Even if an ordinary person could see, the consumer market much larger business-to-business market. In fact, B2B is much larger than the B2C markets. If we are talking about commercial markets, the commercial industry, government organizations or institutions, are all involved in B2B transactions, directly or indirectly.
Some companies focus exclusively on selling the business market, while some consumer and business market. Infosys, Satyam, Tata, IBM, Wipro, Logitech, Epson, HP,Canon, LG, Samsung, for example. Business-to-business do business with the purchases of goods and services to support or facilitate the production of other goods and services, either daily or for society to facilitate resale.
According to Reeder et al (1991), all marketing strategy begins with a thorough understanding of organizational buying behavior, since it implies a different understanding of the situation purchasing procedures and criteria in purchasing decisionsDecisions. The understanding of organizational buying behavior is of fundamental importance for the supplier of an industrial society, to perceive is the best way to respond to customer demands. (Baptista, Forsberg, 1997).
Moreover, said Haas (1995) that the acquisition of organization is not simply the act is someone. It is actually the result of interactions between professionals of purchase. And those who are involved in the process, can affect in one way or another, what ispurchased and delivered. Technological development has changed the traditional way of buying business. New tools have opened a new era and new opportunities in all parts of the market. The arrival of the Internet as a tool to continue editing the versatile performance of organizations. (Smith, Berry & Pulford, 1998)
The rational nature of the Business Market
As consumers, the purchase of companies / supplies will be made to meet the needs. But his primary need for the needs of itsits customers, is similar for all organizations.
Purchasing organization is very different from consumer buying. One of the salient features of the organizational buying is that it is basically a rational process of buying. that is to say that the approach is purely utilitarian. There is nothing more than buying hedonic. With principle, do not wear their emotions in organizational buyers buying process and how these emotional appeals do not affect their buying process.
In addition, there are some otherThe distinctions that can be said as:
Geographic concentration Fewer but larger buyers Vertical or horizontal markets Derived demand: derived from consumer demand Price rigidity: Regardless of price changes in the short term Fluctuating demand
As a manufacturer buys raw materials, machinery, etc., to create products business, while a wholesaler or retailer buys products for resale. And institutional buyers such as government agencies and nonprofit organizationsBuy things to satisfy the needs of their constituents.
With regard to market business is concerned, is completely rational in nature and there is no room for impulse purchases. All this is due to the influence of environmental factors, organizational, and interpersonal factors central purchasing, B2B markets. In addition, budgets, costs, profit considerations play no role in purchasing decisions in the field. Even business-buying process generally involves complex interactions among many people.
Now B2B marketsdifferent transactions between the boxes as small as paper clips to bid for large pieces like a car manufacturer.
For simplicity, the markets business categories can be defined as:
1 Commercial Market
Used in the production of raw materials sold Sale of products, the production aid Sells maintenance supplies
2 Retail Industry
Wholesaler Retailer
3 Government organization / Public Sector Units
Under the central government Under-Government Under a foreign government
4 Institutions
Hospitals Church / temple, etc. College / University Museum Non-profit
Commercial market: it is one of the largest segments of the business market. It includes the acquisition of all persons / companies that provide goods and services, directly or indirectly.
If Air India aircraft purchases, if IBM buys software to produce new software or hardware products, and managed purchase orders of a bulbFactory. All these operations are in commercial markets.
In general we can divide the products / services:
As raw materials (such as CDs, DVDs, etc.) Guide to production (such as desktops, laptops, etc..) It is for maintenance.
The commercial market includes peasant producers and other members of the resource industries, construction companies and provides services such as transport, utilities, finance, insurance and real estateBrokerage.
Commerce and industry: It also includes retail and wholesale dealers to buy goods for resale to third parties. We can also express as retailers. These markets include software, hardware, clothing, appliances, sporting goods, automotive products, etc..
Government Organisations / Public Sector Units: Includes units of the National Library of Central Government and State and foreign governments. This is also one of the most important segments, which has acquired wide range of products,development of social services to the highways.
Institutions: public and private, are the fourth component of the business market. This category includes a wide range of organizations such as the hospital, temple, church, school, schools, universities, museums, nonprofit, etc.
