Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 1

 Tuesday, September 18 – Meet in Calvin 102  Exam 1 – Thursday, September 20  Read Chapter 3 & 4 › Article: Geoffery Moore, “To Succeed in the Long Term, Focus on the Middle Term”  Prepare to discuss: › Chapter 4  Find an example of a B2B ethical problem or dilemma faced by a company 2

Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall  Understand and apply the difference between quantifiable organizational needs and the often qualitative process used to fulfill those need  Understand how organizations develop and satisfy the requirements for selecting and maintaining relationships with suppliers.  Gain an appreciation for the different levels of complexity of decisions made in the buying process and how B2B marketer can influence the process  Understand how organizations develop and satisfy the requirements for selecting and maintaining relationships with suppliers. 3

Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall  Why is understanding B2B buying behavior important to marketers?  Why and how is the buying decision process from and similar for consumers relative to B2B buyers? 4

Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall Need Recognition Information Search Evaluation of Alternatives Purchase Decision Post Purchase Behavior 5

Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall  What is the buying center?  How does the buying center change for different types of purchases?  How does the buying center internal culture work against rational, quantifiable decision making – but results in satisfying decision outcomes. 6

Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall Internal Factors Technology Accounting Management Marketing Legal Production/Mfg. Finance Service External Factors Customer needs and buying behavior Government agencies Independent standards- setting organizations Various Publics Stakeholders in each discipline within the buying organization contribute expertise such that internal and external factors are accommodated. 7

Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall  Involves more Buyers  Stakeholders in Buying Center are driven by professional responsibilities  Different decisions occur simultaneously within the Buying Center 8

Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 1. Problem recognition 2. General need description 3. Product Specification 4. Supplier/Source search 8. Evaluate performance 7. Make the transaction routine 6. Selection 5. Proposal solicitation 9

Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall  Interaction is fluid and broad based  Process is simultaneous, not sequential  The “Track-Record” determines if supplier is included in evoked set  Relationships build loyalty 10

Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall  Organization Needs o Benefits of the product or service  Individual Needs o Based on professional activities and functions of the job  Individual’s Personal Needs o Career, quality of life, recognition 11

Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall Process Flow StagesBuying Decision Process - Steps Definition Stage  Problem recognition  General need description  Product specification Selection Stage  Supplier/Source Search  Proposal Solicitation  Contract for supplier(s) Deliver Selection Stage  Make the transaction routine End Game Stage  Evaluate performance  Resell the job 12

Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall  The first attempt at describing a solution  The intricacy of the solution and the number of organizational units to be involved (size of the buying center) is determined  Successful suppliers are involved, often in the development of the Product Specification 13

Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall  Selection may have occurred in the Definition Stage  If a new buy, members of the buying center may have a “favorite” supplier  A modified or straight re-buy will likely include the existing suppliers 14

Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall  Development activities customize the solution to the specific technical needs (in addition to other needs) of the customer – the Total Offering  Meet the customer’s “way of buying” process – integration of supply logistics with consumption logistics 15

Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall  Reinforce customer decisions made in the selection process  Not the end of the process, but the beginning of the next opportunity for the supplier to serve the customer 16

Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall  Straight Re-Buy › Buying situation that is routine › Established solutions  Modified Re-Buy › Situation from New-Task Situation › Limit exposure from competitive forces 17

Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall  A need not yet faced by Organization  New offering with new technology  Requires many sources of information and assistance  Utilizes complete buying process to investigate alternatives 18

Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall Is the buyer satisfied? New Task Definition Selection Solution Delivery No. Then next purchase Yes. Then next purchase End Game Re-Buy Definition Selection Solution Delivery End Game 19

Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall How different is the next situation? Is the buyer satisfied? Evaluation in End Game Satisfied, No differences Dissatisfied Small Difference Define changes to process Large Difference yes no Straight Re-Buy Definition Selection Solution Delivery End Game Modified Re-Buy Definition Selection Solution Delivery End Game To New Task 20

Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall  Is the total of all impressions that a customer has of the firm (whether relevant to the buying situation)  Is similar to product positioning that occurs with consumer goods  Needs to be maximized in the “mind” of the buyer 21

Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall  Time Dimension › Time fragmentation: Members come and go › Decision cycle time  Vertical and Horizontal Dimensions › Vertical: number of layers of management › Horizontal: number and types of departments and outside consultants  Formalization Dimension › How well are purchasing roles and tasks defined in purchasing policies and procedures?

Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall  Initiator: Starts the purchasing process by recognizing the need  Influencers: Affect decision-maker’s final choice through recommendation  Gatekeepers: Control information into and out of the buying center  Users: Those that use the product/service  Purchasing Agent: Person that makes the purchase or does the paperwork  Decision-Maker: Person who makes final decision, or chooses between alternatives

Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall  Situation: Purchase of new scanners to meet contract with large state government agency  Players › Akshay Menon – SRI’s Dallas operations head › Margier Cabellero – production manager › George Whitaker – Chief Financial Officer › Gloria Sigel – Human Resources Manager  Questions: › Who plays which role in the buying center? › What are the sources of risk for each? › How would this information affect your marketing of this product?