END OF CHAPTER MATERIAL
Discussion Questions
6-1 Explain how the market structure and demand differ for business markets compared to consumer
markets. (AACSB: Communication; Reflective Thinking)
Answer: Student answers will vary based on their personal response. Refer to the MyLab for an
6-2 Describe the tools B-to-B marketers use to engage customers. What are the challenges with B-to-B
social media marketing? (AACSB: Communication; Reflective Thinking)
Answer: Student answers will vary based on their personal response. Refer to the MyLab for an
6-3 What are systems or solutions selling? How can an organization be successful in this area of sales?
What are customers looking for from suppliers? (AACSB: Communication; Reflective Thinking)
Answer: Systems or solutions selling are sales mythologies that focus on the buyer’s needs as
opposed to product features or benefits. The seller aims to identify the buyer’s key needs and explains
6-4 What are the major influences on business buyers? (AACSB: Communication; Reflective Thinking)
Answer:
It is often assumed that the only real influence on business buyers is the price as dictated at the time
by the economic constraints that the organization is operating in. However, in addition to the
6-5 Compare the institutional and government markets and explain how institutional and government
buyers make their buying decisions. (AACSB: Communication)
Answer:
The institutional market consists of schools, hospitals, prisons, and other institutions that provide
goods and services to people in their care. These markets are characterized by low budgets and
The government market, which is vast, consists of government units—federal, state, and local—that
Government buying practices are highly specialized and specified, with open bidding or negotiated
Critical Thinking Exercises
6-6 Business buying can be a very involved process. Many companies employ procurement or purchasing
experts dedicated to managing the firm’s buying process. Visit www.glassdoor.com/salaries and
www.indeed.com/salary to conduct a search of the salary ranges for “procurement specialists” and
similar positions in purchasing. Present your findings. Can e-procurement help to streamline the
buying process? Might it eventually replace employees in these careers? Discuss if it is possible for
all buying functions to be performed through e-procurement. (AACSB: Communication, Reflective
Thinking, Use of IT)
Answer:
In October 2016, the national average salary for a “procurement specialist” position was $56,373,
with a range of $37,000 to $89,000. Searching for “purchasing agent” gives an average salary of
E-procurement has grown exponentially with advances in IT, and was virtually unknown a decade
and a half ago. Now, online purchasing is standard for many companies. E-procurement gives buyers
access to new suppliers, lowers purchasing costs, and speeds order processing and delivery.
Students should discuss the streamlined, simplified process made available by e-procurement and the
impact of e-procurement on purchasing careers. It may not completely eliminate the value provided
6-7 Interview a businessperson to learn how purchases are made in his or her organization. Ask this
person to describe a straight rebuy, a modified rebuy, and a new-task buying situation that took place
recently or of which he or she is aware (define them if necessary). Did the buying process differ based
on the type of product or purchase situation? Ask the businessperson to explain the role he or she
played in a recent purchase and to discuss the factors that influenced the decision. Write a brief report
of your interview by applying the concepts you learned in this chapter regarding business buyer
behavior. (AACSB: Communication; Reflective Thinking)
Answer:
Student answers will vary. The point of the activity is to provide the students with information about
how actual businesses go through purchasing decisions and see how the process matches with the
concepts in the chapter. Students should demonstrate an understanding of business markets, the three
6-8 At various times, many governments have favored a procurement process that requires government
buyers to choose domestic rather than foreign suppliers. This approach has also been used by some
retailers as integral parts of their advertising, encouraging consumers to buy domestic rather than
overseas brands. Investigate the government procurement policy in your own country and try to find a
retailer that has run an advertising campaign like this. How were these policies and campaigns
received? What was their longevity? (AACSB: Communication; Reflective Thinking)
Answer:
Students will discover that governments may have these types of procurement policy, but this will
depend on the ability of domestic producers to supply them with suitable products and services.
