Multiply Everything You And Your Computer Can Do


Derived demand: Intel advertises heavily to personal computer buyers, selling them on the lirtues of Intel microprocessors—both Intel and its ausiness partners benefit.

The business marketer normally deals with far fezver but far larger buyers than the consumer marketer does. Even in large business markets, a few buyers often account for most of the purchasing. For example, when Michelin sells replacement tires to final consumers, its potential market includes the owners of the millions of cars currently in use in Europe and around the world. But Michelin's fate in the business market depends on getting orders from one of only a handful of large automakers. Similarly, Black & Decker sells its power tools and outdoor equipment to tens of millions of consumers worldwide. However, it must sell these products through three huge retail customers—Home Depot, B&Q, and Carrefour.

Further, business demand is derived demand—it ultimately derives from the demand for consumer goods. Hewlett-Packard and Dell buy Intel microprocessor chips because consumers buy personal computers. If consumer demand for diamond jewelry drops, so will the demand for diamonds. Therefore, B-to-B marketers sometimes promote their products directly to final consumers to increase business demand. A For example, Intel advertises heavily to personal computer buyers, selling them on the virtues of Intel microprocessors. "Multiply your mobility," it tells consumers—"great computing starts with Intel inside." The increased demand for Intel chips boosts demand for the PCs containing them, and both Intel and its business partners win.

Many business markets have inelastic demand-, that is, total demand for many business products is not affected much by price changes, especially in the short run. A drop in the price of leather will not cause shoe manufacturers to buy much more leather unless it results in lower shoe prices that, in turn, will increase consumer demand for shoes.

Finally, business markets have more fluctuating demand. The demand for many business goods and services tends to change more—and more quickly—than the demand for consumer goods and services does. A small percentage increase in consumer demand can cause large increases in business demand. Sometimes a rise of only 10 percent in consumer demand can cause as much as a 200 percent rise in business demand during the next period.

Nature of the Buying Unit

Compared with consumer purchases, a business purchase usually involves more decision participants and a more professional purchasing effort. Often, business buying is done by trained purchasing agents who spend their working lives learning how to buy better. The more complex the purchase, the more likely it is that several people will participate in the decision-making process. Buying committees made up of technical experts and top management are common in the buying of major goods. Beyond this, B-to-B marketers now face a new breed of higher-level, better-trained supply managers. Therefore, companies must have well-tcained marketers and salespeople to deal with these well-trained buyers.

Supplier development

Systematic development of networks of supplier-partners to ensure an appropriate and dependable supply of products and materials for use in making products or reselling them to others.

Types of Decisions and the Decision Process

Business buyers usually face more complex buying decisions than do consumer buyers. Business purchases often involve large sums of money, complex technical and economic considerations, and interactions among many people at many levels of the buyer's organization. Because the purchases are more complex, business buyers may take longer to make their decisions. The business buying process also tends to be more formalized than the consumer buying process. Large business purchases usually call for detailed product specifications, written purchase orders, careful supplier searches, and formal approval.

Finally, in the business buying process, the buyer and seller are often much more dependent on each other. B-to-B marketers may roll up their sleeves and work closely with their customers during all stages of the buying process—from helping customers define problems, to finding solutions, to supporting after-sale operation. They often customize their offerings to individual customer needs. In the short run, sales go to suppliers who meet buyers' immediate product and service needs. In the long run, however, business-to-business marketers keep a customer's sales and create customer value by meeting current needs and by partnering with customers to help them solve their problems. For example, when UPS supplies a broad range of logistics services and resources to its business customers, it asks them "What can Brown do for you?" (See Real Marketing 6.1.)

In recent years, relationships between customers and suppliers have been changing from downright adversarial to close and chummy. In fact, many customer companies are now practicing supplier development, systematically developing networks of supplier-partners to ensure an appropriate and dependable supply of products and materials that they will use in making their own products or resell to others. For example, the machinery maker Caterpillar no longer calls its buyers "purchasing agents"—they are managers of "purchasing and supplier development." Wal-Mart doesn't have a "Purchasing Department," it has a "Supplier Development Department." AAnd giant Swedish furniture retailer IKEA doesn't just buy from its suppliers, it involves them deeply in the process of delivering a stylish and affordable lifestyle to IKEA's customers.

IKEA, the world's largest furniture retailer, is the quintessential global cult brand. Customers from Beijing to Moscow to Middletown, Ohio, flock to the $27 billion Scandinavian retailer's more than 276 huge stores in 36 countries, drawn by IKEA's trendy but simple and practical furniture at affordable prices. But IKEA's biggest obstacle to growth isn't opening new stores and attracting customers. Rather, it's finding enough of the right kinds of suppliers to help design and produce the billions of dollars of affordable goods that those customers will carry out of its stores. IKEA currently

Giant Scandinavian furniture retailer IKEA doesn't just buy from its suppliers. It involves them deeply in the process of designing and making stylish but affordable furniture that keeps customers coming back.

Salehoo Secrets and Tips

Salehoo Secrets and Tips

As with any web site, SaleHoo has a number of features that will help you in buying products from around the world. Once you have an account on SaleHoo, which only costs a one-time fee, you can establish up to twenty named searches for products. After that, any time those items become available, you’ll be alerted.

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