed imports

Balance of trade

exports equal to imports and vice versa

Largest imports of U.S products are

Canada, Mexico, China, and Japan

Five developments that influenced global marketing and globalization

1. Economic protectionism (concerned about imports exceeding exports
2. Economic integration
3. Global competition
4. Presence of a networked global marketplace
5. Growing prevalence of economic espionage

Protectionism

Shielding country's industry from competition

Tariffs

Taxes on products or services entering a country

Quota

Restriction on amount allowed to enter/leave country

World Trade Organization (WTO)

Set rules governing trade between members

European Union (EU)

Allowed free trade among nations

United States-Mexico-Canada Agreement (USMCA)

Free trade agreement

Global Companies

1. International firms- markets in other countries the same
2. Multinational firms- markets differently toe each country
3. Transnational firms- emphasize universal needs (one marketing strategy)

Global consumers

consumer groups living in different countries but with similar needs

Networked Global Marketplace

90% of global e-commerce is from B2B

economic espionage

Clandestine collection of trade secrets or proprietary information stealing
- Economic Espionage Act (1996) makes theft a federal crime

Cross-cultural analysis

Study of similarities and differences among culture

Values

Personally or socially preferable modes of conduct that persist over time

Customs

What is considered normal and expected

Cultural symbols

Represent ideas and concepts in a culture

Semiotics

Examines symbols and roles

Back translation

Go back and look how their brand lines translate in different languages and countries

Cultural ethnocentricity

Belief that one's culture is superior to another

Consumer ethnocentrism

Believe it is wrong to purchase foreign made products

Global marketing is affected by economic considerations

1. Economic infrastructure- a country's communications, transportation
2. Consumer income and purchasing power- consumer the average per capita income
3. Currency exchange rates- price of one country's currency (Euro, Yen)

GDP

Gross Domestic Product- the total market value of all final goods and services produced annually in an economy

Riska analysis

includes variables such as risk of internal turmoil external conflict, government regulations

Exporting

Indirect: sells through a foreign intermediary and then they distribute it
Direct- sells directly without intermediaries
(least amount of risk, least amount of control)

Licensing

right to trademark, patent, or trade secret

Joint venture

Foreign and local companies invest together

Direct investment

(most risk, most controlled) own a foreign subsidiary (Beer company decides whether to sell in Germany; so they build a manufacturing facility in Germany

Product and promotion strategies

1. Product extension: Same product sold in different countries
2. Product adaptation: Change product for different countries
3. Product invention: New product for different countries

Communication adoption strategies

1. Identical message around world
2. Communication adaptation: Same product different advertising
3. Dual adaptation: Modify both products and promotion

Dumping

Selling goods in another country below market prices

Gray market

products are sold through unauthorized channels

Marketing Research

Is challenging, used to obtain information to help make better marketing decisions and determine consumer demand

Decision

a conscious choice from among two or more alternatives

Five-Step Marketing Research Approach

1. Define the problem
2. Develop the research plan
3. Collect relevant information
4. Develop findings
5. Take marketing actions

Step 1: Define the problem

Set the research objectives (specific and measurable), identify marketing actions

Step 2: Develop research plan

specify constraints, identify data needed for marketing actions, determine how to collect data

Concepts

Ideas about products

Methods

Approaches to collect data
- Sampling: asking a group for input
- Statistical inference: generalize the results to a larger group

Step 3: Collect relevant information

Secondary data: already exists; saves time and money
- Internal (in firms): budgets, financial statements; Outcomes (sales)
- External: Census reports
Primary data: collected for the first time
- Observational (watching people); questionnaire (asking people)

Secondary Data

Marketing input data: Effort expended to make sales
Marketing outcome data: Results of marketing efforts

Advantages of Secondary

Time saving and inexpensive

Disadvantages of Secondary

Out of date, definitions/categories aren't right, Not specific enough

Primary data

Observational data (observing them):
- Mechanical methods (Nielsen's TV Ratings)
- Personal Methods (mystery shoppers- observe other shoppers), observation
- Neuromarketing methods (Technologies used to study the brain)

Questionnaire data

- Interviews, focus groups- 9-11 customers who are asked for opinions
- Idea evaluation Methods: testing an idea (personal surveys)

Question Formats

1.Open ended
2. Close-end, fixed alt.,
3.Dichotomous(Y/N)
4. Semantic Differential(Y/N scale)
5.Likert (agreement scale)
6. Demographic: gender, age
7. Usage behavior: How often?

Marketing metrics

A measure of the quantitative value or trend of a marketing action

Experiment

A research method in which an investigator manipulates one or more factors to observe the effect on some behavior or mental process
- Independent variable
- Dependent
- Test markets

Big Data

Describes large amounts of data collected from a variety of sources

information technology

Challenge is to transform data into useful information
- Data visualization: The presentation of analysis results
- Intelligent enterprise: an organization that converts data into information

Data mining

reveals personal information
- Collected via tracking devices
- Enables personalization and targeting for marketing

Predictive modeling

a data-mining technique used to predict future behavior and anticipate the consequences of change

Take marketing actions

1. make action recommendations
2. implement action recommendations
3. evaluate the results
- The decision itself
- The decision process

Sales Forecasting Techniques

1. Judgments of the decision maker
- Direct forecast: Estimates the value without any intervening steps
- Lost-horse: starts with the last known value and lists factors that could affect the forecast
2. Surveys of knowledgeable groups
- Survey buyers' intentions
- Salesforce survey forecast- asks salespeople to estimate likely sales
3. Statistical methods
- Trend extrapolation: extends a past pattern into the future
- Linear trend extrapolation: when the pattern is a straight line

Market Segmentation

Involves grouping prospective buyers into groups, or segments, that (1) have common needs and (2) will respond similarly to a marketing action.

product differentiation

how can they be different in their product offering

Segmentation: Linking Needs to Actions

1. identify market needs
2. link needs to actions
3. execute marketing program actions

market-product grid

a framework to relate the market segments of potential buyers to products offered or potential marketing actions

Segmentation Strategies

1. One Product and Multiple Market Segments (Books)
2. Multiple Products and Multiple Market Segments (cars, and coke)
3. Segments of One: Mass Customization
- ability to customize products (Nike)

The Segmentation Tradeoff: Synergies vs. Cannibalization

-Organization synergy (efficiency): better functioning organization
-Cannibalization: competing against yourself, stealing sales from yourself (Anne-Taylor and Loft)
-"Tiffany/Walmart"- selling high-end and low-end segments

Five steps in segmenting and targeting markets

1. Group potential buyers into segments
2. Group products to be sold into categories
3. Develop a market-product grid and estimate size of markets
4. Select target markets
5. Take marketing actions to reach target markets

Step 1: Group Potential Buyers into Segments

simplicity and cost-effectiveness, potential for increased profit, similarity of needs of potential buyers within, difference of needs of buyers among segments, potential of a marketing action to reach a segment

Ways to segment consumer markets

1. geographic segmentation- where live or work
2. demographic segmentation- objective classification (Age, gender, income, race)
3. psychographic segmentation- subjective attributes (attitudes, interest, opinions)
4. behavioral segmentation- observable action

Usage rate

the quantity consumed or the number of store visits during a specific period (Frequency marketing, companies off incentives/rewards)

The 80/20 Rule

20% of users account for 80% of sales

Customer Lifetime Value (CLV)

represents the financial worth of a customer to a company over the course of their relationship