Marketing Exam 2 Notes Like B2C B2B focus on serving specific types of customer markets by creating value for those customers Splenda making sugar like substance for Betty Crocker and Coca Cola find it more productive to focus their efforts on key industries or market segments Siemens What if a train could help drive our economy Can old buildings be just as energy efficient as new ones B2B Markets Manufacturers Resellers Institutions Government 1 Manufacturers Producers to make the products they sell to others manufacturers and producers buy raw materials components and parts that allow them to manufacture their own goods VW s IBM designed internet based private network that links more than 7 619 suppliers and 77 billion worth of components automotive parts and indirect raw materials 2 Resellers marketing intermediaries that resell manufactured products without significantly altering their form wholesalers and distributors buy Xerox products and sell them to retailers B2B and then retailers resell those Xerox products to the ultimate consumer B2C wholesalers distributors and retailers are all resellers TJ Maxx hosted shopper s blog with guess the price enhanced B2C and B2B company buys directly from 10 000 vendors don t advertise names and from hand me downs from department stores 3 Institutions hospitals educational organizations and religious organizations public school system budget B2B for capital construction equipment supplies janitorial services 4 Government largest purchasers of goods and services 2 8 trillion spent by U S fed U S spends 5 billion a year on aerospace and defense some of Pentagon s greatest suppliers of products Policy Studies Inc known for child support enforcement programs B2B Buying Process Need Recognition Product Specification RFP Process Proposal Analysis and Supplier Selection Order Specification Vendor performance assessment using metrics Both B2B and B2C start with recognition but info search and alternative evaluation steps are more formal and structured in B2B 1 Stage 1 Need Recognition Recognizes through either internal or external sources that is has an unfilled need Redmond Oregon airport wants to offer more concessions and services to people waiting for flights 2 Stage 2 Product Specification After recognizing the need the organization considers alternative solutions and comes up with potential specifications that vendors might use to develop their proposals Airport specifications of opening more concessions 3 Stage 3 RFP Process Request for Proposals a common process through which organizations invite alternative vendors or suppliers to bid on supplying their required components or specifications Web Portal an Internet site whose purpose is to be a major starting point for users when they connect to the Web cost saving and offer means to form supply chain that can respond quickly to buyer s needs Small to medium companies looking for skilled service workers can use portals like Guru com which was started to help freelance professionals connect with companies that need their services and Businesscoffeeexpress com 4 Stage 4 Proposal Analysis Vendor Negotiation and Selection The buying organization in conjunction with its critical decision makers evaluates all proposals it receives in response to its RFP Firms are likely to narrow the process to a few suppliers often those with which they have existing relationships and discuss key terms of the sale such as price quality delivery and financing negotiate with several suppliers 5 Stage 5 Order Specification The firm places its order with the preferred supplier or suppliers airport concession stand terms are clearly laid out regarding when the concession stand will commence its operations how it will structure its daily deliveries and the approval process for the construction layout 6 Stage 6 Vendor Performance Assessment Using Metrics More formal and objective analysis by the firm of their vendor s performance so they can make decisions about their future purchases Evaluating a Vendor s Performance 1 Key Issues customer service hours of operation product deliveries and product 2 quality Importance Score must add up to 1 product deliveries customer service hours open product quality 3 Vendor s Performance 1 through 5 4 Overall Performance Score Importance x Performance The Buying Center participants can range from employees who have a formal role in purchasing decisions to members of the design team that is specifying the particular equipment or raw material needed by employees who will be using a new machine that is being ordered Six different buying roles within a typical buying center 1 2 Initiator the person who first suggests buying the particular product or service Your Doctor determines the products and services that will best address and treat your illness or injury Influencer the person whose views influence other members of the buying center in making the final decisions The Medical Device Supplier the Pharmacy ElbowMed s sales rep effectively influenced your doctor s decision to use that screw 3 Decider the person who ultimately determines any part of or the entire buying decision whether to buy what to buy how to buy or where to buy The Hospital The hospital must decide if the ElbowMed screw is not only best for the patients but also involves a cost that is reimbursable by various insurance providers 4 Buyer the person who handles the paperwork of the actual purchase Will most likely be the hospital s materials manager who is charged with buying and maintaining inventory for the hospital in the most cost efficient manner GPO group purchasing organization better prices through volume buying gauze and sutures 5 User the person who consumes or uses the product of service The Patient you may decide that ElbowMed screws are not the best treatment 6 Gatekeeper the person who controls information or access or both to decision makers and influencers The Insurance Company your insurer may believe that ElbowMed screws are too expensive and that other screws deliver equally effective results and therefor refuse to reimburse the hospital in full of in part for the use of the screws Prescribing drugs gold standard new and reflect researcher s most recent understanding of how our bodies work or off label approved for one condition but may help with another Doctors want detailed information about drug safety pricing and prescribing in addition to information about new drugs sales reps don t