Analyzing
Business Markets
Tutored by : Prof. Sunil D’ Anto
CISCO Targets Businesses
Learning Agenda
• What is the business market, and how does it differ
from the consumer market?
• What buying situations do organizational buyers face?
• Who participates in the business-to-business buying
process?
• How do business buyers make their decisions?
• How can companies build strong relationships with
business customers?
• How do institutional buyers and government agencies
do their buying?
What is Organizational Buying?
Organizational buying refers to the
decision-making process by which formal
organizations establish the need for
purchased products and services, and
identify, evaluate, and choose among
alternative brands and suppliers.
Characteristics of Business Markets
• Fewer, larger buyers • Multiple sales calls
• Close supplier- • Derived demand
customer • Inelastic demand
relationships • Fluctuating demand
• Professional • Geographically
purchasing concentrated buyers
• Many buying • Direct purchasing
influences
The Buying Center
Initiators
Influencers
Deciders
Approvers
Buyers
Users
Gatekeepers
Concern to Business Marketers
• Who are the major decision participants?
• What decisions do they influence?
• What is their level of influence?
• What evaluation criteria do they use?
Sales Strategies
Key Buying
Small Sellers Influencers
Multilevel
Large Sellers In-depth
Selling
Stages in the Buying Process: Buyphases
• Problem recognition
• General need description
• Product specification
• Supplier search
• Proposal solicitation
• Supplier selection
• Order-routine specification
• Performance review
Buying Situations
Straight rebuy
Modified rebuy
New task
Buygrid Framework
Systems Buying and Selling
Turnkey solution System
desired; subcomponents
bids solicited assembled
Prime Second-tier
contractors contractors
Copyright © 2009 Dorling Kindersley (India) Pvt. Ltd. 7-13
Electronic Marketplaces / Marketspace
Methods of e-Procurement
• Websites organized using vertical hubs
• Websites organized using functional hubs
• Direct extranet links to major suppliers
• Buying alliances
• Company buying sites
Vendor Analysis sample
OT IF NE
Handling Price-Oriented Customers
Limit quantity purchased
Allow no refunds
Make no adjustments
Provide no services
Methods for Researching
Customer Value
• Internal engineering • Conjoint analysis
assessment (preference)
• Field value-in-use • Benchmarks
assessment • Compositional
• Focus-group value approach (monetary value
to an attribute)
assessment
• Importance ratings
• Direct survey
questions
Order Routine Specification
Stockless
purchase plans
Vendor-managed
inventory
Continuous
replenishment
Establishing Corporate Trust and Credibility
Expertise
Trustworthiness* Likeability
* Trust Dimensions
Cooperating
Transparent
Design
Product/Service Product
Quality Comparison
Incentive Supply Chain
Pervasive
Partnering
Advocacy
Factors Affecting
Buyer-Supplier Relationships
Availability of Importance of
alternatives supply
Complexity of Supply market
supply dynamism
Categories of Buyer-Seller Relationships
• Basic buying and • Cooperative systems
selling • Collaborative
• Bare bones • Mutually adaptive
• Contractual • Customer is king
transaction
• Customer supply
(competitive)
What is Opportunism?
Opportunism is some form of cheating
or undersupply relative to an implicit
or explicit contract.
Top Business Marketing Challenges
• Expanding understanding of customer needs
• Competing and growing globally as China and India (huge emerging
economies) reshape markets
• Mastering analytical tools and improve quantitative skills
• Create new organizational models and linkages
• Identifying new opportunities for growth
• Improving value management techniques
• Calculating better marketing performance and accountability
metrics;
• Countering the threat of product and service commoditization
• Convincing C-level executives to embrace the marketing concept
INSTITUTIONAL AND GOVERNMENT
MARKETS
consists of schools, hospitals, nursing homes, prisons, and
other institutions that must provide goods and services
to people in their care.
• Many of these organizations are characterized by low
budgets and captive clienteles.
• In most countries, government organizations are a major
buyer of goods and services.
• Mostly follows contractual form of buying, under a central
body. E.g.: DGS&D (Director General of Supplies &
Disposals)
Marketing of Farm Output from Rural Areas
• Contract Farming – Pepsi
• Procuring from Cooperatives – Amul
• Use ICT for procurement – ITC
Marketing Debate
how different is B-to-B marketing?
Take a position:
1. Business-to-business marketing
requires a special, unique set of marketing
concepts and principles.
or
2. Business-to-business marketing is really
not that different and the basic marketing
principles apply.
