chapter 4 b2b buying behaviour. 4-2 brassington & pettitt, principles of marketing 4e, ©...

chapter 4

B2B

buying behaviour

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


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


Flybe chose Embraer to supply its new aircraft


B2B and Consumer Markets_1

B2B customers

• Purchase products to meet specific business needs

• Emphasize economic benefits

• Use formal, lengthy purchasing policies and processes

Consumer customers

• Purchase products to meet individual or family needs

• Emphasize psychological benefits

• Buy on impulse or with minimal processes



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



B2B customers

• Experience major problems if supply fails

• Find switching suppliers difficult

• Negotiate on price

Consumer customers

• Experience minor irritation is supply fails

• Find switching suppliers easy

• Accept stated price



B2B customers

• Purchase direct from suppliers

• Justify an emphasis on personal selling

Consumer customers

• Purchase from intermediaries

• Justify an emphasis on mass media


Types of B2B Customers

• Commercial enterprises

• Government bodies

• Institutions


Figure 4.2 A Clothing Manufacturer and its Suppliers

Suppliers of raw materials

and components

Suppliers of manufacturing

equipmentSuppliers of labour

Suppliers of other equipment

and supplies

Suppliers of services

Manufacturer


Characteristics of B2B Markets

Nature of demand Structure of demand

Complexity of buying process

Buyer-seller relationships


Derived Demand

Goodyear’s RunOnFlat Tyres are featured on

•BMWs,

•Ferraris,

•Corvettes,

•Maseratis, and

•MercedesSource: © Goodyear Dunlop Tyres EuropeB.V. http://eu.goodyear.com


Joint Demand

Demand for Samsung’s Solid State Disk (SSD) is tightly coupled with the demand for computers and other devices with memory chips


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


Should a company purchase from multiple suppliers?

Supplier categories at Phillips:

• Supplier-partners

• Preferred suppliers

• Commercial suppliers


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


Disadvantages of Single Sourcing

• Increased costs through lack of competitive pressure

• Increased supply vulnerability

• Reduced market intelligence and flexibility

• Improved supplier appraisal capacity


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


Purchase Significance

New Task

Routinere-buy

Modified re-buy


Buying Decision-Making Process

Precipitation

Supplierselection

Commitment

Product specification


Roles in the Buying Process

• Purchasing - handle relationships with suppliers

• Production/operations - meeting targets for the end product in both quantity and quality terms

• Engineering - the specification and design

• Research and Development (R&D) – look for new solutions to problems

• Finance - devolve budgets to appropriate managers

• Marketing - outputs of the production process


Buyer-Seller Contact in B2B Markets (Unit Production Model)

Production engineering

Quality

Sales

Design

Purchasing

Design


Quality

etc. etc.

Supplier Buyer

Source: Adapted from Johanson (1982), copyright 1982 © John Wiley & Sons Limited. Reproduced with permission.


Buyer-Seller Contact (Mass Production Model)


Design

Sales

Quality

etc.

Purchasing

Source: Adapted from Johanson (1982), copyright 1982 © John Wiley & Sons Limited. Reproduced with permission.


Figure 4.7 Commodity Positioning Matrix


Buying Centres

Initiator

Influencer

Decider

Purchaser

User

User

Influencer

Decider

Buyer

Gatekeeper

Consumer B2B


Buying Criteria: Economic Influences

Appropriate prices

Qualityconsistency

Productspecification

Supply reliabilityand continuity

Customerservice


Buying Criteria: Non-Economic Influences

Prestige

FriendshipCareer security

Other personal needs

Trust


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


Relationship Life Cycle

Awareness

Exploration

Expansion

Commitment

Dissolution


Key Terms_1

• Activities directed towards marketing by one organisation to another are called _____.

B2B marketing

• A group of individuals that contribute towards or take direct responsibility for organisational purchasing decisions is called a _____.

Buying centre

• Another term for buying centre is _____.

Decision making unit


Key Terms_2

• What form of demand for products or components in B2B markets depends on consumer demand further down the chain?

Derived demand

• What form of demand for one product or component in a B2B market is dependent on the supply or availability of another?

Joint demand


Key Terms_3

• A _____ occurs when goods and services are purchased relatively infrequently by organisations that reevaluate their choices before making a repeat purchase decision.

Modified re-buy

• _____ is the sourcing of a particular B2B product from more than one supplier simultaneously.

Multiple sourcing


Key Terms_4

• _____ occurs when products are purchased infrequently by organisations, and involve a high level of formalised information collection and analysis before a purchasing decision is made.

New task purchasing

• The criteria to which an organisational purchase must conform in terms of quality, design, compatibility, performance, price, etc is called _____.

Product specification


Key Terms_5

• _____ refers to an organisation's preferences, systems, and procedures for purchasing.

Purchasing policy

• The evolution of buyer-seller relationships in B2B markets, through stages including awareness, exploration, expansion, commitment and dissolution is called the _____.

Relationship lifecycle


Key Terms_6

• A _____ occurs when products are purchased frequently by organisations from established suppliers, with little or no formal decision-making involved in the repeat purchase.

Routine re-buy

• The sourcing of a particular B2B product from only one supplier is called _____.

Single sourcing

chapter 4 b2b buying behaviour. 4-2 brassington & pettitt, principles of marketing 4e, ©...

Documents

principles of marketing

brassington pettitt

pearson education

structure of b2b

consumer markets

price consumer customers

processes consumer customers

behaviour slide