Midterms: Lesson 7 B2C and B2B

• There is an exchange of products, services, or information between businesses.

  B2B
• This is when business organizations that sell directly to consumers for their own use.

  B2C
• A group of people who influence, control or carry out purchasing activities.

  Decision-making Unit
• DMU also called as

  buying centre
• Who are the DMU

  1. Initiators
  2. Gatekeepers
  3. Buyers
  4. Sellers
  5. Deciders
  6. Influentials
• the members of decision-making unit who first identify a need.

  Initiators
• people in DMU who control the flow of information to a decision-making unit.

  gatekeepers
• member of DMU whose the responsibility is making actual purchase of a product.

  buyers
• member of DMU who has the responsibility of making a final purchase decision.

  deciders
• those members of a buying group who will actually make use of a product

  users
• member of DMU who are respected for their opinions and lifestyles, and who therefore inform purchase behavior.  

  influentials
• Influences of Buyers

  1. Physical
  2. Technological
  3. Economic
  4. Political
  5. Legal
  6. Ethical
  7. Cultural
• the location of the purchasing firm relative to its suppliers may be decisive, since many firms prefer to sources supplies locally

  Physical Influences
• the level of technological development available among local suppliers will affect what the buyer is able to obtain, but also the technology of the buyer and the seller must be compatible

  Technological Influences
• these divide into the macro-economic environment (which is concerned with the level of demand in the economy, and with the current taxation regime within the buyer’s country) and the micro-economic environment, which is about the firm’s current financial health.  

  economic influences
• Governments frequently pass laws to regulate businesses, particularly in international trade. Trade sanctions, trade barriers, and preferred nation status all affect the ways in which buyers are permitted or encouraged to buy.

  political influences
• laws may lay down specific technical standard that affect buyers’ decisions. Often, suppliers can obtain competitive advantage by anticipating changes in law.  

  legal influences
• in general, buyers are expected to act at all times for the benefit of the organization, not for personal gain. This means that, in most cultures, buyers are not allowed to accept gifts and/or bribes, for example.

  ethical influences
• when dealing internationally, cultural influences come to the forefront. There is evidence that national culture is less important than it once was, however; other barriers to international trade, such as political issues, geographic distance and even time zone differences, are often more important.

   

  cultural influence
• Business Customer Classification

  1. Business and Commercial Organization (BCO)
  2. Reseller Organization
  3. Government Organization
  4. Institutional Organizations
• a business customer that buys goods that are used to make other goods for the organization’s business.

  Business and Commercial Organization (BCO)
• business customer that buys goods in order to sell them to other organizations or to final consumers.

  reseller organization
• business customer that buys goods for the sake of government use.

  government organization
• a business customer that buys goods to achieve institutional goals that probably do not include profit.

  institutional organizations
• 3 Buyer's Technique

  1. Straight Rebuy
  2. Modified Rebuy
  3. New Task
• • a situation in which a previous order is simply repeated in its entirely.  

  straight rebuy
• a purchase that, although similar to a previous purchase, has been changed in a minor way.

  modified rebuy
• a type of purchase for which previous experience does not exist.

  new task
• the process of calculating the worth of a purchase on terms of returns made from its use.

  value analysis
•  a method of evaluating components, raw materials and even manufacturing processes to determine ways of cutting costs or improving finished products.

  value analysis
•  is defined as a product’s economic value to the user relative to a specific alternative in a particular

  application.

  value in use
•  It is the price that would equate the overall costs and benefits of using one product rather then using another.  

  value in use
• Assessing Suppliers

  1. Technical Capability
  2. Managerial Capability
  3. Financial Stability
  4. Capacity to Deliver
• it assess the production capacity of the supplier, warehouse stocks of the product, and reputation in the industry.

  capacity to deliver
• they check the accounts filed at company’s house or another public record office, run a credit check, examine annual reports if any.

  financial stability
• they discuss systems for controlling processes, meet the managerial staff, and become involved in planning and scheduling supplies.  

  managerial capability
• they  visit the supplier to examine production equipment, inspect quality control procedures and meet the engineering staff.

  technical capability