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Chapter 7 Business-to-Business (B2B) Marketing 185
important; they sometimes initiate purchase actions
by requesting products and they may also help
develop product specifications
ii. Gatekeepers control the information that all buying
iv. The decider chooses a good or service, although
another person may have the formal authority to do
so; the identity of the decider is the most difficult
role for salespeople to pinpoint
B. B2B marketers face the task of determining the specific
role and the relative decision-making influence of each
buying center participant; salespeople can then tailor their
C. They have found their initial—and in many cases, most
extensive—contacts with a firm’s purchasing department
often fail to reach the buying center participants who have
the greatest influence, because these people may not
work in that department at all
3. International buying centers
a. Two distinct characteristics differentiate international
buying centers from domestic ones:
i. Marketers may have trouble identifying members of
foreign buying centers because of cultural
differences in decision making methods
186 Part 2 Understanding Buyers and Markets
tariffs and customs delays; when the European
union lowered trade barriers between member
nations, however, many companies closed distant
branches and consolidated their buying centers
Assessment check questions
8.1. Identify the five roles of people in a buying center decision. There are
five buying center roles: users (those who use the product), gatekeepers
8.2. What are some of the problems that U.S. marketers face in dealing
with international buying centers? International buying centers pose
several problems. First, there may be cultural differences in decision-
making methods. Second, a buying center in a foreign company typically
includes more participants than is common in the United States. Third,
international buying centers can change in response to political and
economic conditions.
Chapter Objective 9: Discuss the challenges of and strategies for marketing to
government, institutional, and international buyers.
Key Term: remanufacturing
PowerPoint Basic: 20-23
PowerPoint Expanded: 51-57
1. Developing effective business-to-business marketing strategies
a. A business marketers must develop a marketing strategy
2. Challenges of government markets
a. Government agencies—federal, state, and local—together
make up the largest customer group in the United States;
almost 90,000 government units buy a wide variety of
products
Chapter 7 Business-to-Business (B2B) Marketing 187
social goals such as “Buy American” and minority
subcontracting programs
c. Contractual guidelines are an important influence in selling
to government markets
risks from unforeseen expenses, price hikes, and
changing political and economic conditions
e. Government purchasing procedures
i. Many U.S. government purchases go through the
General Services Administration (GSA); the GSA
v. As part of this process, government buyers
develop specifications—detailed descriptions of
needed items—for prospective bidders
vi. U.S. government purchases must comply with the
Federal Acquisition Regulation (FAR), an
those in private industries
f. Online with the federal government
i. Government procurement professionals are
streamlining the purchasing process with new
technologies
3. Challenges of institutional markets
a. Institutional buyers include a wide variety of organizations
such as schools, hospitals, libraries, foundations, and not-
for-profit agencies
b. Institutional markets are characterized by widely diverse
buying practices
i. Buying practices can differ between institutions of
the same type
ii. Within a single institution, multiple-buying
influences may affect decisions
4. Challenges of international markets
a. To sell successfully in international markets, business
marketers must consider buyers’ attitudes and cultural
patterns within areas where they operate
i. In Asian markets, a firm must maintain a local
ANSWERS AND TEACHING NOTES TO CHAPTER EXERCISES
Chapter 7 Assurance of Learning Review
1. Which is the largest segment of the business market? What role does the Internet play in the B2B
5. Strategic Implications of Marketing in the 21st Century
a. To develop marketing strategies for the B2B sector,
marketers must first understand the buying practices that
govern the segment they are targeting
b. B2B marketers must identify people who play the various
roles in the buying decision and understand how these
members interact with one another, other members of their
Assessment check questions
9.1. What are some influences on government purchases? Social goals
9.2. Why is group purchasing important in institutional purchases? Group
9.3. What special factors influence international buying decisions? An
effective international business marketer must be aware of foreign
190 Part 2 Understanding Buyers and Markets
market? What role do resellers play in the B2B market?
Answer: The commercial market is the largest segment of the business market. It includes all individuals
and firms that acquire products to support, directly or indirectly, the production of other goods and
services.
2. How is customer-based segmentation beneficial to B2B marketers? Describe segmentation by
purchasing situation.
