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  • Derived – derived from demand for consumer goods Inelastic- not much affected by price changes eg oil for airlines Fluctuating – more volatile
  • Once customer is acquired – suppliers mmust seek ways to add value to their market offer to facilitate rebuys. Orica- Australian explosives co. – used by quarries – research/ feedback from customers – improve performance and get desired outcome
  • Buying center – decision making unit of buying organization Users- those who will use products/ service Initiators- may also be users Influencers – technicalpersonnel are impt Buyers – authorized to select supplier and arrange purchase terms – high level managesr Approvers – authorize proposals of deciders or buyers Gatekeepers – have power to prevent sellers/ infor from reaching members of buying center – purchasing agents, receptionists, tel operators
  • OR admin – Personal - selection of suppliers based on previous experience, research/ industry knowledge Organizational – ISO-certified only policy
  • Symantec executives partnered with executives of key customer organizations to understand business concerns and develop products that fit their needs
  • VALUE-ADDED SERVICE HP determined need to sell self as advisor offering solutions to unique problems – advisory role when selling complex products like comp networks –to not only meet but EXCEED a buyer’s needs
  • Extranet – set up accounts with dell or office depot and employees can make purchases Buying alliances- transora, covisint – companies join forces to obtain lower prices for raw materials Buying sites – where companies posts requests for proposals, negotiates terms and places orders
  • Bayan trade – knowledge process outsourcing provider
  • Basic – simple, routine exchanges with mod hi coop and info exchange Bare bones – as above, less coop and info exchange Contractual – low levels of trust, coop – formal contract Customer supply – competition is dominant form of governance Cooperative – coupled operationally but no legal structural commitment/ adaptation approaches Collaborative – much trust and commitment – true partnership Mutually adaptive – much relationship but not necessarily strong trust/ coop Customer is king – close coop relationship but seller adapts to customers needs
  • robotic systems – tooling and machinery; office and manufacturing in same facility; linked telecom ESTABLISH STRONG RELATIOSHIPS AND ADD VALUE SOME BUYERS WANT ONLY TRANSACTIONAL RELATIONSHIPS
  • Blatant self interst or deliberate misrepresentation; may shirk/cheat/not deliver expected value Opportuisms – firms must devote resources to control and monitoring that otherwise could be allocated to more productive3 purposes 96 Ford taurus - lear committed to a contract it knew it couldn’t fulfill – missed deadlines, failed to meet weight & price objectives, furnished parts that didn’t work

V49 ch7 business_markets_kristine_bacsal_flores V49 ch7 business_markets_kristine_bacsal_flores Presentation Transcript

  • Chapter 7 ANALYZING BUSINESS MARKETS Kristine Bacsal-Flores Marketing Management MBAH Top 10 Concepts
  • Outline
    • Overview: Organizational buying
    • Concepts
    • Business markets:
      • differ from consumer markets
      • are affected by buying situations
      • have 7 types of participants
      • are influenced by several factors
      • Marketers need to target efforts.
      • The buying process occurs in 8 stages.
      • Internet facilitates procurement.
      • Buyer-supplier relationships are important.
      • Opportunism is a form of cheating relative to a contract.
      • Institutions and governments are business markets.
