Analyzing business markets
•Download as PPT, PDF•
4 likes•895 views
The document discusses organizational buying and business markets. It defines organizational buying as the process by which organizations identify, evaluate, and choose products and suppliers. Business markets differ from consumer markets in that demand is derived, buyers are concentrated geographically, relationships are important, and there are fewer but larger buyers. The stages of organizational buying are described, including problem recognition, specification, supplier selection, ordering, and performance review. Different buying situations like new tasks, modified rebuys, and straight rebuys are also outlined.
More Related Content
What's hot
What's hot (20)
Similar to Analyzing business markets
Similar to Analyzing business markets (20)
More from Mahfuzur Rahman
More from Mahfuzur Rahman (20)
Recently uploaded
Recently uploaded (20)
Analyzing business markets
- 1. Kotler • Keller Phillip Kevin Lane Marketing Management • 14e
- 3. Defined Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall Slide 3 of 27 The 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. -- F. Webster Jr and Y. Wind Organizational Buying
- 4. Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall Slide 4 of 27 Business Markets Professional Buyers Geographically Concentrated Multiple Sales Calls Differences to the Consumer Market Personal Relationships Fewer, Larger Buyers
- 5. Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall Slide 5 of 27 Business Markets Demand •Derived •Inelastic •Fluctuating Derived Demand Differences to the Consumer Market Fluctuating Demand Inelastic Demand
- 6. Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall Slide 6 of 27 Buying Situations Straight Rebuy New Task Modified Rebuy
- 7. Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall Slide 7 of 27 Business Buying Participants Influencer Buyers Gatekeeper DeciderInitiator/ Users Approver
- 8. Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall Slide 8 of 27 Stages in the Buying Process Description and Characteristics Order Specification Performance Review
- 9. Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall Slide 9 of 27 Stages in the Buying Process Internal stimuli •New product being developed •Broken machine •Low stock level External stimuli •Trade show visit •Advertisement
- 10. Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall Slide 10 of 27 Stages in the Buying Process Technical specifications • Reliability • Durability • Price Description and Characteristics Product value analysis
- 11. Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall Slide 11 of 27 Stages in the Buying Process Trade directories Trade advertisements Trade shows E-Procurement Lead generation
- 12. Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall Slide 12 of 27 Stages in the Buying Process Formal presentation Written
- 13. Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall Slide 13 of 27 Stages in the Buying Process Supplier-evaluation model Number of suppliers
- 14. Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall Slide 14 of 27 Order Specification Stages in the Buying Process Technical specifications Quantity Delivery time Return policy Warranties Stockless purchase plan
- 15. Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall Slide 15 of 27 Stages in the Buying Process End user evaluations Weighted-score method Performance Review 7 9 4
- 16. Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall Slide 16 of 27 Buyclasses New Task Modified Rebuy Straight Rebuy 1. Problem Recognition Yes Maybe No 2. General need description Yes Maybe No 3. Product specification Yes Yes Yes 4. Supplier search Yes Maybe No 5. Proposal solicitation Yes Maybe No 6. Supplier Selection Yes Maybe No 7. Order-routine specification Yes Maybe No 8. Performance review Yes Yes Yes Buygrid FrameworkBuyphases Table 7.1
Editor's Notes
- Other differences include: Multiple buying influences – Such as buying committees, which can be comprised of technical experts and senior management. Direct purchasing – Often large volume customers purchase directly from manufacturer, rather than intermediaries
- B2B markets also differ from the consumer market in demand functions. Derived Demand – Demand in the business market depends on demand from the consumer market. Inelastic Demand – Total demand for many business goods and services is inelastic – that is, not affected too much by changes in price. Fluctuating Demand – Demand for business goods tends to be more volatile than the demand for consumer goods. At times, a rise of 10% in consumer demand can result in a rise in business demand by as much as 200%.
- Initiators Users Influences Deciders Approvers Buyers Gatekeepers
- Problems can be discovered from internal or external stimuli. A broken machine, low stock levels, or a new product being developed. External stimuli can trigger the process as well.
- Product value analysis is an approach to cost reduction that studies whether components can be redesigned or standardized or made by cheaper methods of production without affecting the product performance.
- Electronic marketplaces take numerous forms including: Catalog sites, Vertical markets, “Pure Play” auction sites, Spot markets, Private exchanges, Barter markets, and Buying alliances. The suppliers task is to ensure that they are considered when customers are– our could be – in the market and searching for a supplier. Marketing must work together with sales to define what makes a “sales ready” prospect and cooperate to send the right messages via sales calls, trade shows, online activities, PR, events, direct mail, and referrals.
- Buyers next invites suppliers to submit proposals. Complex or expensive items will require written and detail proposals and suppliers who make the cut may often be required to make formal presentations of their proposals. Marketers must be skilled in researching, writing, and presenting proposals. Materials should stress the value and benefits in customer terms.
- Buyers will often specify and rank desired supplier attributes, often using a supplier-evaluation model. In some cases, companies are reducing the overall number of suppliers they deal with. They want to choose suppliers who can be responsible for large component systems. Marketers should develop compelling value propositions and understand how buyers arrive at their valuations.
- After selecting suppliers, the buyer negotiates the final order. Depending on the product, the buyer may end up leasing the product. Advantages of leasing include: Latest product, better service, conservation of capital, and tax advantages. For maintenance, repair, and operating (MRO) items, buyers are beginning to use stockless purchase plans, (blanket contracts) that establish long-term relationships. Here the supplier agrees to resupply the buyer as needed, at agreed upon prices, over a specific period of time.
- Buyers periodically review the performance of chosen suppliers using one of three methods. Buyers contact end users and ask for their evaluations of the product/supplier Rate the supplier on several criteria using a weighted-score method. Aggregate the cost of poor performance to come up with adjusted costs of purchase, including price.