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					 Business Markets and
Business Buyer Behavior


        Chapter 6
          Learning Goals

1.   Define the business market and how it
     differs 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 institutional and government
     markets and explain how they make their
     buying decisions



                                                 6-1
                     Case Study
                        UPS
     Customer Needs                       Services
• Consumers need fast,          • Its 360,000 people and
  friendly, low-cost package      88,000 vehicles offer
  delivery                        ground, air, freight
• Business needs are more         worldwide
  complex                       • Helps customer navigate the
    Shipping part of             complexities of
      complex logistics           international shipping
      process including         • Offers a wide range of
      purchasing, inventory,      financial services
      order status, invoices,   • Provides consulting services
      payments, returns           to improve logistics
                                  operations



                                                           6-2
               Definition
Business 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 retailing and wholesaling firms
    that acquire goods for the purpose of reselling or
    renting them to others at a profit.




                                                         6-3
        Goal 1: Define the business market
        Characteristics of
        Business Markets
 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




                                                   6-4
      Goal 1: Define the business market
         Business Markets

 Characteristics              Compared to
                              consumer markets:
                                  Business markets
Marketing Structure                  • have fewer but larger
                                       customers
and Demand
                                  Business customers
Nature of the                        • are more
Buying Unit                            geographically
                                       concentrated
Types of Decisions and            Demand is different
the Decision Process                 • Demand is derived
                                     • Demand is price
                                       inelastic
                                     • Demand fluctuates
                                       more
                                                           6-5
          Goal 1: Define the business market
         Business Markets

 Characteristics              Compared to consumer
                              purchases:
Marketing Structure               Involve more buyers in
and Demand                         the decision process
                                  More professional
Nature of the                      purchasing effort
Buying Unit
Types of Decisions and
the Decision Process



                                                        6-6
          Goal 1: Define the business market
         Business Markets

 Characteristics              Compared to consumer
                               purchases
                                  More complex buying
Marketing Structure                decisions
and Demand                        The buying process is
Nature of the                      more formalized
Buying Unit                       Buyers and sellers work
Types of Decisions and             more closely together and
the Decision Process               build long-term
                                   relationships



                                                         6-7
          Goal 1: Define the business market
 Business Buyer Behavior

Major Types of Buying Situations
   Straight rebuy
     • Reordering without modification
   Modified rebuy
     • Requires modification to prior purchase
   New task
     • First-time purchase



                                                 6-8
         Goal 1: Define the business market
Business Buyer Behavior
Systems Selling
   Buying a packaged solution to a
    problem from a single seller.
   Often a key marketing strategy for
    businesses seeking to win and hold
    accounts.



                                            6-9
       Goal 1: Define the business market
Business Buyer Behavior
Buying Center
   The decision-making unit of a buying
    organization
   Includes all individuals and units
    that participate in the decision
    making



                                            6 - 10
       Goal 1: Define the business market
 Business Buyer Behavior


Members of the Buying Center

   Users                     Influencers
   Buyers                    Deciders

           Gatekeepers
                                           6 - 11
      Goal 1: Define the business market
           Major Influences on
            Business Buyers

    Key Factors                      Economic trends
                                     Supply conditions
                                     Technological, political
  Environmental                      and competitive
  Organizational                     changes
  Interpersonal                      Culture and customs
  Individual


                                                                    6 - 12
Goal 2: Identify the major factors that influence business buyer behavior
           Major Influences on
            Business Buyers

    Key Factors                        Objectives
                                       Policies
  Environmental                        Procedures
  Organizational                       Organizational
  Interpersonal                        structure
                                       Systems
  Individual


                                                                    6 - 13
Goal 2: Identify the major factors that influence business buyer behavior
           Major Influences on
            Business Buyers

    Key Factors                        Influence of
                                       members in the
  Environmental                        buying center
                                              Authority
  Organizational                              Status
  Interpersonal                               Empathy
  Individual                                  Persuasiveness



                                                                    6 - 14
Goal 2: Identify the major factors that influence business buyer behavior
           Major Influences on
            Business Buyers

    Key Factors                        Personal characteristics of
                                       members in the buying
                                       center
  Environmental                            
                                           
                                               Age and income
                                               Education
  Organizational                              Job position
                                              Personality
  Interpersonal                               Risk attitudes
                                              Buying styles
  Individual


                                                                    6 - 15
Goal 2: Identify the major factors that influence business buyer behavior
        Stages in the Business
           Buying Process
    Stage 1: Problem Recognition
    Stage 2: General Need Description
    Stage 3: Product Specification
         Value analysis helps to reduce costs
    Stage 4: Supplier Search
         Supplier development



                                                                    6 - 16
Goal 3: List and define the steps in the business buying decision process
        Stages in the Business
           Buying Process
    Stage 5: Proposal Solicitation
    Stage 6: Supplier Selection
    Stage 7: Order-Routine
    Specification
         Blanket contracts are often used for
          maintenance, repair and operating
          items.
    Stage 8: Performance Review
                                                                    6 - 17
Goal 3: List and define the steps in the business buying decision process
              Business Buying
              on the Internet
         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



                                                                    6 - 18
Goal 3: List and define the steps in the business buying decision process
      Institutional and
    Government Markets

Institutional Markets
   Consist of churches, schools,
    prisons, hospitals, nursing homes
    and other institutions that provide
    goods and services to people in their
    care.


                                                            6 - 19
 Goal 4: Compare the institutional and government markets
      Institutional and
    Government Markets

Institutional Markets
   Often characterized by low budgets
    and captive patrons.
   Marketers may develop separate
    divisions and marketing mixes to
    service institutional markets.


                                                            6 - 20
 Goal 4: Compare the institutional and government markets
    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

                                                            6 - 21
 Goal 4: Compare the institutional and government markets

				
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