Contemporary Marketing 2013 Update 15th Edition Boone Solutions Manual Download

116 Part 2 Understanding Buyers and Markets
Contemporary Marketing 2013 Update 15th

Edition by Boone Kurtz ISBN 1111579717
9781111579715
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CHAPTER 6
BUSINESS-TO-BUSINESS (B2B) MARKETING
CHAPTER OVERVIEW
The consumer marketplace is easy to see and define. We all act as consumers as we make purchases
every day—whether it’s a newspaper, a pack of gum, or a new convertible. But beyond the actual
purchase, we also become aware of products or services, consider the options, think about what we truly
need or what we merely want. And we can’t help noticing the barrage of marketing messages aimed at
us through a variety of media.
The same thing happens with business purchasers in their everyday considerations and decisions about
buying goods and services. And the business-to-business, or B2B, marketplace is much larger than the
consumer side of marketing.
U.S. companies pay more than $300 billion each year just for office and maintenance supplies.
Government agencies contribute to the business-to-business market even further. The Department of
Defense budget alone for one recent year was nearly $515 billion. And business-to-business commerce
conducted over the Internet now totals nearly $3 trillion.
Unlike individual purchase decisions, decisions involved in the B2B market are more complex because it
involves multiple decision makers. B2B purchase decisions emphasize customer satisfaction and
Copyright ©2013 by South-Western, a division of Cengage Learning. All rights reserved.

Chapter 6 Business-to-Business (B2B) Marketing 117
customer loyalty— the key factors for developing long-term relationships with partners. Ability to respond
quickly to unique and changing circumstances is another dimension of these purchase decisions.
This chapter discusses buying behavior in the business or organizational market. B2B marketing deals
with organizational purchases of goods and services made for three reasons: to support production of
other products, to facilitate daily company operations, and for resale. To distinguish between consumer
and business transactions, consider the answers to two questions: Who is buying the good or service?
Why is the purchase being made?
Changes in the Updated Edition
The chapter has been updated and revised in several ways:
• The Opening Vignette and Evolution of a Brand illustrate the Zappos family, which has grown
fast since its 1999 founding, mostly through word of mouth about its passionate devotion to
customer service. More than 95 percent of its retail transactions occur online. Friendly customer
service, well-trained staff, and a focus toward customer satisfaction drive the company. One of
the ten core values of the firm is to "Deliver WOW through service." The complete story is
discussed in "Corporate Customers Try Zappos’ Advice on for Size."
• Solving an Ethical Controversy analyzes the use of cookies in affiliate marketing. It also
addresses the important question “Should cookie stuffing be illegal?”, its pros, and cons. Many
people want to make quick money online. More on the issue in “To Stuff Cookies, Or Not to Stuff.”
• Marketing Success highlights Sysco, which ships almost 22 million tons of fresh food and food-
related products every year. McDonald’s, Wendy’s, are amongst their main customers. They face
a challenge of managing a complex set of logistics that include properly handling and delivering
nonperishable and stored foods. The company relies on custom logistics tools and software for
executing their daily plans. The challenge, strategy, and outcome will be described in “Sysco
Masters Logistics for Food.”
• Career Readiness provides advice on “How to Work a Trade Show“. As the title suggests, it tells
one how to avoid common mistakes when representing one’s company at a trade show and put
the best foot forward when meeting prospective clients.
• Chapter Case 6.1 talks about Peerless Pump Co. which has been providing high-end industrial
customers with reliable pumps and fire-protection systems for more than 85 years. They supply
almost a quarter of global demand for electric motor energy. The firm focuses on the needs of
customers—both internal and external. “Peerless Pump Puts Customers First,” tells the story of
their success.
• Collaborative Learning Exercises are provided in several areas related to business-to-business

marketing—The Business-to-Business Market, Business-to-Business Marketing Strategy, Buying
Versus Making, Outsourcing, and the Business Buying Process.
• Video Case 6.2 Synopsis includes an overview of the video featuring innovative travel products
of Flight 001.
LECTURE OUTLINE
Opening Vignette and Evolution of a Brand – "Corporate Customers Try Zappos’ Advice on for Size." Do
you agree with Hsieh that keeping employees happy can affect customer and supplier relationships? Why
or why not? Do you think that free delivery of goods offered by Zappos, considering 95 percent sales occur
online is a feasible strategy?

Chapter Objective 1: Explain each of the components of the business-to-business (B2B) market.
Key Terms: business to business (B2B) marketing, commercial market, trade industries, resellers
PowerPoint Basic: 4-6
PowerPoint Expanded: 4-10
1. The B2B marketplace
a. The business marketplace is larger than the consumer
marketplace
i. U.S. firms spend $300 billion annually just for office and
maintenance supplies
ii. Government agencies add to that figure; the Department
of Defense budget for one recent year was over $533
billion
iii. Global Internet sales for businesses now total close to
$3 trillion annually
b. Business-to-business or B2B marketing deals with
organizational sales and purchase of goods and services for
making other products, for running daily operations, or for resale
c. To distinguish between B2B and B2C, ask yourself two
questions:
i. Who is buying the good or service?
ii. Why is the purchase being made?
2. Nature of the business market
a. Differences between the B2B and B2C markets:
i. Transactions are between organizations (firms,
Table 6.1 Comparing government agencies, not-for-profits, marketing
Business-to-Business intermediaries), not individuals
Marketing and ii. Transactions with organizational buyers involve greater
Consumer Marketing. customization, more decision making, and more people
In which ways do the
on both sides
two types of marketing
differ? In which ways iii. Customer service is extremely important due to
are they similar? complexity of purchases
iv. Advertising plays a smaller role—ads are placed to
announce new products or create a company image
v. Personal selling plays a much larger role
vi. Distribution channels are shorter
vii. Customer relationships tend to last longer
viii. Purchases can involve multiple decision makers
b. Organizations buy products to fill various needs but the primary
need—meeting the demands of their own customers—is similar
from firm to firm
c. Totally different firms in various industries may buy the same
parts or supplies from a firm
d. Organizations also purchase services from other businesses
(legal, accounting, consulting, and cleaning service, etc.)
e. Factors that influence B2B markets:
i. Environmental, organizational, and interpersonal factors
ii. Budget, cost, and profit considerations
iii. The organization’s goals
f. Firms may focus entirely on business markets or sell to both
consumer and business markets, at times using the same
marketing strategies developed for consumers

g. Final consumers are often end users of products sold to

businesses, so ultimately they influence these buying decisions
h. The B2B market is diverse where transactions can be large or
small and can involve goods or services
i. Four categories define the business market:
i. Commercial market
ii. Trade industries
iii. Government organizations
iv. Institutions
3. Components of the business market
a. The commercial market
i. The commercial market is the largest segment of the
business market, including all individuals and firms that
acquire products to support—directly or indirectly—the
production of other goods and services
ii. Commercial B2B products are used in one of three
ways:
iii. To aid in the production of other items (example:
computer chip)
iv. To be used up in the production of a good or service
(example: wheat)
v. To contribute to daily operations (example: maintenance
supplies)
b. Trade industries
i. Trade industries include retailers and wholesalers
(called resellers)
ii. Most resale products are finished goods that buyers sell
to final consumers; buyers sometimes complete
processing or repackage before reselling the product
iii. Besides resale goods, trade industries also need to buy
goods to operate their businesses (supplies, computers,
shelving units), maintenance items as well as
specialized services, collectively known as
organizational purchases
c. Government organizations and agencies
i. Domestic units of government (federal, state, and local)
as well as foreign governments make a wide variety of
purchases, ranging from highways to social services
ii. The primary motivation is to provide some form of public
benefit or widespread service
iii. Certain agencies sell unclaimed shipments or
confiscated goods to the highest bidders
d. Institutions
i. Institutions include a wide range of organizations, both
public and private (hospitals, colleges, museums,
medical centers, and not-for-profits)
ii. Some have rigid and standardized buying procedures,
while others have less formalized buying practices
iii. B2B marketers often benefit by setting up separate
divisions to sell to institutional buyers
Solving an Ethical 4. B2B markets: The Internet connection
Controversy: To Stuff

