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6 AnalyzingBusiness Markets
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Chapter Questions
What is the business market, and how does it
differ from the consumer market?
What buying situations do organizationalbuyers face?
Who participates in the business-to-businessbuying process and how are buying decisionsmade?
How can marketers build strong relationshipswith business customers?
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What is a Business Market?
Business market consist of individuals andorganizations that buy goods and services forfurther production, resale, re-rent, re-distribution, etc.
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What is Organizational Buying?
Organizational buying refers to the
decision-making process by which formalorganizations establish the need forpurchased products and services, and
identify, evaluate, and choose amongalternative brands and suppliers.
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Characteristics of
Business Markets
Fewer buyers
Larger buyers
Close supplier-customer relationships
Professionalpurchasing
Many buyinginfluences
Multiple sales calls
Derived demand
Inelastic demand
Fluctuating demand
Geographicallyconcentrated buyers
Direct purchasing
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Top Marketing Challenges
Understanding customer needs in new ways
Identifying new opportunities for growth
Improving value management techniques
Calculating better marketing performance and
accountability metrics
Competing and growing in global markets
Countering the threat of product and servicecommoditization
Convincing C-level executives to embrace themarketing concept
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Institutional and Government
Markets
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Buying Situations
Straight re-buy/re-orderStraight re-buy/re-order
Modified re-buyModified re-buy
New taskNew task
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Systems Buying and Selling
Turnkey solutiondesired;
Bids solicited
PrimeContractors
Second-tierContractors
Systemsubcomponents
assembled
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Sales Strategies
Small Sellers
Large Sellers
Key BuyingInfluencers
Multilevel
In-depthSelling
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The Buying Center
Initiators
Users
Influencers
Deciders
Approvers
Buyers
Gatekeepers
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Stages in the Buying Process:
Buyphases1. Problem recognition
2. General needdescription3. Product specification4. Supplier search5. Proposal solicitation
6. Supplier selection7. Order-routinespecification
8. Performance review
Newtask
Modifiedrebuy
Straightrebuy
Yes Maybe No
Yes Maybe No
Yes Yes Yes
Yes Maybe No
Yes Maybe No
Yes Maybe NoYes Maybe No
Yes Yes Yes
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Supplier Search:
Forms of Electronic Marketplaces
Catalog sites
Vertical markets
Pure play auction sites
Spot markets
Private exchanges
Barter markets
Buying alliances
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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
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Supplier Selection:
An Example of Vendor Analysis
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Order Routine Specification
Stocklesspurchase plans
Vendor-managedinventory
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Building Business Relationships:Establishing Corporate Trustand Credibility
Expertise
LikeabilityTrustworthiness
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Trust Dimensions
Transparent
Product/Service
Quality
Incentive
Partnering
Cooperating
DesignProduct
Comparison
Supply Chain
PervasiveAdvocacy
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Handling Price-Oriented Customers
Limit quantity purchasedLimit quantity purchased
Allow no refundsAllow no refunds
Make no adjustmentsMake no adjustments
Provide no servicesProvide no services
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Factors Affecting
Buyer-Supplier Relationships
Availability ofalternatives
Supply marketdynamism
Complexity ofsupply
Importance ofsupply
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Categories of Buyer-Seller
Relationships
Basic buying andselling
Bare bones
Contractualtransaction
Customer supply
Cooperativesystems
Collaborative
Mutually adaptive
Customer is king
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Methods for Researching
Customer Value
Internal engineering
assessment
Field value-in-useassessment
Focus-group valueassessment
Direct surveyquestions
Conjoint analysis
Benchmarks
Compositionalapproach
Importance ratings
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What is Opportunism?
Opportunism is some form of cheating
or undersupply relative to an implicit orexplicit contract.
Opportunities is a concern because firmsmust devote resources to control andmonitoring that otherwise would be allocatedto more productive purposes.
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