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Analyzing
Business Markets
Prepared By,
Mr. Nishant Agrawal
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?
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?
What is Organizational Buying?
Organizational buying refers to 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.
Top Business Marketing Challenges
• Expand understanding of customer needs
• Compete globally as China and India reshape markets
• Master analytical tools and improve quantitative skills
• Innovation as an engine of growth
• Create new organizational models and linkages
Characteristics of Business Markets
• Fewer, larger
buyers
• Close supplier-
customer
relationships
• Professional
purchasing
• Many buying
influences
• Multiple sales calls
• Derived demand
• Inelastic demand
(not affected by
price change)
• Fluctuating demand
• Geographically
concentrated buyers
• Direct purchasing
Buying Situation
• Straight rebuy
• Purchasing department reorder supplies such as office supplies and
bulk order.
• Goal is to get small order and then enlarge their purchase share over
time
• Modified rebuy
• The buyer in modified rebuy want to change product specification ,
prices, delivery requirement.
• New task
• A new task purchaser buy a product for first time. New task buying is
marketer’s greatest opportunity and challenge.
Participants in Business Buying Process
The Buying Center
• Initiators
• Users
• Influencers
• Deciders
• Approvers
• Buyers
• Gatekeepers (Ex.
Purchasing agent ,
receptionists, telephone
operators)
The buying center include all members of organization who play any of the
Following 7 roles in purchasing decision process
Stages in the Buying Process: Buyphases
Buygrid framework
• Problem recognition
• General need description
• Product specification
• Supplier search
• Proposal solicitation / Tender
• Supplier selection
• Order-routine specification
Supplier Search
Forms of Electronic Marketplaces
• Catalog sites
• Vertical markets / specialized website
• Pure play auction sites
• Spot / exchange markets
• Private exchanges
• Barter markets : trade a goods
• Buying alliances (Ex. Flipkart + SBI)
Methods of e-Procurement
• Websites organized using vertical hubs
• Websites organized using functional
hubs
• Direct extranet links to major suppliers
• Buying alliances
• Company buying sites
Supplier Selection
Handling Price-Oriented Customers
Some companies handle price oriented buyers by setting a lower
price but establishing restrictive condition:
• Limit quantity purchased
• Allow no refunds
• Make no adjustments
• Provide no services
Methods for Researching
Customer Value
• Internal engineering
assessment
• Field value-in-use
assessment
• Focus-group value
assessment
• Direct survey
questions
• Conjoint analysis
• Benchmarks
• Compositional
approach
• Importance ratings
Order Routine Specification
• After selecting suppliers buyer negotiate final order, listing
technical specification , quantity needed, expected time of
delivery , return policy etc.
• Stockless purchase plans
• Buyer’s computer automatically sends an order to seller when stock is
needed.
• Vendor-managed inventory
•
Establishing Corporate Trust
and Credibility
• Expertise
• Trustworthiness
• Likability
Trust Dimensions
• Transparent
• Product/Service
Quality
• Incentive
• Partnering
• Cooperating design
• Product comparison
• Supply chain
• Pervasive advocacy
/ support
Factors Affecting
Buyer-Supplier Relationships
• Availability of alternatives
• Importance of supply
• Complexity of supply
• Supply market dynamism
Managing B to B Customer relationship
Categories of Buyer-Seller Relationships
• Basic buying and
selling
• Bare bones
• Contractual
transaction
• Customer supply
• Cooperative
systems
• Collaborative
• Mutually adaptive
• Customer is king
What is Opportunism?
•Opportunism is some form of cheating or
undersupply relative to an implicit or explicit contract.
•When buyers cannot easily monitor supplier
performance , supplier might cheat and not deliver
expected value.
Thank You

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Analyzing Business Markets

  • 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?
  • 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?
  • 4. What is Organizational Buying? Organizational buying refers to 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.
  • 5. Top Business Marketing Challenges • Expand understanding of customer needs • Compete globally as China and India reshape markets • Master analytical tools and improve quantitative skills • Innovation as an engine of growth • Create new organizational models and linkages
  • 6. Characteristics of Business Markets • Fewer, larger buyers • Close supplier- customer relationships • Professional purchasing • Many buying influences • Multiple sales calls • Derived demand • Inelastic demand (not affected by price change) • Fluctuating demand • Geographically concentrated buyers • Direct purchasing
  • 7. Buying Situation • Straight rebuy • Purchasing department reorder supplies such as office supplies and bulk order. • Goal is to get small order and then enlarge their purchase share over time • Modified rebuy • The buyer in modified rebuy want to change product specification , prices, delivery requirement. • New task • A new task purchaser buy a product for first time. New task buying is marketer’s greatest opportunity and challenge.
  • 8. Participants in Business Buying Process The Buying Center • Initiators • Users • Influencers • Deciders • Approvers • Buyers • Gatekeepers (Ex. Purchasing agent , receptionists, telephone operators) The buying center include all members of organization who play any of the Following 7 roles in purchasing decision process
  • 9. Stages in the Buying Process: Buyphases Buygrid framework • Problem recognition • General need description • Product specification • Supplier search • Proposal solicitation / Tender • Supplier selection • Order-routine specification
  • 10. Supplier Search Forms of Electronic Marketplaces • Catalog sites • Vertical markets / specialized website • Pure play auction sites • Spot / exchange markets • Private exchanges • Barter markets : trade a goods • Buying alliances (Ex. Flipkart + SBI)
  • 11. Methods of e-Procurement • Websites organized using vertical hubs • Websites organized using functional hubs • Direct extranet links to major suppliers • Buying alliances • Company buying sites
  • 12. Supplier Selection Handling Price-Oriented Customers Some companies handle price oriented buyers by setting a lower price but establishing restrictive condition: • Limit quantity purchased • Allow no refunds • Make no adjustments • Provide no services
  • 13. Methods for Researching Customer Value • Internal engineering assessment • Field value-in-use assessment • Focus-group value assessment • Direct survey questions • Conjoint analysis • Benchmarks • Compositional approach • Importance ratings
  • 14. Order Routine Specification • After selecting suppliers buyer negotiate final order, listing technical specification , quantity needed, expected time of delivery , return policy etc. • Stockless purchase plans • Buyer’s computer automatically sends an order to seller when stock is needed. • Vendor-managed inventory •
  • 15. Establishing Corporate Trust and Credibility • Expertise • Trustworthiness • Likability
  • 16. Trust Dimensions • Transparent • Product/Service Quality • Incentive • Partnering • Cooperating design • Product comparison • Supply chain • Pervasive advocacy / support
  • 17. Factors Affecting Buyer-Supplier Relationships • Availability of alternatives • Importance of supply • Complexity of supply • Supply market dynamism
  • 18. Managing B to B Customer relationship Categories of Buyer-Seller Relationships • Basic buying and selling • Bare bones • Contractual transaction • Customer supply • Cooperative systems • Collaborative • Mutually adaptive • Customer is king
  • 19. What is Opportunism? •Opportunism is some form of cheating or undersupply relative to an implicit or explicit contract. •When buyers cannot easily monitor supplier performance , supplier might cheat and not deliver expected value.