Clearly the idea is to support domestic businesses, employment, suppliers of raw materials, etc. In
APPLICATIONS AND CASES
Online, Mobile, and Social Media Marketing: E-Procurement and Mobile Procurement
Gone are the days of tedious, paper-laden, and labor-intensive procurement duties. E-procurement is
changing the way buyers and sellers do business, specifically via mobile procurement that offers
cloud-based platforms that reduce the search, order, and approval cycle. Most large companies have
adopted some form of e-procurement. A recent study found that almost 70 percent of companies utilize
some form of e-procurement, mobile procurement, or supply chain management applications. A leading
industry platform, Coupa, provides a suite of cloud-based applications for finance, including accounts
payable, sourcing, procurement, and expense management that allows customers full functionality from
their mobile devices. Employees now enjoy the flexibility and time savings of viewing, approving, or
denying requisitions, purchase orders, and invoices. One of Coupa’s large retail clients claimed a
reduction from 10 days to 5 hours in their requisition-approval-process cycle by implementing Coupa’s
mobile procurement platform. Talk about savings! Visit www.coupa.com/software/procurement/to learn
more about how this company is revolutionizing the e-procurement and mobile procurement
environments.
6-9 Discuss the advantages of e-procurement to both buyers and sellers. What are the disadvantages?
(AACSB: Communication; Reflective Thinking)
Answer: Student answers will vary based on their personal response. Refer to the MyLab for an
6-10 Research mobile procurement and discuss the roles in the buying center that are impacted most by
this technology. (AACSB: Communication; Reflective Thinking)
Answer:
The two members of the buying center impacted most by mobile procurement are buyers and
deciders. Buyers have formal authority to select the supplier and arrange terms of purchase.
Buyers may help shape product specifications, but their major role is in selecting vendors and
Mobile procurement applications allow procurement professionals to complete tasks while on the
go. Software companies like SAP sap.com/pc/tech/mobile/software/applications/lob/procurement/
For more information on mobile procurement, see: Pat Toensmeier, “Nearly 1 in 3 Companies to
Deploy Mobile Procurement Apps in 12 Months,” Thomasnet.com, (July 17, 2013), available at
thomasnet.com/journals/procurement/nearly-1-in-3-companies-to-deploy-mobile-procurement-ap
Marketing Ethics: Innocent: Proven Guilty?
Innocent, a smoothie brand, is one of the companies that focuses on the importance of a healthy diet to
promote its drinks. Innocent was an especially well-regarded brand in the United Kingdom for its
positioning on sustainability and ethical sourcing from fair-trade suppliers (it also donates 10 percent of
its profit to help charities), so it drew fire when it entered a controversial partnership with the fast-food
chain McDonald’s. Many enthusiasts said that partnering with McDonald’s would reduce Innocent’s
brand value.
Innocent aims to expand the market internationally through McDonald’s outlets, and the company’s
founder consisted that the tie-up with McDonald’s was only a business decision that would not impact any
of the brand’s ethical commitment, and that smoothies is a better alternative than Coke for kids and
consumers. However, after a five-year-trial failed to attract customers, Innocent was dropped from
McDonald’s menu in 2012. In 2013, to further the company’s commercial interest, Innocent was sold to
Coca-Cola for a deal that valued the brand at £320 million.
6-11 What are the likely reasons for the tie-up between Innocent and McDonalds?
Answer:
Innocent wants to further its commercial interest. By partnering with McDonalds, Innocent hopes to
6-12 Do you think that Innocent has lost its “innocence” from a consumer perspective following their
B2B decisions? (AACSB: Written and Oral Communication; Ethical understanding and reasoning)
Answer:
Student answers may differ. On the one hand, Innocent’s business decision might impact how end
users perceived the company’s brand image, as both of its partners were accused of contributing to
Marketing by the Numbers: NAICS
The North American Industry Classification System (NAICS) code is very useful for marketers. It
replaces the old product-based Standard Industrial Classification (SIC) system introduced in the 1930s.
