1. Analyzing Business Markets Chapter 7 MBA Term II
Marketing Decisions
Analyzing Business Markets
Chapter 7
MBA Term II

2. Organizational Buying
It is the decision making process by which organizations recognize and establish the need for purchased products and services and identify, evaluate and choose among alternative brands and suppliers.

3. Business Markets
Business markets consists of all organizations that acquire goods and services used in the production of other products or services that are sold, rented or supplied to others.
The major industries making up the business market: Agriculture, forestry, fisheries, mining, manufacturing, construction, transportation, communication, public utilities.

4. Oracle
Business-software giant Oracle became an industry leader by offering a whole range of products and services to satisfy customer needs for enterprise software. Known originally for its flagship database management systems, Oracle spent $30 billion in recent years to buy 56 companies, including $7.4 billion to buy Sun Microsystems, doubling the company’s revenue to $24 billion and sending its stock soaring in the process. To become a one-stop shop for all kinds of business customers, Oracle seeks to offer the widest ranges of products in the software industry. It now sells everything from server computers and data storage devices to operating systems, databases, and software for running accounting, sales, and supply-chain management. At the same time, Oracle has launched “Project Fusion” to unify its different applications, so customers can reap the benefits of consolidating many of their software needs with Oracle. Oracle’s market power has sometimes raised both criticism from customers and concerns from government regulators. At the same time, its many long-time customers speak to its track record of product innovation and customer satisfaction.

5. Challenges faced by B2B Firms
Understanding deep customer needs in new ways;
Identifying new opportunities for organic business growth;
Improving value management techniques and tools;
Calculating better marketing performance and accountability metrics;
5. Competing and growing in global markets, particularly China;
6. Countering the threat of product and service commoditization by bringing innovative offerings to market faster and moving to more competitive business models; and
7. Convincing C-level executives to embrace the marketing concept and support robust market

6. Characteristics of Business Markets
Fewer, larger buyers
Closer supplier-customer relationship
Professional purchasing
Multiple buying influences
Multiple sales calls
Derived demand
Inelastic demand
Fluctuating demand
Geographically concentrated buyers
Direct purchasing

7. Straight Rebuy Modified Rebuy New Task
Buying Situations
Straight Rebuy
Modified Rebuy
New Task

8. Buying Situations Straight Rebuy:
Involves reordering of supplies on a routine basis
Suppliers try to maintain product and service quality
“Out Suppliers”

9. Buying Situations 2. Modified rebuy:
Involves changes and modifications in:
Product specifications
Prices
Delivery requirements or any other terms

10. Buying Situations 3. New Task:
Involves buying a product or a service for the first time.
The greater the risk or cost involved in the buying, more number of bidders and longer time to gather information about them and longer time to choose one amongst them and take the final decision.
In this type of buying, the buyer must determine the product specifications, price limits, delivery terms and times, service terms and payment terms.

11. Systems Buying and Selling
Business buyers prefer to buy a total problem solution from one seller.
Single supplier provides the buyer with its entire requirements.

12. Participants in the Business Buying Process
Initiators: Users or someone from the organization who request that something should be purchased.
Users: The ones who will actually use the product or service; often the users are the initiators
Influencers: People who assist the purchasing or evaluating process by providing technical definitions and information.
Deciders: People who decide on product requirements or on suppliers.
Approvers: People who authorize the proposed purchase.
Buyers: People who have the formal authority to select the supplier and arrange the purchase terms.
Gatekeepers: People who have the power to prevent sellers or information from reaching the buying center.

13. Targeting Firms and Buying Centers
Successful business-to-business marketing requires that business marketers know:
What type of company's to focus on their selling effort as well as
2. Who to concentrate on within the buying centers of those organizations.
Remember you need to ‘target firms’ then ‘target within buying center of the firms’

14. Targeting within the Business Center
To target their efforts properly, business marketers must know the following:
Who are the major decision participants?
What decisions do they influence?
What is their level of influence?
What evaluation criteria do they use?

