2011.06 marketing
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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
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
________ 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
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.
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
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
Business Buyer Behavior
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 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
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
Business Buyer Behavior
• Buying center provides a major challenge
• Who participates in the process• Their relative authority•What evaluation criteria each participant uses• Informal participants
Participants in the Business Buying Process
Business Buyer Behavior
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
Participants in the Business Buying Process
Business Buyer Behavior
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
Business Buyer Behavior
Objectives
Policies
Procedures
Structure
Systems
Major Influences on Business Buyers Organizational Factors
Business Buyer Behavior
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
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
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
Business Buyer Behavior
Supplier search involves compiling a list of qualified suppliers
Proposal solicitation is the process of requesting proposals from qualified suppliers
The Buying Process
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
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
Business Buyer Behavior
Performance review involves a critique of supplier performance to the purchase terms
The Buying Process
Business Buyer Behavior
• 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
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
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