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DIFFERENCE BETWEEN BUSINESS MARKET & CONSUMER MARKET:

CONSOMER MARKET BUSINESS MARKETFew buyer Larger buys (bulk order)Large buyers Few buyers

Elastic demand Inelastic demandNon-professional buying Professional buying

Almost no close relationship b/w supplier-customer (purchaser)

Very close relationship b/w supplier-customer (purchaser)

Consumer are the drivers of the demand(they create demand)

Derived demand

Geographical scattered market Geographically condensed marketNo buying influences Several buying influencesIndirect purchase (from retailer) Direct purchase (from producers)Fluctuating demand Non-fluctuating demand

MAJOR TYPES OF BUYING SITUATION ( FOR BUSINESS MARKET):1. Straight Rebuy 2. Modified Rebuy 3. New Task 4. System Selling

Straight Rebuy: A business buying situation in which the buyer routinely reorders something withoutany modification

Modified Rebuy: A business buying situation in which the buyer wants to modify productspecifications, prices, terms or suppliers

New Task: A business buying situation in which the buyer purchases a product or services for the first time

System Selling/ Solution Selling:Buying a packaged solution to a problem from a single seller, thus avoiding all theseparate decisions involved in a complex buying situations

PARTICIPANTS IN THE BUSINESS BUYING PROCESS:1. Users 2. Influences 3. Buyers 4. Deciders 5. Gatekeepers

Users:Users are the members of the buying organization who will actually use the productor services.

Influences:People in an organizations buying center who affect the buying decision; they oftenhelp define specifications & also provide information for evaluating alternatives

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Buyers:The people in the organizations buying centre who make an actual purchase

Deciders:The people in the organizations buying centre who have formal or informal power toselect or approve the final suppliers.

Gatekeepers:The people in the organizations buying centre who control the flow of information toothers.

MAJOR INFLUENCES ON BUSINESS BUYERS:

THE BUSINESS BUYING PROCESS/ THE PROCURMENT PROCESS: 1. Problem Recognition 2. General Need Description 3. Product Specification 4. Supplier Search 5. Proposal Solicitation 6. Supplier Selection 7. Order Routine Specification 8. Performance Review

Problem Recognition: The first stage of the business buying process in whichsomeone in the company recognize a problem or need that can be met by acquiringa good or a service

General Need Description: The stage of the business buying process in which thecompany describes the general characteristics & quantity of a needed item

Product Specification: The stage of the business buying process in which thebuying organization decides on & specifies the best technical product characteristicsfor a needed item

Supplier Search: The stage of the business buying process in which the buyer triesto find the best vendors

EnvironmentalEconomicdevelopments,Supplyconditions,Technologicalchange,Political &regularitydevelopments,Competitivedevelopments,Culture &customs

Organizational

Objectives

Policies

Procedures

Organizationalstructure

Systems

Interpersonal

Authority

Status

Empathy

Persuasiveness

Individual

Age

Income

Education

Job position

Personalit

BUYERS

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Proposal Solicitation: The stage of the business buying process in which the buyer invites qualified suppliers to submit proposals

Supplier Selection: The stage of the business buying process in which the buyer reviews proposals & selects a supplier or suppliers

Order Routine Specification: The stage of the business buying process in whichthe buyer writes the final order with the chosen supplier(s), listing the technicalspecification, quality needed, expected time of delivery, return policies, & warranties

Performance Review: The stage of the business buying process in which the buyer assesses the performance of the supplier & decides to continue, modify or drop thearrangement.

Stages of the buying process

INSTITUTIONAL AND GOVERNMENT MARKETS: Institutional Markets:

School, hospitals, nursing homes, prisons, & other institutions that providegoods & services in their care

Government Markets: Governmental units_ federal, state, & local_ that purchase or rent goods &services for carrying out the main functions of government

ProblemRecognition

General Need Description

ProposalSolicitation

Supplier Selection

Order Routine Specification

PerformanceReview

ProductSpecification

Supplier Search