Download - Analysing Business Market
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Dr. Ranjan Kantha, KBS 111/26/2009
AnalyzingBusiness Markets
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Dr. Ranjan Kantha, KBS 211/26/2009
What is Organizational Buying?
It is the decision-making process bywhich organizations establish the
need for products and services,and
identify, evaluate, and choose amongalternative brands and suppliers.
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Dr. Ranjan Kantha, KBS 311/26/2009
Organization Typical Buying Situation
Manufacturer of consumerproducts
Sona Steering supplies steering wheels to Maruti UdyogLimited.
Manufacturer of IndustrialGoods
Tata Timken supplies bearings to Alsthom motormanufacturers who supply to Cummins Engineering
Health care Johnson and Johnson supplies surgical staplers toApollo Hospitals in Hyderabad
Information and Entertainment Sony Television decides whether to sell Sony Max signalsto Bhaskar Television for cable distribution in Indore
Service Industries Infosys decides to sell its financial software Finnacle to
Bank of Baroda
Non-profit Organization Child Relief and You (CRY) makes cards for UNOs Indiaoffice
Government The Government of India asks for sealed bid for GoldenQuadrilateral Golden Highway project
Mining, Forestry and Fishing Oil and Natural Gas Corporation (ONGC) purchasesdrilling machines and off shore platform equipments for
oil explorationAgriculture A farmers cooperative Society purchases a Sonalika
tractors for its members
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Dr. Ranjan Kantha, KBS 411/26/2009
Difference between Consumer and Business MarketsDifference between Consumer and Business Markets
Decision Variables OrganizationalMarketing
Consumer Marketing
Appeal Rational Dramatic
Platform Logical Emotional
Brand Excitement Not Desired Imperative
Brand Personality Mostly Corporate Essential and both Productand Corporate
Pre-launch Research Not Vital Vital
Span of DistributionControl
Narrow Wider
Number of Orders Small Large
Size of the Order Large Very Small
Cost of OrderProcessing Low High
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Dr. Ranjan Kantha, KBS 511/26/2009
Top Business MarketingChallenges
Expand understanding of customer needs Compete globally as China and India reshape
markets
Master analytical tools and improve quantitativeskills
Reinstate innovation as an engine of growth Create new organizational models and linkages
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Dr. Ranjan Kantha, KBS 611/26/2009
Characteristics of BusinessMarkets
Fewer, larger buyers Close supplier-
customer
relationships Professional
purchasing
Many buyinginfluences
Multiple sales calls Derived demand
Inelastic demand
Fluctuating demand
Geographically
concentrated buyers Direct purchasing
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Dr. Ranjan Kantha, KBS 711/26/2009
The Buying CenterInitiatorsInitiators
UsersUsers
InfluencersInfluencers
DecidersDeciders
ApproversApprovers
BuyersBuyers
GatekeepersGatekeepers
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Role and Responsibility of Buying Center
Initiators:These are the people who request for something to be purchased. They maybe users or others in the work organization.
Users:They use the products thus, initiating the purchase process. They report on theproduct performance e.g. worker.
Influencers: Individuals in the organization, influence the decision-making process byproviding information on criteria for buying consultants e.g. Research andDevelopment specialists inside the organization and consultants outside theorganization.
Deciders:Organizational members with decision-making power who decide about thepurchase e.g. engineers deciding specifications or vice-president (finance) who
decides in favor of the purchase. Gatekeepers: People in the organization who have the power to prevent sellers or
information from reaching the members of buying centers e.g. purchasing agents,receptionist, secretaries and telephone operators.
Approvers:People in the organization who authorize the proposed actions of deciders
or buyers. Buyers:These are the people who have formal authority to select the suppliers and
arrange the purchase terms. Buyers help in product specifications, in selection ofsuppliers and negotiating purchases and include senior people in purchasedepartment.
Organizational Buyer Behavior
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Dr. Ranjan Kantha, KBS 911/26/2009
Buying Motives of Business Buyers
Motive Objective
Efficiency In performance, practicability and increased capacity
Economy In money, in use or in time
Good Quality In materials and workmanship
Simplicity In construction, operation and application
Saleability In Increasing saleabilityof user's product
Ease of operation In easier handling, greater convenience, handiness
Space saving In compactness, ease for storage and holding
Obsolescence In which it needs improvement, replacement or additions
Safety In providing safety to employees, clients and customers
Cleanliness In plant, user's product, or for the workmen
Organizational Buyer Behavior
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Dr. Ranjan Kantha, KBS 1011/26/2009
Buying Situation
Straight rebuyStraight rebuy
Modified rebuyModified rebuy
New taskNew task
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Buying Decision Phases
BuyingDecision
Phases
New Task Modified Rebuy Straight Rebuy
1. Problemrecognition
Anticipate problem, useadvertising and creativesales people to convincebuyers of problem solving
capabilities.
In supplier: Maintainquality servicestandardsOut supplier; Watch for
developing trends.
In supplier; Maintainclose relationship ofusers and buyers.Out supplier: Convince
firm to recognizealternatives.
2. Solutiondetermination
Provide technical assistanceand information
In and out supplierstress capability,reliability, and problem
solving capabilities
- same -
3. Determiningneeded item
Provide detailedproduct/service informationto decision-maker.
Same as phase 2. - same -
4. Searching forand qualifyingsupplier
In supplier: maintaindependability, Out supplier:demonstrate ability toperform task.
In supplier, watch forproblem out supplier;demonstrate ability toperform task.
- same -
5. Analyzingproposals Understand details ofcustomer problems/ needs:make timely proposals.
Understand details ofcustomerproblems/needs; maketimely proposals.
Make timely proposals.
Organizational Buyer Behavior
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Steps in Organizational Buying
Recognizing an Organizational Need
Identifying Suppliers
Determining Products Specifications
Searching for Information andEvaluating Suppliers
Negotiating a Purchase Order
Evaluating Performance of theProduct & Supplier
Organizational Buyer Behavior
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Dr. Ranjan Kantha, KBS 1311/26/2009
Stages in the Buying Process:Buyphases
Problem recognition General need description
Product specification
Supplier search
Proposal solicitation
Supplier selection Order-routine specification
Performance review
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Dr. Ranjan Kantha, KBS 1411/26/2009
Buygrid Framework
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Vendor Analysis
O
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Handling Price-Oriented
CustomersLimit quantity purchasedLimit quantity purchased
Allow no refundsAllow no refunds
Make no adjustmentsMake no adjustments
Provide no servicesProvide no services
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Methods for Researching
Customer Value
Internal engineeringassessment
Field value-in-useassessment
Focus-group valueassessment
Direct survey
questions
Conjoint analysis
Benchmarks
Compositionalapproach
Importance ratings
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Trust DimensionsTransparent
Product/Service
Quality
Incentive
Partnering
Cooperating
Design
Product
Comparison
Supply Chain
PervasiveAdvocacy
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Factors AffectingBuyer-Supplier Relationships
Availability ofalternatives
Supply marketdynamismComplexity ofsupply
Importance ofsupply