Cookies, Or Not to a. About 93 percent of Internet sales are B2B transactions, a figure
Stuff. that has risen rapidly
Should cookie stuffing i. Many B2B marketers set up private portals that allow
be illegal? their customers to buy needed items, with service and
customized pages accessed through passwords
ii. Online auctions and virtual marketplaces also bring
buyers and sellers together
b. In the early Internet boom, many start-ups failed when they
neglected to target their markets and make good on promises
i. Those that survived have established a very strong
market presence
ii. Another way for marketers to connect with each other
online is through affiliate marketing
iii. The Internet also opens up foreign markets to sellers
5. Differences in foreign business markets
a. Cultural practices and government regulations create
differences in business markets of nations around the world
b. Business marketers need to adapt to local customs, research
cultural preferences, and understand global business practices
Assessment check questions
1. Define B2B marketing. Business-to-business, or B2B, marketing deals with

organizational purchases of goods and services to support production of other
products, to facilitate daily company operations, or for resale.
2. What is the commercial market? The commercial market consists of

individuals and firms that acquire products to be used, directly or indirectly, to
produce other goods and services.
Chapter Objective 2: Describe the major approaches to segmenting business-to-business (B2B)

markets.
Key Terms: customer-based segmentation, North American Industrial Classification System (NAICS),
end-use application segmentation, customer relationship management (CRM)
PowerPoint Basic: 7
1. Segmenting B2B markets
a. Segmentation is needed due to the wide varieties of customers
within industries
b. Marketers need to identify the segments they serve, dividing
markets based on organizational criteria and product
applications
c. Four ways to segment markets: demographics (size), customer
type, end-use application, and purchasing situation
2. Segmentation by demographic characteristics
a. As with consumer markets, demographic characteristics define
useful segmentation criteria for business markets
b. One example is firm size
i. Firms can be grouped based on revenue or number of
employees

ii. Marketers may develop one strategy for large firms with
complex purchasing procedures and another for small
firms in which decisions are made by a few people
3. Segmentation by customer type
a. Firms can be grouped based on type of customer
b. This approach can be applied in several ways:
i. Customers can be grouped by broad categories—
retailer, manufacturer, service provider, government
agency, not-for-profit firms—or by industry
ii. Customer-based segmentation divides a B2B market
into homogeneous groups based on buyers’ product
specifications
iii. Organizational buyers have much more precise and
complex needs than consumers do
iv. So business products often fit narrower market
segments than consumer products
c. North American Industrial Classification System (NAICS)
i. For 70 years B2B marketers used the Standard
Industrial Classification (SIC) system which
standardized categories of industrial activity and
identified customers
ii. It created broad industrial categories, then assigned
each a two-digit number; subcategories in industries
were given additional three- and four-digit numbers
iii. NAFTA caused the system to become outdated since
each member nation (Canada, Mexico, and U.S.) had its
own classification
iv. A joint system was required, so the North American
Industrial Classification System (NAICS) was created for
the three NAFTA countries to categorize the business
marketplace into detailed segments
v. NAICS created service sectors for new industries in
information; health care and social assistance; and
professional, scientific, and technical services
vi. NAICS uses six digits (compared to four digits for SIC),
the last of which reflects the data needs each member
nation
4. Segmentation by end-use application
a. End- use application segmentation focuses on the precise way
in which a business purchaser will use a product
b. The same product may be used differently by different buyers,
and each end use for the same product dictates unique
Table 6.2 NAICS specifications of performance, design, and price
Classification for c. Small and medium-sized companies may concentrate on
Stationery and Office specific end-use market segments to avoid competing directly in
Supplies Merchant markets dominated by large firms
Wholesalers. What do 5. Segmentation by purchase categories
the various
classification numbers a. Organizations use more complicated purchasing procedures
tell you about this than those of consumers
industry? b. Since firms structure their purchasing functions in specific ways,
this is a good method for segmenting the markets
i. Some firms use centralized purchasing departments to
serve the entire firm

ii. Other firms allow each unit to handle its own buying
c. For important purchases, marketers consider whether the
customer has bought before or if this is the first order
d. A customer relationship management (CRM) system is a set of
strategies and tools to reorient an entire organization to focus on
satisfying customers
e. CRM systems help to segment customers in terms of the stage
of their relationship with the firm
f. A B2B firm might have different strategies for newly acquired
customers, long-term suppliers, loyal purchasers, or at-risk
customers
1. What are the four major ways marketers segment business markets?
Business markets can be segmented by (1) demographics (2) customer type,
(3) end-use application, and (4) purchasing situation.
2. What is the NAICS? The North American Industry Classification System

(NAICS) is a unified system for Mexico, Canada, and the United States to
classify B2B market segments and ease trade.
Chapter Objective 3: Identify the major characteristics of the business market and its demand.
Key Terms: global sourcing, derived demand, joint demand, inelastic demand, just-in-time (JIT) inventory,
sole sourcing, JIT II
1. Characteristics of the B2B market
a. Firms that serve both business and consumer markets must
understand various needs of customers
b. Four characteristics that distinguish B2B from B2C markets:
i. Geographic market concentration
ii. Sizes and numbers of buyers
iii. Purchase-decision process
iv. Buyer-seller relationships
2. Geographic market concentration
a. The U.S. business market is more geographically concentrated
than the consumer market
b. Manufacturers converge in certain regions of the country,
making them prime targets for marketers
c. Certain industries locate in particular areas in order to be close
to customers, so firms locate sales offices and distribution
centers to provide local service
d. As Internet technology improves, business markets may
become less geographically concentrated
3. Sizes and numbers of buyers
a. The business market features a limited number of buyers
b. Marketers can use a wealth of statistical information to estimate
sizes and characteristics of business markets
i. The federal government is the largest data source

ii. Every five years, its Census of Manufacturers and a

Census of Retailing and Wholesaling provide data on
business establishments, output, and employment
iii. Government units and trade organizations also offer
information and data on their Web sites
c. Many purchasers in limited-buyer markets are large
organizations, so firms may compete for business from only a
few big corporations
d. Trade associations and specialized publications provide
information on business markets and classification of individual
firms
Marketing Success:
Sysco Masters 4. The purchase decision process
Logistics for Food a. Businesses must understand the dynamics of the organizational
purchase process
b. Suppliers who service large firms in B2B markets often work
with multiple buyers because decision makers at several levels
may influence final orders
c. The procedure is more formal, professional, and time consuming
than the consumer purchasing process
d. Needs are assessed, proposals are developed, specifications
are addressed, and proposals are analyzed, often resulting in
several rounds of bidding and negotiation
5. Buyer-seller relationships
a. Buyer-seller relationships are more intense in the B2B market
than in the B2C market
b. They require strong communication among organization
personnel because satisfying one customer can mean the
difference in millions of dollars for a firm
c. A primary goal of B2B relationships is to provide advantages
that no other vendor can provide:
i. Lower prices
ii. Quicker delivery
iii. Better quality and reliability
iv. Customized product features
Career Readiness— v. More favorable financing terms
How to Work a Trade d. This could mean expanding the firm’s external relationships to
Show? tells one how include suppliers, distributors, and other partners
to avoid common e. Close cooperation, whether formal or informal, enables firms to
mistakes when meet buyers’ needs for quality products and customer service,
representing one’s both during and after the purchase
company at a trade
show and put the best f. Relationships between for-profit and not-for-profit organizations
foot forward in the are just as important as those between two commercial
booth. organizations
6. Evaluating international business markets
a. Business purchasing practices differ among nations.
b. Companies must weigh quantitative data (such as size of the
potential market) and qualitative features (such as cultural
values, work styles, and business practices)
c. Companies often practice global sourcing, the purchasing of
goods and services from suppliers worldwide, often with
substantial cost savings

