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Business Markets and Buying BehaviorBusiness Markets and Buying Behavior
Professor Chip BesioCox School of BusinessSouthern Methodist University
Business-to-Business Marketing
Sales to businesses rather than consumers
Example: Dell Business-to-Business - sale of a personal
computer to be used in an office environment Consumer Marketing - sale of a personal
computer for use by a student while at college
Business MarketBusiness Market -- all organizations that buy goods and services to use in the production of other products and services that are sold, rented, or supplied to others
Business markets involve many more dollars and items do consumer markets
WHAT AREBUSINESS MARKETS
THE NATURE AND SIZE OF ORGANIZATIONAL MARKETS
Slide 6-6
• Business Marketing• Industrial Markets (Industrial Firms)• Reseller Markets (Resellers)• Government Markets (Government Units)• Global Organizational Markets
Few, large buyers
Geographically concentrated
Derived demand - comes from consumers at the end of the channel
Inelastic demand
CHARACTERISTICS OF ORGANIZATIONAL MARKETS
Slide 6-7
TYPE AND NUMBER OF ORGANIZATIONIAL CUSTOMERS IN THE U.S.
MEASURING DOMESTIC AND GLOBAL INDUSTRIAL, RESELLER, AND
GOVERNMENT MARKETS
Slide 6-9
• North AmericanIndustry ClassificationSystem (NAICS)
• North American Product Classification System (NAPCS)
NAICS breakdown for information industries sector: NAICS code 51 (abbreviated)
Key characteristics of organizational buying behavior
Key Organizational Buying Criteria
Nature of the Buying UnitNature of the Buying Unit
• More participants in the purchase• Professional purchasing effort
• More participants in the purchase• Professional purchasing effort
Nature of the Buying UnitNature of the Buying Unit
• Few participants in the purchase• “Amateur” purchasing effort
• Few participants in the purchase• “Amateur” purchasing effort
Types of Decisions &Decision Process
Types of Decisions &Decision Process
• More complex decisions• Often higher risk; more at stake• Process is more formalized• Buyer/seller depend on one another• Build close long-term relationships with customers
Types of Decisions &Decision Process
Types of Decisions &Decision Process
• Simpler decisions• Usually limited risk• No formal info search or decision• Buyer and seller have limited interface• Psychology can be important
Source: Adapted fromPrentice Hall
Marketing MixMarketing Mix
• Predominantly sales force • Price is often negotiated• Advertising and other
communications are frequently technical
• Predominantly sales force • Price is often negotiated• Advertising and other
communications are frequently technical
Marketing MixMarketing Mix
• Mostly mass communications • Price is fixed• Advertising is emotional or rational;
reminder, persuasive, comparative, or awareness
• Mostly mass communications • Price is fixed• Advertising is emotional or rational;
reminder, persuasive, comparative, or awareness
Organizational Markets Consumer Markets
Comparing consumer and organizational purchases
Comparing the stages in consumer and organizational purchases
CHARACTERISTICS OF ORGANIZATIONAL BUYING
• The Buying Center: A Cross-Functional Group
Buying Center
Buying Committee
People in the Buying Center
CHARACTERISTICS OF ORGANIZATIONAL BUYING
Slide 6-22
• The Buying Center: A Cross-Functional Group
Roles in the Buying Center
• Users
• Influencers
• Buyers
• Deciders
• Gatekeepers
Buying Center
Buying Center
UsersGatekeepers
Deciders Influencers
Buyers
Source: Prentice Hall
Participants in the Business Buying Process
Segmentation variables and breakdowns for U.S. organizational markets
Straight RebuyStraight Rebuy
New Task BuyingNew Task Buying
Modified RebuyModified Rebuy
Invo
lved
Dec
isio
n M
akin
g
Business Buying Situations
How the buying situation affects buying center behavior
(Rarest, most complex type) Big buying unit Many people involved Lots of indirect influence Slower-than-usual processes High risk Buying unit gathers and weighs lots of information Anyone can win Performance matters (price not always as much)
Business Buying SituationsNew Buy
(Most common, most simple)
Small buying unit (generally one person)
Low perceived risk
So long as quality is acceptable … "In supplier” wins "Out suppliers" can’t get an appointment
“Out supplier” salespeople must wait for "in supplier" to fail or requirements to change
Business Buying SituationsStraight Rebuy
A window of opportunity for other suppliersAn "aging" new task or a "rejuvenated" straight re-buyCompared to new buy: Smaller buying unit More rapid decision Less risk Performance and price considered
Compared to straight re-buy:
•Larger buying unit•Slower decision•More risk
Business Buying SituationsModfied Rebuy
Slide 6-42
NAVIGATING THE NAICS
GOING ONLINE
1. What is the three-digit industry subsector code for food manufacturing?
Going Online
Slide 6-44
2. What is the six-digit U.S. code for dog and cat food manufacturing?
Going Online
Slide 6-45
3. How many establishments and what is the value of shipments sold by the U.S. dog and cat food manufacturing industry based on the latest government statistics?
Going Online