HONB Week 3 Reflection
HONB 200 Reflection
Dan Cushing
2/4/2018
Business to Business transactions vary from Business to Consumer transactions. One of the main differences is who is involved in the transaction. In a B2C transaction, the consumer is the only person involved in the transaction on the buying side. In a B2B transaction, there are 6 different roles in the process which collectively called the Buying Center. The Initiator is the person who recognizes the need for the purchase. The Influencer/Evaluator who helps evaluate the product and usually has extra information or expertise needed to help make the decision. The Gatekeeper is responsible for making sure only the best companies are allowed to pitch their product to fulfill the transaction. The Decider is given the power to chose which supplier to use. The Purchaser is the person who actually has a transaction of money to receive the product. Finally, those who use the product are called the User and they can provide feedback to help judge the purchase. It is also important to note that in some of these roles, there can be multiple people involved due to the massive scale of larger companies. If Toyota is going to change suppliers for tires, it will be a multi million dollar deal that will affect hundreds of thousands consumers for a long time to come. For this reason, there has to be many people involved to actually ensure product quality. If someone does not do their job, tires could go bad early and cause an increase in accidents due to blown tires.
Another difference in a B2B transaction is the type of purchases possible. The first type for B2B is a New Buy. This is a situation requiring the purchase of a product for the very first time. At the Engineering Expo, my project team will be attempting to sell our product Smart Bottle. The New Buy is the most difficult of the purchasing types because it requires a great deal of marketing to actually attract consumers. The second type of B2B purchasing is a Straight Rebuy. This occurs when the business reorders the same product without looking at information or other supplies. This will occur in many B2B transactions because things like paper can be ordered on a monthly basis from one supplier they are happy with. However, if a company begins to seek out alternatives as a result of frustration with vendor/product or a different reason, we see the third type of purchase. The third type is called Modified Rebuy and it occurs when the purchaser makes some changes and could have additional analysis or research involved.
A third concept discussed this week was the 4 degrees of competition. This refers to the different market structures that businesses operate in. The most competitive of the four is called Perfect Competition. In this market structure, there are many sellers which results in individual companies having very limited influence in the market. In this structure, there are few to no barriers of entry for companies to enter. Next is monopolistic competition. There are still a large number of sellers, but the suppliers engage in product differentiation which allows for more options for consumers. This allows for more influence over price by the sellers. The third structure is an Oligopoly. In an oligopoly, there are only a handful of sellers. These sellers often operate in similar behavior to each other because they can work together to raise prices. Additionally, there are high barriers of entry that are often very expensive in order to actually gain a foothold in the market. As a result of the control that these sellers have, this market structure is often heavily regulated. The fourth structure is a Monopoly. Here there is only one seller in the market. This structure is often broken up by governments due to the price control that a single seller has. However, in my previous Principles of Micro class I learned that sometimes the government will promote a monopoly and regulate the prices. This is because of natural barriers such as geography. One example is power companies. It is cheaper to have one seller provide electricity for a region. Additionally, if there were many sellers, the amount of power lines would be out of control and look horrendous.
One thing that I would like to learn more about is how companies target their marketing to businesses to try to create a modified rebuy or new buy situation. People get comfortable with their current situation and are often reluctant to change. So how does a company show that their product is worth the hassle of changing?
Dan Cushing
2/4/2018
Business to Business transactions vary from Business to Consumer transactions. One of the main differences is who is involved in the transaction. In a B2C transaction, the consumer is the only person involved in the transaction on the buying side. In a B2B transaction, there are 6 different roles in the process which collectively called the Buying Center. The Initiator is the person who recognizes the need for the purchase. The Influencer/Evaluator who helps evaluate the product and usually has extra information or expertise needed to help make the decision. The Gatekeeper is responsible for making sure only the best companies are allowed to pitch their product to fulfill the transaction. The Decider is given the power to chose which supplier to use. The Purchaser is the person who actually has a transaction of money to receive the product. Finally, those who use the product are called the User and they can provide feedback to help judge the purchase. It is also important to note that in some of these roles, there can be multiple people involved due to the massive scale of larger companies. If Toyota is going to change suppliers for tires, it will be a multi million dollar deal that will affect hundreds of thousands consumers for a long time to come. For this reason, there has to be many people involved to actually ensure product quality. If someone does not do their job, tires could go bad early and cause an increase in accidents due to blown tires.
Another difference in a B2B transaction is the type of purchases possible. The first type for B2B is a New Buy. This is a situation requiring the purchase of a product for the very first time. At the Engineering Expo, my project team will be attempting to sell our product Smart Bottle. The New Buy is the most difficult of the purchasing types because it requires a great deal of marketing to actually attract consumers. The second type of B2B purchasing is a Straight Rebuy. This occurs when the business reorders the same product without looking at information or other supplies. This will occur in many B2B transactions because things like paper can be ordered on a monthly basis from one supplier they are happy with. However, if a company begins to seek out alternatives as a result of frustration with vendor/product or a different reason, we see the third type of purchase. The third type is called Modified Rebuy and it occurs when the purchaser makes some changes and could have additional analysis or research involved.
A third concept discussed this week was the 4 degrees of competition. This refers to the different market structures that businesses operate in. The most competitive of the four is called Perfect Competition. In this market structure, there are many sellers which results in individual companies having very limited influence in the market. In this structure, there are few to no barriers of entry for companies to enter. Next is monopolistic competition. There are still a large number of sellers, but the suppliers engage in product differentiation which allows for more options for consumers. This allows for more influence over price by the sellers. The third structure is an Oligopoly. In an oligopoly, there are only a handful of sellers. These sellers often operate in similar behavior to each other because they can work together to raise prices. Additionally, there are high barriers of entry that are often very expensive in order to actually gain a foothold in the market. As a result of the control that these sellers have, this market structure is often heavily regulated. The fourth structure is a Monopoly. Here there is only one seller in the market. This structure is often broken up by governments due to the price control that a single seller has. However, in my previous Principles of Micro class I learned that sometimes the government will promote a monopoly and regulate the prices. This is because of natural barriers such as geography. One example is power companies. It is cheaper to have one seller provide electricity for a region. Additionally, if there were many sellers, the amount of power lines would be out of control and look horrendous.
One thing that I would like to learn more about is how companies target their marketing to businesses to try to create a modified rebuy or new buy situation. People get comfortable with their current situation and are often reluctant to change. So how does a company show that their product is worth the hassle of changing?
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