Answer: Customer-based segmentation divides a B2B market into homogeneous groups based on
buyers’ product specifications. These buyers tend to have much more precise and complex requirements
for goods than ultimate consumers do. As a result, business products often fit narrower market segments
3. How do the sizes and numbers of buyers affect B2B marketers? Why are buyer-seller relationships so
important in B2B marketing?
Answer: The business market features a limited number of buyers. Many buyers in limited-buyer markets
are large organizations.
Buyer-seller relationships often are more complex than consumer relationships, and they require superior
communication among the organizations’ personnel. Satisfying one major customer may mean the
4. Give an example of each type of demand.
Answer: The major categories of demand include derived demand, volatile demand, joint demand,
inelastic demand, and inventory adjustments.
Derived demand refers to the linkage between demand for a company’s output and its purchases of
resources such as machinery, components, supplies, and raw materials. The demand for computer
microprocessor chips is derived from the demand for personal computers. If more businesses and
individuals buy new computers, the demand for chips increases; if fewer computers are sold, the demand
5. For what reasons might a firm choose an option other than making a good or service in-house? Why is
outsourcing on the rise? How is offshoring different from outsourcing?
Answer: A firm might decide to buy or lease a product—rather than making the product in-house—if the
cost of the product is lower or the product quality is higher. Outsourcing uses outside vendors to produce
goods and services formerly produced in-house.
6. What are some of the environmental factors that may influence buying decisions? Identify
organizational factors that may influence buying decisions. Describe the role of the professional buyer.
Answer: Environmental conditions such as economic, political, regulatory, competitive, technological
considerations, and natural disasters influence business buying decisions.
Organizational factors that may influence buying decisions include organizational structure, policies, and
7. Why are there more steps in the organizational buying process than in the consumer buying process?
Explain why feedback between buyers and sellers is important to the marketing relationship.
Answer: The organizational buying process often involves a sequence of eight activities. The additional
steps arise because business buying decisions introduce new complexities that do not affect consumers.
This involves understanding the needed characteristics and qualities of goods and services, reviewing
8. Give an example of a straight rebuy and a modified rebuy. Why is new-task buying more complex than
the first two buying situations?
Answer: Straight rebuy is a recurring purchase decision in which a customer repurchases a good or
service that has performed satisfactorily in the past. Purchases of low-cost items such as paper clips and
pencils for an office are typical examples of straight rebuys.
Modified rebuy is a situation in which a purchaser is willing to reevaluate available options for
9. What buying center participant is a marketer likely to encounter first? In the buying center, who has the
formal authority to make a purchase?
Answer: A marketer is likely to encounter a gatekeeper first. The gatekeeper is a person who controls the
information that all people in the buying center receive.
10. Describe some of the factors that characterize U.S. government purchases. Why are institutional
markets particularly challenging?
Answer: Government agencies—federal, state, and local—together make up the largest customer group
in the United States. To compete effectively, business marketers must understand the unique challenges
of selling to government units. One challenge results because government purchases typically involve
dozens of interested parties who specify, evaluate, or use the purchased goods and services. These
194 Part 2 Understanding Buyers and Markets
Projects and Teamwork Exercises
1. Answer: Have students name the type of commercial product they chose (such as computer chips,
flour, paint, equipment, or another product) and then share their research. How did they decide on its
2. Answer: Ask pairs of students to discuss the business products they selected and in which of the two
categories—capital or expense—they fell. How many chose capital products? Expense products? In what
3. Answer: Ask teams to share their ideas as buyers for a firm such as Applebee’s, Dick’s Sporting
Goods, Hilton Hotels, or another firm. Stress that a logical buying process for a new-task purchase is
often a complex process involving many steps—determining specifications for what is needed,
understanding options from various suppliers, asking for proposals, reviewing bids, getting feedback from
all involved in the process, etc. Did the teams skip any steps? Is it possible to skip some of these steps
Chapter 7 Business-to-Business (B2B) Marketing 195
and still make a rational and financially sound decision?