The NAICS system classifies businesses by production processes, better reflecting changes in the global
economy, especially in the service and technology industries. It was developed jointly by the United
States, Canada, and Mexico in 1997 in concert with the North American Free Trade Agreement (NAFTA),
providing a common classification system for the three countries and better compatibility with the
International Standard Industrial Classification (ISIC) system. This six-digit number (in some cases, 7 or
10 digits) is very useful for understanding business markets.
6-13 What do the six digits of the NAICS code represent? What industry is represented by the NAICS
code 721110? How many businesses comprise this code? (AACSB: Communication)
Answer:
The NAICS code has a hierarchical structure:
XX Industry sector (20 broad sectors)
XXX Industry subsector
XXXX Industry group
XXXXX Industry
XXXXXX National industries (U.S., Canadian, or Mexican national specific)
The government website (http://www.census.gov/eos/www/naics/faqs/faqs.html#q5) states that U.S.
industries are defined up to the 6-digit level. Each digit in the code is part of a series of progressively
narrower categories, and the more digits in the code signify greater classification detail. The first two
The code 721110 refers to hotels (except casino hotels) and motels. This industry comprises
establishments primarily engaged in providing short-term lodging in facilities known as hotels, motor
6-14 How can marketers use NAICS codes to better deliver customer satisfaction and value? (AACSB:
Communication; Reflective Thinking)
Answer:
The NAICS has a white paper addressing how marketers can use the NAICS codes for marketing
(http://www.naics.com). It discusses using the codes to more effectively identify the best customers
by industry and line of business and to seek potential markets by analyzing the NAICS and SIC codes
Company Case Notes
Procter & Gamble: Treating Business Customers As Strategic Partners
Synopsis
When it comes to B2B marketing, Procter & Gamble (P&G) has long been considered one of the best. In
addition to a stable of top-selling brands and the fact that P&G is the world’s largest advertiser, P&G is an
American icon for building strategic partnerships with its distributors. At P&G, this happens through what
it calls “Customer Business Development” (CBD). The CBD approach involves truly partnering with
retail clients. P&G understands that in order for its own business to grown, the retail client’s business
must grow. That’s a complex task with clients like Walmart, Walgreen’s, and Kroger. For this reason,
P&G assigns a full CBD team to its clients that include salespeople as well as specialists for every aspect
of P&G’s consumer brands. With 5,000 employees in this sales force, CBD teams can vary from 350 for a
client like Walmart (which accounts for 20 percent of all P&G sales) to 30 for Dollar General. In this
manner, CBD team members have all the resources they need to resolve customer problems. CBD teams
focus on meeting customer needs, help clients manage entire categories of products, and help manage
competitor brands. P&G believes that if it can help grow the category, then everyone wins. It’s this kind
of interaction that builds high levels of trust between P&G and its clients.
Teaching Objectives
The teaching objectives for this case are to:
1. Allow students to understand and appreciate the differences between consumer and business
markets.
2. Identify real-world examples for the different buying situations.
3. Help students understand the differences between consumer and business buyer behavior.
4. Provide an opportunity for students to analyze product features and benefits that result for
commercial customers.
Discussion Questions
6-18 Compare and contrast the nature of the business market structure and demand relative to consumer
market structure and demand for a specific P&G product.
Table 6.1 from the text provides the foundation for discussing this question. The implications for
any and all of these points may be discussed. Suggestions for the points that are most relevant to
this case are given below.
1. ============================================================
2.
3. 6-19 For the same product, discuss the differences in the types of decisions and the decision
process for business and consumer markets.
4. Through discussion of this question, it should become apparent that P&G’s buying situations are
much more complex than consumer buying processes. Choose a product, such as Tide. Compare and
contrast the buyer decision process from Chapter 5 (Figure 5.6) with the stages of business buying
behavior from Chapter 6 (Figure 6.3). Eight steps versus five steps is the obvious difference. But what
Implications for P&G Implications for clients
Business markets contain few
but larger buyers.
There is a great deal of
pressure on P&G to
maintain strong customer
relationships and deliver
on promises.
Clients should understand
how important they are to
P&G and take advantage
of the sales force
attention.
Business buyer demand is
derived from final customers.
