Chapter 7
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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

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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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