ASSIGNMENT – 3

Q 1.) Outline the stages in the B2B buying process.

Sol 1.)There are 6 stages in the B2B buying process. Depending on the type of product and the
level of need for that product, moving through the various stages can happen quickly with the
possibility of even skipping one or two stages or it can take a considerable amount of time with
customers wavering between stages.

1.)Awareness
The first stage of the B2B buying process is when a customer realizes there is a problem. They
become aware of a business need. For example, this could be as simple as a small business
experiencing growth, and the Marketing Director recognizing that in order to keep up with
demand and continue to grow and generate leads, they need help automating their marketing
processes. In this scenario the Director has identified a problem and acknowledges a need to fix
it.

2.)Commitment to Change
After recognizing a problem, the next stage of the B2B buying process is when the customer
commits to fixing the problem. It’s at this time when the customer starts thinking about the
budget necessary to fully address the issue, how making a change to the business process would
impact other areas of the organization, and whether the problem can be addressed in stages or all
at once.

3.)Considering Options
During this stage, the customer researches the various options to solve the problem. Going back
to the example with the Marketing Director, she may be asking herself questions like what type
of marketing automation platform would best suit our needs? Is this something that could be
managed in house by one of the marketing team members? Is it better to hire an outside agency
to manage the transition and oversight? What impact would marketing automation have on our
current website and databases?

4.)Commitment to the Solution

After researching the different options a customer will decide on the best solution for their
business. This could mean the customer decides on a specific platform like Hubspot or agency
like Measured Results Marketing to help them implement the desired marketing automation
tasks.

5.)Decision Time
We are closing in on the end of the B2B buying process. At this stage of the game, the customer
needs to justify the decision they are making to themselves and any upper management.
Referring back to our example, the Marketing Director decided the best option and smoothest
transition for implementing a marketing automation process meant hiring an agency. She
narrowed it down, but wants to make sure she’s making the right decision. This typically means
meeting with a sales rep and asking specific questions about why they should choose your
agency to solve their problem. This is when the tough questions can get asked, and you must
prove to the customer that choosing your business is the best solution for their problem.

6.)Final Selection
The final stage of the B2B buying process is when the Marketing Director makes a decision and
purchases the services and/or product. From this point forward, excellent customer service
should be the focus. Happy customers lead to repeat customers and referrals.
Q2.) Explain the scorecard process of evaluating proposals.

Sol 2.) Evaluate And Score Each Proposal.

Proposal evaluation can be an arduous and lengthy undertaking, depending on:

1.)The number of scorable elements in and associated with the RFP.

2.)The number of proposals to be scored.

3.)The length and complexity of the contracts involved.

4.)The comparability of the pricing elements submitted in each proposal.

Conversely, some time may be lost waiting for clarifications or further information from the
suppliers about aspects of their proposals detected during the scoring process.

Effective scoring requires close attention to the following:

1. Rules of engagement

a.)No member of the evaluation team should:

i.)Have a personal interest in any participating supplier

ii.)Have a financial interest in any supplier recommended for award

iii.)Place themselves in any other type of conflict of interest situation

iv.)Have any direct or indirect contact with any representative of a participating supplier prior to,
during or after the course of the RFP process, unless authorised by and in the presence of the
Designated Contact

b.)Each member of the evaluation team must:

i.)Independently, fairly and impartially review and score each proposal

ii.)Comply with their obligations regarding confidentiality

iii.)Act professionally at all times and in accordance with the organisation's policies and ethical /
integrity standards

iv.)Advise team management immediately on becoming aware of any actual or potential conflict
of interest, or the appearance of it, concerning the evaluator
2. Evaluation team readiness

Scoring a supplier proposal and other elements involved in the RFP requires each evaluation
team member to have a thorough understanding of their role and the tools available to help
them.A scoring process guideline and/or training, plus early review of each proposal prior to the
official start of scoring should cover:

a.)Reinforcement of the timelines and the potential consequences of delay

b.)The rules of engagement

c.)Each team member's overall scoring responsibilities, as assigned in stage 4 of the RFP process

d.)Each item a team member is responsible for scoring, whether a requirement, a cost element,
the quality of a presentation or something else

e.)What the supplier has proposed with respect to each item, where applicable

f.)What needs to be considered in allocating a score for any particular item, such as how well a
proposal satisfies a requirement

g.)The scoring scales to be used

3. Supplier team responsiveness

An RFP typically requires a large amount of interaction with the participating suppliers.

This situation is mostly reversed on receipt of supplier proposals, with the evaluation team
raising questions and comments about the proposals submitted for the suppliers to deal with.

