Description
This PPT is about understand the special Features of B2B Buying, to understand different Purchasing Orientations.
1
Agenda
?
?
?
?
?
What are the Special Features of B2B Buying? What are the Different Purchasing Orientations? What is the Buying Centre and the Role of the Members? What are the Motivations of the Members of the Buying Centre? Who is the Powerful Buyer?
2
Agenda
?
?
?
?
?
What are the Key Tools Used in Purchasing Decisions? What is the Purchasing Decision Process of a Business Customer? How Business Customers Evaluate Supplier Performance? How to Understand Customer’s Resulting Experiences? How to Understand Customer Strategic Needs and Priorities?
3
What are the Special Features of B2B Buying?
• More persons participate • Participants different organizational responsibilities and different criteria to purchase decision. • Formal purchasing policies, constraints, and requirements • Buying instruments - requests for quotations, proposals, and purchase contracts
4
What are the Different Purchasing Orientations?
The Buying Orientation The Procurement Orientation The Supply Management Orientation
5
What is Buying Orientation?
Obtain the best deal in terms of price,quality, and availability from suppliers. Maximize power over suppliers. Avoid risks wherever possible.
6
What is Procurement Orientation?
Increase productivity by: Improving quality Reducing total costs Cooperating with suppliers
7
What is Supply Management Orientation?
Focus on delivering value to the end users. Concentrate on firm’s core competencies and strategically outsource all other activities. Build an efficient supply network. Sustain highly collaborative relationships with select supplier and sub-supplier firms.
8
What the Supplier Firm Need to Know about the Buying Centre?
Business marketing managers must find out the answers to the following questions : What are the roles of each member of the buying centre? What does each of the buyingcentre member want? Who are the powerful buyers? How do they perceive us?
9
What are the Roles of Buying Team Members?
Initiator Gatekeeper Influencer Decider Buyer User
10
What are the Motivations of Buying Team Members?
Each buyer-team member attempts to maximize his gain or minimize his loss from the purchase situation by: Acting in consonance with the way in which he is evaluated and rewarded by the organization. Reducing risk from the uncertainty of the outcome in a purchase decision process in a way that he can cope with the risk.
11
Who is the Powerful Buying Team Member?
• The buying team member who has a strong power base. • The buying team member or the department who is best able to cope with relevant risks for the outcome of a purchase decision.
12
What are the Bases of Power of Buying Team Members?
Reward Power Coercive Power Attraction Power Expert Power Status Power
13
What are the Risks of a Purchase Decision?
• The probability of loss due to a bad decision. • The amount of loss that could result from the incorrect decision. • Total purchasing risk is the probability of loss times the amount of loss.
14
What are the Key Tools Used In Purchasing Decisions?
Life-cycle costing Value analysis Time-based buying strategies
15
What is Life-cycle Costing?
Three categories of life-cycle cost: Initial cost Start-up costs Post-purchase costs Salvage value
16
What is Value Analysis?
Value analysis (also called value engineering) is the organized study of a product after it has been developed, aimed at identifying costs that that do not add to the reliability or the quality of the item and at determining whether the product can be improved while achieving cost reductions.
17
What are Time-based Buying Strategies?
These technologies are:
Just-in-Time-Inventory (JIT) Materials Requirement Planning (MRP) Electronic Data Interchange and Internet Web-Based Procurement Enterprise Resource Planning (ERP)
18
What is the Business Customer’s Decision Cycle?
Reconsideration
Satisfaction
Selection
Acknowledgment
Customer
Investigation Decision
Measurement
Criteria
19
How Business Customers Evaluate Supplier Performance?
?
Buying orientated firms evaluate suppliers in usually in one of the following ways: ? Suppliers are rated subjectively on a scale ranging from poor to excellent in respect of each of the categories like quality, price, delivery. ? Suppliers are rated objectively with operational measures in respect to quality, price, and delivery.
