Ch. 5 Business to Business Marketing

B2B marketing

buying and selling goods or services to be used:

• in the production of other goods and services

• for consumption by the buying firm

• for resale by wholesalers and retailers

B2B firms focus on

serving specific types of customer markets to create value for those customers

B2B markets

• resellers (buy from manufacturers and resell without significantly altering the goods: retailers, wholesalers, distributors)

• institutions (schools, museums, religious organizations)

• government (tend to be one of the largest purchasers of goods and services)

• manufacturers (buy raw materials, components, or parts, manufacture their own goods)

challenges of reaching B2B clients

• identify decision maker in organization who authorizes or influences purchases

• understand buying process of each potential client

• identify factors that influence buying process of potential clients

differences between B2B and B2C markets

• market characteristics

• product characteristics

• buying process characteristics

• marketing mix characteristics

B2B market characteristics

• demand is derived fewer customers

• geographically concentrated

• larger orders

• demand is inelastic

B2B product characteristics

• products more technical in nature

• purchased based on specifications

• mainly raw and semi-finished goods

• heavy emphasis on delivery time, technical assistance, after sale service, financing

buying process characteristics

• more complex

• competitive bidding and negotiated prices

• more formalised buying process

• multiple participants in purchase decision

• reciprocal agreements

• close, long term relationships

marketing mix characteristics

• direct selling and physical distribution essential

• advertising more technical

• price often negotiated, inelastic, affected by trade/ quantity discounts

B2B buying process

1. need recognition

2. product specification

3. request for proposals (RFP) process

4. proposal analysis and supplier selection

5. order specification (purchase)

6. vendor performance assessment using metrics

need recognition

• can be generated internally or externally

• sources for recognizing needs: suppliers, salespeople, comeptitors

product specification

• used to develop proposals

• can be done collaboratively with suppliers

request for proposal process

buying organizations invite alternative suppliers to bid on supplying their required components or specifications

proposal analysis and supplier selection

• often several vendors are negotiating against each other

• considerations other than price play a role

order specification (purchase)

• firm places order

• exact details of purchase are specified

• all terms detailed including payment

vendor performance assessment using specific metrics

consider:

• key issues

• importance score

• vendor performance

• importance x performance

the buying centre players

• initiator

• influencer

• decider

• buyer

• user

• gatekeeper

organizational culture

reflects the set of values, traditions, and customs that guides its managers and employees behaviours

• democratic

• consultative

• consensus

• autocratic

buying situations

• new buy

• straight rebuy

• modified rebuy

new buy

• purchasing for the first time

• quite involved

• probably using all six steps of buying process

straight rebuy

• buying additional units or products that have been previously purchases

• most B2B purchases fall in this category

modified rebuy

• purchasing a similar product but changing specifications

• current vendors have an advantage