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Summary MNM2604
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BUSINESS TO BUSINESS MARKETING MNM2604 Ch2-8,10-12
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CHAPTER 2B2B BUYING
B2C – consumers purchase G+S for their own personal consumpton
B2B – buy products + services from other companies for business use – for
producton and operatonal purposes.
Involves making decisions of “what to buy”, “how to +” whom”
Souring –related actvites to support the objectves of the business.
Matching the needs of the customer to the organisatons.
Strategic Importance:
Profitabiliiy – Money spent on buying G+S impact on profts. igher cost paid
for G+S must be recovered in higher prices set in the price the customer pays
which might not be feasible and could have a negatve impact on profts.
The qutliiy of G+S - Woolworths and BMW has positoned on quality. They
would need to buy high quality raw materials to produce P+S of high quality.
Competttie Adtitnitge – B2B can contribute largely to a company’s
compettve advantage. Companies like Pep and Shoprite who market their
products as afordable must buy G+S @ lower prices than other retailers.
Improtied Produci + Process Design – Buying can introduce technology, in
order to achieve this, they need to work closely with suppliers to help generate
innovatve ideas on how to contnually add value to P+S.
Timely mtrketng + delitiery of producis – Buying act as liaison between the
selling business and the department in the buying business. Buying
organisaton can source suppliers early during the product development
process, which will lead to improvements in material costs + quality + product
development tmes. Supplier must be credible and reliable as failure means
goods won’t reach the market on tme.
Btltncing ihe intieniory – constant rising costs means organisatons have to
fnd a balance between having too litle + too much inventory. Buyer plays an
important role to achieve this balance.
,Roles and Responsibility of the Buyer
Doing Price/Cost Analysis
Purchasing represents the largest share of the organisatons costs. Buyer
needs to obtain G+S at the highest quality, lowest cost at the right tme and at
the right place. Price/cost/spend analysis - ongoing analysis of price and cost
trends are carried out.
Doing Market Research
Market research is conducted to learn about the suppliers, needs of the buying
organisaton + the organisatons customers. Estmates the future needs of the
buying organisaton, needs are communicated to the suppliers who must
deliver the G+S that meets the expectatons. Also determines the needs of the
buying’s business’s customers to buy P+S that will meet the needs +
expectatons of their customers.
Maintaining + Improving Quality
Contnuous improvements of the quality of suppliers which is linked to the
organisatons ability to compete efectvely. Ensure materials/services sourced
meet the minimum requirements for quality. If not done the end product will
not meet buying organisatons expectatons or will do so at the cost that is
higher than acceptable.
Developing Contracts + Negotatng with Suppliers
This involves developing appropriate contracts + satsfactory terms to both
partes.
Providing an Uninterrupted Flow of Materials, Supplies + Services
Required for the Operaton of the organisaton
This helps reduce stock out and prevents late deliveries of materials,
components and services which can be extremely costly in terms of lost
producton, reduced proft/revenue + reduce customer goodwill.
Improving the Organisatons Compettve Advantage
Focuses on achieving the overall goals, strategy + objectves. To improve
compettve positon buying management identfes opportunites in the supply
chain that contribute to revenue enhancement, asset management + cost
reducton. The buying department can improve compettve advantage by
,improving the sourcing of G+S at the lowest total cost of supply, providing
access to new technologies, designing fexible delivery arrangements, ensuring
fast response tmes, providing high quality product design + engineering
assistance.
The Buying Centre
Is a buying team consistng of individuals from various departments
These individuals are chosen because they possess the expertse needed
in the buying decision
Formed when there is a need to purchase, especially when there are
inherent risks associated with the buying of P+S
People with diverse backgrounds helps the business make efectve and
efficient buying decisions, reducing buying risks such as fnancial loss due
to buying the wrong products, performance risk due to the product
malfunctoning + social risks – product does not match image and
reputaton.
Roles in the Decision Making
The inittior – starts the process recognising the need. Any individual in the
organisaton
The decision mtker – Makes the fnal decision. They may be several decision
makers
The abuying tgeni – responsible for the buying. An individual from the
purchasing functon
The influencers – individuals who afect the decision makers’ fnal decision.
Recommendatons regarding suppliers and best suited products
The Users – all individuals who use the product infuence the buying decision
by providing informaton that will be useful in evaluatng the product afer
purchase.
The gtiekeepers – Control the informaton that comes to/fow from the buying
centre team between members of the team. Infuence the decision by
determining which informaton is communicated to the Buying Centre team.
, Functons Importance of the Buying Functon to Other Organisaton
Constant contact with suppliers enables them to identfy products with
goods market potental – helping marketng functon to extend the
product range.
Timely availability of stock – Marketng department can’t sell products
that are not available.
Administratve functon – supply of items that are needed by this
functon e.g. computers, office furniture and statonery.
Finance – to reduce/maintain purchasing costs, overspending afects the
fnancial positon
Producton functon – efficient producton processes + lower
manufacturing costs. Timeous + correct supply of raw materials to avoid
producton shortages/poor quality products. uptmal utlisaton of
facilites.
B2B Buying Process
Stage 1: Recognising The Need
Buyers become aware of the need to buy G+S
Diferent people within the organisaton can recognise the need- it is not
solely the responsibility of the buying department.
E.g. product department - raw materials
Stage 2: Determining The Characteristcs +/ Quantty OF The Products Needs
To avoid buying the wrong products/ the wrong quanttes
Determining the characteristcs may involve a full descripton of product:
size, design, style, colour
The buying department fnalises this stage with the assistance of the
department that need the product
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