d. Global sourcing forces sellers to adopt a new mindset or to even

reorganize operations
Figure 6.1 Categories 7. Business market demand
of Business Market a. Like market characteristics, demand characteristics also differ
Demand. Choose one between business and consumer areas
type of demand and b. Five major categories of demand: derived, volatile, joint,
give examples of B2B inelastic, and inventory adjustments
and B2C goods or
c. Derived demand
services that would
apply. i. Derived demand refers to the link between consumer
demand for a firm’s output and its purchases of
resources (raw materials, supplies, and machinery)
ii. Example: Demand for a certain element
(microprocessor chip) is derived, or affected by, the
demand for a finished product (personal computers)
iii. Organizations buy two types of products that are
affected by derived demand:
iv. Capital items are larger, long-lived assets that
depreciate over time, meaning part of their costs are
charged against company revenues (examples: plants,
buildings, computer network systems)
v. Expense items are those consumed quickly, so costs
are charged against income (examples: supplies,
maintenance materials)
d. Volatile demand
i. Derived demand creates volatility in business market
demand, or volatile demand
ii. If demand for a good decreases even slightly, a firm
may hold off on buying new equipment or facilities
related to producing that good
iii. In this way, modest shifts in consumer demand can
greatly affect certain manufacturers
iv. Example: Gas sales decline, so gas pump manufacturer
gets fewer orders for new machines
e. Joint demand
i. Joint demand results when the demand for one
business product is related to the demand for another
one used in combination with the first item
ii. Example: Consumers conserve energy, demand for
electricity falls, fewer plants are built and less machinery
added, so fewer replacement parts or components used
to generate electricity are needed
f. Inelastic demand
i. Inelastic demand means that demand throughout an
industry will not change significantly due to price change
ii. Example: The price of lumber drops, but a construction
firm probably won’t buy more for that reason only
g. Inventory adjustments
i. Inventory adjustments and inventory policies affect
business demand as needs for raw materials shift
ii. Example: A 60-day supply of cell phone parts, once
considered enough inventory, is suddenly increased to a

90-day supply, the change will bombard the raw-

materials supplier with new orders
iii. Just-in-time (JIT) inventory policies work toward
efficiency by cutting inventories to absolute minimum
levels and requiring vendors to deliver inputs only as the
production process needs them
iv. Widespread adaptation of JIT affects purchasing
behavior, because firms tend to order from few suppliers
v. JIT may lead to sole sourcing for some items—buying a
firm’s entire stock of a product from just one supplier
vi. The latest trend, JIT II, has representatives at the
customer’s facility to work as part of an integrated, on-
site, customer-supplier team
vii. Inventory adjustments are also critical to retailers and
wholesalers as they deal with demand shifts for
thousands of products
1. Why is geographic segmentation important in the B2B market? Certain

industries locate in particular areas to be close to customers. Firms may choose
to locate sales offices and distribution centers in these areas to provide more
attentive service. For example, the Washington, D.C. area is favored by
companies that sell to the federal government.
2. In what ways is the buyer-seller relationship important in B2B marketing?

Buyer–seller relationships often are more complex than consumer relationships,
and they require superior communication among the organizations’ personnel.
Satisfying one major customer may mean the difference of millions of dollars to
a firm.
3. What is global sourcing? Global sourcing involves contracting to purchase

goods and services from suppliers worldwide.
4. How does derived demand create volatile demand? Business demand often
is derived from consumer demand. Even modest shifts in consumer demand
can produce disproportionate—and volatile—shifts in business demand.
5. Give an example of joint demand. Both lumber and concrete are required to
build most homes. If the lumber supply falls, the drop in housing construction
will most likely affect the demand for concrete.
6. How might JIT II strengthen marketing relationships? Under JIT II, suppliers
place representatives at the customer’s facility to work as part of an integrated,
on-site customer–supplier team. Suppliers plan and take orders in consultation
with the customer. This streamlining of the inventory process improves control
of the flow of goods.
Chapter Objective 4: Discuss the decision to make, buy, or lease.

Key Terms: offshoring, nearshoring, outsourcing
1. The make, buy, or lease decision
a. Before a firm decides what to buy, it has to decide whether to
buy at all or to use other means to acquire products, choosing
from three options:

i. Make the good or provide the service in-house

ii. Purchase it from another organization
iii. Lease it from another organization
b. What determines the choice of option?
i. Making the product can save a firm money, but most
firms can’t make all the business goods they need—it’s
too expensive to maintain staff, equipment, and supplies
ii. Purchasing from an outside vendor is the most common
choice; in outsourcing, firms look outside their own
plants for goods or services once produced in-house
iii. Leasing spreads out costs (compared to up-front
purchases), provides flexibility for a business that’s
growing. Companies can also lease sophisticated
computer systems and heavy equipment
2. The rise of offshoring and outsourcing
a. Offshoring refers to the growing trend of moving high-wage U.S.
jobs to lower-cost overseas locations
i. This relocation can affect processes for production of
goods (China is a preferred destination) or delivering
services (India is a dominant player)
ii. Nearshoring refers to the decision to cut costs and
improve efficiency by moving operations out of the
country to nearby locations such as Mexico and Canada
b. Outsourcing is the practice of buying from outside vendors the
goods and services that firms formerly produced in-house
c. Firms outsource for several reasons:
i. To reduce costs and remain competitive
ii. To improve quality and speed of software maintenance
and development
iii. To offer greater value
d. Outsourcing allows firms to use resources for core businesses
while getting access to talent or expertise outside the firm
e. Most commonly outsourced: IT and HR functions, also white-
collar, creative, and research jobs
f. It is most commonly done by North American firms, though
Asian, European, and Central American firms are now
outsourcing
g. China has been leading the way in offshore manufacturing and
the size of its workforce in Guangdong province is estimated to
rival that of the entire United States. However, in recent times
many firms are considering leaving China due to the rise in labor
and management costs
h. Outsourcing can work if a vendor provides high-quality products
at lower costs than the firm could achieve on its own, but its
contracts and quality need to be carefully monitored
i. Problems with offshoring and outsourcing
i. Cost savings are often less than expected
ii. Multiyear contracts may lead to a drop in savings after
the first year or two
iii. Security is a concern when an outside firm is handling
proprietary technology

iv. Customer relationships and customer service are at risk

if trusted to the wrong contractor
v. Response to the marketplace may be slower
vi. Introduction of new products may be slower
vii. Failure to deliver on time or to provide required services
can damage a firm’s reputation
viii. Conflict is created amongst union employees
ix. Employee morale and loyalty may be negatively affected
1. Identify two potential benefits of outsourcing. Outsourcing allows firms to

concentrate their resources on their core business. It also allows access to
specialized talent or expertise that does not exist within the firm.
2. Identify two potential problems with outsourcing. Many companies discover

their cost savings are less than vendors sometimes promise. Also, companies
that sign multiyear contracts may find their savings drop after a year or two.
Chapter Objective 5: Describe the major influences on business buying behavior.

