B2B Marketing PDF

Chapter 5 B2B Agenda Organizational Markets Characteristics of Organizational Markets Organizational Buying Behavior Organizational Markets Markets in which companies buy goods and services for their own use or for resale. Organizational Buyers Industrial firms Resellers...

Chapter 5 B2B Agenda Organizational Markets Characteristics of Organizational Markets Organizational Buying Behavior Organizational Markets Markets in which companies buy goods and services for their own use or for resale. Organizational Buyers Industrial firms Resellers Government units Non-profit Organizations Organizational Buyers Industrial firms reprocess a product or service they buy before selling it again to the next buyer. Resellers are wholesalers and retailers who buy physical products and resell them again without any reprocessing. Government units are the federal, provincial, regional, and municipal agencies that buy goods and services for the constituents they serve. Non-profit organizations buy to provide goods and services for the good of society. Characteristics of Organizational Markets Market Structure Fewer but larger buyers, geographically concentrated A small number of customers account for most of the company’s sales Size of market is substantially larger Characteristics of Organizational Markets Demand Derived demand – demand for industrial products and services is driven by demand for consumer products and services. Inelastic Demand – whether there is an increase or decrease of the price of a B2B product, customers will buy the same quantity Fluctuating demand – demand for business products and services fluctuate more than demand for consumer products and services. Characteristics of Organizational Markets Order process Size of the purchase is much larger than consumer buying More people are involved and influenced by the decisions Decision process Length of decision time is typically longer More complex, formalized and dependent More involvement, higher risk Organizational Buying Behaviour Products/services are technical and purchased on the basis of specifications Emphasis on delivery time, technical assistance, and price Technically qualified and professional buyers follow established purchasing policies and procedures Buying objectives and criteria are spelled out, as are procedures for evaluating sellers and products Buying over the Internet is widespread  Organizational Buying Behaviour Risk is high, so is fear! Organizational risk – risk of working with a particular organization Personal risk – risk of being reprimanded in some way for making the wrong decision  Organizational Buying Process + + + + + Product Supplier Proposal Supplier Performance Specification Search Solicitation Selection Review Order- Routine Specification Organizational Buying Process Roles in the buying centre / buying committee Users Gatekeepers Influencers Buying Centre Deciders Buyers Organizational Buying Process Users are the people in the organization who actually use the product or service, such as office staff who will use new word-processing software. Influencers affect the buying decision, usually by helping define the specifications for what is bought. Buyers have formal authority and responsibility to select the supplier and negotiate the terms of the contract. Deciders have the formal or informal power to select or approve the supplier that receives the contract. Gatekeepers control the flow of information in the buying centre. Organizational Buying Situations Long/ uncertain New Decision time and problem definition buy Modified buy Straight rebuy Short/ well defined Few Many Number of people in buying centre and number of suppliers considered Review Organizational Markets Characteristics of Organizational Markets Organizational Buying Behavior