20
Quality Rating Under Weighted-Point Plan
Quality
Percentage Quality Lots Accepted Control Lots Lots Received Accepted Rejected * Factor Rating
Supplier A
Supplier B
60
60
54
56
6 4 4
90.0*40 93.3*40 80.0*40
36.0 37.3 32.0
Supplier C
20
16
21
Price Rating Under The Weighted-Point Plan
Net Price Price (Unit Price - Percentage * Factor Rating Discount + Transportation) Price
Supplier A
Supplier B
93
112
100%
83%
35 35 35
35.0
29.1
Supplier C
123
76%
26.6
22
Service Rating Under Weighted-Point Plan
Service Promises Service Service * Factor = Rating Kept 90% 95% 25 22.5
Supplier A
Supplier B
25
25
23.8
25.0
Supplier C 100%
23
Composite Rating Under The Weighted-Point Plan
Rating Quality (40 Points) Price (35 Points) Service (25 Points) Total Rating Supplier A Supplier B Supplier C 36.0 35.0 22.5 93.5 37.3 29.1 23.8 90.2 32.0 26.6 25.0 83.6
24
How Business Customers Evaluate Supplier Performance?
?
?
As firms migrate to a procurement orientation, they create performance measures that focus on total costs. There are two cost-based supplier evaluation approaches.
25
How Business Customers Evaluate Supplier Performance?
?
?
In the first approach, companies review the costs associated with supplier nonperformance. Supplier Performance Index (SPI) has been developed that recognizes cost attributed to supplier non-performance on delivery, materials quality, and prices.
26
How Business Customers Evaluate Supplier Performance?
?
?
?
The SPI formula is: SPI = (extended purchase price + nonperformance cost)/ extended purchase price Extended purchase price represents the net price the customer firm pays. Non-performance costs are additional costs the customer incurs to correct mistakes the supplier made during a relevant time period, including downtime attributed to stock outs.
27
How Business Customers Evaluate Supplier Performance?
?
?
In the second approach, customers audit and then calculate the total costs of using a product or service during a pre-specified time period. Total costs include not only nonperformance expenses but also those related to the acquisition, conversion, and disposal of a given offering.
28
How Business Customers Evaluate Supplier Performance?
?
?
?
In supply management oriented firm, supply managers evaluate vendors in terms of the value each contributes to their firm’s market offerings. Specifically, they estimate the benefits, total costs, and prices paid to each vendor. These firms supplement direct vendor evaluations with studies of their own customers’ satisfaction.
29
How to Understand Customers’ Resulting Experiences?
?
?
Whether customers buy consumer or industrial products, customers base the perceived value of their purchases on more than specifications, features, and price. Their impressions during the cycle of acquiring, owning, and ultimately discarding the product also contributes to the customers’ perception of value.
30
The Buyer Experience Cycle
Purchase
How long does it take to find product you need? Is the place of purchase attractive & accessible? How secure is the transaction environment? How rapidly can you make a purchase?
Delivery
How long does it take to get the product delivered? How difficult is it to unpack & install the new product?
Use
Does the product require training or expert maintenance?
Is the product easy to store when not in use? How effective are the product’s features and functions?
31
The Buyer Experience Cycle
Supplements
Do you need other products and services to make this product work? If so how costly are they?
Maintenance
Does the product require external maintenance? How easy is it to maintain and upgrade the product?
Disposal
Does use of the product create waste items? How easy is it to dispose of the product?
32
How to Understand Customers’ Resulting Experiences?
?
?
When a marketer explore the customers’ experience cycle, the marketer can learn what exactly valued in a purchase – that is, the whole package, the entire context of that purchase. The next essential step is understanding why the customer wants this package.
33
How to Understand Customer Strategic Needs & Priorities?
?
?
A customer-centric thinker spends time talking to the customers and the conversations yield an understanding of the customers’ problems directly from the customers’ perspective. Successful entrepreneurs act on these insights and design their businesses around what they have learned.
34
How to Understand Customer Strategic Needs & Priorities?
?
?
Through direct contact with the customer, the entrepreneur is able to identify solutions to the customers’ problems that unlock the customers’ enthusiasm, budgets, and loyalty. However, customers’ priorities are continuously changing as a result of the changing environment.
35
How to Understand Customer Strategic Needs & Priorities?
?
?
Jack Welch saw that GE’s customers saw less value in the product and more value in the services and financing. Bill Gates of Microsoft saw where customer priorities were shifting in the computer industry time and time again – from languages to operating systems to applications to communications to the Internet.
