MRKT 305 - Chapter 7 Terms and Key Ideas

Business-to-business (B2B) marketing

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, or for resale by wholesalers and retailers.

A typical B2B marketing transaction involves

Manufacturers selling to wholesalers that, in turn, sell products to retailers. Can also involve service firms that market their services to other businesses but not to the ultimate consumer (you).

Derived demand

The linkage between consumers’ demand for a company’s output and its purchase of necessary inputs to manufacture or assemble that particular output.

B2B firm Constant Contact

Provides a centralized dashboard for small businesses to manage their social media accounts as well as templates for posts and help creating social media campaigns. Could target businesses of any size, but it has become a leading service provider in the small-business social media management field by narrowing its efforts to focus on this key market segment.

Business-to-business markets

Resellers, institutions, government, and manufacturers/service providers.

Manufacturers

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

Resellers

Marketing intermediary that resells manufactured products without significantly altering their form.

Wholesaler

Firm engaged in buying, taking title to, often storing, and physically handling goods in large quantities, then reselling the goods (usually in smaller quantities) to retailers or industrial or business users.

Distributor

A type of reseller or marketing intermediary that resells manufactured products without significantly altering their form. ___ often buy from manufacturers and sell to other businesses like retailers in a B2B transaction.

Examples of resellers

Wholesalers, distributors, and retailers.

Institutions include

Hospitals, educational organizations, and religious organizations.

Public institutions also engage in B2B relationships to fulfill their needs for

Capital construction, equipment, supplies, food, and janitorial services.

Retailers

Represent resellers and engage in B2B transactions when they buy fixtures, capital investments, leasing locations, financing operations, and merchandise for their stores.

Central government

One of the largest purchasers of goods and services.

Business to business buying process is made up of

1. Need recognition, 2. product specification, 3. Request for proposals (RFP) process. 4. Proposal analysis, vendor negotiation, and selection. 5. Order specification, and 6. vender performance assessment using metrics.

Need recognition

Recognizes that it has an unfilled need.

Product specification

A institution writes a list of potential specifications that vendors might use to develop their proposals.

Request for proposals (RFP)

A process through which buying organizations invite alternative suppliers to bid on supplying their required components.

Web portal

An Internet site whose purpose is to be a major starting point for users when they connect to the web. Smaller companies may lack the ability to attract broad attention to their requests, so they might turn to a __.

Web portals 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 buyer’s needs.

Order specification

The firm places its order with its preferred supplier. The order includes a detailed description of the goods, prices, delivery dates, and penalties for noncompliance. The supplier then sends an acknowledgement that it has received the order and fills it by the specified date.

Evaluating a vendor’s performance

Uses metrics such as customer service, issue resolution, delivery, and quality. Gives the metrics an importance skill and rates the vendor’s performance by five and then multiplies the numbers to look at the overall score.

Buying center

The group of people typically responsible for the buying decisions in large organizations.

Buying center roles

Influencer, decider, buyer, user, gatekeeper, and initiator.

Initiator

The buying center participant who first suggests buying the particular product or service.

Influencer

The buying center participant whose views influence other members of the buying center in making the final decision.

Decider

The buying center participant who ultimately determines any part of or the entire buying decision—whether to buy, what to buy, how to buy, or where to buy.

Buyer

The buying center participant who handles the paperwork of the actual purchase.

User

The person who consumes or uses the product or service purchased by the buying center.

Gatekeeper

The buying center participant who controls information or access to decision-makers and influencers.

Group purchasing organization (GPO)

An organization formed to leverage the purchasing power of numerous businesses and thus obtain better pricing for its members.

Organizational culture

Reflects the set of values, traditions, and customs that guide a firm’s employees’ behavior.

Organizational buying culture

Democratic, consultative, consensus, and autocratic.

Autocratic buying center

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

Democratic buying center

A buying center in which the majority rules in making decisions.

Consultative buying center

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

Consensus buying center

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

White papers

In a B2B context, ____ are a promotional technique used by B2B sellers to provide information about a product or service in an educational context, thereby not appearing like a promotion or propaganda.

The goal of white papers

Provide valuable information that a potential B2B buyer can easily understand and that will help the company address its problems with new solutions.

Most business-to-business buying situations can be categorized into three types

New buys, modified rebuys, and straight rebuys.

New buy

In a B2B setting, a purchase of a good or service for the first time; the buying decision is likely to be quite involved because the buyer or the buying organization does not have any experience with the item. Likely to proceed through all six steps in the buying process.

Modified rebuy

In a B2B setting, refers to when the 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, and so forth.

Straight rebuy

In a B2B setting, refers to when the buyer or buying organization simply buys additional units of products that have previously been purchased. Many B2B purchases are likely to fall in this category.

Government markets

Government organizations that purchase goods and services to carry out public functions, including equipment, supplies, construction, and services.

B2B; B2C marketing

____ involves transactions between businesses or organizations, whereas ___ involves businesses selling products or services to individual consumers.

Six steps of the B2B buying process

Need recognition, product specification, request for proposals (RFP), proposal analysis, vendor negotiation and selection, order specification, and vendor performance assessment.

