Copyright © 2003 Prentice-Hall, Inc. 8-1 Chapter 8 Analyzing Business Markets and Business Buying Behavior by PowerPoint by Milton M. Pressley University

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Copyright © 2003 Prentice-Hall, Inc.

Chapter 8Chapter 8Analyzing Business Markets Analyzing Business Markets and Business Buying and Business Buying BehaviorBehaviorbyby

PowerPoint byPowerPoint byMilton M. PressleyMilton M. Pressley

University of New OrleansUniversity of New Orleans

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Kotler on Marketing Many businesses Many businesses

are wisely are wisely turning their turning their suppliers and suppliers and distributors into distributors into valued partners.valued partners.

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Chapter Objectives In this chapter, we focus on six questions:In this chapter, we focus on six questions:

What is the business market, and how does it What is the business market, and how does it differ from the consumer market?differ from the consumer market?

What buying situations do organizational buyers What buying situations do organizational buyers face?face?

Who participates in the business buying process?Who participates in the business buying process? What are the major influences on organizational What are the major influences on organizational

buyers?buyers? How do business buyers make their decisions?How do business buyers make their decisions? How do institutions and government agencies do How do institutions and government agencies do

their buying?their buying?

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What is Organizational Buying?

Organizational buyingOrganizational buying

The business market versus the The business market versus the consumer marketconsumer market Business marketBusiness market

Fewer buyersFewer buyers Larger buyersLarger buyers Close supplier-customer relationshipClose supplier-customer relationship Geographically concentrated buyersGeographically concentrated buyers

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Derived demandDerived demand Inelastic demandInelastic demand Fluctuating demandFluctuating demand Professional purchasingProfessional purchasing

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Several buying influencesSeveral buying influences Multiple sales callsMultiple sales calls Directed purchasingDirected purchasing ReciprocityReciprocity LeasingLeasing

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Buying SituationsBuying Situations Straight rebuyStraight rebuy Modified rebuyModified rebuy New TaskNew Task

Systems Buying and SellingSystems Buying and Selling Systems buyingSystems buying Turnkey solutionTurnkey solution Systems sellingSystems selling

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What are some of the benefits to an What are some of the benefits to an organization that can be derived organization that can be derived from a from a single source solutionsingle source solution, or a , or a systems buyingsystems buying arrangement with a arrangement with a prime contractor? What are some of prime contractor? What are some of the potential pitfalls? What the potential pitfalls? What can the company do to can the company do to protect itself from protect itself from these hazards?these hazards?

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Participants in the Business Buying Process

The Buying CenterThe Buying Center InitiatorsInitiators UsersUsers InfluencersInfluencers DecidersDeciders ApproversApprovers BuyersBuyers GatekeepersGatekeepers

Key buying influencersKey buying influencers Multilevel in-depth sellingMultilevel in-depth selling

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Major Influences on Buying Decisions

Interpersonal and Individual FactorsInterpersonal and Individual Factors Cultural FactorsCultural Factors

FranceFrance GermanyGermany JapanJapan KoreaKorea Latin AmericaLatin America

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The Purchasing/ Procurement Process Incentive to purchaseIncentive to purchase

Three Company Purchasing OrientationsThree Company Purchasing Orientations Buying OrientationBuying Orientation

CommoditizationCommoditization MultisourcingMultisourcing

Procurement OrientationProcurement Orientation Materials requirement planning (MRP)Materials requirement planning (MRP)

Supply Chain Management OrientationSupply Chain Management Orientation

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Table 8.1: Buygrid Framework: Major Stages (Buyphases) of the Industrial Buying Process in Relation to Major Buying Situations

(Buyclasses)

BuyclassesBuyclasses

NewNew ModifiedModified StraightStraight

TaskTask RebuyRebuy RebuyRebuy

1. 1. Problem recognitionProblem recognition YesYes MaybeMaybe NoNo

2. 2. General need descriptionGeneral need description YesYes MaybeMaybe NoNo

3. 3. Product specificationProduct specification YesYes YesYes YesYes

BuyphasesBuyphases 4. 4. Supplier searchSupplier search YesYes MaybeMaybe NoNo

5. 5. Proposal solicitationProposal solicitation YesYes MaybeMaybe NoNo

6. 6. Supplier selectionSupplier selection YesYes MaybeMaybe NoNo

7. 7. Order-routine specificationOrder-routine specification YesYes MaybeMaybe NoNo

8. 8. Performance reviewPerformance review YesYes YesYes YesYes

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The Purchasing/ Procurement Process

General Need Description and General Need Description and Product SpecificationProduct Specification Product value analysisProduct value analysis

Supplier SearchSupplier Search Vertical hubsVertical hubs Functional hubsFunctional hubs Direct extranet links to Direct extranet links to

major suppliersmajor suppliers Buying alliancesBuying alliances

Company buying sitesCompany buying sites Request for proposals (RFPs)Request for proposals (RFPs)

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Table 8-2: An Example of Vendor Analysis

AttributesAttributes Rating ScaleRating Scale

ImportanceImportance

WeightsWeights

PoorPoor

(1)(1)

FairFair

(2)(2)

GoodGood

(3)(3)

ExcellentExcellent

(4)(4)

PricePrice .30.30 xx

Supplier reputationSupplier reputation .20.20 xx

Product reliabilityProduct reliability .30.30 xx

Service reliabilityService reliability .10.10 xx

Supplier FlexibilitySupplier Flexibility .10.10 xx

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

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The Purchasing/ Procurement Process Customer value assessmentCustomer value assessment Routine-order productsRoutine-order products Procedural-problem productsProcedural-problem products Political-problem productsPolitical-problem products

Order-Routine SpecificationOrder-Routine Specification Blanket contractBlanket contract Stockless purchase plansStockless purchase plans

Performance ReviewPerformance Review Buyflow mapBuyflow map

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Copyright © 2003 Prentice-Hall, Inc. 8-1 Chapter 8 Analyzing Business Markets and Business Buying Behavior by PowerPoint by Milton M. Pressley University