Page 230 - Marketing Management

ANALYZING BUSINESS MARKETS | CHAPTER 7 207

Fortunately for businesses of all sizes, the federal government has been trying to simplify the
contracting procedure and make bidding more attractive. Reforms place more emphasis on buy-
ing off-the-shelf items instead of items built to the government’s specs, communicating with
vendors online to eliminate the massive paperwork, and giving vendors who lose a bid a “debrief-
ing” from the appropriate government agency to increase their chances of winning the next time
around. 78 More purchasing is being done online via Web-based forms, digital signatures, and
electronic procurement cards (P-cards). 79 Several federal agencies that act as purchasing agents
for the rest of the government have launched Web-based catalogs that allow authorized defense
and civilian agencies to buy everything from medical and office supplies to clothing online. The
General Services Administration, for example, not only sells stocked merchandise through its
Web site but also creates direct links between buyers and contract suppliers. A good starting
point for any work with the U.S. government is to make sure the company is in the Central
Contractor Registration (CCR) database (www.ccr.gov), which collects, validates, stores, and
disseminates data in support of agency acquisitions. 80
In spite of these reforms, for a number of reasons many companies that sell to the gov-
ernment have not used a marketing orientation. Some, though, have pursued government
business by establishing separate government marketing departments. Companies such as
Gateway, Rockwell, Kodak, and Goodyear anticipate government needs and projects, par-
ticipate in the product specification phase, gather competitive intelligence, prepare bids
carefully, and produce strong communications to describe and enhance their companies’
reputations.

Summary

1. Organizational buying is the decision-making process deciders, approvers, buyers, and gatekeepers. To influ-
by which formal organizations establish the need ence these parties, marketers must be aware of environ-
for purchased products and services, then identify, mental, organizational, interpersonal, and individual factors.
evaluate, and choose among alternative brands and 4. The buying process consists of eight stages called
suppliers. The business market consists of all the buyphases: (1) problem recognition, (2) general need
organizations that acquire goods and services used in description, (3) product specification, (4) supplier search,
the production of other products or services that are (5) proposal solicitation, (6) supplier selection, (7) order-
sold, rented, or supplied to others. routine specification, and (8) performance review.
2. Compared to consumer markets, business markets 5. Business marketers must form strong bonds and rela-
generally have fewer and larger buyers, a closer cus- tionships with their customers and provide them added
tomer supplier relationship, and more geographically value. Some customers, however, may prefer a trans-
concentrated buyers. Demand in the business market actional relationship. Technology is aiding the develop-
is derived from demand in the consumer market and ment of strong business relationships.
fluctuates with the business cycle. Nonetheless, the to- 6. The institutional market consists of schools, hospitals,
tal demand for many business goods and services is nursing homes, prisons, and other institutions that pro-
quite price inelastic. Business marketers need to be vide goods and services to people in their care. Buyers for
aware of the role of professional purchasers and their government organizations tend to require a great deal of
influencers, the need for multiple sales calls, and the im- paperwork from their vendors and to favor open bidding
portance of direct purchasing, reciprocity, and leasing.
and domestic companies. Suppliers must be prepared to
3. The buying center is the decision-making unit of a buying adapt their offers to the special needs and procedures
organization. It consists of initiators, users, influencers, found in institutional and government markets.