B2B Buyer Behaviour and Segmentation
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This document discusses B2B buyer behavior and the B2B buying decision process. It covers why companies buy, what motivates them, the buying center, consumer and B2B buying decision processes. It also discusses B2B market segmentation, including geographic, demographic, psychographic and industrial segments. The document presents a model for B2B market segmentation that scores segments on attributes to determine their overall attractiveness.
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B2B Buyer Behaviour and Segmentation
- 1. B2B Buyer Behaviour Presented by Lindsey Fair
- 5. consumer buying decision process
- 6. B2B buying decision process definition stage selection stage deliver selection stage end game stage process flow model (PFM)
- 8. positioning
- 9. we have a problem..
- 10. B2B market segmentation clusters of firms that are distinct from others in terms of what they need and buy as well as how they buy.
- 12. demographic
- 15. segments chosen based on.. measurability accessibility substantiality actionability
- 18. Attributes Segments Scores on 5-point scale* Segment 1: Major Turnaround Segment 2: Stopping Deterioration Segment 3: Competitive Improvement Segment 4: Specific Area Improvement Potential size year 2010 (in $million) 2 $195.0 3 $390.0 4 $585.0 4 $975.0 Growth, percent increase by 2012 4 100% 4 100% 1 50% 5 150% Need strength 5 4 3.5 3.5 (High variance) Competitive strength 3 3 4 3 (High variance) Channel reach 5 5 5 5 Communications reach 4 4 4 4 Capability fit 2 5 5 2 Price sensitivity 2 3 4 3 Overall attractiveness (sum of attribute scores) 27 31 30.5 29.5
- 19. blink moment
Editor's Notes
- Objectives of this lesson: Develop an understanding of the difference between quantifiable organizational needs and the often qualitative process used to fulfill those needs . Understand how organizations develop and satisfy the requirements for selecting and maintaining relationships with suppliers . Understand how individuals within organizations develop and satisfy the requirements of their professional responsibilities as dictated by their organizations and, within that framework, their own individual needs . See how the supplier– customer relationship is the principal defining factor in the success of business-to-business marketing efforts. \\ Gain an initial sense of the concepts of trust and commitment in effective relationship development. Gain an appreciation for the different levels of complexity of decisions made in the buying process and how a business-to-business marketer can influence the process.
- So basically this is what it comes down to
- Who read it? Read it now. Summarize it. What was the biggest issue with the Covisint model? (PG 52) Covisint: Illustrating the Importance of Adapting to Customers’ Buying Behavior Covisint was the ill-fated attempt by the auto industry to join forces and use the Internet to lower costs. It is a classic example of what not to do in an industry where relationships are important and complex and customers and suppliers are intensely competitive. Pundits who initially heralded the project blamed the industry for not getting past their rivalries. While there may be some truth to that, most had ignored the fact that approximately 80 percent of all automotive purchases were based on “intellectual collaboration” and contained significant proprietary content. In hindsight, it’s not hard to see that the collaboration and proprietary relationships existing in the auto industry would not lend themselves to an online process. The Web holds much promise as a productivity tool in business-to-business marketing, but it was not able to replace relationships. Lesson --> research and understanding your market segment is important
- The buying center—a collection of individuals with a stake in the buying decision. Members of the buying center determine, within their own professional responsibilities, the organization’s needs and the methods the organization uses to satisfy them. Buying center complexity changes depending on the complexity of the need. Stakeholders in each discipline within the buying organization contribute expertise such that internal and external factors are accommodated. B2B Buying Centre (how it differs from B2C): Involves more Buyers Stakeholders in Buying Center are driven by professional responsibilities Different decisions occur simultaneously within the Buying Center The Buying Centre is a complex consideration: Organization’s Needs Benefits of the product or service to the organization. Individual’s Needs Based on the individual’s role in the Buying Center and the expected professional activities/functions of the job. Individual’s Personal Needs Career, quality of life, recognition, and so on will influence decisions.
- Consumer Decision Process *not necessarily a sequential process Discussion: consider the number of individuals (usually few or one) impacted by the decision. Compare this to the scope of an inappropriate purchase decision in a corporation. To reduce the impact of an incorrect decision (reduce error, risk, costs) and to ensure that all stakeholders in the organization receive satisfactory value from the purchase, the business-to-business buying process is more formalized with RFP's, process, etc.
- (Exhibit 3-2) Interaction is fluid and broad based Process is simultaneous, not sequential The “Track-Record” determines if supplier is included in evoked set Relationships build loyalty Process Flow Model (PFM) of the Organizational Buyers Decision Process The traditional, or stepwise model of the decision process can be misleading in that it defines activities as discrete steps and overlooks the value of relationships. The PFM attempts to demonstrate the interaction and fluidity of what really happens in organizational buying decisions. Definition Stage Problem recognition General need description Product specification Selection Stage Supplier/Source Search Proposal Solicitation (if new, buying centremay have 'favourite' supplier) Contract for supplier(s) Deliver Selection Stage Make the transaction routine End Game Stage Evaluate performance Resell the job
- So how do customers solve their problem? We have to do some research to find out.
- ( Includes lifestyle, habits, attitudes, beliefs, values)
- Naics, sic’s
- Measurability Accessibility Substantiality Actionability Determine relative size and growth potential of segments Determine individual segment needs and buying behavior
- Competitive advantage through low cost position Competitive advantage through differentiated offering Competitive advantage through providing an exact product to a niche market
- The hypothetical example, shown in Exhibit 7-7, of the market research company determining the segmentation for a new online service, illustrates how target segments can be chosen analytically.
- Rethinking Business-to-Business Marketing (New York: Free Press, 1991). Sherlock noted that buyers often make their decision very early in the process based on a visceral reaction to the supplier’s initial value image. Blink However, we do a best to create a system that makes our brand be the chosen thing in a blink of an eye