36
How to Understand Customer Strategic Needs & Priorities?
?
?
?
The problem of finding out the customer priorities is further compounded by the fact that all customer’s needs are not articulated. Marketers must apply a considerable degree of rigorous creativity to reach the silent needs. Business customers, particularly, are not able to communicate their entire range of needs because companies are organized in silos.
37
How to Understand Customer Strategic Needs & Priorities?
?
?
In today’s business landscape, it become’s the supplier’s job to identify those silent needs. One of the most powerful tools for ferreting out those silent, unarticulated, and, at times, unknown priorities is analysis of customer’s system economics.
38
How to Understand Customer Strategic Needs & Priorities?
?
A customer’s system economics includes: ? the amount paid for the product or service; ? the costs to use, store, and dispose of it; ? the time consumed in the purchase transactions and the usage pattern; ? and the amount of hassle that has to be tolerated or paid out throughout the entire process. 39
How to Understand Customer Strategic Needs & Priorities?
?
? ?
Really knowing the customer’s system economics brings enormous benefit to suppliers. It puts them in a legitimate position to answer the question: How can we really add value to the customer?
Another way to find out business customers strategic needs is by examining the customer’s value chain.
40
?
How to Understand Customer Strategic Needs & Priorities?
• Customer’s value chain analysis helps a supplier to distinguish between the activities of the customer firm that directly support its competitive strategies and ordinary operations. • By supporting such strategic activities B2B firm will gain a receptive audience and command premium margins.
41
How to Understand Customer Strategic Needs & Priorities?
?
?
?
Traditional market research models try to measure customers over time by periodically asking them a set of questions and measuring change. This kind of episodic market research results in backward-looking insight. Strategic customer analysis demands moving beyond this episodic approach to creating a continuous dialogue with the most important customers.
42
How to Understand Customer Strategic Needs & Priorities?
?
?
Continuous customer interaction yields real-time insight and a glimpse into tomorrow. A marketer must, therefore, create continuous dialogue particularly with ‘future defining customers’, whose issues, practices, and solutions today represent what the marketplace behaviour will be tomorrow.
43
44
doc_297069189.pptx
This PPT is about understand the special Features of B2B Buying, to understand different Purchasing Orientations.
1
Agenda
?
?
?
?
?
What are the Special Features of B2B Buying? What are the Different Purchasing Orientations? What is the Buying Centre and the Role of the Members? What are the Motivations of the Members of the Buying Centre? Who is the Powerful Buyer?
2
Agenda
?
?
?
?
?
What are the Key Tools Used in Purchasing Decisions? What is the Purchasing Decision Process of a Business Customer? How Business Customers Evaluate Supplier Performance? How to Understand Customer’s Resulting Experiences? How to Understand Customer Strategic Needs and Priorities?
3
What are the Special Features of B2B Buying?
• More persons participate • Participants different organizational responsibilities and different criteria to purchase decision. • Formal purchasing policies, constraints, and requirements • Buying instruments - requests for quotations, proposals, and purchase contracts
4
What are the Different Purchasing Orientations?
The Buying Orientation The Procurement Orientation The Supply Management Orientation
5
What is Buying Orientation?
Obtain the best deal in terms of price,quality, and availability from suppliers. Maximize power over suppliers. Avoid risks wherever possible.
6
What is Procurement Orientation?
Increase productivity by: Improving quality Reducing total costs Cooperating with suppliers
7
What is Supply Management Orientation?
Focus on delivering value to the end users. Concentrate on firm’s core competencies and strategically outsource all other activities. Build an efficient supply network. Sustain highly collaborative relationships with select supplier and sub-supplier firms.
8
What the Supplier Firm Need to Know about the Buying Centre?
Business marketing managers must find out the answers to the following questions : What are the roles of each member of the buying centre? What does each of the buyingcentre member want? Who are the powerful buyers? How do they perceive us?
9
What are the Roles of Buying Team Members?
Initiator Gatekeeper Influencer Decider Buyer User
10
What are the Motivations of Buying Team Members?
Each buyer-team member attempts to maximize his gain or minimize his loss from the purchase situation by: Acting in consonance with the way in which he is evaluated and rewarded by the organization. Reducing risk from the uncertainty of the outcome in a purchase decision process in a way that he can cope with the risk.
