2011.06 marketing

MarketingStephan Langdon, MBA, M.Ed.

Week 6

Business Markets and Business Buying Behavior

• Business Markets• Business Buyer Behavior• The Business Buying Process• E-Procurement: Buying on the Internet• Institutional and Government Markets

Topic Outline

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 that are sold, rented, or supplied to others.

Business buying process is the process where business buyers determine which products and services are needed to purchase, and then find, evaluate, and choose among alternative brands

Business Markets

Business Markets

One main difference between business markets and consumer markets is ____________.1. market demand2. nature of the buying unit3. types of decisions4. all of the above

Business MarketsMarket Structure and Demand

Fewer and larger buyers

Geographic concentration

Derived demand• Inelastic demand• Fluctuating demand

Buyer and seller dependency

________ is demand that ultimately comes from the demand for consumer goods.1. Consumer demand2. Marketing demand 3. Derived demand4. B2B demand

Business Markets

• More decision participants• More professional purchasing

effort

Business Markets

Supplier development is the systematic development of networks of supplier-partners to ensure an appropriate and dependable supply of products and materials that they will use in making their own products or resell

Types of Decisions and the Decision Process

Systematic development of supplier-partners to ensure dependable supply of materials for use in making products is called ________.1. vendor management2. supplier development3. B2B4. supply curve

Business Buyer BehaviorThe Model of Business Buyer

Behavior

Which of the following is not a characteristic of the business market?1. Business markets are more geographically concentrated.2. Many business markets have elastic demand. 3. Business markets have more fluctuating demand.4. Business marketers have far fewer but larger customers.

Business Buyer Behavior

Straight rebuy is a routine purchase decision such as reorder without any modification

Modified 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 thorough research such as a new product

Major Types of Buying Situations

Which of the following is not one of the major types of buying situations faced by business buyers?1. Straight rebuy2. New task buy3. Online rebuy

4. Modified rebuy

Which of the following is not one of the major types of buying situations faced by business buyers?1. Straight rebuy2. New task buy3. Online rebuy4. Modified rebuy

Which of the business buyer purchase decisions offers the greatest opportunities and the greatest challenges for marketers?1. Straight rebuy2. New task buy

3. Modified rebuy 4. Both 2 and 3

Business Buyer Behavior• Systems selling involves the purchase of a packaged solution

from a single seller• Two-step process of selling:• Interlocking products• System of production, inventory control, distribution, and other services

to meet the buyer’s need for a smooth-running operation

Major Types of Buying Situations


Buying center is all of the individuals and units that participate in the business decision-making process• Users• Influencers• Buyers• Deciders• Gatekeepers

Participants in the Business Buying Process

The buying center includes all members of the organization who play any of five roles except ________.1. influencers2. deciders3. gatekeepers4. sellers

The ________ role in the purchase decision process is to control the flow of information to others. 1. buyer’s2. gatekeeper’s

3. influencer’s 4. decider’s


• Buying center provides a major challenge

• Who participates in the process• Their relative authority•What evaluation criteria each participant uses• Informal participants



Users are those that will use the product or service

Influencers help define specifications and provide information for evaluating alternatives

Buyers have formal authority to select the supplier and arrange terms of purchase

Deciders have formal or informal power to select and approve final suppliers

Gatekeepers control the flow of information



Major Influences on Business Buyers

Economic Factors

Price

Service

Personal Factors

Emotion

Business Buyer BehaviorMajor Influences on Business

BuyersEnvironmental Factors

Demand for

product

Economic

outlook

Cost of money

Resource

availability

Technology Culture

Politics Competition

http://www.aei.org/publications/filter.all,contentID.20038142219000216/default.asp


Objectives

Policies

Procedures

Structure

Systems

Major Influences on Business Buyers Organizational Factors


Motives Perceptions

Preferences

Age Income Education

Attitude toward

risk

Major Influences on Business BuyersInterpersonal Factors

Business Buyer BehaviorThe Buying Process

Once a business buyer determines a problem or need, the next step in the business buying process is to ________.1. begin a supplier search2. solicit suppliers’ proposals3. determine a general need description4. make a purchase

Business Buyer BehaviorProblem 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

Business Buyer BehaviorGeneral need description describes the

characteristics and quantity of the needed itemProduct 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

An approach to cost reduction in which components are studied to determine if they can be made by less costly methods is called ____________.1. value analysis2. derived demand3. deciders4. inventory control


Supplier search involves compiling a list of qualified suppliers

Proposal solicitation is the process of requesting proposals from qualified suppliers

The Buying Process

http://www.ides.com/manufacturers/default.htm


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

Order-routine specifications is the final order with the chosen supplier and lists all of the specifications and terms of the purchase

The Buying Process

http://www.staples.com/


Performance review involves a critique of supplier performance to the purchase terms

The Buying Process


• Online purchasing• Company-buying

sites• Extranets

E-Procurement

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

Institutional and Government Markets

Institutional markets consist of hospitals, nursing homes, and prisons that provide goods and services to people in their care

• Characteristics• Low budgets• “Captive” audience

Institutional and Government MarketsGovernment markets tend to favor domestic

suppliers and require suppliers to submit bids and normally award to the lowest bidder

• Carefully monitored• Affected by similar environmental factors• Good credit• Non-economic factors• Minority suppliers• Depressed suppliers• Small businesses

The ________ consists of schools, hospitals, nursing homes, and prisons that provide goods and services to people in their care.1. government market2. institutional market3. non-profit market4. for-profit market