15. The Business Buying Process: Stages in the Buying Process - Buyphases
Problem recognition
General need description
Product specification
Supplier search
Proposal solicitation
Supplier selection
Order-routine specification
Performance review

16. Table 6.1 Buygrid Framework

17. Problem Recognition
Identification of a problem or a need that can be solved or satisfied by purchasing a product or a service.
This identification can be triggered by an internal stimuli or external stimuli.
Examples of internal stimuli:
Decision to develop a new product which requires new raw materials, machines and equipments
A machine breaks down or requires new parts
Examples of external stimuli:
Buyer may get ideas at a trade show, seeing an ad or receiving a call from a sales representatives who offers better products at a lower price

18. General Need Description and Product Specification
Determining the required items characteristics and quantity.
For complex, technical products the buyer has to consult the expert/technical people .
Business marketers work by defining how their products meet or even exceed the customers expectation.

19. Supplier Search Modes of searching for suppliers: Trade directories
Contacts with other companies
Trade advertisements
Trade shows
Internet

20. Forms of Electronic Marketplaces
Catalog sites
Vertical markets
Pure play auction sites
Spot markets
Private exchanges
Barter markets
Buying alliances

21. Proposal Solicitation
The buyer invites qualified suppliers to submit proposals that consists of quotation(details of supplies and their costing).
Out of all the proposals that are submitted, the best one/s are called upon for presentation and then finally the best one is chosen

22. Supplier Selection : An Example of Vendor Analysis
Before selecting a supplier, the buying center will specify and rank desired supplier attributes, often using a supplier-evaluation model such as above; a key is to understand these criteria of evaluations.

23. Supplier Selection
The choice of attributes and their relative importance varies with the buying situation:
Routine order products: Delivery reliability, price, supplier reputation
Procedural problem products (zerox machine): Technical service, supplier flexibility and product reliability
Political problem products (stirs rivalries in the organization-choice of internet provider): Price, supplier reputation, product reliability, service reliability and supplier flexibility

24. Some supplier handle price-oriented buyers by setting a lower price but establishing restrictive conditions such as:
Limited quantities
No refunds
No adjustments
No services

25. Order Routine Specification
Process where the buyer negotiates the final order in terms of:
Listing the technical specifications,
Quantity needed,
Expected time of delivery,
Return policies,
Warranties

26. Blanket Contracts
Blanket contract: A contract that establishes long term relationship in which the supplier promises to resupply the buyer as needed, at agreed upon prices, over a specified period of time.
This is also known as stockless purchase plans.
The buyers computer automatically sends an order to the supplier when the supply is needed.
Vendor managed inventory: Suppliers take the responsibility of managing the inventory of the buyers where they get an access to the inventory levels and replenish automatically through continuous replenishment programs.

27. Performance Review
Buyer reviews the performance of the chosen suppliers on a regular basis.
They do this by asking the end users to evaluate the suppliers.
On the basis of the review the buyers either continue the supplier, modify the requirements or end the supplier relationship.

28. Managing Business-to-Business Customer Relationship
Classification of Buyer Supplier relationship
Basic buying and selling
Bare bones
Contractual transaction
Customer supply
Cooperative systems
Collaborative
Mutually Adaptive
Customer is king

29. Managing Business-to-Business Customer Relationship
Basic buying and selling: These are simple, routine exchanges with moderate levels of cooperation and information exchange.
Bare bones: These relationships require more adaptation by the seller and less cooperation and information exchange.
Contractual transaction: These exchanges are defined by formal contract and generally have low levels of trust, cooperation, and interaction.
Customer supply: In this traditional custom supply situation, competition rather than cooperation is the dominant form of governance.

30. Cooperative systems: The partners in cooperative systems are united in operational ways, but neither demonstrates structural commitment through legal means or adaptation.
6. Collaborative: In collaborative exchanges, much trust and commitment lead to true partnership.
Mutually adaptive: Buyers and sellers make many relationship-specific adaptations, but without necessarily achieving strong trust or cooperation.
Customer is king: In this close, cooperative relationship, the seller adapts to meet the customer’s needs without expecting much adaptation or change in exchange.

31. THANK YOU!!!!