Proposal analysis

The buying organization evaluates suppliers' proposals to determine how well each meets its needs, requirements, and purchasing criteria.

Vendor negotiation and selection

The buying organization negotiates terms with potential suppliers and selects the vendor that best meets its requirements.

Vendor performance assessment

The buying organization evaluates the supplier's performance using metrics such as quality, delivery, customer service, and problem resolution.

Vendor performance metrics

Measurable criteria used to evaluate a supplier's performance and determine whether it meets the buying organization's expectations.

Buying center influence

The extent to which different participants affect the purchasing decision, depending on their roles, expertise, authority, and access to information.

Purpose of need recognition

To identify a problem or unmet need that requires the organization to purchase a product or service.

Purpose of product specification

To establish the requirements that potential suppliers must meet so the organization can compare suitable solutions.

Purpose of the RFP process

To solicit competing proposals from suppliers and identify potential vendors that can satisfy the organization's requirements.

Purpose of proposal analysis

To compare proposals using criteria such as price, quality, delivery, service, and the supplier's ability to meet specifications.

Purpose of vendor negotiation

To establish acceptable purchasing terms, which may include price, delivery schedules, quality requirements, and service agreements.

Purpose of vendor selection

To choose the supplier that best satisfies the organization's needs and purchasing criteria.

Purpose of order specification

To formally communicate the agreed-upon purchasing requirements to the selected supplier.

Purpose of vendor performance assessment

To determine whether the supplier met expectations and whether the organization should continue purchasing from that supplier.

Importance of vendor performance assessment

Helps organizations identify reliable suppliers, address performance problems, and make better future purchasing decisions.

Benefits of web portals in B2B purchasing

Can reduce administrative costs and routine paperwork, simplify supplier interactions, and improve coordination throughout the supply chain.

New buy

A first-time purchase of a product or service by an organization that generally requires substantial information gathering and evaluation.

Modified rebuy

A purchase in which an organization has bought a similar product before but wants to change specifications, price, quality, service, or other requirements.

Straight rebuy

A routine repurchase of a previously purchased product or service with little or no change to the existing purchasing requirements.

New buy; modified rebuy

A ____ involves purchasing a product or service for the first time, whereas a ___ involves changing the requirements of a previous purchase.

Modified rebuy versus straight rebuy

A ____ involves changing some purchasing requirements, whereas a ____ involves routinely purchasing additional units with little or no change.

Buying situation and the B2B buying process

The type of buying situation influences how much information gathering, evaluation, and decision-making the organization performs.

New buy and the B2B buying process

A new buy is generally more complex and is more likely to involve all six steps of the buying process.

Initiator; influencer

The _ first suggests making a purchase, whereas the _ provides opinions or information that affect the purchasing decision.

Influencer; decider

The ___ affects the decision, whereas the ___ has the authority to determine some or all of the purchasing decision.

Buyer; user

The ___ handles the purchasing transaction, whereas the ___ consumes or uses the purchased product or service.

Decider; buyer

The ___ determines the purchasing decision, whereas the ___ handles the actual purchase and its procedures. These roles may be performed by the same person.

Gatekeeper; influencer

The ___ controls access to information or decision-makers, whereas the ____ affects the decision through their opinions or expertise.

Autocratic; consultative buying center

In an ___ buying center, one person makes the decision alone; in a ___ buying center, one person makes the final decision after seeking input from others.

Democratic; consensus buying center

In a ___, the majority determines the decision; in a ___, all members must reach an agreement they can support.

Manufacturers; resellers

___ purchase inputs to produce goods or services, whereas ___ purchase finished products to sell them to other customers.

B2B; B2C demand

___ often depends on demand for the final products or services businesses produce, whereas ___ comes from individual consumers' demand for products or services.

Purpose of product specifications

To establish the requirements suppliers must meet so the buying organization can evaluate and compare their proposals.

Initiator; influencer; decider; buyer; user; gatekeeper

The ___ identifies the need, the ___ affects the decision, the ___ determines the purchasing decision, the _ handles the purchase, the _ uses the product or service, and the ___ controls access to information or decision-makers.

New buy; modified rebuy; straight rebuy

A ___ involves purchasing a product or service for the first time, a ___ involves changing the specifications of a previous purchase, and a ___ involves routinely purchasing additional units of a previously purchased product.

Which buying situation typically requires the most effort?:

A new buy, because the organization has little or no previous experience with the product or service and generally needs to conduct more research and evaluation.

Which buying situation typically requires the least effort?

A straight rebuy, because the organization is making a routine purchase of a previously purchased product or service.

Product specification example (police vehicle)

A police department purchasing a Ford Police Interceptor might specify requirements for performance, safety, equipment, technology, and other features needed for law enforcement.

First step of Business to business buying process

Need recognition

Second step of Business to business buying process

Product specification

Third step of Business to business buying process

Request for proposals (RFP) process

Fourth step of Business to business buying process

Proposal analysis, vendor negotiation, and selection

Fifth step of Business to business buying process

Order specification

Sixth and final step of Business to business buying process

Vender performance assessment using metrics