Business Buyer Behavior &
Product Issues
Business Buyer Behavior
What are the three reasons businesses
produce a product?
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Resale to others
Direct use in the production of other products
Consumed in the normal course of business
Business Buyer Behavior
The Buying Decision Process has five stages:
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Problem Recognition
Develop Product Specifications to Solve Problem
Search & Evaluation Alternative Products and
Suppliers
Select both Product & Supplier, the Order Product
Evaluate Product and Supplier Performance
Business Buyer Behavior
What are the major Influences on the
buying decision process?
Business Buyer Behavior
What are the major Influences on the
buying decision process?
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Environmental
Organizational
Interpersonal
Individual
Business Buyer Behavior
What are the four types of
business markets?
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Producer
Reseller
The Government
Institutional
Business Buyer Behavior
Producer Markets
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Wide array of industries
Highly concentrated
Raw Materials
Components
Business Buyer Behavior
Reseller Markets
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Distribution Channels
Wholesalers
Retailers
Touch the end-user
Highly sensitive to market demand
Business Buyer Behavior
Government Markets
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Federal, State, County and Local (city)
Roughly 1/5 of total goods and services sold
Complex purchasing process
Often bid basis
Business Buyer Behavior
Institutional Markets
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Education, Non-Profits, etc.
Specialized or niche marketing
Highly cost-sensitive
Business Buyer Behavior
Important Aspects of the B-to-B Transaction
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Longer sales process, more complex
Relationships more important, larger “jury”
Key Product Attributes include:
Quality
Availability
Service
Price and Terms
Business Buyer Behavior
Important Aspects of the B-to-B Transaction
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Different purchasing procedures
- Sampling
- Description
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- Inspection
- Negotiation
Understanding the Demand
- Derived
- Joint
- Inelastic
- Fluctuating
Product Issues
Profit per unit Product category sales
(real dollars)
(real dollars)
A Product Life Cycle
Life cycle
extension
Profit/unit
Sales
Introduction
Growth
Maturity
Competitive
turbulence
Time (years)
Decline or
extension
Product Concepts
What is a Product?
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Goods
Services
Ideas
Product Concepts
What are the major Product categories?
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Consumer Products
Business Products
Product Concepts
Consumer Products
• Convenience Products
• Shopping Products
• Specialty Products
• Unsought Products
Product Concepts
Business Products
• Installations
• Accessory Equipment
• Raw Materials
• Components
• Process Materials
• Maintenance, Repair & Operating (MRO) items
Key Product Definitions
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Product Item – specific version of the product
Product Line – a collection of closely related
product items that can be considered a unit
Product Mix – all the products that are sold
Width – the number of product lines offered
Depth – the average number of different
products offered in each product line
Profit per unit Product category sales
(real dollars)
(real dollars)
Generalized Product Life Cycle
Life cycle
extension
Profit/unit
Sales
Introduction
Growth
Maturity
Competitive
turbulence
Time (years)
Decline or
extension
Common Product Life-Cycle Curves
I. Growth-decline-plateau
Unit
sales
II. Cycle-recycle
Unit
sales
Time
Time
Time
Decline
Intro.
Unit
sales
Maturity
Unit
sales
IV. Classical
Growth
III. Innovative-maturity
Time
Expected Characteristics and
Responses by Major Life-Cycle Stages
Introduction Stage in Product Life Cycle
Stage
characteristics
Firm’s Normative
Responses
Strategic marketing
objectives
Stimulate
demand
Product
Quality
Few
Product line
Narrow
Competitors
Small
Price
Profitability
Negative
Channels
Skimming vs.
penetration
Selective
Communications
High
Market growth rate
(constant dollars)
Technical change in
product design
Moderate
Segments
High
Expected Characteristics and
Responses by Major Life-Cycle Stages
Growth Stage in Product Life Cycle
Stage
characteristics
Firm’s Normative
Responses
Strategic marketing
objectives
Build share
Moderate
Product
Continue to
improve quality
Segments
Few to many
Product line
Broad
Competitors
Large
Price
Reduce
Profitability
High
Channels
Intensive
Communications
High
Market growth rate
(constant dollars)
Technical change in
product design
High
Expected Characteristics and
Responses by Major Life-Cycle Stages
Shakeout Stage in Product Life Cycle
Stage
characteristics
Market growth rate
(constant dollars)
Technical change in
product design
Segments
Competitors
Profitability
Firm’s Normative
Responses
Leveling
off
Limited
Few to
many
Decreasing
Strategic marketing
objectives
Product
Build share
Product line
Rationalize
Price
Reduce
Channels
Intensive
Communications
High
Rationalize
Low
Expected Characteristics and
Responses by Major Life-Cycle Stages
Mature Stage in Product Life Cycle
Stage
characteristics
Market growth rate
(constant dollars)
Technical change in
product design
Firm’s Normative
Responses
Insignificant
Limited
Segments
Few to many
Competitors
Limited
Profitability
High for
Market share
leaders
Strategic marketing
objectives
Product
Product line
Price
Hold share
Concentrate
on features
Hold length
of line
Hold or cut
selectively
Channels
Intensive
Communications
High to
declining
Expected Characteristics and
Responses by Major Life-Cycle Stages
Decline Stage in Product Life Cycle
Stage
characteristics
Market growth rate
(constant dollars)
Technical change in
product design
Segments
Competitors
Profitability
Firm’s Normative
Responses
Negative
Limited
Strategic marketing
objectives
Product
Harvest
Product line
Price
Cut length
of line
Reduce
Channels
Selective
Communications
Reduce
Few
No change
Few
Low
Product Development & Management
Line Extensions
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Most new products fall into this category
- Closely related
- Lower risk
- Serve a niche
- Less expensive to develop
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Aggressive tactic to capture more market share
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Can also cause cannibalization of core product
Product Development & Management
Product Modifications
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Quality
Functional
Aesthetic
New Product Development
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Generate the ideas
Screen for the good ones/eliminate the others
Conduct concept testing research
Build the business case
Complete the product development analysis
Test market the product
Go to commercialization
Product Differentiation
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Product Quality
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Product Design & Features
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Level
Consistency
Physical appearance (style)
Functional characteristics
Product Support Services
Dimensions of Product Quality
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Performance
How well does the washing machine wash clothes?
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Durability
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Conformance with
specifications
Features
How long will the lawn mower last? What is the
incidence of product defects?
Does an airline flight offer a movie and dinner?
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Reliability
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Serviceability
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Fit and finish
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Brand name
Will each visit to a restaurant result in consistent
quality?
What percentage of the time will a product perform
satisfactorily?
Is the product easy to service?
Is the service system efficient, competent, and
convenient?
Does the product look and feel like a quality product?
Is this a name that customers associate with quality?
What is the brand’s image?
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Product Differentiation
Features
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Product attributes
Less quantifiable
Often vague or
ambiguous
Benefits
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Tangible
Measurable
Clearly identifiable to
end-user
Results-oriented
Specific consequence