B2B-Marketing of Services

UNIT-1

By Krishna Pal Singh

Assistant Professor
Axis Institute Planning & Management
Organizational Buying Behavior:
• Organizational buying process,
• buying situations,
• buying grid,
• buying center.
• Buyer seller relationships:
• Types, Managing relationships with suppliers,
• Customers and Distributors,
• CRM process,
• Strategic alliances,

Axis Institute of Planning & Management, Kanpur 2

Organisational Buying:

Introduction to Organisational Buying:

• Organisation buying is the decision-making process by which formal organizations
establish the need for purchased products and services and identify, evaluate and
choose among alternative brands and suppliers. Organisations buy in furtherance of
organizational objectives, such as to manufacture and deliver goods and services to
members, customers or the community.
• Organizational buying is heavily influenced by derived demand, that is,
demand for an end product or for a product or service sold by the buyer’s
customers. The demand for components by a manufacturer will be dependent
on demand coming from their customers, the retailers and wholesalers, who in
turn are reacting to demand from their customers, the consumers.

Axis Institute of Planning & Management, Kanpur 3

Organizational Buying Behaviour:

• Organizational buying behaviour is the sum total of an

organization’s attitudes, preferences, intentions and decisions
regarding the buying behaviour in the marketplace when
purchasing goods for manufacturing or reselling.

Axis Institute of Planning & Management, Kanpur 4

Organizational Buying Decision Process:

• Organizational buying behavior refers to the process of how companies

or organizations buy goods and services. Organizational Buying is not an
easy activity as most people think of it.
• Following are the stages in the Organizational Buying process:

Axis Institute of Planning & Management, Kanpur 5

Stage-1 – Problem Recognition:
• The first stage of the business buying process in which someone in the
company recognizes a problem or need that can be met by acquiring a good
or a service.
Stage-2 – General Need Description:
• At this stage of business buying Process Company describes the general
characteristics and quantity of a needed item.
Stage-3 – Product Specification:
• At this stage of the business buying process buying organization decide on
the product and specifies the best technical product characteristics for a
needed item.

Axis Institute of Planning & Management, Kanpur 6

Stage-4 – Value Analysis:
• An approach to cost reduction, in which components are studied carefully to
determine if they can be redesigned, standardized or made by less costly methods of
production.
Stage-5 – Supplier Search:
• At this stage of the business buying process buyer tries to find the best vendors.
Stage-6 – Proposal Solicitation:
• The stage of the business buying process in which the buyer invites qualified
suppliers to submit proposals.

Axis Institute of Planning & Management, Kanpur 7

Stage-7 – Supplier Selection:
• The stage of the business buying process in which the buyer reviews proposal and
selects a supplier or suppliers.
Stage-8 – Order-Routine Specification:
• The stage of the business buying process in which the buyer writes the final order with
the chosen suppliers, listing the technical specifications, quantity needed, expected
time of delivery, return policies and warranties.
Stage-9 – Performance Review:
• The stage of the business buying process in which the buyer rates its satisfaction with
suppliers, deciding whether to continue, modifies or drops them.

Axis Institute of Planning & Management, Kanpur 8

Buying Situations:

• A buying situation relates to the circumstances surrounding a purchase that can be

defined by the quality of information and experience that the buyer has concerning
the products and vendors available, as well as the effort it will take to make the
purchase decision.
• Straight rebuy is the situation under which the buyers are engaging in the routine
purchase of standard products from a familiar supplier where you don’t make any
modifications from the most recent order.
• A perfect example is ordering some boxes of copier paper, pens and pencils from
your office supplier. It doesn’t take much effort except to confirm the sales order
has been satisfied.

Axis Institute of Planning & Management, Kanpur 9

• Modified rebuy is the situation where the purchaser is going to buy a similar product but there is a
significant difference in the purchase from the previous purchase. The difference may include a
change in the product specifications or a new supplier.
• An example may be switching to a different type of software provided by a different vendor. This
buying situation involves more effort because you are going to have to research product
specifications and evaluate vendors, as well as possibly negotiate new contracts.

