Business Market & Buying Behavior (Ppt 2003)

• ANALYZING BUSINESS MARKET• BUSINESS BUYING BEHAVIOR

• Decision making process • To purchase products and services • To Identify, evaluate and choose among alternative brands and suppliers.

Business market have several characteristics that contrast sharply with those of consumer markets.1.Fewer Buyers : Business marketer normally deals with far fewer buyers than the consumer marketer does.

2.Larger Buyers : A few large buyers do most of the purchasing in such industries as aircraft ,engineering & defense.

3.Close Supplier-Customer Relationship : Because of the smaller customer base & the importance & power of the larger customers, suppliers are frequently expected to customize their offering to individual needs. Sometimes buyer request sellers to change their practice & performance.

1. Straight Rebuy:2. Modified Rebuy:3. New buy:

Low involvement

More involvement

Initiators: Those Who request something to be purchased. (can be Users or others in the Firm)Users: Those who will use the product or service.Influencers: People who influence the buying decision. Also help define specifications & provides information for evaluating alternatives.

Deciders: People who decides on product requirements or on suppliers.

Approvers: Who authorized the propose actions of deciders or buyers.

Buyers: People who have authority to select the supplier & arrange the purchase term.

Gate Keepers: Who have the power to prevent sellers or information from reaching members of the buying center.

• Business buyers respond to many influences when they make their decision.• When supplier offers are similar ,business buyers can satisfy the purchasing requirements with any supplier.• When supplier offers differ substantially, business buyers are more accountable for their choices and pay more attention to economic factor.

1.Environmental factors:•Close attention to present and expected economic factors.•Make long term contracts with suppliers.

2.Organizational factors:•Every Organization structures & policies vary from others.• So because of this above reason buying business behavior is affected inside the organization

3.Interpersonal & Individual Factors:

• Buying decision is influenced due to the interests ,status ,age and authority of the business buying.

• Also influenced by likes and dislike of business buyers.

4.Cultural Factors:

ENVIRONMENTAL

FACTOR

1. Level of Demand

2. Economic Output

3. Interest Rate

4. Rate of Technology change

5. Political Developments

6. Competitive Developments

7. Social Responsibility

ORGANIZATION

ALFACTOR

1. Objectives

2. Policies

3. Procedure

4. Firm Structure

5. Systems

Influences on buying decision

&

INDIVIDUAL

FACTOR

1. Age

2. Income

3. Education

4. Job Position

5. Personality

6. Risk Attitudes

INTERPERSONAL FACTOR

1. Interest

2. Authority

3. Status

4. Empathy

Three Ways of Company's Purchasing Orientations:

1.Buying Orientation: * focus on short term & tacticalTwo tactics: a.Commoditization: firm imply that product is commodity & care only about price b.Multisourcing: firm use several sources & make them compete for shares of company’s purchase.2.Procurement Orientation: * focus on quality & cost ,long term contracts. * nice relation with suppliers.3.Supply Chain Management Orientation: * more strategic. * firm focus on improvement of value chain.

Marketers need to understand how business purchasing dept works .•Peter kraljic distinguished 4 product-related purchasing process

1.Routine Products: These product have low value and cost to the customer involves low risk. (e.g. stationary)

2.Leverage Products: These Products have high value and cost to the customer but involves little risk of supply.(e.g. engine piston)

3.Strategic Products: Such products have high value and cost to the customer also involves high risk.(e.g. main frame computers)

4.Bottleneck Products: Such products have low value and cost to the customer but they involve some risk.(e.g. spare parts)

Note: purchasing process will vary with different types of products.

Robinson & Associates have identified eight stages & called them Buyphases.There are eight steps in business buying process:1.Problem Recognition:2.General Need Description:3.Product Specification:4.Supplier Search:5.Proposal Solicitation:6.Supplier Selection: (blanket contracts)7.Order-Routine Specification:8.Performance Review:

•Institutional Markets consists of hospitals, schools, nursing homes, prisons and other institution that must provides goods and services to people in their care.

•In major countries, government organization are major buyer of goods and services.

•Government organizations typically require suppliers to submit bids and normally they awards the contract to the lowest bidder.

•In some cases ,the government will make allowance for the supplier’s reputation for completing project on time.

•Government organization tends to favor domestic supplier over foreign supplier.