ANALYSING THE BUSINESS MARKET The Business Market Versus the Consumer Market

Fewer, larger buyers. The business marketer normally deals with far fewer, much larger buyers than the consumer marketer does. The fate of Goodyear Tire Company and other automotive part suppliers depends on getting contracts from a few major automakers. A few large buyers do most of the purchasing in such industries as aircraft engines and defense weapons. Although it should be noted that as a slowing economy has put a stranglehold on large corporations' purchasing departments, the small and midsize business market is offering new opportunities 4 for suppliers. See "Marketing Insight: Big Sales to Small Business," for more on this promising new B2B market, and see "Marketing Memo: Guidelines for Selling to Small Business" for some "do's and don'ts."

Types of Business Customers 1

An original equipment manufacturer, or OEM, manufactures products or components that are purchased by a company and retailed under that purchasing company's brand [1][2][3][4][5] name. OEM refers to the company that originally manufactured the product. It is a type of contract manufacturing and a form of outsourcing. When referring to automotive parts, OEM designates a replacement part made by the manufacturer of the original par An automobile part may carry the designation OEM if it is made by the same manufacturer and is the original part used when building and selling the product.[6] The term "aftermarket" is often used for non-OEM replacement parts.

http://books.google.co.in/books?id=S0F3eV7EwFgC&pg=PA13 &lpg=PA13&dq=classification+of+industrial+products&source =bl&ots=69MxHIBT6h&sig=JhnnSskXIQejXn672rmStF9WO4 s&hl=en&ei=q5G7S6GPKYe2rAe2nezWBw&sa=X&oi=book_ result&ct=result&resnum=5&ved=0CBsQ6AEwBA#v=onepage &q=classification%20of%20industrial%20products&f=false Refer for Shethe Integrative model page 37 Refer page 11, 12 for Type of Business customers 1

Buy Grid model

Robinson and Associates have identified eight stages and called 25 them buypliases. The stages are shown in Table 7.1. This model is called the buygrid framework. Table 7.1 describes the buying stages involved in a new-task buying situation. In modified-rebuy or straight-rebuy situations, some stages are compressed or bypassed. For example, in a straight-rebuy situation, the buyer normally has a favorite supplier or a ranked list of suppliers. Thus the supplier search and proposal solicitation stages would be skipped. The eight-stage buyphase model describes the major steps in the business buying process. Tracing out a buyflow map can provide many clues to the business marketer. A buyflow map for the purchase of a packaging machine in Japan is shown in Figure 7.1. The numbers within the icons are defined at the right. The italicized numbers between icons show the flow of events. Over 20 people in the purchasing company were involved, including the production manager and staff, new-product committee, company laboratory, marketing department, and the department for market development. The entire decision-making process took 121 days. There are important considerations in each of the eight stages. Page 220 of kotler 12 th edition

Peter Kraljics product related Purchasing Processes Kraljic recommends the following purchasing approaches for

Strategic items (high profit impact, high supply risk)

These items deserve the most attention from purchasing managers. Options include developing long-term supply relationships, analyzing and managing risks regularly, planning for contingencies, and considering making the item in-house rather than buying it, if appropriate. Note that step 3, below, provides detailed options for the best purchasing approach for these items, after considering other factors.

Leverage items (high profit impact, low supply risk) Purchasing approaches to consider here include using your full purchasing power, substituting products or suppliers, and placing high-volume orders.

Bottleneck items (low profit impact, high supply risk) Useful approaches here include overordering when the item is available (lack of reliable availability is one of the most common reasons that supply is unreliable), and looking for ways to control vendors.

Non-critical items (low profit impact, low supply risk) Purchasing approaches for these items include using standardized products, monitoring and/or optimizing order volume, and optimizing inventory levels.

Conflict resolution Collaborative: People tending towards a collaborative style try to meet the needs of all people involved. These people can be highly assertive but unlike the competitor, they cooperate effectively and acknowledge that everyone is important. This style is useful when a you need to bring together a variety of viewpoints to get the best solution; when there have been previous conflicts in the group; or when the situation is too important for a simple trade-off. Compromising: People who prefer a compromising style try to find a solution that will at least partially satisfy everyone. Everyone is expected to give up something, and the compromiser him- or herself also expects to relinquish something. Compromise is useful when the cost of conflict is higher than the cost of losing ground, when equal strength opponents are at a standstill and when there is a deadline looming. Accommodating: This style indicates a willingness to meet the needs of others at the expense of the persons own needs. The accommodator often knows when to give in to others, but can be persuaded to surrender a position even when it is not warranted. This person is not assertive but is highly cooperative. Accommodation is appropriate when the issues matter more to the other party, when peace is more valuable than winning, or when you want to be in a position to collect on this favor you gave. However people may not return favors, and overall this approach is unlikely to give the best outcomes.