Axis Institute of Planning & Management, Kanpur 10

BUYGRID Model of Industrial Buying

• In 1967, the Canadian, American and Israeli marketing researchers,

Robinson, Faris and Wind, introduced the buy grid framework as a
generic conceptual model for buying processes of organisations.
• They saw industrial buying not as single events, but as organisational
decision-making processes where multiple individuals decide on a
purchase

Axis Institute of Planning & Management, Kanpur 11

Their framework consists of a matrix of buy-classes and buy-
phases.

Axis Institute of Planning & Management, Kanpur 12

The BUYCLASSES are:

1. New Tasks
• The first-time buyer seeks a wide variety of information to explore
alternative purchasing solutions to his organisational problem.
• The greater the cost or perceived risks related to the purchase, the
greater the need for information and the larger the number of
participants in the buying centre.

Axis Institute of Planning & Management, Kanpur 13

2. Modified Rebuy
• The buyer wants to replace a product the organisation uses.
• The decision making may involve plans to modify the product
specifications, prices, terms or suppliers as when managers of the
company believe that such a change will enhance quality or reduce cost.
• In such circumstances, the buying centre proved to require fewer
participants and allow for a quicker decision process than in a new task
buy class.

Axis Institute of Planning & Management, Kanpur 14

3. Straight Rebuy
• The buyer routinely reorders a product with no modifications.
• The buyer retains the supplier as long as the level of satisfaction with
the delivery, quality and price is maintained.
• New suppliers are considered only when these conditions change.
• The challenge for the new supplier is to offer better conditions or draw
the buyer's attention to greater benefits than in the current offering.

Axis Institute of Planning & Management, Kanpur 15

Based on field research, Robinson, Faris and Wind divided the buyer purchase
process into eight sequential, distinct but interrelated
BUYPHASES:
1.Recognition of the organisational problem or need;
2.Determination of the characteristics of the item and the quantity needed;
3.Description of the characteristics of the item and the quantity needed;
4.Search for and qualification of potential sources;
5.Acquisition and analysis of proposals;
6.Evaluation of the proposals and selection of suppliers;
7.Selection of an order routine;
8.Performance feedback and evaluation.
Axis Institute of Planning & Management, Kanpur 16
• The most complex buying situations occur in the upper left quadrant of
the buy-grid matrix where the largest number of decision makers and
buying influences are involved. A new task that occurs in the problem
recognition phase (1) is generally the most difficult for management.

• The buying process can vary from highly formalised to an

approximation depending on the nature of the buying organisation, the
size of the deal and the buying situation.

Axis Institute of Planning & Management, Kanpur 17

• The relationship between the buyer and seller is initiated in phases 1 and
2. Assessing the buyer's needs and determining gaps between the current
and desired situation is important. Buyers need assistance in forming
realistic perceptions of both the current and the desired situation. Need
gaps create the motive behind any purchase.
• The relationship needs to be developed during phases 3 to 7. A sales
person must be aware that a buyer not only has functional needs, but
psychological, social, knowledge and situational needs as well.
• These components should be addressed in meetings in order to obtain
commitment. The purchase can be a one-time transaction of a repetitive
nature. When there are multiple deliveries, the supplier and buyer must
agree on an order routine.

Axis Institute of Planning & Management, Kanpur 18

• As buy phases are completed, the process of 'creeping commitment'
occurs and reduces the likelihood of new suppliers gaining access to the
buying situation.
• During the performance feedback and evaluation phase, the relationship
between the seller and buyer can develop into a longer term engagement.
• Buyer loyalty and customer satisfaction are primarily determined by the
sales activities during this last phase.