It's important that efforts are made not only to prevent one side from affecting the other side's
ability to respond to questions, but also to effectively deal with the occurrence of any response
delay. This can be achieved by both sides:

a.)Working together to establish an issue prioritisation scheme with defined response times and
escalation paths applicable to both sides

b.)Tracking the performance of each side in meeting those response times and triggering any
needed escalation

c.)Clearly expressing questions or concerns, with a focus on eliminating ambiguity and

minimising opportunities for misinterpretation
d.)Submitting questions and concerns as they are discovered, rather than when a certain amount
has been collected, or submitting them at a certain time each day or only on certain days.

4. Consistent score allocation

It can be simple to score some aspects of a proposal but others may require the application of
various levels of judgment and foresight. Maintaining a consistent approach to allocating scores
is required both within and across proposals.

There are two ways to deal with drift:

a.)Review each proposal's scores the day after scoring has been completed to determine if the
assigned scores still seem valid, and make any adjustments necessary

b.)After all proposals have been individually reviewed, do a side-by-side check of the scores
assigned in the same areas of each proposal, where the supplier responses are very similar. If
some scores seem unjustifiably different given the similarity of responses, make any adjustments
necessary.

5. Price normalisation

Pricing is commonly a difficult area to evaluate. In order to be able to compare supplier prices on
a like-for-like basis, discrete pricing for each cost element needs to be provided.

The normalisation process might proceed as follows when a recalcitrant supplier declines to
provide the requested level of detail:

a.)For each supplier who provided the three required element pricing details

i.)Calculate the bundled price as the sum of the three element prices

ii.)Calculate the percentage of the bundled price that each element's price represents
b.)For each element, calculate the average percentage of the bundled price across all suppliers
who provided the required details

c.)For the supplier who provided only a bundled price, apply to that bundled price each of the
three elements' average percentage of the bundled price calculated above to produce an estimated
price for those elements that can be used for element pricing comparison across suppliers.

6. Scoring focus

The focus of scoring can vary for different areas of the RFP, as follows:

a.)Best fit. Used where the scoring scale describes certain fixed outcomes (say, high cost and low
risk, high cost and high risk, etc) that requires the use of judgement from the evaluator to
estimate risk levels

b.)Level of acceptability. This is another judgement call on the part of the evaluator. It is
commonly used for acceptability assessment of:

c.)Level of fit. Typically required where a very specific requirement has been stated (say,
widgets must come in bronze, silver and gold colours), and the score reflects how well a proposal
satisfies that requirement

d.)Relative ranking. Required for items like pricing or delivery guarantees, where comparison
against each supplier's offering is required. The highest score is assigned to the supplier whose
offering is most attractive, depending on whether a higher or lower offering is better. Scores for
other suppliers should be assigned in decreasing amounts according to the decreasing
comparative attractiveness of their offerings.

7. Scoring analysis

Depending on the legislative environment that the RFP is subject to, greater or lesser care may
be needed to minimise opportunities for challenges to the RFP outcomes.

The following checks need to be conducted on the scores received to discover if there is any
cause for concern:

1.)On receipt of each evaluation team member's individual scoresheets:

i.)Delete any scores assigned outside the specific elements the evaluator is required to score
ii.)Check if any requirement weights or group percentages differ from the master scoresheet
templates and reset as necessary

2.)Following aggregation and averaging of all individual scoresheets to show consolidated total
scores, discussion with the relevant evaluators and instigation of certain actions may be
necessary, if analysis shows that:

i.)Identical scores have been assigned to the same proposal elements by different evaluators, a
potential indicator of collusion

ii.)The scores of any evaluators for any specific proposal diverge consistently and significantly
from the mean scores across all evaluators for that proposal, a possible indicator of bias for or
against that proposal.
Q3.) Describe the different types of B2B buying situations and how they affect sellers.

Sol.) Types of B2B Buying Situations and their affects on sellers :

To some extent the stages an organization goes through and the number of people involved
depend on the buying situation. Is this the first time the firm has purchased the product or the
fiftieth? If it’s the fiftieth time, the buyer is likely to skip the search and other phases and simply
make a purchase. A straight rebuy is a situation in which a purchaser buys the same product in
the same quantities from the same vendor. Nothing changes, in other words. Postpurchase
evaluations are often skipped, unless the buyer notices an unexpected change in the offering such
as a deterioration of its quality or delivery time.

Sellers like straight rebuys because the buyer doesn’t consider any alternative products or search
for new suppliers. The result is a steady, reliable stream of revenue for the seller. Consequently,
the seller doesn’t have to spend a lot of time on the account and can concentrate on capturing
other business opportunities. Nonetheless, the seller cannot ignore the account. The seller still
has to provide the buyer with top-notch, reliable service or the straight-rebuy situation could be
jeopardized.If an account is especially large and important, the seller might go so far as to station
personnel at the customer’s place of business to be sure the customer is happy and the straight-
rebuy situation continues. IBM and the management consulting firm Accenture station
employees all around the world at their customers’ offices and facilities.By contrast, a new-buy
selling situation occurs when a firm purchases a product for the first time. Generally speaking,
all the buying stages we described in the last section occur. New buys are the most time
consuming for both the purchasing firm and the firms selling to them. If the product is complex,
many vendors and products will be considered, and many RFPs will be solicited.

