Industrial buying-behavior

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Text of Industrial buying-behavior

  • 1. Dynamics of industrialbuying behavior Presented By- Rajnish Kumar Rajnish Kumar Accman Institute of management PGDM-MKT (2011-13)
  • 2. 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)
  • 3. Consumer vs. Industrial buyingbehavior 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)
  • 4. B2B products Industrialprocurement 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)
  • 5. B2B systems involve more capabilities and greater workloads From the buyers and the suppliers side decision has more extensive consequences Rajnish Kumar Accman Institute of management PGDM-MKT (2011-13)
  • 6. B2B facilities Industrial plants Manufacturing installations Office buildings Rajnish Kumar Accman Institute of management PGDM-MKT (2011-13)
  • 7. Main types of buyingsituations 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)
  • 8. 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)
  • 9. Stages of decision in B2Bprocurement 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)
  • 10. 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)
  • 11. 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)
  • 12. 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)
  • 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)
  • 14. 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)
  • 15. Buying center Role keepers have different tasks not mandatory Buyer User Initiator Gatekeeper Influencer Rajnish Kumar Accman Institute of management PGDM-MKT (2011-13)
  • 16. 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)
  • 17. 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)
  • 18. 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)
  • 19. 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)
  • 20. Decider Right to say yes or no Mightiest person Rajnish Kumar Accman Institute of management PGDM-MKT (2011-13)
  • 21. Initiator Person who brings new ideas and solutions into the company Rajnish Kumar Accman Institute of management PGDM-MKT (2011-13)
  • 22. Specific marketingconsiderations in the industrialfacilities business Long decision taking process High risk Complex buying center The specific competitive situation Rajnish Kumar Accman Institute of management PGDM-MKT (2011-13)
  • 23. 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)
  • 24. 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)
  • 25. 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)
  • 26.