marketing for engineers ch 6

7/24/2019 Marketing for Engineers Ch 6

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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



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$nvironmental

%rgani&ational

'nterpersonal

'ndividual

1bectives 2olicies

2rocedures

1rgani%ational

structure /ystems

0ey -actors



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In+uence of

members in thebuying center 'uthority

/tatus

mpathy 2ersuasiveness

0ey -actors

$nvironmental

%rgani&ational

'nterpersonal

'ndividual



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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



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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

marketing for engineers ch 6

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