Business to Business Marketing Professor Lawrence Feick University of Pittsburgh

Organizational markets compared to consumer markets Fewer buyers Larger purchases Derived demand

Organizational markets compared to consumer markets (continued) Differences in the purchasing process –professional buying –the buying center –buyclass

Obtain Feedback and Evaluate Performance Select Order Routine Evaluate Proposals and Select Supplier Acquire and Analyze Proposals Search for and Qualify Sources Describe Characteristics and Quantity Determine Characteristics and Quantity Recognize Problem and General Solution Organizational Buying Process

The Buying Center Participants in an organization’s buying decision

USERS BUYERS DECIDERS INFLUENCERS GATEKEEPERSGATEKEEPERS The Buying Center

Organizational buyclasses Straight rebuy Modified rebuy New task purchase

Figure 9.9aChrysler’s Vendor Analysis Form Supplier Rating Chart:Commodity:__________ Supplier Name:__________Annual Sales Dollars:__________ Shipping Location:__________ Ex.GoodSat.FairPoorN/A Quality 40% Supplier defect rates__________________ SQA program conformance__________________ Sample approval performance__________________ Responsiveness to quality problems__________________ Overall quality rating__________________ Delivery 25% Avoidance of late or overshipments__________________ Ability to expand production capacity__________________ Engineering sample delivery performance__________________ Response to fluctuating supply demands__________________ Overall delivery rating__________________

Figure 9.9bChrysler’s Vendor Analysis Form Ex.GoodSat.FairPoorN/A Price 25% Price competitiveness__________________ Absorption of economic price increases__________________ Submission of cost savings plans__________________ Payment terms__________________ Overall price rating__________________ Technology 10% State-of-the-art component technology__________________ Sharing research development capability__________________ Capable and willing to provide circuit design services__________________ Responsiveness to engineering problems__________________ Overall technology rating__________________ Buyer:__________ Date:__________ Comments:_______________________________________________________

PromotionEmphasis on personal sellingEmphasis on advertising Price Competitive bidding for unique items, list prices for standard items List prices, little individual negotiation Product Relatively technical, exact form often variable, accompanying services very important Standardized form, service important but less than for business products Business-to-Business Marketing Consumer-Goods Marketing Summary: comparing business to business marketing and consumer marketing (text: Table 9.2)

Decision- making process Involvement of diverse group of organization members in decision Individual or household members make decision Customer relations Relatively enduring and complex Usually transaction- focused; relationship of relatively short duration Distribution Relatively short, direct channels to market Often complex channels with multiple intermediaries Business-to-Business Marketing Consumer-Goods Marketing Source: Based on Michael Hutt and Thomas Speh, Business Marketing Management, 5th ed. (Fort Worth, Tex : The Dryden Press, 1995), pp Summary: comparing business to business marketing and consumer marketing (continued)

Implications Importance of relationships Importance of personal selling Understanding our customer’s customers Affecting final consumer demand Solving our customers’ business problems