b2b buying behaviour lecture 4. 4-2 brassington & pettitt, principles of marketing 4e, ©...
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B2B Buying Behaviour
Lecture 4
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4-2Brassington & Pettitt, Principles of Marketing 4e, © Pearson Education 2006
learning objectives• Understand the nature and structure of B2B buying
• Appreciate the differences between B2B buying and consumer buying
• Analyze the buying process and the reasons why purchasing varies across different buying situations
• Link B2B buying with the development of marketing strategy
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4-3Brassington & Pettitt, Principles of Marketing 4e, © Pearson Education 2006
B2B marketing defined
B2B marketing is the management process responsible for the facilitation
of exchange between producers of goods and services and their
organisational customers
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4-4Brassington & Pettitt, Principles of Marketing 4e, © Pearson Education 2006
B2B and Consumer Markets
B2B customers • Purchase products to
meet specific business needs
• Emphasise economic benefits
• Use formal, lengthy purchasing policies and processes
Consumer customers• Purchase products to
meet individual or family needs
• Emphasise psychological benefits
• Buy on impulse or with minimal processes
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4-5Brassington & Pettitt, Principles of Marketing 4e, © Pearson Education 2006
B2B and Consumer Markets
B2B customers • Involve large groups in
purchasing decisions• Buy large quantities
infrequently • Want a customised product
package
Consumer customers• Purchase as individuals or
as a family unit• Buy small quantities
frequently• Are content with
standardised product
packages
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4-6Brassington & Pettitt, Principles of Marketing 4e, © Pearson Education 2006
B2B and Consumer Markets
B2B customers• Experience major
problems if supply fails• Find switching
suppliers difficult• Negotiate on price
Consumer customers• Experience minor
irritation if supply fails• Find switching
suppliers easy• Accept stated price
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B2B and Consumer Markets
B2B customers• Purchase direct from
suppliers• Justify an emphasis on
personal selling
Consumer customers• Purchase from
intermediaries• Justify an emphasis on
mass media
4-7Brassington & Pettitt, Principles of Marketing 4e, © Pearson
Education 2006
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4-8Brassington & Pettitt, Principles of Marketing 4e, © Pearson Education 2006
Types of B2B Customers
• Commercial enterprises• Government bodies• Institutions
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4-9Brassington & Pettitt, Principles of Marketing 4e, © Pearson Education 2006
Characteristics of B2B Markets
Nature of demand Structure of demand
Complexity of buying process
Buyer-seller relationships
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4-10Brassington & Pettitt, Principles of Marketing 4e, © Pearson
Education 2006
Derived Demand
Goodyear’s RunOnFlat Tyres are featured on•BMWs, •Ferraris, •Corvettes, •Maseratis, and •Mercedes
Source: © Goodyear Dunlop Tyres EuropeB.V. http://eu.goodyear.com
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4-11Brassington & Pettitt, Principles of Marketing 4e, © Pearson
Education 2006
Joint Demand
Demand for Samsung’s Solid State Disk (SSD) is tightly coupled with the demand for computers and other devices with memory chips
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4-12Brassington & Pettitt, Principles of Marketing 4e, © Pearson Education 2006
Inelastic Demand
Elasticity of demand refers to the extent to which the quantity of a
product demanded changes when its price changes;
If a product has inelastic demand, demand does not change due to
price changes
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4-13Brassington & Pettitt, Principles of Marketing 4e, © Pearson Education 2006
Advantages of Single Sourcing
• Improved communications
• Increased responsiveness
• Shared design of quality control systems
• Elimination of supplier switching costs
• Improvement in product cost effectiveness
• Reduced prices through larger volume
• Reduced prices through reduced supplier costs
• Enhanced ability to implement JIT systems
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4-14Brassington & Pettitt, Principles of Marketing 4e, © Pearson Education 2006
Disadvantages of Single Sourcing
• Increased costs through lack of competitive pressure
• Increased supply vulnerability
• Reduced market intelligence and flexibility
• Improved supplier appraisal capacity
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4-15Brassington & Pettitt, Principles of Marketing 4e, © Pearson Education 2006
Advantages and Disadvantages of Multiple Sourcing
Advantages• Increased competitive
pressure• Improved supply continuity• Improved market
intelligence • Improved supplier appraisal
effectiveness
Disadvantages• Perceived lack of
commitment• Increased costs• Less supplier
investment• Reduced willingness to
adapt• Higher operating costs
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4-16Brassington & Pettitt, Principles of Marketing 4e, © Pearson Education 2006
Purchase Significance
New Task
Routinere-buy
Modified re-buy
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Question for discussion
From the supplier’s point of view, how might the marketing approaches aimed at a customer making a new task purchase differ from those aimed at a routine re-buy customer?
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4-18Brassington & Pettitt, Principles of Marketing 4e, © Pearson Education 2006
Buying Decision-Making Process
Precipitation
Supplierselection
Commitment
Product specification
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4-19Brassington & Pettitt, Principles of Marketing 4e, © Pearson Education 2006
Buying Centres
Initiator
Influencer
Decider
Purchaser
User
User
Influencer
Decider
Buyer
Gatekeeper
Consumer B2B
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4-20Brassington & Pettitt, Principles of Marketing 4e, © Pearson Education 2006
Buying Criteria: Economic Influences
Appropriate prices
Qualityconsistency
Productspecification
Supply reliabilityand continuity
Customerservice
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4-21Brassington & Pettitt, Principles of Marketing 4e, © Pearson Education 2006
Approaches to Supplier Handling
Adversarial• Multiple suppliers• Regular price quotes• Adversarial negotiations• Sporadic communication• Little cooperation• Quality and time scales to meet
lowest expectations• Emphasis on lowest unit price
Collaborative• Few suppliers• Long-term relationship• Partnerships• Frequent, planned communication• Integrated operations• Quality and time scales ‘designed in’• Emphasis on lowest overall cost
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4-22Brassington & Pettitt, Principles of Marketing 4e, © Pearson Education 2006
Relationship Life Cycle
Awareness
Exploration
Expansion
Commitment
Dissolution
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4-23Brassington & Pettitt, Principles of Marketing 4e, © Pearson Education 2006
Buying Criteria: Non-Economic Influences
Prestige
FriendshipCareer security
Other personal needs Trust
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Question for discussionYou are the purchasing manager of a large organisation with anenormous annual spend. Most of your contracts are awarded bytender. What would your attitude be to the following offers frompotential suppliers, and to what extent would they influence yourdecision-making:
(a)a bottle of whiskey at Christmas? (b)an invitation to lunch to discuss your requirements? (c) an offer of the free use of the supplier’s managing director’s Spanish
villa for two weeks? (d) £1500?