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Chapter 5 (B2B) terms

Business-to-business (B2B) e-commerce

Commerce conducted using Internet-based exchanges. Businesses or organizations locate each other's goods and services via e-commerce forums.

B2B marketing

The marketing of goods and services to business customers that need them to enable their production of goods and services. A business my purchase goods and services that are:

1) part of the products/services they make and sale (i.e., BMW buying auto engines), or raw materials such as shoe leather

2) resold such as when Ford purchases Nissan cars and puts their name plate on them.
Value-added resellers take a product and modify it for a customer (i.e., IT consultants buy software then modify it for resale, such as Protiviti buying SAP software and customizing it for resale

3) in support of their operations (i.e., consumables such as copy paper and hand soap)

B2B markets

The group of customers that include manufacturers, wholesalers, retailers, and other organizations. In comparison to B2C, are characterized as a relatively small # of players, yet a huge $$ amount.

Buy class

Business purchases are classified as being one of three types. The three classifications are based on the degree of time and effort required to make a decision. The three categories are straight re-buy, modified re-buy, new task buy).

Buying center

The group of people in an organization who participate in a purchase decision. Can include purchasers, legal, engineering, and other advisors. These can be full-time purchasing dept. employees or called in as needed.

Derived demand

Demand for business or organizational products (tires) caused by demand for consumer goods of services (autos).

Inter-Organizational system (IOS)

A private, corporate computer network that links company departments, employees, and databases to suppliers, customers, and others outside the organization. An example is the Wal-mart extranet that suppliers have to use to communicate order info or a system built on SAP's Enterprise Resource Planning (ERP system).

Government markets

The federal, state, county, and local governments that buy goods and services to carry out public objectives and to support their operations.

Inelastic demand

Demand in which changes in price have little or no effect on the amount demanded. For example a coffee shop's demand for coffee beans is inelastic - (unaffected by price). A company hopes the demand for their product's (tires) is relatively inelastic (demand is impervious -uneffected by price changes).

Modified re-buy

One of the three buying situation classifications used buy business buyers. A previously made purchase that involves some change and that requires limited decision making to deal with the changes is called a modified re-buy. For example instead of buying a fleet of rental cars, Avis buys a fleet of hybrid vehicles.

Multiple sourcing

The business practice of buying a particular product from several different suppliers. Doing this can keep the price down as companies compete for your business.

New-task buy

A new business-to-business purchase that is complex or risky and that requires extensive decision making. This occurs when you have no experience buying the product or service. For ex: a small business buying a we-hosting service.


The business buying process of obtaining outside vendors to provide goods of services that otherwise might be supplied in-house. Examples are outsourcing tax accounting and preparation, or outsourcing legal representation.

Private exchanges

E-commerce systems that link an invited group of suppliers and partners over the web. These are industry groups organized around the production of, for example, meat, steel, ceramics, etc.

Product specifications

A written description of the quality, size, weight, and so forth required of a product purchase. When creating an RFP, a business defines the specs they need the requested products/services to meet. The more detailed the specs, the higher the product/service quality will be.


A trading partnership in which two firms agree to buy from one another.

Request for Proposal (RFP)

a company asks suppliers to place bids (proposals) on a job (such as to build a building or provide component parts or services). Proposals are needed as the job specs are unique (ex: construction job).

Request for Quote (RFQ)

a company asks suppliers to provide quotes (prices) for off-the-shelf needed products


The individuals or organizations that buy finished goods for the purpose of reselling, renting, or leasing to others to make a profit and to maintain their business operations. Could be a value-added reseller, where a company customizes or modifies a product for their customers, or just a retailer.

Single sourcing

The business practices of buying a particular product from only one supplier. This is pretty risky. Many technology companies (computers, software, or equipment like cat scan machines) try to lock a customer in by using proprietary technologies.

Straight re-buy

A buying situation in which business buyers make routine purchases that require minimal decision making. re-buy the same product from a pre-approved vendor. The choice of vendor, delivery specs, and price may change though, but not the product.

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