Introduction To B2b Marketing

INTRODUCTION TO B2B BY :-

Th ree Th eore tica l P ersp ectiv es Conventional marketing • Need for integration of b2b marketing and supply chain management theories • Network Perspective • Strategic partnership • Social construction • Relationship marketing • Buyer-Seller interactions

Dominant Characteristics of the Conventional Approach to B2B Marketing Vendor-focused • Transaction-oriented – Complexity of purchase decisions – Frequency of purchases – Volume – Product service range

Auctions Standardized products Known technology Standardized quality measures • High volume • High frequency of usage • Price as important marketing parameter

The Purchaser Perspective to B2B Marketing Purchasing officers have different profiles and do not think like sales people – Strategic Importance of the product/solution – Cost savings vs. Solution enhancing purchases • Firm size influences purchasing behaviour

Product Value Analysis • • • • •

Does the use of the item contribute value? Is its cost proportionate to its usefulness? Does it need all its features? Is there anything better foor its intended use? Can a usable part be made by a lower-cost method? • Can a standard product be found that will be usable? • Is the product made on proper tooling, considering the quantities that are used? • Will another dependable supplier provide it for

Key F eature s of B2B Pr odu cts • Fewer users and larger purchases • Derived demand - esp. for raw materials and components • Fluctuating demand – 10% change in consumer demand can lead to more than 10% change in the demand for inputs • Rational buying decision process – quality, --- technical, perceived – dependability – performance and service

Classification of Organizational Buyers Producers – Manufacturers – Service firms • Intermediate customers • Public Sectors – Institutions – Projects • Non-Government Organisations

Key Ch arac teris ti cs o f Bu si ness t o Bu si nes s Cu st ome rs • Use other peoples’ money • Professional buyers – usually rational • Collective decison process - buying centre • Key managers are usually involved • Relatively fewer in number • Purchases are usually substantial in volume and value

International Dimensions of Business to Business Marketing Transnationality of Business Activities • Growing need for cross-national inter-firm collaborative arrangements – Contract Production – Out-sourcing of inputs – Strategic Alliances • Increasing demand for technology capacity enhancement packages in the emerging market economies • Governments and international organizations as target markets

Conventional Concepts and Models in B2B Marketing • The Buy Grid Model – Consists of 3 dimensions • Buy Situation – New task – Modified Rebuy – Straight rebuy • Buying Phases • Buying Centre

Two Dimensions of the Buygrid Model Task dimensions of the model • Buying situations/tasks, • Buying phases • Buying centre • Non-task dimensions • The individual • The group • Organisation

Buying Phases • • • • • • • •

Problem recognition General need description Product/service specification Supplier search Proposal solicitation Supplier selection Order-routine specification Performance Review

Role of the Buying Centre • Users • Influencers – Define specifications and provide information for evaluating alternatives • Deciders – Decide on product requirements and/or on suppliers • Approvers – Authorise proposed action • Buyers – Selects suppliers and arranges terms of purchase • Gatekeepers – Prevents information from reaching members of the buying centre

Contribution to Purchase Decisions by Buying Centre Members • Who originates the initial decision? • Who surveys alternatives and determines the basic characteristics of the product required? • Who identifies potential suppliers? • Who collects tenders/information from suppliers? • Who evaluates products offered? • Who authorises the purchase? • Who finally chooses the supplier? • Who monitors and evaluates the performance of both the product and the supplier? • Who is most likely to initiate decisions to change supplier? • Who finally decides on a change in supplier and selects the new supplier?

Buying Centre Analysis • Buying centre members selectively participate in purchasing decision processes • They have different choice criteria • They possess different levels of purchase knowledge • Their degree of involvement shift with the phases of the buying process • Their influence and authority shift from one buying

Strategic Implications of Buying Centre Analysis • Identification of key decision-makers/influencers at each stage of the purchase decision process. • Assessment of buying centre members' decision variables • Assessment of buying centre members' information about/ attitude to one's firm and competitors • Reinforcing positive opinion about one's firm • Legitimacy-seeking strategies • Reduce uncertainty about the expected quality of one's performance. – endorsement tactics,

International Perspectives on the Buy Grid Model • Countries differ in terms of their notions of logic and decision making procedures • Countries differ in terms of their degree of uncertainty avoidance • Countries differ in terms of their degree of individualism and consensus seeking • Countries and organisations differ in terms of respect for

Some Stra tegic Implica tio ns • Influence those whose money is being used (e.g. voters) • Adoption of customer retention strategies • Customized/Direct Marketing – E.g. Internet • Long term marketing strategies • Combination of rational arguments and persuasive negotiation • Stimulating demand for potential customer products • Send high powered salespeople

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