1. B2B
Marketing
Managing Industrial
Marketing Relationships
Professor Philip Weinberg
Summer 2012
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2. B2B Marketing – Professor Weinberg
Lesson Outline
Inside and outside forces influence organizational buying. In
this lesson you’ll learn about:
•The decision process organizational buyers apply to confront
differing buying situations and the resulting implications
•The variables that influence organizational buying decisions
•A model of organizational buying behavior that integrates
these important influences
•How knowledge of organizational buying enables marketers to
make more informed decisions on product design, pricing and
promotion
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3. B2B Marketing – Professor Weinberg
The Dynamics of Institutional Buying
Market-driven firms sense market trends and work closely
with their customers and vendors. This is crucial to:
•Identify profitable market segments
•Locate buying influences within segments
•Reach organizational buyers efficiently and effectively
with an offer
•Each decision goes through various steps. Skipping a step
can be detrimental to the decision making process.
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4. B2B Marketing – Professor Weinberg
The Institutional Buying Process
• Buying is a 1
• Problem Recognition
process, 2 • General Description of Need
not an event • Product Specifications
3
• Various points in
• Supplier Search
the process 4
– Critical Decision 5
• Acquisition & Analysis of Proposals
Points 6 • Supplier Selection
– Evolving
• Selection of Order Routine
Information 7
Requirements 8 • Performance Review
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5. B2B Marketing – Professor Weinberg
The Institutional Buying Process
1
• Problem Recognition
2 • General Description of Need
3 • Product Specifications
4
• Supplier Search
5
• Acquisition & Analysis of Proposals
6 • Supplier Selection
7
• Selection of Order Routine
8 • Performance Review
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6. B2B Marketing – Professor Weinberg
1 • Problem Recognition
• Initially, the buyer is aware of a problem - a discrepancy
between actual and desired states.
– Internal: A machine breaks down; we can capture that
opportunity and provide a replacement
– External: Salesperson, advertising, Push/Pull Strategy
• Our Products, Services and Experiences can move a
customer from the actual to desired states.
Product / Service /
Experience
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7. B2B Marketing – Professor Weinberg
1 • General Description of Need
2
• Once a need is recognized, the purchasing department and
buying group define the requirements by determining:
– The extent of the problem
– The alternatives can solve the problem
– Where the solution can be purchased
• Each small decision ultimately helps define
the product specifications.
• Sometimes the supplier is involved if the supplier influences
the sale (i.e., the supplier makes the buyer aware of the
need).
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8. B2B Marketing – Professor Weinberg
1 • Product Specifications
3
• Many times the question boils down to:
– Is it a new task buy?
– Is it a straight rebuy?
– Is it a modified rebuy?
• Buyers try to be objective and consider many ideas.
• Professional sellers try to influence this decision as early as
possible in the buying process—if they can!
• This is an important because it often determines how the
contract is structured and the specific wording that it uses.
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9. B2B Marketing – Professor Weinberg
1 • Supplier Search
4
• How will suppliers be found?
• The identifier of the problem (step 1) often has influence
on the supplier search
• If a salesperson creates the need, the specs may be
written so his/her company is the only one that can fulfill
the contract
• Often only preferred or approved vendors are
Unive
rsal S
considered. et
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10. B2B Marketing – Professor Weinberg
1 • Supplier Search
4
Inept Consider
Set Inert
-ation Set
Set
Awareness Set
Unive
rs al Set
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11. B2B Marketing – Professor Weinberg
1 • Acquisition & Analysis of Proposals
5
• This step occurs only when the buying organization
lacks adequate information to make a decision.
• Proposals are presented in detail often by a team
engineers, users and purchasing agents. Successful
proposals determine the supplier.
• Many times, this step is perfunctory. The buyer may
have already determined the preferred vendor, but legally
Unive
rsal
it may be necessarySet seek other vendor proposals to
to
attain government contracts.
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12. B2B Marketing – Professor Weinberg
1 • Supplier Selection
6
• At this point, negotiation includes not only the final
price, but also:
– Quantities
– Delivery times
– Level of service
– Warranties
– PaymentUnivers
schedules
al Set
– Etc.
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13. B2B Marketing – Professor Weinberg
1 • Selection of Order Routine
7
• Once the supplier is selected, the order routines are
established:
Unive
rs al Set
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14. B2B Marketing – Professor Weinberg
1 • Performance Review
8
• After receipt of the product or service, a performance
review asks:
– Did the supplier meet
delivery time?