Axis Institute of Planning & Management, Kanpur 19

Buying Centres:

• Buying centres are groups of people within organizations who make

purchasing decisions.
• Large organizations often have permanent departments that consist of the
people who, in a sense, shop for a living.
• They are professional buyers, in other words. Their titles vary. In some
companies, they are simply referred to as buyers.
• In other companies, they are referred to as purchasing agents, purchasing
managers, or procurement officers.
• Retailers often refer to their buyers as merchandisers. Most of the people
who do these jobs have bachelor’s of science degrees. Some undergo a
Axis Institute of Planning & Management, Kanpur 20
The Duties of Professional Buyers

• Considering the availability of products, the reliability of the products’

vendors, and the technical support they can provide
• Studying a company’s sales records and inventory levels
• Identifying suppliers and obtaining bids from them
• Negotiating prices, delivery dates, and payment terms for goods and
services
• Keeping abreast of changes in the supply and demand for goods and
services their firms need

Axis Institute of Planning & Management, Kanpur 21

• Staying informed of the latest trends so as to anticipate consumer
buying patterns
• Determining the media (TV, the Internet, newspapers, and so forth) in
which advertisements will be placed
• Tracking advertisements in newspapers and other media to check
competitors’ sales activities

Axis Institute of Planning & Management, Kanpur 22

Other Players

• Purchasing agents don’t make all the buying decisions in their

companies, though.
• As we explained, other people in the organization often have a say, as
well they should.
• Purchasing agents frequently need their feedback and help to buy the
best products and choose the best vendors.
• The people who provide their firms’ buyers with input generally fall
into one or more of the following groups

Axis Institute of Planning & Management, Kanpur 23

Initiators
• Initiators are the people within the organization who first see the
need for the product.
• But they don’t stop there; whether they have the ability to make the
final decision of what to buy or not, they get the ball rolling.
• Sometimes they initiate the purchase by simply notifying purchasing
agents of what is needed; other times they have to lobby executives to
consider making a change.

Axis Institute of Planning & Management, Kanpur 24

Users
• Users are the people and groups within the organization that actually use
the product.
• Frequently, one or more users serve as an initiator in an effort to improve
what they produce or how they produce it, and they certainly have the
responsibility for implementing what is purchased.
• Users often have certain specifications in mind for products and how
they want them to perform.
• An example of a user might be a professor at your school who wants to
adopt an electronic book and integrate it into his or her online course.

Axis Institute of Planning & Management, Kanpur 25

Influencers
• Influencers are people who may or may not use the product but
have experience or expertise that can help improve the buying
decision.
• For example, an engineer may prefer a certain vendor’s product
platform and try to persuade others that it is the best choice.

Axis Institute of Planning & Management, Kanpur 26

Gatekeepers
• If you want to sell a product to a large company like Walmart, you can’t
just walk in the door of its corporate headquarters and demand to see a
purchasing agent.
• You will first have to get past of a number of gatekeepers, or people
who will decide if and when you get access to members of the buying
centre.
• These are people such as buying assistants, personal assistants, and
other individuals who have some say about which sellers are able to get
a foot in the door

Axis Institute of Planning & Management, Kanpur 27

• Gatekeepers often need to be courted as hard as prospective buyers do.
• They generally have a lot of information about what’s going on behind
the scenes and a certain amount of informal power.
• If they like you, you’re in a good position as a seller. If they don’t,
your job is going to be much harder.
• In the case of textbook sales, the gatekeepers are often faculty
secretaries.
• They know in advance which instructors will be teaching which
courses and the types of books they will need.
• It is not uncommon for faculty secretaries to screen the calls of
textbook sales representatives.

Axis Institute of Planning & Management, Kanpur 28

Deciders
• The decider is the person who makes the final purchasing decision.
The decider might or might not be the purchasing manager.
• Purchasing managers are generally solely responsible for deciding
upon routine purchases and small purchases.
• However, the decision to purchase a large, expensive product that will
have a major impact on a company is likely to be made by or with the
help of other people in the organization, perhaps even the CEO.

Axis Institute of Planning & Management, Kanpur 29

• The decision may be made by a single decider, or there may be a
few who reach consensus.
• Further, deciders take into account the input of all of the other
participants: the users, influencers, and so forth.
• Sellers, of course, pay special attention to what deciders want.
“Who makes the buying decision?” is a key question B2B sales and
marketing personnel are trained to quickly ask potential customers.

