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Business Markets and Business Buyer Behavior
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Business Markets and Business Markets and Business Buyer Business Buyer
BehaviorBehavior
Chapter 6
6 - 2
Learning Goals
1. Define the business market and how it differs from consumer markets
2. Identify the major factors that influence business buyer behavior
3. List and define the steps in the business buying decision process
4. Compare the institutional and government markets and explain how they make their buying decisions
6 - 3
Case StudyUPS
Customer Needs
• Consumers need fast, friendly, low-cost package delivery
• Business needs are more complex Shipping part of
complex logistics process including purchasing, inventory, order status, invoices, payments, returns
Services
• Its 360,000 people and 88,000 vehicles offer ground, air, freight worldwide
• Helps customer navigate the complexities of international shipping
• Offers a wide range of financial services
• Provides consulting services to improve logistics operations
6 - 4
DefinitionBusiness Buyer Behavior:
The buying behavior of organizations that buy goods and services for use in the production of other products and services that are sold, rented, or supplied to others.
Also included are retailing and wholesaling firms that acquire goods for the purpose of reselling or renting them to others at a profit.
Goal 1: Define the business market
6 - 5
Sales in the business market far exceed sales in consumer markets.
Business markets differ from consumer markets in many ways.
• Marketing structure and demand• Nature of the buying unit• Types of decisions and the decision
process
Characteristics of Business Markets
Goal 1: Define the business market
6 - 6
Business Markets
Compared to consumer markets:
Business markets • have fewer but
larger customers Business customers
• are more geographically concentrated
Demand is different• Demand is derived • Demand is price
inelastic• Demand fluctuates
more
CharacteristicsCharacteristics
Goal 1: Define the business market
Marketing Structure and DemandNature of the Buying UnitTypes of Decisions and the Decision Process
6 - 7
Business Markets
Marketing Structure and DemandNature of the Buying UnitTypes of Decisions and the Decision Process
Compared to consumer purchases:
Involve more buyers in the decision process
More professional purchasing effort
CharacteristicsCharacteristics
Goal 1: Define the business market
6 - 8
Business Markets
Marketing Structure and DemandNature of the Buying UnitTypes of Decisions and the Decision Process
Compared to consumer purchases More complex buying
decisions The buying process is
more formalized Buyers and sellers work
more closely together and build long-term relationships
Goal 1: Define the business market
CharacteristicsCharacteristics
6 - 9
Major Types of Buying Situations Straight rebuy
• Reordering without modification Modified rebuy
• Requires modification to prior purchase
New task• First-time purchase
Business Buyer Behavior
Goal 1: Define the business market
6 - 10
Business Buyer Behavior
Systems Selling Buying a packaged solution to a
problem from a single seller. Often a key marketing strategy
for businesses seeking to win and hold accounts.
Goal 1: Define the business market
6 - 11
Business Buyer Behavior
Buying Center The decision-making unit of a
buying organization Includes all individuals and units
that participate in the decision making
Goal 1: Define the business market
6 - 12
Members of the Buying Center
Business Buyer Behavior
UsersBuyers
InfluencersDeciders
Gatekeepers
Goal 1: Define the business market
6 - 13
Major Influences on Business Buyers
Environmental Organizational Interpersonal Individual
Economic trendsSupply conditionsTechnological, political and competitive changesCulture and customs
Key Factors Key Factors
Goal 2: Identify the major factors that influence business buyer behavior
6 - 14
Major Influences on Business Buyers
Environmental Organizational Interpersonal Individual
ObjectivesPoliciesProceduresOrganizational structureSystems
Key Factors Key Factors
Goal 2: Identify the major factors that influence business buyer behavior
6 - 15
Major Influences on Business Buyers
Influence of members in the buying center
Authority Status Empathy Persuasiveness
Key Factors Key Factors
Goal 2: Identify the major factors that influence business buyer behavior
Environmental Organizational Interpersonal Individual
6 - 16
Major Influences on Business Buyers
Personal characteristics of members in the buying center
Age and income Education Job position Personality Risk attitudes Buying styles
Key Factors Key Factors
Goal 2: Identify the major factors that influence business buyer behavior
Environmental Organizational Interpersonal Individual
6 - 17
Stages in the Business Buying Process
Stage 1: Problem RecognitionStage 2: General Need DescriptionStage 3: Product Specification
Value analysis helps to reduce costs
Stage 4: Supplier Search Supplier development
Goal 3: List and define the steps in the business buying decision process
6 - 18
Stage 5: Proposal SolicitationStage 6: Supplier SelectionStage 7: Order-Routine Specification
Blanket contracts are often used for maintenance, repair and operating items.
Stage 8: Performance Review
Stages in the Business Buying Process
Goal 3: List and define the steps in the business buying decision process
6 - 19
E-procurement is growing rapidly Online auctions and online trading
exchanges (e-marketplaces) account for much of the online purchasing activity
E-procurement offers many benefits:• Access to new suppliers• Lower purchasing costs• Quicker order processing and delivery
Business Buying on the Internet
Goal 3: List and define the steps in the business buying decision process
6 - 20
Institutional Markets Consist of churches, schools,
prisons, hospitals, nursing homes and other institutions that provide goods and services to people in their care.
Institutional and Government Markets
Goal 4: Compare the institutional and government markets
6 - 21
Institutional Markets Often characterized by low
budgets and captive patrons. Marketers may develop separate
divisions and marketing mixes to service institutional markets.
Institutional and Government Markets
Goal 4: Compare the institutional and government markets
6 - 22
Government Markets
• More than 82,000 buying units in the U.S.
• Require suppliers to submit bids and often give job to lowest bidder
• Favor domestic suppliers• Much “red tape” can exist
Goal 4: Compare the institutional and government markets