Analyzing Business Markets: B2B and B2C Markets - PowerPoint PDF

Chapter 4: Analyzing Business Markets   Topics 1.Explain the key differences between B2C and B2B markets 2.Describe three buying situations: straight rebuy, modified rebuy, and new task 3.Define the role of the buying center: ”the Benefit Stack and the Decision-Maker Stack” 4. Describe the s...

Chapter 4: Analyzing Business Markets   Topics 1.Explain the key differences between B2C and B2B markets 2.Describe three buying situations: straight rebuy, modified rebuy, and new task 3.Define the role of the buying center: ”the Benefit Stack and the Decision-Maker Stack” 4. Describe the stages in the buying process 5. The video (watch this): “GE”—makes you understand how B2B works 6. Recap important points  What is Business Marketing (B2B Marketing or Industrial Marketing)? Marketing of a business’s goods or services to another business and/or to governments or nonprofits (rather than directly to individuals) (Cespedes and Narayandas 2013) Organizational Buying: “the decision-making process by which formal organizations establish the need for purchased products and services by which they identify, evaluate, and choose among alternative brands and suppliers” (p. 79) Commercial Institutional Governmental  Types of Business Market Customers Customers Customers Customers Manufacturers, Schools, Colleges, Federal government Construction, Service, Hospitals, State government Transportation firms, Foundations Local government Wholesalers, Libraries, Clinics… Retailers…  Comparisons Between B2B and B2C Markets B2B Markets B2C Markets Market A few, larger, concentrated Numerous, widely dispersed Structure/Custo geographically & strategically (e.g., NY., geographically CA, PA, IL, OH, NJ, MI—more than 50% of mer business buyers) Buying Behavior Group decision (involvement at many Individual decision functional levels) Buyer-Seller Long-term, close and strong relationship Short-term and little personal Relationship relationship (very little close contact) Process Lengthy, complex selling process Brief, retail-focused selling process Product Complex; technical; detailed Standardized specifications Price Negotiated price & competitive bidding Predetermined Promotion Emphasis on personal selling Emphasis on advertising In B2B, Personal selling (based on direct contact) is dominant because: Demand Compared Derived there to consumers, from demand aren’t asfor consumer many Media-stimulated potential business customers. for personal products The dollar purchases are much larger. use The products and services are more technical. Salespeople need to know about their customers’ businesses and about their customers’ customers’ businesses, too! Types of buying situations Getting the product on a regular basis Straight Rebuy : the fewest decisions from a company Want to change product specifications, prices, Modified Rebuy delivery requirement, or other terms. In this case, another or other suppliers can get an opportunity The first time buying : the most decisions on everything New Task including : product specifications, price limits, delivery opti and terms, service terms, payment terms, quantities,….  Participants in the Business Buying Process  The Buying Center: the decision-making unit of a buying organization : consists of all those individuals and groups who participate in the purchasing decision-making process, who share some common goals and the risks arising the decisions. CFO: Chief Financial Officer COO: Chief Operating Officer CEO: Chief Executive Officer Narayandas, Das (2005), “Building Loyalty in Business Markets,” Harvard Business Review, 83(9), p. 131-139. Stages in the Business-Buying Process 1.Problem/need recognition: Someone in the company recognizes a problem or need that can be met by acquiring a good or service 2. Need description: the buyer determines the needed item’s general characteristics, required quantity 3. Product specification: the buyer develops the needed item’s technical specifications 4. Supplier search: the buyer identifies suppliers through trade directories, contacts with other companies, trade advertisements, trade shows and the Internet 5. Proposal solicitation: the buyer invites qualified suppliers to submit written proposals. After this, the buyer invites a few qualified suppliers to make formal presentations. 6. Supplier selection: Before selecting a supplier, the buying center will specify what kinds of a supplier or suppliers it looks for. The buyer seeks the highest benefit package (i.e., economic, technical and service) providers (or suppliers) 7. Contact negotiation : After selecting suppliers, the buyer negotiates the final order, listing the technical specifications, the quantity needed, the expected time of delivery, return policies, warranties, etc. 8. Performance review: The buyer periodically reviews the performance of the chosen supplier(s)   Video: B2B: GE Healthcare Q: How is GE Health Care dealing with its B2B customers? (Watching this video will you understand how B2B works including the buying center) http://www.viddler.com/embed/1ac2bf 91/?f=1&autoplay=0&player=full&dis ablebranding=0   Recap important points 1.Differences Between B2C and B2B markets 2.Three buying situations: straight rebuy, modified rebuy, and new task: which one need the most/least d 3.Understand the concept of the buying center 4. Understand stages in the buying process—what states are companies going through? 5. Explain how GE deals with its B2B customers