Axis Institute of Planning & Management, Kanpur 30

Strategies for Improving Supplier Relationship Management (SRM)

• Supplier relationship management (SRM), in simplest terms, refers to

interacting with and managing third-party vendors that provide
goods, materials, and services to your organization.
• It sounds easy enough—you choose suppliers that are cost-efficient
and easy to work with to maximize the value of the business
relationship.

Axis Institute of Planning & Management, Kanpur 31

• Of course, like most modern business practices, it’s become much
more complicated than that.
• Supplier management has gone through a major transition over the
last few years because of growth in technology and the global scale of
the economy.
• You have so many supplier choices that it’s hard to choose the best fit,
but using emerging strategies to streamline your supplier management
system can help a lot.

Axis Institute of Planning & Management, Kanpur 32

Early Supplier Relationship Management Solutions

• The concept of SRM was first introduced in 1983 by McKinsey

consultant Peter Kraljic in a Harvard Business Review article titled
“Purchasing Must Become Supply Management.”

• “Instead of simply monitoring current developments, management

must learn to make things happen to its own advantage.

• This calls for nothing less than a total change of perspective: from
purchasing (an operating function) to supply management (a strategic
one),” Kraljic wrote.
Axis Institute of Planning & Management, Kanpur 33
• This is essential to understanding of SRM. Relationships need to be
strategic, they need to be growth-focused.

• That’s something that spend managers and senior staffers should never
forget, whether they’re buying physical materials or software.

• Later, in 1998, in study titled “

An empirical investigation of supplier development: Reactive and strat
egic processes
,” researcher Daniel R. Krause highlighted two approaches to the
supplier management process:
Axis Institute of Planning & Management, Kanpur 34
• Reactive Approach – Where companies start managing the supplier
relationships only when unpleasant situations with suppliers occur, and try to
figure out how to improve the performance of unreliable suppliers.

• This approach consumes quite a lot of time and resources, which could have
been better spent on more important business processes.

Axis Institute of Planning & Management, Kanpur 35

• Strategic approach – Where supplier relationship management starts
even before an agreement with supplier is signed, in order to ensure
the competitive advantage of the company in the long run. Inputs from
key stakeholders and initiatives for long term gain are implemented.
• This is a forward-focused approach with a strategic plan, which can
lead to a successful relationship even in the early stages.

Axis Institute of Planning & Management, Kanpur 36

• The strategic approach to supplier relationship management has always
been key to successful businesses that rely on third-party suppliers,
regardless of industry.
• For example, by making long-term relationships and building trust
with its suppliers an integral part of its supply chain strategy, Apple,
developed a well-deserved reputation as a global leader in supply chain
management, and ensured that it could deliver seamlessly in vast
quantities when launching new products.

Axis Institute of Planning & Management, Kanpur 37

• During the COVID pandemic the importance of supplier management
and supply chain management came in to focus as an even more
important priority than ever before with the impact on travel and
global supply chains.
• Companies with a focus on strategic sourcing and strategic supplier
relationship management were able to weather the storm in a much
better way.

Axis Institute of Planning & Management, Kanpur 38

The Importance of Your Supplier Management System
First, let’s take a look what types of suppliers a business can work with:

• Wholesalers & Distributors – Wholesalers purchase large quantities

of goods in bulk and then resell them in lower quantities for a higher
unit price.

• They generally offer the lowest prices because they are selling in
large quantities, and are reluctant to work with smaller orders.

Axis Institute of Planning & Management, Kanpur 39

• Manufacturers & Vendors – These are suppliers who can handle
the goods of several different companies.

• The prices might be higher than those of wholesalers, but they handle
small orders from a wide range of manufacturers over a relatively
short time period.

• Import Sources – Domestic importers can work like domestic

wholesalers and sell foreign goods to businesses

Axis Institute of Planning & Management, Kanpur 40

Supplier Management Solutions and Strategies for Better Relationships
Having long-lasting, trusted relationships with dedicated suppliers should be a primary
goal of any business that strives to succeed in the market, so let’s find out which
strategies can help achieve this.
1.Your suppliers are not just vendors
• They are your partners, and this partnership should be based not only on financial
transactions, but also on mutual trust and loyalty.