4. Answer: Have teams talk about their hypothetical team-selling effort for the packaging of products
manufactured by a food company such as General Mills. Ask each member assigned to a particular
5. Answer: Ask students to share their research on the U.S. government’s purchasing process. What
department or agency did they choose? Why? (Examples given were EPA, NASA, or HHS, but others
may have been chosen.) What types of purchases does the agency make? What particular items or
Critical-Thinking Exercises
1. Imagine that you are a wholesaler for poultry products such as milk and cheese, which are produced
by a cooperative of small farmers. Describe what steps you would take to build relationships with both the
producers (farmers) and retailers (supermarkets).
Answer: Make sure students understand the role of a wholesaler—and the reasons why wholesalers
exist—before beginning the exercise. It will be especially helpful for students to carefully consider how
2. Describe an industry that might be segmented by geographic concentration. Then identify some of the
types of firms that might be involved in that industry. Keep in mind that these companies might be
involved in other industries as well.
Answer: Students should be able to complete the exercise with only minimal guidance. Examples of
business clusters—software companies (Silicon Valley), US automobile companies clustered in Detroit—
3. Imagine you are in charge of making the decision to lease or buy a fleet of trucks for the moving
company for which you work. What factors would influence your decision and why?
Answer: If students are having trouble with this exercise, ask them to list the advantages of buying versus
leasing a personal vehicle. Then ask them how many of the advantages of buying versus leasing apply to
4. Do you think online selling to the federal government benefits marketers? What might be some of the
drawbacks to this type of selling?
Answer: Students need to carefully consider the challenges of marketing to the government and explain
whether or not the Internet helps to address these challenges.
Ethics Exercises
Suppose you work for a well-known local restaurant, and a friend of yours is an account representative
for a supplier of restaurant equipment. You know the restaurant owner is considering upgrading some of
the kitchen equipment. Although you have no purchasing authority, your friend has asked you to arrange
a meeting with the restaurant owner. You have heard unflattering rumors about this supplier’s customer
service.
1. Would you arrange the meeting between your friend and your boss?
2. Would you mention the customer-service rumors either to your friend or your boss?
3. Would you try to influence the purchase decision in either direction?
Answer: This exercise raises a difficult ethical dilemma. Where does your loyalty lie—with your friend or
your employer? (Most students will say your employer). If you have no personal knowledge of the
Internet Exercises
1. Marketing to airlines. Boeing and Airbus are major manufacturers of commercial aircraft. Visit the
websites of both firms. After you review the websites, prepare a report that compares and contrasts the
2. Marketing to small businesses. According to some experts, there are important differences between
marketing to large businesses and marketing to small businesses. Go to the websites listed here and
review the material. Prepare a summary you can use in a class discussion on the topic.
http://www.inc.com/marla-tabaka/5-surprising-secrets-for-selling-to-corporate-clients.html
3. Selling to the federal government. The General Services Administration (GSA) purchases billions of
dollars’ worth of goods and services for various federal agencies. Visit the GSA’s website to learn more
about selling to the federal government. What products does the GSA purchase? Who may sell products
to the federal government? What are the requirements to become a federal government vendor?
http://www.gsa.gov/portal/category/100000
Case 7.1 W.W. Grainger Goes Mobile—Questions for Critical Thinking
1. Why is it important for W.W. Grainger to understand exactly who its B2B customers are?
Answer: Business-to-business markets include wide varieties of customers, so marketers must identify
2. In what other ways can Grainger provide a good customer experience via its mobile apps and
company website?
Answer: Student opinion will vary. Their answers may include points like Grainger could make its website
more interactive, use attractive colors and font styles, have a customer feedback page, etc. Grainger
Video Case 7.2 Zappos Offers Insights to Other Businesses—Questions for Critical Thinking
1. Describe the buyer-seller relationship between Zappos Insights and its business clients.
Answer: The buyer–seller relationship between Zappos and its Zappos Insights clients is potentially
complex because these clients could be vendors, direct competitors, or businesses that might compete
with Zappos indirectly. Zappos believes so strongly in its culture of communication and happiness—and
the uniqueness of each company’s environment because of its people—that it doesn’t worry about
2. How would you classify the business market demand for Zappos Insights training? Explain your
answer.
