Chapter 8
Analyzing Business Markets
and Business Buying
Behavior
by
PowerPoint by
Milton M. Pressley
University of New Orleans
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Kotler on
Marketing
Many businesses
are wisely
turning their
suppliers and
distributors into
valued partners.
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Chapter Objectives
 In this chapter, we focus on six questions:
 What is the business market, and how does it
differ from the consumer market?
 What buying situations do organizational buyers
face?
 Who participates in the business buying process?
 What are the major influences on organizational
buyers?
 How do business buyers make their decisions?
 How do institutions and government agencies do
their buying?
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What is Organizational
Buying?
 Organizational buying
 The business market versus the consumer
market
 Business market
 Fewer buyers
 Larger buyers
 Close supplier-customer relationship
 Geographically concentrated buyers
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What is Organizational
Buying?
 Derived demand
 Inelastic demand
 Fluctuating demand
 Professional purchasing
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Blue Shield of California’s mylifepath
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What is Organizational
Buying?
 Several buying influences
 Multiple sales calls
 Directed purchasing
 Reciprocity
 Leasing
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If you were tasked with marketing a
product or service to an organization,
would you attempt to initially contact the
purchasing department, or potential
users of your company’s offerings? Why?
Would the product you
were selling make a
difference? Why?
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What is Organizational
Buying?
 Buying Situations
 Straight rebuy
 Modified rebuy
 New Task
 Systems Buying and Selling
 Systems buying
 Turnkey solution
 Systems selling
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What are some of the benefits to an
organization that can be derived
from a single source solution, or a
systems buying arrangement with a
prime contractor? What are some of
the potential pitfalls? What
can the company do to
protect itself from
these hazards?
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Participants in the Business
Buying Process
 The Buying Center







Initiators
Users
Influencers
Deciders
Approvers
Buyers
Gatekeepers
 Key buying influencers
 Multilevel in-depth selling
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Figure 8-1: Major Influences on
Industrial Buying Behavior
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Major Influences on Buying
Decisions
 Environmental Factors
 Organizational Factors




Purchasing-Department Upgrading
Cross-Functional Roles
Centralized Purchasing
Decentralized Purchasing of Small-Ticket
Items
 Internet Purchasing
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The e-hub Plastics.com home page offers buyers and
sellers of plastics a marketplace plus news and
information
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Covisint’s Web site offers both services and
information
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Major Influences on Buying
Decisions
 Other Organizational Factors
 Long-Term Contracts
 Vendor-managed inventory
 Continuous replenishment programs
 Purchasing-Performance Evaluation and Buyers’
Professional Development
 Improved Supply Chain Management
 Lean Production
 Just-in-time
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Major Influences on Buying
Decisions
 Interpersonal and Individual Factors
 Cultural Factors





France
Germany
Japan
Korea
Latin America
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The Purchasing/
Procurement Process
 Incentive to purchase
 Three Company Purchasing Orientations
 Buying Orientation
 Commoditization
 Multisourcing
 Procurement Orientation
 Materials requirement planning (MRP)
 Supply Chain Management Orientation
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The Purchasing/
Procurement Process
 Types of Purchasing Processes




Routine products
Leverage products
Strategic products
Bottleneck products
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The Purchasing/
Procurement Process
 Stages in the Buying Process
 Problem Recognition
 General Need Description and
Product Specification
 Product value analysis
 Supplier Search

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Vertical hubs
Functional hubs
Direct external links to major suppliers
Buying alliances
 Company buying sites
 Request for proposals (RFPs)
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Table 8.1: Buygrid Framework: Major Stages (Buyphases) of the
Industrial Buying Process in Relation to Major Buying Situations
(Buyclasses)
Buyclasses
Buyphases
New
Modified
Straight
Task
Rebuy
Rebuy
1. Problem recognition
Yes
Maybe
No
2. General need description
Yes
Maybe
No
3. Product specification
Yes
Yes
Yes
4. Supplier search
Yes
Maybe
No
5. Proposal solicitation
Yes
Maybe
No
6. Supplier selection
Yes
Maybe
No
7. Order-routine specification
Yes
Maybe
No
8. Performance review
Yes
Yes
Yes
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The Purchasing/
Procurement Process
 General Need Description and
Product Specification
 Product value analysis
 Supplier Search
 Vertical hubs
 Functional hubs
 Direct extranet links to
major suppliers
 Buying alliances
 Company buying sites
 Request for proposals (RFPs)
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The Purchasing/
Procurement Process
 Proposal Solicitation
 Supplier Selection
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Table 8-2: An Example of Vendor Analysis
Attributes
Rating Scale
Importance
Weights
Price
.30
Supplier reputation
.20
Product reliability
.30
Service reliability
.10
Supplier Flexibility
.10
Poor
(1)
Fair
(2)
Good
(3)
Excellent
(4)
x
x
x
x
x
Total score: .30(4) + .20(3) + .30(4) + .10(2) + .10(3) = 3.5
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The Purchasing/
Procurement Process
 Customer value assessment
 Routine-order products
 Procedural-problem products
 Political-problem products
 Order-Routine Specification
 Blanket contract
 Stockless purchase plans
 Performance Review
 Buyflow map
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Figure 8-2: Major Influences on
Industrial Buying Behavior
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Institutional and
Government Markets
 Institutional market
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