11
Who is the Powerful Buying Team Member?
• The buying team member who has a strong power base. • The buying team member or the department who is best able to cope with relevant risks for the outcome of a purchase decision.
12
What are the Bases of Power of Buying Team Members?
Reward Power Coercive Power Attraction Power Expert Power Status Power
13
What are the Risks of a Purchase Decision?
• The probability of loss due to a bad decision. • The amount of loss that could result from the incorrect decision. • Total purchasing risk is the probability of loss times the amount of loss.
14
What are the Key Tools Used In Purchasing Decisions?
Life-cycle costing Value analysis Time-based buying strategies
15
What is Life-cycle Costing?
Three categories of life-cycle cost: Initial cost Start-up costs Post-purchase costs Salvage value
16
What is Value Analysis?
Value analysis (also called value engineering) is the organized study of a product after it has been developed, aimed at identifying costs that that do not add to the reliability or the quality of the item and at determining whether the product can be improved while achieving cost reductions.
17
What are Time-based Buying Strategies?
These technologies are:
Just-in-Time-Inventory (JIT) Materials Requirement Planning (MRP) Electronic Data Interchange and Internet Web-Based Procurement Enterprise Resource Planning (ERP)
18
What is the Business Customer’s Decision Cycle?
Reconsideration
Satisfaction
Selection
Acknowledgment
Customer
Investigation Decision
Measurement
Criteria
19
How Business Customers Evaluate Supplier Performance?
?
Buying orientated firms evaluate suppliers in usually in one of the following ways: ? Suppliers are rated subjectively on a scale ranging from poor to excellent in respect of each of the categories like quality, price, delivery. ? Suppliers are rated objectively with operational measures in respect to quality, price, and delivery.
20
Quality Rating Under Weighted-Point Plan
Quality
Percentage Quality Lots Accepted Control Lots Lots Received Accepted Rejected * Factor Rating
Supplier A
Supplier B
60
60
54
56
6 4 4
90.0*40 93.3*40 80.0*40
36.0 37.3 32.0
Supplier C
20
16
21
Price Rating Under The Weighted-Point Plan
Net Price Price (Unit Price - Percentage * Factor Rating Discount + Transportation) Price
Supplier A
Supplier B
93
112
100%
83%
35 35 35
35.0
29.1
Supplier C
123
76%
26.6
22
Service Rating Under Weighted-Point Plan
Service Promises Service Service * Factor = Rating Kept 90% 95% 25 22.5
Supplier A
Supplier B
25
25
23.8
25.0
Supplier C 100%
23
Composite Rating Under The Weighted-Point Plan
Rating Quality (40 Points) Price (35 Points) Service (25 Points) Total Rating Supplier A Supplier B Supplier C 36.0 35.0 22.5 93.5 37.3 29.1 23.8 90.2 32.0 26.6 25.0 83.6
24
How Business Customers Evaluate Supplier Performance?
?
?
As firms migrate to a procurement orientation, they create performance measures that focus on total costs. There are two cost-based supplier evaluation approaches.
25
How Business Customers Evaluate Supplier Performance?
?
?
In the first approach, companies review the costs associated with supplier nonperformance. Supplier Performance Index (SPI) has been developed that recognizes cost attributed to supplier non-performance on delivery, materials quality, and prices.
26
How Business Customers Evaluate Supplier Performance?
?
?
?
The SPI formula is: SPI = (extended purchase price + nonperformance cost)/ extended purchase price Extended purchase price represents the net price the customer firm pays. Non-performance costs are additional costs the customer incurs to correct mistakes the supplier made during a relevant time period, including downtime attributed to stock outs.
27
How Business Customers Evaluate Supplier Performance?
?
?
In the second approach, customers audit and then calculate the total costs of using a product or service during a pre-specified time period. Total costs include not only nonperformance expenses but also those related to the acquisition, conversion, and disposal of a given offering.
28
How Business Customers Evaluate Supplier Performance?
?
?
?
In supply management oriented firm, supply managers evaluate vendors in terms of the value each contributes to their firm’s market offerings. Specifically, they estimate the benefits, total costs, and prices paid to each vendor. These firms supplement direct vendor evaluations with studies of their own customers’ satisfaction.
