7 Analyzing

Business Markets

MARKETING MANAGEMENT13th edition

Saihad Shahid Rahman, Falls

Business Buyer Behavior

Participants in the Business Buying Process

The Buying center is all of the individuals and units that participate in the business buying decision-making process such as:

• Initiators• Users• Influencers• Deciders• Approvers• Buyers• Gatekeepers

Initiators

Users

Initiators

Influencers

Deciders

Approvers

Buyers

Gatekeepers

Types of Business CustomersPrice-oriented Customer: Price is everything

for them. They always wait and look for the lowest possible price.

- It is also called Transactional selling (single dealings) like purchasing any product from auction, exhibitions and trade fairs etc.

Solution-oriented Customers: They want low price but will respond to arguments about more dependable supply or service.

- It is also called Consultative selling like buyer for computer and technology related products.

Types of Business CustomersGold-standard Customers: They want the

best performance in terms of product quality, assistance, delivery reliability and so on.

- It is also called Quality selling like selling to Brand Cars, Brand Watches manufacturers.

Strategic-value Customers: They want a fairly permanent and sole-supplier relationship with their supplier companies.

- It is also called Enterprise selling like strategic partnership between customer and supplier; Partnership between AIUB and OTOBI.

Types of Product in Business Purchasing ProcessesRoutine products: These products have low

value and cost to the customer and involve little risk of supply. So Business customers will seek the lowest price and emphasize routine ordering. Suppliers will offer to standardize products.

Example: Office Supplies – Paper, File Folders, Clips.

Leverage products : These products have high value and cost to the customer but involve little risk of supply because many companies make them. The supplier knows that the customer will compare market offerings and costs with other sellers.

Example: Tier for car, Computer accessories, building materials and office furniture.

Strategic products: These products have high value and the cost to the customer also involve high risk of supply. The customer will want a well known and trusted supplier and be willing to pay more than the average price. The supplier should seek strategic alliances.

Example: Complex Computer software and Security Systems, Special technical support for operation etc.

Bottleneck products: These products have low value and cost to the customer but they involve some risk of supply. The customer will want a supplier who can give guarantee a stable supply of reliable products.

Example: Spare parts for Automobile and Electronic product producers.

Types of Product in Business Purchasing Processes

Stages in the Business Buying Decision Process

Problem Recognitio

n

General Need

Description

Product Specificati

on

Supplier Search

Proposal Solicitation

Supplier Selection

Order Routine

Specification

Performance Review

Problem recognition occurs when someone in the company recognizes a problem or need for a business product or services.

Internal sources:• Need for new product or production equipment

from the internal operations of the organization.

External sources:• Idea from some external activities like trade show, advertising campaign or

competitors activities.

Stages in the Business Buying Decision Process

General need description describes the characteristics and quantity of the needed item.

- For standard items the process is simple, but for complex items, the buyer will work with others – engineers, users to define characteristics like utility, reliability, durability or price.

Product specification describes all the technical criteria and details of the product. The company can assign a product-value analysis team to the project to determine the cost and the standard of that product.

Stages in the Business Buying Decision Process

Supplier search involves searching for the most appropriate suppliers through trade directories, contacts with other companies, trade advertisements and trade shows. Company may collect information about the multiple suppliers.

Proposal solicitation is the process of requesting proposals from qualified suppliers. After evaluating the proposals, finally the buyer will invite a few suppliers to make formal presentation or discussion.

Supplier selection is the process when the buying center creates a list of desired supplier attributes and negotiates with preferred suppliers for favorable terms and conditions.

Stages in the Business Buying Decision Process

Order-routine specifications After selecting supplier(s), buyer place the final order to the supplier by listing all the technical specifications, quantity needed, the expected time of delivery, return policies, warranties, payment mode and so on.

Performance review involves a evaluation of supplier’s performance to the purchase terms.

- This is the most important stage for future sales development and relationship. Because performance review may lead the buyer to continue, modify or end a supplier relationship.

Stages in the Business Buying Decision Process

END of CHAPTER - 7