MKT 3010 Chapter 6 Study Guide PDF

MKT 3010: Chapter 6 Study Guide Marketing managers refer to any and all organizational customers collectively as the "business-to-business" market, or simply the B2B market. This includes businesses, governments, and nonprofit organizations. Producers of goods and services are organizational custo...

MKT 3010: Chapter 6 Study Guide Marketing managers refer to any and all organizational customers collectively as the "business-to-business" market, or simply the B2B market. This includes businesses, governments, and nonprofit organizations. Producers of goods and services are organizational customers. It is often easier to understand an organization's needs because most organizations make purchases for the same basic reason. They buy goods and services that will help them meet the demand for the goods and services that they in turn supply to their markets. Organizations intently focus on economic factors when they make purchase decisions. A seller's marketing mix should satisfy both the needs of the customer company and the needs of individuals who influence the purchase. Sellers therefore need to find an overlapping area where both can be satisfied. Individual needs within a customer organization include comfort, risk, job security, career advancement, and money/rewards. Profit, growth, survival, and innovation best describe needs of the company. Many organizations rely on specialists to ensure that purchases are handled sensibly. They are commonly called purchasing managers---buying specialists for their employers. In large organizations, purchasing managers are the buying specialists that marketers must contact in order to present products and services. Purchasing managers typically work within a firm's procurement department and have a great deal of clout. Deciders are the people in the organization who have the power to select or approve the supplier---often a purchasing manager but sometimes top management for larger purchases. Buyers are responsible for working with suppliers and arranging the terms of sale. Influencers can be engineering or R&D people who help write specifications or supply information for evaluating alternatives. Users are the people who will use the product being purchased. Deciders are the people in the organization who have the power to select or approve the supplier---often a purchasing manager but sometimes top management for larger purchases. Gatekeepers are people who control the flow of information within the organization.  Multiple buying influence involves users, influencers, buyers, deciders, gatekeepers in a buying decision. A buying center includes all the people who participate in or influence a purchase. Different people may make up a buying center from one decision to the next. A "buying center" may vary from purchase to purchase, as different people make up a buying center from one decision to the next. Step 1 is defining the problem, which begins with problem recognition. The final task in step 3 (model of organizational buying) is monitoring supplier performance. Organizational buyers often buy on the basis of a set of purchasing specifications---a written (or electronic) description of what the firm wants to buy. Most purchasing managers make purchases from suppliers who deliver on time and with high quality and keep the total costs associated with purchases low. E-commerce computer systems automatically handle a large portion of straight rebuys. Buyers program the decision rules that tell the computer how to order and leave the details of following through to the computer. New-task buying situations provide a good opportunity for a new supplier to make inroads with a customer. With a buyer actively searching for information, the seller's promotion has a much greater chance of being noticed and having an impact. Buyers gather information, solicit proposals and/or bids from suppliers, and finally choose a supplier in the decision-making process stage. New-task buying occurs when a customer organization has a new need and wants a great deal of information. A straight rebuy is a routine repurchase that may have been made many times before. Buyers probably don't bother looking for new information or new sources of supply. A straight rebuy is most likely to occur for paper supplies for the company's copy equipment, as this is a routine repurchase. Impersonal, nonmarketing sources used by organizational buyers include online searches, rating services, trade associations, news publications, product directories, online review sites, and social media. Personal marketing sources used by organizational buyers include salespeople, others from supplier firms, and trade shows. Vendor analysis is a formal rating of suppliers in all relevant areas of performance. Analysis might show that the best vendor is the one that helps the customer reduce costs of excess inventory, retooling of equipment, or defective parts. A vendor is least likely to sell to the buyer who has not bought from the vendor before and is doing a straight rebuy, as this is a routine repurchase and there is no reason for the buyer to seek new information or new sources of supply. A straight rebuy is a routine repurchase that may have been made many times before. Modified rebuy is the in-between process where some review of the buying situation is done, though not as much as in new-task buying. White paper is an authoritative report or guide that addresses important issues in an industry and offers solutions. Buyers like to read case studies---reports on a seller's website that describe how other companies solved a specific problem by using the seller's products. Competitive bids are the terms of sale offered by different suppliers in response to the purchase specifications posted by the buyer. Long-term commitments on larger order quantities would likely cause the supplier to lower its selling price, not raise it. Some relationships involve open sharing of information, whether by discussions between personnel or through information systems connected via the internet---a key facet of B2B e-commerce. However, firms resist sharing information if there's a risk that a partner might misuse it. Just-in-time delivery means reliably getting products there just before the customer needs them. Specific adaptations are usually made when the buying organization chooses to outsource---that is, contract with an outside firm to produce goods or services rather than to produce them internally. While it is true that the number of people employed in manufacturing has been shrinking, U.S. manufacturing output is higher than at any other time in the nation's history. The rate of growth, however, is fastest in countries where labor is cheapest. U.S. manufacturers tend to concentrate by industry. For example, most U.S. automobile manufacturing occurs in Michigan, Indiana, and Ohio. In the United States, many factories are concentrated in big metropolitan areas---especially in New York, Pennsylvania, Ohio, Illinois, Texas, and California. NAICS (North American Industry Classification System) codes help categorize all types of businesses and begin by listing general industry categories, which are marked by two-digit codes. Subcategories of those top-level groupings then receive codes of three or more digits, signifying greater detail about the products and services offered by firms. A marketing manager looking for data on the most general breakdown of a particular industry should follow the NAICS codes with the least number of digits. The NAICS code breakdowns become more detailed as the number of digits in the code increase. Many firms find their current customers' NAICS codes and then look at NAICS coded lists for similar companies that may need the same goods and services to identify prospective customers. Purchases by small service firms are often handled by whoever is in charge or their administrative assistant. This may be a doctor, lawyer, owner of a local insurance agency, hotel manager, or office manager. Most retail and wholesale buyers see themselves as purchasing agents for their target customers. They do not typically see themselves as sales agents for particular manufacturers. When a large wholesaler or retailer uses a buying committee, the seller may not get to present his or her story to the buying committee in person. This approach certainly reduces the impact of a persuasive salesperson. Retailers and wholesalers usually carry a large number of products. Most intermediaries buy their products on a routine, automatic reorder basis---that is, as straight rebuys. Most government customers buy by specification, using a mandatory bidding procedure. The Foreign Corrupt Practices Act, passed by the U.S. Congress in 1977, prohibits U.S. firms from paying bribes to foreign officials.