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Chapter 6Business Markets
And Buying Behavior
6 | 3Copyright © Houghton Mifflin Company. All rights reserved.
Objectives
• Become familiar with various types of business markets
• Identify major characteristics of business customers and transactions
• Understand several attributes of demand for business products
• Become familiar with major components of a buying center
• Describe industrial classification systems and explain how they can be used to identify and analyze business markets
6 | 4Copyright © Houghton Mifflin Company. All rights reserved.
Business Market
Individuals or groups that purchase a specific kind of product for resale, direct use in producing other products, or use in general daily operations (B2B).
6 | 5Copyright © Houghton Mifflin Company. All rights reserved.
B2B Success
• Long-term mutually profitable relationships
• Co-develop products
• Timely exchanges at competitive prices
6 | 6Copyright © Houghton Mifflin Company. All rights reserved.
Categories OfBusiness Markets
1. Producer
2. Reseller
3. Government
4. Institutional
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Producer Market
Individuals and business organizations that purchase products to make profits by using them to produce other products or using them in their operations.
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Number of EstablishmentsIn Industry Groups
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Reseller Markets
Intermediaries that buy finished goods and resell them for profit.
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Factors Considered When Making Business Purchase Decisions
Level of demand
Space required relative to potential profit
Ease of placing orders
Availability of technical assistance
Training programs from producers
Competes or complements
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Government Markets
Federal, state, county, or local governments that buy goods and services to support their internal operations and provide products to their constituencies.
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Institutional Markets
Organizations with charitable, educational, community, or other nonbusiness goals.
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DimensionsOf Marketing B2B
• Characteristics of transactions
• Attributes of customers
• Customer primary concerns
• Methods of buying
• Types of purchases
• Demand
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B2B Transaction Characteristics
• Larger
• Expensive
• Frequent replenishing
• Long-term agreement
• Discussions/negotiations
• Several decisionmakers
• Reciprocity
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Reciprocity
An arrangement unique to business marketing in which two organizations agree to buy from each other.
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B2B Customer Attributes
• Require detailed information
– Product features
– Technical specifications
• Personal goals influence decision
• Agents seek psychological satisfaction
– Advancement
– Financial rewards
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B2B CustomersPrimary Concerns
• Price
• Quality
• Service
• Relationship
6 | 18Copyright © Houghton Mifflin Company. All rights reserved.
Methods Of B2B Buying
• Description
• Inspection
• Sampling
• Negotiation
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Types Of B2B Purchases
• New-Task
• Straight Rebuy
• Modified Rebuy
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New-Task Purchase
An initial purchase by an organization of an item to be used to perform a new job or solve a new problem.
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Straight Rebuy Purchase
A routine purchase of the same products by a business buyer.
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Modified Rebuy Purchase
A new-task purchase that is changed on subsequent orders or when the requirement of a straight rebuy purchase are modified.
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Business Product Demand
• Derived
• Inelastic
• Joint
• Fluctuating
US Economic Outlook
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Derived Demand
Demand for industrial products that stems from demand for consumer products.
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Inelastic Demand
Demand that is not significantly altered by a price increase or decrease.
Prices for Manufactured Goods
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Joint Demand
Demand involving the use of two or more items in combination to produce a product.
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Fluctuating Demand
When demand for a business product is derived by consumer demand, causing it to fluctuate enormously
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Business Buying Decisions
• Buying Behavior
• Buying Center
• Stages of Process
• Influences
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Business (Organizational)Buying Behavior
The purchase behavior of producers, government units, institutions, and resellers.
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Buying Center
The people within an organization who make business purchase decisions.
Purchasing Agent
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Business Buying Decision Process And Factors That May Influence It
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Value Analysis
An evaluation of each component of a potential purchase.
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Vendor Analysis
A formal, systematic evaluation of current and potential vendors.
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Multiple Sourcing
An organization’s decision to use several suppliers.
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Sole Sourcing
An organization’s decision to use only one supplier.
Buyers select the sole source option when...
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Using IndustrialClassification Systems
• Identifying Potential Business Customers
• Estimating Purchase Potential
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North American IndustryClassification System (NAICS)
An industry classification system that generates comparable statistics among the United States, Canada, and Mexico.
North American
Industry Classification System
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SIC/NAICS For Manufacturers Of Magnetic And Optical Media
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Input-Output Data
Information that identifies what types of industries purchase the products of a particular industry.