Some companies follow standardized sales process, while others may use less formal procurement practices. B2B marketing often forced to sell for separate departmentsinstitutional buyers.
B2B Market Segmentation
B2B markets include a variety of customers with the best strategy, by applying the concepts of market segmentation to groups of business customers are produced. The whole process of segmentation divides the market based on several criteria, organizational characteristics, and most of the products applications.
We are able to segment the market, especially on the basis of:
Demographics (size, geographic location). Customer type. Final application. PurchaseSituation.
Demographic segmentation
Based on demographics, company or companies can be grouped according to size (or number of employees and turnover). Different strategies for businesses large and small, with complex procurement procedures and a different strategy for small companies, where decisions are taken by one or two people to develop. Now for days, small and medium enterprises are the eye of the business-to-business marketing captured. This rapidly growing segment offers hugePotential for business analysts, such as Microsoft, SAP, nuclear, etc.
Segmentation of the customer base-type
B2B organizations can group customers with broad categories such as producers, service providers, government agencies, non-profit, retail and many others that are further divided than ever the need may be. Base
In fact, customer segmentation is a related approach, which is often used in B2B markets. In addition, buyers tend to many organizational detailsdetailed product specifications to make as a consumer. All that is needed to be certain buyer requirements, create a form of market segmentation.
Segmentation based on end use
This approach focuses on a precise way in which a company buys a product should be used. It can serve as markets for the production of a mineral paint to cosmetics, inks, paper ministries. Any use of the final product will dictate its specificPerformance, quality and price. This can be focused like a good approach for small and medium-sized enterprises, to address specific end-use market segments.
Segmentation based on the situation of purchase
Buying process for large organizations, in fact structure their purchase decision functions in specific ways. Some organizations have centralized purchasing departments, while others have decentralized purchasing. Similarly, the purchase of 2-3 people can fit comfortably in a small or medium-sized enterpriseswhile a large organization may involve more than the number of people to make purchasing decisions. A supplier or a buyer can do with more decision-makers at various levels. All these structures lead to different buying behaviors. At the time of purchase situation is one of the criteria that must decide whether the customer has made previous purchases or if this is the first order customers. Birla soft as possible, a different marketing approach to its existing customers who sell apotential new customers who are not with their offerings.
It was now the Internet has become a useful tool for businesses. The Internet offers products and information to prospective buyers and provides marketing opportunities available to virtual catalogs, forms, product information, SAML, etc., Wills, and Herbig (1997), explained that the WWW is expected to make a future much larger number of advantages for both suppliers and customers, through better international communicationgenerated from the Internet.
Unlike traditional media, the Internet is dominated by the interaction, making it easier to tow roads. Although this interaction is not physically face to face, but also reduces the time boundation or geographic location. This means that people without a face-to-face contacts still be able to meet and manage their regular work, such as communication, business and even to negotiate.
Haas (1995), says that the wayPurchase of products is one of the organizations most important questions that the company marketing managers today. The purchase of goods and services of organizations is very complex and difficult to analyze. Over the years, many models have been developed in an attempt to explain organizational behavior purchase. Without understanding this, marketing strategies and tactical programs are not designed optimally. It also describes Haas (1995), is the marketing manager of businessWho are those involved in this complex process with the following tasks:
Describe the process through which customers purchase goods and services organizations. Discover the customers involved in the organizations in this process and at what stage of the process everyone is involved. Find out what most people purchasing the search, ie, what are their buying motivations. Discover what factors influence the interaction of the participants in the process.
Themeans that you can not just focus on his / her commitment to the purchasing departments of companies, but must ensure that external factors, to take all the manufacturers website.
Every organization has its own type of checkout, which may be better known as "organizational buying process". There are many people involved in the process, according to Haas (1995) - "a good definition of a sales impact of each is within the purchase, not only has the powerinvolved a decision in favor of the product, but may also be able to express a negative vote against the product. "Once the composition of a buying center determines the marketing business is faced with the problem of determining the relative influence of each member. If marketers can determine which properties of the major influences buying are different from others, may be possible to identify and focus their marketing efforts in their direction, for the winRace.
