7

Analyzing
Business Markets

Marketing Management, 13th ed

 Organizational Buying

Decision-making process by which

formal organizations establish the
need for purchased products and
services, and identify,
evaluate, and choose among
alternative brands and suppliers.

4-2
 Types of Business Customers

Price- Solution-
Oriented Oriented
(transactional selling,
(consultative selling)
price is everything)

Gold- Strategic-
Standard Value
(quality selling) (enterprise selling)

4-3
 Top Business Marketing Challenges

• Expand understanding of customer needs

• Compete globally as China and India
reshape markets
• Master analytical tools and improve
quantitative skills
• Reinstate innovation as an engine of growth

Copyright © 2009 Pearson Education, Inc.  Publishing as Prentice Hall 7-4

 Characteristics of Business Markets

• Fewer, larger • Multiple sales calls

buyers • Derived demand
• Close supplier- • Inelastic demand
customer • Fluctuating demand
relationships
• Geographically
• Professional
concentrated buyers
purchasing
• Direct purchasing
• Many buying
influences

Copyright © 2009 Pearson Education, Inc.  Publishing as Prentice Hall 7-5

 Buying Situation

Straight
Straight rebuy—routine
rebuy—routine

Modified
Modified rebuy—modify
rebuy—modify product
product
specification,
specification, prices,
prices, delivery
delivery
requirements,
requirements, or or other
other terms)
terms)

New
New task—purchase
task—purchase of of
new
new product
product or
or service
service

4-6
 Of Concern to Business Marketers

• Who are the major decision

participants?
• What decisions do they influence?
• What is their level of influence?
• What evaluation criteria do they use?

Copyright © 2009 Pearson Education, Inc.  Publishing as Prentice Hall 7-7

 The Buying Center
• Approvers—authorized
• Initiators--request proposed actions of
• Users—who use deciders or buyers
• Influencers—help • Buyers—formal
authority to select the
define specification supplier and arrange the
• Deciders—choose purchase terms
the product • Gatekeepers—power to
requirements prevent sellers or
information from
reaching member of the
buying center

Copyright © 2009 Pearson Education, Inc.  Publishing as Prentice Hall 7-8

 Stages in the Buying Process:
Buyphases
• Problem recognition
• General need description
• Product specification
• Supplier search
• Proposal solicitation
• Supplier selection
• Order-routine specification
• Performance review

Copyright © 2009 Pearson Education, Inc.  Publishing as Prentice Hall 7-9

 Purchasing Orientations

Buying
(short term and tactical, lowest
price for a given level of quality,
commoditization, multi-sourcing)

Procurement
(quality improvement
and cost reductions)
Supply Chain
Management
(seamless from purchase
of raw materials to the
on-time arrival of finished
4-10
goods to end users)
 Handling Price-Oriented
Customers
Limit
Limit quantity
quantity purchased
purchased

Allow
Allow no
no refunds
refunds

Make
Make no
no adjustments
adjustments

Provide
Provide no
no services
services

4-11
 Product-Related Purchasing
Processes
Routine
Routine products
products
(low
(low value
value and
and cost
cost to
to the
the customer
customer
—office
—office supplies)
supplies)
Leverage
Leverage products
products
(high
(high value
value and
and costs
costs to
to the
the customer
customer
—engine
—engine pistons)
pistons)

Strategic
Strategic products
products
(high
(high value
value and
and costs
costs and
and involve
involve in
in
high
high risks—mainframe
risks—mainframe computers)
computers)

Bottleneck
Bottleneck products
products
(low
(low value
value and
and cost
cost and
and low
low
risks—spare
risks—spare parts)
parts)

4-12
 Categories of Buyer-Seller
Relationships
• Basic buying and selling
• Simple routine exchanges with
moderately high levels
cooperation and information
exchange
• Bare bones
• Adaptation by the seller and
less cooperation and
information exchange
• Contractual transaction
• Generally low levels of trust,
cooperation, and interaction;
exchange is defined by formal
contract
• customer’s needs without
Customer supply
• Competition rather than
cooperation is the dominant
form of governance
4-13
• Cooperative systems
• Coupled closely in operational
ways, although not legally
binding
• Collaborative
• Much trust and commitment
leading to true partnerships
• Mutually adaptive
• Much relationship-specific
adaptation for buyer and
seller, but without necessarily
strong trust or cooperation
• Customer is king
• The seller adapts to meet the
expecting much adaptation or
change on the part of the
customer in exchange