1. Business-to-Business Markets: How and Why Organizations Buy
Chapter Six
© 2012 Pearson Education, Inc. publishing as Prentice-Hall.

2. Chapter Objectives
Understand the characteristics of business-to-business markets, business-to-business market demand, and how marketers classify business-to-business customers
Appreciate opportunities for using e-commerce and social media in business-to-business settings
Identify and describe the different business buying situations and the business buying decision process
© 2012 Pearson Education, Inc. publishing as Prentice-Hall.

3. Real People, Real Choices: Decision Time at NCR Corporation
Which option should NCR pursue in order to market the new generation of point of sale workstations effectively?
Option 1: Attend the trade show as in the past
Option 2: Skip the show this year and reallocate resources to other alternatives
Option 3: Forego the show this year and find out if the venue and sponsorship changes are real
© 2012 Pearson Education, Inc. publishing as Prentice-Hall.

4. Business Markets: Buying and Selling When the Customer is Another Firm
Business-to-business marketing The marketing of goods and services that businesses and other organizations buy for purposes other than personal consumption
Business-to-business (organizational) markets include manufacturers, wholesalers, retailers, and other organizations such as hospitals, and government
© 2012 Pearson Education, Inc. publishing as Prentice-Hall.

5. Factors That Make a Difference in Business Markets
Business markets differ from consumer markets in several ways:
Multiple buyers are involved
Fewer organizational customers exist
Order quantities and cost are much larger
Business customers are more geographically concentration
These differences make B2B marketing more complex
© 2012 Pearson Education, Inc. publishing as Prentice-Hall.

6. Business-to-Business Demand
Business-to-business demand differs from consumer product demand
Demand is:
Derived
Inelastic
Fluctuating
Joint
© 2012 Pearson Education, Inc. publishing as Prentice-Hall.

7. Business-to-Business Demand
Derived demand:
Demand for organizational products is caused by demand for consumer goods
Changes in consumer trends can impact B2B sales
Inelastic demand:
Changes in price have little or no effect on the amount demanded
© 2012 Pearson Education, Inc. publishing as Prentice-Hall.

8. Business-to-Business Demand
Fluctuating demand:
Small changes in consumer demand create large increases or decreases in business demand
Life expectancy of the product can cause fluctuating demand
Joint demand:
Demand occurs for two or more goods that are used together to create a product
© 2012 Pearson Education, Inc. publishing as Prentice-Hall.

9. Types of Business-to-Business Customers
Producers:
Individuals or firms that purchase products for use in the production of other goods and services
Example: Dell buys RAM chips for integration into their PCs
Resellers:
Individuals or firms that buy finished goods for reselling, renting, or leasing
© 2012 Pearson Education, Inc. publishing as Prentice-Hall.

10. Types of Business-to-Business Customers
Organizations: Government markets:
Federal, state, county, and local governments that buy goods and services to carry out public objectives, and support their operations
Organizations: Not-for-profit firms:
Organizations with charitable, educational, community, and other public service goals that buy goods and services to support their functions and to attract and serve their members
© 2012 Pearson Education, Inc. publishing as Prentice-Hall.

11. North American Industry Classification System
Marketers use the North American Industry Classification System (NAICS) to identify their customers and to find new customers
NAICS is a numerical coding of industries in the United States, Canada, and Mexico
© 2012 Pearson Education, Inc. publishing as Prentice-Hall.

12. Business-to-Business E-Commerce and Social Media
B2B E-Commerce Internet exchanges between two or more businesses:
Includes exchanges of information, products, services, and payments
Allows business marketers to link to suppliers, factories, distributors, and their customers
B2B Internet site provides technical support, item and order status information, and customer service
© 2012 Pearson Education, Inc. publishing as Prentice-Hall.

13. Intranets, Extranets, and Private Exchanges
Link a firms’ departments, employees, and databases
Extranets:
Allow authorized suppliers, customers, and other outsiders to access the firm’s intranet
Private exchanges:
Link an invited group of suppliers and partners over the Web
© 2012 Pearson Education, Inc. publishing as Prentice-Hall.

14. The Dark Side of B2B Commerce
Hackers threaten security:
Customer credit card number theft
May destroy firm records or steal trade secrets
Authenticating transactions is critical
Well-meaning employees can be security threats
Firewalls and encryption safeguard e-commerce transactions `
© 2012 Pearson Education, Inc. publishing as Prentice-Hall.