Answer: Zappos Insights provides an example of derived demand. Demand for its training programs
COLLABORATIVE LEARNING EXERCISES
The Business-to-Business Market
Purpose:
To understand the similarities and differences between the B2B and the B2C markets
Background:
While the business-to-business market encompasses a huge percent of our economy, it is largely
invisible to many students. This quick brainstorming exercise is designed to highlight the B2B
market by comparing it to the B2C market.
Relationship to Text:
Nature of the Business Market
Estimated Class Time:
About 10 minutes
Preparation/Materials:
None needed
Exercise:
Ask your students to brainstorm products that are purchased by both organizations and
individuals. Encourage them to stretch. What businesses would buy prepared food? Clothing?
Questions for Reflection:
• What are the career opportunities in the B2B market?
• What skills would you need to succeed in this environment?
Business-to-Business Marketing Strategy
200 Part 2 Understanding Buyers and Markets
Purpose:
To provide a hands-on opportunity to design a B2B marketing strategy
Background:
Successful B2B marketing relies on an effective strategy, which in turn depends on fully
understanding the overall market, the target customers, and the strategic options. This exercise—
which works best after you cover the key points in the chapter—is designed to help students
apply material than can initially seem somewhat abstract.
Relationship to Text:
Characteristics of the B2B Market
Estimated Class Time:
About 20 minutes
Preparation/Materials:
You may want to copy the scenario and goals (below) for each student.
Exercise:
After you have covered the characteristics of the B2B market, divide your students into small
groups for a brief case study exercise.
Questions for Reflection:
• What kind of information would you need in order to do an actual strategic marketing plan?
• In general, how does B2B strategy differ from B2C strategy?
Buying Versus Making
Purpose:
To examine the key considerations behind a decision to buy component parts instead of
producing them internally
Background:
A huge number of products contain multiple components purchased from outside suppliers. This
exercise is designed to explore the issues that manufacturers consider in making those purchase
Chapter 7 Business-to-Business (B2B) Marketing 201
decisions, plus the related marketing implications.
Relationship to Text:
The Make, Buy, or Lease Decision
Estimated Class Time:
About 10 minutes
Preparation/Materials:
None needed
Exercise:
Divide your class into groups and ask each group to ensure that at least one member has a
backpack. Instruct the groups to examine the backpack. What elements make up the product
Questions for Reflection:
• What are the advantages and disadvantages of buying components from outside
manufacturers?
• How might the quality of components impact consumer perceptions of the whole product? Do
brand name components change your purchasing decisions (e.g. “Intel inside,” or “Made with
Hershey’s chocolate”)?
• What are the ethical implications of “Made in America” labels for products manufactured with a
large percentage of foreign components?
The Business Buying Process
Purpose:
To trigger student thinking about personal sales in the B2B market
Background:
Given that multiple parties are usually involved in significant B2B purchases, suppliers often use a
team-based sales approach. The purpose is typically twofold: (1) to demonstrate the importance
Relationship to Text:
Personal Selling
Estimated Class Time:
About 20 to 30 minutes
Preparation/Materials:
You might want to make a copy of the scenario and goals (below) for each student.
Exercise:
202 Part 2 Understanding Buyers and Markets
Divide your class into no more than five groups (please note that this exercise works best for
classes that have fewer than 40 students). Distribute the sales scenario.
Scenario: You are a relatively new sales representative for a large cable programmer, and your
key goal for the year is to convince the large cable systems in your area to carry your company’s
new cable network. You have just secured a five-minute appointment with Chris, the director of
Questions for Reflection:
• In what situations would team selling be most effective? Could it ever be considered
counterproductive?
• How much do listening skills come into play during sales presentations?
• What are the benefits and drawbacks of a career in B2B sales?
Business Buying Situations
Purpose:
To bring out the differences between straight rebuying, modified rebuying, and new-task buying
Background:
Marketers can classify B2B buying situations into three general categories, ranging from least to
most complex: (1) straight rebuying, (2) modified rebuying, and (3) new-task buying. Straight
Relationship to Text:
Classifying Business Buying Situations
Estimated Class Time:
About 15
Preparation/Materials:
None needed
Exercise:
