Business to Business Marketing

Professor Lawrence Feick

University of Pittsburgh

Organizational markets compared to consumer markets

• Fewer buyers

• Larger purchases

• Derived demand

Organizational markets compared to consumer markets (continued)

• Differences in the purchasing process– professional buying– the buying center– buyclass

Obtain Feedback and Evaluate Performance

Select Order Routine

Evaluate Proposals and Select Supplier

Acquire and Analyze Proposals

Search for and Qualify Sources

Describe Characteristics and Quantity

Determine Characteristics and Quantity

Recognize Problem and General Solution

Organizational Buying Process

The Buying Center

• Participants in an organization’s buying decision

USERS

BUYERS

DECIDERS

INFLUENCERS

GATEKEEPERS

The Buying Center

Organizational buyclasses

• Straight rebuy

• Modified rebuy

• New task purchase

Figure 9.9a Chrysler’s Vendor Analysis Form

Supplier Rating Chart: Commodity:__________Supplier Name:__________ Annual Sales Dollars:__________Shipping Location:__________

5 4 3 2 1 0Ex. Good Sat. Fair Poor N/A

Quality 40%Supplier defect rates ___ ___ ___ ___ ___ ___SQA program conformance ___ ___ ___ ___ ___ ___Sample approval performance ___ ___ ___ ___ ___ ___Responsiveness to quality problems ___ ___ ___ ___ ___ ___

Overall quality rating ___ ___ ___ ___ ___ ___

Delivery 25%Avoidance of late or overshipments ___ ___ ___ ___ ___ ___Ability to expand production capacity ___ ___ ___ ___ ___ ___Engineering sample delivery performance ___ ___ ___ ___ ___ ___Response to fluctuating supply demands ___ ___ ___ ___ ___ ___

Overall delivery rating ___ ___ ___ ___ ___ ___

Figure 9.9b Chrysler’s Vendor Analysis Form

5 4 3 2 1 0Ex. Good Sat. Fair Poor N/A

Price 25%Price competitiveness ___ ___ ___ ___ ___ ___Absorption of economic price increases ___ ___ ___ ___ ___ ___Submission of cost savings plans ___ ___ ___ ___ ___ ___Payment terms ___ ___ ___ ___ ___ ___

Overall price rating ___ ___ ___ ___ ___ ___

Technology 10%State-of-the-art component technology ___ ___ ___ ___ ___ ___Sharing research development capability ___ ___ ___ ___ ___ ___Capable and willing to provide circuit design services ___ ___ ___ ___ ___ ___Responsiveness to engineering problems ___ ___ ___ ___ ___ ___

Overall technology rating ___ ___ ___ ___ ___ ___

Buyer:__________ Date:__________

Comments:_______________________________________________________

Promotion Emphasis on personal selling Emphasis on advertising

PriceCompetitive bidding for unique items, list prices for standard items

List prices, little individual negotiation

ProductRelatively technical, exact form often variable, accompanying services very important

Standardized form, service important but less than for business products

Business-to-Business MarketingConsumer-Goods

Marketing

Summary: comparing business to business

marketing and consumer marketing (text: Table 9.2)

Decision-making process

Involvement of diverse group of organization members in decision

Individual or household members make decision

Customer relations

Relatively enduring and complex

Usually transaction-focused; relationship of relatively short duration

DistributionRelatively short, direct channels to market

Often complex channels with multiple intermediaries

Business-to-Business Marketing

Consumer-Goods Marketing

Source: Based on Michael Hutt and Thomas Speh, Business Marketing Management, 5th ed. (Fort Worth, Tex: The Dryden Press, 1995), pp. 11-13.

Summary: comparing business to business marketing and consumer marketing (continued)

Implications

• Importance of relationships

• Importance of personal selling

• Understanding our customer’s customers

• Affecting final consumer demand

• Solving our customers’ business problems