Foundations of Marketing Chapter 7

Business Markets (B2B Markers)
individuals, organizations, or groups that purchase a specific kind of product for resale, direct use in producing other products, or use in general daily operations
Producer Markets
individuals and business organizations that purchase products in order to make a profit by using them in producing other products or in their operations
Resellers
intermediaries (wholesalers or retailers) who buy finished goods and resell them for a profit

factors they consider:
level of demand
space required relative to potential profit
ease of placing orders
availability of technical assistance
training programs from producers
does it compete or complement?

government markets
federal, state, county, or local governments that buy goods and services to support their internal operations and provide products to their constituencies
institutional markets
organizations with charitable, educational, community, or other non-business goals

like churches, hospitals, etc..

differences between business and consumer sales transaction
-larger
-may involve expensive items
-discussions and negotiations can require considerable marketing time and selling effort
reciprocity
an arrangement in which two organizations agree to buy from each other
-unique to business markets
-reciprocal agreements that threaten competition are illegal
attributes of business customers
-well informed about products they purchase
-demand detailed info and technical specs
-help the firm achieve organizational objectives
-engage in rational buying behavior
-often form partnerships with suppliers
primary concerns of busi customers
price
product quality
service
supplier relationships
description
when products are highly standardized, a buyer can order by describing quantity, grade, and other attributes
inspection
used with some products that have unique characteristics and vary in regard to condition
sampling
entails taking a specimen of the product and evaluating it for suitability before purchase
negotiation
some purchases are based on negotiated contracts wherein buyers describe what they need and sellers submit bids
New Task Purchase
an item is purchased to be used to perform a new job or solve a new problem
Straight Rebuy Purchase
a routine purchase of the same products under approximately the same terms
Modified Rebuy Purchase
a new task purchase that is changed on subsequent orders; or when straight rebuy purchases are modified
derived demand
demand for business products that stem from demand for consumer products
inelastic demand
demand that is not significantly altered by a price increase or decrease
joint demand
demand involving the use of two or more items in a combination to produce a product
what can happen to demand for a product?
it can fluctuate in response to consumer demand changes
Business (organizational) Buying Behavior
purchase behavior of producers, government units, institutions, and resellers
the buying center
group of people within the organization who make business purchase decisions

roles include users, influencers, buyers, deciders, and gatekeepers

users
organizational members who actually use the product being acquired
influencers
those who develop the specifications and evaluate the alternative products; often technical personnel
buyers
select suppliers and negotiate terms of purchase
deciders
those who actually choose the products
gatekeepers
controls the flow of information to and among people in the buying center
value analysis
an evaluatation of each component of a potential purchase
vendor analysis
a formal, systematic evaluation of current and potential vendors
multiple sourcing
an organizations decision to use several suppliers
sole sourcing
an organization’s decision to use only one supplier
environmental influences
includes competitive and economic factors, political forces, legal and regulatory forces, technological changes, and sociocultural issues
organizational influences
includes company objectives, purchasing policies, and resources and the size and composition of its buying center
interpersonal forces
the relationships between people in the business; trust and collaboration are important
individual influences
personal characteristics of participants in the buying center
Industrial classification systems
ready-made tools that enable marketers to categorize organizations into groups based on the type of goods and services provided
Two uses for Industrial Classification Systems
1. IDing potential business customers
—>North American Industrial Classification System (NAICS) is used by US, Canada, and Mexico to help generate comparable stats

2. Estimate purchase potential