Lecture 5 Part 1: Developing New Products: B2B

What are B2B markets (4 types & examples)?

1. Manufacturers

2. Resellers

3. Institutions

4. Government

• Manufacturers to wholesalers who sell to retailers

• Service firms market services to other businesses (Zoom)

• To government & institutions

• Derived demand → demand from customers impacts demand for B2B transactions

What are manufacturers and service providers?

Buy raw materials, components, or parts

• manufacture their own goods & ancillary services

What are resellers?

Marketing intermediaries that resell manufactured products without significantly altering their form (Costco, BestBuy, Walmart)

• wholesalers, distributors, retailers develop their own relationships with resellers

What are institutions?

Hospitals, educational institutions, & religious organizations

Purchases by institutions:

• textbooks, capital construction, equipment, supplies, food, janitorial services

What is the Government?

One of the largest purchasers of goods & services in most countries

What is the business-to-business buying process (6 stages)?

1. Need recognition

2. Product specification

3. Request for proposal process (needs → requesting)

4. Proposal analysis, vendor negotiation, and selection

5. Order specification

6. Vendor performance assessment using metrics

What is 1&2. Need recognition & product specifications?

• B2b begins with need recognition - can be generated internally or externally

• Firm creates a list of potential specifications - used by suppliers & vendors to develop proposals

What is 3. request for proposals project?

Firm invites vendors to bid on supplying their required specifications in the request for proposal process:

• use websites

• web portals

• contact vendors directly

What 4. Proposal analysis, vendor negotiation, & selection?

Firm evaluates all proposals received in response to request for proposal:

• narrows down list of suppliers

• negotiates terms with several

• Considers multiple factors

What is 5. Order specicifications?

The firm places an order with its preferred supplier/suppliers detailing all terms of the service:

• description

• price

• delivery date

• penalty for noncompliance

What is 6. Vendor performance assessment using metrics?

Firms analyze their vendor's’ performance so they can make decision about future purchases

• formal

• objective

What are the 6 buying center roles?

1. Initiator - identifies needs (doctor)

2. Influencer - influences decisions (medical device supplier)

3. Decider - hospital

4. Buyer - materials manager

5. User - patient

6. Gatekeeper - decides who gets what (insurance company)

What is organizational buying culture (& the 4 types)?

1. Democratic

2. Consultative

3. Consensus

4. Autocratic

• Organizational culture → set of values, traditions, customers that guide employee behaviour

• unspoken guidelines, influences purchasing decisions

How do firms build B2B relationships?

Firms use multiple ways:

• blogs

• social media (YouTube, LinkedIn)

• social media influencers

• white papers

What are the 3 buying situations?

1. New buy

2. Straight rebuy

3. Modified rebuy

What is a new buy?

Buyer purchases a good or service for the first time → built for you

• the buying center will probably use all 6 steps in the buying process & involve many people in the buying decision

What is a modified rebuy?

Refurbishing or reselling

Buyer purchases similar product but changes certain specifications:

• price

• quality level

• customer service level

• current vendors likely have advantage

What are straight rebuys?

Buyer purchases additional units of products that have been previously purchased:

• most B2B purchases fall in this category

• usually buyer is the only member of buying center involved

What are centers of interest?

Word of mouth → references & networks

Areas of interest - gatherings where interested buyers gather (fashion week)

Auction houses