15. B2B and Social Media Games generate buzz and drive brand awareness
B2B marketers use social networking sites to promote themselves
Linked in is the most prominent social networking site for B2B marketers and offers several advantages
© 2012 Pearson Education, Inc. publishing as Prentice-Hall.

16. Business Buying Situations and the Buying Decision Process
Buy class framework
Identifies the degree of effort a firm needs to collect information and make a decision
Three buy classes:
Straight rebuy
Modified rebuy
New-task buy
© 2012 Pearson Education, Inc. publishing as Prentice-Hall.

17. Professional Buyers and Buying Centers
Trained professional buyers typically carry out buying in business-to-business markets:
Purchasing agents
Procurement officers
Directors of materials management
© 2012 Pearson Education, Inc. publishing as Prentice-Hall.

18. The Buying Center
The group of people in an organization who participate in a buying decision:
Initiator
User
Gatekeeper
Influencer
Decider
Buyer
© 2012 Pearson Education, Inc. publishing as Prentice-Hall.

19. Business Buying Decision Process Step 1: Problem Recognition
Factors prompting recognition vary by buying situation
Actions resulting from problem recognition include:
Initiation of a purchase requisition or request
Formation of a buying center, if needed
© 2012 Pearson Education, Inc. publishing as Prentice-Hall.

20. Business Buying Decision Process Step 2: Information Search
In this stage, buying center members:
Search for information about products and suppliers
Marketers must provide information where and when business buyers need it
Develop product specifications
Written descriptions of the quality, size, weight, color of the item to be purchased
Identify potential suppliers and obtain proposals (or bids)
© 2012 Pearson Education, Inc. publishing as Prentice-Hall.

21. Business Buying Decision Process Step 3: Evaluate the Alternatives
The buying center assesses proposals:
Price is a primary consideration
Other factors may be considered, such as extra services or other perks
Customer reference programs, product demos, and presentations can help sell the marketer’s products to firms
© 2012 Pearson Education, Inc. publishing as Prentice-Hall.

22. Single sourcing: Multiple sourcing: Reciprocity:
Business Buying Decision Process Step 4: Select the Product and Supplier
Single sourcing:
Business practice of buying a particular product from only one supplier
Multiple sourcing:
Buying from several different suppliers
Reciprocity:
Trading partnership in which two firms agree to buy from one another
© 2012 Pearson Education, Inc. publishing as Prentice-Hall.

23. Business Buying Decision Process Step 4: Select the Product and Supplier
Outsourcing:
Obtaining vendors to provide goods / services that might otherwise be supplied in-house
Crowdsourcing:
Pulling together expertise from around the globe to work on solving a problem
Reverse marketing:
Buyers try to find capable suppliers and “sell” their purchase to the suppliers
© 2012 Pearson Education, Inc. publishing as Prentice-Hall.

24. Business Buying Decision Process Step 5: Evaluate Postpurchase
Organizational buyers assess whether the performance of the product and the supplier live up to expectations:
Users are surveyed to determine satisfaction
Producers may also research ultimate consumer satisfaction with the final product
Changes in demand are analyzed
Supplier performance is documented
Add Hitachi ad on page 191 to right side of this slide
© 2012 Pearson Education, Inc. publishing as Prentice-Hall.

25. Business Buying Decision Process Step 5: Evaluate Postpurchase
Metrics used by organizational buyers include:
Satisfaction
Quality
Customer engagement
Purchase intentions
Promptness and effectiveness of problem resolution
Add Hitachi ad on page 191 to right side of this slide
© 2012 Pearson Education, Inc. publishing as Prentice-Hall.

26. Real People, Real Choices: Decision Made at NCR Corporation
Brad chose option 2
Why do you think that Brad passed on the trade show and reallocated its resources to two smaller events?
© 2012 Pearson Education, Inc. publishing as Prentice-Hall.

27. Meet Jim Multari, director of research at PBS Kids Sprout
Keeping It Real: Fast-Forward to Next Class Decision for PBS KIDS Sprout
Meet Jim Multari, director of research at PBS Kids Sprout
Sprout is an emerging cable network that attempts to foster parent and preschooler interaction
The decision to be made: Should the network target current viewers, nonviewers, or both for its first ever brand awareness campaign?
© 2012 Pearson Education, Inc. publishing as Prentice-Hall.

28. All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of the publisher. Printed in the United States of America
© 2012 Pearson Education, Inc. publishing as Prentice-Hall.