Basic Marketing: A Global Managerial Approach

Perreault−McCarthy: Basic

Marketing: A

Global−Managerial

Approach, 14/e

7. Business and
   Organizational Customers
   and Their Buying Behavior

Text © The McGraw−Hill

Companies, 2002

200 Chapter 7

telecommunications capacity. Exchanges are sometimes independent intermediaries or

they may be backed by major firms in the industry. Either way, an exchange must main-

tain a neutral role and not favor either buyers or sellers if it expects return visits.

Procurement hub sites direct suppliers to particular companies (or industries) in

one place. Some large companies have created procurement hubs to handle pur-

chasing for all of their own divisions. In some industries, recognized leaders have

banded together to create procurement hubs. The big three automakers in the U.S.

are doing this. These hubs are becoming an important, buyer-driven force in e-

commerce. They make it easier for a larger number of suppliers to find out about

the purchasing needs of customers in target industries. As a result, the number of

suppliers competing for a buyer’s business increases, and this tends to drive down

selling prices or provide benefits to the buyer with respect to other terms of the sale.

On the other hand, procurement hubs are a way for a seller to find out about and

pursue sales opportunities with new customers (or new markets) without a lot of

additional selling expense.

Most procurement hubs incorporate some sort of interactive system to get com-

petitive bids. Competitive bidsare the terms of sale offered by different suppliers in

response to the purchase specifications posted by the buyer. Usually, the focus is on

the supplier’s price. Firms have used the competitive bidding process for a long time.

However, before the Internet it was usually too slow and too inconvenient to go

through several rounds of bids. Now, however, the Internet makes it fast and easy

for the customer firm to run what is sometimes called a reverse auction. Vendors are

invited (via e-mail or at the procurement hub) to place a bid for a purchase with

a given specification. Usually the bidding still focuses on price, but sometimes other

terms of sales (like warranty period or delivery time) are considered as well. Each

bid, and who made it, is typically visible to all potential bidders via the website.

That way, other bidders can decide whether or not to offer the customer a lower

price. Depending on the preferences of the customer, the bidding can be limited by

a specific deadline.

Auction sites tend to be more seller-driven and are especially popular for items

such as used equipment and vehicles, surplus inventory, and perishable products

(such as unsold advertising space or produce) that are unique and only available for

sale once. For example, http://www.avbid.new runs auctions related to aircraft parts and

services. At these auctions the seller lists and describes what’s for sale, and potential

buyers place their bids (what they would pay) at a website. Auctions use a variety

of formats, but in general the highest bidder (prior to the deadline) purchases the

product. Some auction sites also handle reverse auctions for the benefit of buyers.

Collaboration hubs go beyond matching buyers and sellers for a one-time trans-

action and instead are designed to help firms work together. The collaboration might

involve design, manufacturing, and distribution. Many of these sites focus on the

needs of smaller firms, usually within a vertical industry. For instance, Citadon

(www.citadon.com) provides a single online workplace for construction contractors

to collaborate with architects, store blueprints, work through building permit

requirements, and purchase building materials.

As the examples above suggest, some B2B e-commerce websites are specialized

for firms at different levels of production and distribution within a particular

industry. For example, one of these “vertical” sites that specializes on the plastics

industry might be of interest to firms that make the basic chemicals from which

plastics are formed, firms that create plastic injection molding equipment, and

Auction sites focus on
unique items

Websites within and
across industries

Collaboration hubs
support cooperation

Interactive competitive
bidding systems drive
down prices

Procurement hubs
operate for the benefit
of buyers