industrial buying-behavior
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Dynamics of industrial buying behavior
Presented By-
Rajnish Kumar
Rajnish Kumar Accman Institute of management
PGDM-MKT (2011-13)
Rajnish Kumar Accman Institute of management
PGDM-MKT (2011-13)
Industrial buying behavior
Consumer vs. Industrial buying behavior
Main types of buying situations in B2B Stages of decision in B2B Roles in B2B procurement Influences on organizational behavior Buying centres in summary
Rajnish Kumar Accman Institute of management
PGDM-MKT (2011-13)
Consumer vs. Industrial buying behavior
Decisions made by consumers are quite simple Industrial buying processes are more complicated,
there are several phases and steps Different buying behavior for different products and
target groups Simple consumer goods like food and beverages are
bought very spontaneously – influenced by advertising and product presentation
For premium consumer goods (expensive clothes, computers) – buying behavior is getting more rational – comparison
Private investment goods – price bargaining
Rajnish Kumar Accman Institute of management
PGDM-MKT (2011-13)
B2B products –Industrial procurement starts
More than one person involved Buying process follows certain rules Price comparison, standardisation,
tenders = Ausschreibungen)
Rajnish Kumar Accman Institute of management
PGDM-MKT (2011-13)
B2B systems
involve more capabilities and greater workloads
From the buyer‘s and the supplier‘s side decision has more extensive consequences
Rajnish Kumar Accman Institute of management
PGDM-MKT (2011-13)
B2B facilities
Industrial plants Manufacturing installations Office buildings
Rajnish Kumar Accman Institute of management
PGDM-MKT (2011-13)
Main types of buying situations in B2B Straigtht rebuy – routine decision, repetitive process
(energy, office supplies, raw materials, wood, cigarettes), component suppliers for the automotive industry – little or no new information
Modified rebuy – more complicated but less sophisticated: cars, trucks, computers, consulting – modified rebuys are often treated too uncautious
New task – calls for thorough research – industrial plant – highest level of uncertainty. Strategic new tasks are of extreme strategic and financial importance (aircrafts, military equipment, infrastructure) – re-evaluation of alternatives and search for new information and new alternatives
Rajnish Kumar Accman Institute of management
PGDM-MKT (2011-13)
Buying phases
Problem recognition General need description Product specification Supplier search Proposal solicitation Supplier selection Order routine specification Performance review
Rajnish Kumar Accman Institute of management
PGDM-MKT (2011-13)
Stages of decision in B2B procurement
Backhaus developed a widely usable model to distinguish between 5 phases of procurement
Preliminary application (initiation phase) Tender proposal Negotiation Processing of order Warranty and services
Rajnish Kumar Accman Institute of management
PGDM-MKT (2011-13)
Preliminary application
Recognition of a problem (need) and a general solution
Released by top management = operating department or external consultants
Result request for an offer addressed to a number of potential suppliers
Rajnish Kumar Accman Institute of management
PGDM-MKT (2011-13)
Tender preparation phase
Determination of characteristics and quantity of needed items
Search for and qualification of potential sources
Supplier has to provide an offer Tries to be incomparable with his
competitors Customer tries to make the offer best
comparable
Rajnish Kumar Accman Institute of management
PGDM-MKT (2011-13)
Negotiation phase
= core selling process Comprises acquisition and analysis of
proposals, evaluation of proposals and selection of suppliers
Rajnish Kumar Accman Institute of management
PGDM-MKT (2011-13)
Processing phase/warranty/ service phase
Contains selection of an order routine Realisation of the transaction along
with the fixation of after sales service tasks
Rajnish Kumar Accman Institute of management
PGDM-MKT (2011-13)
Roles in B2B procurement – buying center concept
Group of people involved in the buying process – buying center
Webster/Wind model shows 5 different roles – not institutionalised
This causes probleme in identifying and targeting the right people within the decision process
Rajnish Kumar Accman Institute of management
PGDM-MKT (2011-13)
Buying center
Role keepers have different tasks – not mandatory
Buyer User Initiator Gatekeeper Influencer
Rajnish Kumar Accman Institute of management
PGDM-MKT (2011-13)
Buyer
Formal authority to sign contracts Member of purchasing department Influences the vendor selection Not in technical details Main criteria: price + terms and
conditions of the contract
Rajnish Kumar Accman Institute of management
PGDM-MKT (2011-13)
User
Person working with the product Interested in benefits and
unobstructed function of the product to buy
Large knowhow and preconceived opinion
Rajnish Kumar Accman Institute of management
PGDM-MKT (2011-13)
Influencer
A person with high technical knowledge and practical experience
definition of minimum requirements on technical or company standards
Rajnish Kumar Accman Institute of management
PGDM-MKT (2011-13)
Gatekeeper
Controls the flow of information within the buying center
Assistant of decision maker Influence by preparing the decision
and the relevant documents
(Scriptum p 33-34 + summary)
Rajnish Kumar Accman Institute of management
PGDM-MKT (2011-13)
Decider
Right to say yes or no Mightiest person
Rajnish Kumar Accman Institute of management
PGDM-MKT (2011-13)
Initiator
Person who brings new ideas and solutions into the company
Rajnish Kumar Accman Institute of management
PGDM-MKT (2011-13)
Specific marketing considerations in the industrial facilities business Long decision taking process High risk Complex buying center The specific competitive situation
Rajnish Kumar Accman Institute of management
PGDM-MKT (2011-13)
Product policy
Focuses on innovation Has to care for high flexibility in
research and development And manufacturing and assembling
Rajnish Kumar Accman Institute of management
PGDM-MKT (2011-13)
Price
Strict bid and tender rules High transparency Add value with service offering to
achieve a differentiating position Another aspect: financing and
sourcing models
Rajnish Kumar Accman Institute of management
PGDM-MKT (2011-13)
Distribution policy
Focus on negotiation phase Provide excellent people in the selling
center High technical knowledge
Rajnish Kumar Accman Institute of management
PGDM-MKT (2011-13)
Communication
Problem solver! Proving success with comparable
tasks Reference projects!
THANK YOURajnish Kumar
Accman Institute of management PGDM-MKT (2011-13)
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