Page 210 - Marketing Management

ANALYZING BUSINESS MARKETS | CHAPTER 7 187

Business-to-business technology
leader NetApp has made a
concerted effort to build its brand
through a variety of marketing
communications and activities.

Systems Buying and Selling
Many business buyers prefer to buy a total problem solution from one seller. Called systems buying,
this practice originated with government purchases of major weapons and communications sys-
tems. The government solicited bids from prime contractors that, if awarded the contract, would be
responsible for bidding out and assembling the system’s subcomponents from second-tier contrac-
tors. The prime contractor thus provided a turnkey solution, so-called because the buyer simply
had to turn one key to get the job done.
Sellers have increasingly recognized that buyers like to purchase in this way, and many have
adopted systems selling as a marketing tool. One variant of systems selling is systems contracting, in
which a single supplier provides the buyer with its entire requirement of MRO supplies. During the
contract period, the supplier also manages the customer’s inventory. Shell Oil manages the oil in-
ventories of many of its business customers and knows when they require replenishment. The cus-
tomer benefits from reduced procurement and management costs and from price protection over
the term of the contract. The seller benefits from lower operating costs thanks to steady demand
and reduced paperwork.
Systems selling is a key industrial marketing strategy in bidding to build large-scale industrial
projects such as dams, steel factories, irrigation systems, sanitation systems, pipelines, utilities,
and even new towns. Customers present potential suppliers with a list of project specifications and
requirements. Project engineering firms must compete on price, quality, reliability, and other