Business to Business Marketing CH7

New Buys

A customer purchases a product for the first time the buying decision is likely to be very involved, proceed through all six steps, and involve many members of the buying center. The most complex and challenging of the situations, and one that requires more time to be spent at each stage. New buys can range from capital equipment to components.

The buying center

In most organizations, several people are responsible for buying decisions. They are known as buying center participants. Its important for vendors to understand that these members play different roles in the buying process, and adapt their marketing and sales efforts accordingly. Not understanding these roles could waste a lot of time and could alienate the real decision maker. There are generally six different buying roles within a typical buying center.

The buying Center Roles

Influencer, Initiator, Decider, Gatekeeper, User, Buyer

The buying Situation

New Buys Modified Re-Buy Straight Re-buy

Institutions

Such as hospitals, educational institutions, museums. religious organizations., sports teams

Stage 3: RFP (Request for Proposals) Process

This is a request for Proposals, a process through which the organization invites alternative vendors to bid on supplying their required components or specifications

Derived Demand

the demand for B2B sales is often derived from B2C sales in the same supply chain

Stage 6: Vendor Performance Assessment using Metrics

After the purchase, firms analyze the vendor's performance so they can make decisions about future purchases using formal, objective methods, and criteria called "performance metrics" (e.g. product quality, timely delivery)

Resellers

Are marketing intermediaries that resell manufactured products without significantly altering their form, for example, wholesalers and distributors buy products from manufacturers and sell them to retailers, who sell them to consumers

Common Buying center culture

Autocratic, Democratic, Consultative, Consensus Note that cultures change and may vary even within an organization (e.g. regionally or divisionally)

Organization Culture

Culture has a profound influence on the purchasing decisions. A firms organization culture reflects the values, traditions, and customs that guide its employees' behavior. They are a set of unspoken guidelines that employees share with one another through various work situations Example: is it ok to accept gifts from a vendor? The organization culture is reflected in the buying center culture Knowing which buying center culture is operating in a given organization helps the seller understand how to approach the particular client, how to provide relevant information, and to whom to make sales presentations

Vendor analysis

Importance score * Vendors performance

Who is involved in B2B marketing?

Manufacturers, resellers, institutions. governments

B2B Buying Process

Need Recognition-> product specification -> RFP process > Proposal analysis > order specification > Vendor/Performance assessment using metrics (Differs from B2C process in having 5 steps and the middle three being information search (product specification and RFP process), Alternative Evaluation (Proposal Anlysis and supplier selection), and purchase (order specification))

Manufacturers and Service Providers

Producers of goods, buy raw materials, components, and parts, that they use to manufacture their own goods, which they sell to others.

Modified Rebuy

The buyer purchased a similar product in the past but has decided to change some specification (desired price, quality level, options for features, etc.) Current vendors are likely to have an advantage in a modified rebuy situation (unless there is dissatisfaction with the previous purchase) Requires buyers to spend less time at each stage of the buying process than with the new buy situation (similar to limited decision making in B2C)

Stage 1: Need Recognition

The buying organization recognizes an unfulfilled need through either their internal or external sources

Stage 4: Proposal Analysis, Vendor negotiation, and selection

The buying organization then evaluates all the proposals it receives in response to its RFP. -Critical decision makers narrow down the process to a few suppliers and discuss key terms of the sale, price, quality, delivery, and financing, often following clearly laid-down policies. Clear criteria are used to evaluate the proposals such as the amount of experience of the vendor, ability to meet specification, and financial position.

Example of all the buying center roles

The initiator- the doctor (determines the products used to treat) The influencer- the medical device supplier, pharmacy The Decider- the hospital The buyer- Hospitals material manager The User- The patient The gatekeeper- The insurance company

Stage 5: Order Specification

The order is placed with the selected vendor. This includes a detailed description of the goods, prices, delivery dates, and penalties for noncompliance. Vendor sends an acknowledgment; fills the order

Stage 2: Product Specification

The organization then needs to come up with potential specification that vendors can use to develop proposals to fulfill that need

Straight Rebuy

This occurs when the buyer simply buys additional units of products previously purchased A tremendous amount of B2B purchases fall in this category (e.g. bottled water) The buyer is often the only member of the buying center involved in the process Similar to a consumer's habitual purchase, straight rebuys enable the buyer to skip straight from the need recognition stage directly to the fifth step in the buying process

Distinction between a B2B and a B2C transaction is

Who the ultimate user is of the product and not the product itself

Consensus

all members of a team must reach a collective agreement that they can support a given purchase

Autocratic

event hough there may be multiple participants, one person makes the decision alone

Government

in most countries, one of the largest purchasers of goods and services (US$4 trillion by the US federal government) Central, state, local

B2B Marketing

is when a business markets to another organization: Goods are sold so that they can be 1. Used in the production of other goods or services 2. For consumption by the buying organization or 3. for resale.

White papers

it is common to use white papers for marketing efforts in a B2B context -B2B buyers frequently read them before making a purchase -These are authoritative documents or reports that describe the solving of a problem using the firm's product or technology, and are valuable marketing tools, as they serve to educate the customers -The white paper seeks to provide valuable information in an educational context, that will help a potential buyer easily understand how to address its problems with new solutions from the selling company

Democratic

the majority rules

User

the person who consumes the product

Gatekeeper

the person who controls information, access, or both, to decision makers and influencers

Initiator

the person who first suggests buying the product

Buyer

the person who handles the paperwork of the actual purchase

Decider

the person who ultimately decides whether to buy, what to buy, how or where to buy

Influencer

the person whose views influence other members of the buying center in making the final decision

Consultative

these are buying centers which use one person to make a decision but solicit input from other before doing so