7

Business-to-Business
Marketing

2014

2013byby
McGraw-Hill
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Levi Strauss & Co.

Jim Wilson/The New Times/Redux.

Levis is working with suppliers to implement more sustainable water use and other
environmental practices, as well as more responsible practices with regard to
workers throughout its supply chain.
Would you pay more for your jeans if they were more environmentally friendly?
2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner.
This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

B2B Markets
U.S. Census Website

Resellers

Manufacturers/
Service providers

B2B
Markets

Institutions

Government

2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner.
This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Manufacturers and Service Providers

Buy raw materials,
components or parts
Manufacture their own
goods
Car Culture/Getty Images

Gear Expo News Clip

When Burts Bees buys raw materials to make their products, it is a B2B purchase.
When they sell the products to the retailer it is B2B
when the retailer sells to the end consumer it is B2C.
Tradeshows are common for B2B selling and allows manufacturers to see new raw
materials and for resellers to see new products.
if they have attended any B2B tradeshows?

2014
by McGraw-Hill
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material solely
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instructor
use. Not authorized for sale what
or distribution
in anythey
manner. learn at the show?
If
so,
what Education.
typically
happens,
what
is the
environment,
did
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Resellers
Manufacturer

Reseller

Retailer
Courtesy Eastman Chemical Company

Resellers perform an essential service: They aggregate goods from manufacturers

and sell them to retailers or, in the case of retailers, they sell them to consumers.
Thus, 1 reseller can represent many different manufacturers, which saves the
manufacturers the trouble of finding retailers or consumers and gives retailers or
consumers
the ability to buy only the desired quantity from the reseller
2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner.
This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Institutions
Schools,
Museums and
Religious
Organizations
Royalty-Free/CORBIS

Annie Reynolds/PhotoLink/Getty Images

Royalty-Free/CORBIS

London museum buying Rolling Stones artwork

2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner.
This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Hisham F Ibrahim/Getty Images

US Government spends
$2.1 trillion procuring
goods
State and local
governments also make
significant purchases
Firms specialize in
selling to government

Getty Images

Government

Many firms sell exclusively to government entities and therefore are adept (expert)
at meeting the unique needs of governmental buyers.
For example, firms in the defense industry generally sell exclusively to governments

2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner.
This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Adding Value: Paris Runways

Photo by Eric Ryan/Getty Images

How do runway shows create value?

For the wholesale buyers, they get a preview of fashion trends.
For the designer, they get to create buzz for their products with the end consumers
2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner.
This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

B2B Buying Process

Need recognition
Product
specification
RFP
process
Proposal analysis
and supplier
selection
Order specification
Vendor/
performance
assessment using
metrics
2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner.
This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

 Can be generated
internally or externally

Sources for

Times Photo by Toni L

Sandys/Newscom

Stage 1: Need Recognition

Suppliers
Salespeople
Competitors

Sylvain Grandadam/The Image

Bank/Getty Images

recognizing new needs:

Just like the consumer buying process, the B2B process begins with need recognition.
Needs arise from a variety of sources.
For example, a salesperson from firm A attends a trade show and visits firm Bs booth,
which features a demonstration of a new sorting process. Although firm A had been
looking for ways to improve its efficiency, it had not yet considered the possibility of
sorting
efficiencies.

2014 by McGraw-Hill
Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner.
This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Royalty-Free/CORBIS

Stage 2: Product Specifications

Used by Suppliers to
develop proposals
Can be done collaboratively
with suppliers

Not only do RFPs enable the buyer to solicit pricing and other info from a
variety of suppliers, but they also allow suppliers to learn about the buyer and its
specific needs
2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner.
This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Stage 3: RFP Process

(Request for Proposal)

Federal Busi Opportunities Website

Toyota Motor Engineering & Manufacturing North America, Inc.

RFPs enable the buyer

to solicit pricing and other info from a

variety of suppliers and also allow suppliers to learn about the
buyer and its specific needs.
Fed BizOps site exists for any firm that wishes to bid on
2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner.
This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Step 4: Proposal Analysis, Vendor

Negotiation and Selection
Often several vendors
are negotiating against
each other

Considerations other
than price play a role in
final selection

Courtesy The Goodyear Tire & Rubber Company

Firms apply diff strategies for vendor

selection: Some always choose

the lowest price, whereas others apply more complicated
selection criteria.
The government uses preferred contractor programs,
2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner.
This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Step 5: Order Specification

Firm places the order
The exact details of the
purchase are specified
All terms are detailed
including payment
Digital Vision/Getty Images

After a vendor is chosen, terms

of the contract still need to be

negotiated.
2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner.
This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Step 6: Vendor Analysis

(2) Importance
Score

(3) Vendors
Performance

(4) Importance x
Performance
(2) x (3)

Customer Service

.40

2.0

Issue Resolution

.20

0.8

Delivery

.10

0.5

Quality

.30

0.9

(1) Key Issues

Total

1.00

After vendor

4.2

has performed the service or delivered

the order, the buyer conducts a vendor analysis to judge

2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner.
This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

The Buying Center

Influen
cer

Initiat
or

User

Buying center
Gatekee
per

Buyer
Decid
er

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Organizational Culture
Democratic

Autocratic

Buying
culture

Consultativ
e

Consensus

Different firms assign different ultimate responsibility for purchase decisions. Even
within a firm, different buying groups have unique buying styles.
Marketers must understand the dynamics of the buying center to succeed.
Assume your family or the household in which you live is a buying center.
Is it an autocratic, consultative, or consensus when making group buying decisions such

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Buying Situations
New
buy

Buying
situati
ons

Modifi
ed
rebuy

Straig
ht
rebuy

As in B2C, different B2B buying situations require different levels of effort and the
involvement of various parties. The effort

required by each situation

varies.
Suppose you represented a private label manufacturer of
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This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

New Buy

Purchasing for the first time

Likely to be quite involved

The buying center will

probably use all 6 steps in the
buying process

dynamicgrapics/Jupiterimages

In a new buy situation, a customer

purchases a good or service for

the first time, which means the buying decision is likely to be quite
involved because the buyer or the buying organization does not have
any experience with the item

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This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Modified Rebuy
Purchasing a similar product
but changing specifications
Current vendors have an advantage

RubberBall Productions

In a modified rebuy, the buyer has purchased a similar product in the

past but has decided to change some specifications, such as the desired
price, quality level, customer service level, options, or so forth.
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Straight Rebuys
Buying additional units or
products that have been
previously purchased
Most B2B purchases
fall into this category
Ryan McVay/Getty Images

Straight rebuys occur when the buyer

or buying organization simply

buys additional units of products that had previously been
2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner.
This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.