Furthermore, the purchase of new products, investing significant task in money, time and staff without any guarantee of a successful outcome to participate. But with the Internet technology as a tool in a certain way can open up new opportunities. In recent years, access to new technologies is easier and cheaper.
More and more companies are adapting their system, this revolutionary system, highway data communications, as they can. The Internet offers opportunitiesan organization to improve their activities in a cost ¬ effective and fruitful. This means that the Internet be used to do the research to reach new markets, serve customers 'problems' and communicate effectively with trading partners. The Internet is a useful tool to gather information about customers, competitors and market potential. It 'is also useful to communicate information about / companies or products. (Poon and Jevons, 1997, Quelch, & Klein,1996).
David Roberts (1999) explained in an article that the Internet is to "redesign" a society in a way that the impact on revenue and expenditure are used, but it is difficult to measure. Furthermore, it seems a number of new opportunities for those who have this new opening to new markets in which companies selected customers with information that can reach the value should be used. Kasper van Helsdingen and de Vries (1999) on the one hand speak, that the Internet is a communication and aFunction and distribution companies to offer their services via the Internet. On the other hand, show the effect that the Internet is for the buyer purchasing decisions based on the fact that the Internet changes the traditional way of communication.
Characteristics of B2B markets
The economy needs to understand the needs of business travelers say sellers should be put in place the buyer to get better on the latter. To do so, the characteristics of B2B markets must alsounderstood, including:
The geographical concentration. Size and the number of buyers. Purchase decision. Buyer and seller.
The geographical concentration
Indian business market is more geographically concentrated than the markets of consumption. Industries are places where both raw material developed is available or when the finished product is sold cheap or services are sometimes available (such as electricity, tax breaks, etc..)
Determination of the geographicalConcentrations of marketing allows business customers to allocate resources effectively. An SME may choose to find sales offices and distribution centers in these areas to provide more attention.
Size and the number of buyers
Business markets have a limited number of buyers with larger size. Most markets are served by business enterprises to small and medium-sized enterprises. Segmentation of markets based on the size and number may contribute to the development ofStrategies.
Purchase decision
To market effectively and efficiently in business markets, one must understand the importance of the organizational buying process. Most of the organizations involved in the decision-makers are more and at every level of purchase, they can influence. Also, buy buying process more formal and professional than consumers. Time frame is also much more in the B2B buying decisions with much more complex. Based on thetechnical requirements and specifications should be proposed. The decisions also require more than one betting round and the negotiations. Therefore, the need is to take care purchasing decisions.
Buyer seller relationships
One of the main features of B2B markets is the relationship between buyers and sellers. These relationships are more intense, better communication and more often require long-term.
The main purpose of B2B relationships is toAdvantages that no other vendor can offer, such as reduced prices, fast delivery, better quality and reliability, customized product, service, etc.
The close relations not only in the long-term success of a company to contribute, but also provides an opportunity to increase revenue by a wide customer base.
Purchasing process in B2B markets
Moreover, according to Haas (1995), is the conceptual model of organizational buying process as a model eight stages, beginning with the section "Using Department"and ends with "follow up". However, this step eight is considered the model framework that includes three classes Buygrid purchase or the purchase of situations, eight steps to purchase or we can buy well-known stages. The buy-phases are the expression of thoughts and activities that a buyer from the sequence of activities that goes to a purchase by Robinson, Faris and Wind (1967).
The buy-phase is composed of:
Anticipation or recognition of a problem(Must). Determine the characteristics and quantity of items needed. Description of the nature and quantity of items needed. Research and qualification of potential sources. The recording and analysis of proposals. Evaluation of proposals and selection of suppliers. Order routine selection Performance feedback and evaluation.
Buy While classes consist of:
Straight rebuy. Modified rebuy. To purchase a new activity.
Business buying behavior responds to manyThe purchase of these environmental influences, organizational, interpersonal factors and central purchasing. The behavior is the degree of commitment that the decision to buy the requirements and levels within the organization where it is produced. B2B marketing situations can be divided into three general categories of purchase or classes to purchase the complex at least as indicated by the majority as above.
