B2B

• Why Organizations Buy: Business-to-Business Markets

and B2B E-Commerce

Business Markets

• Generally, the same principles are true for business and consumer customers

• There are characteristics that make B2B buying more complex– Multiple buyers

– Number of customers

– Size of purchases

– Geographic concentration

Types of Organizational Markets

• Industrial Markets• Industrial firms

• Reseller Market• Resellers

• Government Markets• Government Units

• Global Organizational Markets

Type and number of organizational customers

NAICS breakdown for information industries sector: NAICS code 51 (abbreviated)

Key characteristics of organizational buying behavior

Derived Demand

• B2B demand is derived demand because a business’s demand for goods and services comes either directly or indirectly from consumers’ demands

Derived Demand

Demand for education

Derived demand - textbooks

Derived demand - paper

Derived demand - pulp

Derived demand - forestry products

The Nature of Business Buying

• The Buying Situation

• The Professional Buyer

• The Buying Center

The Professional Buyer

• Titles: purchasing agents, procurement officers, director of materials management

• Focus on economic factors beyond the initial price of a product including transportation and delivery charges, accessory products or supplies, maintenance, disposal costs, etc.

• Large firms practice centralized purchasing - one department does all buying

The Buying Center

• A cross-functional group of people in the organization who participate in the decision-making process

• May include production workers, supervisors, engineers, secretaries, shipping clerks, and financial officers

Roles in the Buying Center

• Initiator begins the buying process

• User needs the product

• Gatekeeper controls the flow of information to other members

• Influencer dispenses advice or shares expertise

• Decider makes the final decision

• Buyer executes the purchase

The Buying Situation

• A buy class framework identifies the degree of effort required of the firm’s personnel to collect information and make a purchase decision

• Straight rebuy

• Modified rebuy

• New task buying

How they buying situation affects buying center behavior

International Organization for Standardization (ISO)

Geneva , SwitzerlandOne standards organization per country:

• USA – ANSI• Japan – JISC (MITI)• Germany – DIN• Australia – SAI

ISO 9000

Electronic B2B Commerce

• Internet exchanges between two or more businesses or organizations

• Allows marketers to link directly to suppliers, factories, distributors, and their customers

• Reduces time necessary to order and deliver goods, track sales, and get feedback

Intranets, Extranets, and Private Exchanges

• An intranet is an internal corporate computer network that uses Internet technology to link company departments, employees, and databases

• An extranet allows outsiders to the organization to access its intranet

• A private exchange links invited groups of suppliers and partners over the Web

Security Issues• Authentication - making sure only authorized

individuals are allowed to access a site• Firewalls - combination of hardware and software

that ensures only authorized individuals gain entry• Encryption - scrambling a message so that only

another individual has the right “key” for deciphering it

Comparing the stages in consumer and organizational purchases