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

2.  Understand the characteristics of business- to-business markets, B2B market demand, and how marketers classify B2B 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. 6-2

3.  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. 6-3

4.  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. 6-4

5.  Business-to-business demand differs from consumer product demand  Demand is: ◦ Derived ◦ Inelastic ◦ Fluctuating ◦ Joint © 2012 Pearson Education, Inc. publishing as Prentice-Hall. 6-5

6.  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. 6-6

7.  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. 6-7

8.  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. 6-8

9.  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. 6-9

10.  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. 6-10

11.  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. 6-11

12.  Intranets: ◦ 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. 6-12

13.  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. 6-13

14.  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. 6-14 http://www.youtube.com/watch?v=QzZyUaQvpdc&feature=related

15.  Buy class framework ◦ Identifies the degree of effort a firm needs to collect information and make a decision  Three buy classes: ◦ Straight re-buy ◦ Modified re-buy ◦ New-task buy © 2012 Pearson Education, Inc. publishing as Prentice-Hall. 6-15

16.  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. 6-16

17.  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. 6-17

18.  Factors prompting recognition: ◦ Vary by buying situation  Actions resulting from problem recognition: ◦ Initiation of a purchase requisition or request ◦ Formation of a buying center, if needed © 2012 Pearson Education, Inc. publishing as Prentice-Hall. 6-18

19.  In this stage, buying center members: ◦ Search for info 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/obtain proposals (bids) © 2012 Pearson Education, Inc. publishing as Prentice-Hall. 6-19

20.  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. 6-20

21.  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. 6-21

22.  Outsourcing: ◦ Obtaining vendors to provide goods / services that might otherwise be supplied in-house  Crowd-sourcing: ◦ 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. 6-22

23.  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 © 2012 Pearson Education, Inc. publishing as Prentice-Hall. 6-23

24.  Metrics used by organizational buyers: ◦ Satisfaction ◦ Quality ◦ Customer engagement ◦ Purchase intentions ◦ Promptness and effectiveness of problem resolution © 2012 Pearson Education, Inc. publishing as Prentice-Hall. 6-24