Mktg 350 1st Edition Lecture 7Business-to-Business MarketingBusiness-to-business marketing- Derived demand—a business only ever needs to buy a product because it has a consumer that has a demand for that finished good along the lineEx: contractor: don’t buy tube because they like it but because they need the tubes to build a house for a customer Direct demand- our actual demands I’m hungry so I buy food B2B Markets-1. Resellersa. Manufacture reseller resellerb. Wholesaler buys product and markets up the price when they sell to resellersi. Reseller- brokers 2. Institutionsa. Schools, museums, hospitals, and religious organizations b. Not necessarily for profit c. USC—buys paper, contract with black board, licensing rights, buildings, 3. Governmenta. Spends 2.1 trillion producing goods. Biggest buyer (mostly defense)b. State and local governments also make significant purchases (school, lunch rooms)c. Firms specialize in selling to government d. Buy according to bid – under a certain amount you can buy, over 500 you need written quotes, over 1000 you have to go to a bidding (who wants to buy the product) government is required to buy the lowest bid 4. Manufacturers/ services providersa. Buy raw materials, components or partsb. Manufacture their own goods c. Buy lens and metal and make a light bulbd. Emphasis on personal selling (sales reps) e. Close relationship between manufactures and customers (venders) These notes represent a detailed interpretation of the professor’s lecture. GradeBuddy is best used as a supplement to your own notes, not as a substitute.NAICS- north American industry classification system  first 2 digits mark the industry the rest get into specifics retailers women’s retailer  women’s underwear retailer (allows for easy buy and sell raw materials) B2B buying Process1. Need recognition- can be generated internally (employees) or externally a. Sources for recognizing new needs externally (suppliers, salespeople, competitors) 2. Product specification- used by suppliers to develop proposals (can be done collaboratively with suppliers) a. Playground—age of children, supplies (safe) mulch, what slides are made out of, state playground man 3. RFP process- request for proposal – written document that says this product is now openfor bid – for the right to supply our company 4. Proposal analysis and supplier selection—often several vendors are negotiating against each other (considerations other than price play a role in the final selection) – state/government takes the lowest pricea. Pick top contenders – make sure that that is their best offer – best price, quality, delivery, financing terms b. Dependent of ease of ordering c. Buy back unsold products 5. Oder specification- firm places order and the exact details of the purchase are specified including payment (any penalties for non-compliments) 6. Vendor/ performance assessment using metrics – how we felt about this purchase situation a. Key issues- customer service, issue resolution, delivery, qualityDistinction between business buying and consumer buying - More formal and structures-- Specified in writing - Bought in larger quantities - Uses a buying center - Formal evaluation by the buyers - (shouldn’t feel cognitive dissonance) Buying center—group of people that work together to make a corporate buying decision(something new and hasn’t been done before) --university housing didn’t have a universal computer system (work orders)  Initiator- comes up with the idea—doesn’t have to be an official person (it guy, front desk person, etc0 Influencer- has the ear of the decision maker User- the company/ department (USC housing) need the input of all the users Buyers—does the paperwork and sign the check – someone in accounting office  Decider—the one person who ultimately says yes or no (most important person in the buying center)  Gatekeeper—controls the flow of information through the organization – someone in an official or unofficial position (funnels the right bids, doesn’t connect rude person to maincontact) Organizational Culture 1. Democratic culture- majority rules2. Consultative- one decision maker goes around and gets everyone’s input 3. Autocratic- one decision maker make all decisions for the company (mom makes all the decisions) (owner makes decisions)  good in an emergency 4. Consensus – everyone has to agree Buying situation1. New buy- never bought before—don’t exactly know what you are buying – risk involved (go thorough all of the steps carefully and use all members of the buying center) – no one has advantage 2. Straight rebuy—buying more of the exact same thing—buy new bushes after they were ran into on football field 3. Modified rebuy—committed to a producer – leased so new computer every so often – committed to the pcs because they understood the product (getting cd opposed to floppy disks) dell has advantage because they have been the previous