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8/18/2019 principal of marketing chapter 6
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Chapter Six
Business Markets and Business
Buying Behavior
Copyright ©2014 by Pearson Education, Inc. All rights reserved
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Business Markets andBusiness Buying Behavior
• Business Markets
• Business Buyer Behavior
•
The Business Buying Process
• E-Procurement: Buying on the Internet
• Institutional and Government Markets
Topic Outline
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Business buyer behavior refers to the buying behavior
of the organizations that buy goods and services for
use in production of other products and services thatare sold, rented, or supplied to others.
Business buying process is the process where
business buyers determine which products andservices are needed to purchase, and then find,
evaluate, and choose among alternative brands
Business Markets
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8/18/2019 principal of marketing chapter 6
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Business Markets
Decision Process• More complex
• More decision participants
•
More professionalpurchasing effort
• Buyer and seller more
dependent•
longer and more formalized
• more dependent on each
otherCopyright ©2014 by Pearson Education, Inc. All rights reserved
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Business Markets
Supplier development
systematic development ofnetworks of supplier-partners
to ensure an appropriate and
dependable supply of products
and materials that they will usein making their own products
or resell
Decision Process
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Business Buyer Behavior
The Model of Business Buyer Behavior
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Business Buyer Behavior
Straight rebuy is a routine purchase decision such asreorder without any modification. usually handled on
a routine basis by the purchasing departmentModified rebuy is a purchase decision that requires
some research where the buyer wants to modify the
product specification, price, terms, or suppliers
New task is a purchase decision that requires thoroughresearch such as a new product
Major Types of Buying Situations
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Business Buyer Behavior
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Major Types of Buying Situations
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Business Buyer Behavior
Buying center is all of the individuals
and units that participate in the
business decision-making processThis group includes the actual users of
the product or service, those whomake the buying decision, those who
influence the buying decision, those
who do the actual buying, and those
who control buying information.
Participants in the Business BuyingProcess
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Business Buyer Behavior
Users are those that will use the product or service
Influencers help define specifications and provide information for evaluatingalternatives. Technical personnel are particularly important influencers.
Buyers have formal authority to select the supplier and arrange terms of
purchase. their major role is in selecting vendors and negotiating
Deciders have formal or informal power to select and approve final suppliers
Gatekeepers control the flow of information
Participants in the Business BuyingProcess
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Business Buyer Behavior
•
Buying center provides
a major challenge
•
Who participates in theprocess
– Their relative authority
– What evaluation criteria
each participant uses
– Informal participants
Participants in the Business BuyingProcess
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Business Buyer Behavior
Major Influences on Business Buyers
Economic
Factors
Price
Service
Personal
Factors
Emotion
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Business Buyer Behavior
Major Influences on Business BuyersEnvironmental Factors
Demand for
product
Economic
outlook
Cost of
money
Supply ofMaterials
Technology Culture
Politics Competition
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Business Buyer Behavior
Objectives
Policies
Procedures
Structure
Systems
Major Influences on Business Buyers
Organizational Factors
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Business Buyer Behavior
Motives Perceptions Preferences
Age Income Education
Attitudetoward risk
Major Influences on Business BuyersIndividual Factors
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Business Buyer Behavior
The Buying Process
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Business Buyer Behavior
Problem recognition occurs when someone in
the company recognizes a problem or need
•
Internal stimuli –
Need for new product or production
equipment
• External stimuli
–
Idea from a trade show or advertising
The Buying Process
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Business Buyer Behavior
General need description describes the characteristicsand quantity of the needed item. For complex items,
however, the buyer may need to work with others—
engineers, users, consultants—to define the item.The team may want to rank the importance of
reliability, durability, price, and other attributesdesired in the item
Product specification describes the technical criteriaValue analysis is an approach to cost reduction where
components are studied to determine if they can be
redesigned, standardized, or made with less costly
methods of production
The Buying Process
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Business Buyer Behavior
Supplier search involves compiling a list of
qualified suppliers. The newer the buying task, and themore complex and costly the item, the greater the amount oftime the buyer will spend searching for suppliers.
Proposal solicitation is the process ofrequesting proposals from qualified suppliers.Proposals should be marketing documents, not just technical
documents. Presentations should inspire confidence and should
make the marketer s company stand out from the competition.
The Buying Process
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Business Buyer Behavior
Supplier selection is the process when the buying center creates a
list of desired supplier attributes and negotiates with preferred
suppliers for favorable terms and conditions. include product and
service quality, reputation, on-time delivery, ethical corporatebehavior, honest communication, and competitive prices
Order-routine specifications is the final order with the chosen
supplier and lists all of the specifications and terms of the
purchase. Many large buyers now practice vendor-managedinventory , in which they turn over ordering and inventory
responsibilities to their suppliers. Under such systems, buyers
share sales and inventory information directly with key suppliers.
The Buying Process
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Business Buyer Behavior
Performance review involves a critique ofsupplier performance to the purchase terms.
may lead the buyer to continue, modify, or
drop the arrangement
The Buying Process
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Business Buyer Behavior
• Online purchasing•
Company-buying sites
•
reverse auctions, in which they puttheir purchasing requests online
and invite suppliers to bid for the
business.
•
trading exchanges, through which
companies work collectively tofacilitate the trading process.
•
Extranets links with suppliers
E-Procurement
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Business Buyer Behavior
•
Advantages – Access to new suppliers
– Lowers costs
– Speeds order processing and delivery
– Shares information
– Sales
–
Service and support
•
Disadvantages – Can erode relationships as buyers search for new
suppliers
– Security
E-Procurement
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Institutional and Government Markets
Institutional markets consist of hospitals,
nursing homes, and
prisons that providegoods and services to
people in their care
•
Characteristics – Low budgets
– Captive audience
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Institutional and Government Markets
Government markets tend to favor domestic suppliers and require
suppliers to submit bids and normallyaward to the lowest bidder
•
Affected by environmental factors• Non-economic factors considered
– Minority suppliers
– Depressed suppliers
–
Small businesses
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