INTRODUCTION TO B2B

BY :-

Th ree Th eore tica l P ersp ectiv es

Conventional marketing Need for integration of b2b marketing and supply chain management theories Network Perspective Strategic partnership Social construction Relationship marketing Buyer-Seller interactions

Dominant Characteristics of the Conventional Approach to B2B Marketing Vendor-focused Transaction-oriented Complexity of purchase decisions Frequency of purchases Volume Product service range

Auctions
Standardized products Known technology Standardized quality measures High volume High frequency of usage Price as important marketing parameter

The Purchaser Perspective to B2B Marketing Purchasing officers have different profiles and do not think like sales people Strategic Importance of the product/solution Cost savings vs. Solution enhancing purchases Firm size influences purchasing behaviour

Product Value Analysis

Does the use of the item contribute value? Is its cost proportionate to its usefulness? Does it need all its features? Is there anything better foor its intended use? Can a usable part be made by a lower-cost method? Can a standard product be found that will be usable? Is the product made on proper tooling, considering the quantities that are used? Will another dependable supplier provide it for

Key F eature s of B2B Pr odu cts

Fewer users and larger purchases Derived demand - esp. for raw materials and components Fluctuating demand 10% change in consumer demand can lead to more than 10% change in the demand for inputs Rational buying decision process quality, --- technical, perceived dependability performance and service

Classification of Organizational Buyers Producers Manufacturers Service firms Intermediate customers Public Sectors Institutions Projects Non-Government Organisations

Key Ch arac teris ti cs o f Bu si ness t o Bu si nes s Cu st ome rs Use other peoples money Professional buyers usually rational Collective decison process - buying centre Key managers are usually involved Relatively fewer in number Purchases are usually substantial in volume and value

International Dimensions of Business to Business Marketing

Transnationality of Business Activities Growing need for cross-national inter-firm collaborative arrangements Contract Production Out-sourcing of inputs Strategic Alliances Increasing demand for technology capacity enhancement packages in the emerging market economies Governments and international organizations as target markets

Conventional Concepts and Models in B2B Marketing The Buy Grid Model Consists of 3 dimensions Buy Situation New task Modified Rebuy Straight rebuy Buying Phases Buying Centre

Two Dimensions of the Buygrid Model Task dimensions of the model Buying situations/tasks, Buying phases Buying centre Non-task dimensions The individual The group Organisation

Buying Phases
Problem recognition General need description Product/service specification Supplier search Proposal solicitation Supplier selection Order-routine specification Performance Review

Role of the Buying Centre

Users Influencers Define specifications and provide information for evaluating alternatives Deciders Decide on product requirements and/or on suppliers Approvers Authorise proposed action Buyers Selects suppliers and arranges terms of purchase Gatekeepers Prevents information from reaching members of the buying centre

Contribution to Purchase Decisions by Buying Centre Members

Who originates the initial decision? Who surveys alternatives and determines the basic characteristics of the product required? Who identifies potential suppliers? Who collects tenders/information from suppliers? Who evaluates products offered? Who authorises the purchase? Who finally chooses the supplier? Who monitors and evaluates the performance of both the product and the supplier? Who is most likely to initiate decisions to change supplier? Who finally decides on a change in supplier and selects the new supplier?

Buying Centre Analysis

Buying centre members selectively participate in purchasing decision processes They have different choice criteria They possess different levels of purchase knowledge Their degree of involvement shift with the phases of the buying process Their influence and authority shift from one buying

Strategic Implications of Buying Centre Analysis

Identification of key decision-makers/influencers at each stage of the purchase decision process. Assessment of buying centre members' decision variables Assessment of buying centre members' information about/ attitude to one's firm and competitors Reinforcing positive opinion about one's firm Legitimacy-seeking strategies Reduce uncertainty about the expected quality of one's performance. endorsement tactics,

International Perspectives on the Buy Grid Model

Countries differ in terms of their notions of logic and decision making procedures Countries differ in terms of their degree of uncertainty avoidance Countries differ in terms of their degree of individualism and consensus seeking Countries and organisations differ in terms of respect for

Some Stra tegic Implica tio ns

Influence those whose money is being used (e.g. voters) Adoption of customer retention strategies Customized/Direct Marketing E.g. Internet Long term marketing strategies Combination of rational arguments and persuasive negotiation Stimulating demand for potential customer products Send high powered salespeople

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