B2b Sellers and Companies

0083/54                                                                                                                           Amit Kohad

Part A

Q2.

1. Unique characteristics or profile of any B-2 B customers:

1. Safety, Sustainability and Social Responsibility: Sustainability and social responsibility are not merely fads but critical elements of B-to-B customer value. They represent customer perception of the extent to which a supplier voluntarily incorporates societal and stakeholder concerns in its value proposition.
2. Personal Selling: Another characteristic of B2B markets is the level of personal selling that goes on. Salespeople personally call on business customers to a far greater extent than they do consumers. Most of us have had door-to-door salespeople call on us occasionally. However, businesses often have multiple salespeople call on them in person daily, and some customers even provide office space for key vendors’ salespeople
3. Demand Calculations: B2B sellers carefully watch general economic conditions to anticipate consumer buying patterns. The firms do so because the demand for business products is based on derived demand. Derived demand is demand that springs from, or is derived from, a source other than the primary buyer of a product
4. Few but Larger Customers: Many B2B companies are selling large and complex products to their customers, so each interaction with a customer has more revenue implications. The deal sizes are often in the 10s of thousands of dollars and even into the multi millions. Clearly, if a customer support incident goes wrong in a B2B environment, it could have a very serious impact on revenue.
5. Complex Business Process: The products include everything from high-dollar construction equipment to commercial real estate and buildings, military equipment, and billion-dollar cruise liners used in the tourism industry. A single customer can account for a huge amount of business. Some businesses, like those that supply the U.S. auto industry around Detroit, have just a handful of customers—General Motors, Chrysler, and/or Ford. Not only can business products be complex, but so can figuring out the buying dynamics of organizations. Many people within an organization can be part of the buying process and have a say in ultimately what gets purchased, how much of it, and from whom. Having different people involved makes business marketing much more complicated.
6. Multiple Contact points: While this can also happen in a B2B sale, more often in a B2B environment there are multiple people are using the product within the customer company. This means that many different people could all be calling about different issues, yet still be part of the same customer. The implication to B2B support is that this can lead to duplicate efforts by support agents as well as a lack of understanding of the customer as a whole.

1. Decision making process that B2B companies follow

1. Requirement Identification - One of the most essential assessments in decision making process is identifying the business objective after first knowing the problems being solved
2. Identifying Alternatives –

1. Developing in-house solution
2. Commercial Purchase
3. Buying customized product from Vendor
4. Leasing
5. Outsourcing

1. Feasibility Tests –

1. Financial Feasibility
2. Operational Feasibility
3. Technical Feasibility
4. Contractual Issue

1. Proposal Evaluation –

1. Credibility of the Vendor
2. Terms & Conditions
3. Negotiation of Contract

1. Criteria for Selecting Application Package

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1. Implementing the solution - Acceptance plan should be agreed by both the company and the vendor, so the new application can be ready to be installed or developed. No matter what options the company chooses, even when they decide to build their software in house, the company will most likely have to deal with some vendor (s) and/or certain software that must be purchased from some supplier(s)
2. Reviewing and monitoring the acquisition process - Acquisition process is a continuing process that must be reviewed in ongoing basis. A purchased software solution should effectively and efficiently satisfy user requirements. However, this process can involve external evaluation to make sure the procedures and processes in place and whether the acquisition was following institutional processes and operating procedures.

C) Business-to-business (B2B) markets are different compared to consumer markets in two ways. First, B2B decision making process and units are more complex. While a consumer purchase decision is made by one or two individuals, B2B decisions are made by several employees, each specializing in a different field. B2B decision makers are accountable for their judgments and therefore have more complex needs compared to consumer buyers. Consumers have emotional and rational needs at a personal level, while B2B buyers have these two kinds of needs at both a company as well as personal level. For B2B customers product offering is important in combined weightage of budget spent on the product & the strategic importance level placed upon the product.

1. Low Cost & Low Strategic Importance - purchasing decision is made usually by a single employee. The consumer may not pay attention to the product’s price. The seller might differentiate the product from the competition by making it easy to order the product, and by delivering it quickly. If customers are disappointed with the product, they will take their patronage elsewhere.
2. Low Cost & High Strategic Importance - Since the product is extremely important to the customer, this makes them extremely loyal and ultra-cautious. In this case The customer’s decision making team will include several employees including one or more technical specialists.  The seller need to partner these technical specialists and discuss the fine details of your product with them. In this cases the seller usually tries to differentiate your product from the competition by offering superior partnership, proactivity, reliability, knowledge, and expertise.                                                  
3. High Cost & Low Strategic Importance - In this case customer is concerned about the price rather than the product quality. The customer will bargain to reduce the expenses involved. The decision-making team will include several employees, including a purchasing specialist.
4. High Cost & High Strategic Importance - The client is likely to need customized requirements and considers you as a strategic partner who is critical to their business. The decision-making team consists of at least five employees, including specialists. In this case customer is concerned about the price & product.

D) Different "Perceived Risks" that organization experience before the purchase.

1. Functional – Perceived risks can include the fear and or doubt a consumer has that the product they are buying will fail to perform its intended function. The consumer might be afraid that if they buy a car, the engine or other parts may malfunction.
2. Financial - This kind of a risk is perceived when a consumer doubts as to whether the product is worth its cost? In other words, the consumer assesses the benefit versus cost of the product
3. Social - The kind of risk that a consumer faces when he doubts the product purchase and usage to sanctions and approval by the social group or class to which he belongs.
4. Time - People don't like to waste their time; in some instances, perhaps even more so than wasting money. The time put into buying a product, learning how to use or assemble it is the perceived time risk. This is very common with online educational programs or weight loss programs. A person doesn't want to put hours, weeks or perhaps even months into a program that doesn't yield results.
5. Psychological - This kind of a risk is perceived when a consumer fears social embarrassment.
6. Physical - An item that could cause bodily harm to a person or their family causes perceived risk. Buying a gun, for instance. The gun could accidentally malfunction and cause an accident. A book, on the other hand, can rarely cause any physical harm.

E) How customer reduces the different perceived risks before or after the buying

Perceived risks can be lessened by taking some measures.

Brand Image - Consumers may also decide to go by the brand image and make choices based on product reputation of quality, credibility and dependability. They may decide to go in for a trusted and well-known brand, rather than going in for lesser known or unknown brands

Ensure Transparency - Today's prospects want to know the truth, so don't shade it. In this social media age, where customers freely voice their opinions online, you can be assured that any issue about your offering, customer service, and financial stability can easily be uncovered.