Straight Rebuy
And 'the simplest situation where buyers are still buying or recurrent, andis little or no information is required. We can also say that a purchase applicant is complete, a client creates a new order for existing well-known product that has performed satisfactorily in the past. Since timeliness, consistent quality and the price is very competitive. Such is the demand of the situation.
Most buyers of inexpensive items such as paper clips, pencils are typical examples of office straight rebuy. Even in areas with a continuous demand for raw materials,this option is exercised, but if the seller is focused on maintaining a good relationship with the customer through excellent service and delivery performance, so that competitors are struggling to find more revenue proposals to break the chain of supply.
Modified Rebuy
In the modified rebuy, manufacturers see advantages in view of attractive offers, such as improving quality and reducing costs. While marketing companies should encourage existing customers to rebuy onlytrying in all their needs, but the competitors instead, to induce buyers to modify to make rebuys.
Buy new activities
This is one of the more complex category, the significant efforts by policy makers for the initial purchase or unique circumstances require.
Problem recognition may be internal / external factors and new product line can be activated to buy new equipment, parts or materials. You can change the needs of customers requestsPurchase of new machinery.
This situation often requires a purchase exactly considered, alternative programs and providers. The new task would require several steps would have bought every subsequent decision and this decision are the development of product requirements, the search for potential suppliers and evaluate proposals, etc.
Even the fourth category can be ingested purchase
4 To purchase mutual.
Reciprocity
A policy to extend the purchase preferred suppliersthat even customers. We can also say that as a sort of barter. As an SME could provide raw materials to paint up to the manufacturer. But sometimes need color for their restructuring office in this case the principle of reciprocity may be in use.
Stakeholders of the buy-center
According to Webster and Wind (1972), members of the buying center can play different roles in the organizational buying process take over. The identification of the roles they play better marketing helpsunderstand the nature of interpersonal influences in the buying center. These roles can be classified as follows:
User Influencers Buyer Decision makers Gatekeeper
Users who actually use your product / service. Their influence can vary from negligible to major. You can temporarily take steps to develop procurement specifications, etc.
Gatekeeper, tax information, which is selected by the purchase of half of the members. They can offer access to someand access to others.
Bring to influence the influencers, the decision to purchase, providing information on the evaluation of alternatives, or by setting specific purchase. You could be a technical staff such as engineers, quality assurance specialist, R & D, etc.
Decision maker chooses a product or service. He / she could meet the person or authority over the decision of the purchase.
Buyer has the formal authority of the supplier / manufacturer to choose and implementProcedures for the purchase of goods or services.
In order to develop an efficient system of procurement, purchasing people should distinctly different roles in the buying center. You also need to understand how these members interact with each other and outside the company.
As materials management / purchasing decisions to improve the tools?
In global markets today are not localized purchasing decisions made only by instinct, but different decision support tools. They make some of them are:
Value Analysis Tools Analysis tools vendor
Value analysis examines each component of the purchase in a clear attempt to replace the product or replace it with a lower cost.
Analysis provider provides analysis of supplier performance in categories such as prices, orders, delivery times, etc.
Factors that influence purchase behavior in business
The acquisition of companies is part of a formal organization, budget costs and profitsConsiderations. In addition, the B2B buying decisions usually with many people with a series of complex interactions between individuals and organizational objectives. To understand this, marketers have a solid understanding of the influences on the decision to purchase, the checkout process of organization, the types of purchasing situations, etc.
Let's look at influencing factors:
Environmental 1.
Economic: price, cost, inventory, receivables, etc. Politically, tarrif, quotas,Defense spendings, lobby, etc. Legal: State Regulations Central, etc. Cultural: the corporate culture and personnel. Physical: climate, geography, demography, etc. Technology: procurement of inventory, etc. Ethics: guidelines, rules, regulations, philanthropy, etc.
Organizational 2.
Activities: Purchase of operations are carried out in order to achieve business goals. Structure Technology People
Interpersonal 3.
Buy the Centre and its role PowerRelationships
Differing evaluation criteria, rewards, responsive marketing strategy, information processing, memory, anticipation, individual / group decision making.