Key Terms: multiple sourcing, merchandisers, systems integration, category advisor or category captain
PowerPoint Basic: 13
1. The business buying process
a. Before even approaching suppliers, a firm has to analyze its
needs, determine goals, develop technical specifications, and
set a budget
b. Once it receives proposals, it evaluates them and selects the
best one, though “best” can mean many things
c. Business buying is more complicated than consumer buying,
since it involves a formal organization’s budget, cost, and profit
considerations
d. It involves complex interactions among many individuals and
organizational goals
2. Influences on purchase decisions
a. Environmental factors
i. Economic, political, regulatory, competitive, and
technological issues affect buying decisions.
ii. Natural disasters or weather emergencies can affect
buying decisions
b. Organizational factors
i. Successful business-to-business marketers understand
customers’ organizational structures, policies, and
purchasing systems
ii. A firm with a centralized procurement function operates
differently than one that delegates purchasing decisions
to divisional or geographic units
iii. Centralized buying tends to emphasize long-term
relationships, while decentralized buying focuses on
short-term results

iv. Personal selling skills and user preferences carry more

weight in decentralized purchasing than in centralized
buying
v. The number of suppliers has an effect, since
consolidating vendor relationships can save money;
though firms usually can’t rely too heavily on a few
suppliers
vi. Multiple sourcing—purchasing from many vendors and
spreading orders among them—ensures against
shortages, but takes time and complicates the process
c. Interpersonal influences
i. Many people may influence B2B decisions, and much
time may be spent gathering input and approval from
organization members
ii. Both individual and group forces are at work—when
committees handle buying, they need unanimous
approval, while each individual buyer brings to the
decision personal preferences, experiences, and biases
iii. Marketers must know which departments and which
personnel influence buying decisions, understand their
priorities, and know their products
d. The role of the professional buyer
i. Many firms employ professional buyers, technically
qualified employees responsible for purchases through
systematic procedures
ii. In trade industries these buyers, or merchandisers,
secure needed products at the best possible prices.
iii. A purchasing or merchandising unit determines needs,
locates and evaluates alternative suppliers, and makes
purchasing decisions
iv. Purchasing decisions for capital items may involve
funding commitments and lengthy overview; decisions
on expense items can be done quickly and routinely
v. The process can be streamlined through systems
integration, a way to centralize procurements by
designating certain divisions or giving certain suppliers
more authority
vi. A category advisor or category captain is a trade
industry vendor who deals with all suppliers on a project
and presents the entire package to the buyer
vii. Firms may set up national accounts to deal solely with
buyers at corporate headquarters and separate field
divisions to serve buyers at regional production facilities
viii. Corporate buyers use the Internet to identify sources of
suppliers through online catalogs and networks

1. Identify the three major factors that influence purchase decisions. In addition
to product-specific factors such as purchase price, installation, operating and
maintenance costs, and vendor service, companies must consider broader
environmental, organizational, and interpersonal influences.
2. What are the advantages and disadvantages of multiple sourcing? Spreading

orders ensures against shortages if one vendor cannot deliver on schedule.

However, dealing with many sellers can be counterproductive and take too much
time.
Chapter Objective 6: Outline the steps in the organizational buying process.

Key Terms: None
1. Model of the organizational buying process
a. The organizational buying process often involves a sequence of
activities
b. These eight stages are often involved, though not every buying
decision requires all the steps
i. Stage 1: Anticipate or recognize a
problem/need/opportunity and a general solution
ii. Stage 2: Determine the characteristics and quantity of a
needed good or service
iii. Stage 3: Describe characteristics and the quantity of a
needed good or service
iv. Stage 4: Search for and qualify potential sources
Figure 6.2 Stages in v. Stage 5: Acquire and analyze proposals
the B2B Buying vi. Stage 6: Evaluate proposals and select suppliers
Process. Choose one
vii. Stage 7: Select an order routine
stage and discuss how
it would affect the viii. Stage 8: Obtain feedback and evaluate performance
purchasing decision of
a particular product. Assessment check questions
1. Why does the organizational buying process contain more steps than the
consumer buying process? The additional steps arise because business
purchasing introduces new complexities that do not affect consumers.
2. List the steps in the organizational buying process. The steps in

organizational buying are (1) anticipate or recognize a
problem/need/opportunity and a general solution; (2) determine characteristics
and quantity of needed good or service; (3) describe characteristics and
quantity of needed good or service; (4) search for and qualify potential sources;
(5) acquire and analyze proposals; (6) evaluate proposals and select
supplier(s); (7) select an order routine; and (8) obtain feedback and evaluate
performance.
Chapter Objective 7: Classify organizational buying situations.

Key Terms: straight rebuying, modified rebuying, new-task buying, reciprocity, value analysis, vendor
analysis
PowerPoint Basic::15, 16
1. Classifying business buying situations
a. As with consumer behavior, marketers classify organizational
buying situations into general categories ranging from least to
most complex
b. These include: straight rebuying, modified rebuying, new-task
buying, and reciprocity
c. Straight rebuying

i. Straight rebuying, the simplest buying situation, involves

a recurring purchase decision in which a customer
reorders a product that has satisfied past needs
ii. The purchase requires no new information
iii. The buyer sees no reason to assess competing options.
iv. It is the business market equivalent of a routinized
response behavior in the consumer market
v. Marketers who maintain good relationships with buyers
by providing excellent service and delivery performance
ensure straight rebuying
d. Modified rebuying
i. Modified rebuying involves a purchaser who is willing to
reevaluate available options
ii. It may occur if a marketer allows a straight rebuy
situation to deteriorate due to poor service or delivery
iii. Price, quality, or innovation may be involved, so it
resembles limited problem solving in consumer markets
iv. B2B marketers encourage buyers to respond to
customer needs; competitors try to lure buyers away by
persuading them to reconsider their decisions
e. New-task buying
i. The most complex category of business buying, new-
task buying, refers to first-time or unique purchase
situations that require much effort by decision makers
ii. It resembles extended problem solving in consumer
markets and requires a purchaser to carefully consider
alternative offerings and vendors, possibly for parts or
supplies it has never purchased before
iii. It involves a set of decisions, including developing
product requirements, searching out potential suppliers,
and evaluating proposals
f. Reciprocity
i. Reciprocity is the practice of buying from suppliers who
are also customers, a controversial practice in a number
of procurement situations
ii. It has been common in industries featuring
homogeneous products with similar prices (chemical,
paint, petroleum, rubber, and steel industries)
iii. Reciprocity suggests close links among participants and
can add to the complexity of B2B buying behavior for
new suppliers trying to compete with preferred vendors
iv. It can be viewed by the government as an attempt to
reduce competition, more common and accepted
outside the U.S
2. Analysis tools
a. Professional buyers improve purchase decisions using two
tools: value analysis and vendor analysis
b. Value analysis examines each component of a purchase to
either delete the item or replace it with a more cost-effective
substitute
c. Vendor analysis carries out an ongoing evaluation—often
through a formal process or using checklist—of a supplier’s
performance in various categories (price, EDI capability, back

orders, delivery times, liability insurance, and attention to special

requests)
1. What are the four classifications of business buying situations? The four
classifications of business buying are (1) straight rebuying, (2) modified
rebuying, (3) new-task buying, and (4) reciprocity.
2. Differentiate between value analysis and vendor analysis. Value analysis

examines each component of a purchase in an attempt to either delete the item
or replace it with a more cost-effective substitute. Vendor analysis carries out an
ongoing evaluation of a supplier’s performance in categories such as price, EDI
capability, back orders, delivery times, liability insurance, and attention to special
requests.
Chapter Objective 8: Explain the buying center concept.

