Explain how the typical process for reaching an acceptable price in the business-to-business market differs from the process for reaching a price for most consumer products

Question

What will be an ideal response?

Answer 1

Prices for most consumer products are preestablished by the manufacturer or retailer and are referred to as the sticker price or manufacturer's suggested retail price. Customers and sellers do not typically negotiate prices on products, except high-investment products such as a car or home. In comparison, negotiation plays an important role in determining price in the business-to-business market. A company will typically submit a request for quote (RFQ) to multiple potential product or service providers, and each potential provider will reply with a price quote for the needed product or service. In the competitive bidding process, the buying company evaluates the bids, or quotes, from the different potential providers and works to identify the provider that can meet the RFQ criteria at the lowest cost. Back-and-forth discussions between the buying company and provider will most likely lead to a negotiated price, with the purchasing company trying to lower the cost and the provider trying to maintain its profit margins.