Lectures Marketing management: Chapter 7 - ThS. Nguyễn Tiến Dũng

CHAPTER 7
ANALYZING BUSINESS MARKETS

Nguyen Tien Dung, MBA
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Chapter Questions
1. What is the business market, and how does it
2.
3.
4.
5.
6.

differ from the consumer market?
What buying situations do organizational
buyers face?
Who participates in the business-to-business
buying process?
How do business buyers make their
decisions?
How can companies build strong relationships
with business customers?
How do institutional buyers and government
agencies do their buying?

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Chapter Main Contents
1. What is organisational buying
2. Participants in the Business Buying
3.

4.
5.
6.

Process
The Purchasing/Procurement Process
Stages in the Buying Process
Managing Business-to-Business Customer
Relationships
Institutional and Government Markets

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1. What Is Organizational Buying?
● 1.1. The Business Market versus the

Consumer Market

● 1.2. Buying Situations
● 1.3. Systems Buying and Selling

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Organisational Markets
● Manufacturing companies (industrial market)
● Trading companies (reseller market)
● Non-profit organisations (government

agencies, charitable funds ...)

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1.1. The Business Market versus the Consumer Market
● Fewer, larger buyers
● Close supplier–customer

relationship
● Professional purchasing
● Multiple buying influences
● Multiple sales calls

● Derived demand
● Inelastic demand
● Fluctuating demand
● Geographically concentrated
buyers
● Direct purchasing
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1.2. Buying Situations

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1.3. System Buying and Selling
● System buying: buying a total problem

solution from a single seller.
● Simpler for a business customer
● Requires the system selling: the vendor must
be more professional.

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2. Participants in the Business Buying Process
● 2.1. The Buying Centre
● 2.2. Buying Centre Influences
● 2.3. Targeting Firms and Buying Centres
● Targeting firms

● Targeting within the business centre

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2.1. The Buying Centre
● Concerns of industrial marketers
● Who are the major decision participants?
● What decisions do they influence?
● What is their level of influence?
● What evaluation criteria do they use?

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The Buying Center
● Initiators

● Approvers

● Users

● Buyers

● Influencers

● Gatekeepers

● Deciders

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2.2. Buying Centre Influences
● Different people – different interests and

wants:

● Engineers may want to maximize the

performance of the product;
● Production people: ease of use and reliability of
supply;
● Financial staff: low cost, the economics of the
purchase;
● Purchasing: operating and replacement costs;
● Trade union: safety for employees
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2.3. Targeting Firms and Buying Centres
● Targeting firms:
● Market segmentation  select target customers

● Targeting buying centres
● Collecting personal and interpersonal information

about the persons
● Figure out: Who are the major decision
participants? What decisions do they influence?
What is their level of influence?

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● Business people are not buying “products.” They

are buying solutions to two problems: the
organization’s economic and strategic problem,
and their own personal need for individual
achievement and reward.

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3. The Purchasing/Procurement Process
● The buyer objectives:
● Maximum perceived value = Perceived benefits –
Perceived costs
● Framing
● customers are given a perspective or point of view
that allows the firm to “put its best foot forward.”
● Framing can be as simple as making sure customers
realize all the benefits or cost savings afforded by the
firm’s offerings, or becoming more involved and
influential in the thought process behind how
customers view the economics of purchasing,
owning, using, and disposing product offerings.

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4. Stages in the Buying Process

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5. Managing Business-to-Business Customer
Relationships
● The Benefits of Vertical Coordination
● Business Relationships: Risks and

Opportunism
● New Technology and Business Customers

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Benefits of Vertical Coordination
1.

Basic buying and selling—These are simple, routine exchanges with moderate levels
of cooperation and information exchange.

2.

Bare bones—These relationships require more adaptation by the seller and less
cooperation and information exchange.

3.

Contractual transaction—These exchanges are defined by formal contract and
generally have low levels of trust, cooperation, and interaction.

4.

Customer supply—In this traditional custom supply situation, competition rather than
cooperation is the dominant form of governance.

5.

Cooperative systems—The partners in cooperative systems are united in operational
ways, but neither demonstrates structural commitment through legal means or
adaptation.

6.

Collaborative—In collaborative exchanges, much trust and commitment lead to true
partnership.

7.

Mutually adaptive—Buyers and sellers make many relationship-specific adaptations,
but without necessarily achieving strong trust or cooperation.

8.

Customer is king—In this close, cooperative relationship, the seller adapts to meet the
customer’s needs without expecting much adaptation or change in exchange.

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Business Relationships: Risks and Opportunism
● Risks
● Vertical coordination can facilitate stronger

customer–seller ties but at the same time may
increase the risk to the customer’s and supplier’s
specific investments
● Opportunism
● some form of cheating or undersupply relative to

an implicit or explicit contract.

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6. Institutional and Government Markets
● Small budgets
● Acceptable –

High quality

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Marketing Debate
● How Different Is Business-to-Business Marketing?
● Many business-to-business marketing executives lament

the challenges of business-to-business marketing,
maintaining that many traditional marketing concepts and
principles do not apply. For a number of reasons, they
assert that selling products and services to a company is
fundamentally different from selling to individuals.
● Others disagree, claiming marketing theory is still valid
and only requires some adaptation in marketing tactics.
● Take a position: Business-to-business marketing

requires a special, unique set of marketing concepts
and principles versus Business-to-business
marketing is really not that different, and the basic
marketing concepts and principles apply.
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