Avoiding: People tending towards this style seek to evade the conflict entirely. This style is typified by delegating controversial decisions, accepting default decisions, and not wanting to hurt anyones feelings. It can be appropriate when victory is impossible, when the controversy is trivial, or when someone else is in a better position to solve the problem. However in many situations this is a weak and ineffective approach to take.

Services Marketing MOLECULAR MODEL (Shostack 1982) Shostack (1982) developed a molecular model, designed to be applied to either products or services, which uses a chemical analogy to help marketers visualize and manage what she has termed a total market entity. Shostack argues that, as in chemical formulations, a change in one element may completely change the nature of the entity. At the centre is the core benefit, addressing the basic customers need, linked to a series of other service characteristics. Service elements are often accompanied by physical objects which cannot be categorized as true product elements. These objects, or pieces of evidence, play the critical role of verifying either the existence or the completion of a service. The model provides guidelines for offering a service but does not describe how the services are developed. Shostack suggests the service blueprinting technique for describing the service process and notes that when one element in a molecule changes, it will affect the whole molecule. This

reflects the real situation when developing a new degree program. For example, when essential evidence changes for example, if a degree changes its offering mode from face-to-face to online this will affect the offer of the whole program in term of budget and development time and may delay the launch of the new program.

Ishikawa diagrams (also called fishbone diagrams or causeand-effect diagrams) are diagrams that show the causes of a certain event. Common uses of the Ishikawa diagram are product design and quality defect prevention, to identify potential factors causing an overall effect. Each cause or reason for imperfection is a source of variation. Causes are usually grouped into major categories to identify these sources of variation. The categories typically include:

People: Anyone involved with the process Methods: How the process is performed and the specific requirements for doing it, such as policies, procedures, rules, regulations and laws Machines: Any equipment, computers, tools etc. required to accomplish the job Materials: Raw materials, parts, pens, paper, etc. used to produce the final product Measurements: Data generated from the process that are used to evaluate its quality Environment: The conditions, such as location, time, temperature, and culture in which the process operates

Poka-yoke (IPA: [poka joke]) is a Japanese term that means "fail-safing" or "mistake-proofing". A poka-yoke is any mechanism in a lean manufacturing process that helps an equipment operator avoid (yokeru) mistakes (poka). Its purpose is to eliminate product defects by preventing, correcting, or drawing attention to human errors as they occur. The concept was formalised, and the term adopted, by Shigeo Shingo as part of the Toyota Production System. It was originally described as baka-yoke, but as this means "fool-proofing" (or "idiotproofing") the name was changed to the milder poka-yoke.

5S is the name of a workplace organization methodology that uses a list of five Japanese words which, transliterated and translated into English, start with the letter S. The list describes how items are stored and how the new order is maintained. The decision making process usually comes from a dialogue about standardization which builds a clear understanding among employees of how work should be done. It also instills ownership of the process in each employee. The 5S's are: Phase 1 - Seiri Sorting: Go through all tools, materials, etc., in the plant and work area. Keep only essential items. Everything else is stored or discarded. Phase 2 - Seiton Straighten or Set in Order: There should be a place for everything and everything should be in its place. The place for each item should be clearly labeled or demarcated. Items should be arranged in a manner that promotes efficient

work flow. Workers should not have to repetitively bend to access materials. Each tool, part, supply, piece of equipment, etc. should be kept close to where it will be used (i.e. straighten the flow path). Seiton is one of the features that distinguishes 5S from "standardized cleanup". Phase 3 - Seis Sweeping or Shining or Cleanliness (Systematic Cleaning): Keep the workplace clean as well as neat. At the end of each shift, clean the work area and be sure everything is restored to its place. This makes it easy to know what goes where and insures that everything is where it belongs. A key point is that maintaining cleanliness should be part of the daily work - not an occasional activity initiated when things get too messy. Phase 4 - Seiketsu Standardizing: Work practices should be consistent and standardized. Everyone should know exactly what his or her responsibilities are for adhering to the first 3 S's. Phase 5 - Shitsuke Sustaining the discipline: Maintain and review standards. Once the previous 4 S's have been established, they become the new way to operate. Maintain focus on this new way and do not allow a gradual decline back to the old ways. While thinking about the new way, also be thinking about yet better ways. When an issue arises such as a suggested improvement, a new way of working, a new tool or a new output requirement, review the first 4 S's and make changes as appropriate.