Flashcards in Chapter 5 Deck (22):
What are the differences between Business-to-business and Consumer markets?
1. Relationship with Customer
2. Number and Size of Customer
3. Geographic Concentration
4. Complexity of the Buying Process
5. Complexity of the Supply Chain
6. Demand for Products
How do relationships with the customer differ from B2B and B2C?
B2B - Invest more in maintaining personal relationship
B2C - Impersonal; exist through electronic communication
How does the number and size of customers differ from B2B and B2C?
B2B - Fewer but larger customers
B2C - More customers but buy in smaller, less frequent quantities
How does the geographic concentration differ from B2B and B2C?
B2B - Suppliers located strategically by the buyer
B2C - Could be anywhere in the world
How does the complexity of the buying process differ from B2B and B2C?
B2B - Complex process that can can take a long time (years in some cases) and involve more people
B2C - Fewer people, often just one, directly involved in the purchase decision is often based on personal and psychological benefits
How does the complexity of the supply chain differ from B2B and B2C?
B2B - Direct from supplier to manufacturer
B2C - Complex with product moving through the channel to reach the consumer
How does the demand for product differ from B2B and B2C?
B2B - Derived from consumer demand, fluctuates with changes to consumer demand, and more inelastic (less price sensitive)
B2C - Consumer perception about their own needs mitigated by environmental factors and marketing stimuli
What are the different buying situations?
1. Straight Rebuy
2. Modified Rebuy
3. New Purchase
What is a straight rebuy?
Companies use a wide range of products on a consistent basis and simply reorder when needed. (office supplies, raw materials)
What is a modified rebuy?
Occurs when the customer id familiar with the product and supplier but is looking for additional information.
What is a new purchase?
The purchase of a product or service by a customer for the first time.
This is the most complex and difficult buying situation.
What is the process of the purchasing process?
1. Problem Recognition
2. Define the need and product specifications
3. Search for Suppliers
4. Seek Sales Proposal -- Response to RFP
5. Make the Purchase Decision
6. Post-Purchase Evaluation of Product & Vendor
Nature of B2B Relationships
What are buying centers?
All those individuals who participate in the purchasing decision-making process
What are the roles within buying centers?
Approvers (purchasing staff)
Gatekeepers ( control information)
Actual customers of a product or service who have a great deal of input at various stages of the buying decision process but are typically not decision makers
The individual who starts the buying decision process
An individual, either inside or outside the organization, with relevant expertise in a particular area who provides information used by the buying center in making a final buying decision
An individual who controls access to information and relevant individuals in the buying center
An individual within the buying center who ultimately makes the purchase decision
Local, state and federal entities that have unique and frequently challenging purchasing practices for manufacturing firms