analysing business market

1. How do business buyers make
their decisions ?

2. Business buying decision process is divided into 8
stages called the buy phase
Problem recognition
Product specification
General need description
Suppliers search
Proposal solicitation
Supplier selection
Order routine specification
Performance review

3. Problem recognition
1
First step is to
recognise a
problem or need
that can be met by
acquiring a good or
service. Recognition
can be triggered by
an internal or
external stimuli

4. General need description
2
The buyers
determine needed
item’s general
characteristics and
required quantity

5. Product specification
3
Buying
organisations
develop the items
technical
specification.

6. Product value analysis
It is an approach to
cost reduction that
studies whether
components can be
redesigned or
standardised or made
by cheaper methods
without impacting
products performance

7. Supplier search
4
Buyer tries to
identify the most
appropriate
suppliers through
different modes
Trade
directories
Trade shows
Contacts
with other
companies
Trade
advertisement
Internet

8. Companies that purchase
over internet are utilising
electronic market places in
several forms
Catalog sites
Buying alliances
Barter markets
Private exchanges
Spot (exchange)
market
Vertical markets
Pure play auction
sites

9. E-Procurement
Websites are
organised around
two types of E-hub
Functional hubs
Logistic, media ,buying,
advertising, energy
management
Vertical hubs
Centred on industries

10. Websites are
organised around
two types of E-hub
Set up direct extranet
links to major suppliers
Set up company buying
sites
Form buying alliance

11. Lead generation
Marketing must
work together with
sales to define sales
ready prospect and
cooperate to send
right message to
customers
searching for
suppliers

12. Proposal solicitation
5
The buyer invites
qualified suppliers
to submit proposals

13. Proposals should be
marketing
documents that
describe value and
benefits in
customer terms

14. Oral presentation
must inspire
confidence and
position the
company’s
capabilities and
resources .

15. Supplier selection
6
Buying center will
specify and rank
customer attributes
often using a
supplier evaluation
model.

16. Overcoming
price pressure
The buying center
tries to negotiate
with preferred
suppliers for better
prices and terms

17. Some companies
handle price
oriented buyers by
lowering price but
establishing
restricted condition
Limited
quantities
No refunds
No
adjustments
No services

18. Solution selling can
also elevate price
pressure
Solutions to enhance
customer revenue
Solutions to reduce
customer cost
Solutions to decrease
customer risk

19. Number of
suppliers
Companies are
increasingly
reducing the no. Of
suppliers
Multiple sourcing
Often cite threat of
labour strike
Single sourcing
Suppliers may become
too comfortable and
lose their competitive
edge

20. Order routine
specification
7
Buyers negotiate
the final order,
listing the technical
specifications,the
quantity needed,
the expected time
of delivery, return
policies e.t.c

21. Blanket contracts
It establishes a long
term relationship in
which supplier
promises to
resupply the buyer
as needed.At
agreed upon prices,
over a specified
purchase plan
Vendor
management
inventory
Some companies
shift the ordering
responsibility to the
suppliers. Suppliers
take responsibility
for replenishing
automatically
through continuous
replenishment
program

22. Performance review
8
The buyer
periodically reviews
the performance of
chosen supplier
By contacting end users
and asking for their
evaluation
Aggregate the cost of
poor performance to
come up with adjusted
costs of purchase
Rate the supplier on
various criteria using
weighted score
method

23. SUMMARY
Problem recognition
Product specification
General need description
Suppliers search
Proposal solicitation
Supplier selection
Order routine specification
Performance review