Key Terms: buying center, users, gatekeepers, influencers, decider, buyer
1. The buying center concept
a. A firm’s buying center encompasses everyone who is involved in
any aspect of its buying activity
b. Participants seek to satisfy personal needs, such as
participation or status, as well as organizational needs
c. A buying center is not part of a firm’s formal organizational
structure—it is an informal group that varies in composition and
size, depending on purchase situations and firms
2. Buying center roles
a. Buying center participants play different roles in the purchasing
decision process
b. Common roles include: users, gatekeepers, influencers, the
decider, and the buyer
i. Users are those who actually use the good or service,
with influence ranging from negligible to extremely
important (initiating purchase actions by requesting
products, helping develop specifications)
ii. Gatekeepers control the information that all buying
center members review (distributing data, deciding
which salespeople can meet with certain individuals)
iii. Influencers affect the buying decision by supplying
information to guide evaluation of alternatives or by
setting buying specifications (guiding the decision
through technical staff or outside consultants)
iv. The decider chooses a good or service, although
another person may have the formal authority to do so
(deciding through a buyer or design engineer, often with
the approval of a high-level executive)
v. The buyer has the formal authority to select a supplier
and to implement the procedures for securing goods
and services (making the final decision, usually
surrendering power to an influential member of the firm
such as purchasing manager)

c. B2B marketers need to determine the specific role and decision-

making influence of each buying-center participant, then tailor
presentations to suit them
d. They have found that initial and extensive contacts with the firm
often fail to reach the actual buying center participants who have
the greatest influence over a decision
3. International buying centers
a. Two distinct characteristics differentiate international buying
centers from domestic ones:
i. Marketers may have trouble identifying members of
foreign buying centers due to cultural differences in
decision making
ii. A buying center in a foreign company often includes
more participants than U.S. companies involve
b. Global B2B marketers must recognize and accommodate this
greater diversity of decision makers
c. International buying centers can change in response to political
and economic trends. (For example, European firms closed
branches and consolidated buying centers with the formation of
the EU)
1. Identify the five roles of people in a buying center decision. There are five
buying center roles: users (those who use the product), gatekeepers (those who
control the flow of information), influencers (those who provide technical
information or specifications), deciders (those who actually choose the product),
and buyers (those who have the formal authority to purchase).
2. What are some of the problems that U.S. marketers face in dealing with
international buying centers? International buying centers pose several
problems. First, there may be cultural differences in decision-making methods.
Second, a buying center in a foreign company typically includes more
participants than is common in the United States. Third, international buying
centers can change in response to political and economic conditions.
Chapter Objective 9: Discuss the challenges of and strategies for marketing to government,
institutional, and international buyers.
Key Terms: 18-20
PowerPoint Basic:: 19-21
1. Developing effective business-to-business marketing strategies
a. Marketing strategies must be based on a firm’s buying behavior
and the buying situation in that specific industry or market
b. Three market segments with unique challenges for B2B selling
include units of government, institutions, and international units
2. Challenges of government markets
a. The federal, state, and local governments together make up the
largest customer group in the U.S.—more than 90,000
government units buy products of all kinds
b. To compete, marketers must understand the unique challenges
of selling to government units

i. Government purchases often involve dozens of

interested parties who specify, evaluate, or use the
purchased goods or services
ii. These parties may not work within the government
agency that officially handles a purchase
iii. Government purchases are also influenced by social
goals such as maintaining diversity among suppliers and
contracting to minorities
c. Contractual guidelines are an important influence in selling to
government markets
i. In fixed-price contracts, the seller and buyer agree to a
set price before finalizing the contract, offering potential
for more profit but carrying risk of unforeseen expenses
ii. In cost-reimbursement contracts, the government pays
the vendor for allowable costs ,including profits, incurred
during performance of the contract ,so they’re less risky
to the seller
d. Government purchasing procedures
i. Many U.S. government purchases go through the
General Services Administration (GSA), which buys
goods and services for itself and other agencies
ii. The GSA is the federal government’s business
manager, purchasing billions of dollars worth of products
annually
iii. The Defense Logistics Agency (DLA) serves the same
function for the Department of Defense
iv. By law, most federal purchases must be awarded on the
basis of bids, or written sales proposals, from vendors
v. To do this, federal buyers set specifications—detailed
descriptions of needed items—for prospective bidders
vi. U.S. government purchases must comply with the
Federal Acquisition Regulation (FAR), a 30,000-page
guideline originally designed to cut red tape, but now
complicated by numerous exceptions
vii. State and local government purchasing procedures are
similar, though they often give preference to in-state
bidders
viii. Government spending patterns may differ from those in
private industries, partly due to the tendency to wait until
the end of a fiscal year to spend
e. Online with the federal government
i. Government procurement professionals are streamlining
the purchasing process with technology and online
catalogs
ii. Vendors can sell to the government through electronic
options—Web sites, federally issued credit cards, and
government-sponsored electronic ordering systems
iii. Despite these advances, many government agencies
remain less sophisticated than private-sector
businesses in their purchasing systems
iv. The Pentagon is still coping with purchasing procedures
put into effect 50 years ago, though it’s now in the
process of streamlining defense contracting

3. Challenges of institutional markets

a. Institutional buyers come from organizations such as schools,
hospitals, and not-for-profit agencies
b. Institutional markets are characterized by widely diverse buying
practices
i. Buying practices can differ between institutions of the
same type and within a single institution; multiple-buying
influences may affect decisions
ii. Group purchasing is an important factor in institutional
markets because many organizations join cooperatives
in order to pool their resources and get group discounts
c. Diverse practices in institutional markets pose special
challenges for B2B marketers
i. They must maintain flexibility in developing strategies for
dealing with a range of customers
ii. Buying centers can work with varying members,
priorities, and levels of expertise
iii. Discounts and effective distribution functions play
important roles in obtaining and keeping institutions as
customers
4. Challenges of international markets
a. To sell successfully in international markets, business marketers
must consider buyers’ attitudes and cultural patterns within the
areas where they operate
i. Asian markets often require more personal relationships
ii. Companies that want to expand globally often need to
establish joint ventures with local partners
b. Local industries, economic conditions, geographic
considerations, and legal restrictions must also be considered in
international marketing
c. Remanufacturing—the process of restoring worn-out products to
like-new condition—can be an important marketing strategy in a
nation that cannot afford to buy new products
d. Developing countries often purchase remanufactured machinery
for 35 to 60 percent less than new equipment
e. Foreign governments represent an important business market.
i. In many countries, the government or state-owned
companies dominate certain industries
ii. Depending on the nation, these might include public
utilities, telecommunications, computer networks,
construction of airports and highways, or other
infrastructure sales
iii. Sales to a foreign government can involve an array of
regulations
5. Strategic Implications of Marketing in the 21st Century
a. Marketers must first understand the buying practices that govern
the segment they are targeting
b. B2B marketers must identify the roles played by the members of
their firms they deal with and the amount of influence they exert
on purchase decisions
c. Marketers must be careful to direct their marketing efforts when
dealing with federal agencies and international clients

1. What are some influences on government purchases? Social goals and

programs often influence government purchases.
2. Why is group purchasing important in institutional purchases? Group

purchasing is an important factor because many institutions join cooperative
associations to get quantity discounts.
3. What special factors influence international buying decisions? An effective

international business marketer must be aware of foreign attitudes and cultural
patterns. Other important factors include economic conditions, geographic
characteristics, legal restrictions, and local industries.
ANSWERS AND TEACHING NOTES TO CHAPTER EXERCISES
Chapter 6 Assurance of Learning Review
1. Which is the largest segment of the business market? What role does the Internet play in the B2B
market? What role do resellers play in the B2B market?
The commercial market is the largest segment of the business market, including all individuals and firms
that acquire products to support—directly or indirectly—the production of other goods and services. More
than 93 percent of Internet sales are now B2B transactions, a figure that has risen sharply in recent
years. Many firms have set up private Internet portals in order to purchase or sell products in the B2B
market. Resellers are marketing intermediaries—such wholesalers and retailers—who operate in the
trade sector.
2. How is customer-based segmentation beneficial to B2B marketers? Describe segmentation by

purchasing situation.
Customer-based segmentation divides a B2B market into homogeneous groups based on buyers’
product specifications. These buyers have much more precise and complex needs than consumers do,
so business products often fit narrower market segments than consumer products. In segmentation by
purchasing situation, B2B marketers adapt their strategies to organizational buyer characteristics. They
may appoint centralized purchasing departments to serve the entire firm, or allow each unit to handle its
own buying, and a supplier may deal with one purchasing agent or several decision makers at various
levels. Each of these structures results in a different buying behavior.
3. How do the sizes and numbers of buyers affect B2B marketers? Why are buyer-seller relationships so
important in B2B marketing?
Size and number of buyers affect B2B markets because the business market features a limited number
of buyers and in many cases they are geographically concentrated. And many buyers in limited-buyer
markets are large organizations. Buyer-seller relationships are important because they tend to be
ongoing and are often more intense. Communication between buyers and sellers is even more important
in the B2B market than it is in the B2C market. Strong communication among organization personnel is
needed because satisfying one customer can mean the difference in millions of dollars for a firm. Close

