Lectures "Marketing management - Chapter 7: Analyzing business markets" provides students with the knowledge: What is organisational buying, participants in the business buying process, the purchasing procurement process, stages in the buying process, managing business to business customer relationships, institutional and Government markets. Invite you to refer to the disclosures.
CHAPTER ANALYZING BUSINESS MARKETS Nguyen Tien Dung, MBA Email: dung.nguyentien3@hust.edu.vn Chapter Questions What is the business market, and how does it differ from the consumer market? What buying situations organizational buyers face? Who participates in the business-to-business buying process? How business buyers make their decisions? How can companies build strong relationships with business customers? How institutional buyers and government agencies their buying? © Nguyễn Tiến Dũng Marketing Management Chapter Main Contents What is organisational buying Participants in the Business Buying Process The Purchasing/Procurement Process Stages in the Buying Process Managing Business-to-Business Customer Relationships Institutional and Government Markets © Nguyễn Tiến Dũng Marketing Management What Is Organizational Buying? ● 1.1 The Business Market versus the Consumer Market ● 1.2 Buying Situations ● 1.3 Systems Buying and Selling © Nguyễn Tiến Dũng Marketing Management Organisational Markets ● Manufacturing companies (industrial market) ● Trading companies (reseller market) ● Non-profit organisations (government agencies, charitable funds ) © Nguyễn Tiến Dũng 1.1 The Business Market versus the Consumer Market ● Fewer, larger buyers ● Close supplier–customer relationship ● Professional purchasing ● Multiple buying influences ● Multiple sales calls ● Derived demand ● Inelastic demand ● Fluctuating demand ● Geographically concentrated buyers ● Direct purchasing © Nguyễn Tiến Dũng Marketing Management 1.2 Buying Situations © Nguyễn Tiến Dũng Marketing Management © Nguyễn Tiến Dũng Marketing Management © Nguyễn Tiến Dũng Marketing Management © Nguyễn Tiến Dũng Marketing Management 10 Participants in the Business Buying Process ● 2.1 The Buying Centre ● 2.2 Buying Centre Influences ● 2.3 Targeting Firms and Buying Centres ● Targeting firms ● Targeting within the business centre © Nguyễn Tiến Dũng Marketing Management 13 2.1 The Buying Centre ● Concerns of industrial marketers ● Who are the major decision participants? ● What decisions they influence? ● What is their level of influence? ● What evaluation criteria they use? © Nguyễn Tiến Dũng Marketing Management 14 The Buying Center ● Initiators ● Approvers ● Users ● Buyers ● Influencers ● Gatekeepers ● Deciders © Nguyễn Tiến Dũng Marketing Management 15 2.2 Buying Centre Influences ● Different people – different interests and wants: ● Engineers may want to maximize the performance of the product; ● Production people: ease of use and reliability of supply; ● Financial staff: low cost, the economics of the purchase; ● Purchasing: operating and replacement costs; ● Trade union: safety for employees © Nguyễn Tiến Dũng Marketing Management 16 2.3 Targeting Firms and Buying Centres ● Targeting firms: ● Market segmentation select target customers ● Targeting buying centres ● Collecting personal and interpersonal information about the persons ● Figure out: Who are the major decision participants? What decisions they influence? What is their level of influence? © Nguyễn Tiến Dũng Marketing Management 17 ● Business people are not buying “products.” They are buying solutions to two problems: the organization’s economic and strategic problem, and their own personal need for individual achievement and reward © Nguyễn Tiến Dũng 18 The Purchasing/Procurement Process ● The buyer objectives: ● Maximum perceived value = Perceived benefits – Perceived costs ● Framing ● customers are given a perspective or point of view that allows the firm to “put its best foot forward.” ● Framing can be as simple as making sure customers realize all the benefits or cost savings afforded by the firm’s offerings, or becoming more involved and influential in the thought process behind how customers view the economics of purchasing, owning, using, and disposing product offerings © Nguyễn Tiến Dũng Marketing Management 19 Stages in the Buying Process © Nguyễn Tiến Dũng Marketing Management 20 Managing Business-to-Business Customer Relationships ● The Benefits of Vertical Coordination ● Business Relationships: Risks and Opportunism ● New Technology and Business Customers © Nguyễn Tiến Dũng Marketing Management 21 Benefits of Vertical Coordination Basic buying and selling—These are simple, routine exchanges with moderate levels of cooperation and information exchange Bare bones—These relationships require more adaptation by the seller and less cooperation and information exchange Contractual transaction—These exchanges are defined by formal contract and generally have low levels of trust, cooperation, and interaction Customer supply—In this traditional custom supply situation, competition rather than cooperation is the dominant form of governance Cooperative systems—The partners in cooperative systems are united in operational ways, but neither demonstrates structural commitment through legal means or adaptation Collaborative—In collaborative exchanges, much trust and commitment lead to true partnership Mutually adaptive—Buyers and sellers make many relationship-specific adaptations, but without necessarily achieving strong trust or cooperation Customer is king—In this close, cooperative relationship, the seller adapts to meet the customer’s needs without expecting much adaptation or change in exchange © Nguyễn Tiến Dũng 22 Business Relationships: Risks and Opportunism ● Risks ● Vertical coordination can facilitate stronger customer–seller ties but at the same time may increase the risk to the customer’s and supplier’s specific investments ● Opportunism ● some form of cheating or undersupply relative to an implicit or explicit contract © Nguyễn Tiến Dũng 23 Institutional and Government Markets ● Small budgets ● Acceptable – High quality © Nguyễn Tiến Dũng Marketing Management 24 Marketing Debate ● How Different Is Business-to-Business Marketing? ● Many business-to-business marketing executives lament the challenges of business-to-business marketing, maintaining that many traditional marketing concepts and principles not apply For a number of reasons, they assert that selling products and services to a company is fundamentally different from selling to individuals ● Others disagree, claiming marketing theory is still valid and only requires some adaptation in marketing tactics ● Take a position: Business-to-business marketing requires a special, unique set of marketing concepts and principles versus Business-to-business marketing is really not that different, and the basic marketing concepts and principles apply © Nguyễn Tiến Dũng Marketing Management 25 ● Source: VnExpress.net © Nguyễn Tiến Dũng Marketing Management 26 ● Navistar’s innovative LoneStar truck model was featured in a short film directed by an Academy Award nominee © Nguyễn Tiến Dũng Marketing Management 27 ... © Nguyễn Tiến Dũng Marketing Management 1.2 Buying Situations © Nguyễn Tiến Dũng Marketing Management © Nguyễn Tiến Dũng Marketing Management © Nguyễn Tiến Dũng Marketing Management © Nguyễn Tiến. .. Business-to-business marketing is really not that different, and the basic marketing concepts and principles apply © Nguyễn Tiến Dũng Marketing Management 25 ● Source: VnExpress.net © Nguyễn Tiến Dũng. .. disposing product offerings © Nguyễn Tiến Dũng Marketing Management 19 Stages in the Buying Process © Nguyễn Tiến Dũng Marketing Management 20 Managing Business-to-Business Customer Relationships