Principles of Marketing: Chapter 6

Business buying process vs consumer buying process* (3)

The 3 main differences: - MARKET STRUCTURE (business market has {1} far fewer but larger buyers) and DEMAND( {2}inelastic and more {3} fluctuating demand because the total demand is not affected by price changes in short run, and the demand for business goods change more and quicker since a small % change in consumer demand can cause large increase in business demand- {4} derived demand) - the nature of the BUYING UNIT (more complex because 1. more decision participants and //2. more professional purchasing effort // 3.More time and money spent on purchasing ) -the TYPES OF DECISIONS (more complex buying decisions because more money, complex technical and economic considerations and more interactions among ppl) AND DECISION PROCESS INVOLVED (longer and more formalized/ buyer and seller are more dependent on each other-supplier development)

Total customer relationship management*

is a business strategy directed to understand, anticipate and respond to the needs of an enterprise's current and potential customers in order to grow the relationship value

modified rebuy*

is a buying situation in which the buyer wants to modify product specifications, prices, terms, or suppliers.

product specifications

BBP- the buying organization decides on and specifies the best technical product characterics for a needed item

gatekeepers

control the flow of information

buyers

have formal authority to select the supplier and arrange terms of purchase.

supplier search

BBP- buyer tries to find the best vendors

general need description

BBP - buyer describes the general characteristics and quantity of needed item

proposal solicitation

BBP- buyer invites qualified suppliers to submit proposals

supplier selection

BBP- buyer reviews proposals and selects a supplier or suppliers

order-routine specification

BBP-buyer writes the final order with the chosen supplier(s), listing specifics (the technical specifications, quantity needed, expected time of delivery, return policies and warranties)

new task*

a buying situation in which the buyer purchases a product or service for the first time.

derived demand*

business demand that is ultimately derives from the demand for consumer goods.

buying center*

consists of all the individuals and units that play a role in the business purchase decision-making process. -Users -Influencers -Deciders -Purchasers -Gatekeepers

users

those that will use the product or service.

performance review

BBP-buyer assesses the performance of the supplier and decides to continue, modify, or drop the arrangement

straight rebuy*

a buying situation in which the buyer routinely reorders something without any modifications.

Business buying process* (8 steps)

decision process by which business buyers determine which products and services their organizations need to purchase and then find, evaluate, and choose among alternative suppliers and brands 1. problem recognition 2. general need description 3. product specialization 4. supplier search 5. proposal solicitation 6. supplier selection 7. order-routine specification 8. performance review

problem recognition

first BBP- someone in the company recognizes a problem or need that can be met bu acquiring a good or service -Internal stimuli (Need for new product or production equipment) -External stimuli (Idea from a trade show or advertising)

deciders

have formal or informal power to select and approve final suppliers

influencers

help define specifications and provide information for evaluating alternatives.

business buyer behavior*

the buying behavior of the organizations that buy goods and services for use in the production of other products and services that are resold, rented or supplied to others.

supplier development

the process of collaborating with suppliers to ensure appropriate and dependable supply of products and materials for use in making products or resellng them to others