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Week 2 relationships


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Week 2 relationships

  1. 1. B2BMarketing Managing IndustrialMarketing Relationships Professor Philip Weinberg Summer 2012 1
  2. 2. B2B Marketing – Professor Weinberg Lesson OutlineInside and outside forces influence organizational buying. Inthis lesson you’ll learn about:•The decision process organizational buyers apply to confrontdiffering buying situations and the resulting implications•The variables that influence organizational buying decisions•A model of organizational buying behavior that integratesthese important influences•How knowledge of organizational buying enables marketers tomake more informed decisions on product design, pricing andpromotion 2
  3. 3. B2B Marketing – Professor Weinberg The Dynamics of Institutional BuyingMarket-driven firms sense market trends and work closelywith their customers and vendors. This is crucial to:•Identify profitable market segments•Locate buying influences within segments•Reach organizational buyers efficiently and effectivelywith an offer•Each decision goes through various steps. Skipping a stepcan be detrimental to the decision making process. 3
  4. 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 4
  5. 5. B2B Marketing – Professor WeinbergThe 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 5
  6. 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 6
  7. 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). 7
  8. 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. 8
  9. 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 9
  10. 10. B2B Marketing – Professor Weinberg 1 • Supplier Search 4 Inept Consider Set Inert -ation Set Set Awareness SetUnive rs al Set 10
  11. 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. 11
  12. 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. 12
  13. 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 13
  14. 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? 14
  15. 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 15
  16. 16. B2B Marketing – Professor Weinberg Three Buying Situations New Task Straight Rebuy Modified Rebuy Perceived problem, Recurring problem or Benefit to reevaluationOrigin different from previous continuing requirement (quality / cost / delivery) Extensive External Little (or no) new Can be minimal toInfo Search information needed extensive research Limited problem solvingCriteria Undefined Seldom reviewed of what is “broken”Preference Undefined Existing Relationship Seeking new relationship Judgmental and Casual purchase orDecisions Competitive criteria Strategic routine low priorityBuyer Inexperienced Very experienced Experienced, dissatisfied 16
  17. 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 organizations behavior patterns Weinberg’s Wisdom Leverage your client knowledge and trust to develop Further Business and to create new needs! 17
  18. 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... 18
  19. 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. 19
  20. 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. 20
  21. 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 21
  22. 22. B2B Marketing – Professor Weinberg Buying Centers & GroupsInitiator 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. 22
  23. 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 23
  24. 24. B2B Marketing – Professor Weinberg Industrial Buyer Personas Industrial Engineering Purchasing Product Users Department DepartmentEvaluativeCriteriaBackground& EducationPersonalityTraitsRisks 24
  25. 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. 25