    Outline (cont)
  • Organizational Buying
    • The decision-making process by which formal organizations
      • establish the need for purchased products and services
      • Identify, evaluate and choose among alternative brands and suppliers
  • Concept 1 The business market differs from the consumer market
    • Business market
      • organizations that acquire goods and services used in the production of goods and services that are sold, rented or supplied to others
    • Fewer, larger buyers
    • Close supplier-customer relationships
    • Professional purchasing
    • Many buying influences
    • Multiple sales calls
    • Geographically concentrated buyers
    • Derived, inelastic, fluctuating demands
    Concept 1 The business market differs from the consumer market
    • Examples
    • Kotler: Goodyear contracts from car makers
    • Local: Philam insurance package sold to companies vs sold to individuals
    • Medical: spectacles sold to optical shops vs individual patients
    Concept 1 The business market differs from the consumer market
  • Utilities Office Supplies Bulk chemicals New vehicles Elec. Equip Computer equip. Office building Security systems Concept 2 Buying situations affect business decisions
    • Involved Decision Making
    Modified Rebuy New Task Buying Straight Rebuy
    • *EXAMPLES
      • Kotler: modified rebuy - Orica Ltd
      • Local: straight - internet providers - PLDT SUN Globe – good coverage; improve speeds
      • Medical: new and modified - phaco machines and model improvements/ enhancements
    Concept 2 Buying situations affect business decisions. Add value to facilitate rebuys
  • Concept 3 Participants play any of 7 roles Approvers Buyers Gatekeepers Initiators Influencers Deciders Users Buying Center
    • Examples
      • Kotler: surgical gown supplier for hospitals
      • - purchasing VP/OR admin/MDs
      • Local: textile suppliers for RTW companies
      • eg Kamiseta, Bayo
      • Medical: viscoat in NKTI pharmacy
    Concept 3 Participants play any of 7 roles Approvers Buyers Gatekeepers Initiators Influencers Deciders Users
  • Concept 4 Various factors influence buying centers
    • Kotler: apply previous example
    • Local: environment - handicraft companies producing lahar-based products following Mt Pinatubo eruption
    • Medical: personal - eye center spectacle purchasing
    Concept 4 Various factors influence buying centers
  • Concept 5 Business marketers must target efforts to efficiently acquire and keep customers
    • Who are the decision makers
    • What decisions do they influence
    • What is their level of influence
    • What evaluation criteria do they use
    • Examples
      • Kotler: Symantec executive sponsorship program
      • Local: BizBox IT system – BGH
      • Medical: pharma companies sending MDs to conferences
    Concept 5 Business marketers must target efforts to efficiently acquire and keep customers
  • Problem Recognition Post Purchase Purchase Info Search/ Eval Need Recognition Concept 6 8 stages in the buying process Product Specification Proposal Solicitation Supplier Selection Order Routine Specification Performance Review
    • Examples
      • Kotler: need description and product specification - Hewlett-Packard “trusted advisor; everything is possible”
      • Local: problem recognition - Jollibee seafood offerings for holy week
      • Medical: supplier search - for alternative intraocular lenses (eg MSM, Hoya)
    Concept 6 8 stages in the buying process
  • Concept 7 Internet facilitates procurement: e-procurement
    • Direct extranet links to major suppliers
    • Buying alliances for lower raw material prices
    • Company buying sites
    • Examples
      • Kotler: Covisint
      • Local: PLDT Clark Telecom using BuySite applic of Bayan Trade
      • Medical: procuring hospital supplies on line
    GM, Ford, Chrysler Concept 7 Internet facilitates procurement: e-procurement
  • Concept 8 Buyer-supplier relationships affect business processes.
    • Basic buying and selling
    • Bare bones
    • Contractual transaction
    • Customer supply
    • Cooperative systems
    • Collaborative
    • Mutually adaptive
    • Customer is king
    • Examples
      • Kotler: Motoman and Stillwater Technologies (collaborative)
      • Local: The Oasis and Hizons (cooperative)
      • Medical: pharma companies and Mercury (customer is king)
    Concept 8 Buyer-supplier relationships affect business processes.
  • Concept 9 Opportunism is a form of cheating relative to a contract. Buyer Supplier Monitor C H E A T
    • Examples
      • Kotler: Ford and Lear Corporation
      • Local: Smartmatic
      • Medical: IT supplier of NKTI
    Concept 9 Opportunism is a form of cheating relative to a contract.
  • Concept 10 Institutions and Governments are also business markets.
    • Institutions:
      • Schools, hospitals, nursing homes, prisons
    • Low budgets
    • Captive clientele
    • Examples
    • Kotler - ARAMARK Corp and US prisons
    • Local – NBS supplying schools
    • Medical – Fresenius and NKTI; pharma companies and private hospitals
    • Governments
    • Spending decisions based on public review
    • Strict protocols followed – bidding, red tape
    • Examples
    • Kotler – ADI Technology spending on bids
    • Local – NBN deal
    • Medical – supplier bidding at PGH
    Concept 10 Institutions and Governments are also business markets.
  • SUMMARY
    • Business markets:
      • differ from consumer markets
      • are affected by various buying situations
      • have many participants, each playing any of 7 roles
      • are influenced by several factors
      • Marketers need to target efforts.
      • There are 8 stages in the buying process.
      • Internet facilitates procurement.
      • Buyer-supplier relationships are important.
      • Opportunism is a form of cheating.
      • Business markets also exist in institutions and governments.
    SUMMARY
  • CONCLUSION
    • Business markets
    • Dynamic
    • Create and capture value
    • Understand needs, resources and buying procedures
  • Chapter 7 ANALYZING BUSINESS MARKETS Kristine Bacsal-Flores Marketing Management MBAH Top 10 Concepts