principal of marketing chapter 6

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Chapter Six

Business Markets and Business

Buying Behavior

Copyright ©2014 by Pearson Education, Inc. All rights reserved


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Business Markets andBusiness Buying Behavior

• Business Markets

• Business Buyer Behavior

•

The Business Buying Process

• E-Procurement: Buying on the Internet

• Institutional and Government Markets

Topic Outline



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Business buyer behavior refers to the buying behavior

of the organizations that buy goods and services for

use in production of other products and services thatare sold, rented, or supplied to others.

Business buying process is the process where

business buyers determine which products andservices are needed to purchase, and then find,

evaluate, and choose among alternative brands

Business Markets



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Business Markets

Decision Process• More complex

• More decision participants

•

More professionalpurchasing effort

• Buyer and seller more

dependent•

longer and more formalized

• more dependent on each

otherCopyright ©2014 by Pearson Education, Inc. All rights reserved


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Business Markets

Supplier development

systematic development ofnetworks of supplier-partners

to ensure an appropriate and

dependable supply of products

and materials that they will usein making their own products

or resell

Decision Process



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Business Buyer Behavior

The Model of Business Buyer Behavior



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Straight rebuy is a routine purchase decision such asreorder without any modification. usually handled on

a routine basis by the purchasing departmentModified rebuy is a purchase decision that requires

some research where the buyer wants to modify the

product specification, price, terms, or suppliers

New task is a purchase decision that requires thoroughresearch such as a new product

Major Types of Buying Situations



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Major Types of Buying Situations



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Buying center is all of the individuals

and units that participate in the

business decision-making processThis group includes the actual users of

the product or service, those whomake the buying decision, those who

influence the buying decision, those

who do the actual buying, and those

who control buying information.

Participants in the Business BuyingProcess



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Users are those that will use the product or service

Influencers help define specifications and provide information for evaluatingalternatives. Technical personnel are particularly important influencers.

Buyers have formal authority to select the supplier and arrange terms of

purchase. their major role is in selecting vendors and negotiating

Deciders have formal or informal power to select and approve final suppliers

Gatekeepers control the flow of information




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•

Buying center provides

a major challenge

•

Who participates in theprocess

– Their relative authority

– What evaluation criteria

each participant uses

– Informal participants




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Major Influences on Business Buyers

Economic

Factors

Price

Service

Personal

Factors

Emotion



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Major Influences on Business BuyersEnvironmental Factors

Demand for

product

Economic

outlook

Cost of

money

Supply ofMaterials

Technology Culture

Politics Competition



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Objectives

Policies

Procedures

Structure

Systems

Major Influences on Business Buyers

Organizational Factors



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Motives Perceptions Preferences

Age Income Education

Attitudetoward risk

Major Influences on Business BuyersIndividual Factors



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The Buying Process



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Problem recognition occurs when someone in

the company recognizes a problem or need

•

Internal stimuli –

Need for new product or production

equipment

• External stimuli

–

Idea from a trade show or advertising

The Buying Process



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General need description describes the characteristicsand quantity of the needed item. For complex items,

however, the buyer may need to work with others—

engineers, users, consultants—to define the item.The team may want to rank the importance of

reliability, durability, price, and other attributesdesired in the item

Product specification describes the technical criteriaValue analysis is an approach to cost reduction where

components are studied to determine if they can be

redesigned, standardized, or made with less costly

methods of production

The Buying Process



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Supplier search involves compiling a list of

qualified suppliers. The newer the buying task, and themore complex and costly the item, the greater the amount oftime the buyer will spend searching for suppliers.

Proposal solicitation is the process ofrequesting proposals from qualified suppliers.Proposals should be marketing documents, not just technical

documents. Presentations should inspire confidence and should

make the marketer s company stand out from the competition.

The Buying Process



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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. include product and

service quality, reputation, on-time delivery, ethical corporatebehavior, honest communication, and competitive prices

Order-routine specifications is the final order with the chosen

supplier and lists all of the specifications and terms of the

purchase. Many large buyers now practice vendor-managedinventory , in which they turn over ordering and inventory

responsibilities to their suppliers. Under such systems, buyers

share sales and inventory information directly with key suppliers.

The Buying Process



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Performance review involves a critique ofsupplier performance to the purchase terms.

may lead the buyer to continue, modify, or

drop the arrangement

The Buying Process



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• Online purchasing•

Company-buying sites

•

reverse auctions, in which they puttheir purchasing requests online

and invite suppliers to bid for the

business.

•

trading exchanges, through which

companies work collectively tofacilitate the trading process.

•

Extranets links with suppliers

E-Procurement



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•

Advantages – Access to new suppliers

– Lowers costs

– Speeds order processing and delivery

– Shares information

– Sales

–

Service and support

•

Disadvantages – Can erode relationships as buyers search for new

suppliers

– Security

E-Procurement



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Institutional and Government Markets

Institutional markets consist of hospitals,

nursing homes, and

prisons that providegoods and services to

people in their care

•

Characteristics – Low budgets

– Captive audience



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Institutional and Government Markets

Government markets tend to favor domestic suppliers and require

suppliers to submit bids and normallyaward to the lowest bidder

•

Affected by environmental factors• Non-economic factors considered

– Minority suppliers

– Depressed suppliers

–

Small businesses


Documents

principal of marketing chapter 6