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Analyzing Business Markets

Marketing Management, 13th ed

Group Members
Names 1. Muhammad Waqas 2. Muhammad Moheeb 3. Muhammad Majid 4.Shaid Zafar 5.Mehtab Mushtaq Topics Organizational Buying Business Buying Process Purchasing Process Stages in the Buying Process Managing Business-toBusiness Customer Relationships. Institutional and Government Markets

What is Organizational Buying??

Presented BY Muhammad Waqas

What is Organizational Buying?

Organizational buying refers to the decision-making process by which formal organizations establish the need for purchased products and services, and identify, evaluate, and choose among alternative brands and suppliers.

Top Business Marketing Challenges

Expand understanding of customer needs Compete globally as China and India reshape markets Master analytical tools and improve quantitative skills Reinstate innovation as an engine of growth Create new organizational models and linkages

Characteristics of Business Markets

Fewer, larger buyers Close suppliercustomer relationships Professional purchasing Many buying influences

Multiple sales calls Derived demand Inelastic demand Fluctuating demand Geographically concentrated buyers Direct purchasing

Buying Situation

Straight rebuy Modified rebuy New task

Participants in the Business Buying Process

Presented By Moheeb Iqbal

The Buying Center

Webster and Wind call decision making unit of a buying organization the buying center.

The Buying Center

Roles in the purchase decision process 1. Initiators. 2. Users. 3. Influencers. 4. Deciders. 5. Approvers. 6. Buyers. 7. Gatekeepers.

Buying Center Influences

1. Buyers centers usually include several participants with differing interests, authority, status, and persuasiveness. 2. Business buyers also respond to many influences when they make their decisions. 3. Webster cautions that ultimately, individuals, not organizations, make purchasing decisions.

Needs in buying center influence

1. Personal needs. 2. Organizational needs. Personal needs: Personal needs motivate the behavior of individuals. Organizational needs: Organizational needs legitimate the buying decision process and its outcomes.

Buying Center Targeting

To target their efforts properly, business marketers have to figure out: Who are the major decision participants? What decisions do they influence? What is their level of influence? What evolution criteria do they use?

1. 2. 3. 4.

Business marketer
Exactly what kind of group dynamics take place during the decision process. Small Sellers and Larger Sellers. Small sellers: Small sellers concentrate on reaching the key buying influencers. Larger sellers: Larger sellers go for multilevel in depth selling to reach as many participants as possible.

Target segments Types of identified customers

There are four types of customers: 1. Price oriented customers. 2. Solution oriented customers. 3. Gold standard customers. 4. Strategic value customers.

Restrictive conditions of the companies

Some companies are willing to handle price oriented buyers by setting a lower price, but establishing restrictive conditions: 1. Limiting the quantity that can be purchased. 2. No refunds. 3. No adjustments. 4. No services.

Some companies who restricts.

1. Cardinal health. 2. GE. 3. IBM.

Solution selling
Solution selling can also alleviate price pressure and comes in different forms. Here are three examples: 1. Solutions to Enhance Customer Revenue. 2. Solution to Decrease Customer Risks. 3. Solutions to Reduce Customer Costs.

The Purchasing Process/Procurement

Presented BY Muhammad Majid

Purchasing Orientations
There are three company purchasing Orientations: Buying Orientation Procurement Orientation Supply Chain Management Orientation

Types of Purchasing Process

Products related to purchasing process: Routine products Leverage products Strategic products Bottleneck products

Stages in Buying Process

Presented By Shaid Zafar

Stages in the Buying Process: Buyphases

Problem Recognition General Need Description And Product Specification Supplier Search E-Procurement Proposal Solicitation Supplier Selection Order-Routine Specification Performance Review

Problem Recognition
The buying process begins when someone in the company recognizes a problem or need that can be met by acquiring a good or service. The recognition can be triggered by internal or external stimuli.

General Need Description and Product Specification

Next, the buyer determines the needed items general characteristics and required quantity. For standard items, this is simple.  For complex items, the buyer will work with others- engineers , users- to define characteristics like reliability, durability, or price. Business marketers can help by describing how their products meet or even exceed the buyers needs.

E-Procurement
Websites are organized around two types of ehubs: vertical hubs centered on industries (plastics, steel, chemicals, paper) and  functional hubs ( logistics, media buying , advertising energy management). In addition to using these websites , companies can do eprocurement in other ways: 1. Direct extranet links to major suppliers. 2. Buying alliances

Supplier Selection
Before selecting a supplier, the buying center will specify desired supplier attributes and indicate their relative importance . To rate and identify the most attractive suppliers , buying centers often use a supplier evaluation model.

Methods for Researching Customer Value

Internal engineering assessment Field value-in-use assessment Focus-group value assessment Direct survey questions Conjoint analysis Benchmarks Compositional approach Importance ratings

Order-Routine Specification
After selecting suppliers, the buyer negotiate the final order, listing the technical specifications, the quantity needed , the expected time of delivery, return policies, warranties, and so on.  Stockless purchase plans Vendor-managed inventory Continuous replenishment

Performance Review
The buyer periodically reviews the performance of the chosen supplier(s). Three methods are commonly used. The may contacts the end users and ask for their evaluations; the buyer may rate the supplier on several criteria using a weighted score method.

Managing Businessto-Business Customer Relationships

Presented By Mehtab Mushtaq

Establishing Corporate Trust and Credibility

Expertise Trustworthiness Likability

Trust Dimensions
Transparent Product/Service Quality Incentive Partnering Cooperating design Product comparison Supply chain Pervasive advocacy

Factors Affecting Buyer-Supplier Relationships Availability of alternatives Importance of supply Complexity of supply Supply market dynamism

Categories of Buyer-Seller Relationships

Basic buying and selling Bare bones Contractual transaction Customer supply Cooperative systems Collaborative Mutually adaptive Customer is king

Categories of Buyer-Seller Relationships

Buying and selling Relatively simple, routine exchanges with moderately high level of cooperation and information exchange. Bare Bones Similar to basic buying and selling but more adaptation by the seller and less cooperation and information exchange

Categories of Buyer-Seller Relationships

Contractual transaction Generally low levels of trust, cooperation, and interaction; exchange is defined by formal contract. Customer Supply Traditional customer supply situation where competition rather than cooperation is the dominant form of governance.

Categories of Buyer-Seller Relationships

Cooperative systems Although coupled closely in operational ways, neither party demonstrates structural commitment through legal means or adaptation approaches. Collaborative Much trust and commitment leading to true partnerships.

Categories of Buyer-Seller Relationships

Mutually adaptive Much relationships specific adaption for buyer and seller, but without necessarily strong trust or cooperation. Customer is king Although bonded by a close, cooperative relationships, the seller adapts to meet the customers needs without expecting much adaptation or change on the part of the customer in exchange.

What is Opportunism?
Opportunism is some form of cheating or undersupply relative to an implicit or explicit contract.

Institutional and Government Markets (Buyers)

Institutional market schools, hospitals, prisons. Must provide goods and services to people in their care Need minimum quality standard at low price/low budgets. Cost-quality trade-offs. Government is a major buyer of goods and services Tender process (require bids) Lowest bidder (exceptions on quality) Need to follow detailed guidelines (lots paperwork) Favour - domestic suppliers Subject to public scrutiny

The END