Chp 6 business markets & business buyer behavior

Business Markets and Business Markets and Business Buyer BehaviorBusiness Buyer Behavior

Chapter 6

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Learning Goals

1. Define the business market and how it dif fers 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 inst itut ional and government markets and explain how they make their buying decisions

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Case StudyUPS

Customer Needs• Consumers need fast,

fr iendly, 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 complexit ies of international shipping

• Offers a wide range of f inancial services

• Provides consulting services to improve logistics operations

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Definit ionBusiness 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 retail ing and wholesaling firms that acquire goods for the purpose of resell ing or renting them to others at a profi t.

Goal 1: Define the business market

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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


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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


Marketing Structure and DemandNature of the Buying UnitTypes of Decisions and the Decision Process

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Business Markets


Compared to consumer purchases:

Involve more buyers in the decision process

More professional purchasing effort



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Business Markets


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



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Major Types of Buying Situations Straight rebuy

• Reordering without modif ication Modified rebuy

• Requires modif ication to prior purchase

New task• First-t ime purchase

Business Buyer Behavior


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Systems Sell ing Buying a packaged solution to a

problem from a single seller. Often a key marketing strategy for

businesses seeking to win and hold accounts.


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Buying Center The decision-making unit of a

buying organization Includes all individuals and units

that participate in the decision making


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Members of the Buying Center


UsersBuyers

InfluencersDeciders

Gatekeepers


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Major Influences on Business Buyers

Environmental Organizational Interpersonal Individual

Economic trendsSupply condit ionsTechnological, polit ical and competit ive changesCulture and customs

Key Factors Key Factors

Goal 2: Identify the major factors that influence business buyer behavior

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ObjectivesPoliciesProceduresOrganizational structureSystems



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Influence of members in the buying center

Authority Status Empathy Persuasiveness




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Personal characteristics of members in the buying center

Age and income Education Job posit ion Personali ty Risk att i tudes Buying styles




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Stages in the Business Buying Process

Stage 1: Problem Recognit ionStage 2: General Need DescriptionStage 3: Product Specif ication

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

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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


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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


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Institutional Markets Consist of churches, schools,

prisons, hospitals, nursing homes and other institutions that provide goods and services to people in their care.

Institut ional and Government Markets

Goal 4: Compare the institutional and government markets

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Institutional Markets Often characterized by low budgets

and captive patrons. Marketers may develop separate

divisions and marketing mixes to service institutional markets.

Institut ional and Government Markets


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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


Documents

Chp 6 business markets & business buyer behavior