Unformatted text preview: Organizational Markets BusinesstoBusiness Marketing B 2 B Marketing Business Market Categories Producers Resellers Governments Institutions B 2 B Market Represents Purchases Made for 1 of 3 Reasons: Purchasing to facilitate the production of another product or service Purchasing so that employees can carry out an organization's operations Purchasing for resale to other customers Distinguishing Organizational Market Characteristics Market size Buying power Geographic concentration Demand influences Buying process Geographic Concentration Examples Wichita........................... South Dakota.................. Minneapolis / St. Paul...... Central Massachusetts...... Phoenix......................... Durham, N.C..................
Source: "Secret Capitals," Fortune.com, 10/14/2005 Light Aircraft Firearms Cardiac Devices Medical Imaging Technology Helicopters Weightloss Centers Managing the Market Chain Market Chain*: The series of value adding activities, linked together, to produce goods and services to satisfy client needs. *sometimes referred to as a value chain or demand chain Market Chain for Cars
Upstream Supplier . Extractor Mining company (steel from ore) Upstream Supplier (fasteners) Direct supplier Equipment (Machinery) Direct supplier Products (radiators) Ford Chrysler Toyota GM Honda (autos)
Auto dealerships Auto purchasers California Highway Patrol Rental agencies DOWNSTREAM Traveler Services Leveraging the Market Chain A business doesn't want to just purchase goods and services, but practice supplier development Strategic Alliances include partnerships between suppliers and business customers. build competitive advantages based on winwin scenarios (i.e. UPS and Toshiba) Business Market Demand Traits Derived Demand demand for a business product that relies on the demand for a consumer product (i.e... ATMs). Anticipation of changes in consumer demand creates large changes in industrial demand. demand for one business product is related to demand for another product (i.e... Alloy metals). price increase has minor impact on product's final cost. part or material does not have a substitute. Fluctuating Demand Joint Demand Inelastic Demand Organizational Buying Behavior
4 key issues account for buying complexity:
1. different buying processes exist that affect business purchases. 2. organizational buying can be handled by committees, causing purchase delay. 3. multiple vendors may be used to protect customer from shortages. 4. buyers can be influenced by both rational considerations and emotional needs Buying Center Concept Buying center Knowledgeable participants in an organizational buying action that share in the goals and rewards resulting from the decision. Buying Center Roles
Deciders Users Buyers Influencers Gatekeepers
Page 93 Classifying Business Buying Situations New task buying Straight rebuy first time or unique purchase situation requiring considerable effort on the decision maker's part. routine, lowinvolvement purchases. Modified rebuy same product from new supplier or slightly different product from existing supplier.
Page 94 & 95 Segmenting Business Markets Geographic segmentation Demographic segmentation Operating variables Profitability Buying Steps Need recognition Detailed description of product specifications Supplier search & solicitation Acquisition and analysis of proposals Supplier selection Purchase and use of product Performance review ...
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