cooperation, whether formal or informal, enables companies to meet buyers’ needs for quality products
and customer service.
4. Give an example of each type of demand.
The five major categories of demand are derived, volatile, joint, inelastic, and inventory adjustments.
Examples: Derived—demand for parts and supplies (microprocessor) is derived by demand for a finished
product (cell phone). Volatile—derived demand creates volatility in business market demand (new
construction decline, cement manufacturer gets fewer orders). Joint—demand for one business product
is related to the demand for another one (a large fast-food chain introduces a new orange juice shake
that quickly becomes popular, demand rises so growers need to produce more oranges). Inelastic—
demand throughout an industry will not change significantly due to price change (price of lumber drops,
but a construction firm probably won’t buy more for that reason only). Inventory adjustments—affect
business demand as needs for raw materials shift (a certain amount of video game parts are normally
considered adequate inventory, but a particular game quickly becomes the latest fad so 20 times the
normal amount of parts are now needed).
5. For what reasons might a firm choose an option other than making a good or service in-house? Why is
outsourcing on the rise? How is offshoring different from outsourcing?
A firm might decide to buy or lease a product—rather than making the product in-house—if the cost of
the product is lower or the product quality is higher. In outsourcing, a company acquires inputs from
outside vendors for goods and services formally produced in house. It’s on the rise because it can cut
costs significantly and allow a firm to narrowly concentrate its resources on specific core products while
getting access to talent or expertise outside the firm. Offshoring refers to moving high-wage U.S. jobs to
lower-cost overseas locations, so that it can improve efficiency and cut costs on functions like customer
service, human resources, accounting, information technology, manufacturing, and distribution.
6. What are some of the environmental factors that may influence buying decisions? Identify
organizational factors that may influence buying decisions. Describe the role of the professional buyer.
Some environmental factors that affect purchasing decisions include economic, political, regulatory,
competitive, and technological influences. Changes in any of these conditions may affect the demand for
a firm’s products by business and institutional customers and therefore a number of purchasing
decisions. Organizational factors include organizational structure, policies, and purchasing style
influences—particularly whether a firm has centralized or decentralized buying procedures. Professional
buyers are technically qualified employees responsible for securing needed products for a firm at the best
possible prices. Some types of buyers include merchandisers, category advisors or category captains,
national accounts buyers, or corporate buyers.
7. Why are there more steps in the organizational buying process than in the consumer buying process?
Explain why feedback between buyers and sellers is important to the marketing relationship.
The organizational buying process often involves a sequence of eight activities. The additional steps
arise because business buying decisions introduce new complexities that do not affect consumers. This
involves understanding the needed characteristics and qualities of goods and services, reviewing
proposals and bids, getting feedback, and often working with multiple individuals or departments.
Feedback between buyers and sellers—about such things as product quality, delivery performance,
prices, and technical knowledge—helps to establish long-term relationships between them—relationships
that can benefit both parties. This can also ensure straight rebuying, where the consumers reorder the
product due to satisfied past needs.

8. Give an example of a straight rebuy and a modified rebuy. Why is new-task buying more complex than
the first two buying situations?
Straight rebuying involves a customer who regularly makes the same decision and reorders a product
that has satisfied past needs (ordering printer paper). Modified rebuying involves a purchaser who is
willing to reevaluate available options (considering choices before purchasing desk chairs). New-task
buying refers to a customer in a first-time or unique purchase situation, requiring more time and effort to
consider alternative offerings and vendors for items never purchased before (developing product
requirements, searching out potential suppliers, and evaluating proposals for construction of a new office
facility).
9. What buying center participant is a marketer likely to encounter first? In the buying center, who has the
formal authority to make a purchase?
A marketer is likely to encounter a gatekeeper first, the person who controls the information that all
people in the buying center receive. The buyer has the formal authority to select a supplier and make a
purchase. The buyer often surrenders this power to more influential members of the organization, though.
10. Describe some of the factors that characterize U.S. government purchases. Why are institutional
markets particularly challenging?
Government purchases typically involve dozens of interested parties who may or may not be part of the
government agency that is officially handling the purchase. Another challenge is that government
purchases are influenced by social goals and programs. Institutional markets are challenging because of
their diverse buying influences and practices. Group purchasing is an important factor in institutional
markets, since many institutions join cooperative associations to get quantity discounts. Institutional
marketers must be flexible enough to develop strategies for dealing with a range of customers. Discounts
and effective distribution play an important role.
Projects and Teamwork Exercises
1. Have students name the type of commercial product they chose (such as computer chips, flour for
baking, paint, equipment, or another product) and then share their research. How did they decide on its
foreign market potential? How might they market this product in the global marketplace? Which particular
nations did they have in mind? How did the nature of the product affect their ideas about marketing and
target location?
2. Ask pairs of students to discuss the business products they selected and in which of the two
categories—capital or expense—they fell. How many chose capital products? Expense products? In what
way did they determine how derived demand will affect the sales of the product chosen? Have them
share their charts and results. How did results differ based on category?
3. Ask teams to share their ideas as buyers for a firm such as Olive Garden, Dick’s Sporting Goods,
Marriott, or another firm. Stress that a logical buying process for a new-task purchase is often a complex
process involving many steps—determining specifications for what is needed, understanding options
from various suppliers, asking for proposals, reviewing bids, getting feedback from all involved in the
process, etc. Did the teams skip any steps? Is it possible to skip some of these steps and still make a
rational and financially sound decision?
4. Have teams talk about their hypothetical team-selling effort for the packaging of products
manufactured by a food company such as Kraft or General Mills. Ask each member assigned to a
particular element—such as package design, delivery, and payment schedules—to talk about what ideas
and actions that could be taken to boost sales. How did design, materials, color, labeling, delivery,

merchandising display, shelf space and placement, and payment come into play? Did they think of other
elements involved in packaging?
5. Ask students to share their research on the U.S. government’s purchasing process. What department
or agency did they choose? Why? (Examples given were EPA, NASA, or DHHS, but others may have
been chosen.) What types of purchases does the agency make? What particular items or services are
involved? Did they find out about contract amounts and suppliers? What about the buying process? Was
this information readily available to the public? What did they learn overall about how the government
spends taxpayer dollars?
Critical-Thinking Exercises
1. Imagine that you are a wholesaler for dairy products such as yogurt and cheese, which are produced
by a cooperative of small farmers. Describe what steps you would take to build relationships with both the
producers—farmers—and retailers such as supermarkets.
Make sure students understand the role of a wholesaler—and the reasons why wholesalers exist—before
beginning the exercise. It will be especially helpful for students to carefully consider how exactly this
wholesaler is meeting the needs of both the producers and retailers. What advantages are they—or
should they—be offering?
2. Describe an industry that might be segmented by geographic concentration. Then identify some of the
types of firms that might be involved in that industry. Keep in mind that these companies might be
involved in other industries as well.
Students should be able to complete the exercise with only minimal guidance. Examples of business
clusters—software companies (Silicon Valley), US automobile companies clustered in Detroit—should
help students get started.
3. Imagine you are in charge of making the decision to lease or buy a fleet of automobiles for the
limousine service for which you work. What factors would influence your decision and why?
If students are having trouble with this exercise, ask them to list the advantages of buying versus leasing
a personal vehicle. Then ask them how many of the advantages of buying versus leasing apply to a
business situation.
4. Do you think online selling to the federal government benefits marketers? What might be some of the
drawbacks to this type of selling?
Students need to carefully consider the challenges of marketing to the government and explain whether
or not the Internet helps to address these challenges.
Ethics Exercises
Suppose you work for a well-known local restaurant, and a friend of yours is an account representative
for a supplier of restaurant equipment. You know the restaurant owner is considering upgrading some of
the kitchen equipment. Although you have no purchasing authority, your friend has asked you to arrange
a meeting with the restaurant owner. You have heard unflattering rumors about this supplier’s customer
service.
1. Would you arrange the meeting between your friend and your boss?
2. Would you mention the customer-service rumors either to your friend or your boss?

