- There are three types of Organizational buying markets: Business to Business (B2B), Business to Consumer (B2C), Business to Government (B2G).
Business to Business is the term that defines the type of information and economic interaction, which is classified by the type of interacting agents, in this case, there are legal entities that do not work at the end of the ordinary consumer, and for the same company, that is a different business.
Business to Consumer is the term for the commercial relationship between the organization (Business) and the private, so-called, “final” consumer (customer).B2C is also a form of electronic commerce, the purpose of which means direct sales to consumers.
B2G is the relationship between business and government. Usually the term is used to classify the e-commerce systems.
There is an example of B2B and B2C differences:
Cost-intensive, general magazines and newspapers, television, radio are designed for the mass consumer, i. e. individuals.
Publications narrow profiles, professional journals, journalistic materials in various areas of the economy aimed by professionals, i. e. B2B.
An example of B2G can be electronic procurement system.
- There are 5 uncontrollable factors: Social (S), Legal (L), Economical (E), Political (P) and Technological (T).
Politics is studied because it regulates a power that determines environment of a company and is obtaining key resources for its activities (elections at all levels, changes in legislation, the accession of the state in various supranational structure). The main reason for the study of the economy is to make a picture of distribution of the resources at state level that is essential for the activity of the enterprise (GDP growth, inflation, exchange rate dynamics). It is important that consumer preference is determined by social component of the SLEPT- analysis (changes in demographics, religion, media influence). In the study of the legal components of macro- strategic management interests degree of legal protection, the dynamism of the legal environment, the level of public control over the activities of legal system. The final factor is the technology component, which is considered for identification of the trends in the technological development that are usually caused by changes and extra market losses and the emergence in the new products (new patents, new products, technology development).
- Portfolio analysis is performed using a matrix of the Boston Consulting Group.
According to a portfolio analysis, there are the following conclusions about “The Coca-Cola Company:”
- The “Stars” include drinks, which contain vitamins and minerals, as well as energy drinks. This market segment has a tendency to rapid growth (these drinks are very popular among young people in North America and Europe ). The “Coca –Cola” in this segment has a high market share on a global scale (major competitors “Nestle” and “PepsiCo”).
Vitamin and mineral beverages
fat burning drinks
Drinks with added PUFA
Figure 1. Portfolio analysis of “The Coca-Cola Company”
- The “Cash cows” include low-calorie beverages and tonics as the market has already established and is characterized by low growth rates. “The Coca-Cola Company” has historically been in this segment of the dominant position.
- The “Question marks” include fat burning and high-protein drinks. This is a new trend in the Company’s operations and, therefore, it takes a very small market share. Key competitors are manufacturers of sports nutrition (especially in the U.S.). However, the market for these products , according to experts has very good prospects for growth in the segment of “men 14 to 26 years old” - high-protein drinks and a “segment of women and men older than 40” - drinks with fat burning supplements.
- The “Dogs” include- drinks with containing polyunsaturated fatty acids and collagen. The market has a low growth rate and is only formed. The Company’s share is negligible.
- Routine decisions include making decisions, which the individual faces every day (buying white or black bread, drinking tea or coffee, etc.). It means purchasing of consumer goods (bread, milk, detergents), well-known brands to consumers, which they used to buy.
Extensive problem solving is related with the great efforts of the consumers and has a high degree of complexity. The buyers of new cars, expensive clothes and other luxury goods and services make similar problem solving.
Limited problem solving occurs when consumers know the goods, but looking for an acceptable choice. Limited problem solving develops in case of differential purchasing of goods - food products (tea, coffee), low-cost household appliances (vacuum cleaners, coffee makers), casual clothes (suits, dresses). The complexity of such a decision stands between the advanced and familiar.
Brief description of the actions of individual users at different stages of the purchase decision:
- Step 1. Awareness of the problem (needs). There are two groups of stimuli - internal and external. At this stage, it is determined what problems arose, which cause their appearance and how they brought consumers to a particular product.
- Step 2. Consumer information search is done using various informational sources: personal, commercial, public (media) sources of empirical experience.
- Step 3. Evaluation of options is provided by the consumer, by identifying and comparing the properties of the product, the importance of performance characteristic properties of the product (bread soft), beliefs about the brands (well-known), the utility function of different variants of products that can solve your problem.
- Step 4. A purchasing decision is made after previous steps, and there are important decisions associated with what goods purchased, in what quantity, at what price, etc.
- Step 5. Reaction to purchase (score correct product selection) includes a series of actions of different nature: understanding the degree of satisfaction of the purchase, after purchase action, final decision of the fate of the purchased goods.
- Secondary information means an already exist information, i. e. already collected for other purposes. Its advantages:
- The relative cheapness;
- Speed of its receipt;
- Some data (the state economy as a whole, etc.) the firm would be unable to obtain on their own.
- Information may not be consistent with the objectives;
- May be outdated;
- Reliable information is not always high, methodology is not always correct.
Primary information is data, which is collected for the first time for a particular purpose. Its advantages:
- New data;
- A company becomes an owner of some information, which remains secret of competitors;
- Data are collected in accordance with the objectives.
- The high cost;
- Obligation of competent professionals;
- Time costs ( sometimes up to several months).