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MKT 337 - CH 6 - Business and Organizational Customers and Their Buying Behavior (B2B)
Terms in this set (33)
The key to B2B buying is ...
derived demand (the demand driving a product's production by a customer)
-are used to manufacture other products
-become part of another product
-aid the normal operations of an organization or business
-are acquired for resale w/o any change in form
(the key is intended use)
Demand (for business products) in Business Markets is...
-derived from demand for consumer products
-inelastic - a change in price will not significantly affect the demand for product
-joint - multiple items are used together in making the final product. Demand for one item affects all.
-fluctuating - demand for business products is more volatile than for consumer products thus requiring more planning and exacting detail.
Types of business products
1. major equipment
2. accessory equipment
3. raw materials
4. component parts
5. processed materials
7. business services
Specifications and Quality
Specifications describe the need, and businesses want to do business with orgs who have quality certification (IS0 9000).
A standard of quality for businesses.
business and organizational customers
any buyers who buy for resale or to produce other goods and services
types of organizational customers
producers of goods and services, intermediaries, gov't units, nonprofit orgs
B2B market means
organizational customers are also referred to as...
business buyers, intermediate buyers, or industrial buyers
organizations focus on ... wen they make purchase decisions
orgs are less emotional in their purchases and total cost (instead of product initial price) and dependability have extremely important emphasis on buying from businesses.
a written (or electronic) description of what the firm wants to buy. can be highy-standardized (e.g. serial or part number lists) or complicated by multiple performance standards and requirements the purchaser requires met. typically, purchasing specs for services are more complicated than for products.
customers expect quality certification
via ISO 9000 standard, which is a way for a supplier to document its quality procedures IAW internationally recognized standards. ISO 9000 certification requires a company to prove to outside auditors that it documents how the company operates and who is responsible for quality every step of the way.
buying specialist for their employers. in large orgs, they usually specialize by product area and are experts. they don't want a seller to "sell" them on a product, rather provide them with accurate info that will help solve problems and buy wisely. they like to be updated on relevant info such as price changes, supply shortages, etc.
multiple buying influence
several people - perhaps even top management - play a part in making a purchase decision
possible buying influences include
1. users - production line workers or their supervisors
2. influencers - engineering or R&D people who help write specs or supply info for evaluating alternatives
3. buyers - purchasing managers who have the responsibility for working w/ suppliers and arranging the terms of the sale
4. deciders - the people in the org who have the power to select or approve the supplier - often a purchasing mgr but could be top mgmt for larger purchases
5. gatekeepers - people who control the flow of info w/i the org. could be a purchasing mgr who shields users or other deciders. Gatekeepers can also include receptionists, secretaries, research assistants, and others who influence the flow of info about potential purchases
a formal rating of suppliers on all relevant areas of performance. goal is to not just get a low price from supplier, but to lower the total costs associated with purchases. (e.g. reduce costs of excess inventory, retooling of equipment, or defective parts)
request to buy something
3 kinds of buying processes
1. new-task buying
2. straight rebut
3. modified rebuy
buying process: 1. new-task rebuy
occurs when customer organization has a new need and wants a great deal of info. can involve: setting product specifications, evaluating sources of supply, and establishing an order routing that can be followed if future results are satisfactory. multiple buying influence is often found here.
buying process: 2. straight rebuy
routine repurchase that may have been made many times before. often, buyers don't bother looking for new info or sources of supply. most of a company's small or recurring purchases are of this type. Both important and "unimportant" purchase can be made this way, but only after the firm has decided what will be "routine".
buying process: 3. modified rebuy
the in-between process where some review of the buying situation is done, though not as much as in new-task buying
the terms of sale offered by the supplier in response to the purchase specifications posted by a buyer
relationships b/w org. buyers and sellers may have many dimensions
reliably getting products to a buyer just before the customer needs them
negotiated contract buying
agreeing to contracts that allow for changes in the purchase arrangements
contract w/ an outside firm to produce goods or services rather than to produce them internally
North American Industry Classification System (NAICS) codes
groups of firms in similar lines of business. The number of establishments, sales volumes, and number of employees broken down by geographic areas are given for each NAICS code.
Foreign Corrupt Practices Act
passed by US Congress in 1977, prohibits US firms from paying bribes to foreign officials. Amended in 1988-allows for grease payments if they are customary in a local culture. Since 1998, the law applies to foreign firms or foreign individuals who accept payment in the US.
mutual benefits of close relationships
-share tasks at lower total cost
when may relationships may not make sense
-some purchases are too small or infrequent
-some purchases require much special attention
Dimensions of relationships
dynamics of buyer-seller relationships
1. powerful customers may control the relationship
2. buyers may use several sources to spread risks
3. buying varies by customer type
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