4. Individual.
Motivation of Buying Personal
Perception of Buying Personal
Learning of Buying Personal
5. Product Specific
Perceived risk
Type of purchase
Time pressure
6. Company Specific
Size
Degree of Centralisation
Business to Business Buying Process
Anticipate or recongnise Need/Problem/Opportunity along with a General Solution.
Identify the Characteristics and Quantity of Product /Service.
Describe those Characteristics and Quantity in detail.
Search for and qualify Potential Sources/Vendors.
Acquire Proposals, Analyse and Evaluate them.
Select Suppliers and Finalise the Specific Order Routine.
Obtain Feedback and Evaluate Performance.
A B2B buying situation requires a complex sequence of activities due to its rational nature. This model can be generalized to most of the B2B buying situations.
B2B Organisational Purchase Process starts with the anticipation/ identification of either need, problem or an opportunity based upon the circumstances ( may be either current or futuristic).
Now, Businesses are not just made to run but there is a rational benefit being sought in each and every business, which can be either:
Improvement in Efficiency/ Productivity
Improvement in Quantity
Improvement in Customer Service
Cost Reduction
Based upon the expectations of various stake holders involved, which can be a mix of:
Technical Committee Members
Users
Engineers
Influencers
Consultants
Also, as far as the match / mismatch between rational benefits and expectations of stake holders are concerned, alternative strategic solutions help to a great extent. The source of information for these solutions includes:
Company Websites and search engines
Marketing Executives
Word of Mouth Publicity
IETF/IITF Exhibitions
Seminars & Conferences
Industry References
New Employees from Rival Organisations
Business Magazines like Business India, Economic Times, Hindu, Hindustan Times, etc.
Further, specific company deciders i.e. R& D, Purchase, Finance Departments, etc., their strengths and preferences plays an important role along with their background and previous Vendor as well as customer experiences.
Now, once the exact expectations are decided, budgetary quotations and product literature from vendors are asked in order to draft specific tenders or RFP specifications and bid document. Also, any process is incomplete unless and until funding and budget is provided. So, is the next step in purchase process.
After this, Vendor Eligibility Criteria i.e.
Minimum Size/ Turnover
Past Experience
EMD/Purchase Receipt
And Product Specific Requirements i.e.
Inspection Requirements
DGS&D/NCCF
Quality Parameters
Are identified and described to the extent possible, along with the competitive market requirements and vendor/ proprietary purchase preferences.
Now, the process can be further divided into Govt./PSU purchases & Corporate/MNC Purchases.
In case of Govt./PSU purchases tender notice is published in leading newspapers / websites inviting technical bids and purchase bids, while in case of Corporate/ MNC purchases, RFP is prepared and sent to the prospects, inviting proposal from vendors.
Once, the bids or proposals are acquired, then their evaluation takes place, along with a demo/ presentation & reference verification. In all these processes, file movement should be properly monitored in order to get the best results. Further, T1 and L1 vendor/s is/are found out, where T1 is Technically acceptable and L1 is Lowest Acceptable Price.
Now, comes the stage of negotiation with T1 and L1 vendor/s. As far as negotiation is concerned, if differences occur, then they can be sort out by negotiation, arbitration and litigation, etc. also.
Once, negotiations are thorough, then comes the stage of B2B contract, which is further approved and signed by H.O.D or authorized signatory. Now, contract is accepted by vendor with the deposition of security as finalized in contract.
Further, vendor delivers the product/ service as per terms and conditions, which is then accepted by the user department or stores after a quality and quantity check along with feedback submission and which completes the B2B Purchase process.
Conclusion
Each and Every businesses should have a look at the way their B2B clients (like Satyam, Wipro, Tata, Inforsys, for eaxmple.) in Indian Industry. The rational nature of B2B markets in commercial, trade, PSU's and institutional businesses needs to be worked upon. Further, businesses can concentrate on their markets based upon the segmentation like demographics, Customer type, End use application or purchasing situation., Even, the characteristics of B2B markets should be known to the vendors. Lastly, The Buying Process of B2B, the stake holders involved in purchase/procurement, the tools they use, the factors they consider and the process they follow, must be known to the all businesses for a healthy and long run relationship.
