Marketing Management
Chapter 4
Analyzing Business
Markets
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Learning Objectives
4.1 Explain the key aspects of the organizational buying
process.
4.2 Define the role of the buying center in an organization.
4.3 Describe the stages of the decision process in business
markets.
4.4 Explain how organizations develop marketing programs
to attract and retain business customers.
4.5 Describe how business-to-business marketers build and
maintain relationships with customers.
What Is Organizational Buying?
• Business market
– 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
Understanding Business Markets
• Fewer, larger buyers
• Close supplier–customer relationships
• Professional purchasing
• Multiple buying influences
• Multiple sales calls
• Derived demand
• Inelastic demand
• Fluctuating demand
• Geographically concentrated buyers
• Direct purchasing
Types of Buying Situations
• Straight Rebuy
• Modified Rebuy
• New Task
The Buying Center
• Initiators
• Users
• Influencers
• Deciders
• Approvers
• Buyers
• Gatekeepers
What Is the Role of the Buying Center?
• Seek the best value from fewer and better suppliers
Buying Center Dynamics
• Participants with differing interests, authority, status, and
susceptibility to persuasion, and sometimes with very
different decision criteria
Selling to Buying Centers
• Who are the major decision participants?
• What decisions do they influence, and how deeply?
• What evaluation criteria do they use?
Figure 4.1 Stages in the Business-Buying
Process
Understanding the Buying Process (1 of 6)
• Problem recognition
– Someone in the company recognizes a problem or
need that can be met by acquiring a good or service
• Need description
– Next, the buyer determines the needed item’s general
characteristics and the required quantity
Understanding the Buying Process (2 of 6)
• Product specification
– The buying organization now develops the item’s
technical specifications
▪ Product value analysis—an approach to cost
reduction that studies whether components can be
redesigned, standardized, or made by cheaper
methods of production without adversely affecting
product performance
Understanding the Buying Process (3 of 6)
• Supplier search
– Catalog sites
– Vertical markets
– “Pure Play” auction
– Private exchanges
– Spot and barter markets
Online Buying
• Vertical hubs
• Functional hubs
Understanding the Buying Process (4 of 6)
• Proposal solicitation
– The buyer next invites qualified suppliers to submit
written proposals
• Supplier selection
– Before selecting a supplier, the buying center will
specify and rank desired supplier attributes
Supplier Selection
• Evaluate vendors
– Price
– Reputation
– Reliability
– Agility
Understanding the Buying Process (5 of 6)
• Contract negotiation
– the buyer negotiates the final order, which includes
listing the technical specifications, the quantity
needed, the expected time of delivery, return policies,
and warranties
Contract Negotiation
• Blanket contracts v s periodic purchase orders
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– Stockless purchase plans
• Long-term contracts to ensure supply
• Vendor-managed inventory
Understanding the Buying Process (6 of 6)
• Performance review
– The buyer periodically reviews the performance of the
chosen supplier(s)
Developing Effective Business Marketing
Programs
• Systems selling
• Additional services
• Customer reference programs
• Online and offline communications and branding
From Products to Solutions
• Systems buying
– A total problem solution from one seller
• Systems selling as a marketing tool
Enhancing Services
• Add high quality services to product offerings to provide
value and establish ties with customers
• Bundle services to improve customer satisfaction and
increase profits
Building B2B Brands
• Value of a corporate brand
Overcoming Price Pressures
• Haggling over price
Managing Communication
• Inform customers
– Online presence
– Search engine optimization
– Social media
– Webinars and podcasts
Managing B2B Relationships
• Relationship between supplier and customer
– Loyalty
– One-to-one marketing
Understanding the Buyer–Supplier
Relationship
• Relevant forces
– Availability of alternatives
– Importance of supply
– Complexity of supply
– Supply market dynamism
Trust, Credibility, and Reputation (1 of 2)
• Building trust
– Provide full, honest information
– Align employee incentives with customer needs
– Partner to create market value
– Offer valid product comparisons
Trust, Credibility, and Reputation (2 of 2)
• Corporate credibility
• Corporate trustworthiness
• Corporate likeability
Risks and Opportunism
• Risks
– Specific investments—expenditures tailored to a
particular company and value-chain partner
– Opportunism
Managing Institutional Markets
• Institutional market
– Schools, hospitals, nursing homes, prisons, etc. that
must provide goods and services to people in their
care
• Government organizations
– Are a major buyer of goods and services in most
countries