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Textbook summaries (ch. 7 to 9) Refresh your memories by reading these summaries;) They would help studying for the final exam!

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University of Waterloo
ECON 344
Kevin Hood

CH.7 Business to business (B2B) marketing - The process of buying and selling goods or services to be used in the production of other goods and services, for consumption by the buying organization, or for resale by wholesalers and retailers The distinction between a B2B and a B2C transaction is not the product or service itself; rather, it is the ultimate purchaser and user of that product or service B2B organization - Manufacturers o Buy raw materials, components, and parts that allow them to manufacture their own goods - Resellers o Marketing intermediaries that resell manufactured products without significantly altering their form o Can be in a B2B or a B2C transaction - Institutions o Hospitals, educational organizations, prisons, religious organizations, and other nonprofit organizations, also purchase all kinds of goods and services for the people they serve - Government o In most countries, the central government tends to be one of the largest purchasers of goods and services B2B Classification System and Segmentation - North American Industry Classification System (NAICS) codes o A classification scheme that categorizes all firms into a hierarchical set of six- digit codes o The NAICS system is revised periodically to add new industries or to consolidate or delete others o The NAICS classification system can be quite useful to B2B marketers for analyzing market shares, demand for goods and services, import competition into the Canadian market, and for segmenting and targeting markets - Companies may segment their business customers according to end use application depending on the different ways customers use their products - Companies may segment their business customers based on their geographic location such as U.S., Europe, China, etc. - B2B marketers segment their markets based on the benefits sought by their customers Exhibit 7.3 on page 182 lists the key characteristics of B2B buying behavior The B2B buying process - The information search and alternative evaluation steps are more formal and structured in the B2B process than B2C process - B2B buyers specify their needs in writing and ask potential suppliers to submit formal proposals, whereas B2C buying decisions are usually made by individuals or families and sometimes are unplanned or impulsive. In contrast, B2B buying decisions often are made by committees after a great deal of consideration - Formal performance evaluations of the vendor and the products sold generally do not occur as they do in the B2B setting - Not all B2B purchases to through each stage or go through each stage with the same intensity Stage1: Need recognition - Recognizes through either internal or external sources that it has an unfilled need Stage 2: Product Specifications - Considers alternative solutions and comes up with potential specifications that suppliers might use to develop their proposals to supply the product Stage 3: Request for proposals (RFP) process - A process through which buying organizations invite alternative suppliers to bid on supplying their required components Stage 4: Proposal Analysis, Vendor Negotiation, and Supplier Selection - Evaluates all the proposals - Narrow the process to a few suppliers (existing relationships) - Discuss key terms of the sale (price, quality, delivery, and financing) - Negotiate with several suppliers - Buying firm can always shift a greater portion of its business to an alternative supplier if it offers better terms Stage 5: Order specifications - Places its order with its preferred supplier (or suppliers) - The order will include a detailed description of the goods, prices, delivery dates, and in some cases, penalties if the order is not filled on time Stage 6: Vendor Analysis - Analyze their vendors performance (more formal and objective) Factors affecting the buying process - The Buying Centre o The group of people typically responsible for the buying decisions in large organizations o One or more people may take on a certain role, or one person may take on more than one of the following roles Initiator, influencer, decider, buyer, user, gatekeeper o The final purchase decision must take into consideration every single buying center participant - Organizational Culture o Autocratic buying center One person makes the decision alone, through there may be multiple participants o Democratic buying center The majority rules in marking decisions o Consultative buying center One person makes the decision but he or she solicits input from others before doing so o Consensus buying center All members of the team must reach a collective agreement that they can support a particular purchase - Buying Situations o New buy In a B2B setting, a purchase of a good or service for the first time; the buying decision is likely to be quite involved because the buyer or the buying organization does not have any experience with the item o Modified re-buy Refers to when 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 o Straight re-buy Refers to when the buyer or buying organization simply buys additional units of products that had previously been purchased Role of the internet in B2B marketing - Internet has become the communication mode of choice, and sometimes of necessity, for connecting divisions and employees located in dispersed locations - Private exchange o Occurs when a specific firm, either buyer or seller, invites others to join to participate in online information exchanges and transactions; can help streamline procurement or distribution processes
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