marketing for engineers ch 6
TRANSCRIPT
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Marketing for Engineers
Dr. Karim Kobeissi
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Chapter 6:Business Markets
and Business Buyer Behavior
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Business MarketsIn some ways, business markets are similar
to consumer markets. Both involve
people who assume buying roles and
make purchase decisions to satisfy needs.owever, business markets di!er in many
characteristics from consumer markets: Marketing structure and demand
"ature of the buying unit
#ypes of decisions and the decision process
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Business Markets
Compared to consumermarkets:
Business markets
have fewer but
larger customers Business customers
are moregeographically
concentrated Demand is dierent
Demand is derived
Demand is priceinelastic
Demand uctuates
Characteristics
Marketing Structure
and Demand
ature of the Buying
!nit
"ypes of Decisions and
the Decision #rocess
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Business Markets
Marketing Structureand Demand
ature of theBuying !nit
"ypes of Decisionsand the Decision#rocess
Compared toconsumer
purchases: Involve more buyers
in the decisionprocess
More professional
purchasing eort
Characteristics
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Business Markets
Marketing Structureand Demand
ature of theBuying !nit
"ypes of Decisionsand the Decision#rocess
Compared to consumer
purchasesMore comple$ buying
decisions
#he buying process ismore formali%ed
Buyers and sellers workmore closely together andbuild long&termrelationships
Characteristics
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Business Buyer Behavior
Business buyer behavior is the buying behavior of
organi%ations that buy goods and services for use in
the production of other products and services that
are sold, rented, or supplied to others.
'lso included are retailing and wholesaling (rms
that ac)uire goods for the purpose of reselling or
renting them to others at a pro(t.
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*ike consumer buying decisions business
buying decisions are a!ected by an
incredibly comple$ combination of
environmental, interpersonal, and individual
in+uences, but with an e$tra layer oforgani%ational factors thrown into the mi$.
#he Maor -actors #hat In+uenceBusiness Buyer Behavior
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$nvironmental
%rgani&ational
'nterpersonal
'ndividual
conomic trends
/upply conditions
#echnological,political and
competitive changes Culture and customs
0ey -actors
#he Maor -actors #hat In+uenceBusiness Buyer Behavior
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$nvironmental
%rgani&ational
'nterpersonal
'ndividual
1bectives 2olicies
2rocedures
1rgani%ational
structure /ystems
0ey -actors
#he Maor -actors #hat In+uenceBusiness Buyer Behavior
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In+uence of
members in thebuying center 'uthority
/tatus
mpathy 2ersuasiveness
0ey -actors
$nvironmental
%rgani&ational
'nterpersonal
'ndividual
#he Maor -actors #hat In+uenceBusiness Buyer Behavior
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2ersonal characteristicsof members in thebuying center 'ge and income
ducation
3ob position
2ersonality 4isk attitudes
Buying styles
0ey -actors
$nvironmental
%rgani&ational
'nterpersonal
'ndividual
#he Maor -actors #hat In+uenceBusiness Buyer Behavior
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4M'40: M1#I1"#oday, most B&to&B marketers recogni%e that
emotion plays an important role in business
buying decisions. In fact, when suppliers5 o!ers
are very similar, business buyers have little
basis for strictly rational choices. Because they
can meet organi%ational goals with any
supplier, buyers can allo! personal factors
to play a larger role in their decisions.
owever, when competing products di!er
greatly, business buyers are more accountable
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Ma"or #ypes of Buying $ituations
% $traight rebuy is a routine purchase decision such
as reorder without any modi(cation
% Modi&ed rebuy is a purchase decision that re)uires
some research where the buyer wants to modify the
product speci(cation, price, terms, or suppliers
% 'e! task is a purchase decision that re)uires
thorough research such as a (rst)time purchase
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% $ystems selling: Many business buyers prefer to buy a
complete solution to a problem from a single seller rather
than separate products and services from several suppliers
and putting them together. #he sale often goes to the (rm
that provides the most complete system for meeting the
customer5s needs and solving its problems. /uch systems
selling (or solutions selling) is often a key business
marketing strategy for !inning and holding accounts.