• Make your suppliers feel like they are a part of your business.

• A two-way and win-win relationship is important, especially for you key suppliers.

• Share information with them about your processes, such as releases of new products
and promotions, and listen to their concerns.
Axis Institute of Planning & Management, Kanpur 41
2.Technology makes supplier relationship management simple

• Invest in supplier management software to keep track of information

about your suppliers in one place.

• You can even go further and install advanced 

purchase order management software, which you can use to create,
process, and track purchase orders with your suppliers.

• Some software solutions, like PLANERGY integrate these supplier

management solutions functions into the same platform.

Axis Institute of Planning & Management, Kanpur 42

3.Realize that timely payments are crucial

• If you don’t want to lose your suppliers, step one is making sure to pay them on
time. Cash flow is important for their company just as it is for yours.

• This way, you will prove that you are a reliable customer and that you’re easy to
work with.

• If for any reason you cannot make the payment on a date agreed, then inform the
supplier as soon as possible with the date on which they can expect the payment.

• Suppliers like timely payments just like you like timely action on their side. Cash
flow is important for their company just as it is for yours.

Axis Institute of Planning & Management, Kanpur 43

4.Relationships should be strong and deep

• Make sure to maintain strong and regular communication with each of your
suppliers.

• Keep them regularly informed and up to date, on your strategy and plans so
that they know where they fit in and how they can help, plan for and benefit
from those plans. Make them your partner.

• If you appreciate their work, let them know. If something’s not working for
you, let them know.

• A stronger, deeper relationship with clear and frequent communication allows

this communication to become more organic.
Axis Institute of Planning & Management, Kanpur 44
5.Price is what you pay, value is what you get

• Nothing is better for growing your profits than getting a quality service or materials for
the right price.

• If you have the financial flexibility use it.

• You can buy in bulk and get better pricing but you will have more stock on your
balance sheet and possibly an inventory management headache, or you can arrange to
pay a vendor earlier in order to get a bigger discount.

• Sometimes its better to pay a little more because the supplier is giving you a better
service which pays for itself because you need to provide less time to manage them,
will ensure disruptions are avoided, or because they can be trusted to deliver directly to
your customer.
Axis Institute of Planning & Management, Kanpur 45
6.Detailed agreements make supplier relationships easier

• If you are buying from a vendor on a regular basis, Supplier

Relationship Agreements with a strong contract management process is
a must.

• Write down everything that both parties expect from your partnership
such as Item or Service Description, Price, Delivery Terms, Payment
Terms, Communications, and so on, and then have both parties sign it.

Axis Institute of Planning & Management, Kanpur 46

7.Evaluate the risks

• Always evaluate the risks of dealing with a supplier, and in particular a new
supplier, especially if you have a complex supply chain.
• Gathering the right supplier data is extremely important for 
supplier selection and evaluation.
• Ask for references, examples of their previous work, years in business, areas of
expertise, how they deal with a crisis, what they did the last time they had to deal
with a crisis, and so on. Are they competitively priced?
• Do they have the right experience? Do they have the capacity to deal with your
orders? Are they financially stable?
• These are just some of the questions you should be asking

Axis Institute of Planning & Management, Kanpur 47

• Maybe the supplier you select is not the cheapest but guarantees 100%
on-time delivery with a money back offering;
• you can live with that because a chain is only as strong as its weakest
link, and if your vendor lets you down you whole supply chain may be
at risk, which can affect your ability to deliver to your customers.
• In business, things go wrong, by evaluating your vendors risk profile in
tandem with a good Supplier Relationship Agreement, you can mitigate
the risks and be ready to deal with any emergencies in partnership with
your vendors, which can help minimize interruptions to your business.

Axis Institute of Planning & Management, Kanpur 48

8.Most importantly – Get everyone onboard

• Having a Supplier Relationship Management Process is important but

getting everyone in your organization on board is critical.

Axis Institute of Planning & Management, Kanpur 49