Credit Sprint / Study guides / Marketing Unit 6

Credit Sprint's Guide to Marketing Unit 6: Business-to-Business Markets

Organizations buy more than consumers do, and they buy differently. This unit covers the types of organizational buyers, what makes business demand unusual, the buying center, buying situations and the steps of the business buying process.

What you need to know

• Organizational buyers: producers (manufacturers), resellers (wholesalers and retailers), governments and institutions (schools, hospitals, nonprofits).
• Business demand is derived (it comes from consumer demand for the final product), often inelastic in the short run, joint (needs complementary items) and can fluctuate widely (the accelerator effect).
• Compared with consumer markets, B2B has fewer and larger buyers, more concentrated buyers, more direct channels, professional buyers and more negotiation.
• The buying center includes all who take part in a purchase: initiator, user, influencer, decider, buyer and gatekeeper.
• Buying situations (buy classes): straight rebuy (routine reorder), modified rebuy (change in specs, price or supplier) and new-task buy (first-time purchase needing the most information).
• The business buying process: recognize the problem, describe the general need, specify the product, search for suppliers, request proposals, select a supplier, specify the order routine and review performance.
• Business goods: installations (major equipment), accessory equipment, raw materials, component parts and materials, process materials, supplies (MRO: maintenance, repair, operating) and business services.
• Government buyers often use competitive bidding. Reciprocity (you buy from me, I buy from you) can raise legal concerns.
• NAICS codes (North American Industry Classification System) classify businesses by industry and are used for segmenting and finding B2B customers.
• Relationship selling, long contracts, just-in-time (JIT) delivery and e-procurement are common in B2B. Value analysis compares the cost of an item with its benefits.

Formulas and rules

Exam traps

Key terms

• Derived demand: Demand for business goods that comes from demand for consumer goods.
• Joint demand: Demand for items that are used together.
• Buying center: All the people who take part in an organizational purchase.
• Gatekeeper: The person who controls the flow of information into the buying center.
• Decider: The person with the authority to make the buying choice.
• Influencer: Someone who affects the decision, such as an engineer who writes specs.
• Straight rebuy: A routine reorder from the same supplier.
• Modified rebuy: A reorder with changes in specs, price or supplier.
• New-task buy: A first-time purchase needing extensive information.
• Installations: Major capital equipment such as factories and large machines.
• Accessory equipment: Less costly equipment like tools and office furniture.
• Component parts: Finished items that become part of another product.
• MRO supplies: Maintenance, repair and operating items.
• NAICS: The North American Industry Classification System for categorizing businesses.
• Reciprocity: An arrangement in which two firms agree to buy from each other.
• Value analysis: Studying an item to find a less costly way to do the same job.

Practice questions

Five of the 38 Unit 6 questions in Credit Sprint. Every choice is explained in the app.