ch08 - business market and behaviour

8/13/2019 Ch08 - Business Market and Behaviour

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Copyright 2003 Prentice-Hall, Inc.

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Chapter 8

Analyzing Business Marketsand Business Buying

Behaviorby

PowerPoint by

Milton M. Pressley

University of New Orleans


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Kotler on

Marketing

Many businesses

are wisely

turning their

suppliers and

distr ibutors into

valued partners.


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Chapter Objectives

In this chapter, we focus on six questions: What is the business market, and how does it

differ from the consumer market?

What buying situations do organizational buyers

face?

Who participates in the business buying process?

What are the major influences on organizationalbuyers?

How do business buyers make their decisions?

How do institutions and government agencies dotheir buying?


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What is Organizational

Buying? Organizational buying

The business market versus the consumer

market

Business market

Fewer buyers

Larger buyers

Close supplier-customer relationship

Geographically concentrated buyers


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Buying?

Derived demand

Inelastic demand Fluctuating demand

Professional purchasing


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Blue Shield of Californias mylifepath
http://www.mypath.com/


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Buying?

Several buying influences

Multiple sales calls

Directed purchasing

Reciprocity

Leasing


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If you were tasked with marketing a

product or service to an organization,

would you attempt to initially contact the

purchasing department, or potential

usersof your companys offerings? Why?

Would the product youwere selling make a

difference? Why?


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Buying? Buying Situations

Straight rebuy

Modified rebuy New Task

Systems Buying and Selling

Systems buying Turnkey solution

Systems selling


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What are some of the benefits to an

organization that can be derived

from a single source solution, or asystems buyingarrangement with a

prime contractor? What are some of

the potential pitfalls? What

can the company do to

protect itself from

these hazards?



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Participants in the Business

Buying Process The Buying Center

Initiators

Users

Influencers

Deciders

Approvers

Buyers Gatekeepers

Key buying influencers

Multilevel in-depth selling



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Figure 8-1: Major Influences on

Industrial Buying Behavior



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Major Influences on Buying

Decisions Environmental Factors

Organizational Factors

Purchasing-Department Upgrading Cross-Functional Roles

Centralized Purchasing

Decentralized Purchasing of Small-TicketItems

Internet Purchasing



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The e-hub Plastics.com home page offers buyers and

sellers of plastics a marketplace plus news and

information
http://www.plastics.com/



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Covisints Web site offers both services and

information
http://www.covisint.com/



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Decisions Other Organizational Factors

Long-Term Contracts

Vendor-managed inventory Continuous replenishment programs

Purchasing-Performance Evaluation and Buyers

Professional Development

Improved Supply Chain Management Lean Production

Just-in-time



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Decisions Interpersonal and Individual Factors

Cultural Factors

France

Germany

Japan

Korea

Latin America



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The Purchasing/

Procurement Process Incentive to purchase

Three Company Purchasing Orientations

Buying Orientation Commoditization

Multisourcing

Procurement Orientation

Materials requirement planning (MRP) Supply Chain Management Orientation



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The Purchasing/

Procurement Process Types of Purchasing Processes

Routine products Leverage products

Strategic products

Bottleneck products



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The Purchasing/

Procurement Process Stages in the Buying Process Problem Recognition

General Need Description and

Product Specification Product value analysis

Supplier Search

Vertical hubs

Functional hubs Direct external links to major suppliers

Buying alliances

Company buying sites

Request for proposals (RFPs)



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Table 8.1: Buygrid Framework: Major Stages (Buyphases) of the

Industrial Buying Process in Relation to Major Buying Situations

(Buyclasses)Buyclasses

New Modified Straight

Task Rebuy Rebuy

1. Problem recognition Yes Maybe No

2. General need description Yes Maybe No

3. Product specification Yes Yes Yes

Buyphases 4. Supplier search Yes Maybe No

5. Proposal solicitation Yes Maybe No

6. Supplier selection Yes Maybe No

7. Order-routine specification Yes Maybe No

8. Performance review Yes Yes Yes



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The Purchasing/

Procurement Process General Need Description and

Product Specification

Product value analysis

Supplier Search

Vertical hubs

Functional hubs

Direct extranet links tomajor suppliers

Buying alliances

Company buying sites

Request for proposals (RFPs)



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The Purchasing/

Procurement Process Proposal Solicitation

Supplier Selection



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Table 8-2: An Example of Vendor Analysis

Attributes Rating Scale

Importance

Weights

Poor

(1)

Fair

(2)

Good

(3)

Excellent

(4)

Price .30 x

Supplier reputation .20 x

Product reliability .30 x

Service reliability .10 x

Supplier Flexibility .10 x

Total score: .30(4) + .20(3) + .30(4) + .10(2) + .10(3) = 3.5



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The Purchasing/

Procurement Process Customer value assessment

Routine-order products

Procedural-problem products Political-problem products

Order-Routine Specification

Blanket contract

Stockless purchase plans

Performance Review

Buyflow map



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Figure 8-2: Major Influences on

Industrial Buying Behavior


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Institutional and

Government Markets Institutional market

ch08 - business market and behaviour

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