3. Would you try to influence the purchase decision in either direction?
This exercise raises a difficult ethical dilemma. Where does your loyalty lie—with your friend or your
employer? (Most students will say your employer.) If you have no personal knowledge of the supplier’s
alleged poor customer service, should you pass along a mere rumor? What was the source of the rumor?
Internet Exercises
1. Marketing to airlines. Boeing and Airbus are the two major manufacturers of commercial aircraft. Visit
the Web sites of both firms. After you review the Web sites, prepare a report that compares and contrasts
the marketing strategies employed by both firms.
www.boeing.com/commercial/
www.airbus.com/index.php?id = 1217
Students are expected to analyze the business markets, buying process, important buying centers,
demand patterns, sourcing, business buying situations, as well as the factors that influence the purchase
decisions.
2. Marketing to small businesses. According to some experts, there are important differences between
marketing to large businesses compared with small businesses. Go to the Web sites listed here and
review the material. Prepare a summary you can use in a class discussion on the topic.
http://www.entrepreneurslife.com/thoughts/channel/b2bmarketing/
http://www.score.org/sell_business_12_steps.html
http://smallbiztrends.com/2007/02/five-mistakes-whenselling-to-small-business-owners.html
The students can also visit various Web sites that point out the important differences between marketing
to large businesses compared with small businesses. The discussion can be based on the various
strategies used by small, medium, and large businesses across the U.S. or around the world. Small
businesses in developing strategies can be studied for more insights on the issue.
3. Selling to the federal government. The General Services Administration (GSA) purchases billions of
dollars worth of goods and services for various federal agencies. Visit the GSA’s Web site to learn more
about selling to the federal government. What products does the GSA purchase? Who may sell products
to the federal government? What are the requirements to become a federal government vendor?
http://www.gsa.gov/Portal/gsa/ep/home.do?tabId = 0
Students are to visit the Web site to answer these questions.
Case 6.1 Peerless Pump Puts Customers First—Questions for Critical Thinking
1. Do you think Peerless focuses on safety, quality, schedule, and cost in the right order to meet its
customers’ and distributors’ needs? Why or why not? How do you think a B2B company can most
accurately determine what its business customers need and want?
Student opinions will vary. Some may be of the opinion that cost should rank higher in the list. However,
Peerless involves everyone associated with the company, from suppliers to employees to distributors to
end users in most aspects of its operations. This helps them establish priorities that are relevant to
industrial customers. Their growth also indicates the success of their approach.

2. What benefits does Peerless gain from helping its customers evaluate system repair as a potential
alternative to costly replacement of a pump system? What strategies and business tools do you think the
company must have in place to fulfill this customer need? Why is it important for Peerless to address it, if
it is not as profitable for the firm as selling a new system?
In order to minimize downtime from breakdowns and help customers make the right repair/replace
decision, Peerless advocates ongoing training of its engineers and its customers in preventive
maintenance and management of spare parts inventories. The company’s strategy calls for maintaining a
continuously open line of communication between Peerless and its end-user customers. Such
communication in itself is a core benefit of this strategy. Even though repairs is not as profitable as new
machine sales, the increased level of interaction with end users and continued support provided focuses
on long-term relationships that will definitely add to the bottom-line.
Video Case 6.2 Business-to-Business Marketing at Flight 001—Questions for Critical Thinking
1. How might marketing corporate gift products to companies such as Orbitz affect sales at Flight 001's
retail stores?
Since Flight 001 doesn't use paid advertising, the company must find other means of promoting its
business. The firm uses its corporate gifting program—marketing employee recognition products to large
corporations—as a way to get Flight 001 products in the hands of its ultimate retail customer: travelers.
Individual employees, having received a Flight 001 branded product as a corporate gift, may later decide
to purchase additional Flight 001 products in retail stores.
2. What potential conflicts might arise between Flight 001's wholesale business to Jet Blue and
Northwest and Flight 001 retail business? Do you think their wholesale and retail strategy is sound? Why
or why not?
Answers will vary. However, B2B involves marketing processes and methods that are different than those
used for selling to the B2C retail market. Selling to both markets could potentially strain Flight 001's
resources and lead to inefficiencies and unfocused marketing efforts. If selling in B2B markets generates
large revenues, Flight 001 may need to change its business strategy to fully maximize that opportunity.
COLLABORATIVE LEARNING EXERCISES
The Business-to-Business Market
Purpose:
To underscore the similarities and differences between the B2B and the B2C markets
Background:
While the business-to-business market encompasses a huge percent of our economy, it is largely
invisible to many students. This quick brainstorming exercise is designed to highlight the B2B
market by comparing it to the B2C market.
Relationship to Text:
Nature of the Business Market

Estimated Class Time:

About 10 minutes
Preparation/Materials:
None needed
Exercise:
Ask your students to brainstorm products that are purchased by both organizations and
individuals. Encourage them to stretch. What businesses would buy prepared food? Clothing?
Washing machines? For what reasons? What individuals would buy bricks? Lumber? Machines?
For what reasons? When you have filled the board with examples, guide them through a
discussion. Do the products meet different needs in the business market? Would business
customers evaluate the same products according to different criteria? Why? How? This exercise
typically serves as a nice introduction to the chapter, since it spurs student thinking about key
topics in the B2B market.
Questions for Reflection:

• What are the career opportunities in the B2B market?
• What skills would you need to succeed in this environment?
Business-to-Business Marketing Strategy
Purpose:
To provide a hands-on opportunity to consider B2B marketing strategy
Background:
Successful B2B marketing relies on an effective strategy, which in turn depends on fully
understanding the overall market, the target customers, and the strategic options. This exercise—
which works best after you cover the key points in the chapter—is designed to help students
apply material than can initially seem somewhat abstract.
Characteristics of the B2B Market

About 20 minutes
You may want to copy the scenario and goals (below) for each student.
Exercise:
After you have covered the characteristics of the B2B market, divide your students into small
groups for a brief case study exercise.
Scenario: You and your team were just hired as strategic marketing consultants for a small
company that specializes in Web site translation. The company, which is two years old, translates
and localizes Web sites for organizations with an international presence. They specialize in
Spanish, German, Japanese, and Mandarin. The company has done excellent work for a handful
of low-profile, medium-sized businesses (a wood furniture wholesaler, a trendy clothing retailer,
and a plastic molding producer). Now it would like to expand its business, which is where you
come into play.

Goal: In the next 10 to15 minutes, you and your team will develop a concise strategic overview to
prepare for an upcoming lunch with the CEO of the company. You must briefly address the
following issues. How would you segment the market? Who would you target? Why? How would
you approach the market? Write a discussion outline, including a brief description of your target,
and a five-step marketing strategy (a sentence or two per step). Be sure to clarify any
assumptions that you make along the way.
When the teams have completed their outlines, ask each group to present to the class. You may
be surprised at the diversity and creativity of their approaches.