It is essential that P&G
understand the needs,
wants, and desires of the
end user, not just the
corporation. Also, P&G
must keep an eye on sales
trends in collaboration
markets.
It is essential that the
client understand its own
customer in order to
communicate customer
requirements to P&G.
Demand is more inelastic. Coming up with the exact
“right price” may not be
as important as providing
the right features and
benefits to customers.
The client must accurately
forecast the number of
units that it needs. It
should also maintain
strong procurement
resources to ensure that
benefits are delivered as
promised.
Demand fluctuates more and
more quickly.
P&G needs to maintain
flexibility to adjust to
downturns and spikes in
demand.
Clients need to consider
the means of spreading
demand out to create a
more level structure in
terms of their own costs.
needs to be illustrated is the nature of those steps. Which parts of the B2B model are more extensive
and why? The characteristics of business markets from question 6-18 should provide support for this.
In short, there is often a more formal, documented, and extensive process for making business
5.
6. 6-20 This case covers the various members of a P&G Customer Business Development team. For
a P&G corporate client, illustrate how the different roles of the buying center might interact with that
CBD team. Be specific.
7. P&G’s CBD teams are sales oriented while the buying center is purchasing oriented. Thus, the
purpose of this question is to figure out if there are some natural matches between the selling roles in
CBD and the buying roles in the buying center. An important thing to note from the case is, “Each
time a [CBD] team member contacts the customer, he or she represents the entire team.” That said,
there will certainly be a fair amount of “every CDB role interacts with any and every buying center
role.” But there are likely natural fits that will have certain roles crossing paths more frequently.
“Consider the following:
8.
Users are members of the organization who will use the product or service. In many cases,
Influencers often help define specifications and also provide information for evaluating
Buyers have formal authority to select the supplier and arrange the terms of purchase.
Buyers may help shape product specifications, but their major role is in selecting vendors
Deciders have formal or informal power to select or approve the final suppliers. In routine
Gatekeepers control the flow of information to others. For example, purchasing agents often
9.
10. 6-21 Discuss some ways that P&G’s CBD structure is more effective than a single sales rep.
11. This boils down to the advantages of a generalist versus a specialist. A single sales rep would
have a hard time becoming a specialist in every aspect of a client company. However, with the CBD
approach of having multiple reps, each trained in different areas of expertise, there is a better chance
that all client needs and concerns can be addressed.
P&G salespeople have the resources they need to resolve even the most challenging customer
problems. Although not each CBD member has specialized knowledge in every area, the CBD team
12.
13. 6-22 Why have P&G’s competitors not been able to duplicate its customer relationship strategy?
14. P&G has developed CBD over decades. It is complex, requires resources, and requires a
corporate culture that can support it. Having company decision makers who want CBD and who
approve its development is not enough because implementation would likely require a makeover of
15.
16. 6-23 Will P&G’s divestment of 100 brands pay off? Why or why not?
P&G is a master at managing brands. Based on that alone, it is hard to imagine that the company
would make a move like this if it were not very confident that it would pay off. Consider the following
reasons for this move, and it becomes even more likely that the return-on-divestment will be strong:
The 65 brands not sold off were the strongest performing, responsible for 90 percent of
revenue and 95 percent of profits.
17.
18.
19. Teaching Suggestions
20.
21. To get the discussion started, show this P&G produced recruiting video
(http://www.youtube.com/watch?v=2j5rwJHzbK4) to communicate the nature of Customer
Business Development. It’s a few minutes long, but it gives a complete description of the
members of a CBD team, their roles, and the nature of partnering with clients. If this video does
its job, then there should be a significant number of students interested in learning more about
careers as P&G CBD representatives because they will get a glimpse of the collaborative nature
of real personal selling.
22.
This case was developed for use with Chapter 6. This case also works well with the sales chapter
(Chapter 16).
23.
24. Go to mymktlab.com for the answers to the following assisted-graded writing questions:
25.
26. 6-24 What is supplier development and why are companies practicing it?
27.
28.