– Did the product meet
the specs?
– Does the contract have
Unive
to be modified?sal
r Set
– Did the vendor live up
to expectations?
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15. B2B Marketing – Professor Weinberg
Buying Process Influences
• Environmental Forces
– Economic conditions
– Technological innovations
– Political changes
• Competitive Forces
– Create USP or destroy
competition’s USP
• Organizational Forces
– Buying Situation
– Shifts in organizational
objectives
– Buying group
• Individual Forces
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16. B2B Marketing – Professor Weinberg
Three Buying Situations
New Task Straight Rebuy Modified Rebuy
Perceived problem, Recurring problem or Benefit to reevaluation
Origin
different from previous continuing requirement (quality / cost / delivery)
Extensive External Little (or no) new Can be minimal to
Info
Search information needed extensive research
Limited problem solving
Criteria Undefined Seldom reviewed
of what is “broken”
Preference Undefined Existing Relationship Seeking new relationship
Judgmental and Casual purchase or
Decisions Competitive criteria
Strategic routine low priority
Buyer Inexperienced Very experienced Experienced, dissatisfied
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17. B2B Marketing – Professor Weinberg
Gaining an Advantage: New Task
• Marketers can gain an edge if they:
– Initiate problem recognition
– Get involved very early in the decision-making process
– Get involved early in the procurement process
– Understand the buying organization's behavior patterns
Weinberg’s Wisdom
Leverage your client knowledge
and trust to develop Further
Business and to create new needs!
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18. B2B Marketing – Professor Weinberg
Maintaining an Advantage: Straight Rebuy
• Relationships are the most important element!
• Compare the costs / benefits of changing
• Some companies review this area of business
– At regular intervals
– Randomly
– After employee turnover
– During audits
• Are you In...
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19. B2B Marketing – Professor Weinberg
Seizing an Advantage: Straight Rebuy
• ...or Out? (Don’t worry, Out sellers can get In!)
• They must convince the buyer that
– Their current supplier is not doing their job.
– They are experiencing problems that
they were not aware of earlier.
– Their purchasing requirements have
changed.
– They should consider other
alternatives.
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20. B2B Marketing – Professor Weinberg
Creating an Advantage: Modified Rebuy
• In suppliers need to understand developments within the
buying organization
– Be a part of the modified rebuy situation
– Maintains the “edge” unless out of touch with buyer
• Out suppliers need to create the need and influence the
buyer to consider other alternatives.
– This demands superior salespersonship.
– Selling company needs to offer
performance guarantees, warranties
and additional services and training.
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21. B2B Marketing – Professor Weinberg
• The importance of
Purchasing Departments
has rapidly increased.
– More competitive
– Outsourcing as impetus
• Purchasers play a
strategic role within the
organization
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22. B2B Marketing – Professor Weinberg
Buying Centers & Groups
Initiator Initially perceives a problem and initiates the buying process to solve it.
Influencer Affects the purchasing decision by providing technical information or other
relevant (internal or external) information.
Gatekeeper Controls the information to be reviewed by members of the buying group.
(For example, buyer may screen advertising material and even salespeople.)
Decider Actually makes the buying decision, whether or not they have formal
authority to do so. Could be the owner, an engineer or even the buyer.
Buyer Has formal authority to select and purchase products or services and the
responsibility to implement and follow all procurement procedures.
User Actually use the product in question. Can be inconsequential or major
players in the process.
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23. B2B Marketing – Professor Weinberg
How can I assess buying group forces?
• Answer these three questions:
1. Who takes part in the buying process
2. What is each person’s relative influence in the decision?
3. What criteria are important to each member in evaluating the
supplier?
• And take the following steps:
1. Isolate the personal stakeholders Weinberg’s
2. Follow the information flow Wisdom
3. Identify the experts
Use this technique
4. Trace the connections to the top to get a new Job!
5. Understand purchasing’s role
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24. B2B Marketing – Professor Weinberg
Industrial Buyer Personas
Industrial Engineering Purchasing
Product Users Department Department
Evaluative
Criteria
Background
& Education
Personality
Traits
Risks
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25. B2B Marketing – Professor Weinberg
A Few Final Thoughts
• Understanding the Organizational Buying Process Results in
Favorable Action
• By understanding the buying process, the marketer is better
able to play an active role in stimulating a positive market
response.
• A marketer who identifies
– the organizational screening requirements and
– the important evaluative criteria of individual
buying group members
• can make better product, design, pricing
and promotional decisions.
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