Marketing Chapter 6 Business to Business Marketing Business to Business marketing B2B the process of buying and selling goods or services to be used in the production of other goods and services for consumption by the buying organization or for resale by wholesalers and retailers B2B firms focus on serving specific types of customer markets by creating value for those customers Derived Demand the linkage between consumers demand for a company s output and its purchase of necessary inputs to manufacture or assemble that particular output More specifically derived demand reflects the link between consumers demand for a company s output and the company s purchase of necessary inputs to manufacture or assemble that particular output B2B markets include manufacturers resellers institutions and government Resellers are marketing intermediaries that resell manufactured products without significantly altering their form Wholesalers those firms engaged in buying taking title to often storing and physically handling goods in large quantities then reselling the goods usually in smaller quantities to retailers or industrial or business users Distributors a type of reseller or marketing intermediary that resells manufactured products without significantly altering their form Distributors often buy from manufacturers and sell to other businesses like retailers in a B2B transaction In most countries the central government is one of the largest purchasers of goods and services The Business to Business Buying Process the B2B buying process parallesl the B2C process though it differs in many ways Both start with need recognition but the information search and alternative evaluation steps are more formal and structured in the B2B process 1 Need Recognition 2 Product Specification a The buying organization recognizes through either internal or external sources that it has an unfilled need a After recognizing the need the organization considers alternative solutions and comes up with potential specifications that vendors might use to develop their proposals 3 RFP Process a Request for Proposals is a common process through which organizations invite alternative vendors or suppliers to bid on supplying their required components of specifications The purchasing company may simply post its RFP needs on its website or work through various B2B web portals or contact potential suppliers directly 4 Proposal Analysis and Supplier Selection a The buying organization in conjunction with its critical decision makers evaluates all the proposals it receives in response to its RFP 5 Order Specification a The firm places its order with its preferred suppliers The order includes a detailed description of the goods prices delivery dates and penalties for noncompliance 6 Vendor Performance Assessment Using Metrics a Formal and objective analyzing of the vendors performance so they can make decisions about their future purchases i 1 List of issues the buying team creates that it believes are important to consider in the vendor evaluation ii 2 The buying team assigns an importance score to each iii 3 The buying team assigns numbers that reflect its judgments about how well the vendor performs Usually a 5 point scale Web Portal an Internet site whose purpose is to be a major starting point for users when they connect to the web Buying Center the group of people typically responsible for the buying decisions in large organizations Initiator the buying center participant who first suggests buying the particular product or service Influencer the buying center participant whose views influence other members of the buying center in making the final decision Decider the buying center participant who ultimately determines any part of or the entire buying decision whether to buy what to buy how to buy or where to buy Buyer the buying center participant who handles the paperwork of the actual purchase User the person who consumes or uses the product or service purchased by the buying center Gatekeeper the buying center participant who controls information or access to decision makers and influencers Organizational Culture reflects the set of values traditions and customs that guide a firm s employees behavior Autocratic Buying Center a buying center in which one person makes the decision alone though there may be multiple participants Democratic Buying Center a buying center in which the majority rules in making decisions Consultative Buying Centers a buying center in which one person makes the decision but he or she solicits input form others before doing so Consensus Buying Center a buying center in which all members of the team must reach a collective agreement that they can support a particular purchase New Buy in B2B setting a purchase of a good or service for the first time the buying decision is likely to be quite involved because the buyer or the buying organization does not have any experience with the item Modified Rebuy refers to when the buyer has purchased a similar product in the past but has decided to change some specifications such as the desired price quality level customer service level options or so forth Straight rebuys refers to when the buyer or buying organization simply buys additional units of products that have previously been purchased