MARKETING MANAGEMENT12th edition

7 Analyzing

Business Markets

Kotler Keller 7-2

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?

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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?

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SAP’s software applications automate business functions

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Organizational Buying

Decision-making process by whichformal organizations establish theneed for purchased products and

services, and identify,evaluate, and choose among

alternative brands and suppliers.

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Characteristics of Business Markets

• Fewer, larger buyers• Close supplier-

customer relationships• Professional

purchasing• Many buying

influences• Multiple sales calls

• Derived demand• Inelastic demand• Fluctuating demand• Geographically

concentrated buyers• Direct purchasing

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Buying Situation

Straight rebuy

Modified rebuy

New task

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Systems Buying and Selling

Turnkey solution desired;

Bids solicited

PrimeContractors

Second-tierContractors

System subcomponents

assembled

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The Buying Center

Initiators

Users

Influencers

Deciders

Approvers

Buyers

Gatekeepers

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Of Concern to Business Marketers

• Who are the major decision participants?• What decisions do they influence?• What is their level of influence?• What evaluation criteria do they use?

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Sales Strategies

Small Sellers

Large Sellers

Key Buying Influencers

MultilevelIn-depthSelling

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Types of Business Customers

Price-oriented

Gold-standard

Strategic-value

Solution-oriented

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Handling Price-Oriented Customers

Limit quantity purchased

Allow no refunds

Make no adjustments

Provide no services

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Kodak offers services that streamline processes for hospital administrators

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Purchasing Orientations

Buying

Procurement

Supply Chain Management

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Product-Related Purchasing Processes

Routine products

Leverage products

Strategic products

Bottleneck products

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Table 7.1 Buy-grid Framework

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Figure 7.1 Organizational Buying Behavior in Japan

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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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Forms of Electronic Marketplaces

•Catalog sites•Vertical markets

•Pure play auction sites•Spot markets

•Private exchanges•Barter markets

•Buying alliances

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Table 7.2 Vendor Analysis

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Assessing Customer Value

• Internal engineering assessment

• Field value-in-use assessment

• Focus-group value assessment

• Direct survey questions

• Conjoint analysis• Benchmarks• Compositional

approach• Importance ratings

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Order Routine Specification and Inventory

Stockless purchase plans

Vendor-managedinventory

Continuous replenishment

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Desirable Outcomes of a B2B transaction: OTIFNE

OTOn time

NENo error

IFIn full

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Establishing Corporate Credibility

Expertise

LikeabilityTrustworthiness7-26

Factors Affecting Buyer-Supplier Relationships

Availability of alternatives

Supply marketdynamism

Complexity ofsupply

Importance ofsupply

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Categories of Buyer-Seller Relationships

• Basic buying and selling

• Bare bones• Contractual

transaction• Customer supply

• Cooperative systems• Collaborative• Mutually adaptive• Customer is king

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Opportunism

Some form of cheating orundersupply relative to animplicit or explicit contract.

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Aramark successfully services institutional and government markets

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Marketing Debate

How different is B-to-B Marketing?

Take a position:1. B-to-B requires special, uniquemarketing concepts and principles.2. B-to-B is really not that different;basic marketing concepts apply.

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Marketing Discussion

How might we apply the consumerbehavior topics from Chapter 6 toB-to-B settings?