29
How to Understand Customers’ Resulting Experiences?
?
?
Whether customers buy consumer or industrial products, customers base the perceived value of their purchases on more than specifications, features, and price. Their impressions during the cycle of acquiring, owning, and ultimately discarding the product also contributes to the customers’ perception of value.
30
The Buyer Experience Cycle
Purchase
How long does it take to find product you need? Is the place of purchase attractive & accessible? How secure is the transaction environment? How rapidly can you make a purchase?
Delivery
How long does it take to get the product delivered? How difficult is it to unpack & install the new product?
Use
Does the product require training or expert maintenance?
Is the product easy to store when not in use? How effective are the product’s features and functions?
31
The Buyer Experience Cycle
Supplements
Do you need other products and services to make this product work? If so how costly are they?
Maintenance
Does the product require external maintenance? How easy is it to maintain and upgrade the product?
Disposal
Does use of the product create waste items? How easy is it to dispose of the product?
32
How to Understand Customers’ Resulting Experiences?
?
?
When a marketer explore the customers’ experience cycle, the marketer can learn what exactly valued in a purchase – that is, the whole package, the entire context of that purchase. The next essential step is understanding why the customer wants this package.
33
How to Understand Customer Strategic Needs & Priorities?
?
?
A customer-centric thinker spends time talking to the customers and the conversations yield an understanding of the customers’ problems directly from the customers’ perspective. Successful entrepreneurs act on these insights and design their businesses around what they have learned.
34
How to Understand Customer Strategic Needs & Priorities?
?
?
Through direct contact with the customer, the entrepreneur is able to identify solutions to the customers’ problems that unlock the customers’ enthusiasm, budgets, and loyalty. However, customers’ priorities are continuously changing as a result of the changing environment.
35
How to Understand Customer Strategic Needs & Priorities?
?
?
Jack Welch saw that GE’s customers saw less value in the product and more value in the services and financing. Bill Gates of Microsoft saw where customer priorities were shifting in the computer industry time and time again – from languages to operating systems to applications to communications to the Internet.
36
How to Understand Customer Strategic Needs & Priorities?
?
?
?
The problem of finding out the customer priorities is further compounded by the fact that all customer’s needs are not articulated. Marketers must apply a considerable degree of rigorous creativity to reach the silent needs. Business customers, particularly, are not able to communicate their entire range of needs because companies are organized in silos.
37
How to Understand Customer Strategic Needs & Priorities?
?
?
In today’s business landscape, it become’s the supplier’s job to identify those silent needs. One of the most powerful tools for ferreting out those silent, unarticulated, and, at times, unknown priorities is analysis of customer’s system economics.
38
How to Understand Customer Strategic Needs & Priorities?
?
A customer’s system economics includes: ? the amount paid for the product or service; ? the costs to use, store, and dispose of it; ? the time consumed in the purchase transactions and the usage pattern; ? and the amount of hassle that has to be tolerated or paid out throughout the entire process. 39
How to Understand Customer Strategic Needs & Priorities?
?
? ?
Really knowing the customer’s system economics brings enormous benefit to suppliers. It puts them in a legitimate position to answer the question: How can we really add value to the customer?
Another way to find out business customers strategic needs is by examining the customer’s value chain.
40
?
How to Understand Customer Strategic Needs & Priorities?
• Customer’s value chain analysis helps a supplier to distinguish between the activities of the customer firm that directly support its competitive strategies and ordinary operations. • By supporting such strategic activities B2B firm will gain a receptive audience and command premium margins.
41
How to Understand Customer Strategic Needs & Priorities?
?
?
?
Traditional market research models try to measure customers over time by periodically asking them a set of questions and measuring change. This kind of episodic market research results in backward-looking insight. Strategic customer analysis demands moving beyond this episodic approach to creating a continuous dialogue with the most important customers.
42
How to Understand Customer Strategic Needs & Priorities?
?
?
Continuous customer interaction yields real-time insight and a glimpse into tomorrow. A marketer must, therefore, create continuous dialogue particularly with ‘future defining customers’, whose issues, practices, and solutions today represent what the marketplace behaviour will be tomorrow.
43
44
doc_297069189.pptx