PREVIEW OF BUYERSELLER RELATIONSHIPS

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PREVIEW OF BUYER-SELLER RELATIONSHIPS

• transactional relationships
• preferred-supplier relationships
• benefits to customers and marketers
• relationship development
• customer switching costs

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• 4MD3
• B2B Marketing
• Lecture 4
• Steve Howse
• February 30, 2008

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PREVIEW OF THEORIES

• the buy-grid model
• switch triggers
• how customers evaluate bids
• theories of business buyer motivation
• the buying team (AKA buying centre)

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THE BUY-GRID MODEL

• predicts level of individual buyers motivation
  and involvement using
• eight "buy-phases
• three "buy-classes"
• combined form the "buy-grid"

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THE EIGHT BUY - PHASES

• recognition of a need
• definition of the product-type needed
• preparation of detailed product spec
• search for qualified suppliers
• acquisition and analysis of bids
• bid evaluation and supplier selection
• issue of purchase order
• evaluation of product performance

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THE BUY-CLASSES

• new-task purchase
•  
• straight rebuy
•  
• modified rebuy
•  

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MODIFIED REBUY TRIGGERS

• customer becomes unhappy with "in" supplier
• "in" supplier's price goes up
• personnel change on either side
• customer's needs change  
• technological environment changes
• customer acquires bid resources
• customer wants additional information

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SIMPLE CUSTOMER BID EVALUATION SHEET

• differences in scope of supply
• PV of differences in commercial terms
• PV of projected differences in operating costs
  and revenues
• switching costs
• subjective factors
• price as evaluated
•  
•  
•  

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EVALUATING BIDS USING MULTI-ATTRIBUTE DECISION
MAKING

• product attributes are weighted
• much market research required
• marketers can use the method too!

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WHATS WRONG WITH THESE SIMPLE BID EVALUATION
METHODS?

• they include task factors only (rational)
• but "non-task factors" are also critical
  (fear/acceptance)
• especially whentask factors are equal

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THREE THEORIES OF BUYER MOTIVATION

• the buy-grid and reward measurement theory
• predict the level of motivation of an individual
  buyer and the resulting buying behaviour
• role theory predicts an individuals buying
  behaviour directly
• all base the prediction on an observable fact
•  

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REWARD MEASUREMENT THEORY

• predicts how hard an individual buyer will work
  to achieve a specific purchase outcome
• based on his/her expectation of personal
  rewards
• both intrinsic and extrinsic
• expectation of rewards is function of.
• reward valence/importance 
• outcome probability
• reward probability
• real-world applications?

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ROLE THEORY 

• predicts an individual buyers behaviour
• based on his/her role in the buying team
•  decision maker  
• influencer
• initiator
• controller  
• gatekeeper  
• purchasing agent  
• user  (contd)
•  

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ROLE THEORY (CONTD)

• roles and people
•  
• real-world issues
• players always changing 
• gatekeepers can be defeated!
•  

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THE BUYING TEAM

• AKA buying centre
• AKA decision-making unit (DMU)
•  
• everybody who in any way affects the purchase
  decision
• whatever their role
• however informal or brief their involvement
• whoever employs them (contd)

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THE BUYING TEAM (CONTD)

• what proportion of all business purchases
  requires a team?  
• how does a buying committee relate to a buying
  team?
•  real-world marketing musts
• identify existing buying team members  
• influence addition of new members

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PREDICTING BUYING TEAM SIZE

• the vertical dimension  
• the horizontal dimension  
• team size also varies with
• customer risk and involvement 
• customer size
• customer type
• time available to customer
• skill of customers purchasing people

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YOUR CUSTOMERS SCOPE OPTIONS 

• meaning?
• the "buy" option is one extreme
• the "development supply" option
• the "build-to-print" option
• the "make" option is the other extreme

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Steves Tips

• Public Speaking
• Two styles (podium, moving)
• Project your voice
• Speak slowly
• Use inflection
• Deliberate hand movement
• Practice, practice, practice
• Toastmasters, social committees, charity work, TA