Chapter 6 Marketing Lecture Notes
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| What is Business Marketing | The marketing of goods and services to companies, governments, or not-for-profit organizations for use in the creation of goods and services that they can produce and market to others.
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| What is Organizational Buyer | Are those manufacturers, wholesalers, retailers, and government agencies that buy goods and services for their own use or for resale.
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| A part of the Industrial Market is Industrial Firms, what is an Industrial Firm? | reprocess a product or service they buy before selling it again to the next buyer.
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| What is Reseller Market | When resellers are wholesalers and retailers that buy physical products and resell them again without any reprocessing.
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| What is Government Market | Uses government units are the federal, state, and local agencies that buy goods and services for the constituents they serve.
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| What is North American Industry Classification System (NAICS) | Provides common industry def. for Canada, Mexico, and US, makes easier the measurement of economic activity in the member countries of (NAFTA). The NAICS economic activity to permit studies of market share, demand and services, competition from imports
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| How does NAICS designate industries | six-digit numerical code
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| The first two digits of NAICS | designate a sector of the economy
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| The third digit of NAICS | designates a subsector
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| The fourth digit NAICS | represents an industry group.
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| The fifth digit of NAICS designates | specific industry and is the level at which comparable data are available for Canada, Mexico, and the U.S.
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| The sixth digit | designates individual country-level national industries
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| The benefits of the NAICS are | Permits a firm to find the NAICS codes of present customers & obtain NAICS-coded lists for similar firms. Is possible to monitor NAICS categories to determine the growth in various sectors & industries to identify promising marketing opportunities.
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| NAICS codes have important limitations: | Give 1 code to orgs based on major economic activity, large firms who engage many different activities only 1. 5 digit nat'l industry codes not available for all 3 countries b/c govts wont reveal data when few orgs exist in a category.
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| What are the three main types of organizational buyers? | industrial firms; resellers; government units
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| What are the two demand characteristics | consumer demand and derived demand
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| What is consumer demand | products and services is affected by their price, availability, and consumers’ tastes and income.
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| What is derived demand | the demand for industrial products and services is driven by, or derived from, demand for consumer products and services.
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| Size of the Order or Purchase | The purchase in organizational buying is much larger than that in consumer buying. Most organizations place purchasing constraints on their buyers. The size of the order determines who participates.
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| Number of Potential Buyers | Firms selling to organizations usually have far fewer buyers.
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| Organizational Buying Objectives | usiness firms, buying ismincrease profits by reducing costs or increase revenues. Nonprofit firms & govt agencies are usually to meet needs of the groups they serve. Firms buy from minority & women suppliers & vendors. Other companies buy environmental
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| Organizational buying criteria is | the objective attributes of the supplier’s products and services and the capabilities of the supplier itself. These criteria serve the same purpose as the evaluative criteria used by consumers.
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| Seven commonly used buying criteria are: | Price. Meet the quality specs required for the item. Ability to meet delivery schedules. Technical capability. Warranties & claim policies in the event of poor performance. Past performance on previous contracts. Poduction facilities & capacity.
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| What is Reverse Marketing | deliberate effort by organizational buyers to build relationships that shape suppliers’ products, services, and capabilities to fit a buyer’s needs and those of its customers.
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| What is Reciprocity | Industrial buying practice in which two orgs agree to purchase each other’s products and services. U.S. Justice Department frowns on reciprocal buying because it restricts the normal operation of the free market. Long-term contracts are also prevalent
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| When does supply partnership exists | A buyer and its supplier adopt mutually beneficial objectives, policies, and procedures for the purpose of lowering the cost or increasing the value of products and services delivered to the ultimate consumer.
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| What is Organizational buying behavior | The decision-making process that organizations use to establish the need for products and services and identify, evaluate, and choose among alternative brands and suppliers.
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| Stages in the Organizational Buying Process | The same five stages consumers use in the buying decision process applies to organizational purchases: (1) problem recognition, (2) information search, (3) alternative evaluation, (4) purchase decision, (5) postpurchase evaluation.
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| What is a buying center | consists of a group of individuals in an organization and highly formalized
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| Four questions to provide guidance in understanding the buying center in these organizations for a given product include: | Which individuals are in the buying center? What is the relative influence of each member of the group? What are the buying criteria of each member?mHow does each member perceive the firm, its products, and its salespeople?
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| Which individuals are in the buying center? | The composition of the buying center in a given organization depends on the specific item being bought. The purchasing manager is almost always a member.nIndividuals from top management and other functional areas are included depending on the purchase.
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| Roles in the Buying Center | There are five specific roles that an individual in a buying center can play: Users, Influencers, Buyers, Deciders, Gatekeepers
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| What are Users | are people in the organization who actually use the product or service.
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| What are Influencers | affect the buying decision, usually by helping define the specifications for what is bought.
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| What are Buyers | have formal authority and responsibility to select the supplier and negotiate the terms of the contract.
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| What are deciders | have the formal or informal power to select or approve the supplier that receives the contract.
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| What are Gatekeepers | control the flow of information in the buying center.
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| What are three types of buying situations, called buy classes, which vary from the routine reorder to the completely new purchase: | Straight Rebuy, Modified Rebuy, New Buy
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| What is straight rebuy | where the buyer reorders an existing product or service from the list of acceptable suppliers
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| What is modified rebuy | where users, influencers, or deciders in the buying center want to change the product specifications, price, delivery schedule, or supplier, although the item purchased is largely the same.
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| Whyat is new buy | the firm is a first-time buyer of the product or service. This involves greater risks, so the buying center is enlarged to include all who have a stake in the new buy.
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| What one department is almost always represented by a person in the buying center? | purchasing department
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| What are the three types of buying situations or buy classes? | straight rebuy; modified rebuy; and new buy
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| What buyers buy most online? | Organizational buyers account for 80% of the total worldwide value of all online transactions, both in volume and dollar value. U.S. organizational buyers account for about 60% of these online purchases.
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| Online buying in organizational markets occurs for three reasons: | Org. buyers depend supplier info about product availability, technical specs, application uses, price/delivery. Internet tech. reduce buyer order processing costs and marketing costs, like sales & advertising, & broaden base for products & services.
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| What is eMarketplaces | are online trading communities that bring together buyers and supplier organizations.
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| E-marketplaces exist in settings that have one or more of the following features: | Thousands of geographically dispersed buyers and sellers. Changing prices caused by demand and supply fluctuations. Time sensitivity due to perishable offerings and changing technologies. Easily comparable offerings between a variety of suppliers.
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| Many e-marketplaces offer online auctions. Two types are: | Traditional and Reverse Auction
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| Traditional Auction | Seller puts item up for sale & would-be buyers bid in competition with each other. As more would-be buyers become involved, there is an upward pressure on bid prices. Auction ends when a single bidder remains & wins the item with its highest price.
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| Reverse Auction | Buyer communicates need for a product/service & would-be suppliers bid in competition w/each other. More would-be suppliers create a decrease in bid prices for the buyer’s business. Auction ends when a single bidder remains & wins with its lowest price.
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| Why do some suppliers prefer the reverse auction | give them a chance to capture business that they might not have otherwise had because of a long-standing purchase relationship between the buyer and another supplier.
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| Why do some suppliers not prefer the reverse auction | put too much emphasis on prices, discourage consideration of other important buying criteria, and threaten supply partnerships.
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