New-to-an-organization buying situations rarely occur. What is more likely is that a purchase is
new to the people involved. For example, a school district owns buildings. But when a new high
school needs to be built, there may not be anyone in management who has experience building a
new school. That purchase situation is a new buy for those involved.A modified rebuy occurs
when a company wants to buy the same type of product it has in the past but make some
modifications to it. Maybe the buyer wants different quantities, packaging, or delivery, or the
product customized slightly differently. For example, your instructor might have initially
adopted this textbook “as is” from its publisher, Flat World Knowledge, but then decided to
customize it later with additional questions, problems, or content that he or she created or that
was available from Flat World Knowledge.

A modified rebuy doesn’t necessarily have to be made with the same seller, however. Your
instructor may have taught this course before, using a different publisher’s book. High textbook
costs, lack of customization, and other factors may have led to dissatisfaction. In this case, she
might visit with some other textbook suppliers and see what they have to offer. Some buyers
routinely solicit bids from other sellers when they want to modify their purchases in order to get
sellers to compete for their business. Likewise, savvy sellers look for ways to turn straight rebuys
into modified buys so they can get a shot at the business. They do so by regularly visiting with
customers and seeing if they have unmet needs or problems a modified product might solve.
Q4.) Name some other industries you’re aware of in which companies tend to cluster
geographically. Why are the companies in these industries located near one another?

Sol 4.) The clustering occurs because the resources these firms need—both human and natural—
are located in some areas and not others. For example, the Gulf of Mexico is rich with oil
deposits. As a result, many oil companies and facilities are located along or near the Gulf in
cities such as Houston. Likewise, many high-tech companies are located in Silicon Valley
(California). One reason is that nearby Stanford University is one of the top computer-science
schools in the country and the firms want to hire graduates from the school.

Another reason is the sellers want to be close to their buyers. Bentonville, Arkansas, the world
headquarters of Walmart, used to be a sleepy little rural town. As Walmart grew, so have the
number of companies moving into the area to do business with Walmart. In the last twenty years,
the size of the town has nearly tripled. Buyers also want to be close to their suppliers because it
can help them get inventory more quickly. Dell’s suppliers are located right next to the
company’s assembly plants. And, as you have learned, some companies actually locate their
personnel on their customers’ sites.

Firms in the same industry tend to cluster in the same geographic areas because the resources
these firms need—both human and natural—are located in some areas and not others. Sellers
also want to be close to their buyers. E-commerce, or commerce conducted electronically such as
over the Internet, has made locating near buyers less important for business-to-business sellers
and opened up opportunities for them to sell their products around the world. However, e-
commerce has also led to more competition and made it difficult for sellers to raise their prices.
B2B e-commerce was slower to take hold than B2C e-commerce. Companies have since
developed sophisticated e-commerce systems, including sell-side and buy-side Web sites,
exchanges, and B2B auctions.
Q5.) How can firms that sell their products on the Internet prevent their prices from being
driven down by competitors?

Sol 5.)

 Identify likely threats. The earlier a low-price rival can be detected, the less likely you
will have to compete on their terms. Look for companies focused on reducing complexity
or originality in product design to drive down costs, assembling products in low-wage
markets, or moving bulk volumes via low-cost shipping or distribution models.
 Conduct a total-cost analysis. Perform an analysis that compares what your
competitor’s products or methods should cost compared with what they actually cost in
order to quantify the cost advantage. Next, try to see how that advantage translates into
pricing options and whether they are sustainable — and can be replicated by your
company — in the long-term.
 Explore all potential scenarios. Developing a few “what-if” scenarios can help
determine the next steps in your response. Is your competitor planning to enter new
markets, roll out new products, or reposition itself to consumers? To forecast effectively,
try to anticipate where the market is headed and which low-price companies have
sustainable capabilities.
 Choose an effective strategy. The next step is to choose a goal that will improve your
company’s operations and competitiveness based on the scenarios examined. “Often the
better tactic is to shift the competition away from price alone. The newer rival may be
less competitive in other areas,” A.T. Kearney explains. “Use product differentiation to
appeal to customers’ needs for features or benefits they can’t get from the low-cost
competitor.”

Thus, Differentiating between types of customers and learning which market segments
firm can afford to lose is another valuable, short-term strategy for dealing with a
competitor’s undercut price.