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Chapter 7. Why Organizations Buy: Business-to-Business Markets and B2B E-Commerce. Chapter Objectives_1. Describe the general characteristics of business-to-business markets and business buying practices Tell how marketers classify business and organizational markets. Chapter Objectives _2.

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chapter 7

Chapter 7

Why Organizations Buy: Business-to-Business Markets and B2B E-Commerce

Marketing: Real People, Real Choices 3rd edition

chapter objectives 1
Chapter Objectives_1
  • Describe the general characteristics of business-to-business markets and business buying practices
  • Tell how marketers classify business and organizational markets

Marketing: Real People, Real Choices 3rd edition

chapter objectives 2
Chapter Objectives _2
  • Explain the business buying situation and describe business buyers
  • Understand the stages of the business buying decision process
  • Understand the growing role of B2B E-Commerce

Marketing: Real People, Real Choices 3rd edition

business to business marketing
Business-to-Business Marketing
  • Marketing of goods and services that businesses and organizations buy for purposes other than personal consumption
  • Also called organizational markets

Marketing: Real People, Real Choices 3rd edition

characteristics of b2b markets
Characteristics of B2B Markets
  • Generally, the same principles are true for business and consumer customers
  • There are characteristics that make B2B buying more complex
    • Multiple buyers
    • Number of customers
    • Size of purchases
    • Geographic concentration

Marketing: Real People, Real Choices 3rd edition

b2b demand characteristics
B2B Demand Characteristics
  • Derived Demand
  • Inelastic Demand
  • Fluctuating Demand
  • Joint Demand

Marketing: Real People, Real Choices 3rd edition

derived demand
Derived Demand
  • B2B demand is derived demand because a business’s demand for goods and services comes either directly or indirectly from consumers’ demands

Marketing: Real People, Real Choices 3rd edition

inelastic demand
Inelastic Demand
  • Inelastic demand means that business customers buy the same quantity whether the price goes up or down
  • Example: A BMW Z3 Roadster 2.5i has a list price starting at just over $30,000. If the price of tires, batteries, or stereos goes up or down, BMW still must buy enough to meet consumer demand for the Z3.

Marketing: Real People, Real Choices 3rd edition

fluctuating demand
Fluctuating Demand
  • Small changes in consumer demand can create large increases or decreases in business demand
  • Acceleration principles (multiplier effect) means that changes in consumer behavior has a ripple effect through several related businesses

Marketing: Real People, Real Choices 3rd edition

joint demand
Joint Demand
  • Joint demand occurs when two or more goods are necessary to create a product
  • Companies try to avoid dependence on specific suppliers by dealing with multiple suppliers whenever possible

Marketing: Real People, Real Choices 3rd edition

b2b classifications
B2B Classifications
  • Producers
  • Resellers
  • Governments
    • Government contracts often require competitive bids
    • Requests for proposals (RFPs) are posted in the Commerce Business Daily
  • Not-for-profit organizations

Marketing: Real People, Real Choices 3rd edition

north american industry classification system naics
North American Industry Classification System (NAICS)
  • Replaced the SIC system in 1997
  • Reports the number of firms, total dollar amount of sales, number of employees, growth rate for industries, broken down by geographic region
  • Can be used to assess potential markets and to determine how well a firm is doing compared to their industry group

Marketing: Real People, Real Choices 3rd edition

the nature of business buying
The Nature of Business Buying
  • The Buying Situation
  • The Professional Buyer
  • The Buying Center

Marketing: Real People, Real Choices 3rd edition

the buying situation
The Buying Situation
  • A buy class framework identifies the degree of effort required of the firm’s personnel to collect information and make a purchase decision
      • Straight rebuy
      • Modified rebuy
      • New task buying

Marketing: Real People, Real Choices 3rd edition

the professional buyer
The Professional Buyer
  • Titles: purchasing agents, procurement officers, director of materials management
  • Focus on economic factors beyond the initial price of a product including transportation and delivery charges, accessory products or supplies, maintenance, disposal costs, etc.
  • Large firms practice centralized purchasing - one department does all buying

Marketing: Real People, Real Choices 3rd edition

the buying center
The Buying Center
  • The group of people in the organization who participate in the decision-making process
  • May include production workers, supervisors, engineers, secretaries, shipping clerks, and financial officers

Marketing: Real People, Real Choices 3rd edition

roles in the buying center
Roles in the Buying Center
  • Initiator begins the buying process
  • User needs the product
  • Gatekeeper controls the flow of information to other members
  • Influencer dispenses advice or shares expertise
  • Decider makes the final decision
  • Buyer executes the purchase

Marketing: Real People, Real Choices 3rd edition

electronic b2b commerce
Electronic B2B Commerce
  • Internet exchanges between two or more businesses or organizations
  • Allows marketers to link directly to suppliers, factories, distributors, and their customers
  • Reduces time necessary to order and deliver goods, track sales, and get feedback

Marketing: Real People, Real Choices 3rd edition

intranets extranets and private exchanges
Intranets, Extranets, and Private Exchanges
  • An intranet is an internal corporate computer network that uses Internet technology to link company departments, employees, and databases
  • An extranet allows outsiders to the organization to access its intranet
  • A private exchange links invited groups of suppliers and partners over the Web

Marketing: Real People, Real Choices 3rd edition

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