• What kind of information would you need in order to do an actual strategic marketing plan?
• In general, how does B2B strategy differ from B2C strategy?
Buying Versus Making
Purpose:
To examine the key considerations behind a decision to buy component parts instead of
producing them internally
Background:
A huge number of products contain multiple components purchased from outside suppliers. This
exercise is designed to explore the issues that manufacturers consider in making those purchase
decisions, plus the related marketing implications.
The Make, Buy, or Lease Decision

About 10 minutes
None needed
Exercise:
Divide your class into groups and ask each group to ensure that at least one member has a
backpack. Instruct the groups to examine the backpack. What elements make up the product
(zippers, handles, nylon material, etc.)? Which parts do they think were purchased, and which
were manufactured? Why? What do they think the manufacturer was seeking when choosing
component producers (price, durability, style, etc.)? Ask the groups to share their responses with
the class, and keep a list on the board of the components and the suspected decision criteria.
When the list is complete, ask your class to consider each component from the supplier’s
perspective. How can suppliers most effectively position themselves? How can they prevent
themselves from becoming a simple price-based commodity?

• What are the advantages and disadvantages of buying components from outside
manufacturers?
• How might the quality of components impact consumer perceptions of the whole product? Do
brand name components change your purchasing decisions (e.g. “Intel inside,” or “Made with
Hershey’s chocolate”)?

• What are the ethical implications of “Made in America” labels for products manufactured with a
large percentage of foreign components?
Outsourcing
Purpose:
To highlight the impact of outsourcing on the key parties involved
Background:
Despite a number of hiccups, “off-shoring” (or outsourcing overseas) remains a powerful, well-
publicized trend in our economy. However, many companies also engage in more traditional
outsourcing, with some unpleasant consequences such as downsizings and layoffs. Many firms
lay off individual employees or entire departments, and then rehire some people as independent
contractors to perform the same services. This quick, discussion-based exercise is designed to
help students examine the impact of this phenomenon.
Outsourcing

About 5 to 10 minutes
None needed
Exercise:
Share with your class that companies sometimes choose to layoff individuals and then rehire
those people as independent contractors to perform the same services (examples range from
janitors to copy editors to executive-level consultants). Ask your students to identify the
advantages and disadvantages of this kind of outsourcing, both for the firm and for the individuals
involved. Help them understand that an entrepreneurial spirit and a strong marketing plan can
transform these circumstances into a significant opportunity for the laid-off workers.

• Should marketing ever be outsourced? When? Why?
• Who profits from outsourcing? Who suffers?
• How can a layoff be seen as an opportunity for the average American worker?
The Business Buying Process
Purpose:
To trigger student thinking about personal sales in the B2B market
Background:
Given that multiple parties are usually involved in significant B2B purchases, suppliers often use a
team-based sales approach. The purpose is typically twofold: (1) to demonstrate the importance
of the account to key decision makers and (2) to cover more fully the range of decision
influencers. This exercise is designed to help students better understand team-based B2B selling
through role-playing.

Personal Selling

About 20 to 30 minutes
You might want to make a copy of the scenario and goals (below) for each student.
Exercise:
Divide your class into no more than five groups (please note that this exercise works best for
classes that have fewer than 40 students). Distribute the sales scenario.
Scenario: You are a relatively new sales representative for a large cable programmer, and your
key goal for the year is to convince the large cable systems in your area to carry your company’s
new cable network. You have just secured a five-minute appointment with Chris, the director of
programming for your largest system. You haven’t ever met Chris in person, and you know that
no one from your company has called on this system for quite some time. (The last person to
handle your territory was fired for poor customer service.) Your manager—thrilled that you
generated this opportunity—has decided to accompany you to this brief meeting.
Goal: In the next five minutes your group—representing the sales team—must prepare the sales
representative and the sales manager to fully leverage the chance to sell your network to this
pivotal system.
Instruct each group to choose a sales rep and a manager to role-play the sales call for the class.
For the sake of fairness, you may want to role-play the client (Chris) for every group. After each
role-play session, ask the class to identify the strengths of the approach and the opportunities for
improvement. Encourage students to consider the following issues: Was the goal of each sales
call clear? Did the sales reps attempt to accomplish too much or too little? Did they build rapport
and identify the client’s needs? Did they identify other parties who would influence the
programming decision? Did they establish clear steps for action? Did they respect the client’s
time? Most classes develop a surprising range of approaches to this fun exercise.

• In what situations would team selling be most effective? Could it ever be considered
counterproductive?
• How much do listening skills come into play during sales presentations?
• What are the benefits and drawbacks of a career in B2B sales?

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116 Part 2 Understanding Buyers and Markets

Contemporary Marketing 2013 Update 15th

Download full test bank at :

BUSINESS-TO-BUSINESS (B2B) MARKETING

Copyright ©2013 by South-Western, a division of Cengage Learning. All rights reserved.

Changes in the Updated Edition

The chapter has been updated and revised in several ways:

• Collaborative Learning Exercises are provided in several areas related to business-to-business

Copyright ©2013 by South-Western, a division of Cengage Learning. All rights reserved.

Copyright ©2013 by South-Western, a division of Cengage Learning. All rights reserved.

g. Final consumers are often end users of products sold to

Copyright ©2013 by South-Western, a division of Cengage Learning. All rights reserved.

Assessment check questions

1. Define B2B marketing. Business-to-business, or B2B, marketing deals with

2. What is the commercial market? The commercial market consists of

Chapter Objective 2: Describe the major approaches to segmenting business-to-business (B2B)

Copyright ©2013 by South-Western, a division of Cengage Learning. All rights reserved.

Copyright ©2013 by South-Western, a division of Cengage Learning. All rights reserved.

Assessment check questions

2. What is the NAICS? The North American Industry Classification System

Copyright ©2013 by South-Western, a division of Cengage Learning. All rights reserved.

ii. Every five years, its Census of Manufacturers and a

Copyright ©2013 by South-Western, a division of Cengage Learning. All rights reserved.

d. Global sourcing forces sellers to adopt a new mindset or to even

Copyright ©2013 by South-Western, a division of Cengage Learning. All rights reserved.

90-day supply, the change will bombard the raw-

Assessment check questions

1. Why is geographic segmentation important in the B2B market? Certain

2. In what ways is the buyer-seller relationship important in B2B marketing?

3. What is global sourcing? Global sourcing involves contracting to purchase

Chapter Objective 4: Discuss the decision to make, buy, or lease.

Copyright ©2013 by South-Western, a division of Cengage Learning. All rights reserved.

i. Make the good or provide the service in-house

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iv. Customer relationships and customer service are at risk

Assessment check questions

1. Identify two potential benefits of outsourcing. Outsourcing allows firms to

2. Identify two potential problems with outsourcing. Many companies discover

Chapter Objective 5: Describe the major influences on business buying behavior.

Copyright ©2013 by South-Western, a division of Cengage Learning. All rights reserved.

iv. Personal selling skills and user preferences carry more

Assessment check questions

2. What are the advantages and disadvantages of multiple sourcing? Spreading

Copyright ©2013 by South-Western, a division of Cengage Learning. All rights reserved.

Chapter Objective 6: Outline the steps in the organizational buying process.

2. List the steps in the organizational buying process. The steps in

Chapter Objective 7: Classify organizational buying situations.

Copyright ©2013 by South-Western, a division of Cengage Learning. All rights reserved.

i. Straight rebuying, the simplest buying situation, involves

Copyright ©2013 by South-Western, a division of Cengage Learning. All rights reserved.

orders, delivery times, liability insurance, and attention to special

Assessment check questions

2. Differentiate between value analysis and vendor analysis. Value analysis

Chapter Objective 8: Explain the buying center concept.

Copyright ©2013 by South-Western, a division of Cengage Learning. All rights reserved.

c. B2B marketers need to determine the specific role and decision-

Assessment check questions

Copyright ©2013 by South-Western, a division of Cengage Learning. All rights reserved.

i. Government purchases often involve dozens of

Copyright ©2013 by South-Western, a division of Cengage Learning. All rights reserved.

3. Challenges of institutional markets

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Assessment check questions

1. What are some influences on government purchases? Social goals and