B2B Markets:

Purchase Perspectives, Vendor Development

B2B Markets: Purchase Perspectives, Vendor Development 1

 B2B Buying Process
Purchase decision is arrived at by a team, even though one or two
persons in the team may be the key to the final decision

There is a need to address both an individual as well as a company’s

requirements during a B2B purchase

This means that as part of the buying journey, decision makers

factor in both rational and emotional-driven motivations before
their final selection

B2B Markets: Purchase Perspectives, Vendor Development 2

 Creating Value in Competitive B2B Markets
Creating ‘Value’ is the biggest push in the journey of attracting &
retaining B2B customers

B2B customers buy value – in the form of convenience, simplicity or

integration

 What exactly is ‘Value’?

 Can it be maintained or built upon (in the face of fierce competition)?

B2B Markets: Purchase Perspectives, Vendor Development 3

B2B Markets: Purchase Perspectives, Vendor Development 4
 Some Buying Motives …

Rational Motives
Price, Quality, Service, Continuity of Supply & Reciprocity

Emotional Motives
Desire for Status, Desire for Promotion, Increased Job Security

B2B Markets: Purchase Perspectives, Vendor Development 5

 Some Buying Motives …
For responding effectively to buyer needs, B2B Marketer/Seller
requires an ‘Understanding of Criteria’ used by buyers for evaluation

Marketer faces difficult task of ‘Defining the Buying Motives’ of

buyers who will ultimately pass judgements on their product

Buyers are influenced by both ‘RATIONAL’ and ‘EMOTIONAL’ factors

in choosing among offerings of competing B2B Sellers

B2B Markets: Purchase Perspectives, Vendor Development 6

 Rational Motives ..
Rational or Economic buying motives are significant for commercial
enterprises as they are guided by ‘profit objectives’
Types …
 Price
 Quality
 Service
 Continuity of Supply

B2B Markets: Purchase Perspectives, Vendor Development 7

 Rational Motives (Price) ..
Buyer evaluates quoted price from many perspectives

Illustration 1: Purchase of Capital Equipment

•Buyer analyses ‘potential savings’ in manpower, energy, material
and relates all these to the price [Investment]
•‘ROI’ is used in comparing offers from competing equipment firms

B2B Markets: Purchase Perspectives, Vendor Development 8

 Rational Motives (Price) ..
Illustration 2 : Purchase of final component ( Tyres, Small Motors )

 Buyer considers ‘Price’ in relation to ‘Ease of Installation’

 Higher priced component that was easier and less costly to

install ‘has an edge’ on a less expensive model but posing
installation problems.

B2B Markets: Purchase Perspectives, Vendor Development 9

 Rational Motives (Quality) ..
Buyers seek a level of quality consistent with defined
specifications and intended use

They do not want to pay for more quality than required and
also unwilling to compromise specifications for a reduced
price
… Uniformity / Consistency of product quality is a crucial
factor for B2B buyers

B2B Markets: Purchase Perspectives, Vendor Development 10

 Rational Motives (Quality) ..
Consistency for Buyers
 Guarantees uniformity in the end product that the buyer
sells to his end market
 Reduces need for careful and costly inspections of each
incoming shipment
 Ensures that purchased material will mesh smoothly with
the existing production process

B2B Markets: Purchase Perspectives, Vendor Development 11

 Rational Motives (Quality) ..

Low degree of consistency in quality of incoming

materials/components creates ‘costly problems’ for buying
organizations

B2B Markets: Purchase Perspectives, Vendor Development 12

 Rational Motives (Service) ..
Includes - Technical Assistance, Information, Delivery
Repair Capability, Spares Availability, Finance option

B2B Marketer offering sound technical advice, reliable &

intime delivery and an available supply of replacement
parts have strong edge over competing suppliers offering
weaker service packages

B2B Markets: Purchase Perspectives, Vendor Development 13

 Rational Motives (Service) ..

Buyers need to make large investment in inventory if suppliers

delivery service is either slow or unpredictable

‘Physical distribution service’ ranks second to ‘Product

quality’ in influencing purchase decisions.

B2B Markets: Purchase Perspectives, Vendor Development 14

 Emotional Motives ..
Include :
 Desire for Status within the Organization
 Desire for promotion
 Increased Job Security

Buyers exhibit a high degree of fear in resisting the new. They

are motivated by a strong need to reduce uncertainty

B2B Markets: Purchase Perspectives, Vendor Development 15

 Emotional Motives ..
Reasons for uncertainty amongst buyers …
 Number of buying alternatives available

 Specific level of performance expected of each alternative

 How will the Organization members { that may have other

goals} evaluate the buying decisions?

B2B Markets: Purchase Perspectives, Vendor Development 16

 Emotional Motives ..
Buyer often reduces uncertainty either by :
 Relying on familiar suppliers used in the past
OR
 By favoring suppliers with high reputation

Understanding of both rational and emotional motives salient

to the members of the buying center is of utmost importance

B2B Markets: Purchase Perspectives, Vendor Development 17

 Supplier Selection (Vendor Development)
Conceptual Three Factor Supplier Selection

 Supplier Quality

 Supplier Service

 Strategic Management Fit with Supplier

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 Vendor Development (Strategic Management Fit)
 Suppliers Reputation
 Suppliers Financial Stability
 Honest and Frequent Communication
 Cultural Match with Supplier
 Past and Current Relationship with Supplier
 Strategic Importance of Supplier
 Ability to Maintain Confidentiality

B2B Markets: Purchase Perspectives, Vendor Development 19