© 2009 South-Western, Cengage LearningMARKETING 1 Chapter 12 BUSINESS-TO-BUSINESS MARKETING 12-1Business-to-Business Exchanges 12-2Making Business Purchase Decisions 12-3Business Purchasing Procedures 12-4Retail Purchasing CHAPTER 12

© 2009 South-Western, Cengage LearningMARKETING Chapter 12 2 Focus Questions: After reviewing the advertisement, what types of products do you believe Norilsk Nickel sells? Who might be some of its customers? Why would a company that sells to other businesses benefit from advertising? If you were a business customer, would the ad interest you in Norilsk Nickel? Why or why not? COURTESY, NORILSK NICKEL

© 2009 South-Western, Cengage LearningMARKETING Chapter 12 3 BUSINESS-TO-BUSINESS EXCHANGES GOALS Explain the reasons businesses buy things from other businesses. Define the five major classifications of business consumers. Describe the common characteristics typical of business markets. 12-1

© 2009 South-Western, Cengage LearningMARKETING Chapter 12 4 Reasons for Business Purchases Reasons for purchasing Purchase products to be incorporated into a production or manufacturing process Purchase products for direct resale to other customers Purchase products to operate a business Purchasing as a marketing activity

© 2009 South-Western, Cengage LearningMARKETING Chapter 12 5 Categories of the Business Product Classification System Capital Goods The building and major equipment of business Operating Equipment Equipment used in the daily operation of the business SuppliesConsumable materials used in the operation of the business Raw Materials Unprocessed materials that are incorporated into the products by the business Component Parts Partially or completely processed items that become a part of the products produced by the business ServicesTasks performed in the operation of the business or to support the production, sale, or maintenance of the business’s products and services

© 2009 South-Western, Cengage LearningMARKETING Chapter 12 6 Types of Business Purchasers Business Customer Classifications Producers Resellers Service businesses Government Nonprofit organizations

© 2009 South-Western, Cengage LearningMARKETING Chapter 12 7 Characteristics of Business Markets Derived demand Purchase volume Similar purchases Number of businesses Buyer/seller relationship

© 2009 South-Western, Cengage LearningMARKETING Chapter 12 8 MAKING BUSINESS PURCHASE DECISIONS GOALS Describe how businesses make new purchase, modified purchase, and repeat purchase decisions. Explain the roles played by purchasing specialists. Identify issues that often arise in international purchasing. 12-2

© 2009 South-Western, Cengage LearningMARKETING Chapter 12 9 The Buying Decision Make or buy Types of purchases New purchase Modified purchase Repeat purchase

© 2009 South-Western, Cengage LearningMARKETING Chapter Purchasing Requires Specialists Buyer Product manager Merchandise manager Purchasing agent

© 2009 South-Western, Cengage LearningMARKETING Chapter International Purchasing Supplier qualifications Pricing considerations Reciprocal trading Financing Transportation

© 2009 South-Western, Cengage LearningMARKETING Chapter BUSINESS PURCHASING PROCEDURES GOALS Identify the steps in the business purchasing process. Explain why purchasing decisions need to take into consideration more than just the direct cost of products and services. Describe the importance of keeping accurate inventory and purchasing records. 12-3

© 2009 South-Western, Cengage LearningMARKETING Chapter Steps in the Purchasing Process Identify needs Determine alternatives Search for vendors Select appropriate a vendor Negotiate a purchase Make a decision Evaluate the purchase

© 2009 South-Western, Cengage LearningMARKETING Chapter Purchasing by Final Consumers and Business Consumers Final Consumers 1. Identify needs 2. Gather information 3. Evaluate alternatives 4. Make purchase decision 5. Evaluate decision Business Consumers 1. Identify purchasing needs 2. Determine alternatives 3. Search for vendors 4. Select appropriate vendors 5. Negotiate a purchase 6. Make purchase decision 7. Evaluate purchase

© 2009 South-Western, Cengage LearningMARKETING Chapter Improving Purchasing Procedures Improved performance Supply chain management Just-in-time Total quality management (TQM)

© 2009 South-Western, Cengage LearningMARKETING Chapter Processing Purchases Inventory Records Inventory Physical inventory Perpetual inventory Purchasing Records Purchase order Packing list Invoice Receiving record Inventory records

© 2009 South-Western, Cengage LearningMARKETING Chapter RETAIL PURCHASING GOALS Describe how retailers identify customer needs and how to satisfy them. Identify the ways retailers locate the products they need to satisfy their customers. 12-4

© 2009 South-Western, Cengage LearningMARKETING Chapter Planning to Satisfy Customer Needs Determining customer needs Tracking product sales Developing a purchasing plan Merchandise plan Basic stock list Model stock list

© 2009 South-Western, Cengage LearningMARKETING Chapter Obtaining the Needed Products Selling to retail businesses Salespeople Manufacturer showrooms Trade shows Catalogs and web sites Completing the purchase process Determine source of supply Place order Ship and receive