% #!o%stepprocess of selling:
Interlocking products
/ystem of production, inventory control, distribution, and other
services to meet the buyer5s need for a smooth&running operation
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i i i h i i
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2articipants in the Business Buying 2rocess
#he Buying Center
#he decision making unit of a buying organi*ation.
#he buying center includes all members of the organi%ation
who play any of (ve roles in the purchase decision
process:
+sers are members of the organi%ation who will use the
product or service. In many cases, users initiate the
buying proposal and help de(ne product speci(cations.
In,uencers often help de(ne speci(cations and also
provide information for evaluating alternatives. #echnical
personnel are particularly important in+uencers.
2 ti i t i th B i B i 2 8 9
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Buyers have formal authority to select the supplier and
arrange terms of purchase. Buyers may help shape
product speci(cations, but their maor role is in selecting
vendors and negotiating. In more comple$ purchases,
buyers might include high&level o7cers participating in
the negotiations.
Deciders have formal or informal power to select or
approve the (nal suppliers. In routine buying, the buyers
are often the deciders, or at least the approvers.
-atekeepers control the +ow of information to others.-or e$ample, purchasing agents often have authority to
prevent salespersons from seeing users or deciders.
1ther gatekeepers include technical personnel and even
personal secretaries.
2articipants in the Business Buying 2rocess 8con9
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Business buying process is the process
where business buyers determine which
products are needed to purchase, and
then (nd, evaluate, and choose among
alternative suppliers and brands.
Business Buying rocess
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/t i th B i B i 2
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/tages in the Business Buying 2rocess
$tage /: roblem 0ecognition
1ccurs when someone in the companyrecogni%es a problem or need
Internal stimuli
"eed for new product or production e)uipment $ternal stimuli
Idea from a trade show or advertising
$tage 1: -eneral 'eed Descriptionescription describes the characteristics and
)uantity of the needed item.
y
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y8con9$tage 2: roduct $peci&cation
escribes the technical criteria.
$tage 3: $upplier $earch
Involves compiling a list of )uali(ed
suppliers.
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$tage 4: roposal $olicitation
Is the process of re)uesting proposals from
)uali(ed suppliers.
$tage 5: $upplier $election
Is the process when the buying center
creates a list of desired supplier
attributes and negotiates with preferred
suppliers for favorable terms and
/tages in the Business Buying 2rocess 8con9
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$tage 6: 7rder%0outine $peci&cation
Is the (nal order with the chosen supplier
and lists all of the speci(cations and
terms of the purchase.
$tage 8: erformance 0evie!
Involves a criti)ue of supplier performance
to the purchase terms.
/tages in the Business Buying 2rocess 8con9
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E%procurement: 2urchasing through
electronic connections between buyers and
sellers; usually online.
E%procurementis growing rapidly 1nline auctions and online trading e$changes 8e&
marketplaces9 account for much of the online purchasing
activity
&procurement o!ers many bene(ts:
'ccess to new suppliers
*ower purchasing costs
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Business to Business E
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'dvantages 'ccess to new suppliers
*owers costs
/peeds order processing and delivery
/hares information
/ales
/ervice and support
isadvantages Can erode relationships as buyers search for new
suppliers
/ecurity
Business%to%Business E%procurement
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Institutional and -overnment Markets
Institutional markets consist of hospitals,
nursing homes, and prisons that provide
goods and services to people in their care.
Characteristics *ow budgets and captive patrons.
Marketers may develop separate divisions and
marketing mi$es to service institutional markets.
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-overnment markets8more than =>,??? buying
units in the @./9 tend to favor domestic suppliers
and re)uire suppliers to submit bids and normally
award to the lowest bidder
Carefully monitored
Aood credit
Institutional and Aovernment Markets