1. Analyzing Business Markets7
Analyzing Business Markets
Marketing Management, 13th ed

2. Chapter Questions
What is the business market, and how does it differ from the consumer market?
What buying situations do organizational buyers face?
Who participates in the business-to-business buying process?
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3. Chapter Questions How do business buyers make their decisions?
How can companies build strong relationships with business customers?
How do institutional buyers and government agencies do their buying?
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4. Organizational Buying
Decision-making process by which
formal organizations establish the
need for purchased products and
services, and identify,
evaluate, and choose among
alternative brands and suppliers.

5. Types of Business Customers
Price-
Oriented
(transactional selling,
price is everything)
Solution-
Oriented
(consultative selling)
Gold-
Standard
(quality selling)
Strategic-
Value
(enterprise selling)

6. Top Business Marketing Challenges
Expand understanding of customer needs
Compete globally as China and India reshape markets
Master analytical tools and improve quantitative skills
Reinstate innovation as an engine of growth
Create new organizational models and linkages
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7. Characteristics of Business Markets
Inelastic demand (e.g., price change)
Fluctuating demand (e.g., % increase in consumer demand lead to much larger increase in demand for plant equipment—acceleration effect)
Geographically concentrated buyers
Direct purchasing
Fewer, larger buyers
Close supplier-customer relationships
Professional purchasing
Many buying influences
Multiple sales calls
Derived demand
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8. Buying Situation Straight re-buy—routine
Modified rebuy—modify product specification, prices, delivery requirements, or other terms)
New task—purchase of new product or service

9. Of Concern to Business Marketers
Who are the major decision participants?
What decisions do they influence?
What is their level of influence?
What evaluation criteria do they use?
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10. The Buying Center Initiators--request Users—who use
Approvers—authorized proposed actions of deciders or buyers
Buyers—formal authority to select the supplier and arrange the purchase terms
Gatekeepers—power to prevent sellers or information from reaching member of the buying center
Initiators--request
Users—who use
Influencers—help define specification
Deciders—choose the product requirements
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11. Stages in the Buying Process: Buy phases
Problem recognition
General need description
Product specification
Supplier search
Proposal solicitation
Supplier selection
Order-routine specification
Performance review
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12. Forms of Electronic Marketplaces
Catalog sites—order through electronic catalog distributed by e-procurement software, such as Grainger’s (industrial products)
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13. Forms of Electronic Marketplaces
Vertical markets—e-hubs, such as plastics, steel, or chemicals—Plastic.com (best prices among thousands of plastic sellers)
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14. Forms of Electronic Marketplaces
Pure play auction sites—eBay
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15. Forms of Electronic Marketplaces
Spot markets—prices change by the minute—ChemConnect.com
(exchange for buyers and sellers of bulk chemicals such as
benzene)
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16. Forms of Electronic Marketplaces
Private exchanges—suppliers—Hewlett –Packard, IBM, and Wal-Mart (invited groups of suppliers and partners over the web)
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17. Forms of Electronic Marketplaces
Barter markets—trade goods & service
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18. Forms of Electronic Marketplaces
Buying alliances—several companies buying the same goods join together to form purchasing consortia such as Transora and Covisant to gain deeper discounts on volume purchases
Covisint is an online automotive trading and communication exchange that was formed initially by a consortium of General Motors, Ford, and DaimlerChrysler AG, and later included Renault S.A. and Nissan Motor Co.  The consortium has also formed a strategic alliance with technology partners Oracle and Commerce One Inc. This industry marketplace created a single automotive-parts exchange for the thousands of suppliers and dealers that serve the auto companies.
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19. Methods of e-Procurement
Websites organized using vertical hubs
Centered on industries such as plastics, steel, chemicals, paper

20. Methods of e-Procurement
Websites organized using functional hubs
Centered on functions logistics, media buying, advertising, energy management

21. Methods of e-Procurement
Direct extranet links to major suppliers
Dell, Office Depot

22. Methods of e-Procurement
Buying alliances (several companies combine to buy in volume to obtain lower prices)
Transora—Coca-Cola, Sara Lee, Kraft, PepsiCo, P&G, and several other companies
Diageo, Kraft, P&G and Others Launch Major Online Business Marketplace

23. Methods of e-Procurement
Company buying sites
For example, General Electric formed the Trading Process Network where requests are posted for proposals, negotiates terms, and orders can be placed.