29. 6-25 Describe how online purchasing has changed the business-to-business marketing
30. process and discuss the advantages and disadvantages of electronic purchasing.
31.
32. ADDITIONAL PROJECTS, ASSIGNMENTS, AND EXAMPLES
33.
34. Projects
35.
1. Identify a product that is bought and sold in a business-to-business context. Identify individuals
within the buying organization who fulfill the different roles of the buying center. Identify as
many for each role as possible, doing research where necessary. Point out how some individuals
might play more than one role. Is there a relationship between some of the roles? Is that
relationship always present?
2. Interview a purchasing agent from a company with regard to the major types of buying situations.
Have him or her identify at least one example for each of the three major types. What are the
main differences for them in these types of buys?
36.
37. Small Group Assignments
38.
1. Form students into groups of three to five. Each group should read Real Marketing 6.1:
International Marketing Manners. Then, answer the following questions and share their answers
with the class.
a. What can be done to keep us all from becoming “ugly Americans”?
b. What does the saying “When in Rome, do as the Romans do” mean to American businesses?
Provide an example or two.
c. Go online and further research business customs for any of the countries mentioned in Real
Marketing 6.1. What else did you discover about their practices that Americans should know?
39.
2. Form students into groups of three to five. Each group should read Real Marketing 6.2: GE: A
Model for B-to-B Digital and Social Media Marketing. Then, answer the following questions and
share their answers with the class.
a. Try to imagine the profile of the typical business buyer. How might that person differ from
the social media users you know at your college or university? How could these differences
affect the content and messaging you create on social media sites designed for business
customers?
b. Does it surprise you that the business community has embraced social media on such a large
scale? Why or why not?
c. Discuss a few of the marketing tasks for which social media is particularly well suited to
serve the business market.
40.
41. Individual Assignments
42.
1. Read Real Marketing 6.1: International Marketing Manners, and then answer the following
questions.
a. What is the “ugly American”?
b. How has American business gotten to the point where we believe everything should be
“American” when we travel? What does this say about us as a society?
c. Find a classmate from another country and speak with him or her about their country’s
customs. Which ones translate to business settings? What else did you learn from this
exercise?
43.
2. Read Real Marketing 6.2: GE: A Model for B-to-B Digital and Social Media Marketing. Then,
answer the following questions.
a. When customers choose GE, what are they purchasing beyond an actual piece of equipment?
What does it mean to be an “industrial infrastructure company?”
b. Analyze the quote, “We are selling business-to-people.” What does it mean for anyone
engaged in B-to-B marketing?
c. Do you believe that digital and social marketing are passing B-to-B fads, or are they here to
stay? Explain your answer.
44.
45. Think-Pair-Share
46.
47. Consider the following questions, formulate an answer, pair with the student on your right, share
your thoughts with one another, and respond to questions from the instructor.
48.
1. What are the primary differences between the consumer market and the business market?
2. What are the roles in the business purchase decision process? Can these same roles be applied in
the consumer decision process? Give a detailed example.
3. What are the advantages to business buying on the Internet?
4. How might a government buyer differ from a non-government institutional buyer?
49.
50. Outside Examples
51.
1. Intel microprocessors power just about all of the personal computers on the planet. Take a look at
Intel’s homepage and go to the section pertaining to the company
(www.intel.com/intel/company/index.htm?iid=about_intel+cr_faq). See what you can find that
gives you an idea of the scope of their market. Remember, business marketers sell products to
others for inclusion in that company’s product. If you were a company wanting to use Intel chips
in your products, how would you go about it?
52.
53. Possible Solution:
54.
55. A review of this website provides a substantial amount of information regarding Intel’s
clients. Specifically, students will find that Intel does not sell to resellers directly. Intel has made a
56.
2. Walmart goes to great lengths to develop suppliers. Imagine you are a small manufacturer of a
57.
58. Possible Solution:
59.
60. This website gives potential suppliers everything they need to know to submit a
successful proposal to Walmart. Given that the students are to imagine themselves as a small
manufacturer, they will most likely make the decision to try and become a “local supplier.” It is