Chapter 7 Business to Business 2

Business-to-Business (B2B) Marketing Overview

  • B2B marketing involves transactions between businesses rather than between a business and individual consumers.

Key B2B Examples

  • Manufacturers to Wholesalers: Manufacturers sell products to wholesalers, who then distribute them to retailers.

  • Service Providers: Businesses that provide services to other businesses, e.g., consulting or IT services.

  • Derived Demand: The demand for B2B transactions is influenced by consumer demand; when consumer demand increases, it may lead to more purchases from manufacturers and service providers.

B2B Market Participants

  • Manufacturers/Service Providers:

    • Purchase raw materials, components, or services necessary for their operations.

    • Example: Volkswagen Group, a European manufacturer with multiple brands.

  • Resellers:

    • Types: Wholesalers, distributors, and retailers who resell products without significant alteration.

  • Institutions:

    • Include hospitals, educational establishments, and religious organizations.

    • Examples of institutional purchases: textbooks, equipment, catering services.

  • Government:

    • A significant buyer in B2B markets; e.g., U.S. Department of Defense budget approaching $700 billion for various supplies and services.

Business-to-Business Buying Process

  1. Need Recognition: Customer identifies a need (e.g., a university needing to purchase tablets).

  2. Product Specification:

    • A specification list is created detailing the desired characteristics (e.g., screen size, power requirements).

  3. Request for Proposals (RFP):

    • Invitations sent to vendors to bid on fulfilling the specified needs, possibly utilizing websites or direct contacts.

  4. Proposal Analysis and Vendor Negotiation:

    • Proposals from vendors are evaluated based on factors like experience and compatibility of technology, followed by negotiations with shortlisted vendors.

  5. Order Specifications:

    • An order is placed that details pricing, delivery terms, and penalties for noncompliance (e.g., maintenance and replacement policies).

  6. Vendor Performance Assessment:

    • Using metrics, firms analyze vendor performance post-purchase to inform future decisions.

Evaluating Vendor Performance

  • Key Issues: Performance is evaluated based on aspects such as customer service, issue resolution, delivery, and product quality.

  • Scoring Method: Importance scores multiplied by vendor performance to yield an overall score, aiding in performance assessment.

Buying Center Roles in B2B Purchases

  • Roles:

    • Initiator: Identifies the need.

    • Gatekeeper: Controls information flow.

    • Influencer: Affects the decision with expertise.

    • User: End-user of the purchased product.

    • Decider: Makes the final purchasing decision.

    • Buyer: Executes the purchase agreement.