24. Purchasing Orientations
Buying
(short term and tactical, lowest
price for a given level of quality,
commoditization, multi-sourcing)
Procurement
(quality improvement
and cost reductions)
Supply Chain
Management
(seamless from purchase
of raw materials to the
on-time arrival of finished
goods to end users)

25. Handling Price-Oriented Customers
Limit quantity purchased
Allow no refunds
Make no adjustments
Provide no services

26. Product-Related Purchasing Processes
Routine products
(low value and cost to the customer—office supplies)
Leverage products
(high value and costs to the customer—engine pistons)
Strategic products
(high value and costs and involve in high risks—mainframe computers)
Bottleneck products
(low value and cost and low risks—spare parts)

27. Methods for Researching Customer Value
Conjoint analysis
rank preference for alternative market offering or concepts and than estimate the implicit value placed on each attribute.
Benchmarks
Compare a “benchmark” offerings and new-market offering and then asked how much more they would pay if new features were offered or how much less if certain features were removed
Compositional approach
Attach a monetary value to each of 3 alternative levels of given attribute and repeated for other attributes. The values are then added together for any product configuration.
Importance ratings
Rate the importance of different attributes and the supplier firms’ performance on these attributes
Internal engineering assessment
determine product performance characteristics
Field value-in-use assessment
customer evaluate elements of new product
Focus-group value assessment
determine value of potential marketing offering
Direct survey questions
place a direct dollar value on one or more changes in the market offering

28. Order Routine Specification and Inventory
Stockless
purchase plans
Vendor-managed
inventory
Continuous
replenishment

29. Establishing Corporate Trust and Credibility
Expertise—Able to make and sell products
Trustworthiness--Honest and dependable, sensitive to customer needs
Likability--Attractive, prestigious, dynamic
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30. Product/Service Quality Incentive Partnering Cooperating design
Trust Dimensions
Transparent
Product/Service Quality
Incentive
Partnering
Cooperating design
Product comparison
Supply chain
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31. Categories of Buyer-Seller Relationships
Basic buying and selling
Simple routine exchanges with moderately high levels cooperation and information exchange
Bare bones
Adaptation by the seller and less cooperation and information exchange
Contractual transaction
Generally low levels of trust, cooperation, and interaction; exchange is defined by formal contract
Customer supply
Competition rather than cooperation is the dominant form of governance
Cooperative systems
Coupled closely in operational ways, although not legally binding
Collaborative
Much trust and commitment leading to true partnerships
Mutually adaptive
Much relationship-specific adaptation for buyer and seller, but without necessarily strong trust or cooperation
Customer is king
The seller adapts to meet the customer’s needs without expecting much adaptation or change on the part of the customer in exchange

32. Some form of cheating or undersupply relative to an
Opportunism
Some form of cheating or
undersupply relative to an
implicit or explicit contract.

33. Study Question 1 The ________ consists of all the
organizations that acquire goods and
services used in the production of other
products or services that are sold, rented, or
supplied to others.
business market
consumer market
e-commerce market
global market
supplier market
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34. All of the following would be among the
Study Question 2
All of the following would be among the
major industries that make up the
business market EXCEPT ________.
agriculture, forestry, and fisheries
Manufacturing
Construction
banking, finance, and insurance
the Internet
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35. Study Question 3
Ultimately, the amount of steel sold to General Motors
depends on the consumer’s demand for GM cars and
trucks. From the standpoint of the steel manufacturer,
which of the following demand forms is most pertinent?
Derived demand
Inelastic demand
Geographic demand
Relational demand
Static demand
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36. The purchasing department buys office
Study Question 4
The purchasing department buys office
supplies on a routine basis. This type of
purchase is classified as a ________.
straight rebuy
modified rebuy
new task
secondary purchase
preordained purchase
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37. Study Question 5 ________ is composed of all parties who
participate in the purchasing decision-making
process and share common goals and risks
associated with their decisions.
The buying center
The marketing sales team
Strategic management
Engineering support
The logistics center
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